Why Synageva Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Synageva BioPharma (UNKNOWN: GEVA.DL  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Synageva and see what CAPS investors are saying about the stock right now.

Synageva facts

Headquarters (founded)

Lexington, Mass. (1996)

Market Cap

$1.2 billion



Trailing-12-Month Revenue

$11.7 million


CEO Sanj Patel (since 2008)
CFO Carsten Boess (since 2011)

Trailing-12-Month Return on Equity



$233.4 million / $0


Gilead Sciences (NASDAQ: GILD  )
Merck (NYSE: MRK  )
Pfizer (NYSE: PFE  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 83% of the 12 members who have rated Synageva believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, All-Star zzlangerhans, succinctly summed up the bear case for our community:

I imagine that Synageva bulls, who maintain a low profile, look to [Alexion Pharmaceuticals (NASDAQ: ALXN  ) ] as a model for a multi-billion company treating a single orphan disease. However, no other companies developing replacement therapies for orphan congenital diseases have come close to Alexion's success. ...

Synageva has only completed a single phase I/II trial of sebelipase alfa for CESD, and to the best of my knowledge has not announced concrete plans for further trials. ...

I also find it concerning that Synageva obtained their public listing via a reverse merger with zombie biopharma Trimeris in July 2011. That gave Synageva some cash, a dying HIV drug called Fuzeon, and the ability to avoid the scrutiny that comes with an IPO. ... The current valuation of Synageva reminds me of that of [Protalix Biotherapeutics (NYSEMKT: PLX  ) ]  right before they crushed their shareholders with an 80% below market dilutive financing in 2007. Food for thought.

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