Human Genome Sciences (NASDAQ:HGSI) is halfway home. The company's hepatitis C drug, Albuferon, passed its first phase 3 trial test yesterday, but the harder test is yet to come.

In a trial on patients infected with genotypes 2 and 3 of the hepatitis C virus, Albuferon worked just as well as Roche's Pegasys. (Genotypes refer to the virus's different genetic variations.) Fortunately, it didn't have to work better than Pegasys, because it's given every other week. The other interferon treatments, Pegasys and Schering-Plough's (NYSE:SGP) Pegintron, require weekly shots. Since injecting interferon causes unpleasant side effects, halving the number of injections should be a great selling point.

Still, to get approved by the Food and Drug Administration, Human Genome Sciences and its marketing partner Novartis (NYSE:NVS) will need to show that the drug can treat genotype 1 patients as well -- especially since that's the most common genotype in the U.S.

Genotype 1 is also harder to treat, requiring 48 weeks of treatment versus the 24 weeks that patients infected with genotype 2 and 3 must undergo. Considering the issues that Albuferon has had with side effects -- a higher dose had to be scaled back during this trial because of serious pulmonary side effects -- the drug isn't out of the woods yet.

Investors won't have to wait too long to find out whether Albuferon is up to the task. The results from the trial testing genotype 1 patients are due in March.

Human Genome Sciences also has to worry about up-and-coming drugs like Schering's boceprevir and Vertex Pharmaceuticals' (NASDAQ:VRTX) and Johnson & Johnson's (NYSE:JNJ) telaprevir. These are being tested in combination with Pegasys and Pegintron. When they make it to market, doctors will likely favor the pair tested in clinical trials, potentially leaving Albuferon out in the cold. HGS can of course run trials testing Albuferon with boceprevir and telaprevir, but its developers aren't likely to be interested until Albuferon has proven its worth.

Fellow Fool Brian Lawler called it right earlier this year, when he said Human Genome Sciences was overpriced with an $800 million market cap. Now, with a market cap far less than $300 million, and one clinical trial under its belt, Human Genome Sciences is looking a little more investment-worthy. Just don't put all your eggs in its basket.

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