Eli Lilly will gain exclusive worldwide license to Rigel Pharmaceuticals Inc's autoimmune and inflammatory diseases treatment, including its lead candidate, R552, for potentially up to $960 million, the companies said on Thursday.

Rigel will receive an upfront cash payment of $125 million, with the potential for an additional up to $835 million in milestone payments.

R552 belongs to a class of drugs called RIPK1 inhibitors which target a critical signaling protein that regulates inflammation and cell death in tissues. It is a new approach to treat various autoimmune, inflammatory, and neurodegenerative disorders.

Under the deal, Lilly will foot the costs of global commercialization for the therapy, R552, and Rigel will have the right to co-sell the treatment in the United States.

Lilly will also lead all clinical development and commercialization of the treatment in central nervous system diseases.

Rigel's lead therapy has completed early-stage trials and will begin mid-stage trials this year.

Shares of Rigel were up 37% before the bell.