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<TYPE>424B1
<SEQUENCE>1
<DESCRIPTION>FINAL PROSPECTUS DATED 08/12/1999
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European Government Regulation and Product Testing
Sales of medical devices outside the United States are subject to foreign
regulatory requirements that vary widely from country to country. The time
required to obtain approvals required by foreign countries may be longer or
shorter than that required for FDA approval, and requirements for licensing may
differ from FDA requirements. Export sales of investigational devices that have
not received FDA marketing approval may be subject to FDA export permit
requirements. As KeraVision begins to sell products in additional foreign
markets it will be required to obtain an FDA export permit and comply with
foreign regulations for each of these markets. A delay in obtaining the
necessary approvals or failing to comply with regulatory requirements could
have a material adverse effect on KeraVision's business, financial condition
and results of operations.
The regulatory environment in Europe for medical devices differs
significantly from that in the United States. A total of 19 European countries
are grouped in a union with the objective of establishing a single market
without internal borders among the member countries and eliminating divergent
national requirements. The members of the European Union include Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
The Netherlands, Portugal, Spain, Sweden, the United Kingdom, Iceland, Norway,
Switzerland and Lichtenstein.
Products that comply with the requirements of a specified EC medical
directive are entitled to bear CE marking. Since July 14, 1998, all commercial
medical device products have been required to bear CE marking. It is illegal to
market these products in the European Union without a CE marking.
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To obtain a CE marking, the product must be assessed and found to conform to
the applicable directive. This assessment is carried out by the manufacturer,
in most cases with the assistance of a third party certification organization
known as a "notified body." The notified body assessment may consist of an
audit of the manufacturer's quality system or specific testing of the product.
A manufacturer can sell a product throughout the European Union once it secures
an assessment by a notified body in one of the European Union countries.
The European Union has adopted two directives to regulate medical devices,
including the "Active Implantable Medical Devices Directive" ("AIMDD") and the
"Medical Devices Directive," ("MDD") and has proposed a third directive, the
"In Vitro Diagnostic Directive," ("IVDD") to harmonize the regulatory
requirements for medical devices.
Medical devices such as Intacs are regulated under the MDD. A manufacturer
may affix CE marking after a determination that the product complies with the
essential requirements of this directive and completion of the appropriate
conformity assessment procedure as specified by the directive. The conformity
assessment requirements are based upon a given product's classification within
the directive. Products within the scope of the directive are grouped within
four classes: Class I, IIA, IIB and III. A product with a higher classification
is considered to have higher risk, and will therefore be subject to more
controls in order to obtain CE marking. Intacs have been designated as a Class
IIB device. Essential requirements under the directive include substantiating
that the device meets the manufacturer's performance claims and that any
undesirable side effects of the device constitute an acceptable medical risk
when weighed against the intended benefits of the device.
There are two basic options for assessing conformity of devices designated as
Class IIB. The first option allows a manufacturer to seek a decision from the
notified body that the processes employed in the design and manufacture of a
device qualify as a full quality system. Alternatively, manufacturers can seek
product certification based on various control schemes. KeraVision obtained
qualification of its processes as a full quality system. Approval of
KeraVision's full quality system has been achieved through ISO 9001 and
EN 46001 certification by an approved notified body. The full quality system
encompasses the organizational structure, responsibilities, procedures,
processes and resources necessary to assure quality assurance in design,
development, production, installation and servicing of its medical devices.
The Medical Devices Directive also covers the instrumentation supplied by
KeraVision for the purpose of implanting Intacs. These instruments are
classified as Class I and therefore are not subject to full quality assurance
system requirements.
Once a manufacturer has satisfactorily completed the regulatory compliance
tasks required by the directive and received a favorable decision from the
notified body, it may affix CE marking to its product. Based on the current
regulatory laws, no additional premarket approvals in the individual European
Union countries are required. Custom-made devices and devices intended for
clinical investigation do not bear CE marking and are subject to particular
requirements under the Directive. Manufacturers are required to report serious
adverse incidents concerning CE marked devices to the authorities of the
countries where the incidents take place. If such incidents occur, the
manufacturer may have to take remedial action, perhaps including withdrawal of
the product from the European market.
The directives must be transposed into national law in order to be applied.
All member states of the European Union have completed this transposition. This
transposition process has not created significant differences among the member
states of the European Union with respect to compliance with the essential
requirements and the conformity assessment process. However, meaningful
differences have emerged in at least the following areas: authorities'
evaluation of proposed clinical investigation, notification of products and
activities, handling of adverse event reporting and language requirements for
labels and instructions for use. As the directive does not cover distribution
practices, healthcare financing and purchasing, it is expected that there will
be significant regulatory variances from country to country in these areas.
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KeraVision obtained conformity certification under Annex II of the MDD in
October 1996 from a notified body and thus achieved the right to affix the CE
marking to Intacs corneal ring segments in November 1996. The right to affix
the CE mark can be withdrawn by the notified body and no assurance can be given
that it will be obtained again in a timely fashion or at all. Furthermore,
there can be no assurance that KeraVision's notified body will retain its
status as a "notified body."
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