Roche and Pharmasset have entered into a partnership to develop nucleoside polymerase inhibitors for the treatment of chronic hepatitis C virus (HCV) infections. Pharmasset will receive an upfront fee, research and development support, and milestone payments that could total $168 million for PSI-6130, the lead nucleoside compound of the partnership. In addition, Pharmasset will receive royalties on product sales and retain certain co-promotion rights in the US.

PSI-6130 has the potential to offer greater efficacy and activity against the hepatitis C virus, especially when used in combination with Roche's Pegasys and Copegus. For patients not responding to today's standard of care therapy, the addition of nucleoside polymerase inhibitors to their treatment regimen may offer benefit.

Under the terms of the agreement, Roche will gain worldwide rights, excluding Latin America and Korea, to Pharmasset's PSI-6130 and its prodrugs. Pharmasset will be responsible for preclinical work, investigational new drug (IND) filings, and phase I proof of concept studies, with Roche managing other preclinical studies and clinical development. Roche will also receive options to related nucleoside polymerase inhibitors, which, if exercised, could result in Pharmasset receiving in excess of $300 million in total milestones under the agreement.

Pharmasset will continue to develop and retain worldwide rights to ongoing and future hepatitis C programmes unrelated to the PSI-6130 series of nucleoside polymerase inhibitors. In addition, the Roche Venture Fund has made a $4 million investment in Pharmasset and has received warrants to purchase an additional $6 million in shares within the next two years, at a premium price.

Schaefer Price, Pharmasset's president and CEO stated, "The economics of this deal are significant. In addition, this partnership will support Pharmasset's activities toward establishing a commercial infrastructure for our HIV and HCV clinical candidates."

"We believe that nucleosides are likely to be an important new class of drugs in HCV treatment," Jonathan K.C. Knowles, president of Global Research Roche said adding, "PSI-6130 fits perfectly within our virology portfolio. When used in combination with Pegasys and Copegus, this therapy may offer significant benefit to patients who have previously been resistant to treatment, especially those with a difficult to treat virus."