Belgian biotech Ablynx has agreed to license AbbVie global rights to its experimental drug for rheumatoid arthritis and lupus in a deal worth up to $840 million.

Under the agreement, Ablynx will receive $175 million in an upfront payment and is eligible for up to $665 million in milestones, plus double-digit royalties on net sales.

The deal offers Ablynx the opportunity to advance its drug, known as ALX-0061, into late-stage development. For AbbVie, the deal holds potential to yield a follow-on therapeutic to Humira, its blockbuster drug for rheumatoid arthritis that had $9.3 billion in global sales in 2012. Humira’s U.S. patent expires at the end of 2016 and its EU patent expires in April 2018.

Ablynx CEO and chairman Edwin Moses called the deal a major milestone for the company in a conference call following the announcement, noting it “confirms both the potential value of ALX-0061 and the ability of our Nanobody technology to generate clinical candidates with very exciting potential.”

In February 2013, Ablynx completed a mid-stage study that showed strong efficacy and safety data for ALX-0061 in patients with moderately to severely active rheumatoid arthritis who had previously been treated with methotrexate. At that point, it began seeking a partner to further develop and commercialize the drug, which led to the tie-up with AbbVie.

Upon reaching predetermined milestones, AbbVie will take responsibility for late-stage clinical development and commercialization of ALX-0061. Ablynx is keeping an option for co-promotion rights in Belgium, the Netherlands and Luxembourg.

ALX-0061 is a proprietary Nanobody that inhibits the IL-6 receptor, which plays a key role in the inflammation process in rheumatoid arthritis. What sets it apart from other antibodies that target the same receptor is its small size and high affinity to its target, potentially allowing it to penetrate more effectively into tissues and limiting potential off-target effects.

The compound holds promise for treating rheumatoid arthritis patients who can’t tolerate Humira, which is a TNF inhibitor. Currently the only approved IL-6 receptor inhibitor to treat rheumatoid arthritis is Genentech’s Actemra.

Rheumatoid arthritis is characterized by chronic and progressive joint inflammation that typically results in permanent, debilitating tissue damage, which is further compounded by joint deformation. It is estimated that up to 1 percent of the adult population worldwide suffer from RA. The total market value of rheumatoid arthritis drugs is expected to grow to $15.2 billion in 2021, from $11.1 billion in 2011.

Systemic lupus is a complex autoimmune disorder that can result in widespread tissue damage throughout the body. Its causes are not fully understood and it affects about 5 million people worldwide, 90 percent of which are women.

If all goes as planned, Ablynx and AbbVie hope to have top line results from ongoing mid-stage trials of ALX-0061 in rheumatoid arthritis in mid-2016 and in lupus in early 2018.