The World Health Organization (WHO) estimates that, in 1998, approximately 33.4 million people worldwide were living with HIV or AIDS. By the turn of the century, over 40 million cases are expected to occur globally. In the absence of therapeutic intervention, the vast majority of individuals infected with HIV will ultimately develop AIDS, which currently has a fatality rate approaching 100%. Nearly 12 million people have died from AIDS or AIDS-related diseases to date. This illness is at the top of the list for causes of death in young adults in most countries. In addition to the established and growing epidemic in Africa, the disease is spreading very rapidly in Eastern Europe, Asia and South America.

33,400,000 people worldwide are living with AIDS

Nucleoside Analogs are used to treat HIV infection

Initially, HIV was treated only with AZT, a nucleoside analogue reverse transcriptase inhibitor, first introduced in 1987. Three other nucleoside analogues - ddI, ddC and d4T - were introduced to the market in the early 1990's. These drugs, when used alone, provided only short-term clinical benefit and could be toxic. As a result, the use of anti-HIV therapy was limited and market penetration was low (less than 25% of the infected population in the United States).

More recently, clinical research in HIV has been facilitated by the introduction in the mid-1990's of tests that can reliably determine the amount of virus in the blood (viral load) at any given time. As a result, it is now possible to rapidly evaluate potential therapeutic agents and combinations of agents and to accurately determine the potency and resistance profiles of these agents. This has led to the accelerated development of a number of new therapeutic agents and their use in combination therapy.

According to the recently published "Guidelines for the Use of Antiretroviral Agents in HIV Infected Adults and Adolescents" preferred combinations include two nucleoside analogs and a protease inhibitor or, two nucleoside analogs and a non-nucleoside analog compound.

The following drugs are currently licensed in the USA:

Category	Nucleoside Analogues	Non-nucleoside Analogs	Protease inhibitors
	Thymidine analogs Retrovir (zidovudine/AZT) Zerit (stavudine/d4T)	Viramine (navirapine) Rescriptor (delavardine) Sastiva (efavirenz)	Invirase (saquinavir) Crixivan (indinavir) Viracept (nelfinavir) Norvir (ritonavir)
	Other analogs Epivir (lamivudine/3TC) Videx (didanosine/ddI) Hivid (zalcitabine/ddC) Ziagen (abacavir/ABC)

The standard combination therapy approved in the developed countries include at least one component of the thymidine analogues (AZT or d4T), nucleoside analogues targeting resting T-cells (ddI, ddC, 3TC, etc.) and also either a non-nucleoside analogue (Sustiva) or a protease inhibitor.

The standard combination therapy include at least one component of the thymidine analogues

Sales of approved thymidine analogue drugs (AZT and d4T) are in the hundreds of millions of dollars. In 1997 worldwide sales of AZT were USD$860M (Pharmaceutical Research & Manufacturers Association). Sales of 3TC reached USD$1.2B in 1998 (Biochem Pharma, Inc).

The use of combination therapy, including combinations of protease inhibitors or non-nucleoside reverse transcriptase inhibitors with two reverse transcriptase inhibitors, has demonstrated significant therapeutic benefit, sometimes rendering the virus undetectable in the blood of certain patients for up to two years to date. Additional combinations may be possible as new therapeutic agents are developed.

It is expected that research will continue with the discovery of novel compounds that target existing and other key enzymes required for HIV to reproduce. These compounds will be used in combinations to avoid the development of viral drug resistance. In addition research continues on developing immune-based therapies and AIDS vaccines. The first vaccine efficacy trials began this year; an effective vaccine for AIDS is many years away.

These significant advances produced numerous challenges in the treatment of HIV. In the absence of a cure, HIV-infected individuals are subject to lifelong antiviral therapy. Reasons for them to stop or substitute a component are either unacceptable toxicity or non-response to treatment due to induced viral resistance to the drug. Although combination therapy has demonstrated the ability to markedly slow resistance development, resistant mutants are already being identified to all drugs currently used during the course of combination therapy studies, and cross-resistance among many agents is being discovered at an alarming rate. Present combination treatments are increasingly complex and expensive (published reports indicate the cost per patient per year can exceed USD$13,000). Adverse reactions to many of the drugs used in combination therapy are common and may limit compliance or even preclude use in some patients. Even brief periods of non-compliance can reduce or eliminate the ability of combination therapy to suppress the virus, and may thus accelerate the development of resistance. The Company believes that these challenges present an opportunity to develop additional drugs in thymidine nucleoside analog class that have attractive safety, pharmacokinetic and/or resistance profiles.

Hepatitis B (HBV)

HBV is the causative agent of both the acute and chronic forms of hepatitis B, a liver disease that is a major cause of illness and death throughout the world. HBV can lead to cirrhosis and cancer of the liver. In the United States approximately 300,000 people become acutely infected each year and approximately one million people currently are chronic hepatitis B carriers. Of these, as many as 5,000 die each year as a result of the consequences of this liver damage. Worldwide, over 300 million people are chronically infected. Presently, there are over 120 million carriers of hepatitis B in Asia, of whom one-fourth may develop serious illnesses such as cirrhosis and liver cancer.

300,000,000 people worldwide are infected with HBV

Vaccines are currently available that can prevent the transmission of HBV; however, they have no activity in those already infected with the virus. Alpha interferon, approved for the treatment of HBV, is administered by injection, is not always successful in controlling the virus and is associated with significant side-effects, the most common being severe "flu-like" symptoms.

3TC was recently approved for treatment of HBV

While other compounds have some activity in the treatment of HBV infection, it is likely that additional drugs will be necessary to effectively treat the disease. For example, Epivir-HBVor 3TC (initially developed as an anti-HIV drug) has shown good tolerance and effective suppression of HBV replication during the course of treatment and was recently approved for treatment of HBV. Epivir-HBV’s annual sales are expected to surpass USD$1B mark.

However, virus replication can return during prolonged therapy and antiviral resistance has been observed with certain patients. These findings suggest that HBV, like HIV, may be treated more effectively with combination therapy. Therefore, even if other drugs are approved for the treatment of HBV, the Company believes there will still be a need for additional safe and effective oral therapies for chronic HBV that can be used in combination therapies.

Herpes (HSV)

Herpes is a common viral infection. It causes oral herpes (cold sores or fever blisters), and genital herpes (genital sores). Herpes is estimated to affect some 80 million people in North America. At least one in six adults in North America has genital herpes. Herpes Simplex classification falls into four categories, types 1, 2, 6, and 8. Generally type I infects the mouth in humans and type II affects the genital tract, but there is a substantial overlap. Type 6 causes an infection of infancy and Type 8 has been associated with Kaposi’s Sarcoma, which is seen in HIV. Herpes simplex virus (HSV) has a vast presence in humans. It has been estimated that 90% of humans experience oral herpes infections by the age of ten years old, an acute episode manifesting as infected gums and lips, causing high fevers. A substantial portion of the population has recurrent oral herpes infection, showing up as those nuisance little "cold sores" on lips and sides of the mouth, and occasionally elsewhere on the face.

80,000,000 people in North America are infected by HSV

Herpes infects the nerve cells of the spinal cord of the pelvis (in the setting of genital herpes) and of the nerve ganglia serving the face at the base of the brain (in the setting of oral herpes). The nerve cell then becomes a factory for making more viruses. The infection is permanent. Most patients suffer from recurrences that may vary in frequency from once in a lifetime to non-stop infections that never go away. The average rate of recurrences is about four times per year, plus or minus one. Recurrences typically take about a week or so to heal. This means that the average untreated person with HI spends about a month out of the year with lesions.

Nucleoside Analogs are used for treatment of HSV

Vaccines for genital herpes infection have been being produced for at least twenty years but their benefit is marginal. New improved vaccines are constantly under development. About fifteen years ago it was noticed that certain viral infections could be treated through the use of chemicals that are part of DNA. Soon to follow was the use of a modified nucleoside analog, called acyclovir (Zovirax). About 10 years ago it was found that acyclovir, when taken on a daily basis, could decrease recurrence frequency to about once per year. Further, modified acyclovir, such as valacyclovir (Valtrex) and famciclovir (Famvir) appeared on the market, their combined annual sales are measured in hundreds of millions US dollars.

The use of any anti-infective chemical is associated with increasing the occurrence of resistant organisms. Resistant organisms have occurred, in some cases requiring multiple anti-viral medications to control symptoms. A number of strains of HSV, which are resistant to acyclovir, Valtrex, and Famvir, have been discovered. In the overall population percentage of resistant strains is relatively small now, though in immunocompromised patients, such as those in the later stages of HIV infection, resistant strains are more common. The Company believes that there is an opportunity to develop additional drugs that have attractive safety profiles and are effective in treatment of herpes infections including those, which are resistant to current therapies.

Cancer
Telomerase

Cancer deaths accounted for 12% of all deaths worldwide in 1997 according to World Health Organization and are continuing to rise. WHO estimates that by 2020, there will be somewhat 20 million new cancer patients in the world each year. Today only one third of cancers are curable using existing methods.

Cancer accounts for 12% of all deaths worldwide.

While most normal cells in our body can divide only a finite number of times (cell mortality), cancer cells are abnormal in that they can divide without limit (cell immortality). Normal cells have the potential to become cancerous when a series of random mutations activate various cancer genes (oncogenes) and deactivate tumor suppressor genes. With each mutation, pre-cancerous cells become increasingly aberrant and uncontrolled, and may begin to generate a tumor mass.

Telomerase is an enzyme that enables cancer cells to maintain indefinite replicative capacity, or cellular "immortality." While not sufficient in itself to transform a normal cell into cancer cell, telomerase is believed to be necessary for the cancer cell to grow without limit.

Nucleoside Analogs as Telomerase Inhibitors

Company’s intention is to discover and develop telomerase inhibitor, which, by blocking the activity of telomerase, will allow cancer cell telomeres to resume shortening, ultimately leading to cancer cell death. Advantage of this strategy resides in the universality and specificity of telomerase as a target for cancer. Historically speaking, telomerase is an unusually attractive target for drug discovery because there may have never been a molecule discovered that was present in nearly all cancers, required for the tumor cells to continue growing without limit, and a molecule that if eliminated by a drug, would not have serious side effects. Telomerase is very similar to reverse transcriptase of HIV, which allows for use of nucleoside analogs as telomerase inhibitors.

In regard to universality, research has shown that telomerase is present in all of the over 20 different cancer types, including the 10 most prevalent cancers of prostate, breast, lung, colon, bladder, uterus, and ovary, along with lymphomas and leukemias, melanomas and pancreatic cancer. In all of these cancers, nearly all tumor samples contain telomerase. Because telomerase is present in all cancer types evaluated and is not biologically active in most normal cells, telomerase appears to be the first universal marker for cancer. In regard to specificity, telomerase is not present in most normal cells and tissues in levels sufficient to confer replicative immortality with the exception of the reproductive cells. Recent research has demonstrated that a telomerase inhibitor can block cancer cells from using telomerase to maintain telomere length. As a result, the telomeres in the cancer cells shorten as the cells continue to divide, until reaching a critically short length, at which point the cancer cells die.

Viscount believes that a telomerase inhibitor will be an effective therapeutic for a broad range of cancers, although there may be certain limitations to its use. A telomerase inhibitor is expected to have a side effect profile that is superior to current cancer therapies that target all dividing cells.