Merck & Co. (NYSE: MRK) might be slipping in Friday’s session, but the company is definitely making waves in its industry with its most recent acquisition agreement. Merck and Afferent Pharmaceuticals reportedly have signed a definitive agreement under which the former will acquire the latter.

The deal is still subject to certain closing conditions. However, the companies anticipate that this transaction will close in the third quarter of 2016.

Under terms of the agreement, Merck, through a subsidiary, will acquire all outstanding stock of Afferent in exchange for an upfront payment of $500 million in cash. At the same time, Afferent shareholders will be eligible to receive a total of up to an additional $750 million associated with the attainment of certain clinical development and commercial milestones.

Dr. Roger M. Perlmutter, president of Merck Research Laboratories, commented:

Afferent has pioneered the clinical development of novel investigational candidates selectively targeting the P2X3 receptor, an exciting area of research. We look forward to advancing these innovative molecules for patients with conditions like chronic cough, an area of significant unmet medical need.

Kathleen Sereda Glaub, CEO of Afferent Pharmaceuticals, commented:

This achievement is a reflection of the talent and hard work of the experienced Afferent team in advancing the science of P2X3 receptors and the clinical development of our novel therapeutic candidates. We are very pleased to enter into this agreement given Merck’s reputation for maximizing opportunities around novel mechanisms. This agreement with Merck creates significant value for Afferent shareholders while enhancing the potential of our portfolio to provide meaningful benefits to patients globally.

Privately held Afferent is a leader in the development of therapeutic candidates targeting the P2X3 receptor for the treatment of common, poorly managed, neurogenic conditions. Afferent’s lead investigational candidate, AF-219, is a selective, non-narcotic, orally administered P2X3 antagonist currently being evaluated in a Phase 2b clinical trial for the treatment of refractory, chronic cough as well as in a Phase 2 clinical trial in idiopathic pulmonary fibrosis with cough.

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Shares of Merck were trading down 0.6% at $56.83 on Friday, with a consensus analyst price target of $61.55 and a 52-week trading range of $45.69 to $60.07.

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