AbbVie Inc (NYSE:ABBV) has agreed to part with $5.8 billion to add StemcenTrx to its cancer portfolio. The transaction will both expand and diversify AbbVie’s oncology business. AbbVie has been on acquisition spree in the recent times as it seeks to offset potential revenue loss as its lead product Humira faces increasing competition.

As for the acquisition of StemcenTrx, the $5.8 billion price tag will be settled in both cash and stock. The cash component of the deal is $2 billion while the remaining $3.8 billion will be settled in stock. But that is not all. Additional payments up to $4 billion will be made to StemcenTrx owners if certain drug development milestones are hit.

Treating cancer in solid organs

Through StemcenTrx, AbbVie will add to its portfolio a treatment for lung cancer, among other cancer drug candidates. AbbVie says that StemcenTrx’s lead lung cancer drug Rova-T has multibillion dollar revenue potential. Clinical trials of the drug showed that it significantly shrunk tumors in a group of patients that received its treatment.

With Rova-T, AbbVie could not only add significant amount in new revenue, but also diversify its cancer treatment away from blood cancers to treatments of solid organ tumors.

StemcenTrx’s area of specialty is cancer stem cells. As such, it provides AbbVie with an opportunity to significantly diversify its cancer treatments and pipeline.

On sale sign pays off

Before even AbbVie announced that it was acquiring StemcenTrx, the cancer drug startup had already hung “On Sale” sign. There were reports that the startup was seeking more than $5 billion from the buyer and it got it.

Largest startup exist

One of the early investors in StemcenTrx was Founders Fund, whose investment in the startup stands at about $300 million. By StemcenTrx selling to AbbVie, Founders Fund is about to make its largest startup cash out in history.

AbbVie Inc expects to close the deal with StemcenTrx in 2Q2016.