Johnson & Johnson (J&J) will pay $650 million for San Diego-based Aragon Pharmaceuticals and its experimental prostate cancer drug.

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The purchase price may climb to $1 billion if the prostate cancer program reaches certain milestones according to a J&J statement.

ARN-509 may help treat those men whose prostate cancer has not spread to other parts of the body J&J said on Monday.

All other assets of Aragon will be spun off in a new company, called Seragon Pharmaceuticals.

Seragon will be based in San Diego and will be financed by the current Aragon investors. It will retain members of the company's management team including current CEO Richard Heyman, who will become the new company's CEO.

The deal is expected to close in the third quarter.