Silo Pharma, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited. Silo is a developmental-stage biopharmaceutical company pursuing university-licensed research and drug-development opportunities, including psychedelic-related research. Its NFID apparel business was sold in September 2021 and is reported as discontinued operations.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $18,026 | $17,188 |
| Gross profit | $16,566 | $16,563 |
| Operating expenses | $543,825 | $917,699 |
| Operating loss from continuing operations | $(527,259) | $(901,136) |
| Net loss | $(604,072) | $(930,702) |
| Net loss per common share, basic and diluted | $(0.01) | $(0.03) |
| Cash used in operating activities | $(789,165) | $(319,318) |
- Revenue was license-fee income, primarily under agreements with Aikido Pharma; one licensee accounted for all license-fee revenue. The filing reports no meaningful product-sales revenue from continuing operations.
- Cash and cash equivalents were $9.07 million at March 31, 2022, down from $9.84 million at December 31, 2021. Working capital was $9.33 million, versus $9.91 million at year-end.
- Total assets were $9.72 million and total liabilities were $1.21 million. Liabilities were principally deferred revenue; the filing reports no material interest-bearing debt.
- Equity investments at fair value were $343,930, down from $419,995 at year-end. The quarter included a $161,798 unrealized investment loss. The company also recorded $85,733 of other income for shares received for services.
Material changes versus the prior comparable period
- Net loss narrowed by $326,630, while operating loss from continuing operations narrowed by $373,877. Lower professional fees were the main contributor: $196,248 versus $671,570.
- Research and development expense rose to $170,279 from $48,602, reflecting research activities involving Columbia University, UCSF, and the University of Maryland, Baltimore (UMB). Compensation and insurance expenses also increased.
- Other income/expense swung from $37,401 of income to $75,650 of expense, largely because of the unrealized loss on equity investments.
- Operating cash use increased by $469,847. The prior-year quarter included $3.79 million of financing proceeds from a preferred-stock offering; there were no financing cash flows in Q1 2022.
- NFID discontinued-operations loss declined to $1,163 from $66,967 following the 2021 sale. The company converted its remaining 227 Series C preferred shares into 758,334 common shares in March 2022; no proceeds were received. Common shares outstanding were 99,395,304 at March 31.
Outlook, risks, and notable items
- Management stated that cash on hand should fund obligations for at least 12 months from the filing date. The company reported a quarterly net loss and operating cash burn; this outlook is management’s estimate, not a guarantee.
- Research and development remains early-stage. Programs include UMB peptide and drug-delivery work, UCSF psilocybin research, Columbia research, and a proposed ketamine joint venture with Zylö Therapeutics. The joint venture entity had not been formed as of the report date.
- Research agreements involve significant potential spending, including a Columbia agreement totaling $1,436,082 and a UCSF agreement totaling $342,850. The UMB license includes development milestones, royalties, and sublicense-income payments. A subsequent April 2022 research-services agreement calls for $58,548 in payments.
- The company identifies clinical-development timing and cost, financing needs, regulatory and intellectual-property matters, competition, and market acceptance as risks. It also warns that COVID-19 could delay partner research and affect access to capital.
- Disclosure controls and procedures were reported ineffective at March 31, 2022. Management cited material weaknesses involving insufficient segregation of accounting duties and inadequate system and manual controls. No material legal proceedings were reported.
- Management reported no material changes to the risk factors in the 2021 Form 10-K. The company had stockholder authorization for a possible reverse split of up to 1-for-50 but had not effected one as of the report date.
Important facts for investors to verify
- Whether the reported cash balance and stated 12-month liquidity outlook remain adequate as research spending and operating cash use evolve.
- Progress, timelines, funding requirements, and deliverables for the research programs and the not-yet-formed Zylö joint venture.
- Potential dilution from 17,353,987 outstanding warrants and 1,100,000 stock options, alongside the common shares issued on preferred-stock conversion.
- The carrying value and volatility of equity investments, including the large quarterly unrealized loss and shares received for services.
- Remediation of the disclosed material weaknesses in financial reporting controls.
- Reconciliation of license-fee revenue: the statements report $18,026, while the agreement disclosures describe $17,187 and $838 of recognized revenue.