BERLIN, Jan 18 (Reuters) - German biotech company Evotec said on Tuesday that it had entered into a drug discovery collaboration in metabolic diseases with U.S. drugmaker Eli Lilly.

The total potential value of the collaboration, which will run for three years, is up to $1 billion.

As part of the collaboration, Evotec will explore potential drug candidates for the treatment of diabetes and chronic liver disease, the Hamburg-based company said.

Eli Lilly has the right to select up to five programmes developed within the partnership and then assume responsibility for further development and commercialisation.

Evotec will receive an upfront payment from the U.S. company, the amount of which was not disclosed, and will receive performance-based milestone payments of up to $180 million per programme and royalties on any products from the collaboration.

(Reporting by Patricia Weiss, Writing by Miranda Murray Editing by Paul Carrel)