Fast-Track proposals will be accepted. Direct to Phase II will not be accepted. Number of anticipated awards: 2-3 Budget (total costs): Phase I: $300,000 for up to one year; Phase II: $1,500,000 for up to 3 years. Background Chronic infection with hepatitis B virus (HBV) leads to serious and often fatal liver diseases like cirrhosis and hepatocellular carcinoma. Current therapy uses potent antiviral drugs that significantly lower viral replication in patients. However, all the currently used small molecule drugs - nucleoside/nucleotide analogs - target the function of a single HBV protein, the polymerase (reverse transcriptase), and none achieves complete and permanent cure. Thus, these drugs are used for many years, even lifelong, at the risk of inducing toxicity and drug resistance. With the elucidation of new viral and cellular targets and pathways involved in HBV infection and replication, novel antiviral drugs may be within reach. Novel drugs may potentially be used as monotherapies or in combination with existing therapies. It is imperative that the pace of development of new drugs be measurably accelerated to lower the very substantial global burden of HBV. Project Goal The purpose of this solicitation is to invite research on candidate drugs and mechanisms of action different from that of existing licensed drugs, and pre-clinical development of such candidates, with the express purpose of advancing them commercially. The objective is to obtain functional cure of HBV - defined as loss of virus, loss of hepatitis B surface antigen (HBsAg) and seroconversion, which rarely occurs with current regimens. As the intent of this project is to obtain potentially curative drugs, it may be necessary to develop, in parallel, additional determinants of post-treatment efficacy (both short- and intermediate-term). Phase 1 activities may include, but are not limited to: • Selection of lead compounds that efficiently target viral or cellular products or pathways with potent anti-HBV effects and low cell toxicities. • Studies on mechanisms of action of potent inhibitors of HBV and/or host cellular pathways that support HBV infection, replication, and persistence. Phase 2 activities may include, but are not limited to: • Developing promising selected lead compounds characterized in phase I studies, including investigating structure activity relationships (SARs) for optimization of lead compounds. • Studying efficacy parameters of new anti-HBV drug candidates in an animal model of HBV replication, as envisioned in the project goals. • Optimizing absorption, distribution, metabolism, and excretion (ADME); pharmacokinetics (PK); and minimizing cytotoxicity. • Examining potential synergistic activity of candidate drug with currently used standard of care HBV drug(s). This SBIR will not support: The design and conduct of clinical trials (see http://www.niaid.nih.gov/researchfunding/glossary/pages/c.aspx#clintrial) for the NIH definition of a clinical trial). For SBIR phase II clinical trial support, see the NIAID SBIR Phase II Clinical Trial Implementation Cooperative Agreement program announcement.