Source: Flickr user

Attaching a dollar value to a biotech stock's clinical trial pipeline is one -- if not the most -- vexing challenge facing biotech investors.

The vast majority of drugs in human trials are destined for the waste basket rather than pharmacy shelves, and the fast-moving, competitive nature of the industry means that even if drugs do get approved, projections for market share are more estimates than reliable forecasts.

Yet, despite the difficult nature of valuing clinical stage drugs, considering their market potential remains important to modeling a biotech stock's risk and reward. With that in mind, I've come up with a list of five drugs that I believe could be worth more to their developers than investors think.

No. 1: Amicus Therapeutics' (FOLD 2.71%) Galafold
Amicus Therapeutics' Galafold is under review by European regulators for use in Fabry disease patients. If approved, Galafold will compete against Sanofi's Fabrazyme and Shire's Replagel, two drugs with combined annual sales of $990 million last year.

Initially, Amicus Therapeutics is seeking approval as a monotherapy; however, a much larger revenue potential could exist if current studies evaluating its use alongside Fabrazyme and Replagel pan out. If they do, then Galafold could end up as a standard of care that is used in most Fabry patients.

Because Fabrazyme and Replagel cost $200,000 per patient annually and pricing of Galafold could be similar, this drug could move the needle enough to send Amicus Therapeutics' current market cap of $1.6 billion higher.

Source: gPHA.

No. 2: Receptos' (NASDAQ: RCPT) Ozanimod
Receptos' ozanimod is in phase 3 trials as a treatment for relapsing multiple sclerosis. The drug is taken orally, like the multibillion blockbuster MS drugs Gilenya and Tecfidera, but it could have a significant safety advantage over these drugs that could make it the best-in-class option.

Safety risks associated with MS drugs that work by altering immune system responses are a key concern for doctors and patients -- but in mid-stage studies, ozanimod had a safety profile that was similar to placebo. If that holds up in late-stage studies, ozanimod could become a multibillion blockbuster; especially if it outperforms the control arm of the study, which is Biogen's $2.8 billion-a-year Avonex.

Just how big could ozanimod's sales be? Consider that Gilenya, the only other drug to outpace Avonex in trials, is selling at a $2.4 billion annualized clip and Tecfidera is racking up annualized sales of over $3.2 billion. Slap an M&A-worthy multiple of five times sales on those numbers and an argument could be made that Receptos' current $6.2 billion market cap is too low.

No. 3: Gilead Sciences' (GILD 0.91%) GS-5816
Gilead Sciences expects to report data from four phase 3 studies of GS-5816 in hepatitis C patients this quarter, and if results are good, then a GS-5816-containing regimen could displace Gilead Sciences' blockbuster Sovaldi as the go-to therapy in non-genotype 1 patients.

Investors looking to speculate on GS-5816's potential impact don't need to look any further than Gilead Sciences' own Harvoni, a genotype 1 therapy that won approval last fall and quickly supplanted Sovaldi's use in those patients. In the first quarter alone, Harvoni racked up sales of $3.6 billion.

Because a GS-5816 cocktail would likely command premium pricing to Sovaldi, would face fewer competitors in the non-genotype 1 market, and non-genotype 1 patients account for more than half of all HCV patients, its impact on the top and bottom line could amount to billions of dollars that isn't already reflected in Gilead Sciences' already low forward P/E ratio of 10.3.

No. 4: Achillion Pharmaceuticals' (ACHN) ACH-3102
Achillion Pharmaceuticals is one of the only pure-play hepatitis C researchers out there, and in small, mid-stage studies, 100% of patients taking Achillion's ACH-3102 alongside Gilead's Sovaldi achieved a functional cure after just six weeks of treatment.

That's a nice improvement over current therapies, which in most cases are dosed over 12 weeks or more, but investors have soured on Achillion following a licensing deal it inked with Johnson & Johnson in May.

In that deal, J&J acquired the rights to Achillion's HCV franchise, including ACH-3422, a drug that Achillion was hoping to use alongside ACH-3102 instead of Sovaldi in future trials.

Because J&J already has a strong HCV research program that includes the prior-generation therapy Incivek, the more recently-approved Olysio, as well as assets acquired when it bought Alios last year, all of which can be combined with Achillion's pipeline, investors may not want to count Achillion out just yet.

If J&J can craft a shorter-duration, next-generation HCV drug, Achillion could receive up to $1.1 billion in milestones and mid-teens to low-20s royalties on eventual sales. Because J&J also took a $225 million equity stake in Achillion at a price of $12.25 per share, Achillion's current $8.69 price and $1.02 billion market cap could ultimately be too low.

No. 5: Ophthotech Corp's (ISEE) Fovista
While some biotech companies are developing therapies they hope will replace existing treatments, Ophthotech is developing one that could make existing therapies work better.

Ophthotech's lead drug is Fovista for wet-state, age-related macular degeneration, or wet AMD, a condition that is increasingly common as baby boomers get older.

Currently, doctors prescribe the multibillion-dollar blockbuster drugs Lucentis or Eylea for wet AMD, but Fovista could end up being prescribed right alongside those drugs. In phase 2b trials, patients receiving Lucentis and Fovista saw their vision improve by 10.6 letters on a standard eye chart versus 6.5 letters for patients receiving Lucentis and a placebo.

Because Lucentis racks up global sales of $4 billion and Eylea's sales eclipse $3 billion, Fovista could become a top seller. Novartis appears to agree. Last year, Novartis paid $200 million up front and agreed to pay up to another $800 million in milestones, plus royalties, to lock up overseas rights to Fovista.

If Ophthotech's Fovista delivers strong phase 3 results, then its multibillion-dollar potential could mean that Ophthotech's $1.8 billion market cap goes north.

Tying it together
All five of these drugs still need to overcome hurdles that could trip them up and relegate them to the waste bin, and that means there's plenty of risk associated with them. Investors who are willing to accept that risk, however, may find themselves rewarded if these drugs do succeed.