Washington Editor

Editor's Note: This is part one in a three-part series on biotech development in Flanders, Belgium. Parts two and three will be published in the following two issues.

GHENT, Belgium - In the Flanders region of Belgium, a nation known for culinary delights and diamonds, there also is an established cluster of biotech companies.

"We have a tradition in the region of pioneering life science research," said Rudy Dekeyser, the vice director of the Flanders Interuniversity Institute for Biotechnology. Known locally as the VIB, the organization was created to bring together academic investigators and their studies from schools across Flanders, the northern province of Belgium, as an early step toward commercializing promising research.

To that end, its researchers work through four Flemish universities - Ghent, Leuven, Antwerp and Brussels - to create a cooperation of 800 scientists and technology specialists in one institute. In addition to its role in facilitating multi-institution contact, VIB has an active technology transfer policy.

And based on success stories spun out of the collective effort, it's clear that the formula is working.

Among such companies is Ablynx NV, a relatively early stage company that has raised €33 million since becoming operational three years ago, largely on the basis of its preclinical accomplishments.

Its young pipeline is based on what it calls Nanobodies, a new class of biologicals that blend some antibody and small-molecule characteristics into a single compound. The company has programs in Alzheimer's disease, rheumatoid arthritis, psoriasis, irritable bowel syndrome, thrombosis and solid tumors, and already has demonstrated efficacy in five animal models.

"I think we are well positioned for growth," said its CEO, Mark Vaeck.

Ablynx is involved in collaborations with Genencor International Inc. on cancer targets and Procter & Gamble in an undisclosed area. Ablynx also is working with Canadian researchers on Alzheimer's disease, a program that Vaeck said is drawing pharmaceutical interest for possible partnering.

The company, based in the Zwijnaarde suburb of Ghent within VIB's incubator facility, is an example of a commercial spirit that in recent years has taken hold in Flanders, perhaps more so than in the past.

"In Europe, there is a sound basis of research and discovery," Vaeck said, but he added that the commercial potential of such research often isn't tapped into because the business mindset there isn't as corporate as in the U.S. "But we are setting up structures, and the VIB is a good example of that."

Ablynx holds a license to its Nanobody technology's underlying intellectual property from the University of Brussels.

Largely contributing to the commercialization drive in the region is the Flemish government. For example, Ablynx and the VIB incubator are situated on government-owned property, Techologiepark, a sprawling office facility that includes computer and other technology companies, as well as at least two dozen biotech firms of varying size and focus.

"The Flemish government," said Fientje Moerman, its minister for economy, enterprise, science, innovation and foreign trade, "is dedicated to seeing Flanders become one of the top-five regions in the world for biotech research and development by 2010."

More broadly speaking, the entire country of Belgium recently was recognized for its life science success. Findings from a new study released by the Organization for Economic Cooperation and Development labeled the country as the best in biopharmaceutical innovation and industry among eight European countries judged on per capita measures. Criteria included biopharma patent applications, drugs under development related to country size, venture capital invested in biotech and the number of biotech companies. Also, Belgium ranked second in terms of overall science, based on criteria such as biopharmaceutical publications per million capita, biopharmaceutical publications per 1,000 researchers, annual growth rate on such publications, and citations to them.

"It is clear," Moerman said, "that Flanders has played a major role in achieving this status."

Other companies based at the Techologiepark include Innogenetics NV, a long-tenured firm with a diagnostics business and therapeutic pipeline, and Bayer BioScience NV, the agricultural biotech division of the Bayer CropScience group within Bayer AG. Originally, it was founded in the 1980s as Plant Genetics Systems NV before being absorbed first by the former Aventis SA and then Bayer.

While Innogenetics recently reported a setback - poor Phase II data on a hepatitis C therapeutic vaccine devalued by a quarter the company's shares, which trade on the Euronext market's Brussels exchange - the 20-year-old company isn't going away. Together with Bayer BioScience, they represent the oldest Belgian biotech businesses.

Additional government support has played a role in the development of the Flemish biotech cluster. Belgium's federal government allows reductions in social security contributions, while the regional government in Flanders offers cash grants; tax incentives such as personnel and real estate deductions; grants from the Institute for Science and Technology, also called the IWT, as well as a notional interest deduction that especially is helpful for large cap companies. It provides a deduction of such firms' capital base equal to a percentage of the company's equity, a percentage equal to the interest of a 10-year government bond that last year was nearly 24 percent.

"There is a commitment from the Flemish government to make Flanders a knowledge-based economy, and several measures are taken in order to allow this to happen," explained Els Vanheusden, the general manager of FlandersBio. "Flanders is especially competitive with regard to research grants [such as the] IWT grants for basic and applied research, and the notional interest deduction, [which is] not known elsewhere in the world."