(Reuters) - Japan's Sosei Group Corp will collaborate with AbbVie Inc on a drug discovery partnership that could be worth up to $1 billion.

Sosei shares soared 12.4% in Tokyo trading, compared with a 1.2% slide in the broader market.

The partnership will initially focus on the discovery of novel small molecules, targeting inflammatory and autoimmune diseases, the companies said in a news release on Thursday.

Sosei is eligible to receive up to $32 million in upfront and near-term milestone payments, along with future commercial milestones of up to $377 million, plus tiered royalties on sales.

The companies will work to discover and commercialise medicines that modulate G protein-coupled receptor (GPCR) targets.

Chicago-based AbbVie has the option to expand the collaboration to a total of four targets.

An expansion to four targets would put the total deal size "in a similar ballpark" to deals signed in 2019 with Genentech Inc and Takeda Pharmaceutical Co, a Sosei spokesman said.

The Genentech deal is worth up to $1 billion, while the Takeda partnership could total $1.2 billion.

(Reporting by Rocky Swift in Tokyo; editing by Anil D'Silva and Jason Neely)