GSK will increase potential milestone payments to Avalon Ventures from $40m to $50m for each biotech formed.
The companies have also formed the seventh out of ten biotechs possible under their alliance, which was started in April 2013.
Dubbed Iron Horse Therapeutics, the company is researching and developing novel treatments for amyotrophic lateral sclerosis that modulate the activity of a protein called EphA4.
Iron Horse will receive up to $10m in Series A financing and R&D support from Avalon and GSK.
The other companies launched under the collaboration include Sitari Pharma, Silarus Therapeutics, Thyritope Biosciences, Adrenergics, Cadherx Therapeutics, and Calporta Therapeutics.
As per the terms of the expanded collaboration, Avalon and GSK will create and fund additional companies through the development of clinical candidates.
GSK has the option to buy each of the companies when a clinical candidate is found.
If GSK does not elect to exercise its option, Avalon will retain its ownership in the company, which will be free to enter into other transactions.