Ablynx NV (ABLX-EBR)

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September 18, 2009 Issue

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Ablynx NV Is A European Based Biotech That Has Used An Aggressive US Style Approach To Building Their Company, Raising Lots Of Capital And Bringing In Early Partners To Add Revenues And Help Bring Their Nanobodybased Drugs Through Clinical Trials

Company Profile:

Ablynx, a biopharmaceutical company with headquarters in Ghent, Belgium, is engaged in the discovery and development of Nanobodies® to treat a range of serious human diseases. Nanobodies® are a novel class of antibody-derived therapeutic proteins. Because of their small size, unique structure and extreme stability, Nanobodies® combine the advantages of conventional antibody therapeutics with the key features of small-molecule drugs.

The power of Ablynx's discovery platform has resulted in three Nanobody® development candidates which are wholly-owned and one partnered with Wyeth Pharmaceuticals. Ablynx’s lead programme, a novel anti-thrombotic, ALX-0081, became the first ever single domain antibody to enter clinical trials and Ablynx reported the final positive results from its Phase I study in December 2007. Following these positive results, Ablynx initiated a Phase Ib multiple-dose study in May 2008 in patients. In December 2008, Ablynx reported positive results confirming that ALX-0081 had reached the primary endpoint of the Phase Ib study, demonstrating the desired pharmacological effect and in September 2009 ALX-0081 entered Phase II clinical trials. In December 2008, Ablynx initiated its second clinical development programme, ALX-0681. ALX-0681, also an anti-thrombotic, which is administered subcutaneously, entered a healthy volunteer Phase I study which successfully completed in August 2009.

Ablynx’s preclinical candidate ALX-0141 is a fully humanized Nanobody® that targets the Receptor Activator for Nuclear Factor kappa B Ligand (RANKL), a molecule important in bone metabolism. Ablynx aims to develop ALX-0141 for a range of indications including the treatment of osteoporosis.

Ablynx's partner, Wyeth Pharmaceuticals, also initiated a healthy volunteer Phase I study in December 2008 for its anti-TNF alpha Nanobody®. There are now three Nanobodies® in clinical development.

Edwin Moses Ph.D, Chief Executive Officer and Chairman of the Board

After completing his post-doctoral research in Germany, Edwin Moses began a commercial career with successful periods spent at Amersham International, Enzymatix and Raggio-Italgene. From 1993-2001, first as CEO and later as Chairman, he was responsible for the growth of Oxford Asymmetry (OAI) through a series of venture rounds cumulating in a flotation (LSE) in 1998 at a value of €175m (£120m). This was followed by a sale of the company to Evotec Biosystems in 2000 for €460m (£316m). During this period, OAI grew from 4 people to over 250. Over the past five years Edwin has played an important role at Board level (primarily as Chairman) in over 15 European life science companies. During this time he has been involved in financing rounds totaling more than €200m, a series of M&A transactions and three IPOs.

Edwin has been Chairman of Ablynx since 2004, and in 2006 Edwin accepted the offer by Ablynx's Board to extend his role as Chairman to include that of Chief Executive Officer. Outside of and in addition to his duties as CEO and Chairman of the Company, Edwin continues to be involved as a non-executive Director for a small number of companies.


Ablynx NV
Technologiepark 4
Ghent/Zwijnaarde, 9052 Belgium
Phone: 32-9-2620000


Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – September 18, 2009

Dr. Moses, you have a long history with life science companies, why are you with Ablynx today?

Dr. Moses: “I finished a role with a company that was a started in 1993 and then sold for £316M in 2000; I was the CEO of that company. For a few years after that I took up non-executive director positions with a whole range of European life science companies, though not being involved in the routine running of the company. One of those companies happened to be Ablynx, where I became Chairman in 2004. I became Chairman with the intention of just running the Board. However, the CEO position became available and although I had not intended to move back into management I accepted the position. Of all the companies I have been involved with, Ablynx is by far the most exciting. I remember going home to my wife and telling here that this opportunity was coming and she said, ‘Well thank goodness for that, because this is the only company you ever talk about when you come home.’ It was just one of those companies that you sometimes get, where everything seems in the right time. The technology was right and the commercial opportunities were abundant. There was a great platform already in place to build upon and a good team around it. You don’t get many lucky opportunities like that, so that’s why I decided to jump in.”


CEOCFO: What is Ablynx about and what are Nanobodies?

Dr. Moses: “Nanobodies are based upon a discovery that was made in Belgium in the early 1990’s. The discovery is all around antibodies and most people know that we humans have an immune system that protects us from invaders. So if we get viral infections or whatever, the immune system creates molecules that are specifically designed to fight that particular invader and those molecules are called antibodies. It is an amazing system and allows us to fight off all types of diseases. All mammals have that system and the whole idea of antibodies has been used over the last twenty years by the pharmaceutical industry to manufacture drugs. Some of the most exciting drugs such as Herceptin, which is a breast cancer drug, are based on antibodies. There is a $20 billion market now in antibody based drugs, using nature’s exquisite capability to design molecules specifically to hit a particular target.

The discovery that was made in Belgium was that a certain group of animals called camelides (e.g. camels, llamas and alpacas), make antibodies like other mammals, but they also make much smaller antibodies, which we call Nanobodies. These Nanobodies do all the good things that classic antibodies can do, but they are much smaller and much easier to manufacture, much more robust and can stand up to high temperatures, low temperatures, as well as acids and enzymes. So they offer some very interesting advantages for a pharmaceutical building block. What we do then at Ablynx, when we have a protein target that we think is involved in disease, is simply immunize, or inoculate the llama with that protein, just like being immunized against a potential disease. Then after about two months we can come back to the llama and take a small blood sample and already the llama’s immune system will have produced a whole range of these Nanobodies against the target we think is involved in a disease. We analyze the Nanobodies and then we can engineer them, so we don’t need the llama again. We can produce those molecules in micro-organisms like bacteria and use them as our building block for drugs.

One of the diseases that we are interested in is rheumatoid arthritis where a protein target is something called TNF alpha. If you can interfere with that protein, you can potentially interfere with the development of rheumatoid arthritis. We inoculated a llama with the protein TNF alpha, generated Nanobodies to the protein and took them through a series of tests. We partnered that program with Wyeth Pharmaceuticals in 2006 and now they are developing the Nanobodies and are actually testing them in human clinical trials. So that is what we do, we use the llama immune system to give us ideas on how to fight disease.”


CEOCFO: How was it that they decided on using the llama to produce the Nanobodies?

Dr. Moses: “The story goes that a professor was actually running a med school practical class in Brussels, and what that med school normally did was have the students take blood from each other to analyze and see the various constituents of blood. It was in the 1990’s when HIV AIDS was coming to the fore and the med students said no. They did not want to take blood from each other as they were nervous about doing that. The professor was adjacent to the zoology department, so he went into the big cold storage room and found some blood serum from a camel. So he took that and gave it to the students to get the practical done and analyze the constituents. They saw all they expected to see but they also saw what appeared to be these small antibodies that nobody had ever seen before. Well the professor was a smart guy and said that the med students could have made a mistake but if not it might be something interesting. So he went and got actual blood samples from camels and llamas and found that they all contained these small antibodies. What has been discovered was that these groups of animals, the camelides, together with two species of shark, are the only animals that produce these small antibodies. Like all great science it is careful observation combined with tremendous vision and creativity.”

CEOCFO: What are you working on, and why have you chosen to go after those diseases?

Dr. Moses: “The first drug that we are working on is an anti-thrombotic. So it is a drug that is used to prevent clot formation in blood. We have a program that is just about to go into Phase II clinical trials and we have already treated healthy volunteers to ensure the drug is safe and we have treated patients as well. A particular protein called von Willebrand Factor is involved in clot formation in arteries which can lead to a heart attack. So we are able to inject llamas with that protein, get a Nanobody to bind to that protein and use that in development. What we are taking advantage of is the very specific nature of the Nanobody, so it just targets the von Willebrand Factor. It doesn’t interact with any other target and so doesn’t appear to cause any side-effects that you would not want. We are also able to produce it in E.coli, a simple bacteria, and it is very easy to manufacture. In addition, we’ve been able to do these studies very quickly, so going from the initial idea that we would like to investigate this protein it has just taken us just 4½ years to get into the Phase II clinical trials which compared to any other approach is extremely rapid.

There are two indications that we are initially interested in with this particular Nanobody product. One is in the cardiology market. If someone has angina and has pains in their chest, a current treatment is to insert a stent into the artery, which helps to improve blood flow... It is very routine and normal procedure but can lead to further clot formation in the short-term. At the moment, people get a cocktail of drugs that help protect them against further clot formation after that insertion of the stent. We are going through a trial where we are testing the addition of our product to that cocktail, to give those patients extra protection. This is a surgical procedure of which millions are carried out worldwide, so there is a very large potential market for us there. The other target we have in the short-term for this particular drug is a so called orphan disease called TTP (Thrombotic Thrombocytopenic Purpura). It is a rare disease with probably only about 14,000 or 15,000 new cases a year worldwide and is characterized by. The onset of spontaneous formation of clots around the body. Currently, there is no real drug treatment for these patients. They have to go into the hospital and basically have their whole blood cleaned out on a regular basis. We are hopeful that our drug can prevent these patients from having to go through this complete plasma substitution, or at least increase the intervals between which they have to go into the hospital.

On the one hand, the first PCI-based application targets a very big market, where there are a lot of drugs, for example, Plavix, which is sold by Sanofi- Aventis and has about $9 billion annual sales. On the other hand, with TTP, we have a much rarer disease, but one for which there is a huge medical demand because there is no specific drug treatment. Outside of cardiovascular indications, I already mentioned the partnership with Wyeth, which is for the protein target TNF alpha that I mentioned earlier and could be important for rheumatoid arthritis as well as other inflammatory diseases such as Crohn’s disease and psoriasis. The TNF alpha based had over $16 billion of sales associated with them in 2008. It is a huge potential market bringing great benefits to a wide range of patients and that is something that we are very excited about. In addition to that, our next program that will go into clinical trials at the end of this year is one in osteoporosis. We are targeting the same protein as Amgen who are developing a potentially important drug called Denosumab in Phase III clinical trials. This is a product that a lot of people are very excited about as it for the treatment of osteoporosis in postmenopausal women. This is a huge market and analyst talking about potential sales of $3 or $4 billion a year for Amgen. So that is another market where we are using Nanobodies and using the fact that Nonobodies are smaller, easier to produce and potentially have an additional benefit in the terms of the way they work. Other areas we are interested include cancer and neurology. We are able to take advantage of the fact that Nanobodies are broadly applicable across a range of acute and chronic indications in many therapeutic areas.”


CEOCFO: You say that you’ve adopted a progressive strategy; what do you mean by that?

Dr. Moses: “I think there is quite a difference between biotech companies in Europe and biotech companies in the US. In the US, there have been some huge successes, such as with Amgen and Genentech, but we haven’t seen that type of success from companies in Europe. Part of the reason is because there has been too conservative of an approach by European companies. The US companies are generally more optimistic, aggressive, raise more money, and have given themselves the very best chance of success an the industry, where you might find as many as eight or nine out of every ten projects will fail. We think that our failure rate may be better than that but in any event, you will have a lot of projects in research that will not make it to the market; therefore you need lots of projects ongoing at any one time.

What we have tried to do is develop an organization here in Europe where we are learning from some of the best aspects of the US biotechs. We have raised money aggressively - €70M in venture capital followed by an €85M IPO in 2007. We recently announced our results for the half year and we still had over €101M in cash. So we are one of the better capitalized biotech companies in Europe. Our strong cash position enables us to ensure that we partner programmes when appropriate and are not forced to do so at too early a stage. As I mentioned, the rare disease TTP is a good example where we could potentially have the capabilities to take our programme all the way through the various phases of clinical trials and actually market it. As the company grows up it becomes more ambitious and takes advantage of the outstanding capabilities and resources that we’ve put together.”


CEOCFO: I noticed from your results that you have grown your internal resources; what have you done, how have you strengthened the company, and how will you continue to do that?

Dr. Moses: “Key internal resources for companies like us are people. We have just over 220 staff. We benefit in Belgium from the huge diversity of the labor force. If you take our senior team of five people, the executive team that run the company, it comprises three women and two men. To my knowledge, we are the only public biotech, both in Europe and the US, where the majority of executives on the team are women. There are also five different nationalities within that team, so we have a Brit, Swede, German, Belgian and American. That diversity flows right through our company. Currently we have 14 different nationalities and we really believe Belgium is a fantastic environment to attract the best talent from around the world. We build on that, as we really like the idea of bringing people in of different cultures, different educations and mindsets, who all approach problems in different ways, and so can come up with the best solution. In addition, facilities are important. People don’t often talk about that, but in our business you have to have the specialized laboratories that you need, because otherwise you simply can’t do the work. So again, we have benefited from the local environment in Belgium, which is extremely supportive of fast growing companies. They have provided facilities that have allowed us to go from 50 people in 2006 to 220 people now. We are about to move into a new building that a local consortium has funded, so we don’t have to outlay any capital. We just rent the facilities, but we are able to tailor them to our particular needs. It is a very favorable local environment which recognizes the need to grow quickly, the need to have flexible space and provide it at a reasonable price, and this is exactly what we need to help us drive our company forward.”


CEOCFO: Address potential investors, why does Ablynx stand out?

Dr. Moses: “Ablynx stands out because it is what you might call the next generation in the antibody area, which is a relatively new class of pharmaceuticals, where there are already products on the market generating annual sales of more than $20 billion. Classical antibodies are a great new class of drugs, but they have disadvantages as they can be difficult and expensive to make and they can usually only be delivered by injection. People have therefore been looking for “next generation antibodies” which can overcome these disadvantages. We believe Ablynx is a leader in this “next generation antibody” space. So we are able to build on the great success of antibodies quickly and cost-effectively to develop products with tremendous potential.

Another thing that I would point to is that our closest competitor in terms of technology in this whole area is a company called Domantis. They were bought by GSK (GlaxoSmithKline) at the end of 2006 for about $450 million. At that time they didn’t have any products in the clinic, we now have three Nanobody products in the clinic, and they didn’t have a pipeline anywhere near as advanced as ours is, but one of the world’s biggest pharma companies thought that they were worth nearly half a billion dollars. So from this and evidenced by our own collaborations with major pharmaceutical companies, it is clear that the big companies believe that this is really exciting technology for the future. We have taken it from the lab bench, where it was an interesting academic discovery, and turned it now into a practical product engine for the pharmaceutical industry. Over 200 volunteers and patients have now been treated with Nanobodies and so this original idea is well on the way to being converted into real commercial products.”


CEOCFO: And you have the background to do that!

Dr. Moses: “Yes!”


CEOCFO: Many companies don’t, so that is an important factor!

Dr. Moses: “I think it is an important factor. One of the things that the company did well, and plays to the strength of the original CEO, is that he and the Board realized in 2006 it was time to change the management team in preparation for a new phase for the company. The advantage I had coming in as a relative newcomer was that I could be more objective and there was no danger that I would be too much in-love with the technology not to make tough decisions with regard to strategy and projects. So bringing in a new team at that point meant that it was very easy for the team to not be emotionally attached to things and just make business-led decisions on what really was going to create the maximum value for investors. It speaks well of the Board and the previous CEO that they realized that was the right timing to go forward. This allowed us to create a new team. We now have our Chief Business officer who is a lady called, Eva-Lotta Allan. She was formally with Vertex Pharmaceuticals of the US, very experienced in doing international deals and since she has come to the organization, we have done four major collaborations. So we have people who have done it before, developing private and then public companies, and who also understand how to collaborate with other companies. You are right, we do have experience!”


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“What we have tried to do is develop an organization here in Europe where we are learning from some of the best aspects of the US biotechs. We have raised money aggressively - €70M in venture capital followed by an €85M IPO in 2007. We recently announced our results for the half year and we still had over €101M in cash. So we are one of the better capitalized biotech companies in Europe. Our strong cash position enables us to ensure that we partner programmes when appropriate and are not forced to do so at too early a stage.” - Edwin Moses Ph.D

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