There are six major genotypes of HCV recognized in the world. Genotype 1, the most prevalent variant, is also the most difficult to treat. The currently approved standard of care is a regimen of pegylated interferon combined with ribavirin. Some experts estimate patient response rates for genotype 1 to be as low as 46% with the current standard of care, while response rates for genotype 2 and 3, the less prevalent HCV genotypes, post positive response rates as high as 76%. Both ribavirin and interferon have known toxicity profiles that can cause tolerance issues in some patients thereby limiting some patient's ability to maintain a therapy regime long enough to achieve a long term therapeutic benefit.

Nucleonics believes that its eiRNA technology enables a novel HCV therapeutic option that uses RNAi to potently interfere with the viral function of all HCV genotypes while also providing a more favorable toxicity profile than obtainable with the current standard of care. Accordingly, Nucleonics' second drug candidate, directed against HCV, is being specifically engineered to be:

The Company's HCV clinical candidate vector is substantially the same as the clinical vector for HBV except that the vector will be modified to target genetic sequences unique to HCV with RNAi. Nucleonics' HCV product consists of a DNA plasmid vector formulated with a proprietary cationic-lipid delivery system. The active ingredient (i.e. the DNA vector) will encode multiple short hairpin RNA molecules ("shRNAs"), each under the control of an RNA polymerase III promoter. Each of the 4 shRNAs will target a different segment of the HCV RNA virus. These shRNAs are referred to as "sequitopes" and collectively they mediate the destruction of all RNA molecules produced within a HCV infected cell. The HCV vector is further optimized to ensure that each of the sequitopes or shRNAs incorporated into the vector contributes significantly to the potent anti-viral effect of the vector in HCV infected cells, such that effective inhibition of viral activity is achieved.

The multi-targeted approach is a critical feature of Nucleonics' HCV product as HCV is a highly mutable virus that is capable of developing resistance to classical small molecule anti-viral agents that chemically target the virus at a single location. The HCV virus would have to simultaneously mutate in multiple genetic regions in order to mutate around Nucleonics' eiRNA vector. Such a mutation scenario is statistically improbable.

Nucleonics has developed its hepatitis C program with the input of a number of prominent clinical specialists in viral hepatitis disease. Current plans are to complete an IND filing during the second half of 2007 for the HCV product candidate.