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(Updates with CEO interview, background)
By Julien Ponthus and Ben Hirschler
BRUSSELS/LONDON, Oct 10 (Reuters) - Belgium's Ablynx, which is using llamas to develop a new class of drugs, plans to raise funds through an initial public offering on Euronext Brussels this year, it said on Wednesday.
Cash from the IPO, which is subject to market conditions, will be used to develop the biotech firm's pipeline of ultra-small antibody medicines.
Chief Executive Edwin Moses declined to comment on the size of the new share issue but noted Ablynx was more advanced than Domantis -- a rival -- bought by GlaxoSmithKline (GSK.L) for 230 million pounds ($470 million) last December.
"That was obviously an acquisition. But, in terms of development, we have already carried out the first clinical trial of nanobodies in humans. Domantis were not in that position when they were sold," he said in a telephone interview.
Ablynx has already raised more than 70 million euros ($98.87 million) in private funding rounds.
The Ghent-based company plans to catch a new wave in antibody medicine by capitalising on a quirk of nature, which means llamas and camels possess an unusual type of antibodies that are much smaller than those in humans and other animals.
It believes "nanobodies" created from cloning llama DNA can be used to develop drugs to treat conditions including arthritis, cancer and Alzheimer's disease.
Ablynx's most advanced product, a treatment for acute thrombosis known as ALX-0081, recently completed Phase I clinical tests and should start mid-stage Phase II trials in 2008, Moses said.
It also has research deals on earlier-stage products with several big drug firms, including Boehringer Ingelheim, Wyeth WYE.N, Novartis NOVN.VX and Procter & Gamble (PG.N).
The company was established in 2001 on the back of research at the Free University of Brussels into the unique immune system proteins found in camel and llama blood.
The protein fragments, or nanobodies, made by its scientists are one-tenth the size of normal antibodies, which means they may reach new targets in the body and could potentially be given by mouth rather than injection.
Antibody therapies have revolutionised some areas of medicine, such as cancer and rheumatoid arthritis, in recent years and have become among the biggest selling medicines in the world.
But their use remains limited by the fact that they are very large molecules.
JP Morgan and KBC will act as joint global coordinators and bookrunners for the forthcoming IPO.
Ablynx's venture capital backers include Abingworth, Alta Partners, Gilde, GIMV (GIMV.BR), KBC Private Equity, Privak Biotech, Sofinnova, SR One and VIB.