Earlier in the week, Human Genome Sciences (Nasdaq: HGSI) announced its 2007 year-end financial results and guidance for 2008, but investors should be more concerned with the drug developer's pipeline.

Human Genome is particularly interesting because it has multiple phase 3 drug candidates producing clinical trial data in the next two years. Human Genome and partner Novartis (NYSE: NVS) expect lead drug Albuferon, a treatment for hepatitis C, to have its first phase 3 data ready in late 2008, and data for potential lupus treatment LymphoStat is expected in 2009.

Human Genome Sciences has a storied history, but both Albuferon and LymphoStat face an uncertain and difficult path to commercialization. In January, patients in the highest treatment group from both of the phase 3 Albuferon trials had reduce their dosage because of "serious pulmonary" adverse events.

I'd go so far as to say that Albuferon is getting close to dead-in-the-water status from a competitive commercialization standpoint, considering the rich and robust clinical data for competing hepatitis C interferons from Roche and Schering-Plough (NYSE: SGP), and Albuferon's very unsatisfying safety data to date.

Even with sales of its anthrax drug expected to reach at least $100 million this year, Human Genome forecasts that it will burn through $135 million to $155 million of its cash in 2008, and this reduced cash load will have an effect on its valuation if its pipeline drug candidates don't come to fruition.

Human Genome trades at a market capitalization of more than $800 million, and an enterprise value of well more than $1 billion when you account for its convertible notes and long-term debt. On that basis, shares just don't seem cheap at all if Albuferon or LymphoStat don't produce robust results in the next two years. I'm not the only one who thinks so, either; more than 17% of Human Genome's float has been sold short.

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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.