The award for best announcement from a development-stage drugmaker at the JPMorgan health-care conference goes to ... Pharmasset (Nasdaq: VRUS)! Since last week's conference, when the company announced results from a phase 1b study of its hepatitis C virus (HCV) compound, shares of Pharmasset have more than doubled.

With so much other pharma news and earnings guidance out there, I didn't have time to cover the data Pharmasset announced in conjunction with JPM last week. But the clinical trial results that Pharmasset released for its potential HCV polymerase inhibitor, R7128, were nothing short of excellent.

In a 50-person phase 1 study, in combination treatment with Roche's Pegasys, the highest dosage of R7128 was able to lower the amount of HCV to undetectable levels in 85% of genotype 1 patients after four weeks. (Genotype 1 is the most common subtype of HCV in North America.) Compare these results to the 79% of patients that Vertex Pharmaceuticals' (Nasdaq: VRTX) telaprevir was able to bring down to undetectable levels after four weeks in its Prove 1 study -- as well as the data that other drugs, like ViroPharma's (Nasdaq: VPHM) HCV compound, have produced -- and you can see that Pharmasset has a very exciting drug candidate on its hands with R7128.

Four weeks of testing is usually too early for any derailing safety signals to pop up, and Pharmasset did note that there were no serious adverse events during the study. We'll have to wait until the data is presented at a scientific conference for more details on the safety and efficacy data, though.

The thousand-dollar question for investors is: With shares of Pharmasset up another 17% yesterday, are they still a value, or have they reached excessively optimistic, overvalued levels? If R7128 were the leading nucleoside polymerase inhibitor on the block, then I'd have no qualms about Pharmasset's $720 million market capitalization, but R7128 isn't even Roche's top hepatitis C polymerase inhibitor. That distinction goes to Roche's internally developed R1626, which produced undetectable levels of HCV in 81% of patients after four weeks in a phase 2a study that that was similar to Pharmasset's.

Roche has worldwide rights to Pharmasset's R7128, with Pharmasset retaining certain co-promotion rights in the United States. If Roche gets into the enviable position of having two top HCV polymerase inhibitors, it will undoubtedly hamper sales of R7128, unless the drug differentiates itself in its safety or efficacy profile from R1626. Surely, Roche wouldn't do anything to breach its collaboration agreement with Pharmasset, but it's not hard to figure out that Roche would prefer to take in 100% of revenue from its own drug, rather than having to give up revenue to Pharmasset.

With $70 million in the bank at the end of September, and its share price bolstered by these recent trial results, Pharmasset will likely face a dilutive financing to bulk up its balance sheet in the coming weeks or months.

The risk that R7128 will be eclipsed by a drug from its own partner is definitely worth watching out for. But Pharmasset does have other valuable pipeline assets, and it doesn't deserve to be struck with the "overvalued" label yet, considering the price the market is awarding to exciting new anti-hepatitis C molecules.

More Foolishness on anti-HCV compounds:

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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.