From its base in a business park outside the city of Ghent, Belgium's biotech industry is attracting a global following, benefiting from years of patient investment, promising clinical trials and pharmaceutical companies' hunger for new medicines.
Syngenta , the world's biggest agribusiness company, last month agreed to pay a whopping 70 percent premium for Belgian seed technology firm Devgen, fuelling share price gains across the sector that some analysts think can continue.
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Biotech companies worldwide are seeing their shares boosted by hopes they will be the next takeover targets or drug deal partners for a pharmaceutical industry struggling with patent expiries and clinical trial failures.
But investors have been burnt many times before betting on small companies only for them to run out of money or see their biggest drug hopes fail before a buyer ever materializes.
In Belgium, some investors think they have found something different in companies like ThromboGenics , which has an innovative eye treatment poised to be launched in the United States, and Ablynx , whose ultra-small antibodies can reach parts of the body inaccessible to regular antibodies.
"I think people see good value in Belgium from abroad," said Stephen Bunting, managing director of life sciences investment group Abingworth, which owns a 9-percent stake in Ablynx and previously held shares in Devgen and another Belgian biotech company, Galapagos .
"I would be fairly sure that some of the recent buying in Belgian markets has been driven from the (United) States," he added, highlighting the interest in the country's biotech industry from the world's biggest drugs market.
Shares in five Belgian biotech companies have risen by more than 20 percent over the past month - Devgen (65 percent), TiGenix (60 percent), Ablynx (59 percent), Galapagos (29 percent) and IBA (20 percent).
That compares with just one in Switzerland, Addex Pharma , and none in Britain - two rival European biotech centers.
"I have no reason to believe at this moment in time that it would stop in the short term," said KBC Securities analyst Jan De Kerpel of the Belgian biotech share price rally.
PLAYING THE LONG GAME
Part of the success appears to be down to Belgium's distinct approach to biotech start-ups, with organizations like VIB, a Belgian life sciences business incubator which backed Ablynx and Devgen, investing money for longer than European peers before firms have to start convincing outside investors.
VIB, which gets 43 million euros of its 100-million-euro annual budget from the regional Flemish government, typically invests 1 to 1.5 million euros in the early stages of a biotech company.
"It's not a numbers game," said VIB Managing Director Johan Cardoen. "We only go for those opportunities where we believe a project has really significant potential to make a difference in life sciences."
That has proved a shrewd strategy and contrasts with a more scattergun approach elsewhere.
"I think that in general the (medical research) targets that they pick tend to be a little bit less risky," said Hartaj Singh, an analyst at Visium Asset Management which has stakes in European pharmaceutical firms, noting Belgium's biotech industry had seen fewer product failures than in Switzerland and Britain.
Several Belgian biotech firm are hoping to show the benefits of their selective approach in the coming weeks.
On Thursday, Ablynx announced strong mid-stage clinical trial results for its rheumatoid arthritis drug ALX-0061, bringing it closer to the $14-billion-a-year market for treating the disease, while ThromboGenics is tipped to win U.S. approval for its main drug Ocriplasmin, which treats an eye disease that can currently only be tackled by surgery.
SUCCESS BREEDS SUCCESS
Within Belgium, there is a concentration of biotech companies in the northern Dutch-speaking area of Flanders thanks to investment from the regional government.
It all started in the 1980s with Plant Genetic Systems, now part of Germany's Bayer , and Innogenetics, now owned by Fujirebio <4544.T>. They and other start-ups built a critical mass, attracting talent and investment.
The focal point is a technology park beside a highway on the outskirts of the Flemish city of Ghent. It lacks the household names, Starbucks and scale of Silicon Valley, but Ghent's "Biotech Valley" has spawned Devgen, Ablynx and a host of other successful biotech firms, many offshoots from Ghent University.
Devgen's sale to Syngenta for 403 million euros has highlighted the rewards that can be achieved, and some of its shareholders plan to reinvest their proceeds in the sector.
"If you have success stories of exits, it attracts new investors," said investor Rudi Marien, who made 50 million euros from the sale and plans to put the money back into biotech firms from the Benelux (Belgium, Netherlands and Luxembourg) region.
Investors are also taking note further afield as they try to pick the next company to get a partnership deal or be snapped up by a major multinational.
In July, Galapagos said U.S. investor Baker Brothers Life Sciences had bought a 6.5 percent stake in the company.
Next month Belgian broker KBC Securities will host its first investor conference dedicated to Benelux drugmakers in the United States.
Analysts think Belgian biotech firms' existing partners are the most likely companies to buy them.
"It's like in solving a murder case, the most obvious suspects are family and related parties," said Petercam analyst Jan Van den Bossche.
ThromboGenics has signed a deal for its main drug with Switzerland's Novartis outside the United States, while Ablynx's antibody technology might appeal to any of its existing partners, which include Boehringer Ingelheim and Merck Serono, part of Germany's Merck KGaA .
"If you ask me will there be other acquisitions of Belgian biotech, yes I truly believe that, the only question is when," said KBC Securities' De Kerpel.
(Additional reporting by Philip Blenkinsop; Editing by Mark Potter)