Silo Pharma, Inc. — Form 10-Q Summary
Business context and reporting period
Quarter ended September 30, 2023; filed November 13, 2023. Silo Pharma is a development-stage biopharmaceutical company pursuing licensed and research-stage therapeutics, including peptide-based drug delivery and psychedelic-related research for neurological, psychiatric, and other conditions. Its reported revenue is principally license-fee income from Aikido Pharma. The former NFID apparel business is classified as discontinued operations.
Financial performance and position
| Metric | Q3 2023 / September 30, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $18,025 for the quarter; $54,076 for nine months | Unchanged from the same periods in 2022 |
| Gross profit | $16,566 for the quarter; $49,698 for nine months | Unchanged; gross margin approximately 92% |
| Operating expenses | $789,964 for the quarter; $2,741,566 for nine months | Quarter down from $965,720; nine months up from $2,020,396 |
| Net loss | $660,160 for the quarter; $2,579,507 for nine months | Quarter loss narrowed from $983,246; nine-month loss increased from $2,245,720 |
| Loss per share, basic and diluted | $(0.21) for the quarter; $(0.82) for nine months | $(0.49) and $(1.13), respectively |
| Cash and cash equivalents | $199,839 | $11,367,034 at December 31, 2022 |
| Short-term investments | $8,571,247 | None at December 31, 2022 |
| Working capital | $8,241,824 | $11,135,738 at December 31, 2022 |
| Total liabilities | $1,490,477 | $1,302,100 at December 31, 2022 |
For the first nine months, operating cash use was $2,314,486, compared with $2,611,633 in 2022. Investing activities used $8,576,011, largely reflecting purchases of short-term investments; financing activities used $276,698, primarily for share repurchases. The filing reports no debt balance or material capital-expenditure commitments beyond research and development agreements. License revenue is minimal and entirely dependent on one licensee.
Material changes versus prior comparable periods
- Nine-month operating expenses rose 35.7% to $2.74 million, led by higher compensation and professional fees; research and development expense fell 22.0% to $508,127.
- Nine-month operating loss increased to $2.69 million from $1.97 million. Higher interest and dividend income helped bring nine-month net loss to $2.58 million, despite higher operating loss and a $166,034 penalty for early termination of a certificate of deposit.
- Quarterly compensation expense increased substantially, including a $200,000 executive bonus paid in September. Quarterly selling, general and administrative expenses included a reversal of a previously accrued $186,638 Delaware franchise tax.
- Cash declined sharply as funds were shifted into short-term U.S. government securities; cash plus short-term investments totaled approximately $8.77 million at quarter-end.
Outlook, commentary, risks and unusual items
- Management said cash and liquid short-term investments should fund obligations for at least 12 months from the filing date. The company nevertheless reported a $9.75 million accumulated deficit and $2.31 million of operating cash use for the nine months.
- Research programs and licensing arrangements remain early-stage; outcomes, clinical timing, costs, regulatory approval, and commercialization are uncertain. Management said the Columbia research project was approximately 90% complete at September 30, 2023. The planned Ketamine Joint Venture with Zylö Therapeutics had not yet been formed.
- Future amounts due under sponsored study and research agreements were reported at $461,276 for the year ending September 30, 2024. Columbia research payments include $330,825 unpaid at quarter-end and a further $143,607 due on completion.
- The NFID note receivable, including accrued interest, was $69,600 at quarter-end. After the quarter, its maturity was extended to December 30, 2023 and its interest rate increased from 8% to 9%.
- The company’s board authorized a $1 million share-repurchase plan through December 31, 2023. The filing reports additional repurchases after quarter-end of 66,776 shares for $104,587.
- Management concluded disclosure controls were ineffective at September 30, 2023, citing material weaknesses in segregation of accounting duties and system and manual controls. It expects weaknesses may continue until staffing and controls improve.
- The filing reports no material legal proceedings and no material change in previously disclosed risk factors. Key risks include financing needs, clinical research costs and timing, regulation, intellectual property, and market acceptance.
Important facts for investors to verify
- Reconcile share-repurchase disclosures: the notes report 129,293 shares purchased for $276,698 through September 30, while the issuer-purchases section reports 57,335 shares for $130,959 through that date and separately lists 71,958 third-quarter shares. Confirm the periods, totals, and cancellation treatment.
- Assess cash runway using actual operating burn and planned research spending, and monitor the company’s stated 12-month liquidity assessment.
- Confirm collection of the $69,600 NFID note receivable by its amended December 30, 2023 maturity.
- Track Columbia project completion, remaining payments, and whether any research options or licenses result in further commitments.
- Monitor remediation of the disclosed material weaknesses and the concentration of all license revenue in one customer.