The European Medicines Agency has granted orphan drug designation to Emerald Health Pharmaceuticals’ lead cannabis-based product for treating systemic scleroderma.

EHP-101 is derived from cannabidiol, a chemical found in the cannabis plant. The therapy activates the cell-surface receptors PPARγ and CB2, which in turn activate cell signaling pathways that can help people with tissue-scarring conditions, multiple sclerosis and other diseases. The signals prevent nerve cell inflammation, deterioration of the myelin coating that protects nerve cells, and tissue scarring, or fibrosis.

European regulators grant orphan drug status to promising treatments for rare diseases. The designation provides companies with a number of incentives to continue developing the treatments. These include reduced regulatory-review-related fees, European Commission funding for clinical trials, and 10 years of market exclusivity if a drug is approved.

Systemic scleroderma is a rare and chronic autoimmune disease that leads to fibrosis of the skin and internal organs. This involves tissue becoming hard and scarred, impairing its function.

EHP-101 received orphan drug status from the U.S. Food and Drug Administration in 2017.

European’s orphan drug designation “for EHP-101 for scleroderma adds additional value when combined with the US FDA’s recent granting to us of Orphan Drug Designation,” Jim DeMesa, Emerald Health Pharmaceuticals’ CEO, said in a press release. The new designation gives the company “further incentive and opportunity to advance a possible solution for patients suffering from this terrible disease that has no cure,” he said.

Emerald Health plans to start a Phase 1 clinical trial of EHP-101’s ability to treat scleroderma in 2018. This could lead to Phase 2 trials in scleroderma and MS in 2019, it said.

The San Diego-based company is developing cannabis-based treatments for inflammatory, autoimmune, metabolic, neurodegenerative, and fibrotic diseases.

In addition to EHP-101, which it designed for multiple sclerosis and scleroderma patients, it is developing EHP-102 as a treatment for Huntington’s and Parkinson’s diseases.