Silo Pharma, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; unaudited consolidated financial statements. Silo is a developmental-stage biopharmaceutical company pursuing licensed research and development, including peptide drug delivery and psychedelic-related research. The former NFID apparel business is reported as discontinued operations.
Key financial metrics
| Metric | Q1 2023 | Q1 2022 / prior balance |
|---|---|---|
| Revenue | $18,026 | $18,026 |
| Gross profit / margin | $16,566 / approximately 91.9% | $16,566 / approximately 91.9% |
| Operating expenses | $820,051 | $543,825 |
| Net loss | $906,396 | $604,072 |
| Basic and diluted loss per share | $0.29 | $0.31 |
| Cash used in operating activities | $692,688 | $789,165 |
| Cash and cash equivalents | $4,666,007 | $11,367,034 at Dec. 31, 2022 |
| Short-term investments | $6,013,578 | None reported at Dec. 31, 2022 |
| Working capital | $10,222,253 | $11,135,738 at Dec. 31, 2022 |
| Total liabilities | $1,580,138 | $1,302,100 at Dec. 31, 2022 |
The filing reports no borrowings; liabilities primarily comprise accounts payable and accrued expenses and deferred revenue. Cash plus short-term investments totaled approximately $10.68 million at quarter-end. Investing cash outflow of $6.01 million mainly reflected purchases of short-term investments, rather than operating spending. No financing cash flows were reported.
Material changes and unusual items
- Revenue was unchanged year over year and remained minimal. One licensee accounted for all customer license-fee revenue in both periods.
- Net loss increased by $302,324, or 50%, mainly as operating expenses rose 50.8%. Professional fees increased 86.1% to $365,270; research and development increased 19.2% to $202,913; and compensation increased 27.6% to $162,257.
- Other expense included a $166,034 penalty for early termination of a certificate of deposit. Interest and dividend income was $64,388, compared with $415 in Q1 2022.
- Cash declined substantially as the company moved funds into short-term U.S. government securities. The company disclosed approximately $4.16 million of cash above FDIC limits at March 31, 2023.
- After quarter-end, the company repurchased 18,398 shares for $44,300 through May 12, 2023, under a plan authorizing up to $1 million of repurchases through December 31, 2023.
Outlook, commitments, and risks
- Management says available cash and liquid short-term investments should fund obligations for at least 12 months from the filing date. The company nevertheless reported a $906,396 quarterly net loss, $692,688 of operating cash use, and an accumulated deficit of $8,077,524.
- Future amounts due under sponsored study and research agreements were reported as $831,002 for 2023. Research programs include work with Columbia University, UCSF, and the University of Maryland, Baltimore (UMB). The Columbia project was estimated to be approximately 80% complete; a scheduled $430,825 payment was reported unpaid at March 31, 2023.
- The proposed ketamine joint venture with Zylö Therapeutics had not yet been formed as of the report date. The company’s research and licensing plans depend on external academic and commercial partners.
- UMB license terms include potential milestone payments up to $1 million, royalties, and sublicense-income sharing. Aikido’s sublicense provides for potential milestone payments up to $1.9 million; these are contingent, not current revenue.
- Management identified risks including the need for additional funding, clinical research timing and cost, regulatory approval, intellectual property, market acceptance, and access to capital. The filing provides no quantitative revenue or earnings guidance.
- Disclosure controls and procedures were deemed ineffective at March 31, 2023 because of material weaknesses: insufficient segregation of accounting duties and inadequate system and manual controls. The company reported no material legal proceedings and no material change to previously disclosed risk factors.
Most important facts for investors to verify
- Whether the stated 12-month liquidity outlook remains adequate after research commitments, operating cash use, and share repurchases.
- Progress, timing, and remaining funding needs for the Columbia, UCSF, and UMB research programs, including the unpaid Columbia payment.
- Whether the Aikido and UMB licenses generate future milestones, royalties, or sublicense income; current quarterly revenue depends on one licensee.
- Management’s remediation of the disclosed internal-control material weaknesses and the status of cash exposure above insured limits.
- Subsequent buyback activity and the remaining authorization under the $1 million repurchase plan.