German drug discovery and development company Evotec has entered into a strategic, multi-year collaboration with Japan’s Takeda Pharmaceutical that could be worth in excess of $850 million.

The partners aim to establish at least five drug discovery programs with the goal of Evotec delivering clinical candidates for Takeda to pursue into clinical development. The collaboration will see the companies combine their expertise to discover new treatments in Takeda’s four core therapeutic areas: oncology, gastroenterology, neuroscience and rare diseases.

Under the terms of the deal, the Osaka-headquartered drugmaker will pay Evotec an undisclosed, one-time, upfront fee. In addition, Evotec is eligible to receive pre-clinical, clinical and commercial milestones that could total more than $170 million per program as well as tiered royalties on future sales.

Takeda, which merged with Shire in January, and Evotec are also working together on a treatment for neurodegenerative diseases that cause dementia.

Last year Evotec signed collaborations with Sanofi and Celgene in the areas of infectious diseases and oncology respectively. The Hamburg-based company is also working with Bayer on a treatment for chronic kidney diseases.

More recently, in July this year, Evotec closed its $90 million purchase of US biologics company Just Biotherapeutics.