Exhibit 10.18

                                 Lease Agreement


<PAGE>


                                 LEASE AGREEMENT

THIS INDENTURE OF LEASE,  made on the 22nd day of August 1997, by STOCKING WORKS
ASSOCIATES,  a Pennsylvania  Limited Partnership with Offices at 301 South State
Street,  Newtown,  Pennsylvania  (hereinafter  called "Landlord") and Collagenex
Inc., A Delaware  Corporation with offices also at The Stocking Works, 301 South
State Street, Newtown, Pennsylvania (hereinafter called "Tenant"),

                                   WITNESSETH:

LEASED  PREMISES : Landlord hereby leases to Tenant and Tenant hereby rents from
Landlord  that  portion  of  the  building  premises   (hereinafter  called  the
"premises",  "leased premises" or "demised  premises") more fully described as a
portion  of those  offices  as shown on  Exhibit  A  attached  hereto  which are
currently  occupied  by Ashmead  Associates  and which are  located on the first
floor  of the  south  wing of 301  South  State  Street  which  is a part of The
Stocking  Works  complex (a three  building - two existing and one to be built -
compound situated on approximately  four and one half acres) closest to Sterling
Street  together with the right to the non exclusive  use, in common with others
entitled to use same, of all such  automobile  parking areas,  driveways,  malls
courts,  corridors and footways,  loading facilities and other facilities as may
be designated by Landlord,  subject  however to the terms and conditions of this
Indenture of Lease and the General Lease  Provisions  attached hereto and made a
part hereof (hereinafter collectively referred to as "Lease"), and to reasonable
rules and  regulations  for the use thereof  prescribed from time to time by the
Landlord.

LENGTH OF TERM : This lease shall  commence on the date of possession and expire
one (1) year from the Rental Commencement Date set forth below or, provided that
the Rental Commencement Date falls on a day other than the first day of a month,
one  year  plus  that  period  between  the  odd day on  which  the  first  year
anniversary  of the  Rental  Commencement  Date  falls  and the first day of the
following month.

POSSESSION : For purposes of this lease,  possession  is defined as September 1,
1997


                                       I

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RENTAL  COMMENCEMENT  DATE :  Minimum  Rent and the  Tenant's  Share  of  Taxes,
Insurance and Operating  Costs, as set forth below,  will become due and payable
on the date of  Possession  of the premises as set forth above,  said date being
referred to herein as the "Rental Commencement Date".

MINIMUM  RENT : The fixed  minimum  rent for each year of the term of this lease
shall be THIRTEEN THOUSAND FIVE HUNDRED DOLLARS  ($13,500.00)  payable in twelve
(12) equal monthly installments due on or before the first day of each month, in
advance,  at the  office  of the  Landlord  or at  such  other  place  as may be
designated by Landlord from time to time, without any prior demand therefore and
without any deduction or setoff  whatsoever.  In the event that the term of this
lease shall commence on a day other than the first day of a month,  Tenant shall
pay fixed minimum rent in advance for the  fractional  month on a per diem basis
calculated on the basis of a thirty (30) day month.

TENANT'S  MINIMUM SHARE OF TAXES,  INSURANCE  AND OPERATING  COSTS : During each
year of this lease, or part thereof,  Tenant shall pay to Landlord as a minimum,
that amount of the Landlord's  property taxes,  insurance and operating costs as
described in Section 4.02 of the attached  General Lease  Provisions  reasonably
allocated  to the  building in which the leased  premises  is located.  Tenant's
share of said  taxes,  insurance  and  operating  costs  will be  calculated  by
multiplying the total of said operating costs allocated to the building in which
the leased  premises  are located by the  percentage  arrived at by dividing the
square  footage  of the  leased  premises  by the total  square  footage  of the
building  in which the  leased  premises  is  located.  During the first year of
occupancy it is estimated that this  calculation will result in an expense equal
to FIVE  THOUSAND  FOUR HUNDRED  DOLLARS  ($5,400.00)  which shall be payable by
Tenant in equal monthly installments together with Tenant's minimum rent.

USE OF  PREMISES  :  Tenant  shall  use  the  leased  premises,  subject  to the
provisions of the Lease Agreement attached hereto,  solely as an office.  Tenant
will be responsible  for obtaining all occupancy,  use, and other like approvals
necessitated by Tenant's use of the Premises.

SECURITY DEPOSIT : None.


                                       II

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CONSTRUCTION : Tenant  acknowledges  that after the date it takes  possession of
the Premises construction will be required within the Premises in order to bring
the space up to regulatory  building codes in conjunction  with the expansion of
PaineWebber's  offices into the offices  adjoining the Premises.  While Landlord
will make every  effort to keep  disruptions  to a minimum  during the time said
construction  takes place Tenant agrees to allow said construction to take place
and will not hinder nor delay said construction.

LEASE DOCUMENTS : In addition to this Lease Agreement,  this Lease shall for all
purposes  be deemed to  include  as though  set out in full  within  this  Lease
Agreement the following attached document:  General Lease Provisions  consisting
of forty four (44) pages and one exhibit.

IN WITNESS  WHEREOF,  the parties hereto,  intending to be legally bound hereby,
have hereunto set their hands and seals the day and year first above written.


                                     TENANT


WITNESS  /s/ Carol Nielsen                  By  /s/ Nancy Broadbent
        -------------------------              ---------------------------------


WITNESS                                     Attest
        -------------------------                  -----------------------------


                                            STOCKING WORKS ASSOCIATES


                                            By  /s/ Kenneth S. Sweet, Jr.
                                               ---------------------------------
                                                          Partner


                                            Attest
                                                   -----------------------------


                                      III