The ultimate objective of this SBIR project is to develop an immunotherapy based on our recently patented virus-like vesicle (VLV) platform for the treatment of chronic hepatitis B (CHB). The goal of this project is to complete preclinical studies and product development of the CARG-201 vaccine. We have designed this vector to achieve a functional cure in CHB patients, characterized by a sustained loss of hepatitis B surface antigen (HBsAg) (with or without HBsAg antibody seroconversion), using our VLV-based hepatitis B virus (HBV) therapies. We have developed a therapeutic vaccine capable of inducing virus-specific CD8+ T cells that clear HBV infection. As detailed in the progress report (see attached RPRR), we have attained the majority of the Phase II milestones. Using a VLV dual promoter and a glycoprotein switch, we have enhanced efficacy, as demonstrated in an adeno-associated virus (AAV) mouse model of persistent HBV. We have generated CARG-201 harboring both MHBs and HBcAg antigens, which can control HBV replication, as evidenced by reduced serum HBsAg levels in mice. The reduction in serum biomarker levels in more than 80% AAV-HBV mice with high antigenemia is highly significant as it indicates that CARG-201 can break tolerance and drive T-cell responses to HBV antigens. As this is the first attempt to produce good manufacturing practice (GMP)-grade VLVs, our task is critically important and requires innovative approaches. The Food and Drug Administration (FDA) provided pre-investigational new drug (IND) feedback on CARG-201 in April 2019, and we have addressed all of their concerns. The FDA agreed with our proposed plan on the animal toxicology program, GMP manufacturing methods, and quality control testing. The FDA also provided positive feedback on our clinical study objectives/endpoints and our Phase 1 study design, including the dosing regimen and patient eligibility criteria. Thus, with the completion of GMP manufacturing and animal toxicology studies, we are now progressing CARG-201 to clinical trial(s). To complete the studies required by the FDA for an IND application, we propose the following specific aims in Phase IIb: Aim 1. Complete safety, non-clinical toxicology, and pharmacokinetics studies of CARG-201. Aim 2. Conduct product development studies of CARG- 201, including manufacturing process development, scale-up feasibility studies, purification, analytic assay development, and formulation and stability studies. Aim 3. Initiate GMP manufacture and release of clinical-grade CARG-201 material and submit an IND application to support Phase I evaluation. IMPACT: This project addresses the urgent unmet need for a therapeutic vaccine for CHB, harnessing work previously funded by an NIH SBIR Phase I and II grant. This project is well positioned to yield sustained and powerful progress towards the development of an efficacious immunotherapy for CHB.