Silo Pharma, Inc. — FY2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023; comparisons are with the year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report. Amounts are in U.S. dollars.
Business context
Silo is a developmental-stage biopharmaceutical company with no approved products. Its programs target PTSD and stress-induced anxiety (SPC-15), fibromyalgia and chronic pain (SP-26), Alzheimer’s disease (SPC-14), and multiple sclerosis/CNS inflammation (SPU-16). Revenue remains minimal and is from license agreements, not product sales.
Financial and operating highlights
| Metric | FY2023 / Dec. 31, 2023 | FY2022 / Dec. 31, 2022 |
|---|---|---|
| Revenue | $72,102 | $72,102 |
| Gross profit | $66,264; approximately 92% gross margin | $66,264; approximately 92% gross margin |
| Operating expenses | $3,921,856 | $3,693,920 |
| Operating loss | $(3,855,592) | $(3,627,656) |
| Net loss | $(3,700,683), or $(1.20) per share | $(3,908,551), or $(1.71) per share |
| Cash used in operating activities | $(3,224,498) | $(3,497,622) |
| Cash and cash equivalents | $3,524,308 | $11,367,034 |
| Short-term investments | $4,140,880 | — |
| Working capital | $6,905,568 | $11,135,738 |
| Total liabilities | $1,569,270 | $1,302,100 |
Revenue was unchanged and entirely attributable to one licensee. Operating expenses rose 6.2%: compensation and professional fees increased, while R&D expense fell 34.1% to $845,092. Net loss narrowed 5.3%, principally reflecting higher interest and dividend income and lower equity-investment losses, partly offset by a $166,034 penalty for early termination of a certificate of deposit. A $69,600 allowance for an uncollectible NFID note and accrued interest was recorded in discontinued operations.
Operating cash use improved by $273,124 year over year. Investing activities used $4,147,107, primarily for purchases of short-term investments; financing activities used $471,121 for share repurchases. Cash decreased by $7,842,726 overall. The company reported no funded debt; liabilities primarily comprise accounts payable/accruals and deferred revenue. Current assets were $7,681,158 and current liabilities were $775,590 at year-end.
Material changes and developments
- SPC-15 received a U.S. patent in April 2023. Silo exercised its Columbia University option for an exclusive license, with the completed agreement expected in the first half of 2024. It also licensed Medspray soft-mist nasal delivery technology; the agreement provides for a 5% royalty on net sales.
- The company expected SPC-15 preclinical and formulation work to finish in Q1 2024 and planned to request an FDA pre-IND meeting in the first half of 2024.
- Further SPC-14 preclinical results were expected in 2024. SPU-16’s licensed technology received a U.S. patent in April 2023. SP-26 had a provisional patent application filed in March 2023.
- Silo decided not to continue the joint venture with Zylö Therapeutics; the joint venture entity had not been formed. It also allowed a UMB joint-homing-peptide evaluation license to expire and said it would not continue the UCSF psilocybin inflammation study.
- The company repurchased 252,855 shares for $471,121 through year-end. The repurchase authorization was extended through March 31, 2024; an additional 62,607 shares were repurchased for $95,682 through March 23, 2024.
Outlook, risks and other notable items
- Management believes cash and liquid short-term investments are sufficient to meet obligations for at least 12 months from the filing date. Silo nevertheless reports continuing losses, an accumulated deficit of $10,871,811, no history of profitable operations, and a need for future financing; additional capital may dilute shareholders or constrain operations.
- Development is early-stage, with uncertain trial timelines, results, patient enrollment, regulatory approval, commercialization, market acceptance and reimbursement. Psilocybin and psilocin are Schedule I controlled substances in the United States, creating substantial legal, regulatory, operational and reputational risks.
- Management concluded disclosure controls and internal control over financial reporting were ineffective as of December 31, 2023. Cited material weaknesses were inadequate segregation of accounting duties and inadequate system and manual controls. The auditor did not attest to internal-control effectiveness.
- The financial-statement auditor issued an unqualified opinion and reported no critical audit matters. The filing identifies no material legal proceedings known to the company.
- Short-term investments were highly rated U.S. government securities. The company reported a $6,227 unrealized loss on these investments. It also disclosed that cash deposits exceeded FDIC limits by approximately $2.805 million at year-end, while describing transfers among banks to mitigate exposure.
- Research agreements require $725,244 in future payments during 2024. The company disclosed $330,825 remaining unpaid to Columbia at year-end and a further $143,607 due upon completion; it estimated the Columbia project was approximately 90% complete.
Important facts for investors to verify
- Whether the Columbia exclusive SPC-15 license was finalized and whether the planned preclinical work and FDA pre-IND request occurred on schedule.
- Current cash, short-term investment balances, actual cash burn, financing needs and the basis for management’s 12-month liquidity assessment.
- Updated status, costs and milestones for each development program, including the UMB license obligations and 2024 research commitments.
- Whether the material weaknesses in financial reporting controls have been remediated, and whether reported share counts and repurchase totals reconcile across filing dates.
- Collection prospects for the defaulted NFID note and any subsequent developments affecting the recorded $69,600 allowance.