**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10 - Q**
 
 xQUARTERLY
        REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 For
        the
        quarterly period ended September 30, 2005
 
 OR
 
 oTRANSITION
        REPORT PURSUANT TO SECTION 13
        OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
        the
        transition period from ______________ to ______________
 
 **Commission
        File Number 1-10352**
 
 
 **COLUMBIA
        LABORATORIES, INC.**
 (Exact
        name of Registrant as specified in its charter)
 
 
 **Delaware**
              **59-2758596**(State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization)
              Identification
                  No.)**354
                  Eisenhower Parkway, Plaza 1, 2****nd****Floor****Livingston,
                  New Jersey**
              **07039**(Address
                  of principal executive offices)
              (Zip
                  Code)
 
 
 Registrant's
        telephone number, including area code: **(973)
        994-3999**
 
 
 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 xNo o
 
 Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule
        12b-2 of the Exchange Act) Yes xNo
o
 
 Number
        of
        shares of Common Stock of Columbia Laboratories, Inc. issued and outstanding
        as
        of November 1, 2005: 41,751,934
 
 
 **PART
        1 - FINANCIAL INFORMATION**
 
 
 **Item
        1. Financial Statements**
 
 
 The
        following unaudited, condensed consolidated financial statements of Columbia
        Laboratories, Inc. (the “Company”) have been prepared in accordance with the
        instructions to Form 10-Q and, therefore, omit or condense certain footnotes
        and
        other information normally included in financial statements prepared in
        accordance with generally accepted accounting principles. In the opinion
        of
        management, all adjustments (consisting only of normal recurring accruals)
        necessary for a fair presentation of the financial information for the interim
        periods reported have been made. Results of operations for the three and
        nine
        months ended September 30, 2005 are not necessarily indicative of the results
        for the year ending December 31, 2005. It is suggested that these financial
        statements be read in conjunction with the financial statements and related
        disclosures for the year ended December 31, 2004 included on Form 10-K filed
        with the SEC, as amended.
 
 Page
            2 of
            21
 
 COLUMBIA
        LABORATORIES, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED BALANCE SHEETS
  September
                        30,
                    
                    December
                        31,2005
                    
                    2004(Unaudited)ASSETSCurrent
                        assets-Cash
                        and cash equivalents
                    
                    $
                    7,202,394
                    
                    $
                    19,781,591Accounts
                        receivable, net of allowances of $75,000 and$86,114
                        in 2005 and 2004, respectively
                    
                    
                    6,232,910
                    
                    
                    4,260,379Inventories
                    
                    
                    2,160,898
                    
                    
                    2,742,544Prepaid
                        expenses and other current assets
                    
                    
                    675,739
                    
                    
                    1,155,673Total
                        current assets
                    
                    
                    16,271,941
                    
                    
                    27,940,187Property
                        and equipment, net
                    
                    
                    1,065,102
                    
                    
                    1,207,041Other
                        assets
                    
                    
                    120,101
                    
                    
                    121,140TOTAL
                        ASSETS
                    
                    $
                    17,457,144
                    
                    $
                    29,268,368LIABILITIES
                        AND STOCKHOLDERS' EQUITY (DEFICIENCY)Current
                        liabilities-Note
                        payable
                    
                    $
                    -
                    
                    $
                    10,000,000Current
                        portion of financing agreements
                    
                    
                    995,790
                    
                    
                    2,753,486Accounts
                        payable
                    
                    
                    2,539,479
                    
                    
                    2,772,107Accrued
                        sales returns and other accrued expenses
                    
                    
                    2,524,508
                    
                    
                    3,111,198Total
                        current liabilities
                    
                    
                    6,059,777
                    
                    
                    18,636,791Deferred
                        revenue
                    
                    
                    4,204,608
                    
                    
                    4,239,060Long-term
                        portion of financing agreements
                    
                    
                    20,085,444
                    
                    
                    18,923,440TOTAL
                        LIABILITIES
                    
                    
                    30,349,829
                    
                    
                    41,799,291Stockholders'
                        equity (deficiency)-Preferred
                        stock, $.01 par value; 1,000,000 shares authorized:Series
                        B Convertible Preferred Stock, 130 shares issued andoutstanding
                        in 2005 and 2004
                    
                    
                    1
                    
                    
                    1Series
                        C Convertible Preferred Stock, 3,250 shares issuedand
                        outstanding in 2005 and 2004
                    
                    
                    32
                    
                    
                    32Series
                        E Convertible Preferred Stock, 69,000 shares issuedand
                        outstanding in 2005
                    
                    
                    690
                    
                    
                    -Common
                        stock, $.01 par value; 100,000,000 authorized41,751,934
                        shares issued and outstanding in 2005 and 2004
                    
                    
                    417,519
                    
                    
                    417,519Capital
                        in excess of par value
                    
                    
                    175,371,709
                    
                    
                    168,587,536Accumulated
                        deficit
                    
                    
                    (188,864,523
                    )
                    
                    (181,777,838
                    )Accumulated
                        other comprehensive income
                    
                    
                    181,887
                    
                    
                    241,827TOTAL
                        STOCKHOLDERS' EQUITY (DEFICIENCY)
                    
                    
                    (12,892,685
                    )
                    
                    (12,530,923
                    )TOTAL
                        LIABILITIES AND STOCKHOLDERS'EQUITY
                        (DEFICIENCY)
                    
                    $
                    17,457,144
                    
                    $
                    29,268,368
 
 See
          notes
          to condensed consolidated financial statements
 Page
            3 of
            21
 
 
 **** COLUMBIA
        LABORATORIES, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 
 Nine
                  Months Ended
                September
                  30,
              
              Three
                  Months Ended
                September
                  30,2005
              
              2004
              
              2005
              
              2004NET
                  REVENUES
              
              $
              17,148,364
              
              $
              14,296,456
              
              $
              6,533,942
              
              $
              5,092,819COST
                  OF REVENUES
              
              
              6,452,554
              
              
              5,685,011
              
              
              2,390,114
              
              
              2,182,140Gross
                  profit
              
              
              10,695,810
              
              
              8,611,445
              
              
              4,143,828
              
              
              2,910,679OPERATING
                  EXPENSES:Selling
                  and distribution
              
              
              6,700,682
              
              
              14,958,153
              
              
              1,700,286
              
              
              5,210,005General
                  and administrative
              
              
              5,163,342
              
              
              5,687,018
              
              
              1,640,620
              
              
              1,904,281Research
                  and development
              
              
              3,993,397
              
              
              4,072,932
              
              
              1,452,575
              
              
              1,016,269Total
                  operating expenses
              
              
              15,857,421
              
              
              24,718,103
              
              
              4,793,481
              
              
              8,130,555Loss
                  from operations
              
              
              (5,161,611
              )
              
              (16,106,658
              )
              
              (649,653
              )
              
              (5,219,876
              )OTHER
                  INCOME (EXPENSE):Interest
                  income
              
              
              127,995
              
              
              182,321
              
              
              41,596
              
              
              63,345Interest
                  expense
              
              
              (2,031,630
              )
              
              (2,206,489
              )
              
              (665,664
              )
              
              (770,953
              )Loss
                  on sale of intangible assets
              
              
              -
              
              
              (577,917
              )
              
              -
              
              
              -Other,
                  net
              
              
              (21,439
              )
              
              (131,205
              )
              
              (8,221
              )
              
              (54,355
              )(1,925,074
              )
              
              (2,733,290
              )
              
              (632,289
              )
              
              (761,963
              )Net
                  loss
              
              $
              (7,086,685
              )
              $
              (18,839,948
              )
              $
              (1,281,942
              )
              $
              (5,981,839
              )NET
                  LOSS PER COMMON SHARE:Basic
                  and diluted
              
              $
              (0.17
              )
              $
              (0.47
              )
              $
              (0.03
              )
              $
              (0.14
              )WEIGHTED
                  AVERAGE NUMBER OFCOMMON
                  SHARES OUTSTANDING:Basic
                  and diluted
              
              
              41,751,934
              
              
              40,726,264
              
              
              41,751,934
              
              
              41,751,934
 
 
 See
        notes
        to condensed consolidated financial statements
 
 
 Page
            4 of
            21
 COLUMBIA
        LABORATORIES, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
 (Unaudited)
 
 
 
 Nine
                  Months Ended
                September
                  30,
              
              Three
                  Months Ended
                September
                  30,2005
              
              2004
              
              2005
              
              2004NET
                  LOSS
              
              $
              (7,086,685
              )
              $
              (18,839,948
              )
              $
              (1,281,942
              )
              $
              (5,981,839
              )Other
                  comprehensive loss:Foreign
                  currency translation, net of tax
              
              
              (59,940
              )
              
              (6,126
              )
              
              (1,705
              )
              
              10,666Comprehensive
                  loss
              
              $
              (7,146,625
              )
              $
              (18,846,074
              )
              $
              (1,283,647
              )
              $
              (5,971,173
              )
 
 
 See
        notes
        to condensed consolidated financial statements
 
 Page
            5 of
            21
 COLUMBIA
        LABORATORIES, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 Nine
                    Months Ended September 30,2005
                
                2004CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    loss
                
                $
                (7,086,685
                )
                $
                (18,839,948
                )Adjustments
                    to reconcile net loss to netcash
                    used in operating activities-Depreciation
                    and amortization
                
                
                220,763
                
                
                301,712Provision
                    for doubtful accounts
                
                
                136,661
                
                
                48,917Provision
                    for returns and allowances
                
                
                2,263,044
                
                
                580,906Writedown
                    of inventories
                
                
                807,354
                
                
                511,323Interest
                    expense on financing agreements
                
                
                1,876,050
                
                
                1,639,969Loss
                    on sale of intangible assets
                
                
                -
                
                
                577,917Issuance
                    of options for sales services
                
                
                6,738
                
                
                10,130Changes
                    in assets and liabilities-(Increase)
                    decrease in:Accounts
                    receivable
                
                
                (2,109,192
                )
                
                (1,218,919
                )Inventories
                
                
                (225,708
                )
                
                (1,416,919
                )Prepaid
                    expenses
                
                
                479,934
                
                
                1,099,312Other
                    assets
                
                
                1,039
                
                
                (20,445
                )Increase
                    (decrease) in:Accounts
                    payable
                
                
                (232,628
                )
                
                (1,098,060
                )Accrued
                    sales returns and other accrued expenses
                
                
                (2,849,734
                )
                
                (1,900,175
                )Deferred
                    revenue
                
                
                (34,452
                )
                
                515,338Net
                    cash used in operating activities
                
                
                (6,746,816
                )
                
                (19,208,942
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Purchase
                    of property and equipment
                
                
                (78,936
                )
                
                (170,683
                )Sale
                    of intangible assets
                
                
                -
                
                
                300,000Net
                    cash provided by (used in) investing activities
                
                
                (78,936
                )
                
                129,317CASH
                    FLOWS FROM FINANCING ACTIVITIES:Proceeds
                    from issuance of common stock, net
                
                
                -
                
                
                6,380,000Proceeds
                    from issuance of preferred stock, net
                
                
                6,900,000
                
                
                -Exercise
                    of options and warrants
                
                
                -
                
                
                229,688Payment
                    of note payable
                
                
                (10,000,000
                )
                
                -Proceeds
                    from financing agreements
                
                
                -
                
                
                3,000,000Payments
                    pursuant to financing agreements
                
                
                (2,471,742
                )
                
                (298,418
                )Dividends
                    paid
                
                
                (121,875
                )
                
                (121,875
                )Net
                    cash provided by (used in) financing activities
                
                
                (5,693,617
                )
                
                9,189,395
 (Continued)
 Page
            6 of
            21
 
 
 COLUMBIA
        LABORATORIES, INC. AND SUBSIDIARIES
  CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Unaudited)
  (Continued)
  Nine
                        Months Ended September 30,2005
                    
                    2004EFFECT
                        OF EXCHANGE RATE CHANGES ON CASH
                    
                    
                    (59,828
                    )
                    
                    (5,996
                    )NET
                        INCREASE (DECREASE) IN CASHAND
                        CASH EQUIVALENTS
                    
                    
                    (12,579,197
                    )
                    
                    (9,896,226
                    )CASH
                        AND CASH EQUIVALENTS,Beginning
                        of period
                    
                    
                    19,781,591
                    
                    
                    30,965,517CASH
                        AND CASH EQUIVALENTS,End
                        of period
                    
                    $
                    7,202,394
                    
                    $
                    21,069,291
 
 
 See
        notes
        to condensed consolidated financial statements
 
 Page
            7 of
            21
 COLUMBIA
        LABORATORIES, INC. AND SUBSIDIARIES
 
 NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
 
 (1)
        SIGNIFICANT ACCOUNTING POLICIES :
 
 The
        accounting policies followed for quarterly financial reporting are the same
        as
        those disclosed in Note (1) of the Notes to Consolidated Financial Statements
        included in the Company's Annual Report on Form 10-K filed with the SEC for
        the
        fiscal year ended December 31, 2004, as amended.
 
 Prior-year
        financial statements have been reclassified to conform to the 2005
        presentations.
 
 (2)
        LIQUIDITY:
 
 As
        shown
        in the accompanying financial statements, the Company has had recurring losses
        from operations and has a stockholders' deficiency. The Company has been
        able to
        raise additional funds from equity offerings and financing arrangements and
        management believes it can continue to do so in the future. Management
        believes that certain cost reduction measures taken in 2005, together with
        projected revenues in 2005 and 2006 and potential equity offerings, such
        as the
        one consummated in the second quarter of 2005, and/or financing arrangements,
        will enable the Company to sustain its operations. However, there can be
        no
        assurance given that this will occur.
 
 (3)
        INVENTORIES:
 
 Inventories
        as of September 30, 2005, and December 31, 2004, consisted of the
        following:
 
 September
                  30,
              
              December
                  31,2005
              
              2004Finished
                  goods
              
              $
              1,345,614
              
              $
              1,993,190Raw
                  materials
              
              
              815,284
              
              
              749,354$
              2,160,898
              
              $
              2,742,544
 
 
 (4 )
        NOTES PAYABLE:
 
 On
        March
        16, 1998, the Company issued to an institutional investor a $10 million
        convertible subordinated note due March 15, 2005. The note was paid in full
        on
        March 15, 2005.
 
 (5)
        FINANCING AGREEMENTS:
 
 In
        an
        agreement dated July 31, 2002, Quintiles Transnational Corp’s (“Quintiles”)
        strategic investment group, PharmaBio Development, Inc. (“PharmaBio”), agreed to
        pay $4.5 million, in four equal quarterly installments commencing in the
        third
        quarter of 2002, for the right to receive a 5% royalty on the net sales of
        the
        Company’s women’s healthcare products in the United States for five years
        beginning in the first quarter of 2003. The royalty payments are subject
        to
        minimum ($8 million) and maximum ($12 million) amounts. Because the minimum
        amount exceeds $4.5 million, the Company has recorded the amounts received
        as
        liabilities. The excess of the minimum ($8 million) to be paid by the Company
        over the $4.5 million received by the Company is being recognized as interest
        expense over the five-year term of the agreement, assuming an interest rate
        of
        12.51%. $198,119 and $159,644 were recorded as interest expense for the three
        months ended September 30, 2005 and September 30, 2004, respectively, and
        $518,287 and $460,657 were recorded as interest expense for the nine months
        ended September 30, 2005 and September 30, 2004, respectively. The Company
        has
        paid PharmaBio $2,928,838 through September 30, 2005 under this agreement.
 
 Page
            8 of
            21
 In
        an
        agreement dated March 5, 2003, PharmaBio agreed to pay $15
        million in five quarterly installments commencing with the signing of the
        agreement. In return, PharmaBio will receive a 9% royalty on net sales of
        Striant® (testosterone buccal system) in the United States up to agreed annual
        sales revenues, and a 4.5% royalty of net sales above those levels. The royalty
        term is seven years. Royalty payments commenced in the 2003 third quarter
        and
        are subject to minimum ($30 million) and maximum ($55 million) amounts. Because
        the minimum amount exceeds $15 million, the Company has recorded the amounts
        received as liabilities. The excess of the minimum ($30 million) to be paid
        by
        the Company over the $15 million received by the Company is being recognized
        as
        interest expense over the seven-year term of the agreement, assuming an interest
        rate of 10.67%. $467,545 and $422,469 were recorded as interest expense for
        the
        three months ended September 30, 2005 and September 30, 2004, respectively,
        and
        $1,357,763 and $1,179,312 were recorded as interest expense for the nine
        months
        ended September 30, 2005 and September 30, 2004, respectively. The agreement
        calls for a true-up payment to PharmaBio in an amount equal to the difference
        between royalties paid through September 30, 2006 and $13,000,000. The true-up
        payment is due on November 14, 2006. The Company has paid PharmaBio $686,828
        through September 30, 2005 under this agreement.
 
 Liabilities
        from financing agreements as
        of
        September 30, 2005 and December 31, 2004 consisted of the
        following:
 
 September
                  30,
              
              December
                  31,2005
              
              2004July
                  31, 2002 financing agreement
              
              $
              3,213,113
              
              $
              4,932,548March
                  5, 2003 financing agreement
              
              
              17,868,121
              
              
              16,744,37821,081,234
              
              
              21,676,926Less
                  current portion
              
              
              995,790
              
              
              2,753,486$
              20,085,444
              
              $
              18,923,440
 
 Page
            9 of
            21
 (6)
        SEGMENT INFORMATION:
 
 The
          Company and its subsidiaries are engaged in one line of business, the
          development, licensing and sale of pharmaceutical products, medical devices
          and
          cosmetics. The following table shows selected unaudited information by
          geographic area:
  IncomeNet
                    
                    (Loss)
                        from
                    
                    IdentifiableRevenues
                    
                    Operations
                    
                    AssetsAs
                        of and for the nine monthsended
                        September 30, 2005-United
                        States
                    
                    $
                    9,195,126
                    
                    $
                    (8,875,021
                    )
                    $
                    6,311,442Europe
                    
                    
                    7,953,238
                    
                    
                    3,713,410
                    
                    
                    11,145,702$
                    17,148,364
                    
                    $
                    (5,161,611
                    )
                    $
                    17,457,144For
                        the nine monthsended
                        September 30, 2004-United
                        States
                    
                    $
                    9,292,983
                    
                    $
                    (16,570,852
                    )Europe
                    
                    
                    5,003,473
                    
                    
                    464,194$
                    14,296,456
                    
                    $
                    (16,106,658
                    )For
                        the three monthsended
                        September 30, 2005-United
                        States
                    
                    $
                    4,034,120
                    
                    $
                    (1,733,665
                    )Europe
                    
                    
                    2,499,822
                    
                    
                    1,084,012$
                    6,533,942
                    
                    $
                    (649,653
                    )For
                        the three monthsended
                        September 30, 2004-United
                        States
                    
                    $
                    3,915,976
                    
                    $
                    (4,880,318
                    )Europe
                    
                    
                    1,176,843
                    
                    
                    (339,558
                    )$
                    5,092,819
                    
                    $
                    (5,219,876
                    )
  Page
            10
            of 21
 (7)
        LOSS PER COMMON AND COMMON EQUIVALENT SHARE:
 
 The
        calculation of basic and diluted loss per common and common equivalent share
        is
        as follows:
  Nine
                        Months EndedSeptember 30,
                  
                  Three
                        Months EndedSeptember 30,2005
                  
                  2004
                  
                  2005
                  
                  2004Net
                      loss
                  
                  $
                  (7,086,685
                  )
                  $
                  (18,839,948
                  )
                  $
                  (1,281,942
                  )
                  $
                  (5,981,839
                  )Plus:
                      Preferred stock dividends
                  
                  
                  (121,875
                  )
                  
                  (121,875
                  )
                  
                  (40,625
                  )
                  
                  (40,625
                  )Net
                      loss applicable tocommon
                      stockholders
                  
                  $
                  (7,208,560
                  )
                  $
                  (18,961,823
                  )
                  $
                  (1,322,567
                  )
                  $
                  (6,022,464
                  )Basic
                      and diluted:Weighted
                      average number ofcommon
                      shares outstanding
                  
                  
                  41,751,934
                  
                  
                  40,726,264
                  
                  
                  41,751,934
                  
                  
                  41,751,934Basic
                      and diluted net loss per common share
                  
                  $
                  (0.17
                  )
                  $
                  (0.47
                  )
                  $
                  (0.03
                  )
                  $
                  (0.14
                  )
 
 Basic
        loss per share is computed by dividing the net loss plus preferred dividends
        by
        the weighted-average number of shares of common stock outstanding during
        the
        period. Diluted earnings per share gives effect to dilutive options, warrants
        and other potential common stock outstanding during the periods. Shares to
        be
        issued upon the exercise of the outstanding options and warrants or the
        conversion of the preferred stock are not included in the computation of
        diluted
        loss per share as their effect is anti-dilutive. Shares to be issued upon
        the
        exercise of the outstanding options and warrants excluded from the calculation
        amounted to 6,826,745 and 6,283,836 at September 30, 2005 and 2004,
        respectively.
 
 (8)
        LEGAL PROCEEDINGS:
 
 Claims
        and lawsuits have been filed against the Company from time to time. Although
        the results of pending claims are always uncertain, the Company does not
        believe
        the results of any such actions, individually or in the aggregate, will have
        a
        material adverse effect on the Company’s financial position or results of
        operations. Additionally, the Company believes that it has adequate reserves
        or
        adequate insurance coverage in respect of these claims, but no assurance
        can be
        given as to the sufficiency of such reserves or insurance in the event of
        any
        unfavorable outcome resulting from these actions. It is the policy of management
        to disclose the amount or range of reasonably possible losses in excess of
        recorded amounts.
 
 Page
            11
            of 21
 (9)
        STOCK-BASED COMPENSATION:
 
 The
        Company has elected to apply Accounting Principles Board Opinion No. 25,
        Accounting for Stock Issued to Employees, and related interpretations in
        accounting for its stock options and has adopted the disclosure-only provisions
        of Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting
        for
        Stock-Based Compensation. If the Company had elected to recognize compensation
        cost based on the fair value of the options granted at the grant date as
        prescribed by SFAS No. 123, the Company's net loss and net loss per common
        share
        for the nine and three month periods ended September 30, 2005 and 2004 would
        have been as follows:
  Nine
                          Months EndedSeptember 30,
                    
                    Three
                          Months EndedSeptember 30,2005
                    
                    2004
                    
                    2005
                    
                    2004Net
                        loss, as reported
                    
                    $
                    (7,086,685
                    )
                    $
                    (18,839,948
                    )
                    $
                    (1,281,942
                    )
                    $
                    (5,981,839
                    )Add:
                        Value of options chargedto
                        operations, net of tax
                    
                    
                    6,738
                    
                    
                    10,130
                    
                    
                    2,201
                    
                    
                    3,141Deduct
                        : Total stock-based compensationexpense
                        determined under fair valuebased
                        method for all awards, net of tax
                    
                    
                    (1,041,426
                    )
                    
                    (1,410,607
                    )
                    
                    (261,182
                    )
                    
                    (438,133
                    )Pro
                        forma net loss
                    
                    $
                    (8,121,373
                    )
                    $
                    (20,240,425
                    )
                    $
                    (1,540,923
                    )
                    $
                    (6,416,831
                    )Loss
                        per share - basic and dilutedAs
                        reported
                    
                    $
                    (0.17
                    )
                    $
                    (0.47
                    )
                    $
                    (0.03
                    )
                    $
                    (0.14
                    )Pro
                        forma
                    
                    $
                    (0.20
                    )
                    $
                    (0.50
                    )
                    $
                    (0.04
                    )
                    $
                    (0.15
                    )
  (10)
            RECENT ACCOUNTING PRONOUNCEMENTS:
  In
        December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
        123R (Revised 2004), Share-Based Payment ("SFAS No. 123R"), which requires
        that
        the compensation cost relating to share-based payment transactions be recognized
        in financial statements based on alternative fair value models. The share-based
        compensation cost will be measured based on the fair value of the equity
        or
        liability instruments issued. The Company currently discloses pro forma
        compensation expense quarterly and annually by calculating the stock option
        grants' fair value using the Black-Scholes model and disclosing the impact
        on
        net loss and net loss per share in a Note to the Condensed Consolidated
        Financial Statements. See Note 9. Upon adoption, pro forma disclosure will
        no
        longer be an alternative. SFAS No. 123R also requires the benefits of tax
        deductions in excess of recognized compensation cost to be reported as a
        financing cash flow rather than as an operating cash flow as required under
        current literature. This requirement will reduce net operating cash flows
        and
        increase net financing cash flows in periods after adoption. The Company
        has not
        completed its evaluation of SFAS No. 123R and therefore has not determined
        the
        impact that adopting SFAS No. 123R will have on its results of operations.
        The
        Company will begin to apply SFAS No. 123R using the most appropriate fair
        value
        model as of the interim reporting period ending March 31, 2006.
 
 The
        Company does not believe that any other recently issued, but not yet effective,
        accounting standards would have a material effect on the Company’s consolidated
        financial position, results of operations or cash flows.
 
 
 
 Page
            12
            of 21
 **Item
        2. Management’s Discussion and Analysis of Financial Condition and Results of
        Operations**
 
 **Overview**
  The
        following Management’s Discussion and Analysis of Financial Condition and
        Results of Operations (“MD&A”) is intended to help the reader understand the
        Company’s financial condition and results of operations. MD&A is provided as
        a supplement to, and should be read in conjunction with, our financial
        statements and the accompanying notes (“Notes”).
 
 We
        are in
        the business of developing, manufacturing and selling pharmaceutical, medical
        device, and cosmetic products that address various healthcare conditions.
        Most
        of our products and developmental product candidates address women’s healthcare.
        We have also developed Striant ® ,
        a
        buccal system for the treatment of hypogonadism in men, and a desmopressin
        buccal product for the treatment of nocturnal enuresis in children.
 All
        of
        our products and product candidates utilize our patented, proprietary
        Bioadhesive Delivery System (“BDS”), which consists principally of a polymer
        (polycarbophil) and an active ingredient. The BDS is based upon the principle
        of
        bioadhesion, a process by which the polymer adheres to epithelial surfaces
        or
        mucosa. The polymer remains attached to epithelial surfaces or mucosa and
        is
        discharged upon normal cell turnover, a physiological process that, depending
        upon the area of the body, occurs every 12 to 72 hours, or longer. This extended
        period of attachment permits the BDS to be utilized in products when extended
        duration of effectiveness is desirable or required.
 
 Over
        the
        last few years we have laid a foundation for the Company’s long-term growth by
        establishing marketing partnerships and forging alliances with strategic
        partners to create a base business of products that these partners market
        and
        that provide us with good margins and growth potential. In addition, in
        September 2002, we developed our own commercial organization to commercialize
        our women’s healthcare products in the United States. We more than doubled the
        size of that sales organization in the summer of 2003 upon approval of
        Striant ® by
        the
        Food and Drug Administration. Subsequently, in both January 2004 and February
        2005, we restructured our sales and marketing organizations and downsized
        them
        to reduce costs. We have advanced several clinical research initiatives designed
        to realize additional potential from currently marketed Prochieve ® products
        by developing new indications, while also bringing new products through the
        clinic. Our focus in fiscal 2005 is building on this foundation and executing
        well in key areas, including the successful implementation of our selling
        strategy of targeting our sales force on current prescribers of our products.
  **Results
        of Operations - Nine Months Ended September 30, 2005 versus Nine Months Ended
        September 30, 2004**
 
 Net
        revenues increased 20% in the nine months ended September 30, 2005 to $17.1
        million as compared to $14.3 million in the nine months ended September 30,
        2004. Net revenues in the nine-month period ended September 30, 2005 reflect
        a
        provision for product returns amounting to $2.3 million. During the period,
        the
        Company re-evaluated its estimate for product returns to take into consideration
        additional factors related to inventory and return practices of its primary
        trade customers. We receive revenues both from selling our products to
        licensees, which we refer to as our “partnered products”, and selling our
        products that we promote through our own sales force to wholesalers and other
        distributors, which we refer to as our “promoted products.”
  Partnered
        products are:
 ·
              Crinone®sold to Ares Trading S.A. (“Serono”) on a worldwide
                  basis;
 ·
              Striant®sold to our non-U.S. marketing partners;
 ·
              Replens®Vaginal Moisturizer sold to Lil’ Drug Store Products, Inc. (“Lil’ Drug
                  Store”) non-U.S.;
 ·
              RepHresh®Vaginal Gel and Advantage-S®Bioadhesive Contraceptive Gel sold to Lil’ Drug Store on a worldwide
                  basis; and
 ·
              Royalty
                  and licensing revenues.
 
 Promoted
        products are:
 ·
              Prochieve®8%, Prochieve®4%
                  and Striant®in
                  the U.S.;
 ·
              Crinone®prescriptions in the U.S. from our OB/GYN audience, for which Serono
                  pays
                  us a 40% supplemental royalty; and
 ·
              Replens®Vaginal Moisturizer, RepHresh®Vaginal Gel, and Advantage-S®Bioadhesive Contraceptive Gel, for which Lil’ Drug Store pays us promotion
                  fees to present to OB/GYNs.
 
 Page
            13
            of 21
 Net
        revenues from promoted products decreased 2% to $5.4 million in the nine
        months
        ended September 30, 2005 as compared to $5.5 million in the nine months ended
        June 30, 2004, primarily as a result of a decrease in the sales of Striant®
        offset by an increase in the sales of Prochieve ® 8% to
        trade customers.
 
 Net
        revenues from partnered products increased 33% to $11.7 million in the nine
        months ended September 30, 2005 as compared to $8.8 million in the nine months
        ended September 30, 2004, primarily as a result of an increase in the sale
        of
        RepHresh ® and
        Crinone ® to our
        marketing partners.
 
 Gross
        profit as a percentage of revenues was 62% in the nine months ended September
        30, 2005 versus 60% in the nine months ended September 30, 2004. The
        increase in gross profit percentage in 2005 as compared to 2004 resulted
        from an
        increase in overall production and a change in product mix in 2005. Cost
        of
        revenues for Prochieve ® includes
        a 30% royalty on net sales paid to Serono.
 
 Selling
        and distribution expenses decreased 55% to $6.7 million in the nine months
        ended
        September 30, 2005, as compared to $15.0 million in the nine
        months ended September 30, 2004. Selling and distribution expenses include
        payroll, employee benefits, equity compensation and other personnel-related
        costs associated with sales and marketing personnel, and advertising,
        promotions, tradeshows, seminars, and other marketing-related programs. The
        Company restructured its sales force in February 2005, reducing the number
        of
        salespeople, which is reflected in the 2005 reduction in expense. Included
        in
        the 2005 expenses were sales force costs of approximately $3.8 million, product
        marketing expenses of approximately $1.1 and non-sales force salary costs
        of
        approximately $610,000. Expenses in 2004 included approximately $8.6 million
        in
        sales force costs, approximately $3.7 million in product marketing expenses
        and
        approximately $1.1 million in non-sales force salary costs.
 
 General
        and administrative costs include payroll, employee benefits, equity compensation
        and other personnel-related costs associated with the finance, legal, regulatory
        affairs, information technology, facilities, certain human resources and
        other
        administrative personnel, as well as legal costs and other administrative
        fees.
        General and administrative expenses decreased 9% to $5.2 million in the nine
        months ended September 30, 2005 as compared to $5.7 million in the nine months
        ended September 30, 2004. The reduction in 2005 expenses is primarily the
        result
        in a decrease in insurance premiums ($702,000) offset by an increase in salaries
        ($172,000).
 
 Research
        and development expenses include payroll, employee benefits, equity compensation
        and other personnel-related costs associated with product development, as
        well
        as the cost of conducting and administering clinical studies and the cost
        of
        regulatory filings for our products. Research and development expenses decreased
        2% to $4.0 million in the nine months ended September 30, 2005 as compared
        to
        $4.1 million in the nine months ended September 30, 2004. The decrease is
        related to a reduction in the costs associated with obtaining regulatory
        approvals for Striant ® in
        Europe ($396,000), the cost of outside consultants ($224,000) and costs
        associated with completing Striant ® Phase
        III follow-up studies ($164,000) offset by an increase in costs of the Company’s
        on-going Phase III trial for Prochieve® 8% in preventing pre-term delivery in
        pregnant women who are at high risk ($717,000).
 
 Interest
        expense for the nine months ended September 30, 2005 of $2.0 million included
        $1.9 million from the PharmaBio financing agreements and $155,580 from a
        convertible subordinated note that was paid off on March 15, 2005. Interest
        expense in 2004 of $2.2 million included $1.6 million from the PharmaBio
        financing agreements and $566,520 from a convertible subordinated
        note.
 
 In
        2004,
        the Company recorded a loss of approximately $578,000 when it sold its
        intangible assets associated with its over-the-counter products to Lil’ Drug
        Store.
  As
        a
        result, the net loss for the nine months ended September 30, 2005 was $7.1
        million or $(.17) per common share as compared to the net loss for the nine
        months ended September 30, 2004 of $18.8 million or $(.47) per common
        share.
 
 
 
 Page
            14
            of 21
 **Results
        of Operations - Three Months Ended September 30, 2005 versus Three Months
        Ended
        September 30, 2004**
 
 Net
        revenues increased 28% in the three months ended September 30, 2005 to $6.5
        million as compared to $5.1 million in the three months ended September 30,
        2004.  We
        receive revenues both from our partnered products and our promoted products,
        which are described above under “ Results
        of Operations - Nine Months Ended September 30, 2005 versus Nine Months Ended
        September 30, 2004.”
 
 Revenues
        from promoted products decreased 35% to $2.3 million in the three months
        ended
        September 30, 2005 as compared to $3.6 million in the three months ended
        September 30, 2004, primarily as a result of a decrease in sales of both
        Striant ® and the
        Prochieve ® line of
        products to trade customers.
 
 Revenues
        from partnered products increased 185% to $4.2 million in the three months
        ended
        September 30, 2005 as compared to $1.5 million in the three months ended
        September 30, 2004, primarily as a result of an increase in the sale of
        RepHresh ® and
        Crinone ® to our
        marketing partners.
 
 Gross
        profit as a percentage of revenues was 63% in the three months ended September
        30, 2005 and 57% in the three months ended September 30, 2004. The
        increase in gross profit percentage in 2005 as compared to 2004 resulted
        from an
        increase in overall production and a change in product mix in 2005. Cost
        of
        revenues for Prochieve ® includes
        a 30% royalty on net sales paid to Serono.
 
 Selling
        and distribution expenses decreased 67% to $1.7 million in the three months
        ended September 30, 2005, as compared to $5.2 million in the
        three months ended September 30, 2004.. The Company restructured its sales
        force
        in February 2005, reducing the number of salespeople, which is reflected
        in the
        2005 reduction in expense. Included in the 2005 expenses were sales force
        costs
        of approximately $920,000, product marketing expenses of approximately $312,000
        and non-sales force salary costs of approximately $143,000. Expenses in 2004
        included approximately $2.7 million in sales force costs, approximately $1.8
        million in product marketing expenses and approximately $374,000 in non-sales
        force salary costs.
 
 General
        and administrative expenses decreased 14% to $1.6 million in the three months
        ended September 30, 2005 as compared to $1.9 million in the three months
        ended
        September 30, 2004. The reduction in 2005 expenses is primarily the result
        in a
        decrease in insurance premiums ($206,000).
 
 Research
        and development expenses increased 43% to $1.5 million in the three months
        ended
        September 30, 2005 as compared to $1.0 million in the three months ended
        September 30, 2004. The increase is primarily related to an increase in costs
        of
        the Company’s on-going Phase III trial for Prochieve® 8% in preventing pre-term
        delivery in pregnant women who are at high risk ($709,000) offset by a reduction
        in the costs of outside consultants ($118,000).
 
 Interest
        expense for the three months ended September 30, 2005 of $665,664 represented
        the interest from the PharmaBio financing agreements. Interest expense in
        2004
        of $770,953 included $582,113 from the PharmaBio financing agreements and
        $188,840 from a convertible subordinated note that was paid off on March
        15,
        2005.
 
 As
        a
        result, the net loss for the three months ended September 30, 2005 was $1.3
        million or $(.03) per common share as compared to the net loss for the three
        months ended September 30, 2004 of $6.0 million or $(.14) per common
        share.
 
 **Liquidity
        and Capital Resources**
 
 Cash
        and
        cash equivalents decreased from $19,781,591 at December 31, 2004 to $7,202,394
        at September 30, 2005. During the nine months ended September 30, 2005 the
        Company received $6,900,000 from the sale of 69,000 shares of Series E Preferred
        Stock. The Company used $6,746,816, for operations, paid off its $10,000,000
        convertible subordinated note, paid $2,471,742, which included a $1,891,944
        true-up payment to PharmaBio, spent $78,936 on property and equipment and
        paid a
        $121,875 dividend to holders of its Series C preferred stock. The effect
        of
        exchange rate changes reduced cash by $59,828.
 
 Page
            15
            of 21
  On
          May
          10, 2005, the Company raised $6.9 million from the issuance and sale of
          69,000
          shares of Series E Preferred Stock in a transaction exempt from the registration
          requirements of the Securities Act. The Series E Preferred Stock has a
          stated
          value of $100 per share. Each share of the Series E Preferred Stock may
          be
          converted by the holder into 50 shares of common stock, subject to adjustment,
          and will automatically be converted into common stock at that rate upon
          the date
          that the average of the daily market prices of the Company’s common stock for
          the 20 consecutive trading days preceding such date exceeds $6.00 per share.
          The
          Series E Preferred Stock pays no dividend and contains voting rights equal
          to
          the number of shares of common stock into which each share of Series E
          Preferred
          Stock is convertible. Upon liquidation of the Company, the holders of the
          Series
          E Preferred Stock are entitled to $100 per share. The Company believes
          that
          certain cost reduction measures taken in 2005, together with projected
          revenues
          in 2005 and 2006 and potential equity offerings, such as the one consummated
          on
          May 10, 2005, and/or financing arrangements, will enable the Company to
          sustain
          its operations. However, there can be no assurance given that this will
          occur.
 
 The
          Company has an effective registration statement that we filed with the
          Securities and Exchange Commission (the “SEC”) using a shelf registration
          process. Under the shelf registration process, we may offer from time to
          time
          shares of our common stock up to an aggregate amount of $75,000,000. To
          date the
          Company has sold approximately $56,400,000 in common stock under the
          registration statement. We cannot be certain that additional funding will
          be
          available on acceptable terms, or at all. To the extent that we raise additional
          funds by issuing equity securities, our stockholders may experience significant
          dilution. Any debt financing, if available, may involve restrictive covenants
          that impact our ability to conduct our business. If we are unable to raise
          additional capital when required or on acceptable terms, we may have to
          significantly delay, scale back or discontinue the marketing of one or
          more of
          our products and the development and/or commercialization
          of one or more of our product candidates.
 
 In
          connection with the 1989 purchase of the assets of Bio-Mimetics, Inc.,
          which
          assets consisted of the patents underlying the Company’s BDS, other patent
          applications and related technology, the Company pays Bio-Mimetics, Inc.
          a
          royalty equal to two percent of the net sales of products based on the
          BDS, up
          to an aggregate of $7.5 million or until the last of the relevant patents
          expire. The Company is required to prepay 25% of the remaining maximum
          royalty
          obligation, in cash or stock at the option of the Company, within 30 days
          of
          March 2 of any year in which the closing price on that date of the Company’s
          common stock on any national securities exchange is $20 or more. Through
          September 30, 2005, the Company has paid approximately $3.3 million in
          royalty
          payments.
 
 As
          of
          September 30, 2005, the Company has outstanding exercisable options and
          warrants
          that, if exercised, would result in approximately $48.4 million of additional
          capital and would cause the total number of shares outstanding to increase.
          However, there can be no assurance that any such
          options or warrants will be exercised.
 
 Significant
          expenditures anticipated by the Company in the near future are concentrated
          on
          research and development related to new products. In addition, the Company
          anticipates it will spend approximately $120,000 on property and equipment
          in
          2005.
 
 As
          of
          September 30, 2005, the Company had available net operating loss carryforwards
          of approximately $122 million to offset its future U.S. taxable income. There
          can
          be no assurance that the Company will have sufficient income to utilize
          the net
          operating loss carryforwards or that the net operating loss carryforwards
          will
          be available at that time.
 
 In
          accordance with SFAS No. 109, as of September 30, 2005 and December 31,
          2004,
          other assets in the accompanying consolidated balance sheets include deferred
          tax assets of approximately $44 and $41 million, respectively (comprised
          primarily of a net operating loss carryforward), for which a full valuation
          allowance has been recorded since the realizability of the deferred tax
          assets
          are not determinable.
 
 **Recent
          Accounting Pronouncements**
 
 In
          December 2004, the FASB issued SFAS No. 123R, which requires that the
          compensation cost relating to share-based payment transactions be recognized
          in
          financial statements based on alternative fair value models. The share-based
          compensation cost will be measured based on the fair value of the equity
          or
          liability instruments issued. The Company currently discloses pro forma
          compensation expense quarterly and annually by calculating the stock option
          grants' fair value using the Black-Scholes model and disclosing the impact
          on
          net loss and net loss per share in a Note to the Consolidated Financial
          Statements. Upon adoption, pro forma disclosure will no longer be an
          alternative. SFAS No. 123R also requires the benefits of tax deductions
          in
          excess of recognized compensation cost to be reported as a financing cash
          flow
          rather than as an operating cash flow as required under current literature.
          This
          requirement will reduce net operating cash flows and increase net financing
          cash
          flows in periods after adoption. The Company has not completed its evaluation
          of
          SFAS No. 123R and therefore has not determined the impact that adopting
          SFAS No.
          123R will have on its results of operations. The Company will begin to
          apply
          SFAS No. 123R using the most appropriate fair value model as of the interim
          reporting period ending March 31, 2006.
  Page
            16
            of 21
  The
        Company does not believe that any other recently issued, but not yet effective,
        accounting standards would have a material effect on the Company’s consolidated
        financial position, results of operations or cash flows.
  **Critical
        Accounting Policies and Estimates**
 
 The **** Company
        has identified the policies below as critical to its business operations
        and the
        understanding of its **** results
        of operations. For a detailed discussion on the application of these and
        other
        accounting policies, see Note 1 of the consolidated financial statements
        included in Item 15 of the Annual Report for the year ended December 31,
        2004 on
        Form 10-K, beginning on page F-11. Note that the preparation of this Quarterly
        Report on Form 10-Q requires the Company to make estimates and assumptions
        that
        affect the reported amount of assets and liabilities, disclosure of contingent
        assets and liabilities at the date of the financial statements, and the reported
        amounts of revenues and expenses during the reporting period. There can be
        no
        assurance that actual results will not differ from those estimates.
 
 *Revenue
        Recognition.* The
        Company’s revenue recognition is significant because revenue is a key component
        of our results of operations. In addition, revenue recognition determines
        the
        timing of certain expenses, such as commissions and royalties. Revenue results
        are difficult to predict, and any shortfall in revenue or delay in recognizing
        revenue could cause operating results to vary significantly from quarter
        to
        quarter. Revenues
        from the sale of products are recorded at the time goods are shipped to
        customers. Provisions for returns, rebates and other allowances are estimated
        based on a percentage of sales, using such factors as historical trends,
        distributor inventory levels and product prescription data, and are recorded
        in
        the same period the related sales are recognized. Royalties
        and additional monies owed to the Company based on the strategic alliance
        partners’ sales are recorded as revenue as those sales are made by the strategic
        alliance partners. License fees are recognized in net sales over the term
        of the
        license.
 
 *Accounting
        for PharmaBio Agreements.* In
        July
        2002 and March 2003, the Company entered into agreements with PharmaBio under
        which the Company received upfront money paid in quarterly installments in
        exchange for royalty payments on certain of the Company’s products to be paid to
        PharmaBio for a fixed period of time. The
        royalty payments are subject to minimum and maximum amounts. Because the
        minimum
        amounts exceed the amount received by the Company, the Company has recorded
        the
        monies received as liabilities. The excess of the minimum to be paid by the
        Company over the amount received by the Company is being recorded as interest
        expense over the terms of the agreements.
 
 **Forward-Looking
        Information**
 
 The
        Company and its representatives from time to time make written or verbal
        forward-looking statements, including statements contained in this and other
        filings with the SEC and in the Company’s reports to stockholders, which are
        made pursuant to the safe harbor provisions of the Private Securities Litigation
        Reform Act of 1995. Such statements include, without limitation, the Company’s
        expectations regarding sales, earnings or other future financial performance
        and
        liquidity, clinical studies, product introductions, entry into new geographic
        regions and general views about future operations or operating results. Some
        of
        these statements can be identified by the use of forward-looking terminology
        such as "prospects," "outlook," "believes," "estimates," "intends," "may,"
        "will," "should," "anticipates," "expects" or "plans," or the negative or
        other
        variation of these or similar words, or by discussion of trends and conditions,
        strategy or risks and uncertainties. Although
        the Company believes that its expectations are based on reasonable assumptions
        within the bounds of its knowledge of its business and operations, there
        can be
        no assurance that actual results will not differ materially from its
        expectations. Factors
        that might cause future results to differ include, but are not limited to,
        the
        following: the successful marketing of Striant ® ,
        Prochieve ® 8% and
        Prochieve ® 4% in
        the U.S.; the timing and size of orders for out-licensed products from our
        marketing partners; the timely receipt of national marketing authorizations
        and
        individual licenses for Striant ® in
        European countries; the timely payment of milestone payments by our marketing
        and product development partners; the timely and successful development of
        products; the timely and successful completion of clinical studies, including
        the Prochieve ® 8% study
        in the prevention of preterm birth and the lidocaine vaginal gel studies;
        success in obtaining acceptance and approval of new products and indications
        for
        current products by the FDA and international regulatory agencies, including
        acceptance and approval of an indication for preventing preterm delivery
        for
        Prochieve 8% from the FDA; the impact of competitive products and pricing;
        competitive economic and regulatory factors in the pharmaceutical and health
        care industry; general economic conditions; and other risks and uncertainties
        that may be detailed, from time to time, in the Company’s reports filed with the
        SEC . All
        subsequent written and oral forward-looking statements attributable to the
        Company or persons acting on behalf of the Company are expressly qualified
        in
        their entirety by the Cautionary Statements in this Quarterly Report. Readers
        are advised to consult any further disclosures the Company may make on related
        subjects in subsequent Form 10-Q, 8-K, and 10-K reports to the SEC.
  Page
            17
            of 21
 **Item
        3. Quantitative and Qualitative Disclosures about Market
        Risk**
 
 The
        Company does not believe that it has material exposure to market rate risk.
        The
        Company may, however, require additional financing to fund future obligations
        and no assurance can be given that the terms of future sources of financing
        will
        not expose the Company to material market risk.
 **Item
        4. Controls and Procedures**
 
 The
        Company maintains disclosure controls and procedures that are designed to
        ensure
        that information required to be disclosed in the Company's filings with the
        SEC
        is recorded, processed, summarized and reported within the periods specified
        in
        the rules and forms of the SEC. Such information is accumulated and communicated
        to the Company's management, including its Chief Executive Officer and Chief
        Financial Officer, as appropriate, to allow timely decisions regarding required
        disclosure. The Company's management, including the Chief Executive Officer
        and
        the Chief Financial Officer, recognizes that any set of controls and procedures,
        no matter how well designed and operated, can provide only reasonable assurance
        of achieving the desired control objectives.
 
 As
        of
        September 30, 2005, the end of the period covered by this report, the Company
        carried out an evaluation, under the supervision and with the participation
        of
        the Company's management, including the Company's Chief Executive Officer
        and
        the Company's Chief Financial Officer, of the effectiveness of the design
        and
        operation of the Company's disclosure controls and procedures. Based on such
        evaluation, the Company's Chief Executive Officer and Chief Financial Officer
        concluded that the Company's disclosure controls and procedures were
        effective .
 
 **Changes
        in Internal Control Over Financial Reporting**
 
 During
        the quarter ended September 30, 2005, there
        were no significant changes in the Company’s internal controls over financial
        reporting, which have materially affected, or are reasonably likely to
        materially affect, the Company’s internal control over financial reporting.
 
 
 
 Page
            18
            of 21
 **PART
        II - OTHER INFORMATION**
  **Item
        1.**  **Legal
        Proceedings**
 
 Claims
        and lawsuits have been filed against the Company from time to time. Although
        the results of pending claims are always uncertain, the Company does not
        believe
        the results of any such actions, individually or in the aggregate, will have
        a
        material adverse effect on the Company’s financial position or results of
        operation. Additionally, the Company believes that it has adequate reserves
        or
        adequate insurance coverage in respect of these claims, but no assurance
        can be
        given as to the sufficiency of such reserves or insurance in the event of
        for
        any unfavorable outcome resulting from these actions.
 
 **Item
        2.**  **Unregistered
        Sales of Equity Securities and Use of Proceeds**
 
 None.
  **Item
        3.**  **Defaults
        upon Senior Securities**
  None.
 
 **Item
        4.**  **Submission
        of Matters to a Vote of Security Holders**
 
 None.
 
 **Item
        5.**  **Other
        Information**
 
 None.
 
 **Item
        6.**  **Exhibits**
 
 A.
              Exhibits
 
 31(i).1
              --
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive Officer of
                  the
                  Company.31(i).2
              --
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial Officer of
                  the
                  Company.32.1
              --
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.32.2
              --
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.
 
 
 
 Page
            19
            of 21
 **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.
 
 **COLUMBIA
                  LABORATORIES, INC.**DATE:
                  November 7, 2005
                By:
                /S/
                  DAVID L. WEINBERGDAVID
                  L. WEINBERG, Vice President-Finance and Chief
                  Financial Officer
  
 Page
            20
            of 21
  **Exhibit
        Index**
 
 
 .
 31(i).1
              --
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Executive Officer of
                  the
                  Company.31(i).2
              --
              Rule
                  13a-14(a)/15d-14(a) Certification of Chief Financial Officer of
                  the
                  Company.32.1
              --
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.32.2
              --
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.
 
 
 Page
            21
            of 21