Pfizer Inc. agreed to buy privately held biopharmaceutical company Excaliard Pharmaceuticals for an undisclosed sum, to gain access to Excaliard's experimental skin scarring drug.

Pfizer, which expects to close the deal by the year end, said Excaliard will receive an upfront payment and related milestone payments.

The drug EXC 001, which is in mid-stage trials, was co-developed by Excaliard and Isis Pharmaceuticals Inc to treat skin fibrosis, characterized by the formation of excess fibrous connective tissue.

Separately, Isis said it will receive up to $14 million from Pfizer for its stake in Excaliard.

The science behind Excaliard's lead compound aligns well with our R&D focus on new treatments for fibrosis and tissue remodeling, Pfizer said.

Pfizer shares closed at $18.96 on Monday on the New York Stock Exchange, while Isis shares closed at $6.57 on Nasdaq.

(Reporting by Balaji Sridharan in Bangalore; Editing by Esha Dey)