About 18 months after it was founded to acquire and develop antiviral compounds, FermaVir Pharmaceuticals Inc. is one step closer to advancing its first candidate into the clinic.

The New York-based company, which filed a pre-investigational new drug application with the FDA in November, recently received a positive response from the agency to proceed with clinical development of FermaVir's CF-1743 compound for treating shingles, an infection caused by the Varicella zoster virus.

The FDA's response also included "advice on our preclinical plan," plus recommendations for drug development "all the way through Phase IIa," said Geoffrey Henson, president and CEO of FermaVir, adding that those guidelines should help the company proceed quickly to human testing, expected to start during the second half of this year.

Right now FermaVir is finishing up preclinical work and designing a prodrug of the CF-1743 compound.

Shingles, also known as herpes zoster, affects people who previously had chicken pox; the same virus becomes reactivated in nerve roots and causes the affliction. Shingles affects about 1 million Americans each year and, in about one in five cases, results in post-herpetic neuralgia (PHN), a condition that "is not effectively treated with drugs on the market," Henson said.

FermaVir's compound appears to be "extremely potent," with in vitro data suggesting potency at 10,000 times more than existing treatments, such as acyclovir. CF-1743 also is "extremely selective," and is designed to work by "penetrating the nerve roots where the virus hides," Henson told BioWorld Today.

Right now there are only a handful of companies actively working on products to inhibit the virus causing shingles. Among them is Whitehouse Station, N.J.-based Merck & Co. Inc., which filed a biologics license application last year for its shingles vaccine. The FDA recently extended the BLA review date to May 25.

More companies are focusing on palliative therapies to treat the pain associated with PHN, such as San Carlos, Calif.-based NeurogesX Inc., which began Phase III testing last year of NGX-4010, and Santa Clara, Calif.-based XenoPort Inc., which is in Phase II with its gabapentin prodrug, XP13512.

Behind its shingles drug, FermaVir plans to advance a compound for cytomegalovirus, a viral disease also caused by the Varicella zoster virus that is most troublesome in patients with compromised immune systems from HIV, cancer or organ transplants.

"Current drugs are effective at treating CMV, but they have a number of toxic side effects, and those effects can be danger to an immune-suppressed patient," Henson said. "Our compounds have shown good potency that's as good [as existing drugs], with a better safety profile."

Founded as FermaVir Research in December 2004, the company in-licensed its antiviral technology and compounds a few months later, with the aim of taking them into the clinic through Phase II proof-of-concept studies and then out-licensing them to larger partners for Phase III development and commercialization.

FermaVir has a small full-time staff - five people - and operates as a "very virtual company," Henson said. "We use a lot of CROs."

The company went public in August 2005 by merging into shell company Venus Beauty Supply Inc., and immediately raised about $3 million through a stock sale to fund product development.

"We're in the process of looking to raise additional money," Henson said, and beyond the first two drug candidates, "we'll be looking for new technologies as we go forward."

For the quarter ending Jan. 31, FermaVir posted a net loss of $1.7 million, or 10 cents per share. Cash and cash equivalents totaled about $359,000.

The company's shares (OTC BB:FMVR) on Monday were valued at $1.60.