Encore Vision Delivers Big Payday to Angel Investors
Big winners in Novartis AG’s acquisition of Encore Vision for $465 million are members of a network of angel investors in Fort Worth, TX, that bet $4 million on the presbyopia-correcting eye drop that Encore Vision president and CEO Bill Burns has been working on for about nine years.
The $4 million the Cowtown Angels put up includes $3.7 million from one angel, the Fort Worth private equity firm Bios Partners and its co-manager Les Kreis. The Fort Worth Star Telegram reported that about eight other investors kicked in the other $300,000 of the Cowtown Angels’ investment.
The total payout could more than double the acquisition price, industry sources told Eye on Innovation. They put it at upward of $800 million. Novartis’ SEC filing confirms the up-front price of $375 million “before ordinary purchase price adjustment” and another $90 million in early milestone payments. Encore Vision has been developing EV06 ophthalmic solution (lipoic acid choline ester 1.5%), a first-in-class topical treatment that has shown some effectiveness in treating presbyopia.
The turnaround on the acquisition was lightning fast. Novartis announced the agreement of sale on December 20, 2016, and then closed it on January 12, 2017. Industry sources said Encore Vision drew a number of suitors, but the ability to close the deal quickly may have given the advantage to Novartis.
Bios Partners’ Kreis declined to tell the Star Telegram what percentage stake the angels held in Encore, but he said it amounted to less than 20%. “It’s their first exit so that’s a big deal,” said Darlene Boudreaux, executive director of the Tech Fort Worth, or Tech FW, incubator that’s housed Encore since 2008. Cowtown Angels is a program of Tech FW, but functions as a network in which individual members put up their own money; it does not operate as a fund.
Kreis did tell Eye on Innovation what intrigued him about Encore Vision. Stella Robertson, PhD, a founding partner of Bios Partners and former VP of R&D at Alcon, talked up Encore Vision at a Cowtown Angels meeting. “Given her experience and understanding of the field, I paid attention to her,” Kreis said. “From an overall investment opportunity standpoint, the addressable market problem [presbyopia] that Encore Vision is attempting to solve is tremendously large, so it was clear that there would be tremendous upside if the drops showed promise in human trials, which they did.”
The acquisition of Encore Vision bodes well for angel investors, Boudreaux said. “What I think this acquisition says is that this is what angel networks are for – to invest in companies in the very early stage,” she added. “They’re not going to win on every one, but hopefully when they do win it’s a big one.”
Said Kreis: “The Encore Vision investment is an excellent example of how local angel investors can work closely with institutional investors to share expertise and ultimately some success.”
Novartis is now calling the EV06 drop UNR844, Frederic Guerard, worldwide business franchise head, ophthalmology for Novartis, told Eye on Innovation content director Tom Salemi in a recent podcast.
In a Phase I/II masked, placebo-controlled proof-of-concept study, 50 patients were treated daily for 90 days with topical EV06 and 25 received a placebo. At day 90, 82% of the EV06-treated group had 20/40 near vision, and more than half demonstrated a gain of at least 10 letters in distance-corrected near visual acuity in the nondominant eye as well as bilateral vision.
Researchers had found that the lens loses flexibilitywhen oxidation-induced disulphide bonds form between crystalline proteins, which inhibits accommodation, Burns reported at OIS@ASCRS 2016. EV06 interacts with enzymes within the lens fiber cells to chemically reduce lipoic acid and actively form dihydrolipoic acid, which in turn reduces the disulphide bonds and restores microfluidics to the lens.
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