Executive Summary / Key Takeaways

• Silo Pharma (NASDAQ:SILO) is a developmental-stage biopharmaceutical company focused on addressing underserved conditions like PTSD, chronic pain, and CNS disorders through novel therapeutics, including psychedelic formulations, and differentiated drug delivery systems.
• The company's strategy centers on licensing intellectual property from leading universities and advancing a pipeline of four product candidates: SPC-15 (intranasal for PTSD/anxiety), SP-26 (ketamine implant for chronic pain), SPC-14 (intranasal for Alzheimer's), and SPU-16 (CNS-homing peptide for MS).
• Recent operational progress is highlighted by the advancement of lead asset SPC-15 towards an IND submission in 2025, supported by ongoing GLP toxicology and pharmacokinetic studies and recent patent allowances for biomarkers and prophylactic use.
• Q1 2025 financial results reflect the company's developmental stage, showing minimal revenue ($18,026) and increased operating expenses ($1.11M), primarily driven by an 86.6% surge in R&D costs ($593,962) as pipeline activities accelerate, resulting in a net loss of $1.03M.
• Liquidity was bolstered by a $2 million public offering in May 2025, supplementing the $3.14M in cash and $2.31M in short-term investments held as of March 31, 2025, which the company believes provides sufficient runway for at least twelve months, though significant future funding will be required to advance clinical programs.

Silo Pharma is carving out a niche in the evolving landscape of neuroscience and pain management, positioning itself as a developer of novel therapeutics and advanced drug delivery systems. Operating as a single, focused segment, the company's strategy is rooted in identifying and licensing promising intellectual property from academic institutions, aiming to translate cutting-edge research into potential treatments for conditions with significant unmet medical needs, such as PTSD, stress-induced anxiety, fibromyalgia, chronic pain, Alzheimer's disease, and multiple sclerosis. This approach allows Silo to leverage external scientific expertise while concentrating its internal resources on preclinical development and regulatory pathway navigation.

The company's historical journey, marked by shifts in focus and state of incorporation, underscores its strategic pivot in 2020 towards becoming a biopharmaceutical entity. This transformation laid the groundwork for its current model: a lean, developmental-stage company reliant on strategic collaborations and a targeted pipeline.

A key differentiator for Silo lies in its exploration of both conventional and psychedelic formulations, coupled with innovative drug delivery technologies. The company's lead asset, SPC-15, an intranasal therapy for PTSD and anxiety, utilizes a serotonin 5-HT4 receptor agonist delivered via a proprietary soft mist nasal spray technology licensed from Medspray Pharma BV. This intranasal approach is designed to bypass the blood-brain barrier, potentially leading to faster onset of therapeutic effects and optimized safety compared to traditional systemic administration. While specific quantifiable benefits like percentage increase in brain drug concentration or reduction in side effects are not detailed with precise figures, the strategic intent is clear: enhance efficacy and safety through targeted delivery.

Similarly, SP-26, a ketamine-based dissolvable implant for fibromyalgia and chronic pain, represents a technological effort to improve pain management. Designed for subcutaneous insertion, the implant aims to provide sustained, controlled release of ketamine, offering a non-opioid alternative with potentially better dosage regulation compared to intravenous delivery. Recent preclinical data for SP-26 in a fibromyalgia study reportedly met all endpoints, suggesting strong tolerability, sustained drug release, and safety.

Silo's preclinical asset, SPU-16, targeting CNS disorders like multiple sclerosis, utilizes CNS-homing peptides licensed from the University of Maryland, Baltimore. The stated advantage of this technology is the use of these peptides to reduce toxicity while enhancing therapeutic payload delivery to the central nervous system. For SPC-14, an intranasal compound for Alzheimer's licensed from Columbia, the focus is on targeting glutamate receptor NDMAR and serotonin 5-HT4 to address cognitive and neuropsychiatric symptoms.

In the competitive landscape, Silo Pharma operates among a diverse group of players, ranging from large, established pharmaceutical companies like Johnson & Johnson (JNJ) and AbbVie (ABBV) with broad CNS and pain portfolios, to more direct, albeit larger, psychedelic-focused biotechs like Compass Pathways (CMPS) and Mind Medicine (MindMed) (MNMD). While JNJ and ABBV possess vast scale, established market share (estimated at 20% and 15% respectively in relevant areas), significant revenue streams (JNJ $85B, ABBV $54B in 2023), and robust profitability (net margins of 18% and 22%), Silo is a nascent player with minimal revenue and substantial losses. Psychedelic peers like CMPS and MNMD, while also largely pre-revenue ($0.5M and $0M respectively in 2023) and unprofitable (net loss margins of -1,200% and -800%), are further along in clinical development for some indications (CMPS has Phase 3 trials).

Silo's competitive positioning relies on its differentiated technology platforms (intranasal, implant, homing peptides) and its strategic university partnerships, which can potentially reduce early-stage R&D costs (estimated 20% lower R&D costs per unit via partnerships) and accelerate preclinical timelines (estimated 20% faster R&D cycles via collaborations) compared to internal development by larger entities. However, Silo faces significant vulnerabilities due to its small scale, high cash burn rate, and early-stage pipeline, which result in substantially higher operating costs per unit and expose it to the pricing power and extensive resources of larger competitors. The company's financial health, characterized by negative margins (TTM Net Profit Margin: -6411.26%) and negative cash flow, is significantly weaker than established players and even lags some psychedelic peers in terms of cash reserves and capital efficiency (TTM ROIC: -200%).

Recent operational developments underscore the company's focus on advancing its lead programs. For SPC-15, preclinical and formulation studies were completed in the first half of 2024, followed by a pre-IND submission and meeting with the FDA in September 2024 to discuss the 505(b)(2) regulatory pathway. The company initiated IND-enabling GLP toxicology and toxicokinetics studies with first dosing in early March 2025 and commenced an FDA-requested 7-day safety and toxicology large animal study in May 2025. Recent patent activity includes a provisional patent filing for an SPC-15 combination treatment in February 2025, a granted US patent for pharmacological prophylactics against stress-induced affective disorders in females in February 2025, and a Notice of Allowance for a biomarker patent licensed from Columbia in June 2025. These steps are critical prerequisites for filing an IND, which the company aims to submit in 2025, potentially leading to a first-in-human Phase 1 clinical trial.

For SP-26, initial animal studies began in early 2025, with positive initial pharmacokinetic, safety, and tolerability results reported in February 2025, indicating no serious side effects. The preclinical study evaluating SP-26 for fibromyalgia met all endpoints, as announced in April 2025. The SPC-14 program saw a patent application filed in April 2025, further building out the IP portfolio licensed from Columbia University.

Financially, the first quarter of 2025 reflects the expected profile of a developmental biotech. Revenue remained flat at $18,026 compared to Q1 2024, derived solely from the amortization of deferred revenue related to the Aikido License and Sublicense Agreement. Cost of revenues also remained constant at $1,460. The significant increase in operating expenses, particularly the 86.6% rise in research and development costs to $593,962, directly correlates with the acceleration of preclinical studies and third-party research projects for the pipeline candidates. This increased spend led to a higher loss from operations ($1.09M vs $879k in Q1 2024) and a larger net loss ($1.03M vs $801k in Q1 2024).

As of March 31, 2025, Silo held $3.14 million in cash and cash equivalents and $2.31 million in short-term investments, totaling $5.45 million in liquid assets. This represented a decrease from $3.91 million and $3.17 million, respectively, at December 31, 2024. Working capital also decreased to $4.42 million from $5.46 million over the same period.

Cash flow analysis shows a substantial increase in cash used in operating activities, rising from $838,179 in Q1 2024 to $1.64 million in Q1 2025, primarily due to the increased net loss and changes in operating assets and liabilities. Net cash provided by investing activities saw a significant increase to $871,381 in Q1 2025, mainly from the sale of short-term investments. There were no financing activities in Q1 2025.

Subsequent to the quarter end, in May 2025, Silo closed a $2 million public offering, which included common stock and associated warrants. This financing event is crucial for extending the company's cash runway. Management stated, as of the May 9, 2025 filing date, they believe current cash and short-term investments are sufficient for at least twelve months, a positive signal regarding near-term liquidity concerns, although further funding will be necessary to support future clinical trials and continued development. The recent decision to approve the purchase of up to $1 million in Bitcoin as a treasury reserve asset is a notable, albeit unconventional for a biotech, strategic move aimed at asset diversification and hedging against inflation.

Key risks for investors include the inherent uncertainties of clinical development, regulatory approval processes, and the need for significant additional capital to fund future trials. The company's reliance on licensed IP and third-party vendors for research also presents potential dependencies. Customer and vendor concentration risks, with one licensee and one licensor accounting for 100% of respective revenues and vendor agreements, highlight potential vulnerabilities. The ongoing remediation of previously identified material weaknesses in internal controls is also a factor to monitor.

The outlook for Silo Pharma is largely tied to the successful advancement of its pipeline, particularly the IND submission for SPC-15 in 2025 and the subsequent initiation of clinical trials. Management anticipates increased R&D expenses as these programs progress. The positive preclinical data for SP-26 also sets the stage for potential future development steps.

Conclusion

Silo Pharma represents a high-risk, high-reward investment opportunity typical of the developmental-stage biopharmaceutical sector. The company's core investment thesis is predicated on the potential of its early-stage pipeline, particularly SPC-15 and SP-26, and the differentiation offered by its novel drug delivery technologies and university-licensed intellectual property. While recent operational milestones, such as the initiation of IND-enabling studies for SPC-15 and positive preclinical results for SP-26, demonstrate tangible progress, the company faces significant financial hurdles, including substantial cash burn and the need for future funding, and operates in a competitive environment dominated by much larger, better-resourced players.

The Q1 2025 financials underscore the increased investment in R&D necessary to move programs forward, resulting in expected losses. The recent $2 million financing provides a near-term liquidity buffer, but the path to commercialization is long, expensive, and fraught with clinical and regulatory uncertainty. Investors should closely monitor the progress towards the SPC-15 IND submission, the outcome of ongoing and planned preclinical studies, and the company's ability to secure additional funding to support its ambitious pipeline goals. The success of Silo's differentiated technology platforms in demonstrating clinical superiority or significant cost advantages will be critical in carving out a sustainable position against both large pharma and emerging psychedelic therapy competitors.