Silo Pharma, Inc. — 2022 Form 10-K Summary
Business context and reporting period
For the fiscal year ended December 31, 2022, Silo Pharma was a development-stage biopharmaceutical company pursuing licensed research and drug-delivery programs for neurological, psychiatric, inflammatory and other underserved conditions. Programs involve university and research partners and potential use of psilocybin, ketamine and peptide-guided delivery. The company had no approved therapies and generated only minimal license-fee revenue. This is an annual-period summary, not a standalone fourth-quarter report.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $72,102 | $71,264 |
| Gross profit / gross margin | $66,264 / 91.9% | $66,260 / 93.0% |
| Operating expenses | $3,693,920 | $2,810,603 |
| Operating loss from continuing operations | $(3,627,656) | $(2,744,343) |
| Net income (loss) | $(3,908,551) | $3,903,741 |
| Net income (loss) per basic common share | $(1.71) | $1.45 |
| Cash used in operating activities | $(3,497,622) | $(2,278,016) |
At year-end 2022, cash and cash equivalents were $11,367,034; working capital was $11,135,738; total assets were $11,642,877; and total liabilities were $1,302,100, principally accounts payable/accruals and deferred revenue. No material interest-bearing debt balance is reported in the supplied financial statements. Cash increased by $1,530,033 during 2022, supported by $4,940,948 in net proceeds from common-stock issuance. The company reported an accumulated deficit of $7,171,128. Management stated that available resources were expected to fund obligations for at least 12 months from the filing date.
Material changes versus 2021
- Operating expenses rose 31%, with research and development expense increasing 85% to $1,286,434, primarily reflecting university and other research programs.
- Operating loss widened by $883,313. Net results swung from 2021 income to a 2022 loss, largely because 2021 included a $6,660,483 realized gain on equity investments and a $248,588 unrealized gain; 2022 included a $104,700 realized loss and a $331,203 unrealized loss.
- Operating cash use increased 54%. Financing cash inflow came from common-stock sales in 2022; 2021 financing was primarily Series C preferred-stock proceeds.
- Common shares outstanding increased from 1,972,739 at year-end 2021 to 3,158,797 at year-end 2022, including a September public offering that raised $4,940,948 net. The company also effected a 1-for-50 reverse stock split in September 2022; reported share data is retroactively adjusted.
Outlook, risks and unusual items
- No quantified revenue, earnings or clinical-development guidance was provided. Management plans to continue research and pursue licensing and development opportunities; substantial doubt historically raised about going concern was described as mitigated by cash and working capital, but the company expects to need additional financing.
- Research agreements and related commitments included approximately $898,967 of future amounts due in 2023. The planned ketamine joint venture with Zylö Therapeutics had not been formed as of the report date. The Columbia research payment schedule was extended through March 2024.
- Key risks include clinical and regulatory uncertainty, patient enrollment, intellectual-property and licensing risks, controlled-substance restrictions (psilocybin is Schedule I in the United States), reliance on external research partners, competition, and financing and dilution risk.
- Management reported ineffective disclosure controls and internal control over financial reporting at December 31, 2022, citing inadequate segregation of accounting duties and insufficient system and manual controls. The auditor gave an unqualified opinion on the financial statements but did not attest to control effectiveness. Research-and-development project completion estimates were identified as a critical audit matter.
- About $10.9 million of year-end cash exceeded FDIC insurance limits. The company reported no accounts at Silicon Valley Bank or Signature Bank and said it began transferring funds to other banks after year-end to reduce uninsured exposure.
- On January 26, 2023, the board authorized a stock repurchase program of up to $1.0 million through December 31, 2023; no shares had been repurchased by the filing date.
Important facts for investors to verify
- Current cash, operating burn, financing needs and whether management’s stated 12-month liquidity expectation remains supportable.
- Research-program progress, milestone and payment obligations, and any material updates to the Columbia and UMB agreements or the proposed Zylö joint venture.
- Remediation of the disclosed material weaknesses in financial reporting controls.
- Potential dilution from future equity financing and outstanding options and warrants.
- Bank-deposit concentration and the status of cash transfers intended to reduce uninsured balances.