CONTRACT
                                    --------

               Between Quintiles Scotland Ltd and CollaGenex Inc.
               --------------------------------------------------

                    Quintiles Project Number: CPF00700 series
                    -----------------------------------------

To conduct the following:
A programme of Preclinical  safety  protocols and support  studies with COL-8 as
listed below.  The  programme of work is defined in the proposal  dated 20 March
1998 and amended at the meeting of 16 April 1998.
<TABLE>
<CAPTION>

Price:
------
<S>                           <C>                                              <C>
Analytical Chemistry          Transfer and validate HPLC method for             32,000 (pounds)
                              QC testing and supply for toxcology studies.

Safety Pharmacology           Irwin test, Renal and GI function in rodent       14,400 (pounds)
                              Respiration, haemodynamics and ECG in primate     48,000 (pounds)

Toxicology                    Acute toxicity (i.v. and oral) in rat and mouse   19,300 (pounds)
                              14 day rat  dose  finding study                    8,500 (pounds)
                              90 day rat repeat dose study  (with  interim     116,000 (pounds)
                              kill) 
                              Satellite  animals for toxicokinetics             18,000 (pounds)
                              14 day primate MTD                                20,000 (pounds)
                              90 day primate repeat dose study                 271,000 (pounds)
                              (with interim kill)

Bioanalysis/toxicokinetics    Transfer and validate hplc bioanalytical method   12,000 (pounds)
                              (rat and primate plasma)  
                              Bioanalysis rat (216 samples)                      6,264 (pounds)
                              Bioanalysis primate  (324   samples)               9,396 (pounds)
                              PK analysis and toxicokinetic report appendices    9,400 (pounds)

Project Management            Management and coordination of Project activities 38,750 (pounds)

                                    Quintiles Total Fee                        623,010 (pounds)
</TABLE>

Payment Schedule:
Services will be billed on the basis of an initial  payment of direct costs plus
20% of the  cost of the  services  provided  with  the  balance  distributed  as
milestone payments over the duration of the programme.  A payment schedule based
on these criteria will be generated and agreed between  CollaGenex and Quintiles
once the schedule for the programme has been finalised. This will be reviewed as
the studies  progress  and any  amendments  made if the schedule or scope of the
work changes.

Special conditions:
1) Any   meeting,  shipping  or travel  costs  incurred  outsidethe  confines of
Quintiles' facilities in connection with the performance of this project will be
invoiced in addition to the above.  2) Sufficient  test article,  solubility and
formulation  information  and  material  safety  data  sheets are  delivered  to
Quintiles seven days prior to the initiation phase of the programme (formulation
sciences and bioanalytical method development).

Work  will  be  performed  in  accordance  with  Quintiles  Standard  Terms  and
Conditions as specified overleaf.

SIGNED on BEHALF of                                          SIGNED on BEHALF of
Quintiles Scotland Ltd.                                      CollaGenex


/s/PP WR Rush                                          /s/Christopher Powala
-----------------------------------------              -------------------------
Dr. DJ Graham, Director of Preclinical Sciences        Christopher Powala
Date:    22 April 1998                                 Date:    28 April 1998

Quintiles Scotland Ltd                            CollaGenex Pharmaceutical Inc.
Heriot-Watt University Research Park              301 South State Street
Edinburgh EH14 4AP, UK.                           Newtown, 18940 USA
<PAGE>
                              TERMS and CONDITIONS

In these Terms and  Conditions  the term  "Contract"  shall mean these Terms and
Conditions, the Contract set out overleaf and the attached protocol.

1.0      The  Contract  shall  commence on the date  executed by both parties as
         specified  overleaf  and shall  continue  in effect  until such time as
         contract  services   described  overleaf  have  been  completed  unless
         terminated earlier by Sponsor or Quintiles.

2.0      It is understood  that during the course of the Contract  Quintiles and
         its  employees  may be exposed to  material  and  information  which is
         confidential  to  Sponsor.  All such  material  and  information,  made
         available,  disclosed  or  otherwise  made known to  Quintiles  and its
         employees  as a result of  services  under this  Contract  (hereinafter
         "Sponsor   Confidential   Information")  is  confidential   information
         belonging to Sponsor. All information regarding Quintiles'  operations,
         including  but not limited to Quintiles  Property (as defined in Clause
         4.0 below),  disclosed to Sponsor in connection  with this Agreement is
         confidential   information   belonging  to  Quintiles  (the  "Quintiles
         Confidential  Information",  and together with the Sponsor Confidential
         Information,   the   "Confidential   Information").   The  Confidential
         Information shall be used by the receiving party and its employees only
         for purposes of performing the receiving party's obligations hereunder.
         Each  party  agrees  that it will  not  reveal,  publish  or  otherwise
         disclose the  Confidential  Information of the other party to any third
         party  without  the prior  written  consent  of the  disclosing  party,
         provided that the foregoing obligations shall not apply to Confidential
         Information which: (a) is or becomes generally  available to the public
         other than as a result of a  disclosure  by the  receiving  party;  (b)
         becomes  available to the receiving party on a  non-confidential  basis
         from a source which is not prohibited from disclosing such  information
         by a legal,  contractual  or  fiduciary  obligation  to the  disclosing
         party; (c) the receiving party develops independently of any disclosure
         by the disclosing party; (d) was in the receiving party's possession or
         known to the receiving  party prior to its receipt from the  disclosing
         party;  or (e) is required by law to be disclosed.  This  obligation of
         confidentiality and non-disclosure  shall remain in effect for a period
         of five years after the termination of this Agreement.

3.0      Publication by the Sponsor of any  information or document  relating to
         or arising as a result of the provision of the Contract  services (with
         the  exception  of  information  or reports  submitted  to a  competent
         regulatory  authority)(  shall not without the prior written consent of
         Quintiles  directly  or  indirectly  identify  or  otherwise  refer  to
         Quintiles in  connection  therewith  and, in  particular,  no reference
         shall be made to Quintiles in connection with any conclusion or opinion
         of Sponsor and no report or extract  from such a report or reference to
         Quintiles  shall be used to endorse or imply approval of any product of
         Sponsor or the use or proposed use of any product of Sponsor.

4.0      All data and  information  necessary for  Quintiles to conduct  project
         assignments  will be  forwarded by Sponsor to  Quintiles.  All data and
         information generated or derived by Quintiles as the result of services
         performed  by Quintiles  under this  agreement  shall be the  exclusive
         property of Sponsor.  Any inventions  that may evolve from the data and
         information described above or as the results of the services performed
         by Quintiles  under the Contract  shall belong to Sponsor and Quintiles
         agrees to assign all its rights to such inventions to Sponsor.

         Notwithstanding  the  foregoing,  Sponsor  acknowledges  that Quintiles
         possesses  certain  inventions,  processes,  know-how,  trade  secrets,
         improvements, other intellectual properties and other assets, including
         but not limited to laboratory analyses,  analytical methods, procedures
         and techniques,  computer technical expertise and software,  which have
         been  independently  developed  by Quintiles  (collectively  "Quintiles
         Property"). The Sponsor and Quintiles agree that any Quintiles Property
         or improvements thereto which are used, improved, modified or developed
         by Quintiles under or during the term of this Agreement are the product
         of Quintiles'  technical expertise possessed and developed by Quintiles
         prior to or during the  performance  of this Agreement and are the sole
         and exclusive property of Quintiles.

         Subject to the provisions of paragraph  14.0., at the completion of the
         contract services by Quintiles,  all raw data including paper data, wet
         tissues,  wax  blocks,  microscope  slides,  computer  tapes  and other
         materials as  appropriate  will be retained in the archive of Quintiles
         for a period of two (2) years.  After this time,  Sponsor will be given
         the  option to (i)  accept  the  return of  archive  material  at their
         expense,  (ii) pay an annual fee for continued  storage,  (iii) request
         destruction.

5.0      For the purposes of the Contract,  the parties  hereto are  independent
         contractors and nothing contained in the Contract shall be construed to
         place  them in the  relationship  of  partners,  principle  and  agent,
         employer/employee  or joint venturers.  Each party agrees that it shall
         have no power or right to bind or obligate the other  party,  nor shall
         either party hold itself out as having such authority.

6.0      Quintiles agrees its services shall be conducted in compliance with the
         agreed  protocol(s) and  specifications  and with all applicable  laws,
         rules and regulations.

7.0      Quintiles  represents and warrants to Sponsor that it is not a party to
         any agreement  which would prevent it from  fulfilling its  obligations
         under the Contract.

8.0      In order for Quintiles to comply with the Health and Safety at Work Act
         1974  and any  applicable  regulation  made  pursuant  thereto  it is a
         condition of Quintiles  providing  the contract  services  that Sponsor
         shall provide Quintiles with all information  available to it regarding
         known or potential  hazards  associated  with the use of any substances
         supplied to Quintiles by Sponsor and that Sponsor shall comply with all
         current   legislation  and  regulations   concerning  the  shipment  of
         substances by the land, sea or air.

9.0      Neither Quintiles nor its affiliates nor any of its or their respective
         directors,  officers,  employees  or agents  shall  have any  liability
         whatsoever  under  this  Agreement or otherwise  except with respect to
         damages directly attributable  solely to Quintiles' gross negligence or
         intentional    misconduct.   Notwithstanding  the  foregoing,   neither
         Quintiles  nor  its   affiliates  nor  any of its or  their  respective
         directors,  officers,  employees or agents shall have any liability for
         any special,  incidental, or  consequential damages, including, but not
         limited to loss of revenue or profit  in connection with or arising out
         of  the   Contract,  or  the  existence,  furnishing,  functioning,  or
         Sponsor's use  of any information  documentation  or services  provided
         pursuant to the Contract,  even if Quintiles shall have been advised of
         the  possibility of such  damages.  In addition,  in no event shall the
         collective,  aggregate  liability  of Quintiles and its  affiliates and
         its and their  respective  directors,   officers,  employees and agents
         under this  Agreement  exceed the amount  of  aggregate  fees  actually
         received by Quintiles from  Sponsor  pursuant to this Agreement for the
         assignment or task from which such liability arose.

10.0     Sponsor  shall  defend,  indemnify  and hold  harmless  Quintiles,  its
         affiliates and its and their respective directors,  officers, employees
         and agents (each, an "Indemnified  Party") from and against any and all
         losses,  claims,  actions,  damages,  liabilities,  costs and expenses,
         (including reasonable legal costs) (collectively,  "Losses"),  relating
         to or arising from or in  connection  with this  Agreement  (including,
         without  limitation,  any Losses arising from or in connection with any
         study,   test,  product or  potential  product to which this  Agreement
         relates)  or any litigation, investigation or other proceeding relating
         to  any  of  the  foregoing,  except  to the  extent  such  Losses  are
         determined   to  have  resulted   solely   from  gross   negligence  or
         intentional  misconduct of  the  Indemnified  Party  seeking  indemnity
         hereunder.

11.0     Where Quintiles  advises on the  construction of a protocol for a study
         involving human  volunteers,  the Sponsor agrees any advice relating to
         the  clinical  phase of the study is given on the basis  that  under no
         circumstances   whatsoever   will  Quintiles  be  under  any  liability
         whatsoever  to Sponsor or to any third party for such advice or for any
         loss or damage howsoever caused  consequential  upon the giving of such
         advice and it is at all times  Sponsor's  responsibility  to obtain all
         appropriate and necessary  verifications  of the safety and suitability
         of such a protocol.

12.0     The Contract may be  terminated  by Sponsor or Quintiles at any time on
         thirty  (30) days  written  notice to the other  party.  On  receipt or
         delivery of such  notification  by Quintiles work will be terminated in
         accordance with Sponsor's instructions and Sponsor will then be charged
         a  final   instalment   to  include  all  costs   associated  with  the
         termination,  such   instalment  to be  paid  on  presentation  of  the
         account.

13.0     In the event that the Contract is  terminated,  Quintiles  reserves the
         right to retain  copies of all  material  provided  to  Sponsor  as the
         result of services  performed  by  Quintiles  under the  contract for a
         period of five (5) years.

14.0     In the event  Quintiles  shall be delayed or hindered  in or  prevented
         from the  performance  of any act  required  hereunder  by  reasons  of
         strike,  lockouts,  labour  troubles,  inability to procure  materials,
         failure of power or  restrictive  government  or  judicial  orders,  or
         decrees,  riots,  insurrection,  war, Acts of God, inclement weather or
         any other reason or cause beyond Quintiles' control performance of such
         act shall be excused for the period of the delay.

15.0     Quintiles agrees to furnish and Sponsor agrees to purchase the services
         as described  overleaf at the prices stated.  All payments will be made
         in accordance with the schedule referred to overleaf. The final payment
         may be adjusted to reflect any budget re-evaluations.

         All  payments  shall be made to  Quintiles  within  thirty (30) days of
         receipt of invoice by Sponsor.  Sponsor shall pay Quintiles interest in
         an amount  equal to four  percent  (4%)  above the base  interest  rate
         established  by Hambros  Bank  Limited per month of all  amounts  owing
         hereunder and not paid when due (or the maximum lesser amount permitted
         by applicable law).

16.0     Quintiles  shall be reimbursed for all reasonable and necessary  travel
         and lodging expenses  incurred in the performance of services  provided
         herein  which have been  expressly  requested  or  approved by Sponsor.
         Payment for such services  shall be made by Sponsor  within thirty (30)
         days of  receipt  by  Sponsor of  invoices  or other  evidence  of such
         expenditure.

17.0     Any times  quoted for  the  commencement  of the  contract  services or
         delivery of a report are  intended to be  estimates  only and shall not
         involve any contractual obligation on Quintiles' part.

18.0     Any notice  given by either  party  hereunder  shall be in writing  and
         delivered  personally or by registered or certified mail to the address
         shown on the overleaf.

19.0     All provisions  of  these  Terms  and  Conditions  and the Contract are
         subject to English law.

20.0     If any one or more  provisions of these Terms and  Conditions  shall be
         found to be illegal or  unenforceable  in any  respect,  the  validity,
         legality and  enforceability  of the remaining  provisions shall not in
         any way be affected or impaired thereby.

21.0     These Terms and  Conditions  shall govern the provision of the contract
         services  by  Quintiles  to  the  exclusion  of  any  other  terms  and
         conditions  subject to which the offer to provide the contract services
         is  accepted  or  purported  to be  accepted  or  subject  to which the
         provision of the contract services is requested by Sponsor.

22.0     The  Contract  contains  the entire  understanding  of the parties with
         respect to the subject  matter  herein,  and  supersedes  all  previous
         agreement (oral or written),  negotiations and discussions. The parties
         may, from time to time during the  continuance of the Contract,  modify
         any of the provisions  hereof by an instrument in writing duly executed
         by the parties.