This study will assess the efficacy of ABF656 in chronic hepatitis B characterized by HBeAg positivity. The study is designed to establish a dose response and safety relationship sufficient to allow the subsequent design and conduct of Phase 3 trials. The trial is also designed to generate the PK data in hepatitis B patients to satisfy regulatory requirements in China.

Inclusion Criteria:

• Male or female, aged 18-75 years of either non-child bearing potential or if of child bearing potential on two adequate forms of birth control
• Chronic HBV infection (serum HBsAg detectable for > 6 months)
• Serum HBeAg positive with HBV DNA >106copies/mL (or >200,000 IU/mL)
• Serum ALT must be > 2 x ULN but below 10 x ULN

Exclusion Criteria:

• Steroid treatment or immunosuppression 3 months prior to entry.
• Chest X-ray with clinically significant active inflammatory process, history of significant pulmonary disease or any history of interstitial lung disease.
• Hb< 10g/dL or, and ANC < 750/mm3 or , and platelet count < 75,000 mm3 .
• Significant chronic medical conditions other than chronic hepatitis B which in the opinion of the investigator preclude enrollment into the study.
• Evidence of hepatic decompensation (i.e., Child-Pugh score of B or C).
• Seropositive for HIV, HCV, or HDV (Hepatitis Delta virus).
• History of hypothyroidism or current treatment for thyroid disease.
• Patients with treated or untreated malignancy of any organs, with the exception of localized basal cell carcinoma

Other protocol-defined inclusion/exclusion criteria may apply