The $465 Million Man

A Fort Worth entrepreneur, retired from Alcon Labs, pursues his vision for an eyedrop that would significantly correct nearsightedness – and hits it big.

How big? Bill Burns isn’t saying, declining to answer a reporter’s question about the size of his stake in Encore Vision, which he operated out of small offices at Fort Worth’s Tech Fort Worth incubator on the Southside. “I’m not gonna tell you,” he says firmly and politely, after taking a moment to consider the question.

It’s mid-January, just a day after Novartis, the global eyecare giant that owns Alcon, disclosed in a paragraph on page 191 of its annual report and federal filing that the company’s paying up to $465 million for Encore Vision – including $375 million in cash that it paid to close the deal and another $90 million to come for completion of future milestones. A month earlier, in announcing it was buying the company for undisclosed terms, Novartis cited data from human clinical trials that Burns’ EVO6 eyedrops work to significantly correct nearsightedness – the aging condition that affects 1.5 billion people worldwide.

You might expect the 68-year-old Burns – an unassuming, grandfatherly man – to be freaking out. Instead, he was having lunch – a plastic container filled with pasta he made at home, topped with an heirloom tomato sauce. “The sweetest sauce,” Burns, 68, said, after heating his lunch up in the microwave inside Tech Fort Worth’s small kitchen.

Sweet, indeed. That Burns was able to convert such a big payday for a company that has no sales and probably won’t come to market before the next three to four years elevated the career pharma marketer to superstar status in the halls of the incubator, where numerous other entrepreneurs are working on concepts they want to bring to market.

It was the first exit for the Cowtown Angels angel investor group, which was founded in 2013 by Tech Fort Worth and invested $4 million in Encore Vision, one of the first companies that pitched the Angels. Encore Vision was also the second big score for Tech Fort Worth; ZS Pharma, a Coppell company founded out of the incubator, sold in 2015 for $2.7 billion to AstraZeneca.

“We’re not a one-trick pony,” says Darlene Boudreaux, the Tech Fort Worth executive director and entrepreneur who built a contract pharmaceuticals manufacturer and sold it at $28 million in sales. “You can be lucky once, but I don’t think you can get lucky twice. We’re pretty good at picking these early-stage entrepreneurs who have potential and helping them.”

The reality of angel investing is that most investments go nowhere, and the few winners carry an investor’s portfolio. The Cowtown Angels had invested $15.6 million through 2016 in more than 20 deals, with no busts. To draw more capital, the Angels in December decreased their minimum investment to $10,000 from $25,000 for accredited investors.

“This exit freed up capital,” says Mike Butts, a roofing materials manufacturer and chairman of the Angels. “This is what the end game can be.”

Boudreaux, who founded the Cowtown Angels, says Tech Fort Worth has taken some calls from exiting Encore Vision investors. “They’re calling and saying we have more money,” she says.

The Angels haven’t disclosed any estimates on the potential value of their members’ combined stakes in Encore Vision after the sale. Eight Cowtown members invested in Encore Vision at different times. Bios Partners, the largest, invested $3.7 million.

Les Kreis, co-managing partner in Bios Partners and principal in Steelhead Capital Management in Fort Worth, declined in an interview to say what his group’s investment was worth in the sale.

But he said, “Our position was large enough to ask for and receive a position on the board of directors, so that should imply that it was somewhat meaningful.”

That Burns was pitching a treatment for nearsightedness might have startled investors. Years of eyecare research went into treatments for glaucoma and macular degeneration. Even Burns pitched it to a boss early on during his career at Alcon but was rebuffed.

“He said, ‘Don’t worry about it,’” Burns says. “Nobody’s going to lose their vision. They’ll just go to Walgreens and get readers. There are so many other vision problems. And he was right. There were no definitive studies on glaucoma then.”

Kreis says he readily understood the problem when Burns pitched it to the Cowtown Angels but didn’t understand all of the science. One of his investment partners is Dr. Stella Robertson, who spent 25 years at Alcon in research and drug development. “I was lucky [she] told me to pay attention to it,” Kreis, 45, says.

“Most angel investors are looking for things that are disruptive,” Butts, surprised when he heard Burns pitch the idea, says. “Is it disruptive to the industry, and is there demand for it? Nearsightedness, that’s as disruptive as it gets.”

Burns grew up on a farm in Pennsylvania, one of five siblings whose father worked in a steel mill and mother as a nurse. They ran dairy cows and farmed hay, corn, oats and wheat. “It had no address, no town,” Burns recalls.

He remembers being able to work the farm “when you were old enough and weighed enough to stand up on a clutch.” Burns was interested in science then, earning a bachelor’s degree in biology and chemistry from Slippery Rock University in western Pennsylvania.

After college, Burns landed his first job working for a pharmaceuticals company in sales and then research and development. He moved to Alcon in Fort Worth for three years as a senior product manager and then marketing director. Then he moved to Bristol-Myers Squibb Co. as director of business development in Evansville, Indiana, where he stayed five years before jumping back to Alcon in 1988 as marketing director for pharma products. He worked his way up through a series of executive jobs before retiring in 2005 as global vice president.

Burns says he loved specialty pharmaceuticals because it was easy to make contact with influencers. “When you’ve got 12,000 or 13,000, it’s not too difficult to learn who the movers and shakers are within a group,” he says.

While at Alcon, Burns had looked at data on the top reasons why patients visit ophthalmologists. The top reason is cataracts, and the second is presbyopia, or nearsightedness. Even after groundbreaking studies were done on glaucoma and age-related macular degeneration in the 1980s, ‘90s, and 2000s, Burns watched as nobody attacked presbyopia. “No one had latched on to this vast opportunity,” Burns says.

Why not? Encore Vision ended up pioneering an understanding of the role of the eye’s lenses in near vision, Burns says. Patients fear the risk of treating their eyes, he says. “Going blind is one of the biggest fears of anybody.”

With surgery and glasses the only treatments for presbyopia, Burns saw a huge potential market for a proven safe topical treatment, comparing it to the market for contact lenses and lens care products. In the United States, 10 percent of the population wears lenses and spends an average $600-$800 annually for them, he estimates.

“There has not been a practical alternative to glasses for vision correction for presbyopia,” he says. “If the same economics that apply to contact lens wearers is applied to presbyopia, then the math is quite simple – it is a vast, unmet vision correction need.”

Retired and doing consulting work, Burns was introduced to two men – Dr. Ron Blum, an optometrist and serial entrepreneur, and physician Jon Till – who were working together on a proposed method of treating nearsightedness at an incubator in Roanoke, Virginia. The men had secured a patent for the method, which applied energy into the tissue, reducing the charge between certain proteins. Burns agreed to carry out the patent to its use in the invention and come on board the company, Encore Vision, as president in 2006.

Serving as the company’s lone employee and working with a team of consultants experienced in developing ophthalmic pharma products, Burns soon proved the concept that a drug he developed could soften the eye’s lens. Presbyopia comes on as the lens hardens and loses function with age.

Working out of the garage of his North Richland Hills home in early experimentation – “these companies all start in your garage,” he says – Burns used an off-the-shelf reducing chemical agent and made a device that would measure changes in a lens. He obtained pig lenses from a slaughterhouse in Oklahoma, soaked them in his solution, and measured whether they softened and flattened. Then he sent them to a histologist, a scientist who studies the microanatomy of cells and tissues.

“Sure enough, we made the lens softer in about two hours,” Burns says. And importantly, the histologist said “no change in the cell structure [from the soaking]. We had not damaged the lenses.” Burns next had a toxicology firm in Boston test the solution on human lenses that were 60 to 70 years old. “We felt we had a great proof of concept,” he says.

Burns raised $1.6 million from a group of ophthalmologists in a first round of fundraising in 2007, which gave the company enough money to build a lab and move forward with preliminary work on animal lenses on its drug. He brought in a husband-and-wife team of research scientists on contract and began work on formulations and toxicology studies. “I’m a novice scientist,” Burns says. “I know enough to be dangerous.”

Burns also joined Tech Fort Worth and its ThinkLab program, which helps entrepreneurs think through ideas and decide whether to proceed. “How do I talk about it in English instead of science-ese? What’s the right model? Licensing? Do I build a company?” Boudreaux, the executive director, says.

Enter the Angels. In August 2012, Boudreaux, who was looking to form the Cowtown Angels, asked Burns to be the sole pitchman before an informal gathering of community members and potential Angels founders at the Fort Worth Club.

Boudreaux’s invitees were mostly older than 40, with deteriorating eyesight. “They all have this issue; we all just want to throw away these stupid bifocals,” Boudreaux says.

Kreis, who had been in just a few other pitches and says he harbored no expectations, was in the group. “I was just beginning to lose my ability to see near objects, and reading glasses were becoming an unfortunate reality,” he says. The Cowtown Angels formed and in 2013, Burns pitched again, becoming one of the Angels’ first investments.

“All of my friends are now starting to suffer from the same reading glasses misery, and so they continually ask me when the drops are going to be ready,” Kreis, now 45, says. “The truth is, I would have been happy to just get my money back and have a solution to reading glasses.”

Burns had various points where he could have exited, Boudreaux says. “It was more about what he didn’t want to do,” she says. “He could have stopped and licensed it out. He could have built a manufacturing company. He ended up continuing the strategy of development, outsourcing, and selling when the opportunity happened.”

In the summer of 2015, the federal Food and Drug Administration gave Encore Vision the go-ahead to begin human trials on EVO6, using 75 subjects, 50 of whom were kept on the drug for three months and 25 on a placebo.

“When you’re a small startup company and you have one shot on goal, you want to make that first study as meaningful as possible,” Burns says. “We made the first study as robust as possible.”

The project, which Burns estimates he’s run Encore Vision using as many as 80 people on contract, hasn’t been without setbacks. “Stupid ones,” Burns says. “This has all of the challenges that any R&D project has.”

In 2015, in preparation for its human study, Burns synthesized his active ingredient into a powder to be used in formulating the eyedrops. His provider in Boston shipped the product to a company in Philadelphia that would do the formulation. “This product needs to be kept refrigerated, with a required chain of control,” Burns says.

The shipper got the product to the company in Philadelphia on time, but the employee who would have checked it in and put it in refrigeration had been allowed to leave early ahead of a winter storm.

“It sat on the desk over the weekend,” Burns says. “We couldn’t verify storage conditions and temperature.” The product had to be sent back to Boston for re-testing. “It was okay, but you have to test it,” Burns says.

EVO6, expected to be available by prescription, faces several development milestones before it comes to market, including dosage studies to identify the best drug concentrations, completion of clinical studies required for registration, FDA approval, and commercialization. Burns said he used only one drug concentration in the human clinical studies.

Why sell now? Burns, who ran four rounds of fundraising, was facing having to raise more money to bring the product to market and its first sales, which he estimates will take three years or more to the United States. Using the consultants dramatically simplified EVO6’s development and reduced overhead.

“Overall, the amount of money invested…was dramatically less than such efforts in large established pharmaceutical companies, a very small fractional expense by comparison,” Burns says.

“While Encore Vision could have continued to develop EVO6 with a mostly consultant and contract research and development team, much more spending would have been needed,” says Burns, who declined to disclose total cash raised, how much Encore Vision had invested, and how much more it might take to bring EVO6 to market. “When you hit these next levels of cash required, most [investors] can’t keep their original positions; it makes sense to balance that out.”

Burns’ strategy from the start, he says, was to “drive research and development far enough to interest an established pharmaceutical company to acquire the asset and complete development and commercialize the product.”

Burns pitched the company to as many as 12 global pharma companies, using the relationships he’d maintained from decades of working in the space. “When we had clinical data, it was an easy reach,” Burns says. “We have something you want to see. It was a level of interest.”

Novartis, with $49.4 billion in 2015 sales, bit and announced Dec. 20 that it “confirms its leadership in ophthalmology by entering a new therapy.” Novartis called EVO6 a “first-in-class disease modifying topical treatment…in an area of high unmet medical need and high prevalence.”

Novartis said presbyopia affects 80 percent of people older than 45. “There is a large need for innovative, effective and safe treatment options for people with presbyopia, and there is currently no disease-modifying treatment available at all,” Vasant Narasimhan, Novartis’ global head of drug development and chief medical officer, said in a release.

Of the human trial, Novartis said EVO6 “showed a statistical significant difference to placebo…at all time points measured.” At the 90th day, 82 percent of the participants treated with EVO6 had 20/40 near vision, compared to 48 percent in the placebo group. “Near vision of 20/40 allows for majority of near vision tasks in most people.”

With Novartis having made the announcement early that morning in Europe, Boudreaux and Tech Fort Worth director Jorge Varela received an email from Burns at 6:29 a.m. Fort Worth time.

“Nothing happens until somebody sells something,” Burns wrote. “Well, I only made one sale these past 10 years, but it’s a big one.”

What’s next for Burns? Burns says he’ll help Novartis complete the integration of EVO6 and Encore Vision. Once that’s done, he says he plans to serve as an advisor and board member for other small and startup companies.

“The entrepreneurial life gets into your system,” he says. “There are no textbooks on this type of work. Once you have been through the effort of a taking startup through to exit, there is knowledge that can be passed along to others in startup companies. It’s the American Dream.”

Rumor in the halls of Tech Fort Worth, days after Novartis’ January announcement on what it paid for Encore Vision, held that Burns had departed for a big vacation to Disney World with his children and grandchildren. Then Burns showed up in the kitchen in Tech Fort Worth with his homemade pasta and sweet sauce. Disney World? “That’s next week,” he said.