SOUTH SAN FRANCISCO, Calif. ( TheStreet) -- Rigel Pharmaceuticals ( RIGL) could receive $1.245 billion in a license agreement for its rheumatoid arthritis drug with AstraZeneca ( AZN).

The agreement is for Rigel's R788, which is known chemically as fostamatinib disodium.

AstraZeneca will make an upfront payment to Rigel of $100 million, with up to an additional $345 million payable if certain milestones are achieved. Rigel also will be eligible to receive up to an additional $800 million of specified sales-related milestone payments as well as "significant stepped double-digit royalties on net sales worldwide," the companies said in a statement Tuesday.

In July, Rigel said R788 significantly improved the symptoms of rheumatoid arthritis patients in a phase II study compared with a placebo, but as in previous studies of the drug high blood pressure emerged as a leading side effect.

Based on the data, Rigel said then it would seek out a corporate partner to co-develop and help finance phase III studies of R788.

AstraZeneca said Tuesday it would design a global phase III program for the drug, which it anticipates will begin in the second half of 2010. Its goal is to file a new drug application with the Food and Drug Administration and the European Medicines Agency in 2013.

-- Reported by Joseph Woelfel in New York.

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