SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934, FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.

                             Commission File Number
                                     0-28308

                        CollaGenex Pharmaceuticals, Inc.
             (Exact name of registrant as specified in its charter)

              Delaware                                      52-1758016
      (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                     Identification No.)

301 South State Street, Newtown, PA                          18940
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:  (215) 579-7388



     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes   X        No       
    ----           ---       



     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock as of June 30, 1997:

     Common Stock $0.01 par value     8,543,579




<PAGE>


                        COLLAGENEX PHARMACEUTICALS, INC.
                                 AND SUBSIDIARY
                        (A Development Stage Enterprise)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        December 31,1996 and June 30,1997




<TABLE>
<CAPTION>

                                                          12/31/96     6/30/97
                                                          --------     -------
                                                                     (unaudited)
                                                          (in thousands except
                                                             share amounts)
<S>                                                       <C>          <C>     
ASSETS

Current Assets:
  Cash and cash equivalents ..........................    $  9,848     $ 14,673
  Short-term investments .............................       8,367       12,603
  Interest receivable ................................          66          163
  Prepaid expenses ...................................          88          112
                                                          --------     --------
         Total current assets ........................      18,369       27,551
Equipment, net .......................................          57           84
Other assets .........................................          11           11
                                                          --------     --------
         Total assets ................................    $ 18,437     $ 27,646
                                                          ========     ========


LIABILITIES and STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable ....................................   $     46     $    467
  Accrued expenses ....................................        799        1,435
                                                          --------     --------
         Total current liabilities ....................        845        1,902
                                                          --------     --------

Stockholders' equity:
  Preferred stock, $0.01 par value; 5,000,000 shares
   authorized; none issued and outstanding ...........          --           --
  Common stock, $0.01 par value; 25,000,000 shares
   authorized; 7,535,533 and 8,543,579 shares issued
   and outstanding in 1996 and 1997, respectively ...           75           85
  Additional paid-in capital .........................      35,552       47,152
  Deferred compensation ..............................        (296)        (247)
  Deficit accumulated during the development stage....     (17,739)     (21,246)
                                                          --------      -------
         Stockholders' equity ........................      17,592       25,744
                                                          --------     --------
Commitments
         Total liabilities and stockholders' equity ....  $ 18,437     $ 27,646
                                                          ========     ========
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements.



                                       2
<PAGE>


<TABLE>
<CAPTION>

                                                  COLLAGENEX PHARMACEUTICALS, INC.
                                                           AND SUBSIDIARY
                                                  (A Development Stage Enterprise)

                                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   For the Three Months and Six Months Ended June 30,1996 and 1997
                                and for the period from January 10, 1992 (inception) to June 30,1997
                                                             (Unaudited)


                                           Three Months Ended            Six Months Ended
                                                 June 30,                      June 30,              For the Period from
                                        --------------------------    --------------------------     1/10/92 (inception)
                                             1996           1997         1996            1997            to 6/30/97     
                                             ----           ----         ----            ----       ------------------- 
 
                                                               (in thousands, except share amounts)
<S>                                     <C>            <C>            <C>            <C>                 <C>      
Revenues:
  Licensing Fees ...................... $        --    $       300    $        --    $       300         $     700
Operating expenses incurred in the
  development stage:
  Research and development ............       1,301          1,379          2,277          2,072            15,116
  Selling, general and administrative..         535          1,385            953          2,353             8,167
                                        -----------    -----------    -----------    -----------         ---------
         Total operating expenses .....       1,836          2,764          3,230          4,425            23,283
Other income (expense)
  Interest income .....................          48            382            109            618             1,481
  Other expense .......................          --             --             --             --              (144)
                                        -----------    -----------    -----------    -----------         --------- 

Net loss .............................. $    (1,788)   $    (2,082)   $    (3,121)   $    (3,507)        $ (21,246)
                                        ===========    ===========    ===========    ===========         ========= 

Accretion of undeclared dividends
attributable to mandatorily redeem-
able convertible preferred stock ...... $       336    $        --    $       720    $        --         $   2,597
                                        ===========    ===========    ===========    ===========         =========

Net loss allocable to common
  stockholders ........................ $    (2,124)   $    (2,082)   $    (3,841)   $    (3,507)        $ (23,843)
                                        ===========    ===========    ===========    ===========         ========= 

Proforma net loss per share ........... $     (0.31)   $     (0.24)   $     (0.56)   $     (0.44)
                                        ===========    ===========    ===========    =========== 
Shares used in computing
  proforma net loss per share .........   5,734,061      8,521,601      5,623,333      8,030,087
                                        ===========    ===========    ===========    ===========


                          See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>



                                       3
<PAGE>

<TABLE>
<CAPTION>

                             COLLAGENEX PHARMACEUTICALS, INC.
                                      AND SUBSIDIARY
                             (A Development Stage Enterprise)

                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      For the Six Months Ended June 30, 1996 and 1997
            and for the period from January 10, 1992 (inception) to June 30,1997
                                        (Unaudited)



                                                      Six Months Ended
                                                          June 30,              For the Period
                                                      -----------------          from 1/10/92  
                                                      1996         1997      (inception) to 6/30/97
                                                      ----         ----      ---------------------
                                                                  (in thousands)
<S>                                                <C>          <C>               <C>      

Cash flows from operating activities:
  Net loss ....................................... $ (3,121)    $ (3,507)         $(21,246)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Non-cash research and development expense ....       --           --               514
    Non-cash compensation expense ................      101           49               221
    Non-cash consulting expense ..................       --           --                15
    Depreciation and amortization expense ........        2           16                39
  Change in assets and liabilities:
    Increase in accounts and interest receivable..       --          (97)             (163)
    Increase in prepaid expenses .................      (13)         (24)             (112)
    Increase in other assets .....................       (1)          --               (11)
    Increase in accounts payable .................      290          421               467
    Increase in accrued expenses .................      275          636             1,435
                                                   --------     --------          --------
Net cash used in operating activities ............   (2,467)      (2,506)          (18,841)
                                                   --------     --------          -------- 

Cash flows from investing activities:
  Organizational costs ...........................       --           --                (5)
  Capital expenditures ...........................      (28)         (43)             (118)
  Purchase of short-term investments (available
     for sale) ...................................       --      (15,587)          (27,877)
  Proceeds from the sale of short-term
    investments (available for sale) .............       --       11,351            15,274
                                                   --------     --------          --------
Net cash used in investing activities ............      (28)      (4,279)          (12,726)
                                                   --------     --------          -------- 

Cash flows from financing activities:
  Proceeds from issuance of preferred stock ......       --           --            13,508
  Proceeds from issuance of common stock .........   18,053       11,610            29,707
  Proceeds from issuance of promissory notes .....       --           --             3,150
Repayment of promissory note .....................       --           --              (125)
                                                   --------     --------          -------- 
Net cash provided by financing activities ........   18,053       11,610            46,240
                                                   --------     --------          --------

Net increase in cash and cash equivalents ........   15,558        4,825            14,673
Cash and cash equivalents at beginning of period .    5,807        9,848                 0
                                                   --------     --------          --------
Cash and cash equivalents at end of period ....... $ 21,365     $ 14,673          $ 14,673
                                                   ========     ========          ========



                                       4
<PAGE>

(Continued from preceding page)


                                                      Six Months Ended
                                                          June 30,              For the Period
                                                      -----------------          from 1/10/92  
                                                      1996         1997      (inception) to 6/30/97
                                                      ----         ----      ---------------------
                                                                  (in thousands)

Supplemental disclosure of cash flows information:
  Cash paid for interest ......................... $    --      $     --          $     23
                                                   =======      ========          ========
Supplemental schedule of non-cash financing
  activities:
  Conversion of mandatorily redeemable
   convertible preferred stock to common stock ... $19,628      $     --          $ 19,628
                                                   =======      ========          ========
  Accretion of undeclared dividends attributable
   to mandatorily redeemable convertible
   preferred stock ............................... $    --      $     --          $  2,597
                                                   =======      ========          ========
  Conversion of promissory notes plus accrued
   interest to preferred stock ................... $    --      $     --          $  2,903
                                                   =======      ========          ========
  Deferred compensation .......................... $   381      $     --          $    469
                                                   =======      ========          ========
  Preferred stock issued in connection with
   technology license agreements ................. $    --      $     --          $    498
                                                   =======      ========          ========


     See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>



                                       5
<PAGE>

                        COLLAGENEX PHARMACEUTICALS, INC.
                                 AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1996 and 1997
                                   (Unaudited)

(1) Basis of Presentation

     The unaudited condensed  consolidated  financial statements included herein
have been prepared by the Company,  pursuant to the rules and regulations of the
Securities  and Exchange  Commission and in accordance  with generally  accepted
accounting  principles.  Certain information and footnote  disclosures  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations.  These unaudited financial statements should be read in conjunction
with the Company's 1996 audited financial statements and footnotes.

     The accompanying  unaudited  consolidated  financial statements include the
results   of  the   Company   and  its   wholly-owned   subsidiary   (CollaGenex
International,  Ltd.).  All  intercompany  accounts and  transactions  have been
eliminated.

     In the opinion of the  Company's  management,  the  accompanying  unaudited
condensed  financial  statements  have been  prepared  on a basis  substantially
consistent with the audited financial statements and contain adjustments, all of
which  are of a  normal  recurring  nature,  necessary  to  present  fairly  its
financial  position as of June 30, 1997, its results of operations for the three
and six months ended June 30, 1996 and 1997 and for the period  January 10, 1992
(inception)  to June 30, 1997,  and its cash flows for the six months ended June
30, 1996 and 1997 and for the period  January 10, 1992  (inception)  to June 30,
1997. Interim reports are not necessarily  indicative of results anticipated for
the full fiscal year.

(2) Completion of Follow-on Offering of Common Stock

     On April 8, 1997, the Company  completed a follow-on  offering of 1,000,000
shares of its common stock at a price of $12.50 per share. The net proceeds from
the offering after underwriting fees and other expenses were $11.6 million.

(3) Line of Credit

     On June 26, 1997, the Company entered into a credit arrangement  consisting
of a $5,000,000 line of credit (the "LOC") to support the future working capital
needs of the Company.  The LOC will be unsecured as long as the  Company's  cash
and investment balances maintained with the lender or an affiliate of the lender
equals  or  exceeds  $10,000,000.  At the  Company's  option,  the LOC will bear
interest at either the prime rate charged by the lender or LIBOR plus 2.15%. The
LOC is terminable by the lender at any time.

     No balance was outstanding under the LOC at June 30, 1997.



                                       6
<PAGE>

(4) Licensing Fee

     During 1996, the Company  executed a licensing  agreement  with  Boehringer
Mannheim  Italia ("BMI")  pursuant to which BMI will  distribute and manufacture
Periostat(R)  in Italy.  The  agreement  provided  for BMI to pay the  Company a
license  fee upon  signing,  additional  fees  upon the  achievement  of  future
milestones and royalties upon future sales of Periostat in Italy, San Marino and
The Vatican  City.  During the second  quarter of 1997,  the Company  received a
nonrefundable  $300,000  licensing fee related to the  achievement  of the first
milestone under the agreement.
 
(5) Earnings Per Share

     In February 1997, the Financial Accounting Standards Board issued statement
of Financial  Accounting Standards No. 128 Earnings Per Share ("Statement 128").
Statement 128 replaces the  presentation  of primary  earnings per share ("EPS")
and fully  diluted EPS with basic EPS and diluted EPS,  respectively.  Statement
128 is effective for both interim and annual  periods  ending after December 15,
1997 and once  implemented  will  require  restatement  of all prior EPS data to
conform with Statement 128. The Company  believes that this restatement will not
be material.



                                       7
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview

     The  Company  began  operations  in  January  1992  and is  engaged  in the
development and  commercialization of innovative,  proprietary medical therapies
for the treatment of  periodontal  disease and other dental  pathologies.  Since
inception, the Company has had no revenues from product sales and has funded its
operations primarily from the proceeds of public and private offerings of equity
securities.  Substantially  all of the Company's  expenditures to date have been
for  pharmaceutical  development,  prelaunch sales and marketing  activities and
general and administrative expenses.

     Since  inception,  the  Company  has  operated  with a  minimal  number  of
employees.  Substantially all pharmaceutical  development activities,  including
clinical trials, have been contracted to independent contract research and other
organizations.  The Company anticipates that it will significantly  increase the
number  of its  employees  over the next  several  years,  primarily  to build a
commercial  infrastructure  in  anticipation  of regulatory  approval and market
commercialization of Periostat(R).

     The  Company  has  incurred  losses  each year since  inception  and had an
accumulated  deficit of $21.2 million at June 30, 1997.  The Company  expects to
continue  to  incur  losses  in the  foreseeable  future  from  expenditures  on
marketing, drug development, manufacturing and administrative activities.
 
     The Company does not expect to generate any material revenues from sales of
its own products in 1997. No assurance can be given that such product sales will
be achieved  in the  future.  Successful  future  operations  will depend on the
Company's ability to develop,  obtain regulatory  approval for and commercialize
its products.

     Statements  contained or incorporated by reference in this Quarterly Report
on Form  10-Q  that  are not  based  on  historical  fact  are  "forward-looking
statements" within the meaning of Section 21E of the Securities  Exchange Act of
1934,  as amended.  Forward-looking  statements  may be identified by the use of
forward-looking  terminology  such  as  "may", "will",  "expect",   "estimate",
"anticipate",  "continue",  or similar  terms,  variations  of such terms or the
negative of those terms. This Form 10-Q contains forward-looking statements that
involve  risks  and   uncertainties.   The  Company's   business  of  developing
pharmaceutical  products is subject to a number of significant risks,  including
risks inherent in research and development activities and in conducting business
in a highly regulated environment. The success of the Company depends to a large
degree upon  obtaining FDA and foreign  regulatory  approval to market  products
currently under development. There can be no assurance that any of the Company s
product candidates will be approved by any regulatory authority for marketing in
any  jurisdiction  or, if approved,  that any such products will be successfully
commercialized  by  the  Company.   The  Company's  actual  results  may  differ
materially  from  the  results  discussed  in  the  forward-looking   statements
contained herein.



                                       8
<PAGE>

Results of Operations
 
     From  inception  through  June 30, 1997,  the Company had no revenues  from
product sales.  Operating expenses consist of research and development expenses,
prelaunch sales and marketing and general and administrative expenses.  Research
and development  expenses consist  primarily of funds paid to contract  research
organizations  for the provision of services and materials for drug  development
and clinical trials.  General and  administrative  expenses consist primarily of
personnel  salaries and benefits,  contract selling  expenses,  professional and
consulting fees, facilities and general office expenses. The Company anticipates
that selling,  general and administrative expenses will increase during the next
several years due to the expansion of its commercial  infrastructure,  primarily
in sales, marketing and finance.

     During 1996, the Company  executed a licensing  agreement  with  Boehringer
Mannheim  Italia ("BMI")  pursuant to which BMI will  distribute and manufacture
Periostat(R)  in Italy.  The Company  earned  $300,000 in licensing  fee revenue
during the three month period ending June 30, 1997.  This revenue  represented a
milestone  payment pursuant to the agreement.  (See Note 4 of Notes to Condensed
Consolidated Financial Statements.)

     Research and development expenses decreased $205,000,  or 9%, but increased
$78,000, or 6%, respectively, for the six months and three months ended June 30,
1997,  over the comparable year earlier  periods.  The decrease in the six month
period was due to lower contract costs  associated with the New Drug Application
("NDA") for  Periostat(R),  which was  submitted to the FDA in August 1996.  The
increase  in  the  three  month  period  resulted  from  costs  associated  with
validating  manufacturing  processes  for  Periostat(R).  Selling,  general  and
administrative  expenses increased  $1,400,000,  or 147%, and $850,000, or 159%,
respectively,  during  these six and three  month  periods  due to the hiring of
additional staff in finance, commercial development and sales and marketing, the
initiation  of certain  prelaunch  sales and  marketing  activities,  and higher
insurance and professional fees associated with becoming a public company.

     Interest  income for the six month  period  ended June 30,  1997  increased
$509,000 from the comparable  period in 1996 due to higher  interest income from
the invested net proceeds of the Company's  initial public offering in June 1996
and its follow-on common stock offering in April 1997.


Liquidity and Capital Resources

     On June 20,  1996,  the Company  completed  an initial  public  offering of
2,000,000 shares of common stock at a price of $10.00 per share, which generated
net proceeds to the Company of  approximately  $18.0 million after  underwriting
fees and related expenses. An additional $11.6 million, net of underwriting fees
and  expenses,  was raised as a result of the  Company's  follow-on  offering of
1,000,000 shares of common stock completed on April 8, 1997 at a price of $12.50
per share (See Note 2 of Notes to Condensed  Consolidated Financial Statements).
At June 30,  1997,  the  Company  had  cash,  cash  equivalents  and  short-term
investments of approximately $27.3 million. This was an increase of $9.1 million



                                       9
<PAGE>

from the $18.2  million  balance  at  December  31,  1996.  In  accordance  with
investment  guidelines  approved  by the  Company's  Board  of  Directors,  cash
balances in excess of those  required to fund  operations  have been invested in
short-term U.S. Treasury securities and commercial paper with a credit rating no
lower than A1/P1.  The  Company's  working  capital of $25.6 million at June 30,
1997  reflected an increase of $8.1 million from December 31, 1996 due primarily
to the proceeds  received from the  follow-on  offering,  less normal  operating
expenses incurred during the six months ended June 30,1997.
 
     The  Company  had no debt  outstanding  (other  than  accounts  payable and
accrued  expenses)  at  June  30,  1997.  The  Company  had  no  capital  leases
outstanding  at June 30,  1997.  On June 26,  1997,  the Company  entered into a
credit  arrangement  consisting  of a  $5,000,000  line of credit (the "LOC") to
support  the  future  working  capital  needs  of the  Company.  The LOC will be
unsecured as long as the Company's cash and investment  balances maintained with
the lender or an affiliate of the lender equals or exceeds  $10,000,000.  At the
Company's option, the LOC will bear interest at either the prime rate charged by
the lender or LIBOR plus 2.15%. The LOC is terminable by the lender at any time.
No balance was outstanding under the LOC at June 30, 1997.

     The  Company   anticipates  that  its  existing  working  capital  will  be
sufficient to fund the Company's operations through at least 1998. The Company's
future capital  requirements and the adequacy of its available funds will depend
on many factors,  including the timing of FDA approval, if any, of the Company's
NDA for Periostat(R),  such NDA having been submitted to the FDA in August 1996,
the size and scope of the  Company's  sales and marketing  effort,  the terms of
agreements  entered  into with  corporate  partners,  if any, and the results of
research  and  development  and  pre-clinical  and  clinical  studies  for other
applications of the Company's core technology. Over the long term, the Company's
liquidity is dependent on market acceptance of its products and technology.


                           PART II. OTHER INFORMATION


Item 2. Changes in Securities.

     The following  information relates to all securities of the Company sold by
the  Company  within  the past  quarter  which  were not  registered  under  the
securities laws at the time of grant, issuance and/or sale:

     1.   The Company has, during the quarter, granted stock options pursuant to
          its 1996  Stock  Plan  which,  at the time of grant,  had not yet been
          registered  under the securities  laws. The following table sets forth
          certain information regarding such grants during the quarter:

<TABLE>
<CAPTION>

                   Number
                 of shares                      Exercise price
                 ---------                      --------------

<S>                <C>                              <C>   
                   25,000                           $12.25
</TABLE>



                                       10
<PAGE>

     No underwriter  was employed by the Company in connection with the issuance
of the securities described above. The Company believes that the issuance of all
of the  foregoing  securities  were exempt from  registration  under  either (i)
Section  4(2)  of  the  Securities  Act of  1933,  as  amended  (the  "Act")  as
transactions not involving any public  offering,  or (ii) Rule 701 under the Act
as transactions made pursuant to a written compensatory benefit plan or pursuant
to a written  contract  relating to  compensation.  All  recipients had adequate
access to information about the Company.

     On July 14, 1997,  the Company filed a  Registration  Statement on Form S-8
with respect to the  Company's  1992 Stock Option Plan,  as amended,  1996 Stock
Plan and 1996 Non-Employee Director Stock Option Plan, as amended.

Item 4. Submission of Matters to a Vote of Security Holders.

     The Annual meeting of  Shareholders of the Company (the "Meeting") was held
on May 8, 1997.

     There  were  present  at the  Meeting  in person  or by proxy  shareholders
holding an  aggregate of 6,432,790  shares of Common  Stock.  The results of the
vote taken at such Meeting  with  respect to each  nominee for director  were as
follows:

<TABLE>
<CAPTION>
Common Stock Nominees                      For                Withheld
---------------------                      ---                --------
<S>                                 <C>                     <C>         
Helmer P.K. Agersborg, Ph.D.        6,429,740 Shares        3,050 Shares
Brian M. Gallagher, Ph.D.           6,429,740 Shares        3,050 Shares
Peter R. Barnett, D.M.D.            6,429,740 Shares        3,050 Shares
Robert J. Easton                    6,429,740 Shares        3,050 Shares
James E. Daverman                   6,429,740 Shares        3,050 Shares
Stephen W. Ritterbush, Ph.D.        6,429,740 Shares        3,050 Shares
Pieter J. Schiller                  6,429,740 Shares        3,050 Shares
Terence E. Winters, Ph.D.           6,429,740 Shares        3,050 Shares
</TABLE>

     In  addition,  a vote of the  shareholders  was taken at the Meeting on the
proposal to ratify the  appointment of KPMG Peat Marwick LLP as the  independent
auditors of the Company for the fiscal year ending  December  31,  1997.  Of the
shares present at the meeting in person or by proxy,  6,428,790 shares of Common
Stock were voted in favor of such  proposal,  2,500  shares of Common Stock were
voted  against such  proposal and 1,500  shares of Common Stock  abstained  from
voting.

     In  addition,  a vote of the  shareholders  was taken at the Meeting on the
proposal  to approve  certain  amendments  to the  Company's  1996  Non-Employee
Director Stock Option Plan. Of the shares present at the meeting in person or by
proxy,  5,573,269  shares of Common Stock were voted in favor of such  proposal,
563,075  shares of Common  Stock were voted  against  such  proposal  and 85,898
shares of Common Stock abstained from voting.



                                       11
<PAGE>

Item 5. Other Information.

Follow-on Offering of Common Stock
----------------------------------

     On April 8, 1997, the Company  completed a follow-on  offering of 1,000,000
shares of its common stock at a price of $12.50 per share. The net proceeds from
the offering after underwriting fees and other expenses were $11.6 million.

Line of Credit
--------------

     On June 26, 1997, the Company entered into a credit arrangement  consisting
of a $5,000,000 line of credit (the "LOC") to support the future working capital
needs of the Company.  The LOC will be unsecured as long as the  Company's  cash
and investment balances maintained with the lender or an affiliate of the lender
equals  or  exceeds  $10,000,000.  At the  Company's  option,  the LOC will bear
interest at either the prime rate charged by the lender or LIBOR plus 2.15%. The
LOC is terminable by the lender at any time.  No balance was  outstanding  under
the LOC at June 30, 1997.

Product Launches
----------------

     On May 12,  1997,  the  Company  announced  that  it  signed  an  exclusive
marketing agreement with the Parke-Davis  Division of the Warner Lambert Company
to promote  Ponstel(R)(Mefenamic  Acid) to the  professional  dental  community.
Ponstel(R) is a nonsteriodal  anti-inflammatory drug indicated for the relief of
moderate  pain. As of June 30, 1997,  the Company had not recognized any revenue
from its marketing of Ponstel(R).

     On June  17,  1997,  the  Company  announced  that it  signed  a  marketing
agreement with Advanced Clincal Technologies, Inc. pursuant to which the Company
will promote  Periocheck(R) to the professional dental community.  Periocheck(R)
is an FDA-approved  test for monitoring the  periodontal  disease process in the
dentist's  office.  As of June 30,  1997,  the  Company had not  recognized  any
revenue from its marketing of Periocheck(R).

Executive Officers
------------------

     On June 9, 1997,  the Company  hired David F.  Pfeiffer as Vice  President,
Marketing,  and on June 16, 1997,  the Company  hired  Douglas C. Gehrig as Vice
President, Sales.

Extension of Collaboration Agreement with National Cancer Institute
-------------------------------------------------------------------

     On June 30, 1997,  the Company and the National  Cancer  Institute  ("NCI")
formally extended its collaboration  with the Company.  As a result, NCI and the
Company will  collaborate  in the clinical  development  of one of the Company's
compounds,  Metastat(TM),  for the prevention of cancer metastases.  The Company
expects  that  Metastat(TM)  will  be  the  first  of  a  new  class  of  matrix
metalloproteinase  (MMP) inhibitors to reach clinical development.  Metastat(TM)
is a chemically  modified  tetracycline  that has shown promise in  pre-clinical
studies in a variety of human tumor types as an  inhibitor  of tumor  growth and
metastases.



                                       12
<PAGE>

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits
 
    10.1 - Letter  Agreement  dated June 24, 1997 relating to  CoreStates  Bank
           N.A. line of credit, together with Master Commercial Promissory Note.

    10.2 - Consulting and Contract Service  Agreement dated February 1, 1997 by
            and between the Company and Innovative Customer Solutions, Ltd.

    27   - Financial Data Schedule

(b) Reports on Form 8-K.

    No reports on Form 8-K were filed  during the quarter for which this report
on Form 10-Q is filed.



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<PAGE>

                                   SIGNATURES


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                   CollaGenex Pharmaceuticals, Inc.




Date: July 31, 1997                By: /s/ Brian M. Gallagher, Ph.D
                                       ----------------------------
                                           Brian M. Gallagher, Ph.D.
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)




Date: July 31, 1997                By: /s/ Nancy C. Broadbent 
                                       ----------------------
                                           Nancy C. Broadbent
                                           Chief Financial Officer (Principal
                                           Financial and Accounting Officer)


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