Clevudine

Clevudine is an oral, once-daily pyrimidine nucleoside analog that we are developing for the treatment of HBV. Clevudine has been studied in 14 completed clinical trials in a total of more than 800 patients. We license clevudine from Bukwang Pharm. Co., Ltd., or Bukwang, a Korean pharmaceutical company. Bukwang completed two Korean Phase 3 clinical trials, Studies 301 and 302, in which clevudine demonstrated the ability to significantly reduce HBV viral load in 337 patients. Based on the results of these trials, Bukwang received Korean approval in November 2006. Bukwang initiated the commercial launch of clevudine in the Korean market in February 2007 under the brand name Levovir.

We intend to seek regulatory approval for clevudine in North, Central and South America and Europe. Marketing approval by the FDA and European regulatory authoritories will be based primarily on the data resulting from our two 48 week Phase 3 registration studies, one in approximately 376 e-antigen positive patients, Study 305, and one in approximately 480 e-antigen negative patients, Study 306, each comparing clevudine treatment to the approved HBV antiviral adefovir. In these trials, which commenced dosing patients in October 2007, patients will be randomized and will receive either adefovir or 30 mg of clevudine once-daily for the 48-week duration of the studies. The primary endpoint of these registration studies is a composite endpoint measuring the percentage of patients with undetectable HBV DNA (less than 300 copies/ml) and the normalization of liver enzyme levels at the 48th week on therapy. The registration studies will also assess improvement in liver histology, hepatitis B e-antigen (eAg) seroconversion (which is the loss of eAg together with an undetectable level of HBV DNA and normalized levels of liver enzyme), decreases in the reservoir of HBV hepatic cccDNA, and quantitative eAg and surface antigen (sAg). These trials are designed to test the superiority of clevudine over adefovir on these endpoints. We will continue these studies from week 48 to week 96. The number of patients to be enrolled in the e-antigen positive and e-antigen negative studies are intended to provide sufficient statistical support to detect a 20% and a 19% difference, respectively, between clevudine and adefovir for the primary endpoint with a 95% confidence level.

Both Study 305 and Study 306 will continue for an additional 48 weeks after the registration data has been obtained to gather additional safety and efficacy data through week 96, as well as to assess clevudine’s SVR rate. We expect that a portion of the e-antigen negative patients treated with clevudine will continue to be evaluated against adefovir through week 96. We expect that the remaining clevudine e-antigen negative patients, if they continue to meet the primary composite endpoint, will be taken off clevudine therapy at week 72 to measure SVR at week 96 after 24 weeks without treatment. Additionally, we expect that a portion of the e-antigen positive patients treated with clevudine will continue to be evaluated against a portion of the e-antigen positive patients treated with adefovir through week 96. We expect the remaining e-antigen positive patients treated with clevudine and adefovir, if they meet certain criteria, will be taken off therapy at week 72. These criteria include undetectable HBV DNA, alanine aminotransferase, or ALT, normalization and the loss of e-antigen and the presence of anti-HBV e antibody. We will then measure SVR in these e-antigen positive patients for clevudine and adefovir at week 96, 24 weeks after stopping treatment. There can be no assurances as to the results of these planned registration and continuation studies or as to any particular patient’s response to clevudine.

Bukwang received marketing approval for clevudine from the Korean equivalent of the FDA based on two placebo-controlled, double-blinded, randomized, multi-center Korean Phase 3 clinical trials, Study 301 and Study 302, designed to determine the efficacy of clevudine over a 24-week period. Patients were evaluated for an additional 24 weeks of follow-up care without treatment. Study 301 enrolled e-antigen positive hepatitis B patients, and Study 302 enrolled e-antigen negative hepatitis B patients.

Study 301 involved 248 e-antigen positive patients who received 30 mg of clevudine or a placebo once daily. At week 24, 59% of patients receiving clevudine in this study had HBV DNA levels below those detectable by a PCR test, indicating very low viral infection or clearance of the virus from the body versus 0% of patients receiving placebo. Furthermore, 68% of e-antigen positive patients had normalized liver enzyme levels. Study 302 comprised 89 e-antigen negative patients who received 30 mg of clevudine or a placebo once daily. At week 24, 92% of patients receiving clevudine in this study had undetectable HBV DNA levels, versus 0% of patients receiving placebo. Furthermore, 75% of e-antigen negative patients had normalized liver enzyme levels. These viral load reductions were statistically significant when compared to the placebo groups. Clevudine’s effect on viral load observed after 24 weeks of treatment in Study 301 and Study 302 was comparable to the effect observed in independent clinical studies after 48 or 52 weeks of treatment with other HBV drugs that are currently available or in development based on historical data for those therapies.

In Study 301, 24 weeks after the cessation of therapy, average HBV DNA levels in patients who received clevudine remained lower than baseline by 2.02 log (99.1% reduction) compared to patients who received placebo, whose average HBV DNA levels were lower than baseline by only 0.68 log (79.1% reduction), a statistically significant difference. In Study 302, 24 weeks after the cessation of therapy, the reduction in HBV DNA levels was 3.11 log (99.9% reduction) for treated patients versus 0.66 log (78.1% reduction) for the placebo group, a statistically significant difference. Furthermore, in Study 302, 24 weeks after the cessation of treatment, 16% of the patients who had received clevudine had an SVR versus 0% of the patients who had received placebo. We believe that patients whose viral load remains undetectable after 24 weeks off-treatment demonstrate the potential for a limited duration of therapy.

In March 2006, Bukwang completed Study 303, a Korean follow-on study of clevudine Studies 301 and 302. The goal of Study 303 was to evaluate the safety, antiviral activity, biochemical improvement, and serologic response in patients treated with clevudine for a total of 48 weeks. This open label follow-on study enrolled 55 treatment-naïve patients (40 e-antigen positive patients and 15 e-antigen negative patients) who were receiving placebo in Studies 301 and 302. Although, based on the results of the prior Phase 1 and Phase 2 dose-ranging studies, we expect clevudine’s commercial dosing regimen to be 30 mg per day for the entire duration of treatment, Study 303 used a dosing regimen of 30 mg of clevudine for 24 weeks followed by a maintenance dose for an additional 24 weeks of 10 mg of clevudine, a dose which has previously been shown to be suboptimal. Results show that, at week 48, 63% of e-antigen positive patients and 87% of e-antigen negative patients had HBV DNA levels below those detectable by PCR tests. Furthermore, 83% of e-antigen positive patients and 87% of e-antigen negative patients had normalized liver enzyme levels. No serious adverse events were observed, and all adverse events were mild and transient. At week 60, twelve weeks after stopping treatment, the viral load had been sustained at undetectable levels in 28% of e-antigen positive patients and 80% of e-antigen negative patients. To our knowledge, no other HBV oral therapeutic has demonstrated this sustained antiviral effect.

The table below summarizes historical data for approved HBV nucleoside therapies. This historical data was derived from independent clinical trials reported in patient information inserts, New Drug Application, or NDA filings, medical journals and company reports and presentations. We have not conducted any clinical trials comparing clevudine to any of these other therapies.

In Study 302, 16% of e-antigen negative patients sustained a viral load that was undetectable by PCR 24 weeks after completing the 24-week course of therapy. In Study 303, 80% of e-antigen negative patients receiving clevudine sustained a viral load that was undetectable by PCR 12 weeks after completing the 48-week course of therapy. This compares to one year of pegylated interferon therapy, which produces a viral load that is undetectable by PCR 6 months after stopping therapy in 19% of e-antigen negative patients, and other nucleoside HBV treatments that have reported viral load undetectable by PCR in approximately 3% to 7% of e-antigen negative patients, 24 weeks after completing a one year course of therapy. We note that while these results are not directly comparable because the clevudine data represents viral load 12 weeks after completing therapy, while the data for the competing products represents viral load 24 weeks after completing therapy, we believe the results indicate the potential for a higher rate of SVR with clevudine.

Overall, clevudine was generally well-tolerated by patients with chronic hepatitis due to HBV. Serious adverse events during treatment in Studies 301 and 302 and during follow-up indicated that a higher percentage of placebo-treated patients had seriously elevated ALT levels or flares. ALT (also called alanine aminotransferase) is an enzyme found mainly in the liver. High levels of ALT in the bloodstream mean that the liver may be damaged or diseased. Otherwise, there was no meaningful difference between clevudine and placebo in the incidence of serious adverse events.