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<TYPE>424B1
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<DESCRIPTION>FINAL PROSPECTUS DATED 08/12/1999
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Manufacturing
KeraVision manufactures Intacs in its facility in Fremont, California using a
computer-controlled machining process. KeraVision has limited volume
manufacturing capacity and is building experience in manufacturing medical
devices and other products. To be successful, we must manufacture our products
and potential products in commercial quantities in compliance with regulatory
requirements at acceptable costs. Production of commercial-scale quantities
will involve technical challenges for us. As we establish our own commercial-
scale manufacturing capability for Intacs corneal ring segments, we could incur
significant scale-up expenses including the need to expand our facilities and
personnel. KeraVision may seek collaborative arrangements with other companies
to manufacture products and potential products, including Intacs. The
manufacturer of KeraVision's potential products will be subject to periodic
inspection by regulatory authorities. Any such operations must undergo
compliance inspections conducted by the FDA and equivalent inspections
conducted by state and foreign officials. We cannot assure you that any
KeraVision manufacturer will be able to successfully pass these inspections on
a timely basis or at all. In addition, we cannot assure you that KeraVision
will be able to develop clinical or commercial-scale manufacturing capabilities
at acceptable costs or enter into agreements with third parties with respect to
these activities. In many cases, instruments and other purchased materials
critical for production are sole-sourced.
KeraVision has several sole-sources for sterilization, tools and equipment,
the PMMA raw material and other elements necessary to manufacture Intacs and
the related instrumentation. If we are dependent upon third parties for the
manufacture of our products, our profit margins and ability to develop and
deliver such products on a timely basis may be adversely affected. Moreover, we
cannot assure you that such third parties will adequately perform, and any
failures by these parties may impair our ability to deliver products on a
timely basis or otherwise impair our competitive position.
Intacs are made from PMMA, a polymer widely used in implantable intraocular
lenses since 1952. PMMA cast sheet is purchased from a sole supplier and is
stored at KeraVision prior to release to production. KeraVision believes it
could develop the capability over a significant time period to manufacture PMMA
cast sheet internally if this sole-source were to become unavailable. Any
change in materials used for Intacs would require additional testing,
regulatory review and approval, which could result in significant manufacturing
and shipping delays. See "Risk Factors--KeraVision will need to find a new
supplier for the raw material we use in manufacturing our products."
RISK FACTORS
6
Having received approval from the FDA for the correction of mild myopia,
Intacs are subject to additional post-market testing, extensive record keeping
and other device follow up required by the FDA and other regulatory agencies.
In addition, to the extent KeraVision continues to perform the manufacturing
function, we will be required to adhere to additional FDA requirements for the
manufacture and distribution of Intacs. KeraVision's ongoing compliance with
the Quality System Regulation, labeling and other applicable regulatory
requirements is monitored through periodic inspections by federal and state
agencies, including the FDA, and comparable agencies in other countries.
Current FDA enforcement policy strictly prohibits the marketing of medical
devices for unapproved ("off label") uses. Product approvals can be withdrawn
due to unforeseen safety or effectiveness problems following initial marketing.
Failure to comply with the applicable regulatory requirements can, among other
things, result in fines, injunctions, civil penalties, suspensions or
withdrawal of regulatory approvals, product recalls, product seizures,
including cessation of manufacturing and sales, operating restrictions and
criminal prosecution. Any such FDA enforcement actions could have a material
adverse effect on KeraVision's business, financial condition and results of
operations.
KeraVision will need to find a new supplier for the raw material we use in
manufacturing our products.
Our sole supplier of polymethylmethacrylate (PMMA), the polymer raw material
used in manufacturing Intacs, no longer provides the particular material we use
for Intacs, and has notified us that the material may be purchased by special
order only. We currently have what we estimate is at least a three-year supply
of PMMA. We have not yet made arrangements to obtain additional PMMA beyond
this supply. We have stored our current supply of PMMA in two separate
locations. Should the PMMA at either or both of these locations be damaged or
destroyed, our ability to continue to manufacture and distribute Intacs corneal
ring segments or additional products may be seriously impaired. We would be
required to find an alternate source of PMMA or a similar polymer material, or
commence manufacturing the raw material ourselves. We would need to obtain FDA
regulatory approval for the use of new raw materials in any of our products or
to qualify a new PMMA supplier. If we elected to manufacture PMMA ourselves, we
would need to establish manufacturing facilities for this purpose, hire
additional personnel, and obtain additional regulatory approvals, processes
which could take up to several years and require additional expenditures.
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Instruments
KeraVision has developed proprietary surgical instruments to be used for the
insertion of Intacs. These stainless steel and titanium instruments include a
marking instrument, a centering guide and stromal separators. KeraVision's
instruments have been designed to standardize the Intacs placement procedure
and reduce the variability associated with differing levels of surgical skill
by, among other things, showing the surgeon where to make the corneal incision
and aiding the surgeon in placing Intacs at the desired depth. The purchase of
KeraVision's instruments represents a relatively small capital investment
compared to the cost of equipment required for surgeons performing LASIK or PRK
procedures.
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