(The New York Times News Service) - Vertex Pharmaceuticals and Eli Lilly are expected to announce on Monday that they have developed a drug candidate that can attack the hepatitis C virus in the same way that several drugs attack HIV, the virus that causes AIDS.

The companies say that their compound, which they hope to begin testing in patients in 2003, blocks the an enzyme known as a protease, which the hepatitis C virus needs to replicate itself. Protease inhibitors for HIV have had a significant effect in treating AIDS, and many companies have tried to develop one for hepatitis C.

But this has been devilishly difficult. "So far no one has succeeded," said Michael Lai, a professor of molecular microbiology and immunology at the University of Southern California. But Lai said he was not convinced that Vertex and Lilly had succeeded either, adding that they had not published any data and had not begun human testing.

Joshua Boger, chief executive of Vertex, a biotechnology company in Cambridge, Mass., said the drug, which can be taken orally, seemed to work and was nontoxic in laboratory and some animal tests. But he said further animal tests were needed before human testing could begin.

Boger said that he thought Vertex and Lilly were the first to announce a hepatitis C protease inhibitor and that Vertex was receiving a $5 million milestone payment from Lilly for the achievement.

But Charles M. Rice, executive and scientific director of the center for the study of hepatitis C at Rockefeller University in New York, said he had heard that other companies might also be close. Still other companies, he said, were developing other ways to attack the virus.

"We're getting pretty excited about some of these new compounds that are entering into clinical trials," he said. "It's kind of like when the first protease and reverse transcriptase inhibitors were hitting the clinic for HIV."

Biotechnology companies like Vertex typically announce every nugget of progress to attract investors. Indeed, the company's announcement coincides with the start on Monday of the J.P. Morgan H&Q health care conference in San Francisco. Larger drug companies do not always discuss compounds until they reach later-stage clinical trials. A spokesman for Schering-Plough, for instance, said his company also had a protease inhibitor candidate that was not in clinical trials.

About 4 million Americans have been infected with hepatitis C, which is spread through infected blood or needles. The virus can lead to cirrhosis or liver cancer.

The main treatment now is the combination of alpha interferon and ribavirin, which some scientists think works by stimulating the immune system to attack the virus. But the drugs work in only about half of the cases, so the search has been on for drugs that attack the virus directly.

Vertex specializes in structure-based drug design. Instead of trying thousands of compounds to see which one can bind to the intended target, it first determines the three-dimensional shape of the target and then tries to design a drug to mesh with it like a glove on a hand.

It has taken Vertex five years since determining the structure of the hepatitis C protease in 1996 to design a molecule that can bind to it.

The problem is the unusual shape of the protease. Most targets have various nooks and crannies to which the drug can cling. The HIV protease, for instance, had a deep hole in it. But the surface of the hepatitis C protease is practically flat, with only the slightest depression.

"Instead of stuffing a bomb in a cave, which is what the HIV protease inhibitor does, it's like climbing a sheer rock face," said Boger of Vertex, which developed Agenerase, one of the HIV protease inhibitors on the market. "In my nearly 25 years in the industry, this is the most difficult drug design problem that I've ever encountered."

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