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<DESCRIPTION>KeraVision Conference Call, 10/19/1999
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10/19/1999 Kera Conference Call
Tom Loarie (chmn ceo)
Tremendous consumer interest.
$4.2 mln sales from training, kit sales, reorders. Just over 200 doctors trained in quarter,
expect same rate  through end of year.  Continuing to make significant investmests
in sales and marketing for the US launch. As a result, our net loss for the quarter was $5 mln.
Cash balance $58mln. Intacs maintain the natural shape of the cornea. They are exchangeable and
removable, much like prescription lenses. They have gone through the most stringent testing of 
any ophthalmic product: 8 years, 1262 eyes prior to FDA approval. Probably the most well 
characterized technology in opthamology today with regard to safety and efficacy issues. Approved
for what are called "mild" myopes, the most nearsighted of who can't see beyond end of their hand.
This is the largest and fastest growing segment in vision correction surgery.   
With Intacs today, we can treat 50% of all these myopes, or 20 million Americans.Including
the population being treated in Phase III trials, Intacs will cover over 90% of the market.

Procedure rate rising. "Our initial patient outcomes are duplicating the high 20/20 success 
rate we achieved during trials." Will be releasing first commercial results on outcomes at
AAO (American Academy of Ophthamology) meeting next week.  Points to strength and effectiveness
of training program.

With increasing competition, the professional market is becoming segmented, with 7% of surgeons
doing 31% of all LASIK procedures. These doctors are operating at full capacity.  Company's 
focus is on doctors with capacity, who want to differentiate themselves.  This is where KeraVision
is finding initial success. Competition among surgeons is increasing.  Surgeons need to
differentiate themselves .  Intacs provide a way for them to do so.

Many are surgeons pre-treating presbyopia [the difficulty with near vision which sets in
around the age of 40] with LASIK by undercorrecting one eye, leaving patients with 
less-than-perfect vision. A better solution is doing one eye with Intacs - optimal today,
flexibility of treatment options tomorrow.

Some surgeons, in an attempt to differentiate themselves, offer a combination of LASIK and
Intacs.  This preserves not all but some of the options for treating reading vision in the
future. LASIK is (usually) done in the patient's dominant eye, and Intacs in the non-dominant
eye to preserve options.  This was demonstrated in the CNBC piece.  This is and important
consideration as the average age of refractive surgery patients is 38-41.

Doctors advertising Intacs report a significant increase in inquiries about refractive surgery,
allowing them to build not only their Intacs procedure rate, but their entire refractive
surgery practice.  One group intensively advertising Intacs saw inquiries go up 300% each 
month for three months as they promoted Intacs. Intacs offer the possibility of practice-
building in a highly competitive marketplace.

KeraVision has been conducting surveys of intacs wearers.  53% who chose Intacs chose them within
6 months of consideration, vs. 12-16 months for other refractive surgery vision alternatives
(this has been stated publicly).  Another study found that if LASIK were offered for free,
only 50% would choose to have the procedure.  Intacs are designed for the risk averse, and
don't compete with LASIK directly; rather, they open up the market a for whole new segment
of the population.

At the ISRS (International Society of Refractive Surgeons) meeting (a pre-meeting to the AAO),
there will be several important presentations. KeraVision has long talked about the quality of
vision one gets by staying outside the central optical zone. This attribute has not been fully
appreciated.  There will be information presented at the meeting from one or more laser 
companies who are moving away from current treatment for shaping the cornea to custom corneal
ablation - natural shaping. At the same meeting, KeraVision will show that the current intacs
procedure mirrors what laser companies hope to achieve in the future.

There has been a change in the mix of training in Q3.  Once a primary doctor who has purchased 
Intacs instruments has been trained and proctored, more and more associates, more private doctors
within a practice, more doctors within a practice provider group request training.  Training 
revenues are lower because these doctors are not required to purchase a "starter kit," to
buy instruments and Intacs.  KeraVision will continue to accommodate these surgeons who want
to train other surgeons in their groups.

Four building blocks in KeraVision's launch plan:
1) Training 2) Proctoring (in doctor's office as he's doing his first procedures, to make sure 
he achieves same results as in trials - achieving great success) 3) Practice Integration (train
entire office staff how to integrate practice of Intacs in total practice)  4)  once clinical 
foundation has been laid down, in the future, KeraVision will work with doctors on local 
marketing; when there are enough surgeons, on regional marketing; and the company will consider
national marketing if circumstances merit.

Training: Certification phase, one day session at a KERA site or academic institution.  
Proctoring: A trained specialist shows up at his office the day before a doctor does his 
first procedure.  The company require doctors to do a minimum of 5 procedures on his first 
day.  The specialist reviews patient records to make sure they're the right for Intacs,
and insures the quality of procedures; he critiques the doctor's first day results, and 
works with the office staff on what they need to know on the post-operative course.

During Q4, the main focus will be on rolling out several of the company's practice integration 
models, which we've been working on at a number of practices during last couple of months in a 
very structured way.  KeraVision will roll them out in Q4 in a small number of practices to 
test local market conditions and needs.  The company will replicate the models on national
basis in the year 2000.

Introduction of John Galantic (pres and coo) &  Steve Henderson (vp of sales)

The company is still in early stages of building its business, and wants investors to focus 
on the aspects of building the business. The focus in the 4Q will be on model application. As
such KeraVision is not yet prepared to disclose procedure numbers, kit sales,  or reorder rates, 
but will in the future.

Q & A [Pardon me if I've spelled some of the names incorrectly]

David Dirkelson (Dain Rauscher)
Q: How are success rates for commercial implants compared to clinical trials, in terms of
outcomes, complication rates, explants?
A: The data to be presented next week will show looking at 20/20 the percentages of outcomes
   are slightly higher by 1 or 2%; nothing other than clinicals in explants -  4.3% removal
   rate, half due to exchanges (there are some taking place)
Q: In terms of practices doing well, what are other factors besides being middle volume?
   (geography? marketing?)
John Galantic A: The middle of the market is better at present, due to full capacity of high-
   volume practices.  The middle market has more of an incentive to differentiate.
Tom Loarie: Some practices just don't want to cut into vision zone; the practice shown on CNBC -
   which is a fairly high-volume practice in its area -decided to integrate the presbyopia
   options for the aging population.   In Southern California practices are carving share by
   differentiating with intacs.
John Galantic: Some practices - which could include high volume practices - are driven by 
   optometrist recommendations, and the optometric community seems to be welcoming our 
   technology, product, and procedure, finding it quite attractive.
Q: What is the balance of U.S. and International sales?
A: The mix is unchanged. Our emphasis in Europe is on setting up a dealer network, in Canada,
   we're not putting much resources other than supporting 20 or so sites doing procedures.

Kenneth Boehringer (Prudential)
Q: On the revenue mix, cost of sales and manufacturing expenses went down in absolute terms 
   despite increases in sales.  Why is that?
Mark Fischer-Colbrie (cfo) A: We had been doing a lot of investment to build up manufacturing
   capacity, and now we've achieved that goal, so there's more efficiency in spending, lowering 
   the cost of sales.
Q: So will the percent of sales continue trending down or stay the same?
A: We expect to see it at this same level, changing as we see further increases in volume. 
   Our margin will change due to our fixed cost base.  We see the current percentage continuing
   forward.
Q: Could you discuss the difference in practice integration models?
John Galantic A: The point is to focus resources on making sure Intacs are fully integrated
   in a practice,  so doctors, receptionists, phone operators, refractive surgery coordinators
   know how to deal with patients. We're tailoring the model to different kinds of practices.
   With higher-volume practices which are already advertising, we're building   marketing
   partnerships with them. Some practices are driven by O.D. referrals, and we're
   adapting company resources to different models.
Tom Loarie: We've learned that as doctors advertise Intacs, when they bring in an Intacs patient,
   if they start talking about LASIK because they're out of the category, the patient feels
   the doctor may be switching them to something less desirable, and that doesn't sit well
   with patients. If a patient comes in pre-sold on LASIK and the doctor tries to convert
   them to Intacs, there's the same problem.  One part of practice integration is how to walk
   patients in our category through that process.  In the 4Q, our people in field aren't
   going to be knocking on doctors' doors asking them to sign up for our training program.
   Our people in the field will be working with practices for a week or two to increase 
   procedure rates.

Steve Lamas (Goldman, Sachs) 
Q:  Can you talk about reorder rates not only in the 3Q but into
   the 4Q, and give us a profile of surgeons who are reordering?
A: Reorders are increasing,  in all groups, with the bulk in the middle of the market.
Q: Can you give us a rough idea of the rate? And what is the mix of reorder/training revenue?
A: You can infer, because of the similar number of surgeons trained as in 2Q but a lower 
   revenue per surgeon, due to the mix shift, this implies reorder rates are growing.   
   We don't want to get into a daily scorecard.

George Bauer (Legg Mason) 
Q:  Will it be a general policy to offer the procedure on a refundable basis?
A: We haven't formalized anything yet.  Doctors removing Intacs are absorbing cost, and there
    are even situations where doctors have done LASIK after removal at the doctor's expense.
    This is a consumer market, and everyone wants a happy person at the end of the day.
    We've always talked about having a more formalized policy.
Q:  Interesting that some doctors are advertising that if you're not satisfied with Intacs
    they'll do LASIK for free.  Patients are happy with their Intacs, and not choosing
to have LASIK. Advertising the opposite wouldn't be possible, of course.

Matthew Campbell (Knott Partners)
Q:  Can you tell us when you think procedure sales will outpace kit sales?
MF-C A: I can't tell you today.  As we said, the initial revenue stream would be off of kit
    sales, and the appropriate to do thing is to build up the professional base
     to build procedure volume.

Michael McCormick  (Guilder Gagnen)
Q: What is the cost structure of your plan?
A: Going into 2nd Q,  we had planned on training only 200 doctors in the first nine months.
   The demand for training was so intense. A lack of resources delayed proctoring, practice 
   integration. Now that we have the resources, we're playing catch-up. We're closing the 
   gap on proctoring and starting serious work on practice integration.
Q: What is the cost of doctor training?
A: $2500 for the immediate training, plus proctoring and practice integration. All those 
   costs are rolled into the sale and marketing line.

Adam Rashid (Eminence Capital)
Q: Of the 448 doctors you've trained, how many don't do laser? Of those that do, how many do
   it at their own site, and how many are affiliated with a center?
A: Very few are not doing any. We have no data on ownership of lasers.  We don't have the
   data available yet, but we will.  The procedure has tremendous flexibility where they can
   do it.  There are profit margin advantages depending on the location where a doctor chooses
   to do the procedure.
Q: Are there other factors besides range preventing the use of Intacs?
A: If someone is pregnant, it can't be done. If they have eye disease, no.  There is no 
   condition on the thickness of the cornea. There is use in Europe by a growing number of
   doctors to treat keratoconus - a thinning of the cornea resulting in a  bulging of the 
   cornea requiring a corneal transplant - doctors are using Intacs to delay the need for
   a corneal transplant.  Work in Europe is underway on this.  There are no restrictions for
   thinness as there is for LASIK. There are similar restrictions on pupil size as for LASIK.

Hans Luft (MacDonald Investments)
Q: Are you planning any special programs at the AAO and ISRS meetings?
A: We'll be doing short wet-lab type courses to let doctors have a hands-on experience doing
   Intacs, on pig eyes, I believe, at both meetings. A number of papers will be presented.
Q: Will there be any special pricing to encourage reordering?
A: No. There will be a special program for doctors in training. JG: We'll have a new financing
   option to finance instrument purchases through Intacs purchases over time.
Q: With the proctoring of five patients - is it often one eye Intacs/one LASIK?
A: The bulk are two eyes Intacs. 
Q: On explants - complication rates look very low, but in the few cases where they are explanting,
   what results are surgeons having with LASIK after explantation?
A: That's not our data.  We don't know of one case of an untoward result of LASIK following
   Intacs.

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