Exhibit 10.5

                       SECOND LOAN MODIFICATION AGREEMENT


      This  Second  Loan   Modification   Agreement  (this  "Loan   Modification
Agreement") is entered into as of March 27, 2002, by and between  SILICON VALLEY
BANK, a California-chartered  bank, with its principal place of business at 3003
Tasman Drive,  Santa Clara,  California 95054 and with a loan production  office
located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts  02462,  doing  business  under  the name  "Silicon  Valley  East"
("Bank") and COLLAGENEX  PHARMACEUTICALS,  INC., a Delaware corporation with its
chief executive  office located at 41 University  Drive,  Newtown,  Pennsylvania
18940 ("Borrower").

1.  DESCRIPTION  OF  EXISTING   INDEBTEDNESS   AND   OBLIGATIONS.   Among  other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank  pursuant  to a loan  arrangement  dated as of March 19,  2001,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of March 19, 2001 between  Borrower and Bank,  as amended by a certain  First
Loan  Modification  Agreement dated as of March 22, 2002 (as amended,  the "Loan
Agreement").  Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.

Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be
referred to as the "Obligations".

2.  DESCRIPTION  OF COLLATERAL.  Repayment of the  Obligations is secured by the
Collateral  as described in the Loan  Agreement  and the  Intellectual  Property
Collateral,  as described in the Intellectual  Property Security Agreement dated
as of March 19, 2001, between the Borrower and the Bank (together with any other
collateral security granted to Bank, the "Security Documents").

Hereinafter,   the  Security  Documents,   together  with  all  other  documents
evidencing,  securing or otherwise  executed in connection  with the Obligations
shall be referred to as the "Existing Loan Documents".

3. DESCRIPTION OF CHANGE IN TERMS.

      Modification to Loan Agreement.  From and after the execution of this Loan
Modification  Agreement,  the Loan  Agreement  shall be amended by deleting  the
following text appearing as Section 5.5(x) of the Loan Agreement:

      "(x)  pay or  declare  any  dividends  on  Borrower's  stock  (except  for
      dividends  payable  solely in stock of Borrower  and except for  dividends
      payable to  holders  of the  Borrower's  Series D  Cumulative  Convertible
      Preferred  Stock  (the  "Series  D  Stock"),  except  for,  prior  to  the
      occurrence of an Event of Default,  preferred  stock cash  dividends in an
      amount  not to exceed  $400,000  in  calendar  year  2002,  $1,600,000  in
      calendar  year 2003,  and $400,000 in the first  quarter of calendar  year
      2004."

and replacing it with the following text:

      "(x) pay any dividends on Borrower's  stock (except for dividends  payable
      solely in stock of Borrower and except for dividends payable to holders of
      the  Borrower's  Series D  Cumulative  Convertible  Preferred  Stock  (the
      "Series D Stock"),  except  for,  prior to the  occurrence  of an Event of
      Default,  preferred  stock  cash  dividends  in an  amount  not to  exceed
      $430,000 in calendar  year 2002,  $1,600,000  in calendar  year 2003,  and
      $400,000 in the first quarter of calendar year 2004."

4.  RATIFICATION OF INTELLECTUAL  PROPERTY SECURITY  AGREEMENT.  Borrower hereby
ratifies,  confirms and reaffirms, all and singular, the terms and conditions of
a certain  Intellectual  Property Security  Agreement dated as of March 19, 2001
between Borrower and Bank, and acknowledges, confirms and agrees that, except as
previously  disclosed in writing to Bank, said  Intellectual  Property  Security
Agreement contains an accurate and complete listing of all Intellectual Property
Collateral (as defined in said  Intellectual  Property  Security  Agreement) and
shall remain in full force and effect.



<PAGE>


5. WAIVER. Bank hereby waives Borrower's failure to comply with the Tangible Net
Worth  covenant  requirement  set forth in the  Schedule  to the Loan  Agreement
tested as of February 28, 2002 (the  "Existing  Default").  This waiver  applies
only to the specific  Existing Default,  is a one-time waiver,  and shall not be
deemed to constitute a continuing  waiver of this or any other  provision of the
Loan  Agreement or a waiver of this  Tangible  Net Worth  covenant for any other
period.

6. CONSISTENT  CHANGES.  The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

7.  RATIFICATION OF LOAN  DOCUMENTS.  Borrower hereby  ratifies,  confirms,  and
reaffirms  all terms and  conditions  of the  Existing  Loan  Documents  and all
security  or  other  collateral  granted  to the  Bank,  and  confirms  that the
indebtedness secured thereby includes, without limitation, the Obligations.

8. NO DEFENSES OF BORROWER. The Borrower hereby acknowledges and agrees that the
Borrower has no offsets,  defenses, claims, or counterclaims against the Bank or
the  Bank's  officers,   directors,   employees,   attorneys,   representatives,
predecessors,  affiliates,  subsidiaries,  parents, successors, and assigns with
respect to the Obligations,  and/or the Existing Loan Documents, and that if the
Borrower  now  has,  or  ever  did  have,  any  offsets,  defenses,  claims,  or
counterclaims  against the Bank or the Bank's  officers,  directors,  employees,
attorneys,  representatives,  predecessors,  affiliates,  subsidiaries, parents,
successors, and assigns, whether known or unknown, at law or in equity, from the
beginning  of the world  through  this date and through the time of execution of
this Loan  Modification  Agreement,  with respect to the Obligations  and/or the
Existing  Loan  Documents,  all of them are  hereby  expressly  WAIVED,  and the
Borrower hereby RELEASES the Bank and the Bank's officers, directors, employees,
attorneys,  representatives,  predecessors,  successors,  and  assigns  from any
liability therefor.

9. FEES.  Borrower shall reimburse Bank for all legal fees and expenses incurred
in connection with this amendment to the Existing Loan Documents.

10. CONTINUING  VALIDITY.  Borrower understands and agrees that in modifying the
existing   Obligations,   Bank  is  relying  upon  Borrower's   representations,
warranties, and agreements, as set forth in the Existing Loan Documents.  Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the  Existing  Loan  Documents  remain  unchanged  and in full force and effect.
Bank's  agreement  to modify  the  existing  Obligations  pursuant  to this Loan
Modification  Agreement  in no way  shall  obligate  Bank  to  make  any  future
modifications to the Obligations.  Nothing in this Loan  Modification  Agreement
shall constitute a satisfaction of the Obligations.  It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan  Documents,
unless the party is  expressly  released  by Bank in  writing.  No maker will be
released by virtue of this Loan Modification Agreement.

11.  JURISDICTION/VENUE.  Borrower accepts for itself and in connection with its
properties,  unconditionally,  the  non-exclusive  jurisdiction  of any state or
federal court of competent  jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement;  provided,  however, that if for any
reason  Bank  cannot  avail  itself  of  the  courts  of  the   Commonwealth  of
Massachusetts,   then  venue  shall  lie  in  Santa  Clara  County,  California.
NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR  PROCEEDING  AGAINST THE  BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION  WHICH THE BANK DEEMS  NECESSARY OR APPROPRIATE IN ORDER TO REALIZE
ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK'S RIGHTS AGAINST THE BORROWER
OR ITS PROPERTY.


<PAGE>


      This Loan Modification  Agreement is executed as a sealed instrument under
the laws of the  Commonwealth  of  Massachusetts  as of the date  first  written
above.

BORROWER:                                 BANK:

COLLAGENEX PHARMACEUTICALS, INC.          SILICON VALLEY BANK, doing business
                                          as SILICON VALLEY EAST

By:  /s/ Nancy C. Broadbent               By:  /s/ John V. Atanasoff
   ---------------------------------         ---------------------------------

Name:  Nancy C. Broadbent                 Name:  John V. Atanasoff
     -------------------------------           -------------------------------

Title: Chief Financial Officer            Title: Regional Market Manager
      ------------------------------            ------------------------------

ACKNOWLEDGED AND AGREED:

MMP, INC.

By:  /s/ Frank Ruffo
   ---------------------------------

Name:  Frank Ruffo
     -------------------------------

Title: Secretary & Treasurer
      ------------------------------