Inclusion Criteria:

Documented Chronic hepatitis B (CHB) defined by all of the following:

• Clinical history compatible with CHB
• Detectable serum HBsAg at the Screening visit and at least 6 months prior
• HBeAg-positive at the Screening visit
• HBeAb-negative at the Screening visit
• History of evidence of chronic liver inflammation,
• Elevated serum ALT level (1.3 - 10 x upper limit of normal (ULN)) at the Screening visit
• Serum HBV DNA level ≥ 6 log10 copies/mL,
• Chronic liver inflammation on previous liver biopsy within the previous 24 months.

Exclusion Criteria:

• Co-infection with HCV, HDV, or HIV.

• Has any of the following drug therapy:

  • Previously been treated in a trial with telbivudine
  • Received nucleoside or nucleotide therapy whether approved or investigational
  • Received any immunomodulatory treatment in the 12 months before Screening for this study.
  • Has a medical condition that required prolonged or frequent use of systemic acyclovir or famciclovir.
  • Has a medical condition that requires frequent or prolonged use of systemic corticosteroids although inhaled or intra-articular corticosteroids are allowed.
  • Has a medical condition requiring the chronic or prolonged use of potentially hepatotoxic drugs or nephrotoxic drugs.
  • Is currently abusing alcohol or illicit drugs or has a history of alcohol abuse illicit substance abuse within the preceding two years.
  • Uses other investigational drugs at the time of enrollment, or within 30 days or 5 half-lives of enrollment, whichever is longer.
  • Is currently receiving methadone.

• Patient has any of the following:

  • History of or clinical signs/symptoms of hepatic decompensation such as ascites, esophageal variceal bleeding, hepatic encephalopathy, or spontaneous bacterial peritonitis.
  • History of malignancy of any organ system, treated or untreated, within the past 5 years whether or not there is evidence of local recurrence or metastases, with the exception of localized basal cell carcinoma of the skin. Patients with previous findings suggestive of possible HCC should have the disease ruled out prior to entrance into the study.
  • One or more additional known primary or secondary causes of liver disease other than hepatitis B, including steatohepatitis.
  • History of clinical and laboratory evidence of chronic pancreatitis, or demonstrates a clinical and laboratory course consistent with current pancreatitis.
• Has laboratory values during screening visit not within normal limits:
• Is pregnant or breastfeeding.
• Is a women of child-bearing potential that is unwilling to practice birth control.