Sanofi is deep in talks with Evotec about a five-year “multi-component strategic alliance” that would be worth at least 250 million euros to the German biotech.

The firms are holding “exclusive negotiations” about three initiatives, the most striking of which will see Evotec acquire Sanofi’s troubled operations in Toulouse “to build a European centre of excellence for compound management and drug discovery services”.

The French drugmaker had planned to run down operations at Toulouse but under pressure from the government and trades unions, in May 2013, it pledged to keep doing research at the site for five more years. Now some 200 of its scientists working in Toulouse will transfer to Evotec.

The proposed deal will also see Evotec license from Sanofi a portfolio including “five well-advanced pre-clinical projects in oncology” that will be progressed to the investigational new drug stage jointly before potential partnering. It also includes a “French academic bridge programme”.

The third element will see the companies combine their libraries to make them available for screening to Evotec’s partners. Sanofi’s library in Toulouse site has over one million compounds and this, added to Evotec’s 400,000 or so compounds, will create “a very large and valuable source of starting points for drug discovery”.

The 250 million euro figure includes a “sizeable upfront cash payment”, plus royalties. Werner Lanthaler, Evotec chief executive, said the collaboration “is a major milestone in the drug discovery space”. It also “accelerates Evotec’s strategy to become the leading drug discovery partner to the pharma and biotech industry as well as academia”.

Elias Zerhouni, head of R&D for the Paris-based giant, said  “open innovation is a key driver of Sanofi’s strategy” and Evotec is “a company that fits our quality expectations and our strategic vision”. He added that the collaboration “will secure the future for our employees in Toulouse and importantly accelerate our pipeline productivity”.