ViroPharma's (NASDAQ:VPHM) presentation Tuesday at the UBS Global Life Sciences Conference was particularly interesting, in the wake of last month's disappointing and mixed news on its hepatitis C antiviral compound.

The prospects for ViroPharma's HCV-796 darkened significantly after the company reported troubling clinical results. Patients taking the drug in a phase 2 study had elevated levels of a liver enzyme in their blood, which can be an early warning of potential liver damage -- the very thing hepatitis drugs strive to prevent.

Nonetheless, there's still hope for the compound. Other HCV drugs, including Schering-Plough's (NYSE:SGP) PegIntron, have also caused liver-related issues and still made it to market.

The phase 2 study of HCV-796 turned up liver enzyme issues when the drug was combined with PegIntron, but don't rush to blame the latter compound just yet. In the ViroPharma study, 8% of patients treated with both HCV-796 and PegIntron experienced the higher liver enzyme issues, compared with only 1% taking PegIntron alone.

ViroPharma did mention that some of these cases of higher liver enzyme issues were transient. That leaves open the possibility of using HCV-796 to get patients down to undetectable levels of HCV in the first weeks of therapy -- what's known as a rapid or early virologic response (RVR).

An RVR is a good predictor of future treatment success, and the likelihood of completely curing hepatitis C. After stopping treatment of HCV-796 following several weeks of dosing, and assuming the virus counts in their bodies don't then rebound, patients could always continue on PegIntron for the remainder of their therapy.

With such strong efficacy, it's also possible that HCV-796 could be reserved for patients not responding to current therapies. After 12 weeks of dosing with HCV-796 in the phase 2 study, 23% of patients who had previously failed HCV treatments had undetectable levels of the virus.

Likely for these reasons, ViroPharma and partner Wyeth (NYSE:WYE) will continue to run the trial, although they have discontinued the dosing of HCV-796 as a conservative safety precaution. While the drug's path ahead looks tough, ViroPharma says it can't be counted out yet.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has an A+ disclosure policy.