Axsome Q4 Earnings: Revenues Rising, Skepticism Lingering

Core Insights - The article emphasizes a conservative investment strategy, allocating 90% to stable investments and 10% to growth opportunities to achieve balanced returns [1] Valuation Framework - The base valuation framework projects free cash flows over a 9-year period, starting from a baseline year, applying consistent annual growth rates [1] - Cash flows are discounted using a rate calculated through CAPM, considering time value and risk factors, with terminal value calculated for Year 9 [1] - The model assumes steady growth patterns and discount rates that exceed long-term growth to maintain mathematical validity [1] Pharmaceutical Revenue Model - The pharmaceutical revenue model indicates a linear market adoption from 10% initial uptake to full penetration, followed by an 8% yearly decline while maintaining at least 40% of peak levels [1] - Revenue calculations are based on patient numbers, market penetration, and annual treatment costs, with operating and production costs scaling proportionally with sales volume [1] - The final valuation incorporates success probability factors and time-adjusted cash flows using standard discount rates [1]