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, 1997
                                

                                  OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the transition period from_______________  to_____________

For Quarter Ended                                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: (201)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--37,005,702 shares as of May 1, 1997
<PAGE>
                                      INDEX

                           UNIGENE LABORATORIES, INC.

PART I. FINANCIAL INFORMATION                             

Item 1. Financial Statements (Unaudited)

Condensed balance sheets-
         March 31, 1997 and December 31, 1996             

Condensed statements of operations-
         Three months ended March 31, 1997 and 1996       

Condensed statements of cash flows-
    Three months ended March 31, 1997 and 1996            

Notes to condensed financial statements-
    March 31, 1997                                        

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


PART II. OTHER INFORMATION

Item 2.           Changes in Securities                   

Item 6.           Exhibits and Reports on Form 8-K        


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

                                                    March 31           December 31
                                                      1997                  1996
                                                  ------------         ------------
                                                  (Unaudited)
<S>                                               <C>                   <C>
ASSETS
Current assets:
   Cash and cash equivalents ..................   $  2,308,013          $ 4,491,386
   Accounts receivable ........................        100,380              100,954
   Prepaid expenses and other
      current assets ..........................        869,187              882,135
                                                  ------------         ------------
        Total current assets ..................      3,277,580            5,474,475

Property, plant and equipment-net
   of accumulated depreciation and
   amortization ...............................     10,131,055           10,356,070
Patents and other assets ......................      1,336,367            1,338,691
                                                  ------------         ------------
                                                   $14,745,002         $ 17,169,236
                                                  ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ...........................   $    795,137         $  1,025,136
   Accrued expenses ...........................        633,345              685,568
   Notes payable - stockholders ...............        810,000              810,000
                                                  ------------         ------------
         Total current liabilities ............      2,238,482            2,520,704

   Note payable - stockholders ................        655,000              655,000
   9.5% convertible debentures ................        502,694            1,283,400
   10% convertible debentures .................        650,000              850,000

Stockholders' equity:
   Common stock-par value $.01 per share;
      authorized 48,000,000 shares, issued
      and outstanding 37,005,702 shares in
      1997 and 35,352,824 shares in 1996 ......        370,057              353,528
   Additional paid-in capital .................     59,087,806           55,829,641
   Accumulated deficit ........................    (48,758,006)         (44,322,006)
   Less: Treasury stock, at cost,
      7,290 shares ............................         (1,031)              (1,031)
                                                  ------------         ------------
        Total stockholders' equity ............     10,698,826           11,860,132
                                                  ------------         ------------
                                                  $ 14,745,002         $ 17,169,236
                                                  ============         ============

                    See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                   Three Months Ended
                                                         March 31
                                              ---------------------------- 
                                                  1997              1996
                                              -----------      -----------
<S>                                           <C>              <C>
Licensing and
   other revenue ........................     $     1,442      $   305,181
                                              -----------      -----------
Operating expenses:
   Research and
      development .......................       2,192,961        1,765,446

   Settlement of contractual right
   (Note C) .............................       1,669,063             --

   General and
      administrative ....................         550,016          391,180
                                              -----------      -----------
                                                4,412,040        2,156,626
                                              -----------      -----------
   Operating loss .......................      (4,410,598)      (1,851,445)
                                              -----------      -----------

Other income (expense):
         Interest/other income ..........          48,198           78,338
         Interest expense ...............         (73,601)        (174,589)
                                              -----------      -----------
                                                  (25,403)         (96,251)
                                              -----------      -----------

Net loss ................................     $(4,436,001)     $(1,947,696)
                                              ===========      ===========

Net loss per share ......................     $      (.12)     $      (.08)
                                              ===========      ===========
Weighted average number
  of shares outstanding .................      36,019,408       23,850,944
                                              ===========      ===========

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

                                                         Three Months Ended
                                                              March 31,
                                                   -----------------------------
                                                       1997             1996
                                                  ------------      -----------
<S>                                               <C>               <C>

Net cash used for operating activities .......    $ (2,567,809)     $(2,955,029)
                                                   -----------      -----------

Investing activities:

   Construction of leasehold improvements ....         (18,298)            --
   Purchase of equipment and furniture .......        (126,087)         (16,901)
   Increase in patents and other assets ......         (22,644)         (38,676)
                                                   -----------      -----------
                                                      (167,029)         (55,577)
                                                   -----------      -----------

Financing activities:

   Sales of stock, net of related expenses ...            --            300,440
   Issuance of debt, net of related expenses .            --          8,137,000
   Exercise of stock options and warrants ....         551,465           23,612
                                                   -----------      -----------
                                                       551,465        8,461,052
                                                   -----------      -----------
Net increase (decrease) in cash and
  cash equivalents ...........................      (2,183,373)       5,450,446
Cash and cash equivalents at
   beginning of year .........................       4,491,386          258,627
                                                   -----------      -----------
Cash and cash equivalents at
   end of period .............................     $ 2,308,013      $ 5,709,073
                                                   ===========      ===========

Supplemental cash flow information:
   Exchange of notes .........................            --        $ 3,300,000

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



                  See notes to condensed financial statements.
</TABLE>
<PAGE>
                           UNIGENE LABORATORIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 1997

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, 1997 are not necessarily  indicative of the results
that  may be  expected  for the  year  ended  December  31,  1997.  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, 1996.

NOTE B - CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS INTO COMMON STOCK

During 1995, executive officers of the company, Warren Levy, Ronald Levy and Jay
Levy,  and a member of the Levy  family  loaned to the Company an  aggregate  of
$1,905,000.  A total of $440,000  of these  loans was repaid in 1996.  On May 2,
1997, an aggregate of $200,000 in principal  amount of these loans was converted
into 57,200  shares of the common stock of the Company at a conversion  price of
$3.4965 per share.  The  closing  price of the common  stock on May 1, 1997,  as
reported in the Wall Street Journal, was $3.21875 per share.

NOTE C - SETTLEMENT OF CONTRACTUAL RIGHT

On February 7, 1997, the Company issued an aggregate of 490,000 shares of common
stock to the holders of the Company's 9.5% Senior Secured Convertible Debentures
(the "Debentures") in exchange for the surrender of certain  contractual rights.
Under the terms of the agreement  pursuant to which the Debentures  were issued,
the Company  could have become  obligated  as of December 31, 1998 to pay to the
holders a fee equal to 2% of the sum of the market value of the Company's 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  $1,669,603,  based on a closing  price of the
common stock of $3.40625 on February 7, 1997.

NOTE D - CONVERTIBLE DEBENTURES

During the period January 1, 1997 through March 31, 1997,  $780,706 of principal
amount of the Company's 9.5% Senior Secured Convertible Debentures was converted
into 697,058 shares of common stock.

During the period January 1, 1997 through March 31, 1997,  $200,000 of principal
amount of the  Company's  10%  Convertible  Debentures,  plus $18,136 of accrued
interest,  had been converted into 109,068 shares of common stock. From April 1,
1997 through May 5, 1997,  an additional  $200,000 of principal  amount of these
debentures,  plus $22,795 of accrued interest, was converted into 111,397 shares
of common stock.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Revenues for the first  quarter of 1996  included a license fee of $300,000 from
the  Company's  joint  venture in China.  Revenues from hormone and enzyme sales
were  $1,000 and  $5,000 for the three  months  ended  March 31,  1997 and 1996,
respectively.

Research and  development,  the Company's  largest  expense,  increased 24% from
$1,765,000 to $2,193,000, for the three months ended March 31, 1997, as compared
to the same period in 1996.  The increase was  primarily  related to  regulatory
documentation  preparation  fees and  increased  expenditures  for  supplies and
salaries.

Settlement of contractual right in 1997 represents the following. On February 7,
1997,  the Company  issued an aggregate of 490,000 shares of common stock to the
holders  of the  Company's  9.5%  Senior  Secured  Convertible  Debentures  (the
"Debentures") in exchange for the surrender of certain contractual rights. Under
the terms of the agreement  pursuant to which the  Debentures  were issued,  the
Company  could have  become  obligated  as of  December  31,  1998 to pay to the
holders a fee equal to 2% of the sum of the market value of the Company's 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  $1,669,603,  based on a closing  price of the
common stock of $3.40625 on February 7, 1997.

General and administrative expenses increased 41% from $391,000 to $550,000, for
the three months  ended March 31, 1997,  as compared to the same period in 1996.
The increase was primarily due to higher public  relations,  insurance and legal
expenses.

Interest and other income decreased $30,000 for the three months ended March 31,
1997,  as compared to the same period in 1996.  The decrease was due to gains on
settlement of debt recognized in 1996.

Interest expense  decreased  $101,000 for the three months ended March 31, 1997,
as compared to the same  period in 1996 due to  conversions  in 1996 and 1997 of
the Company's convertible debentures.

As a result of  decreased  revenue,  as well as  increased  operating  expenses,
partially offset by decreased interest expense, the Company's net loss increased
$2,488,000 or 128% compared to the prior year.

As of December  31, 1996,  the Company had  available  for income tax  reporting
purposes  net  operating  loss   carryforwards  in  the  approximate  amount  of
$44,300,000,  expiring  from 1997 through  2011,  which are  available to reduce
future earnings that otherwise would be subject to federal income taxes. For the
three months ending March 31, 1997, the Company accumulated additional losses of
approximately  $4,400,000.  In addition,  the Company has investment tax credits
and research and  development  credits in the amounts of $64,000 and $1,454,000,
respectively,  which are available to reduce the amount of future federal income
taxes. These credits expire from 1997 through 2011.
<PAGE>
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, 1997,  under FASB 109, the
Company  had  deferred  tax assets of  approximately  $19,200,000,  subject to a
valuation  allowance of  $19,200,000.  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, 1997, the Company's deferred
tax assets and valuation allowances each increased by approximately $1,800,000.
 
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,  totaled
approximately  $12 million.  The  improvements and equipment have been 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 for capital  expenditures  relating to either
the Boonton facility or the Company's facility in Fairfield.

The Company,  at March 31, 1997, had cash and cash equivalents of $2,308,000,  a
decrease of $2,183,000 from December 31, 1996.

The  Company's  ability to  generate  additional  cash from  operations  depends
primarily  upon signing  research or  licensing  agreements,  achieving  defined
benchmarks in such agreements,  receiving  regulatory approval for its products,
and marketing  hormones and enzyme  products.  The Company has one joint venture
agreement in effect, which contributed $300,000 to 1996 revenues. However, there
is no assurance  that any  additional  revenues  will be  recognized or received
under this agreement.

The Company's cash requirements have increased by approximately  $2.5-$3 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 debentures and other indebtedness. However, because of the
recent  increase  in the  Company's  stock price and 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.  Management  believes that the Company has
sufficient  financial  resources to sustain its  operations at the current level
through at least the second quarter of 1997. The Company will require additional
funds through financing or licensing  agreements to ensure continued  operations
beyond  that time.  Management  is  actively  seeking  licensing  and/or  supply
agreements with pharmaceutical  companies.  The Company is currently  developing
two Calcitonin products (an oral version and an injectable version) for which it
is seeking  licensing  partners.  The signing of one or more  agreements will be
necessary to fund  operations  and to repay its loans and interest  thereon when
due.  In the  absence  of or the delay in  signing  such  agreements,  obtaining
adequate interim financing from other sources would be necessary. However, there
is no assurance that  sufficient  funds will be obtained.  The Company  believes
that the  implementation  of a licensing  transaction will satisfy the Company's
liquidity  requirements over the short-term.  Satisfying the Company's long-term
liquidity  requirements will require the successful  commercialization of one or
more of its Calcitonin products.
<PAGE>
PART II.  OTHER INFORMATION

Item 2.           CHANGES IN SECURITIES.

(a) and (b) Not applicable

(c) Recent Sales of Unregistered Securities

         On February 7, 1997,  the Company issued an aggregate of 490,000 shares
of common  stock to the  holders  (the  "Holders")  of its 9.5%  Senior  Secured
Convertible Debentures due November 15, 1998 (the "9.5% Debentures") in exchange
for the surrender by the Holders of certain contractual rights.  Under the terms
of the agreement  pursuant to which the 9.5% Debentures were issued, the Company
would have been obligated to pay the Holders a fee equal to 2% of the sum of the
market value of the Company's outstanding common stock plus the principal amount
of all  outstanding  debt of the  Company  less its cash on  deposit,  all as of
December 31, 1998,  up to a maximum fee of  $3,000,000.  The expense  associated
with the  surrender  of the fee was valued at  $1,669,603,  based on the closing
price of the common stock of $3.406 per share on February 7, 1997.  The issuance
of the 490,000 shares was effected in reliance on an exemption from registration
pursuant  to  Section  4(2) of the  Securities  Act of  1933,  as  amended  (the
"Securities Act").

         In the first quarter of 1997,  the Company issued (i) 697,058 shares of
common stock upon the  conversion  of $780,706 in  principal  amount of the 9.5%
Debentures,  and (ii)  109,068  shares of common  stock upon the  conversion  of
$218,137 in  principal  amount of and  accrued  interest  on the  Company's  10%
Convertible  Debentures  due March 4, 1999 (the "10%  Debentures").  All of such
shares  were  issued by the  Company  without  registration  pursuant to Section
3(a)(9) of the Securities Act.

         In the first  quarter of 1997,  the Company  issued  132,952  shares of
common  stock upon the exercise of an equal  number of warrants  exercisable  to
purchase one share of common stock at an exercise price of $2.10 per share.  The
warrants  were  issued  by  the  Company  to  certain  accredited  investors  in
connection  with the sale of the 10%  Debentures in March 1996.  The issuance of
such shares was effected in reliance on an exemption from registration  pursuant
to Section 4(2) of the Securities Act.

         In the first  quarter  of 1997,  the  Company  issued an  aggregate  of
112,000  shares  of common  stock to  certain  financial  and  public  relations
consultants  upon the  exercise of an equal  number of warrants  exercisable  to
purchase  one share of common  stock at exercise  prices  ranging  from $1.50 to
$2.00 per share. All such consultants were accredited investors and the issuance
of such  shares was  affected  in reliance  on an  exemption  from  registration
pursuant to Section 4(2) of the Securities Act.

         In the first  quarter of 1997,  the  Company  issued  10,000  shares of
common stock to a financial  consultant  under the terms of an  agreement  dated
December  30,  1994 as partial  compensation  for  services  rendered  under the
agreement.  The Company received no additional consideration for the issuance of
such shares. Such consultant was an accredited investor and the issuance of such
shares was affected in reliance on an exemption  from  registration  pursuant to
Section 4(2) of the Securities Act.
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)               Exhibits:

                  Letter  Agreement  dated as of February 7, 1997 among  Unigene
                  Laboratories,   Inc.,  Olympus  Securities,  Ltd.  and  Nelson
                  Partners.

(b)               Reports on Form 8-K.

                  The  Company  did not file any  reports on Form 8-K during the
                  three months ended March 31, 1997.
<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 12, 1997                       -----------------------------
                                   Warren P. Levy, President
                                   (Chief Executive Officer)


                                   /s/ Jay Levy
May 12, 1997                       -----------------------------
                                   Jay Levy, Treasurer
                                   (Chief Financial Officer and
                                    Chief Accounting Officer)


<PAGE>
                                     EXHIBIT


                                February 6, 1997




Dr. Ronald S. Levy
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, New Jersey 07004

Re:      Repurchase of Success Fee

Dear Ron:

         Pursuant  to our phone  conversation  earlier  today,  I have set forth
below the terms pursuant to which each of Nelson Partners ("Nelson") and Olympus
Securities,  Ltd.  ("Olympus")  will sell to  Unigene  Laboratories,  Inc.  (the
"Company"),  and the Company will purchase from each of Nelson and Olympus,  the
contractual  right of each of Nelson and Olympus to receive from the Company the
success  fee  described  in Section 8 of the  Amended  and  Restated  Securities
Purchase  Agreement dated as of March 6, 1996, by and among Nelson,  Olympus and
the Company (the "Purchase  Agreement").  Capitalized terms used but not defined
in this letter have the respective meanings set forth in the Purchase Agreement.

         1.   Issuance  of Common  Stock.  The  Company  hereby  agrees to issue
              378,638  shares of Common  Stock to Nelson and  111,362  shares of
              Common  Stock  to  Olympus  within  10  business  days  after  the
              Company's  execution  of this letter  (collectively,  the "Success
              Shares").

         2.   Cancellation  of Success Fee.  Nelson and Olympus hereby agree (a)
              that the Company's issuance of the Success Shares shall constitute
              full consideration for their rights to receive the Success Fee and
              (b) to waive all rights to receive  the Success Fee from and after
              the date of receipt of the Success Shares.

        3.    Registration  of Success  Shares.  The  Company  hereby  agrees to
              effect the  registration  of the Success Shares for resale by each
              of Nelson and Olympus on a Form S-3  registration  statement  (the
              "Registration  Statement")  within  one year after the date of the
              Company's execution of this letter (such one year anniversary, the
              "Registration  Date") and to  maintain  the  effectiveness  of the
              Registration  Statement  for a period of three years from the date
              of the  Company's  issuance of the Success  Shares.  Except as set
              forth in the  preceding  sentence,  the Company  hereby  agrees to
              effect such registration on substantially the same terms set forth
              in the Registration Rights Agreement dated as of October 11, 1996,
              by and  among the  Company,  Nelson,  Olympus  and  certain  other
              stockholders of the Company.

        4.    Miscellaneous.  Except as expressly  modified by the terms of this
              letter,  the  Purchase  Agreement  shall  remain in full force and
              effect.  This letter shall be governed and construed in accordance
              with the laws of the State of New York.
<PAGE>
Unigene Laboratories, Inc.
February 6, 1997
Page 2


         If you are in  agreement  with  the  terms  of this  letter  please  so
indicate by executing this letter in the space provided below and returning (via
facsimile)  an  executed  copy  of  this  letter  to  my  attention.  The  offer
incorporated in this letter shall expire at 5:00 p.m. (CST) on Friday,  February
7, 1997 unless the Company has executed and delivered  this letter in the manner
referred to in the preceding sentence.

                                       Sincerely,

                                       NELSON PARTNERS

                                       By:      Citadel Limited Partnership
                                       Its:     Managing General Partner

                                       By:      GLB Partners, L.P.
                                       Its:     General Partner

                                       By:      Citadel Investment Group, L.L.C.
                                       Its:     General Partner

                                       By:      /s/Kenneth C. Griffin
                                       Name:    Kenneth C. Griffin
                                       Its:     President


                                       OLYMPUS SECURITIES, LTD.

                                       By:      Citadel Limited Partnership
                                       Its:     Trading Manager

                                       By:      GLB Partners, L.P.
                                       Its:     General Partner

                                       By:      Citadel Investment Group, L.L.C.
                                       Its:     General Partner

                                       By:      /s/Kenneth C. Griffin
                                       Name:    Kenneth C. Griffin
                                       Its:     President


Agreed and Accepted as of February 7, 1997:

UNIGENE LABORATORIES, INC.

By:      /s/Ronald S. Levy
         -----------------
Name:    Ronald S. Levy
Its:     Vice President