Inclusion Criteria:

• Adults >= 18 years of age
• Chronic HBV infection, known to be HbsAg positive >= 6 months
• Plasma HBV DNA level >= 100,000 copies/mL
• HBe-antigen positive
• HIV negative
• Basic hematologic and chemistry parameters within acceptable limits (defined in protocol
• No need for excluded medications
• Subjects of reproductive capability must utilize two approved forms of birth control, one of which must be barrier protection.

Exclusion Criteria:

• HIV infection
• Hepatitis C co-infection
• Concurrent systemic antiviral treatment
• Previous antiviral treatment for HBV infection within 6 months prior to randomization or treatment with 3TC for more than 6 months at any time in the past
• Previous therapy with agents with significant systemic myelosuppressive or cytotoxic potential within 3 months of study start or the expected need for such therapy at study start
• Alcohol abuse
• Pregnancy or breast-feeding
• Inability to tolerate oral medication
• AST>7.0 times the upper limit of normal
• ALT>7.0 times the upper limit of normal
• Any clinical condition or prior therapy that, in the Investigators opinion, would make the subject unsuitable for the study or unable to comply with the dosing requirements
• Use of any investigational drug.