C4X shares surged 30% in early trading following the news and were trading up 12% in afternoon deals.

C4X has discovered a small molecule IL-17A inhibitor that targets the IL-17 family of cytokines, or inflammatory proteins, implicated in autoimmune diseases such as psoriasis, psoriatic arthritis and ankylosing spondylitis.

Sanofi will use the molecules to develop an oral therapy able to replace current monoclonal antibody injections in a multi-billion dollar market.

"While antibody therapies have demonstrated the potential of IL-17 inhibition ... the injectable route means many patients currently do not have access to the medicines that can change their lives," said C4X Chief Executive Officer Clive Dix.

Many pharma companies were searching for suitable molecules, he said, but C4X's drug discovery engine, which analyses complex 3D models of free drug molecules, had given it the edge.

"We've been really pleased that using our Conformetrix technology we've been able to eke out a binding site on IL-17 and find small molecules to interact with it," he said in an interview.

"There was a lot of interest in IL-17 and Sanofi was always one of the keenest of all the companies."

C4X will get an upfront payment of 7 million euros and receive up to a further 407 million euros for potential development, regulatory and commercialisation milestones.

Dix, who is currently chairing the British COVID-19 vaccine taskforce, said C4X's other programmes included an anti-inflammatory antioxidant for inflammatory diseases, a second anti-inflammatory focused on Crohn's disease, and a third that also had indications in blood-borne cancers.

($1 = 0.8413 euros)

(Reporting by Yadarisa Shabong in Bengaluru and Paul Sandle in London; Editing by Shounak Dasgupta and Mike Harrison)