SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 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 SEPTEMBER 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 September 30, 1997:

Common Stock $.01 par value                                   8,543,579


<PAGE>


<TABLE>


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


<CAPTION>

                                                            12/31/96    9/30/97
                                                            --------    -------
                                                                       (unaudited)
                                                            (in thousands except
                                                               share amounts)

<S>                                                         <C>         <C>     
ASSETS
Current assets:
   Cash and cash equivalents ............................   $  9,848    $ 14,101
   Short-term investments ...............................      8,367      10,646
   Interest receivable ..................................         66         166
   Prepaid expenses .....................................         88         132
                                                            --------    --------
        Total current assets ............................     18,369      25,045
Equipment, net ..........................................         57          94
Other assets ............................................         11          13
                                                            --------    --------
        Total assets ....................................   $ 18,437    $ 25,152
                                                            ========    ========

LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable .....................................   $     46    $    538
   Accrued expenses .....................................        799       1,868
                                                            --------    --------
        Total current liabilities .......................        845       2,406
                                                            --------    --------

Shareholders' 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      47,250
   Deferred compensation ................................       (296)       (344)
   Deficit accumulated during the development stage .....    (17,739)    (24,245)
                                                            --------    --------
        Stockholders' equity ............................     17,592      22,746
                                                            --------    --------
Commitments
        Total liabilities and stockholders' equity ......   $ 18,437    $ 25,152
                                                            ========    ========


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


                                       2
<PAGE>


<TABLE>


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

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


<CAPTION>

                                                                                                          For the
                                                                                                        Period from
                                                  Three Months Ended          Nine Months Ended           1/10/92
                                                     September 30,              September 30,            (inception)
                                            --------------------------    --------------------------
                                                1996          1997            1996            1997       to 9/30/97
                                            -----------    -----------    -----------    -----------     ----------
                                        (in thousands, except share amounts)

Revenues:
<S>                                         <C>            <C>            <C>            <C>            <C>        
   Licensing Fees ........................  $       400    $      --      $       400    $       300    $       700
Operating expenses incurred in
     the development stage:
   Research and development ..............        1,287          1,554          3,564          3,626         16,670
   Selling, general and administrative ...          788          1,802          1,741          4,156          9,970
                                            -----------    -----------    -----------    -----------    ----------- 
      Total operating expenses ...........        2,075          3,356          5,305          7,782         26,640
Other income (expense)
   Interest income .......................          277            358            386            976          1,839
   Other expense .........................         --             --             --             --             (144)
                                            -----------    -----------    -----------    -----------    ----------- 

Net loss .................................  $    (1,398)   $    (2,998)   $    (4,519)   $    (6,506)   $   (24,245)
                                            ===========    ===========    ===========    ===========    =========== 

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

Net loss allocable to common
  stockholders ...........................  $    (1,398)   $    (2,998)   $    (5,239)   $    (6,506)   $   (26,842)
                                            ===========    ===========    ===========    ===========    =========== 

Proforma net loss per share ..............  $     (0.19)   $     (0.35)   $     (0.71)   $     (0.79)
                                            ===========    ===========    ===========    ===========
Shares used in computing
  proforma net loss per share ............    7,515,560      8,543,579      6,376,056      8,201,251
                                            ===========    ===========    ===========    ===========


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


                                       3
<PAGE>


<TABLE>


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

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

<CAPTION>

                                                       Nine Months Ended     For the Period
                                                         September 30,        From 1/10/92
                                                     ---------------------   (inception) to
                                                        1996        1997        9/30/97
                                                     ---------   ---------    -------------
                                                                (in thousands)

<S>                                                  <C>         <C>         <C>      
Cash flows from operating activities:
  Net loss .......................................   $ (4,519)   $ (6,506)   $(24,245)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
   Non-cash research and development expense .....       --          --           514
   Non-cash compensation expense .................        125          93         266
   Non-cash consulting expense ...................       --          --            15
   Depreciation and amortization expense .........          3          26          48
  Change in assets and liabilities:
   Increase in accounts and interest receivable ..       (389)       (100)       (166)
   Increase in prepaid expenses ..................        (30)        (44)       (132)
   (Increase) decrease in other assets ...........          1          (2)        (13)
   Increase in accounts payable ..................        146         492         538
                                                     --------    --------    -------- 
   Increase (decrease) in accrued expenses .......       (176)      1,069       1,868
Net cash used in operating activities ............     (4,839)     (4,972)    (21,307)
                                                     --------    --------    -------- 

Cash flows from investing activities:
  Organizational costs ...........................       --          --            (5)
  Capital expenditures ...........................        (30)        (63)       (138)
  Purchase of short-term investments
   (available for sale) ..........................       --       (18,997)    (31,287)
  Proceeds from the sale of short-term
   investments (available for sale) ..............       --        16,718      20,641
                                                     --------    --------    -------- 
Net cash used in investing activities ............        (30)     (2,342)    (10,789)
                                                     --------    --------    -------- 

Cash flows from financing activities:
  Proceeds from issuance of preferred stock ......       --          --        13,508
  Proceeds from issuance of common stock .........     18,011      11,567      29,664
  Proceeds from issuance of promissory notes .....       --          --         3,150
  Repayment of promissory note ...................       --          --          (125)
                                                     --------    --------    -------- 
Net cash provided by financing activities ........     18,011      11,567      46,197
                                                     --------    --------    -------- 
Net increase in cash and cash equivalents ........     13,142       4,253      14,101
Cash  and cash  equivalents  at  beginning  of
  period .........................................      5,807       9,848           0
Cash and cash equivalents at end of period .......   $ 18,949    $ 14,101    $ 14,101
                                                     ========    ========    ========


                                       4
<PAGE>


(Continued from preceding page)


                                                       Nine Months Ended     For the Period
                                                         September 30,        From 1/10/92
                                                     ---------------------   (inception) to
                                                        1996        1997        9/30/97
                                                     ---------   ---------    -------------
                                                                (in thousands)

<S>                                                  <C>         <C>         <C>     
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 ................................  $    760    $   --      $  2,597
                                                     ========    ========    ========
Conversion of promissory notes plus accrued
  interest to preferred stock .....................  $   --      $   --      $  2,903
                                                     ========    ========    ========
Deferred compensation .............................  $    426    $    142    $    611
                                                     ========    ========    ========
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
                           September 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 September 30, 1997,  its results of operations for the
three and nine  months  ended  September  30,  1996 and 1997 and for the  period
January 10, 1992  (inception)  to September 30, 1997, and its cash flows for the
nine months  ended  September  30, 1996 and 1997 and for the period  January 10,
1992  (inception)  to September 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
equal or exceed $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 September 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 sales of its own  products 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 $24.2 million at September 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  approvals 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  September 30, 1997,  the Company had no revenues
from sales of its own  products.  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 nine month period ended September 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 increased $62,000, or 2%, and $267,000,
or 21%,  respectively,  for the nine months and three months ended September 30,
1997,  over the  comparable  year  earlier  periods.  These  increases  resulted
primarily from costs  associated  with  validating  manufacturing  processes for
Periostat(R). Selling, general and administrative expenses increased $2,415,000,
or 139%,  and  $1,014,000,  or 129%,  respectively,  during these nine and three
month  periods  due to the  hiring of  additional  staff in  finance,  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 nine month and three month periods ended September
30, 1997 increased  $590,000 and $81,000,  respectively,  from the corresponding
periods in 1996 due to higher  balances in cash and short-term  investments as a
result of the net proceeds from 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 September 30, 1997,  the Company had cash,  cash  equivalents  and short-term
investments of approximately $24.7 million. This was an increase of $6.5 million
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 $22.6 million at September
30, 1997  reflected  an  increase of $5.1  million  from  December  31, 1996 due
primarily to the proceeds  received  from the


                                       9
<PAGE>


follow-on  offering,  less normal  operating  expenses  incurred during the nine
months ended September 30, 1997.

      The  Company had no debt  outstanding  (other  than  accounts  payable and
accrued  expenses) at  September  30,  1997.  The Company had no capital  leases
outstanding at September 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 September 30, 1997. (See Note 3 of
Notes to Condensed Consolidated Financial Statements.)

      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 and Use of Proceeds.

      In September 1997, the Company's Board of Directors (the "Board") declared
a  distribution  of one  preferred  stock  purchase  right (a "Right")  for each
outstanding common share, par value $0.01 per share (the "Common Stock"), of the
Company.  The distribution was payable at the close of business on September 26,
1997 to  shareholders  of record on September  26, 1997 (the "Record  Date").  A
Right will  automatically  attach to shares of the Company's Common Stock issued
after the Record Date. The  description and terms of the Rights are set forth in
a Shareholder  Protection  Rights  Agreement dated as of September 15, 1997 (the
"Rights  Agreement")  between the Company and  American  Stock  Transfer & Trust
Company, as rights agent.

      The Rights Agreement provides, among other things, for the issuance of one
Right to buy one  one-hundredth  (1/100)  of a share of the  Company's  Series A
Participating Preferred Stock, no par value, to stockholders of the Common Stock
as of the Record Date and to stockholders of Common Stock issued thereafter. The
Series A Participating  Preferred Stock is a series of the Company's  authorized
preferred stock (each share, a "Preferred Share").

      The Rights will remain  attached to and trade with the Common  Stock until
the  earlier  to  occur  of (i)  ten  (10)  business  days  following  a  public
announcement  that a person or group of  affiliated  or  associated  persons (an
"Acquiring Person") has acquired,  or obtained the right to acquire,  beneficial
ownership of shares of the Company's  Common Stock  representing  twenty


                                       10
<PAGE>


percent  (20%) or more of the voting power of all  outstanding  shares of Common
Stock  of the  Company,  or  such  later  date as the  Board  may  determine  by
resolution  adopted prior to the Separation Date (as defined below), or (ii) ten
(10) business  days  following  the  commencement  of a tender offer or exchange
offer that would  result in a person or group  beneficially  owning  outstanding
shares of the Company's Common Stock  representing  twenty percent (20%) or more
of the voting power of all outstanding shares of Common Stock of the Company, or
such later date as the Board may  determine by  resolution  adopted prior to the
Separation  Date. The earlier of (i) and (ii) is referred to as the  "Separation
Date."  Following the  Separation  Date,  the Rights will detach from the Common
Stock and will be tradable  separately  from the Common Stock and Rights holders
will be entitled to purchase one one-hundredth  (1/100) of a Preferred Share for
$65.

      In the event that a person or group of affiliated  or  associated  persons
becomes an Acquiring  Person,  on the Separation  Date,  each Right,  other than
Rights held by the Acquiring Person, shall become exercisable for that number of
shares of Common  Stock as shall have a market value equal to two times the then
applicable  exercise  price of the Right  (or,  at the  option  of the  Company,
Preferred  Shares at a ratio of one  one-hundredth  (1/100) of a Preferred Share
for each share of Common Stock required to be issued).  If the Company shall not
have  sufficient  treasury  shares or authorized  but unissued  shares of Common
Stock or Preferred Shares to permit the full exercise of the Rights, the Company
may issue a combination of stock,  cash and debt in respect  thereof.  Following
the time at which a person  shall  become an  Acquiring  Person but prior to the
acquisition by such Acquiring  Person of more than 50% of the Common Stock,  the
Board may also,  at its  option,  exchange  all of the then  outstanding  Rights
(other than Rights held by the Acquiring Person) for shares of Common Stock (or,
at the option of the Board,  Preferred Shares) at an exchange ratio of one share
of Common  Stock (or one  one-hundredth  (1/100) of a Preferred  Share) for each
Right.

      In the event that the Company is  acquired  in a merger or other  business
combination  transaction  or 50% or more of its  consolidated  assets or earning
power are sold to an Acquiring  Person,  its associates or affiliates or certain
other  persons in which such persons  have an  interest,  each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current  exercise  price of any Right,  that number of shares of common stock of
the acquiring  company which at the time of such transaction have a market value
equal to two times the exercise price of the Right.

      The Rights are not exercisable  until the Separation Date. The Rights will
expire on September 26, 2007 (the "Expiration Date"), unless the Expiration Date
is  extended  or unless the Rights are  earlier  redeemed  or  exchanged  by the
Company.

      The  foregoing  description  of the Rights is qualified in its entirety by
reference  to the  Rights  Agreement,  which was filed with the  Securities  and
Exchange  Commission  on  September  17,  1997 as Exhibit  4.1 to the  Company's
Current Report on Form 8-K, and which is incorporated herein by reference.


                                       11
<PAGE>


Item 5.  Other Information

      On September 2, 1997, the Company announced that it had received its first
action letter from the U.S. Food and Drug  Administration  (the "FDA") regarding
its new drug  application (the "NDA") for  Periostat(R),  the Company's drug for
the  treatment  of  periodontal  disease.  In its  letter  and  in a  subsequent
discussion with the Company,  the FDA indicated that  additional  information is
needed to obtain marketing clearance,  primarily  clarification  relating to the
statistical  methodology  used in the NDA.  The FDA has  agreed to meet with the
Company in the near future to discuss the outstanding issues.

      In  October  1997,  the  Company  entered  into an  agreement  with  Heska
Corporation  ("Heska")  pursuant  to which  Heska  will  develop  certain of the
Company's  chemically modified  tetracyclines for use in companion animal health
applications, including osteoarthritis, periodontal disease and cancer.



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

(a)   Exhibits

      4.1 -    Shareholder  Protection Rights  Agreement,  dated as of September
               15, 1997, between the Company and American Stock Transfer & Trust
               Company  which  includes (i) the Form of Rights  Certificate  and
               (ii) the  Certificate of  Designation  of Series A  Participating
               Preferred Stock of the Company  (incorporated by reference to the
               Company's  Current Report on Form 8-K, dated  September 16, 1997,
               filed with the  Securities  and Exchange  Commission on September
               17, 1997).

      27  -   Financial Data Schedule

(b) Reports on Form 8-K.

      During the  quarter  ended  September  30,  1997,  the Company  filed,  on
September  17,  1997,  a  Current  Report  on Form 8-K with the  Securities  and
Exchange  Commission  relating to the Company's adoption of a Shareholder Rights
Plan. See Item 2, Changes in Securities and Use of Proceeds.


                                       12
<PAGE>


                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  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: November 13, 1997             By: /s/Brian M. Gallagher, Ph.D.
                                        --------------------------------------
                                          Brian M. Gallagher, Ph.D.
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)


Date: November 13, 1997             By: /s/Nancy C. Broadbent
                                        --------------------------------------
                                          Nancy C. Broadbent
                                          Chief Financial Officer (Principal
                                          Financial and Accounting Officer)