Inclusion Criteria:

• Nucleoside treatment-naïve subjects of either gender, females who are non-pregnant and non-lactating, aged 16 years or older (or the legal age of consent as allowed by local regulations), with compensated hepatic function despite a diagnosis of chronic HBeAg negative hepatitis B infection (i.e., based on serological, virological and histological markers) will be eligible for this study.
• Subjects entering the study with an historical biopsy will have chronic hepatic inflammatory injury at screening (Knodell HAI score ≥ 4 and modified Ishak fibrosis score ≤ 5).
• The number of subjects entering the study with an Ishak fibrosis score of 5 will be limited to approximately 10%. If applicable, subjects must cease previous treatment with any form of alpha interferon 12 months prior to baseline.
• For eligibility, subjects must meet the laboratory criteria for total bilirubin, prothrombin time, serum albumin, platelet count, absolute neutrophil count, ANA titer and have a creatinine clearance of ≥ 50 mL/min.

Exclusion Criteria:

• Subjects participating in a clinical trial or receiving an investigational agent for any reason within 60 days of baseline will be excluded.
• Subjects with clinically significant concomitant diseases will be excluded.