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 June 30, 1999


                         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 - 41,174,329 shares as of August 1, 1999
<PAGE>
                                      INDEX


                           UNIGENE LABORATORIES, INC.




PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed balance sheets-
    June 30, 1999 and December 31, 1998

Condensed statements of operations-
    Three months and six months ended June 30, 1999 and 1998

Condensed statements of cash flows-
    Six months ended June 30, 1999 and 1998

Notes to condensed financial statements-
    June 30, 1999

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

Item 3. Quantitative and Qualitative Disclosures About
    Market Risk

PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

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

Item 6.  Exhibits and Reports on Form 8-K


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

                                                                June 30       December 31
                                                                 1999              1998
                                                            ------------      ------------
ASSETS                                                       (Unaudited)
<S>                                                         <C>               <C>
Current assets:
    Cash and cash equivalents .........................     $    571,249      $    402,664
    Prepaid expenses ..................................          141,242           317,823
    Other current assets ..............................          664,102           887,904
                                                            ------------      ------------
         Total current assets .........................        1,376,593         1,608,391

Property, plant and equipment-net
    of accumulated depreciation and amortization ......        7,396,285         8,085,250
Patents and other intangibles, net ....................        1,231,027         1,206,018
Other assets ..........................................          494,339           664,434
                                                            ------------      ------------
                                                            $ 10,498,244      $ 11,564,093
                                                            ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ..................................     $  1,559,068      $    982,752
    Accrued expenses ..................................        1,434,233         1,329,199
    Notes payable - stockholders ......................        2,640,000         1,040,000
    Current portion-capital lease obligations .........           61,464            61,464
                                                            ------------      ------------
  Total current liabilities ...........................        5,694,765         3,413,415

5% convertible debentures .............................        2,800,000         3,802,807
Capital lease obligations, excluding current portion ..           99,657           127,783

   Stockholders' equity:
    Common stock-par value $.01 per share;
       authorized 60,000,000 shares, issued
       41,085,766 shares in 1999 and 39,384,822 in 1998          410,858           393,848
    Additional paid-in capital ........................       66,366,492        65,158,403
    Accumulated deficit ...............................      (64,872,497)      (61,331,132)
    Less: Treasury stock, at cost, 7,290 shares .......           (1,031)           (1,031)
                                                            ------------      ------------
         Total stockholders' equity ...................        1,903,822         4,220,088
                                                            ------------      ------------
                                                            $ 10,498,244      $ 11,564,093
                                                            ============      ============
</TABLE>

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



                                             Three Months Ended                  Six Months Ended
                                                 June 30                              June 30
                                      ------------------------------      ------------------------------
                                           1999              1998              1999             1998
                                      ------------      ------------      ------------      ------------
<S>                                   <C>               <C>               <C>               <C>
Licensing and other revenue .....     $     26,670      $        142      $  2,526,842      $  2,011,857
                                      ------------      ------------      ------------      ------------
Operating expenses:

    Research and development ....        2,236,316         2,256,358         4,609,959         4,406,672

    General and administrative ..          615,897           568,342         1,092,133         1,057,528
                                      ------------      ------------      ------------      ------------

                                         2,852,213         2,824,700         5,702,092         5,464,200
                                      ------------      ------------      ------------      ------------

Operating loss ..................       (2,825,543)       (2,824,558)       (3,175,250)       (3,452,343)
                                      ------------      ------------      ------------      ------------
Other income (expense):

   Interest income ..............            4,589            13,754            15,542            44,094

   Interest expense .............         (156,656)          (57,023)         (381,657)         (108,278)
                                      ------------      ------------      ------------      ------------

                                          (152,067)          (43,269)         (366,115)          (64,184)


Net loss ........................     $ (2,977,610)     $ (2,867,827)     $ (3,541,365)     $ (3,516,527)
                                      ============      ============      ============      ============

Net loss per share, basic .......     $       (.07)     $       (.07)     $       (.09)     $       (.09)
                                      ============      ============      ============      ============
Net loss per share, diluted .....     $       (.07)     $       (.07)     $       (.09)     $       (.09)
                                      ============      ============      ============      ============

Weighted average number of shares
 outstanding ....................       40,109,449        38,528,152        39,835,348        38,519,341
                                      ============      ============      ============      ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                UNIGENE LABORATORIES, INC.
                            CONDENSED STATEMENTS OF CASH FLOWS
                                        (Unaudited)

                                                                  Six Months Ended
                                                                       June 30
                                                             ----------------------------
                                                                 1999             1998
                                                             -----------      -----------

<S>                                                          <C>              <C>
Net cash used for operating activities .................     $(1,349,104)     $(2,084,404)
                                                             -----------      -----------
Investing activities:

    Purchase of equipment and furniture ................         (62,625)        (200,661)
    (Increase) decrease in patents
      and other assets .................................          12,450          (91,638)
    Construction of leasehold and  building improvements          (4,010)          (2,484)
                                                             -----------      -----------
                                                                 (54,185)        (294,783)
                                                             -----------      -----------
Financing activities:
    Issuance of notes payable-stockholders..............       1,600,000               --
    Issuance of debt, net of related expenses ..........            --          3,779,258
    Exercise of stock options and warrants .............            --             21,063
    Repayment of capital lease obligations .............         (28,126)            --
                                                             -----------      -----------
                                                               1,571,874        3,800,321
                                                             -----------      -----------

Net increase in cash and cash equivalents ..............         168,585        1,421,134

Cash and cash equivalents at beginning of year .........         402,664        2,126,327
                                                             -----------      -----------
Cash and cash equivalents at end of period .............     $   571,249      $ 3,547,461
                                                             ===========      ===========

SUPPLEMENTAL CASH FLOW INFORMATION:

Non-cash investing and financing activities:

Conversion of convertible debentures and
   accrued interest into Common Stock ..................     $ 1,301,096      $      --
                                                             ===========      ===========

Cash paid for interest .................................     $     9,041      $    30,287
                                                             ===========      ===========
</TABLE>
See notes to condensed financial statements
<PAGE>
                           UNIGENE LABORATORIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 1999

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 six-month
period ended June 30, 1999 are not  necessarily  indicative  of the results that
may be expected for the year ended December 31, 1999.  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, 1998.

NOTE B - CONVERTIBLE DEBENTURES

During  January  1999,   $200,000  of  principal  amount  of  the  Company's  5%
Convertible  Debentures,  due December 31, 2001, were converted into (a) 164,102
shares of Common Stock and (b) warrants,  expiring January 29, 2004, to purchase
6,564  shares of  Common  Stock at an  exercise  price of $1.52  per  share.  In
addition,  the  Company  issued  79,384  shares of Common  Stock as  payment  of
interest on the 5% Convertible Debentures in lieu of a semi-annual cash interest
payment in the amount of $101,000.

During  the  second  quarter  of 1999,  $1,000,000  of  principal  amount of the
Company's 5% Convertible Debentures,  due December 31, 2001, were converted into
(a)  1,457,458  shares of Common Stock and (b) warrants,  expiring  April - June
2004,  to purchase an  aggregate  of 58,298  shares of Common  Stock at exercise
prices ranging from $.78 to $1.15 per share.

NOTE C - NOTES PAYABLE - STOCKHOLDERS

During the second  quarter of 1999 (a) Jay Levy,  a director  and officer of the
Company,  loaned  the  Company  $1,500,000  evidenced  by demand  notes  bearing
interest at 6% per year,  and (b) Warren  Levy and Ronald  Levy,  directors  and
officers of the Company,  loaned the Company $100,000  evidenced by demand notes
bearing interest at the Merrill Lynch Margin Loan Rate plus .25% (8.125% at June
30, 1999) (the "Floating  Rate").  All of these loans were classified as current
liabilities as of June 30, 1999. In July and August of 1999, (a) Warren Levy and
Ronald Levy loaned the Company an additional  $30,000  evidenced by demand notes
bearing  interest  at the  Floating  Rate,  (b) Jay Levy  loaned the  Company an
additional  $370,000  evidenced by term notes maturing  January 2002 and bearing
interest at 6% per year, and (c) the $1,500,000 of demand notes evidencing loans
made  by Jay  Levy in the  second  quarter  were  converted  into 6% term  notes
maturing  January 2002. The Company has granted Jay Levy a security  interest in
all of its equipment  and a mortgage on its real  property to secure  payment of
the term notes  which are senior to all notes  payable to Warren Levy and Ronald
Levy.  The Company is required  to make  installment  payments on the term notes
commencing in October 1999 and ending in January 2002 in an aggregate  amount of
$72,426 per month.
<PAGE>
NOTE D - LIQUIDITY

The Company has incurred annual  operating  losses since its inception and, as a
result, at June 30, 1999 had an accumulated deficit of approximately $64,872,000
and a working capital  deficiency of approximately  $4,318,000.  The independent
auditors'  report covering the Company's 1998 financial  statements  includes an
explanatory  paragraph  that states the above  factors raise  substantial  doubt
about the  Company's  ability  to  continue  as a going  concern.  However,  the
financial  statements have been prepared on a going concern basis and as such do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

In August 1999,  the Company and  Warner-Lambert  successfully  concluded  their
second pilot human study for their oral calcitonin  formulation.  This milestone
will result in a payment to the Company of $2.5 million, which is expected to be
received during the third quarter of 1999.

With the receipt of $2 million in stockholder  loans during the second and third
quarters  of 1999,  in  addition  to the  upcoming  $2.5  million  payment  from
Warner-Lambert in the third quarter,  management  believes that the Company will
have  sufficient  financial  resources to sustain its  operations at the current
level into the fourth quarter of 1999. The Company expects to achieve additional
milestones under the Warner-Lambert  agreement during 1999, which will result in
further  payments.  However,  there  can be no  assurance  as to  when or if the
Company  will  achieve such  milestones.  The Company is  currently  negotiating
licensing  agreements for its nasal and injectable  calcitonin  products.  These
agreements could provide  short-term funds to the Company in upfront payments as
well as milestone  payments.  The Company has executed an agreement for the sale
of its state tax benefits  under a New Jersey  program which allows  certain New
Jersey  taxpayers to sell their state tax benefits to  third-parties.  This sale
should provide the Company with a total of  approximately  $4 million,  although
the Company's  application  for the sale is subject to final  approval by the NJ
Economic Development Authority. These tax benefit proceeds should be received in
1999 and 2000. However, there can be no assurance that any of these transactions
will  be  completed  or,  if  completed,  that  the  terms  and  timing  of such
transactions would provide sufficient funds to sustain operations at the current
level.

While the Company  believes that the  transactions  it currently is pursuing and
the milestone  payments  under the  Warner-Lambert  agreement  would satisfy the
Company's  liquidity  requirements  in the near term,  satisfying  the Company's
long-term liquidity  requirements will require the successful  commercialization
of its nasal or oral calcitonin product. In addition,  the  commercialization of
its  calcitonin  products will require the Company to incur  additional  capital
expenditures,   including  expenditures  to  expand  or  upgrade  the  Company's
manufacturing   operations  to  satisfy   certain  of  its   calcitonin   supply
obligations.  However,  neither the cost nor timing of such capital expenditures
is determinable at this time.
<PAGE>
NOTE E - DIRECTORS STOCK OPTION PLAN

At the Company's June 23, 1999 Annual  Meeting,  the  stockholders  approved the
adoption of a new  Directors  Stock  Option Plan (the "New Plan") to replace the
1994 Outside Directors Stock Option Plan (the "1994 Plan").  Under the New Plan,
each person elected to the Board after June 23, 1999,who is not an employee will
receive,  on the date of his  initial  election,  an option to  purchase  21,000
shares of Common Stock. In addition,  on May 1st of each year, commencing May 1,
1999,  each  non-employee  director  will  receive an option to purchase  10,000
shares of Common Stock if he has served as a non-employee  director for at least
six months prior to the May 1st grant.  Each option  granted  under the New Plan
will have a ten-year term and the exercise price of each option will be equal to
the  market  price of the  Common  Stock on the  date of the  grant.  A total of
350,000 shares of Common Stock are reserved for issuance under the New Plan.
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

RESULTS OF OPERATIONS

Revenue for the first half of 1999 increased 26% to $2,527,000  from  $2,012,000
in the first half of 1998.  Revenue  for both  periods  consisted  primarily  of
milestone payments from Warner-Lambert Company, as the result of the achievement
of  benchmarks in the  development  of an oral  calcitonin  product for treating
osteoporosis under a July 1997 licensing agreement. Revenues for the three month
periods ended June 30, 1999 and June 30, 1998 were minimal.

Research and  development,  the  Company's  largest  expense,  decreased 1% from
$2,256,000 to  $2,236,000  for the three months ended June 30, 1999, as compared
to the  same  period  in  1998.  The  decrease  was  primarily  attributable  to
regulatory  expenses  incurred  in  1998  related  to the  Company's  injectable
calcitonin product,  partially offset by development expenses in 1999 related to
the  Company's  nasal  calcitonin  product.  Research and  development  expenses
increased 5% from  $4,407,000  to  $4,610,000  for the six months ended June 30,
1999,  as  compared  to the same  period in 1998.  The  increase  was  primarily
attributable  to  1999  development  expenses  related  to the  Company's  nasal
calcitonin  product  partially  offset by a  reduction  in  regulatory  expenses
incurred in 1998 related to the Company's injectable calcitonin product.

General and  administrative  expenses increased 8% from $568,000 to $616,000 and
3% from  $1,058,000 to $1,092,000 for the three months and six months ended June
30, 1999,  respectively,  as compared to the same periods in 1998. The increases
were  primarily  due  to  increased   professional  fees,  partially  offset  by
reductions in public relations and travel expenses.

Interest income decreased $9,000 and $29,000 for the three months and six months
ended June 30, 1999, respectively,  as compared to the same periods in 1998, due
to reduced funds available for investment in 1999.

Interest  expense  increased  $100,000 and $273,000 for the three months and six
months  ended June 30,  1999,  respectively,  as compared to the same periods in
1998. The 1999 increases  principally  were due to the amortization of the value
of the beneficial  conversion  feature and related  warrants of the Company's 5%
Convertible  Debentures in the amounts of $46,000 for the second quarter of 1999
and $197,000 for the first half of 1999.

As a result of increased  operating  expenses and  interest  expense,  partially
offset by an increase in licensing  revenue,  net loss increased  $110,000 or 4%
and  $25,000  or 1% for the three  months and six  months  ended June 30,  1999,
respectively, as compared to the corresponding periods in 1998.

As of December  31, 1998,  the Company had  available  for income tax  reporting
purposes  net  operating  loss   carryforwards  in  the  approximate  amount  of
$58,400,000,  expiring  from 1999 through  2018,  which are  available to reduce
future earnings that would otherwise be subject to federal income taxes. For the
six months ending June 30, 1999, the Company  accumulated  additional  losses of
approximately  $3,541,000.  In addition,  the Company has investment tax credits
and research and  development  credits in the amounts of $19,000 and $2,178,000,
respectively,  which are available to reduce the amount of future federal income
taxes. These credits expire from 1999 through 2018.
<PAGE>
The Company follows Statement of Financial  Accounting Standards (SFAS) No. 109,
"Accounting  for Income  Taxes".  Given the Company's  past history of incurring
operating losses,  any deferred tax assets that are recognizable  under SFAS 109
have been fully reserved. As of January 1, 1999, under SFAS 109, the Company had
deferred  tax  assets  of  approximately  $25,500,000,  subject  to a  valuation
allowance of  $25,500,000.  The deferred tax assets are primarily as a result of
the Company's net operating losses and tax credits generated.  For the six-month
period  ended June 30, 1999,  the  Company's  deferred tax assets and  valuation
allowances each increased by approximately $1,416,000.

LIQUIDITY AND CAPITAL RESOURCES

There are currently no material commitments outstanding for capital expenditures
relating to either the Boonton,  New Jersey production facility or the Company's
facility in Fairfield,  New Jersey.

The Company,  at June 30, 1999, had cash and cash  equivalents  of $571,000,  an
increase of $169,000 from December 31, 1998.

The Company has incurred annual  operating  losses since its inception and, as a
result, at June 30, 1999 had an accumulated deficit of approximately $64,872,000
and a working capital  deficiency of approximately  $4,318,000.  The independent
auditors'  report covering the Company's 1998 financial  statements  includes an
explanatory  paragraph  that states the above  factors raise  substantial  doubt
about the  Company's  ability  to  continue  as a going  concern.  However,  the
financial  statements have been prepared on a going concern basis and as such do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

The  Company's  future  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.

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. Through June 30, 1999, the Company had
received an aggregate of $13.5  million  from  Warner-Lambert  in the form of an
equity investment,  a licensing fee and milestone  payments.  Under the terms of
the license  agreement,  the Company is eligible to receive up to an  additional
$41 million in milestone payments during the course of the development  program,
of which $8  million  would be  received  prior to the  commencement  of Phase I
clinical studies in the U.S. if specified  milestones are achieved.  Early-stage
milestones primarily relate to the product's performance characteristics,  while
the latter-stage  milestones are primarily related to regulatory  activities and
approvals. 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. The Company 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 are approximately $10-11 million per year due to
the  operations of its research and peptide  manufacturing  facilities  and with
three  calcitonin  products in various stages of development.  In addition,  the
Company  faces  principal and interest  obligations  over the next several years
under  its  outstanding   notes  payable  to  stockholders  and  5%  Convertible
Debentures.  However,  because of the conversion  features of the 5% Convertible
Debentures,  a substantial portion of this debt is expected to be converted into
Common  Stock,  thereby  decreasing  the amount of cash  required for  principal
payments.  The Company  also may elect to pay  interest on these  debentures  in
Common  Stock,  which would  decrease  the amount of cash  required for interest
payments.
<PAGE>
During the second  quarter of 1999 (a) Jay Levy,  a director  and officer of the
Company,  loaned  the  Company  $1,500,000  evidenced  by demand  notes  bearing
interest at 6% per year,  and (b) Warren  Levy and Ronald  Levy,  directors  and
officers of the Company,  loaned the Company $100,000  evidenced by demand notes
bearing interest at the Merrill Lynch Margin Loan Rate plus .25% (8.125% at June
30, 1999) (the "Floating  Rate").  All of these loans were classified as current
liabilities as of June 30, 1999. In July and August of 1999, (a) Warren Levy and
Ronald Levy loaned the Company an additional  $30,000  evidenced by demand notes
bearing  interest  at the  Floating  Rate,  (b) Jay Levy  loaned the  Company an
additional  $370,000  evidenced by term notes maturing  January 2002 and bearing
interest at 6% per year, and (c) the $1,500,000 of demand notes evidencing loans
made  by Jay  Levy in the  second  quarter  were  converted  into 6% term  notes
maturing  January 2002. The Company has granted Jay Levy a security  interest in
all of its equipment  and a mortgage on its real  property to secure  payment of
the term notes  which are senior to all notes  payable to Warren Levy and Ronald
Levy.  The Company is required  to make  installment  payments on the term notes
commencing in October 1999 and ending in January 2002 in an aggregate  amount of
$72,426 per month.

In August 1999,  the Company and  Warner-Lambert  successfully  concluded  their
second pilot human study for their oral calcitonin  formulation.  This milestone
will result in a payment to the Company of $2.5 million, which is expected to be
received during the third quarter of 1999.

With the receipt of $2 million in stockholder  loans during the second and third
quarters  of 1999,  in  addition  to the  upcoming  $2.5  million  payment  from
Warner-Lambert in the third quarter,  management  believes that the Company will
have  sufficient  financial  resources to sustain its  operations at the current
level into the fourth quarter of 1999.

The Company expects to achieve  additional  milestones under the  Warner-Lambert
agreement during 1999, which will result in further payments. However, there can
be no assurance as to when or if the Company will achieve such  milestones.  The
Company  is  currently  negotiating  licensing  agreements  for  its  nasal  and
injectable calcitonin products.  These agreements could provide short-term funds
to the Company in upfront  payments as well as milestone  payments.  The Company
has  executed an agreement  for the sale of its state tax  benefits  under a New
Jersey program which allows certain New Jersey taxpayers to sell their state tax
benefits to third-parties.  This sale should provide the Company with a total of
approximately  $4 million,  although the Company's  application  for the sale is
subject to final approval by the NJ Economic  Development  Authority.  These tax
benefit proceeds should be received in 1999 and 2000.  However,  there can be no
assurance  that any of these  transactions  will be completed  or, if completed,
that the terms and timing of such transactions would provide sufficient funds to
sustain operations at the current level.

While the Company  believes that the  transactions  it currently is pursuing and
the milestone  payments  under the  Warner-Lambert  agreement  would satisfy the
Company's  liquidity  requirements  in the near term,  satisfying  the Company's
long-term liquidity  requirements will require the successful  commercialization
of its nasal or oral calcitonin product. In addition,  the  commercialization of
its  calcitonin  products will require the Company to incur  additional  capital
expenditures,   including  expenditures  to  expand  or  upgrade  the  Company's
manufacturing   operations  to  satisfy   certain  of  its   calcitonin   supply
obligations.  However,  neither the cost nor timing of such capital expenditures
is determinable at this time.
<PAGE>
YEAR 2000
---------

The  Company has  established  a Year 2000  taskforce  that is  responsible  for
identifying  and reviewing all of the Company's  internal  computer  systems for
Year 2000 compliance,  including  workstations,  the accounting  system, and the
control  systems for equipment in the  Company's  manufacturing  and  laboratory
facilities.  The  taskforce  is currently  taking  inventory of all critical and
non-critical systems and has begun to test its systems and workstations for Year
2000 compliance.  Of the systems and workstations  tested so far, most have been
found to be in compliance. Certain systems, such as the accounting and telephone
systems have been brought into compliance.  Of the workstations tested and found
not to be in compliance,  most have been updated to be compliant. The review and
all testing  should be  completed  during the third  quarter of 1999.  After the
review and testing are  completed,  the taskforce  will determine how to address
any  remediation  necessary.  The  Company  intends  to  repair or  replace  any
noncompliant systems in a timely manner so that the business of the Company will
not be adversely affected.

Because  most  of the  principal  hardware  and  software  used  by the  Company
(including most of the equipment  control  systems) were acquired by the Company
within the last several years, the Company expects that most of its systems will
be Year 2000 compliant.  However,  until the taskforce  completes its review and
testing,  the Company will not be able to assess the level of compliance or make
an accurate  estimate  of the costs of any  remediation.  To date,  the costs of
remediation  have  not  been  material.  Contingency  plans  have  not yet  been
developed.

The Company has no material  relationships  with third party  suppliers,  to the
extent that third party noncompliance  could seriously disrupt  operations.  The
Company could be significantly  affected by Year 2000  noncompliance on the part
of  Warner-Lambert  as the Company  currently is dependent upon timely milestone
payments from Warner-Lambert. In addition, the loss of the utility supply to the
Company's  laboratory,  production and  administrative  facilities would cause a
shut down of those facilities which, depending on the duration of the shut down,
may have a material adverse impact on the Company's business.  In addition,  the
loss of  telecommunications  services and banking services would, as is the case
with all businesses, adversely affect the Company.

OTHER

The  Company  has been  notified  by the staff of the  National  Association  of
Securities  Dealers that it currently does not meet all of the  requirements for
the  continued  listing of the  Company's  Common  Stock on the Nasdaq  National
Market.  The Company is  appealing  the staff  decision  and has  developed  and
submitted to the Nasdaq Listing Qualifications Panel a plan by which it believes
that  it can  regain  compliance  with  the  listing  maintenance  requirements.
However,  there is no  assurance  that the Panel will find the plan  acceptable.
Should the panel not accept the plan,  the Common  Stock will be  delisted  from
trading on the  Nasdaq  National  Market,  which  could have a material  adverse
effect on the price and liquidity of the Common Stock.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting For Derivative  Instruments and Hedging  Activities." This statement
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging  activities.  SFAS  No.  133,  as  amended,  will be  effective  for the
Company's fiscal year beginning January 1, 2001. The adoption of SFAS No. 133 is
not expected to have a material  effect on the Company's  financial  position or
results of operations.
<PAGE>
Item 3.      Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

In the normal  course of  business,  the Company is exposed to  fluctuations  in
interest  rates as the Company seeks debt  financing to sustain its  operations.
The  Company  does not use  derivative  instruments  or  hedging  to manage  its
exposures.

The information below summarizes the Company's market risks associated with debt
obligations as of June 30, 1999. Fair values included herein have been estimated
taking  into  consideration  the  nature  and terms of each  instrument  and the
prevailing  economic and market  conditions  at June 30,  1999.  The table below
presents  principal  cash flows and related  interest  rates by year of maturity
based on the terms of the debt. The informatin  presented as to the  convertible
debentures is without consideration as to conversion features, as the Company is
unable to predict if and when such  conversions  may  occur.  Variable  interest
rates disclosed represent the rates at June 30, 1999.
<PAGE>
<TABLE>
<CAPTION>

                                          Estimated                                                Year of Maturity
                                            Fair              Carrying        ----------------------------------------------------
                                            Value              Amount              1999       2000        2001       2002     2003
                                            ------             ------              ----       ----        ----       ----     ----
<S>                                      <C>                 <C>              <C>
Notes payable - stockholders             $1,140,000          1,140,000        1,140,000         --         --         --       --
Variable interest rate                                                            8.125%        --         --         --       --
Notes payable - stockholders             $1,500,000          1,500,000        1,500,000         --         --         --       --
Fixed interest rate                                                                   6%
5% convertible debentures                $2,800,000          2,800,000              --          --     2,800,000      --       --
Fixed interest rate (1)                                                               5%          5%           5%     --       --
</TABLE>

(1) At the  option  of the  Company,  interest  payments  may be made  using the
Company's Common Stock.

                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, including the Company's need
for and success in securing  additional  financing,  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,  including the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
<PAGE>
PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds
         -----------------------------------------

         (a)       Not applicable.

         (b)       Not applicable.

         (c)       Recent Sales of Unregistered Securities.

During  the  second  quarter  of 1999,  $1,000,000  of  principal  amount of the
Company's 5% Convertible  Debentures,  due Decembe 31, 2001, were converted into
(a)  1,457,458  shares of Common Stock and (b) warrants,  expiring  April - June
2004,  to purchase an  aggregate  of 58,298  shares of Common  Stock at exercise
prices  ranging  from $.78 to $1.15 per share.  All of such shares and  warrants
were  issued by the Company  without  registration  in reliance on an  exemption
under Section 3(a)(9) of the Securities Act.

         (d)       Not applicable.

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

                  (a) The matters described under item 4(c) below were submitted
                  to a vote  of  security  holders  at  the  Annual  Meeting  of
                  Stockholders  held on June 23, 1999 (the "Annual  Meeting") in
                  connection  with which  proxies  were  solicited  pursuant  to
                  Regulation 14A under the Securities Exchange Act.

                  (b)      Not applicable

                  (c) The  following  describes  the  matters  voted upon at the
                  Annual  Meeting  and sets  forth the number of votes cast for,
                  against or withheld and the number of  abstentions  as to each
                  such matter (there were no broker non-votes):

                           (i)       Election of directors:

                  Nominee                    For                     Withheld
                  -------                    ---                     --------

                  Jay Levy                   31,946,540              1,069,691
                  Ronald S. Levy             31,960,540              1,055,691
                  Warren P. Levy             32,009,534              1,006,697
                  Robert F. Hendrickson      32,015,761              1,000,470
                  Allen Bloom                32,014,789              1,001,442

                           (ii)   Proposal  to  approve  the   adoption  of  the
                  Company's Directors Stock Option Plan:

                  For                         Against              Abstain
                  ---                         -------              -------

                  30,722,251                  2,098,628            195,352

<PAGE>
                           (iii) Proposal to ratify the  appointment of KPMG LLP
                  as auditors of the Company for 1999:

                  For                         Against              Abstain
                  ---                         -------              -------

                  32,554,309                  249,093              212,829

                  (d)       Not applicable.





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

         (a)      Exhibits:

                  Exhibit 10.1       Form of Promissory Note between the Company
                                     and Jay Levy.

                  Exhibit 10.2       Form of Promissory Note between the Company
                                     and Warren Levy and Ronald Levy.

                  Exhibit 10.3       Amendment to  Loan  Agreement  and Security
                                     Agreement between the Company and Jay Levy,
                                     Warren Levy and Ronald Levy dated  June 25,
                                     1999.

                  Exhibit 10.4       Directors Stock Option Plan.

                  Exhibit 27         Financial  Data  Schedule -  period  ended
                                     June 30,  1999.

         (b)      Reports on Form 8-K:

The Company did not file any reports on Form 8-K during the three  months  ended
June 30, 1999.

 <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
August 16, 1999                                 -----------------------
                                                Warren P. Levy, President
                                                (Chief Executive Officer)


                                                /s/ Jay Levy
August 16, 1999                                 -----------------------
                                                Jay Levy, Treasurer
                                                (Chief Financial Officer and
                                                 Chief Accounting Officer)