French drugmaker Sanofi has signed an agreement to develop Principia Biopharma’s experimental oral treatment that is seen to show promise in treating multiple sclerosis (MS) and potentially other central nervous system (CNS) diseases.

Under the terms of the transaction planned to close during the fourth quarter following all approvals, Sanofi will acquire an exclusive worldwide license to develop Principia’s Brutonmtyrosine kinase (BTK) inhibitor (PRN2246), which is currently in clinical development. The drug is designed to access the brain and spinal cord by crossing the blood-brain barrier and impact immune cell and brain cell signaling.

The French company will pay the biotech firm $40 million upfront. Future  milestone payments could total as much $765 million in addition to royalties on product sales.

Principia will have the option to co-fund Phase 3 development in exchange for either increased royalties on worldwide product sales or a profit-and-loss sharing arrangement in the US market.

Rita Balice-Gordon, head of MS/Neuroscience Therapeutic Research Area at Sanofi, said that along with complementing the company’s own internal R&D expertise external relationships such as this could accelerate delivery of new treatment.

Martin Babler, CEO of Principia Biopharma, commented that the agreement with Sanofi will allow his company to maximize the BTK opportunity in neurology with a strong partner for PRN2246 while focusing its internal resources on its lead BTK inhibitor in another therapeutic area.

Sanofi Genzyme, the specialty care global business unit of Sanofi, currently has two MS medicines on the worldwide market. It also has R&D programs to address the disease through neuroprotection and remyelination in addition to anti-inflammatory mechanisms.