Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical AVEO Pharmaceuticals (Nasdaq: AVEO) has received the dreaded one-star ranking.

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

AVEO facts

Headquarters (founded)

Cambridge, Mass. (2001)

Market Cap

$474 million



Trailing-12-Month Revenue

$38.46 million


CEO Tuan Ha-Ngoc

CFO David Johnston

Trailing-12-Month Operating Margin



$107.04 million / $22.88 million


Pfizer (NYSE: PFE)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 73% of the 70 members who have rated AVEO believe the stock will underperform the S&P 500 going forward. These bears include UltraLong and zzlangerhans, both of whom are ranked in the top 1% of our community.

Earlier this month, CAPS investor UltraLong touched on AVEO's seemingly unsustainable valuation:

Aveo Pharmaceuticals is working on a renal cancer drug and regained the rights to its lung cancer drug from Merck (NYSE: MRK) ... good for them. Now to the crux of the problem, that they are about 2-3 years away from having a viable product on the market. Trust me, I don't wish these companies to fail ... I'd love for them to succeed, but at nearly 500M the valuation here is just stupid.

AVEO is up a whopping 70% since its IPO this past March, while behemoth cancer-fighters like Pfizer, Johnson & Johnson (NYSE: JNJ), Teva (Nasdaq: TEVA), and Sanofi-Aventis (NYSE: SNY) are either flat or down over the same period. Although Mr. Market seems to think AVEO's kidney cancer drug candidate, tivozani, has plenty blockbuster potential, the company has managed to rack up losses totaling about $180 million since being founded in 2001. And with product sales still not expected until at least 2013, biotech expert zzlangerhans thinks AVEO just doesn't have enough fuel to keep skyrocketing:

I doubt we'll see a major catalyst before topline data from the phase III trial of TIVO-1 in renal cell carcinoma in mid-2011. Most of the optimism for TIVO-1 comes from its performance in an uncontrolled phase II trial, with progression-free survival measured against historical standards. Sounds like a story I've heard many times before. In the meantime, broad market downdrafts are sure to pressure AVEO at their current lofty valuation.

What do you think about AVEO, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Pfizer is a Motley Fool Inside Value selection. J&J is an Income Investor choice, and Motley Fool Options has recommended a diagonal call position on it. The Fool owns shares of J&J and Teva. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool's disclosure policy always gets a perfect score.