FORM 10Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1998
                                    


                         Commission file number 0-16005

                           Unigene Laboratories, Inc.
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                         22-2328609
-------------------------------                         -------------------
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                         Identification No.)

110 Little Falls Road, Fairfield, New Jersey                  07004
--------------------------------------------                ---------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code: (973) 882-0860
                                                     -------------

--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report.)

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 [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

Common Stock, $.01 Par Value--38,529,432 shares as of May 1, 1998
<PAGE>



                                      INDEX


                           UNIGENE LABORATORIES, INC.




PART I.  FINANCIAL INFORMATION   

Item 1. Financial Statements (Unaudited)

Condensed balance sheets-
    March 31, 1998 and December 31, 1997                                    

Condensed statements of operations-
    Three months ended March 31, 1998 and 1997                              

Condensed statements of cash flows-
    Three months ended March 31, 1998 and 1997                              

Notes to condensed financial statements-
    March 31, 1998                                                          

Item 2. Management's Discussion and Analysis of Financial
    Condition and Results of Operations                                     


PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K           


SIGNATURES                                                                  
<PAGE>
PART I.  FINANCIAL INFORMATION
Item 1.   Financial Statements
<TABLE>
<CAPTION>
                             UNIGENE LABORATORIES, INC.
                              CONDENSED BALANCE SHEETS

                                                       March 31         December  31
                                                         1998               1997
                                                     ------------      ------------
                                                      (Unaudited)
<S>                                                  <C>               <C>
ASSETS
Current assets:
    Cash and cash equivalents ..................     $  1,561,812      $  2,126,327
    Prepaid expenses and other current assets ..          738,814           834,245
                                                     ------------      ------------
         Total current assets ..................        2,300,626         2,960,572

Property, plant and equipment-net
    of accumulated depreciation and amortization        9,001,404         9,298,445
Patents and other assets .......................        1,462,684         1,432,883
                                                     ------------      ------------
                                                     $ 12,764,714      $ 13,691,900
                                                     ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ...........................     $    960,620      $  1,041,529
    Accrued expenses ...........................          801,635           999,212
    Notes payable - stockholders ...............          610,000           610,000
                                                     ------------      ------------
  Total current liabilities ....................        2,372,255         2,650,741

Note payable - stockholders ....................          655,000           655,000
9.5% convertible debentures ....................          502,694           502,694
10% convertible debentures .....................          450,000           450,000

Stockholders' equity:
    Common stock-par value $.01 per share;
       authorized 60,000,000 shares, issued
       38,517,722 shares in 1998 and 1997 ......          385,177           385,177
    Additional paid-in capital .................       63,499,439        63,499,439
    Accumulated deficit ........................      (55,098,820)      (54,450,120)
    Less: Treasury stock, at cost, 7,290 shares            (1,031)           (1,031)
                                                     ------------      ------------

         Total stockholders' equity ............        8,784,765         9,433,465
                                                     ------------      ------------
                                                     $ 12,764,714      $ 13,691,900
                                                     ============      ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                             UNIGENE LABORATORIES, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                        Three Months Ended
                                                            March 31
                                                  ------------------------------
                                                       1998                1997
                                                  ------------      ------------
<S>                                               <C>               <C>
Licensing and other revenue .................     $  2,011,715      $      1,442
                                                  ------------      ------------
Operating expenses:
    Research and development ................        2,150,314         2,192,961

    Settlement of contractual right .........             --           1,669,063

    General and administrative ..............          489,186           550,016
                                                  ------------      ------------
                                                     2,639,500         4,412,040
                                                  ------------      ------------
Operating loss ..............................         (627,785)       (4,410,598)
                                                  ------------      ------------
Other income (expense):
   Interest/other income ....................           30,340            48,198
   Interest expense .........................          (51,255)          (73,601)
                                                  ------------      ------------
                                                       (20,915)          (25,403)
                                                  ------------      ------------
Net loss ....................................     $   (648,700)     $ (4,436,001)
                                                  ============      ============
Net loss per share, basic ...................     $       (.02)     $       (.12)
                                                  ============      ============
Net loss per share, diluted .................     $       (.02)     $       (.12)
                                                  ============      ============
Weighted average number of shares outstanding       38,510,432        36,019,408
                                                  ============      ============

</TABLE>

See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                               UNIGENE LABORATORIES, INC.
                           CONDENSED STATEMENTS OF CASH FLOWS
                                      (Unaudited)


                                                               Three Months Ended
                                                                    March 31
                                                          ---------------------------- 
                                                              1998             1997
                                                          -----------      -----------
<S>                                                       <C>              <C>
Net cash used for operating activities ..............     $  (448,637)     $(2,567,809)
                                                          -----------      -----------
Investing activities:

    Purchase of equipment and furniture .............         (78,759)        (126,087)
    Increase in patents and other assets ............         (37,119)         (22,644)
    Construction of leasehold improvements ..........            --            (18,298)
                                                          -----------      -----------
                                                             (115,878)        (167,029)
                                                          -----------      -----------
Financing activities:

    Exercise of stock options and warrants ..........            --            551,465
                                                          -----------      -----------
                                                                 --            551,465
                                                          -----------      -----------
Net decrease in cash and cash equivalents ...........        (564,515)      (2,183,373)
Cash and cash equivalents at beginning of year ......       2,126,327        4,491,386
                                                          -----------      -----------
Cash and cash equivalents at end of period ..........     $ 1,561,812      $ 2,308,013
                                                          ===========      ===========
Supplemental cash flow information:

Conversion of convertible debentures and
   accrued interest, net of related offering expenses
   into common stock ................................            --        $   978,842


</TABLE>

See notes to condensed financial statements.
<PAGE>
                           UNIGENE LABORATORIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 1998

NOTE A-BASIS OF PRESENTATION

The accompanying  unaudited condensed financial statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management,  all adjustments considered necessary
for a fair  presentation  have been  included.  Operating  results for the three
month period ended March 31, 1998 are not necessarily  indicative of the results
that  may be  expected  for the  year  ended  December  31,  1998.  For  further
information,  please refer to the Company's  financial  statements and footnotes
thereto  included in the Company's annual report on Form 10-K for the year ended
December 31, 1997.


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

Revenue  for the first  quarter  of 1998  consisted  primarily  of a $2  million
milestone  payment  from  Warner-Lambert  Company,  under a July 1997  licensing
agreement, as the result of the achievement of a benchmark in the development of
an oral  calcitonin  product for  treating  osteoporosis.  Revenue for the first
quarter of 1997 represents hormone and enzyme sales.

Research and  development,  the  Company's  largest  expense,  decreased 2% from
$2,193,000 to $2,150,000  for the three months ended March 31, 1998, as compared
to the same period in 1997. The decrease was primarily  attributable to expenses
incurred in 1997 related to the Company's  clinical trials for its  FORTICAL(TM)
Injection product.

On February 7, 1997,  the Company  issued an aggregate of 490,000  shares of its
Common Stock to the holders of the  Company's  9.5% Senior  Secured  Convertible
Debentures  (the  "Debentures")  in  consideration  for the  cancellation  of an
obligation  of the Company to pay to the holders a fee equal to 2% of the sum of
the market  value as of December  31, 1998 of all of the  Company's  outstanding
shares of Common Stock plus the principal  amount of all outstanding debt of the
Company,  less its cash on  deposit,  up to a  maximum  fee of  $3,000,000.  The
expense  associated with this  transaction was valued at $1,669,063,  based on a
closing price of the Common Stock of $3.40625 on February 7, 1997.

General and administrative  expenses decreased 11% from $550,000 to $489,000 for
the three months  ended March 31, 1998,  as compared to the same period in 1997.
The decrease was primarily due to non-recurring  expenses  incurred in 1997 that
were associated with the Company's financing activities.

Interest and other income decreased $18,000 for the three months ended March 31,
1998, as compared to the same period in 1997, due to reduced funds available for
investment in 1998.

Interest expense decreased $22,000 for the three months ended March 31, 1998, as
compared to the same period in 1997, due to a reduction in outstanding debt from
the prior year as of result of conversions in 1997 of the Company's  convertible
debentures into Common Stock.
<PAGE>
As a result of increased revenue, as well as decreased  operating expenses,  net
loss  decreased  $3,787,000 or 85% for the three months ended March 31, 1998, as
compared to the corresponding period in 1997.

As of December  31, 1997,  the Company had  available  for income tax  reporting
purposes  net  operating  loss   carryforwards  in  the  approximate  amount  of
$53,400,000,  expiring  from 1998 through  2012,  which are  available to reduce
future earnings that would otherwise be subject to federal income taxes. For the
three months ending March 31, 1998, the Company accumulated additional losses of
approximately  $649,000. In addition, the Company has investment tax credits and
research  and  development  credits in the  amounts of $50,000  and  $1,984,000,
respectively,  which are available to reduce the amount of future federal income
taxes. These credits expire from 1998 through 2012.

The Company follows  Statement of Financial  Accounting  Standards No. 109 (FASB
109),  "Accounting  for  Income  Taxes".  Given the  Company's  past  history of
incurring  operating losses, any deferred tax assets that are recognizable under
FASB 109 have been fully  reserved.  As of January 1, 1998,  under FASB 109, the
Company  had  deferred  tax assets of  approximately  $23,400,000,  subject to a
valuation  allowance of  $23,400,000.  The  deferred  tax assets were  generated
primarily as a result of the Company's  net  operating  losses and available tax
credits. For the three-month period ended March 31, 1998, the Company's deferred
tax assets and valuation allowances each increased by approximately $260,000.

The Company  adopted the  provisions  of SFAS No. 128,  "Earnings  Per Share" on
December 31, 1997. SFAS 128  establishes  standards for computing and presenting
earnings per share  ("EPS") and  supersedes  APB Opinion No. 15,  "Earnings  Per
Share".  It also  requires  presentation  of both basic and  diluted EPS for net
income on the face of the income statement and a separate reconciliation of both
EPS amounts.  Basic EPS is computed using the weighted  average number of common
shares outstanding during the period being reported on. Diluted EPS reflects the
potential  dilution that could occur if  securities or other  contracts to issue
common stock were  exercised or converted  into common stock at the beginning of
the period being  reported on. The adoption of SFAS 128 has had no effect on the
Company's reported per share results.

LIQUIDITY AND CAPITAL RESOURCES

During  1994,  the Company  completed  construction  of its  peptide  production
facility in  Boonton,  New  Jersey.  The  facility  was  constructed  in a shell
building that is being leased under a ten-year net lease which began in February
1994.  The  Company  has two  ten-year  renewal  options as well as an option to
purchase  the  facility.  The total cost of leasehold  improvements  and process
equipment for this facility,  including  current  validation costs, have totaled
approximately  $12  million.  The  improvements  and  equipment  were  primarily
financed from the remainder of the $17 million of proceeds  received as a result
of the exercise by the warrant holders of the Company's Class A Warrants in 1991
and the  proceeds  of $2.2  million  from the sale of stock in 1994.  There  are
currently no material commitments  outstanding for capital expenditures relating
to either the Boonton  facility or the  Company's  facility  in  Fairfield,  New
Jersey.

The Company,  at March 31, 1998, had cash and cash equivalents of $1,562,000,  a
decrease of $565,000 from December 31, 1997.

The Company's  ability to generate cash from  operations  will depend  primarily
upon signing research or licensing  agreements,  achieving defined benchmarks in
such agreements,  receiving  regulatory approval for its licensed products,  and
the commercial sale of these products.
<PAGE>
In  1996,   the  Company   entered  into  a  joint  venture   agreement  with  a
pharmaceutical company in China. This joint venture contributed $300,000 to 1996
revenues.  It is uncertain whether any additional revenues will be recognized or
received in connection with this joint venture.

In July 1997,  the Company  entered into an agreement  under which it granted to
the Parke-Davis  division of  Warner-Lambert  Company a worldwide license to use
the Company's oral calcitonin technology.  Upon execution of the agreement,  the
Company received $6 million in payments from Warner-Lambert,  consisting of a $3
million  licensing  fee and a $3 million  equity  investment  by  Warner-Lambert
(695,066 shares of Common Stock were purchased at a price of approximately $4.32
per share). In addition,  the Company is eligible to receive up to an additional
$48.5 million in milestone payments during the course of the development program
if specified  milestones are achieved,  of which $15.5 million would be received
prior to the  commencement of Phase I clinical  studies in the U.S.  Early-stage
milestones primarily relate to the product's performance characteristics,  while
the  latter-stage  milestones  are primarily  related to regulatory  filings and
approvals.  The  first  of these  milestones  was  achieved  in  February  1998,
resulting  in a  payment  to  the  Company  of $2  million.  If the  product  is
successfully  commercialized,  the  Company  also  would  receive  revenue  from
royalties on product sales by  Warner-Lambert  and its  affiliates  and from the
sale of raw  material to  Warner-Lambert.  The Company has retained the right to
license the use of its  technologies  for injectable and nasal  formulations  of
calcitonin on a worldwide basis.  Management is actively seeking other licensing
and/or supply agreements with pharmaceutical  companies for injectable and nasal
forms  of  calcitonin.  However,  there  is no  assurance  that  any  additional
revenue-generating agreements will be signed.

The Company's cash  requirements have increased to approximately $10 million per
year with the opening of its peptide manufacturing  facility.  In addition,  the
Company  faces  principal and interest  obligations  over the next several years
under its outstanding  convertible  debentures and other indebtedness.  However,
because of the current  below-market  conversion prices of each of the issues of
debentures, a substantial portion of such debentures has been, and a substantial
portion of the remainder is expected to be, converted into Common Stock, thereby
decreasing the amount of cash required for principal and interest payments.

After receipt of an aggregate of $8 million from Warner-Lambert in July 1997 and
February  1998,  management  believes that the Company  currently has sufficient
financial  resources to sustain its  operations at the current level through the
second  quarter  of 1998.  While  the  Company  expects  to  achieve  additional
milestones  under the  Warner-Lambert  agreement,  which will  result in further
payments,  the timing of such  payments is uncertain and the Company may have to
rely on outside  sources for financing to sustain the Company's  operations over
the near  term.  However,  there is no  assurance  as to the terms on which such
additional  funds would be  available or that in such  circumstances  sufficient
funds could be obtained.

Satisfying  the  Company's  long-term  liquidity  requirements  will require the
successful commercialization of the product licensed to Warner-Lambert or one of
its  other  calcitonin  products.  In  addition,   the  commercialization  of  a
calcitonin  product  will  require  the  Company  to  incur  additional  capital
expenditures,   including  expenditures  to  expand  or  upgrade  the  Company's
manufacturing   operations   to  satisfy  its  supply   obligations   under  the
Warner-Lambert  license agreement.  However,  neither the cost or timing of such
capital expenditures are determinable at this time.
<PAGE>
                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain  statements in this Form 10-Q  constitute  "forward-looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking  statements involve known and unknown risks,
uncertainties  and other factors that may cause the actual results,  performance
or activities of the Company,  or industry results,  to be materially  different
from any future results,  performance or activities expressed or implied by such
forward-looking  statements. Such factors include: general economic and business
conditions, the financial condition of the Company,  competition,  the Company's
dependence on other  companies to  commercialize,  manufacture and sell products
using the Company's technologies,  the uncertainty of results of preclinical and
clinical testing, the risk of product liability and liability for human clinical
trials,  the  Company's  dependence  on patents  and other  proprietary  rights,
dependence on key management  officials,  the  availability and cost of capital,
the  availability of qualified  personnel,  changes in, or the failure to comply
with,  governmental  regulations,  the failure to obtain regulatory approvals of
the  Company's  products and other factors  discussed in the  Company's  various
filings with the Securities and Exchange Commission.




PART II. OTHER INFORMATION

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a)               Exhibits:  None

(b)               Reports on Form 8-K:

                  The  Company  did not file any  reports on Form 8-K during the
                  three months ended March 31, 1998.




<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.


                                                  UNIGENE LABORATORIES, INC.
                                                  -----------------------
                                                       (Registrant)


                                                  /s/ Warren P. Levy
May 15, 1998                                      -----------------------
                                                  Warren P. Levy, President
                                                  (Chief Executive Officer)


                                                  /s/ Jay Levy
May 15, 1998                                      -----------------------
                                                  Jay Levy, Treasurer
                                                  (Chief Financial Officer and
                                                   Chief Accounting Officer)