The company noted that beta cells play a major role in the pathogenesis of diabetes, which currently affects 387 million patients across the world.
Under the deal, beta cell replacement therapies will be developed based on functional human beta cells derived from human stem cells.
The firms will also use human beta cells for high-throughput drug screening in order to discover beta cell active small molecules or biologics.
Sanofi Global Head of Diabetes Research and Translational Science vice-president Philip Larsen said: "With the significant burden of diabetes worldwide, it is imperative we continue challenging ourselves to develop treatment breakthroughs for the millions of people living with this progressive and debilitating disease.
"This collaboration will leverage Evotec’s expertise in technology and Sanofi’s extensive experience and leadership in diabetes. Our shared vision is to change how diabetes is treated in the future by developing novel therapeutic approaches to disease management."
The deal will see Evotec receive development, regulatory and commercial milestone payments, which could total more than €300m, and royalties on net sales.
Evotec chief scientific officer Dr Cord Dohrmann said: "Stem cell-based drug discovery and development is on the cutting edge of therapeutic innovation.
"We are very proud to partner with Sanofi, a company with a deep history in diabetes, in a truly complementary collaboration to enhance how this disease is treated in the future."
Image: Sanofi enters into research collaboration with Evotec for new diabetes treatment. Photo: courtesy of Baitong333/ FreeDigitalPhotos.net.