By Lisa Seachrist

Washington Editor

WASHINGTON — In an unusual move, Chiron Corp. initiated a program to grant non-exclusive licensing rights to the company's patented hepatitis C virus (HCV) protease.

The program is an industry-wide, time-limited offer for companies to research and develop inhibitors to the HCV NS3 protease under Chiron's patents. The program does not open any other portion of Chiron's HCV patent portfolio up to non-exclusive licensing.

"It is important to realize that this program is only for the development of NS3 protease inhibitors," Jeff Knighton, vice president of investor relations for the Emeryville, Calif., firm, said. "Chiron in no way is scaling down its commitment to HCV research. This program doesn't affect our internal inhibitor program nor does it impact on diagnostics, gene therapy or vaccine efforts."

The company did not release terms under whichit is offering non-exclusive licenses, but did indicate there would be a licensing fee as well as royalty income should a product come to market.

"We think we can create a lot of value for Chiron by offering non-exclusive licensing," Knighton said. "We have had a lot of companies approach us about obtaining a non-exclusive license and we feel that we can get the most value for the company this way."

Knighton also noted inhibitors for HCV protease are a hot area of research at the present time, and the more companies that have access to the protease target, the sooner a therapeutic could be developed.

Like HIV, HCV uses its protease to cleave a long protein and create a new virus. Without the protease, HCV cannot replicate and infect new cells.

Chiron became a leader in HCV research when Michael Houghton cloned the pathogen in 1989. Up until that time, the HCV infection was referred to as "non-A, non-B hepatitis" to denote the fact that researchers didn't know exactly what caused the disease. Since then, Chiron has obtained several patents pertaining to HCV.

There are approximately 300 million HCV carriers worldwide. In the United States and China, HCV infection is the leading cause of liver cancer. In the United States approximately 2 percent of all Americans are chronically infected with HCV. In Japan, nearly 5 percent of the population is chronically infected.

Tony Butler, an analyst with Lehman Brothers, in New York, noted the company's move for a non-exclusive licensing program was unusual in light of the factit wasn't announcing it had entered into any such agreements. Financially, Butler observed the company would receive some up-front cash and potential royalties downstream.

Chiron's stock (NASDAQ:CHIR) closed at $22.938 a share, up $0.562. *