OWL — Massive fatty liver opportunity

OWL (One Way Liver SL) provides novel solutions to support the diagnosis of highly prevalent fatty liver conditions (non-alcoholic Fatty liver disease (NAFLD) with a specific test for non-alcoholic steatohepatitis (NASH), an inflammatory condition of the liver. OWL was founded in 2002 by Dr José M Mato. It is based on the Parque Tecnológico de Bizkaia in the Basque Country of Northern Spain and has strong links to the CIC bioGUNE (Center for Cooperative Research in Biosciences in Bizkaia). There are 23 employees in Spain and two people in the United States responsible for the commercial introduction of OWL tests in North America.

OWL’s metabolomic technology can track the process of NAFLD. This moves from a normal liver to fatty liver, steatosis or non-alcoholic fatty liver (NAFL), to inflamed liver (NASH) to badly damaged, scarred and poorly functioning liver, cirrhosis, in four main stages, Exhibit 1. If an individual progresses (not all do), the process is slow, linked to diet and lifestyle and associated with metabolic syndrome and Type 2 Diabetes (T2D). The liver can still operate normally until decompensated cirrhosis starts. By then the liver is badly scarred and dysfunctional.

OWL’s lead diagnostic test, OWLiver, is intended for USA launch in 2018. There is a pipeline of further developments (Exhibit 2). OWLiverCare was developed alongside OWLiver and is used to identify earlier stage patients with steatosis. OWLiverCare is not initially being launched in the USA market but is available as a test for use in clinical trials. OWLFiber is due for 2018 launch. It is potentially crucial to long-term development as the main medical concern is the extent of any fibrosis; OWLiver determines NASH but not the fibrosis level.

The pipeline is given in more detail in Exhibit 3.

The tests require a blood sample to be taken by the physician and sent to a qualified laboratory. Tests require sophisticated, but standard, laboratory equipment using defined protocols.1 The data are processed using mathematical analysis to produce the result.

In the EU, this laboratory will be OWL’s facility in Northern Spain. For marketing deals such as the planned US arrangement there is one marketing partner with one or more local partner laboratories that are able to perform tests not otherwise regulated by the FDA – so called CLIA waived status.2

Non-alcoholic fatty liver disease (NAFLD), Exhibit 4, has been reviewed by Cohen et al (2011). The Current US guidelines were restated in September 2017 (Chalasani et al (2017)). The Cleveland Clinic, one of the US’s leading medical centres, gives a medical perspective on current diagnosis, treatments and disease progression. In Europe, there is NICE 2016 guidance.

Basically, if the liver is more than 5.5% fat and the patient has moderate alcohol consumption, the patient has NAFLD. NAFLD covers a whole range of diagnostic categories. Which stage depends on if the liver is otherwise healthy, non-alcoholic fatty liver (NAFL) or is showing detectable levels of inflammation and possible fibrosis (NASH), or has cirrhosis.

Almost all people with NAFLD are obese. Non-obese individuals can have steatosis but with no external symptoms this is unlikely to be diagnosed. Metabolic syndrome is linked to obesity and is a set of interlinked conditions that occur due to loss of control over blood glucose levels due to insulin resistance. Insulin resistance is caused by excess glucose and fructose in the diet, although some people may regard this as over-simplistic. Metabolic syndrome often progresses to type 2 diabetes.

NASH is NAFLD where the liver is inflamed and will progressively become scarred and fibrotic. This can lead to cirrhosis and eventual liver failure. A few patients with NASH progress to liver cancer but this is very rare: 0.04% of NAFLD cases. However, overall cancer rates are higher in NAFLD individuals although not necessarily due to NAFLD. The commonest cause of death is cardiovascular disease (CV). Both high cancer and CV death rates are linked to obesity.

Cohen, Horton and Hobbs (2011) reviewed the underlying physiology (summarised in Exhibit 5). Fat (as triglyceride droplets, see Exhibit 6) within liver cells is not normal as liver is not a fat storage tissue. Adipose tissue (body fat) is adapted to contain large volumes of lipid.

Adams et al (2009) carried out a long-term follow-up study of 358 Australian subjects and found that 18.9% of patients with NAFLD developed type 2 diabetes after 11 years vs 6% without NAFLD. However, NAFL itself was not a risk factor once other parameters such as weight, circumference, hypertension and initial resistance were also taken into account. NAFLD therefore appears to be a symptom rather than a cause of further complications.

Data is hard to access on liver disease indications and diagnoses. A 2008 paper used a small sample of 1999-2001 data to extrapolate to 150,000 new liver disease diagnoses per year (Bell et al (2008)). Of these, hepatitis C and alcohol-related liver disease accounted for 66% of cases. NAFLD was only 9% or 13,500 cases. This is of course a limited sample and old data, but it gives a benchmark and shows medical priorities.

According to NICE 2016 guidance, progression of NAFLD is assessed by:

Other countries will have different guidelines and this is not an exhaustive list of tests. The current US guidelines (Chalasani et al (2017)) state “Routine Screening for NAFLD in high-risk groups attending primary care, diabetes, or obesity clinics is not advised at this time because of uncertainties surrounding diagnostic tests and treatment options, along with lack of knowledge related to long-term benefits and cost-effectiveness of screening”.

Basically, physicians are interested in fibrosis levels rather than fat levels. Hence, there are few NAFL tests but many for fibrosis; these are also used in assessing hepatitis C infections. Fibrosis is scored using the METAVIR system ranging from F0 (none) to F4 (cirrhosis). Buzzetti et al (2015) and Jayakumar et al (2016) have reviewed the availability of non-invasive tests for fibrosis and inflammation in NAFLD.

Diagnostic tests usually produce a yes/no or a numerical score. These tend to be regarded as “facts”. However, any measurement has a margin of error and diagnostic test errors, ranges and statistics are hard to interpret. Exhibit 7 explains common terms.

Liver biopsy provides direct histological analysis. Rockey et al (2009) give the US guidance. The sample is scored on the NAS score to provide a standardised number. However, biopsy is risky and the tissue sample is tiny: 1/50,000th the overall size of the liver. Because of this, the idea that a biopsy is representative of the entire organ is being challenged. A study by Ratziu et al (2005) in 51 patients who had two closely localised simultaneous biopsies demonstrated a κ-reliability score of 0.64 for grading steatosis. The low agreement indicates that biopsy is inadequate for reliable grading. It is difficult to get numbers for biopsies performed; a 2001 source suggested 30,000 per year in the US, which will include viral disease. However, market research by OWL suggests the number of biopsies for NAFLD alone is several orders of magnitude higher than this (see below under markets). The cost of liver biopsy, according to OWL, is between $2,000 and $5,000. The 2017 CPT code for Medicare lists liver biopsy (47000) at about $380 for non-facility procedures (that is a doctor’s private office) to about $120 if done in a hospital. A non-urgent histological examination (88161) varies from $25 to $70 depending on location.

Exhibit 8 shows the three main imaging methods. MRI can give quantitative overall fat content levels for liver. CT can indicate fat levels. Ultrasound detects high fat, is easy, fairly cheap but much less reliable but can be a good screening test. The advantage of each over biopsy is that they examine the whole organ or a significant proportion of it. All can work if the liver has fat content of over 20%. The exceptions are Fibroscan and the Siemens ARFI, which give fibrosis status data based on the stiffness of the organ as measured by sound waves.

The blood tests in Exhibit 9 focus on fibrosis (Ratziu et al (2009)) as this is a lead indicator of long-term complications. They can be run as a screen if a liver biopsy is being considered.

These blood tests often use a high cut off to include and a low cut off to exclude. This gives good sensitivity and specificity. The problem lies with patients in the middle ranges. These tests mostly use standard measures, often including the liver enzymes AST and ALT5, so are easy to run and some are cheap, for example, APRI.

Calès et al (2009) compared FibroMeter with NAFLD Fibrosis score and APRI in 235 biopsy staged patients and found AUROC of 0.943, 0.884 and 0.866, respectively. Some of these non-invasive tests based on liver do not correlate well with fibrosis stage unless it is in advanced stage; see Sirli and Sporea (2011) and related papers and comments. On their own, AST and ALT levels do not correlate with NASH.

Medically the concern is to detect fibrosis. Fatty liver is not an immediate problem and in any case, there is no therapy – other than diet and exercise, which is presumably a failed option anyway. Exhibit 10 tries to position these various tests graphically.

The OWL business plan rests on the assumption that there is a role for a test (OWLiver) that can detect NASH at high accuracy without indicating the fibrosis level. This market may be created by the emergence of new therapeutics that seek low to mild fibrosis NASH patients.

NAFLD is highly correlated with obesity. CDC data shows 36% of the US population is obese (BMI ≥ 30kg/m2) but this is skewed to the middle-aged with 40% of people in the 40-59-year old group being obese; younger ages 20-39 are not much lighter at 32% obesity. Ahmed (2015) noted that 90% of people with severe obesity have NAFLD. NAFLD is therefore common. Chalasani et al (2017) comment that NAFLD incidence is poorly reported but Younossi et al (2016)) have estimated at global prevalence at about 25.24%. Exhibit 7 shows various specific estimates.

These figures, though extrapolations and very variable, are massive and because of this, NAFLD and especially NASH are attractive markets for pharmaceutical interventions. Novartis, for example, has a big programme in the area (discussed below). However, all products require a reliable, cheaper and easier test than liver biopsy. NASH is more attractive since a higher medical need can justify high prices.

In the US, Medicare provides a baseline level of coverage for people over 65 and for younger people with specific serious conditions like end-stage renal disease (also linked to liver dysfunction). Accordingly, it is a selected group and not representative of the overall US market. However, it does have good statistical evidence and accounts for 23% of US healthcare spending overall. Younossi et al (2014) analysed the five years from 2005-10. They found that 18.01% of admissions for chronic liver disease were for non-alcoholic cirrhosis, so about 9,000 cases per year. As a very crude scale up,6 this might be 40,000 cases a year across the whole US medical system. There are also about 800,000 patients with chronic liver disease of whom non-alcoholic cirrhosis cases were 14% of claims. That equates to a US prevalence of perhaps 500,000.7 The average Medicare outpatient claim was $400; Medicare does not cover all costs but this amount does not leave much room for expensive testing.

At a broader level, NAFLD in the US was projected to have direct annual medical costs of $103bn (Younossi et al (2016)) based on 64 million people. Prevalence, modelled as a percentage of age group, is shown in Exhibit 12. Edison notes that this assumes that all 64 million US prevalence cases are identified and under treatment at an average of $1,610 a year, costs are in Exhibit 13. This expenditure level, as cash, seems unlikely as the level of diagnosis will in reality be low..

In Europe, across the UK, Germany, France and Italy, medical costs were estimated at $35bn based on 52 million people. If anything, this is less likely as a real figure than in the US but shows wide variations: UK £313, Italy €997, Germany €304, France €670 (annual costs for NASH with fibrosis). Most medical spending is on the consequences of metabolic syndrome and obesity such as type 2 diabetes. However, it provides an estimate of the potential cost of disease management.

Although NAFLD can progress to liver cancer, SEER data (Younossi et al (2015)) shows that only 14.1% of hepatocellular cancer was NAFLD related (about 6,000 cases per year), although over the 2004-09 period, the incidence did increase by 9%.

The pharmaceutical industry clearly sees the NASH opportunity as a very significant one given the extremely high prevalence of obesity and the consequent high prevalence of NASH. This could be a similar sized market to that for type 2 diabetes (T2D), not least as T2D patients are also highly likely to have NAFLD. The market could be larger if the problem of easy diagnosis can be resolved with a simple test like OWLiver. Therapeutic developers, especially of metabolic products, need a test that can identify eligible earlier stage NASH patients; again, OWLiver could be a gatekeeper test to access their market. Other blood tests really only exclude severe fibrosis or identify it. No pharmaceutical company would want a product whose prescription and effectiveness monitoring is limited by the need for liver biopsy.

There is currently no treatment for NASH other than dietary restriction. This works if the patient can either stick to a rigorous diet for a long period of time or undergoes bariartric surgery (to reduce stomach volume). Surgery is only offered to the morbidly obese and most other patients are unable to achieve sufficient dietary restriction. The pharmaceutical industry is developing possible major blockbuster drugs. Currently, the only therapies available are those used to treat T2D, in effect metformin, which improves insulin sensitivity but does not alter the fundamental course of the disease or have any effect on NAFLD or fibrosis (Li et al (2016)). For T2D patients with NASH, pioglitazone seems useful (Cusi (2016)) but is not approved for this indication. However, as a generic drug with toxicity concerns, investment in clinical evaluation for NASH is unlikely.

There are currently six Phase III studies running according to the standard clinical trials database. These could produce products on the market. There are a further 22 Phase II studies. Exhibit 14 shows six current Phase III studies plus some interesting Phase II projects from Conatus, Novartis and Shire. Novartis is very active in NASH.

Exhibit 15 discusses the leading metabolic therapies in development in more detail. These aim to affect the disease course by affecting carbohydrate and lipid metabolism.

Novartis, for example, has an entry criteria for its Phase II studies of NASH; no fibrosis level is specified. Galmed with Aramchol, as a further example, specifies NAS score level 4, so presumably a fibrosis test would be required. Volixibat (Shire) excludes severe fibrosis from its target indication so a fibrosis test is required.

Fibrosis therapies aim to reduce fibrosis and stop progression, Exhibit 16. As a side effect, they may affect lipid levels.

The clinical basis for the OWLiver test uses biopsy data as a “gold standard” reference test. The OWL trial was in two parts: a 467 patient study cohort by Barr et al 2012, and a validation cohort of 295 patients, preliminary data Crespo et al (2016), Exhibit 17.

Barr et al 2012 used a main analysis group of 467 people who all had a liver biopsy. Of these 90 were healthy controls and 377 had some form of NAFLD, either steatosis or NASH. Qualitative determinations of 540 serum metabolite variables were performed using ultra high-performance liquid chromatography coupled to mass spectrometry (UPLC−MS). Barr et al 2012 noted that “The metabolic profile was dependent on patient body-mass index (BMI), suggesting that the NAFLD pathogenesis mechanism may be quite different depending on an individual’s level of obesity.” OWL has a potential test, OWLiverCare to separate NAFL from NASH but does not plan to sell this.

Crespo et al (2016) then recruited a new validation cohort of 295 patients of whom 255 had NAFLD and 40 were controls. The NAFLD patients were then further separated into steatosis (108) and NASH (147). The outcome is in Exhibit 18.

OWL calculates for the validation cohort a PPV of 93% and NPV of 76%. These values are the probability that a positive test is correct in showing disease and that a negative test result is correct in showing no disease. There are no healthy individuals in this subset tested.

PPV and NPV are based on the mix of positive and negative patients tested at that time whereas sensitivity and specificity are, in theory, absolute values with error ranges. Since the validation cohort was enriched in NASH patients, the PPV based on the test cohort is high relative to the sensitivity of 0.79.

Edison does not know the likely potential screening population composition, but in real clinical use it is likely to be obese individuals possibly pre-screened with ultrasound to establish a high level of liver fat. From the NHANES work (see Wong et al (2017) and Exhibit 11 above) about 25% of these might have NASH. In that case, the effective PPV and NPV might be 77% and 93% respectively (Edison indicative calculations). This will be a good basis for avoiding biopsy for lower risk patients and give a better basis for further testing, including biopsy, for at risk patients

Only a full prospective study could establish these figures more accurately but running a large biopsy controlled study would be expensive. This might however be needed in the US for full reimbursement. Extensive test use might also depend on a link to a therapeutic but the FDA will not recommended this without a large scale trial.

OWL has a test for liver fibrosis (OWLFiber) based to date on 208 samples, Exhibit 19. The test is due for launch in 2018. OWLFiber has two algorithms. The first separates patients with Fibrosis F1-4 (positive) from those without any fibrosis (negative). It uses 16 biomarkers phospholipids, triacyglycerols and non-esterified fatty acids. Secondly, patients with fibrosis F3 and F4 are separated from F1 and F2 using five biomarkers. Medical attention and most current imaging and other tests, and possible new therapeutics, is based on identifying fibrosis F3 or F4. The initial results are in Exhibit 20.

One aspect of this test is that NASH is liver inflammation but in the early stages fibrosis may not be apparent. Hence a patient could theoretically have an inflamed liver without fibrosis so be positive on OWLiver and negative on OWLFiber. Data may be too limited to be clear on this. [OWL to comment] Comparative data against other tests for fibrosis may be needed for commercialisation.

OWL has two granted US patents with European and other applications pending stated by management to be relevant to OWLiver. These rely on the discovery that some metabolic biomarkers are increased in NASH patients relative to steatosis (NAFL) patients and that some biomarkers are decreased in NASH patients relative to steatosis.

US8563318 (B2), expiry date August 2029, has lists of unnamed up and down regulated markers.

US8758992 (B2), expiry date September 2030, provides a method for 11 metabolic markers (10 named) in serum, which are up- or down-regulated in the NASH patients.

Exhibits 21 and 22 show a schematic output of the claim in US8758992 (B2) using the probabilities stated in the patent as relative abundances. Metabolite 4 is the most crucial. NB only 10 metabolite weights are given. The identities of metabolites 8-11 are not determined in the patent.

One biomarker, metabolite number 4, is increased in NASH but decreased in steatosis (NAFL). The other 10 biomarkers have the reverse action. Metabolite 4 is as sphingomyelin.10 The various metabolite abundances are weighted to calculate the final score.

OWL has three other patent applications relevant to the current portfolio.

WO/2017/055397 describes the determination of the metabolic signature of diagnosis and disease regression in NAFLD. This covers monitoring progression of the disease from early to late fibrosis stage. If granted, it will expire in September 2036. Edison notes from the diagrams that the various metabolite components have wide interquartile ranges with considerable overlap.

Two other applications were filed in July 2016 but have not, as yet, been published, so Edison cannot comment further. One is for identification of human non-alcoholic fatty liver disease subtypes. The other is for diagnostic methods based on lipid profiles.

Given the size of the projected US market by OWL management at US$255m before risk adjustment, strong patent protection will be essential.

OWL has commissioned primary market research in the US (Exhibit 23) focusing on a sample of 55 hepatologists and gastroenterologists. Of these, 10 had detailed interviews.

Exhibit 24 tries to quantify the market based upon the figures presented in OWL market research. Note that this survey was a selected sample and may focus on NAFLD specialists. For a qualitative survey, this gives excellent data but it might mislead on overall market numbers. Edison has used the data for NASH as the specific market targeted by OWLiver and OWLFiber. There is an associated market for NAFLD testing. This adds up to a further 937,000 new cases and 221,000 biopsies assuming no double counting.

If the market numbers sourced by OWL are correct and not biased due to selective sampling, there may be 641,000 new NASH cases per year requiring 384,000 biopsies a year as part of diagnosis. What the market research does clearly show is that market access is controlled by a limited number of specialists who recommend most of the diagnostic procedures. Influencing their perception and their use of the OWL liver tests will be crucial to rapid market penetration.

OWL plans via US marketing partners to sell OWLiver at US$300-400 but with an initial 50% discount to build market share. In the market research, physicians stated that a price point over $250 would discourage them from prescribing. Note that the patient, Medicare or the insurer pays the test cost. Doctors get reimbursed for running the test and using the results.

The market potential depends on how the test is positioned in the market. As the data on OWLiver in NASH is based on confirmed NAFLD patients, presumably ultrasound will be required as a pre-test; ultrasound only works in very fatty livers.

The key issue is if OWLiver can substitute for biopsy. The best market segment is probably Gastroenterologists as they are more likely to screen for NAFLD using ultrasound and less likely to use biopsy. OWLiver could also be used to track NASH as it is easily repeated – unlike biopsy.

Note that these are current NASH estimates. The lack of therapy means that the condition is underdiagnosed (see Exhibit 11). The advent of new therapeutics will increase the need for NASH testing. Biopsy is not easily run as a mass-market test and OWLiver would be more convenient and less risky. The need will be for OWL to link to multiple therapeutics as a gatekeeper diagnostic.

OWL sells its diagnostic test as a service with a proprietary set of algorithms, depending on the test. The usual marketing route is to gain recommendations from professional bodies and international organisations. The key is to get a reimbursement code in each country.

OWL is in discussion with US marketing and laboratory partners. US revenues could start in 2018 and management envisages sales at significant levels by 2019. Initially, OWL will sell direct in Europe. In both markets, OWL will initially target private patients (outside the Basque market).

In the US, the FDA does not directly regulate diagnostic services. Instead, these are supplied by qualified centralised laboratories under CLIA regulations. There may be a marketing partner to sell the test or major labs can sell direct. The use of a diagnostic test as a service in the US creates reimbursement issues. Insurers, providers and clinicians can find it hard to assess the clinical value of new service tests as they do not have FDA Pre-Market Authorisation or de novo 510(k). OWLiver will need to negotiate a new CPT code and price. Medicare and many insurers do not fund what they regard as unproven tests so OWL may need to invest to fully develop the US market.

From the market research, US hepatologists and gastroenterologists rarely use serum-based liver tests (as they are not CPT reimbursed), but they are seeking an accurate, simple NASH test. Adoption may be helped if the OWL tests are used in conjunction with new therapeutic agents that are also heavily promoted and used.

Exhibit 25 shows the OWL management market projections at a 55% probability adjustment (by OWL) to the OWL base case of 700,000 US tests a year. Also shown is the expected royalty. The expected royalty income is about €11m by 2024 starting in 2018. The royalty rate is expected to rise with sales levels from 6% to 8%. The price will be US300-400 but with an initial 50% discount. As the discount unwinds as the test gains traction, OWL expects prices to rise in the US market from US$200 to US$350. Edison notes that it can be difficult to obtain large price rises from initial reimbursement levels. OWL also expects upfront and milestone payments and then further sales-related milestones of at least €0.5m from 2019.

European marketing has the added complication of diverse and nationally fragmented, cash constrained healthcare systems. The CE mark system for in vitro tests is a manufacturing standard. Hence, OWL tests cannot be CE marked but need to adhere to standardised procedures.

OWL management’s forecast sales are in Exhibit 26. OWL will initially market direct in Europe and aims to find a major European partner by 2022 with milestone payments of €1m per year.

OWL management expects the European price to be about €150. OWL does have reimbursement under the local Basque healthcare scheme and may gain national Spanish approval. The fastest other market is possibly German private insurance companies. Although these are only 10% of the German healthcare market, they look to offer the latest innovations. To get German public reimbursement, an insurance code will be needed and this will take at least two years. France tends to take a price sensitive stance after long negotiations. In the UK, NICE will need to give an opinion, which will take over a year, and regional uptake is frequently slow. For the rest of the world, OWL envisages one or more partnering deals in 2019.

OWL currently sells metabolomics services to pharmaceutical companies for use in clinical trials. This is a useful current income stream and produces good strategic relations with potential future partners. OWL also carries out various metabolomics services for other customers in the research area especially for pharmaceutical trials. OWL also expects a revenue stream from upfront payments and sales-based milestones.

Because 85% of revenues forecast by management come from royalties and milestones, Exhibit 27, OWL management forecast a cost of goods of about €2.2m and operating costs of under €3m by 2024. The cost of providing a limited number of direct European OWL liver tests gives a gross margin on direct sales of about 32%. Consequently, the royalty income is crucial to the projected profitability. By 2024, OWL expects to have income of €21.4m, a gross profit of €19.3m and EBT of €16.5m, which, after tax of €4.1m, should give a profit of €12.3m. Edison notes that this is a 57% post-tax margin, which is not normally seen in diagnostic companies.

In general, for a diagnostic company with a new product in a currently underserved market, the major sensitivity is the actual sales level and the timing of sales. OWL’s primary market research indicates a large potential market, but this is based on a small sample of respondents who are possibly unrepresentative of the broader market. Many companies find that sales are slower to develop than expected, that levels are lower due to medical inertia and that costs are often higher. OWL’s big advantage is that its test is novel, accurate and patent protected. OWL probably needs to develop and publish an extensive package of clinical and economic data to support the widespread use of its tests. This might come from working with pharmaceutical companies developing NASH therapies. Validation has been limited and there is no third-party independent collaboration of these markers. A major likely future driver is the approval of one or more major therapeutic products to treat NASH. Hence, the OWLFiber test is potentially crucial since the OWLiver test does not indicate the fibrosis level.

This section looks at historical accounts to 30 June 2017 and the management outlook as disclosed. Edison has not made any independent financial forecasts and does not provide a valuation of OWL.

In 2016, OWL reported revenues of €0.92m, of which nearly €0.59 was for collaborations fees and services, the rest being other income. The gross margin was €0.81m before costs of €1.73m. This gave an EBIT loss of €1.36m. Financial costs were €0.44m and there was a tax credit of €0.44m giving an overall loss of €1.33m.

In H117, OWL disclosed a loss of €1.5m on sales of €0.34m. The operational cash outflow was €0.85m. There were various debt and loan movements in H1 netting to €1.33m giving a cash inflow of €0.48m. Cash on 31 December 2016 was €0.05m so cash at 30 June 2017 was €0.53m.

The balance sheet on 30 June 2017 shows long-term bank debt of €1.26m, loans of €1m and other long-term loans of €2.11m. There was also short-term debt of €0.53m. This gives a debt position of €4.9m and net debt of €4.4m. OWL has share capital of €7.3m.

OWL management have indicated that they expect losses in 2017 and 2018, but expect sales of about €5m in 2019, which could give a small profit. This however will depend upon securing US royalties of about €1.89m and €1m in milestone payments.