Pheno Therapeutics has secured more than £5 million of funding to search for new drugs to repair damage to the nervous system the disease causes and improve symptoms including problems with balance, speech, vision and movement.
University of Edinburgh professors Siddharthan Chandran and Neil Carragher are among the company founders and the firm will build on their original research.
It aims to develop new therapies for MS by identifying novel molecules that spark the body to repair a protective cover for nerve cells damaged the disease.
MS causes the immune system to attack the myelin sheath surrounding nerve cells, disrupting the signals travelling to the nerves.
Developing a remyelination process, as Pheno Theraputics hopes to, has the potential to slow or arrest the progressive disability MS patients face.
The company has secured funding over three years, subject to hitting certain milestones, from investment organisations and a medical research charity.
Pheno Therapeutics co-founder Professor Siddharthan Chandran said: "There are no interventions for people with later stage multiple sclerosis, which is a devastating and debilitating condition.
"The opportunity for this company is to bring new and repurposed therapeutics to clinical trials and, by doing so, meet an urgent and currently unmet need."
The university's commercialisation service, Edinburgh Innovations, helped to launch the company.
George Baxter, Edinburgh Innovations chief executive, said: "Everyone involved is focused on driving the science forward, and we look forward to supporting the team as momentum continues to build, ultimately offering the promise of new treatments."