By Karen Young

Viragen Inc. signed a deal with a U.S. drug distributor for the Taiwanese market in a relationship it said helps move it to a ¿viable commercial entity.¿

Viragen¿s deal with Tradeway Inc. calls for Tradeway initially to purchase $5 million of the company¿s natural alpha interferon product to complete the regulatory process in Taiwan. Upon completion of clinical trials and regulatory approval of the drug, which Viragen will market as Multiferon, Tradeway will purchase an additional $250 million of the drug in increments of $50 million over a consecutive five-year period.

Multiferon will be used to treat hepatitis C patients in Taiwan. Taiwan has a population of 26 million people and more than 1.5 million patients with the disease.

¿This is the initiation of a revenue stream for Viragen,¿ said Douglas Calder, director of communications for Viragen, of Plantation, Fla. ¿We are transitioning from a research and development company to a viable commercial entity.

¿This is the critical milestone,¿ Calder said. ¿This is what an emerging biotechnology company shoots for ¿ to commercialize a product, build a revenue stream and grow that revenue stream.¿

The trials should be complete for Multiferon in Taiwan within 12 to 18 months, Calder said. Tradeway, of Placentia, Calif., is paying the cost estimated at $2 million to fund these trials.

Southeast Asia has the highest concentration of hepatitis C patients in the world, Calder said, so Viragen hopes ultimately to announce a series of similar supply and distribution agreements throughout not only this region but also the world.

Multiferon is the better of two nearly identical formulations of natural interferon owned by Viragen. In early October, Viragen Ltd., Viragen¿s European subsidiary, acquired BioNative AB, of Umee, Sweden. BioNative, renamed ViraNative following the acquisition, produced Alphanative, a product virtually identical to Viragen¿s natural alpha interferon drug. Viragen has taken the best of both products and combined them into a product called Multiferon, which will be manufactured in Sweden.

¿The difference [between the two drugs] is in the manufacturing process,¿ Calder said. ¿We are able to significantly increase our yields.¿

The global standard treatment for hepatitis C is a combination of a recombinant interferon and an antiviral drug, but not all patients respond favorably to this treatment, Calder said.

¿For those who fail, it is an unmet clinical need,¿ Calder said. ¿That¿s why we are so excited about being able to offer an alternative to those patients.¿

Alphanative is approved in Sweden to treat two forms of leukemia: hairy cell leukemia and chronic myelogenous leukemia. It also is in a Phase III trial in Germany for melanoma.

Viragen¿s stock (AMEX:VRA) rose 1 cent Wednesday to close at $1.45.