**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C** **.
      20549**





**FORM
      10-Q**





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934


For
      the
      quarterly period ended March 31, 2007





OR





o
            TRANSITION
                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
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)


**354
                  Eisenhower
                  Parkway**
                **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 x No
o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). (Check
      one):





Large
      accelerated filer o Accelerated filer x Non-accelerated filer o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act).





o
      Yes     x No





Number
      of
      shares of Common Stock of Columbia Laboratories, Inc. issued and outstanding
      as
      of May 4, 2007: 51,341,361









**PART
      1 - FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





The
      following unaudited, condensed consolidated financial statements of Columbia
      Laboratories, Inc. (“Columbia” or 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
      (GAAP). 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 months ended March 31, 2007 are not necessarily
      indicative of the results for the year ending December 31, 2007 . It
      is
      suggested that these financial statements be read in conjunction with the
      financial statements and related disclosures for the year ended December 31,
      2006 included in the Company’s Annual Report on Form 10-K filed with the
      Securities and Exchange Commission (the “SEC”).





Page
          2 of
          24




COLUMBIA
      LABORATORIES, INC. AND SUBSIDIARIES





CONDENSED
      CONSOLIDATED BALANCE SHEETS


March
                  31,
              
              December
                  31,2007
              
              2006(Unaudited)ASSETS:Cash
                  and cash equivalents
              
              $
              20,269,847
              
              $
              25,270,377Accounts
                  receivable, net
              
              
              5,015,715
              
              
              2,445,318Inventories
              
              
              2,456,656
              
              
              2,105,038Prepaid
                  expenses and other current assets
              
              
              609,858
              
              
              853,504Total
                  current assets
              
              
              28,352,076
              
              
              30,674,237Property
                  and equipment, net
              
              
              710,632
              
              
              763,836Intangible
                  Assets, net
              
              
              31,643,335
              
              
              32,865,556Other
                  Assets
              
              
              1,677,058
              
              
              1,535,115TOTAL
                  ASSETS
              
              $
              62,383,101
              
              $
              65,838,744LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  portion of financing agreements
              
              $
              3,745,244
              
              $
              553,947Accounts
                  payable
              
              
              3,258,341
              
              
              3,586,770Accrued
                  expenses
              
              
              2,050,793
              
              
              3,123,092Total
                  Current Liabilities
              
              
              9,054,378
              
              
              7,263,809Notes
                  Payable
              
              
              25,837,064
              
              
              25,299,135Deferred
                  revenue
              
              
              4,119,368
              
              
              4,182,648Long-term
                  portion of financing agreements
              
              
              8,644,667
              
              
              11,229,777TOTAL
                  LIABILITIES
              
              
              47,655,477
              
              
              47,975,369Stockholders'
                  equityPreferred
                  Stock, $0.01 par value; 1,000,000 shares authorizedSeries
                  B Convertible Preferred Stock, 130 shares issuedand
                  outstanding in 2007 and 2006
              
              
              1
              
              
              1Series
                  C Convertible Preferred Stock, 1,400 and 3,200 sharesissued
                  and outstanding in 2007 and 2006
              
              
              14
              
              
              32Series
                  E Convertible Preferred Stock, 69,000 sharesissued
                  and outstanding in 2007 and 2006
              
              
              690
              
              
              690Common
                  Stock, $0.01 par value; 100,000,000authorized;
                  51,188,863 and 49,694,213 shares issuedin
                  2007 and 2006 respectively
              
              
              511,889
              
              
              496,942Capital
                  in excess of par value
              
              
              222,465,977
              
              
              221,887,945Less
                  cost of 6,000 treasury shares
              
              
              (26,880
              )
              
              (26,880
              )Accumulated
                  deficit
              
              
              (208,423,564
              )
              
              (204,694,399
              )Accumulated
                  other comprehensive income
              
              
              199,497
              
              
              199,044TOTAL
                  STOCKHOLDERS' EQUITY
              
              
              14,727,624
              
              
              17,863,375TOTAL
                  LIABILITIES AND STOCKHOLDERSEQUITY
              
              $
              62,383,101
              
              $
              65,838,744




See
      notes
      to condensed consolidated financial statements




Page
          3 of
          24




COLUMBIA
      LABORATORIES, INC. AND SUBSIDIARIES





CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


Three
                  Months EndedMarch
                  31,2007
              
              2006NET
                  REVENUES
              
              $
              6,684,620
              
              $
              4,545,377COST
                  OF REVENUES
              
              
              2,072,187
              
              
              1,878,268Gross
                  profit
              
              
              4,612,433
              
              
              2,667,109OPERATING
                  EXPENSES:Selling
                  and distribution
              
              
              1,897,282
              
              
              1,499,979General
                  and administrative
              
              
              1,984,525
              
              
              1,588,866Research
                  and development
              
              
              1,350,901
              
              
              1,726,617Amortization
                  of licensing right
              
              
              1,222,221
              
              
              -Total
                  operating expenses
              
              
              6,454,929
              
              
              4,815,462Loss
                  from operations
              
              
              (1,842,496
              )
              
              (2,148,353
              )OTHER
                  INCOME (EXPENSE):Interest
                  income
              
              
              263,556
              
              
              100,495Interest
                  expense
              
              
              (2,127,743
              )
              
              (670,991
              )Other,
                  net
              
              
              (22,482
              )
              
              (27,473
              )(1,886,669
              )
              
              (597,969
              )Net
                  loss
              
              $
              (3,729,165
              )
              $
              (2,746,322
              )NET
                  LOSS PER COMMON SHARE:Basic
                  and diluted
              
              $
              (0.08
              )
              $
              (0.06
              )WEIGHTED
                  AVERAGE NUMBER OFCOMMON
                  SHARES OUTSTANDING:Basic
                  and diluted
              
              
              50,081,448
              
              
              43,344,645




See
      notes
      to condensed consolidated financial statements




Page
          4 of
          24




COLUMBIA
      LABORATORIES, INC. AND SUBSIDIARIES





CONDENSED
      CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS


(Unaudited)




Three
                  Months EndedMarch
                  31,2007
              
              2006NET
                  LOSS
              
              $
              (3,729,165
              )
              $
              (2,746,322
              )Other
                  comprehensive income (loss):Foreign
                  currency translation, net of tax
              
              
              453
              
              
              7,125Comprehensive
                  loss
              
              $
              (3,728,712
              )
              $
              (2,739,197
              )




See
      notes
      to condensed consolidated financial statements





Page
          5 of
          24




COLUMBIA
      LABORATORIES, INC. AND SUBSIDIARIES





CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


2007
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (3,729,165
              )
              $
              (2,746,322
              )Adjustments
                  to reconcile net loss to netcash
                  used in operating activities-Depreciation
                  and amortization
              
              
              1,336,005
              
              
              65,674Amortization
                  on beneficial conversion features
              
              
              303,441
              
              
              -Amortization
                  on warrant valuation
              
              
              234,489
              
              
              -Provision
                  for doubtful accounts
              
              
              -
              
              
              721Provision
                  for sales returns
              
              
              309,047
              
              
              208,014Writedown
                  of inventories
              
              
              -
              
              
              158,275Stock
                  based compensation
              
              
              627,023
              
              
              101,057Interest
                  expense on financing agreements
              
              
              729,234
              
              
              670,991Loss
                  on disposal of fixed asset
              
              
              -
              
              
              2,177Changes
                  in assets and liabilities-(Increase)
                  decrease in:Accounts
                  receivable
              
              
              (2,570,397
              )
              
              167,173Inventories
              
              
              (351,618
              )
              
              (229,758
              )Prepaid
                  expenses and other current assets
              
              
              243,646
              
              
              (313,188
              )Other
                  assets
              
              
              (202,523
              )
              
              (145
              )Increase
                  (decrease) in:Accounts
                  payable
              
              
              (328,429
              )
              
              1,426,703Accrued
                  expenses
              
              
              (1,381,346
              )
              
              (752,468
              )Deferred
                  revenue
              
              
              (63,280
              )
              
              243,846Net
                  cash used in operating activities
              
              
              (4,843,873
              )
              
              (997,250
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchase
                  of property and equipment
              
              
              -
              
              
              (9,500
              )Net
                  cash used in investing activities
              
              
              -
              
              
              (9,500
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from the sale of common stock, net
              
              
              -
              
              
              28,813,385Proceeds
                  from exercise of options
              
              
              -
              
              
              260,045Payments
                  pursuant to financing agreements
              
              
              (123,047
              )
              
              (89,657
              )Dividends
                  paid
              
              
              (34,063
              )
              
              (40,625
              )Net
                  cash provided by (used in) financing activities
              
              
              (157,110
              )
              
              28,943,148





(Continued)




Page
          6 of
          24


COLUMBIA
      LABORATORIES, INC. AND SUBSIDIARIES




CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





(Continued)


Three
                  Months Ended March 31,2007
              
              2006EFFECT
                  OF EXCHANGE RATE CHANGES ON CASH
              
              
              453
              
              
              7,125NET
                  INCREASE (DECREASE) IN CASH
              
              
              (5,000,530
              )
              
              27,943,523CASH,
                  BEGINNING OF PERIOD
              
              
              25,270,377
              
              
              7,136,854CASH
                  END OF PERIOD
              
              $
              20,269,847
              
              $
              35,080,377


See
      notes
      to condensed consolidated financial statements


COLUMBIA
      LABORATORIES, INC. AND SUBSIDIARIES




Page
          7 of
          24





NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





(1)
      SIGNIFICANT ACCOUNTING POLICIES :





The
      significant 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 for the fiscal
      year ended December 31, 2006.





Effective
      January 1, 2007, the Company adopted the provisions of FASB Interpretation
      No.
      48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation
      of FASB Statement No. 109.” FIN 48 provides detailed guidance for the financial
      statement recognition, measurement and disclosure of uncertain tax positions
      recognized in the financial statements in accordance with SFAS No. 109. Tax
      positions must meet a “more-likely-than-not” recognition threshold at the
      effective date to be recognized upon the adoption of FIN 48 and in subsequent
      periods. Upon the adoption of FIN 48, the Company had no unrecognized tax
      benefits. During the first quarter of 2007, the Company recognized no
      adjustments for uncertain tax benefits.





Income
      taxes are computed using the asset and liability method of accounting. Under
      the
      asset and liability method, a deferred tax asset or liability is recognized
      for
      estimated future tax effects attributable to temporary differences and
      carryforwards. The measurement of deferred income tax assets is adjusted by
      a
      valuation allowance, if necessary, to recognize future tax benefits only to
      the
      extent, based on available evidence, it is more likely than not such benefits
      will be realized. The Company’s deferred tax assets were fully reserved at March
      31, 2007 and December 31, 2006.





The
      Company recognizes interest and penalties, if any, related to uncertain tax
      positions in general and administrative expenses. No interest and penalties
      related to uncertain tax positions were accrued at March 31, 2007.





The
      Company has not been audited by the IRS to date. However, the Company expects
      no
      material changes to unrecognized tax positions within the next twelve
      months.





(2)
      SALES RETURN RESERVES:





Revenues
      from the sale of products are recorded at the time goods are shipped to
      customers. The Company believes that it has not made any shipments in excess
      of
      its customers' ordinary course of business inventory levels. Our return policy
      allows product to be returned for a period beginning three months prior to
      the
      product expiration date and ending twelve months after the product expiration
      date. Provisions for returns on sales to wholesalers, distributors and retail
      chain stores are estimated based on a percentage of sales, using such factors
      as
      historical sales information, distributor inventory levels and product
      prescription data, and are recorded as a reduction to sales in the same period
      as the related sales are recognized. We also continually analyze the reserve
      for
      future sales returns and adjust such reserve if deemed appropriate. The Company
      purchases prescription data on all its products from IMS Health, a leading
      provider of market information to the pharmaceutical and healthcare industries.
      The Company also purchases certain information regarding inventory levels from
      its largest wholesale customer. This information includes, for each of the
      Company’s products, the quantity on hand, the number of days of inventory on
      hand and a 28-day forecast of sales by units. Using this information and
      historical information, the Company estimates potential returns by taking the
      number of product units sold by the Company by expiration date and then
      subtracting actual units and potential units that may be sold to end users
      (consumers) based on prescription data up to five months prior to the product’s
      expiration date. The Company assumes that our customers are using the first-in,
      first-out method in filling orders so that the oldest saleable product is used
      first. The Company also assumes that our customers will not ship product that
      has expiration dating of less than six months to a retail pharmacy, but that
      retail pharmacies will continue to dispense product they have on hand until
      two
      months prior to the product’s expiration date. The Company’s products are used
      by the consumer immediately so no shelf life is needed. Retail pharmacies tend
      not to maintain a large supply of our products in their inventory, so they
      order
      on an ‘as needed’ basis. The Company also subtracts units that have already been
      returned or, based on notifications received from customers, will be returned.
      The Company then records a provision for returns on a quarterly basis using
      an
      estimated rate and adjusts the provision if the above analysis indicates that
      the potential for product non-saleability exists.




Page
          8 of
          24




An
      analysis of the reserve for sales returns is as follows:





Three
                months ending
            
            Three
                months endingMarch
                31,
            
            March
                31,2007
            
            2006Balance
                at beginning of year
            
            $
            1,240,235
            
            $
            745,882Provision:Related
                to current period sales
            
            
            127,156
            
            
            45,389Related
                to prior period sales
            
            
            181,891
            
            
            162,625309,047
            
            
            208,014Returns:Related
                to prior period sales
            
            
            (451,974
            )
            
            (399,657
            )(451,974
            )
            
            (399,657
            )Balance
                at end of quarter
            
            $
            1,097,307
            
            $
            554,239





The
      Company believes that the greatest potential for uncertainty in estimating
      sales
      returns is the estimation of future prescriptions. They are wholly dependent
      on
      the Company’s ability to market the products. If prescriptions are lower in
      future periods, then the current reserve will be inadequate.





The
      Company continues to carry out its plan from 2006 to bring inventory levels
      in
      distribution channels to demand levels and expects overall product returns
      to
      drop in 2007. We have already seen a drop in inventory levels at the larger
      customers for all of the Company’s products.




Page
          9 of
          24





(3)
      INVENTORIES:





Inventories
      consisted of the following:


March
                  31,
              
              December
                  31,2007
              
              2006Finished
                  goods
              
              $
              1,577,556
              
              $
              1,305,872Raw
                  materials
              
              
              879,100
              
              
              799,166$
              2,456,656
              
              $
              2,105,038




(4)
      FINANCING AGREEMENTS:





In
      an
      agreement dated July 31, 2002, Quintiles Transnational Corp.’s (“Quintiles”)
      strategic investment group, PharmaBio Development, Inc. (“PharmaBio”) agreed to
      pay the Company $4.5 million in four equal quarterly installments commencing
      third quarter 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 and 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%. $0.2 and $0.2 million were recorded as interest expense for the quarters
      ended March 31, 2007 and March 31, 2006, respectively. The Company has paid
      PharmaBio $3.7 million under this agreement through March 31, 2007.





In
      an
      agreement dated March 5, 2003, PharmaBio agreed to pay the Company $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 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 for the 2003 third quarter and are subject to minimum
      ($30 million) and maximum ($55 million) amounts. Because
      the minimum amount exceeds the $15 million received by the Company, 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%. $0.5 and $0.5 million were
      recorded as interest expense for the quarters ended March 31, 2007 and March
      31,
      2006, respectively.  The
      agreement called for a true-up payment on November 14, 2006 equal to the
      difference between royalties paid through and for the third quarter of 2006,
      and
      $13 million. On April 14, 2006, the Company entered into a letter agreement
      (the
“Letter Agreement”) with PharmaBio pursuant to which the Company agreed to pay
      approximately $12 million of this true-up payment seven months early.
      Accordingly, on April 14, 2006, the Company paid PharmaBio $11.6 million (the
      “Early Payment”), which was the present value of a November 14, 2006 $12 million
      true-up payment using a six percent (6%) annual discount factor. In
      consideration of such payment, PharmaBio agreed that PharmaBio will be deemed
      to
      have received on account of that payment $12 million for purposes of the true-up
      payment. Although the Company paid and recorded approximately $0.4 million
      less
      in interest expense during 2006 due to this early payment, for accounting
      purposes, the payment resulted in a non cash loss of approximately $0.3 million
      during the second quarter of 2006. The Company has paid PharmaBio $13.0 million
      under this agreement through March 31, 2007




Page
          10
          of 24




Long
      term
      l iabilities
      from financing agreements consisted of the following:


March
                  31,
              
              December
                  31,2007
              
              2006July
                  31, 2002 financing agreement
              
              $
              3,597,862
              
              $
              3,485,672March
                  5, 2003 financing agreement
              
              
              8,792,049
              
              
              8,298,05212,389,911
              
              
              11,783,724Less:
                  current portion
              
              
              3,745,244
              
              
              553,947$
              8,644,667
              
              $
              11,229,777




(5)
      NOTES PAYABLE:





On
      December 22, 2006, the Company raised approximately $40 million in gross
      proceeds to the Company from the sale of convertible subordinated notes to
      a
      group of institutional investors. The notes bear interest at a rate of 8% per
      annum, are subordinated to the PharmaBio financing agreements and mature on
      December 31, 2011. They are convertible into a total of approximately 7.6
      million shares of Common Stock at a conversion price of $5.25. Investors also
      received warrants to purchase 2,285,714 shares of Common Stock at an exercise
      price of $5.50 per share. The warrants become exercisable on June 20, 2007
      and
      expire on December 22, 2011 unless earlier exercised or terminated. The Company
      used the proceeds of this offering to acquire from Ares Trading S.A. (“Merck
      Serono”) the U.S. marketing rights to CRINONE ® for $33
      million and purchased Merck Serono’s existing inventory of that product. The
      balance of the proceeds were used to pay other costs related to the transaction
      and for general corporate purposes. The Company filed a registration statement
      with the SEC to register for resale the shares of Common Stock issuable upon
      the
      conversion of the notes and the exercise of the warrants, which registration
      statement was declared effective on April 17, 2007.





We
      recorded original issue discounts of $6.3 million to the notes based upon the
      fair value of warrants granted. In addition, beneficial conversion features
      totaling $8.5 million have been recorded as a discount to the notes and
      warrants. These discounts are being amortized at an imputed rate over the five
      year term of the related notes. For the quarter ended March 31, 2007, $0.5
      million of amortization related to these discounts is classified as interest
      expense in our consolidated statements of operations. Unamortized discounts
      of
      $14.2 million have been reflected as a reduction to the face value of the
      convertible notes in our consolidated balance sheet as of March 31,
      2007.





(6)
      COMMON STOCK





During
      the quarter ended March 31, 2007, 1,800 shares of series C convertible preferred
      stock were converted to 1,412,050 shares of Common Stock.





On
      March 10, 2006, the Company entered into a Securities Purchase Agreement with
      certain investors for the private placement of 7,428,220 shares of the Company’s
      common stock, par value $.01 per share (the “Shares”), at a price of $4.04 per
      share and warrants to purchase 1,857,041 shares of common stock (the
“Warrants”). The gross proceeds from the sale of the Shares were approximately
      $30 million. The Warrants are exercisable for common stock of the Company at
      $5.39 per share beginning on September 9, 2006, and expiring on March 11, 2011.
      The exercise price and number of shares issuable upon exercise of the Warrants
      are subject to adjustment in the event of stock split, stock dividend,
      recapitalization, reclassification, combination or exchange of shares,
      reorganization, liquidation, dissolution, consolidation, or merger. Pursuant
      to
      the Securities Purchase Agreement, the Company filed, within 30 days, a
      registration statement with the SEC to register for resale the Shares and the
      shares of common stock issuable upon the exercise of the Warrants, which
      registration statement was declared effective on April 14, 2006.




Page
          11
          of 24




(7)
      GEOGRAPHIC INFORMATION:





The
      Company and its subsidiaries are engaged in one line of business, the
      development and sale of pharmaceutical products. In certain foreign countries
      these products may be classified as medical devices or cosmetics by those
      countries’ regulatory agencies. The following table shows selected unaudited
      information by geographic area:


Net
              
              Profit
                  (loss) from
              
              IdentifiableRevenues
              
              Operations
              
              AssetsAs
                  of and for the three monthsended
                  March 31, 2007United
                  States
              
              $
              3,408,639
              
              $
              (3,156,481
              )
              $
              54,822,836Europe
              
              
              3,275,981
              
              
              1,313,985
              
              
              7,560,265$
              6,684,620
              
              $
              (1,842,496
              )
              $
              62,383,101As
                  of and for the three monthsended
                  March 31, 2006United
                  States
              
              $
              2,051,692
              
              $
              (3,091,349
              )
              $
              34,810,608Europe
              
              
              2,493,685
              
              
              944,212
              
              
              8,023,036$
              4,545,377
              
              $
              (2,147,137
              )
              $
              42,833,644
  Page
            12
            of 24


(8)
      INCOME (LOSS) PER COMMON AND POTENTIAL COMMON SHARE:





The
      calculation of basic and diluted loss per common and common equivalent share
      is
      as follows:


Three
                  Months EndedMarch
                  31,2007
              
              2006Net
                  loss
              
              $
              (3,729,165
              )
              $
              (2,746,322
              )Less:
                  Preferred stock dividends
              
              
              (34,063
              )
              
              (40,625
              )Net
                  loss applicable tocommon
                  stock
              
              $
              (3,763,228
              )
              $
              (2,786,947
              )Basic
                  and diluted:Weighted
                  average number ofcommon
                  shares outstanding
              
              
              50,081,448
              
              
              43,344,645Basic
                  and diluted net loss per common share
              
              $
              (0.08
              )
              $
              (0.06
              )




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,
      convertible notes, convertible preferred stock, and other potential common
      stock
      outstanding during the period. Shares to be issued upon the exercise of the
      outstanding options and warrants or the conversion of the convertible notes
      and
      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 or the conversion of the convertible notes
      and
      preferred stock excluded from the calculation amounted to 22,249,533 and
      12,365,408 at March 31, 2007 and 2006, respectively.





(9)
      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 reserves or 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.





Page
          13
          of 24


(10)
      STOCK-BASED COMPENSATION:





As
      a result of the adoption of SFAS No. 123R, the Company’s net loss for the three
      months ended March 31, 2007 and March 31, 2006 includes $0.6 million and $0.1
      million, respectively of compensation expense. The compensation expense related
      to all of the Company’s stock-based compensation arrangements is recorded as a
      component of cost of goods sold, selling, general administrative, and research
      and development expenses.




(11)
      RECENT ACCOUNTING PRONOUNCEMENTS:





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
          14
          of 24


**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. The MD&A is
      provided as a supplement to, and should be read in conjunction with, our
      financial statements and the accompanying notes thereto.




We
      are in the business of developing, manufacturing and selling pharmaceuticals products
      that utilize our proprietary bioadhesive drug delivery technologies. We
      are predominantly
      focused on the women’s healthcare market. Our
      bioadhesive vaginal gel products provide patient-friendly solutions for
      infertility, pregnancy support, amenorrhea, and other obstetric, gynecologic
      and
      medical conditions.




Our
      U.S. sales organization currently promotes
      three natural progesterone gel products, CRINONE ® 8%, PROCHIEVE ® 8% and PROCHIEVE 4%. We acquired the U.S. marketing rights to CRINONE in
      December 2006, and can now address the full range of reproductive
      endocrinologists, obstetricians and gynecologists who treat infertility in
      2007.
      We also promote STRIANT ® testosterone buccal tablet for the treatment of hypogonadism in men, however, our
      focus
      in fiscal 2007 is to increase prescriptions
      of our infertility products.




We
      deri ve
      additional revenues from our established marketing partnerships, through which
      our products are commercialized in global territories outside the U.S. and
      U.S.
      markets on which we are not currently focused.




We
      also
      seek opportunities to develop new products using our drug delivery technology,
      both proprietary projects and for strategic partners; to expand our product
      base
      and thereby leverage our sales force; and, to partner or divest products that
      fall outside our core women’s healthcare focus.




Our
      net
      loss for 2006 was $ 12.6 million, or $0.27 per basic and diluted common share.
      We expect to continue to incur operating losses in the near future because
      of
      the significant non-cash items related to the CRINONE ® acquisition that our future financial statements will reflect. We expect to
      have
      positive cash flow from operations in 2008. Our sales and distribution expenses
      will be higher in 2007 to fund market research and medical education programs
      critical to our growth strategy. In 2007, we expect that our research and
      development expenses will be lower than those in 2006 as we focus on the
      streamlined clinical development of vaginally-administered lidocaine for
      dysmenorrhea and look to potentially advance another drug candidate into the
      clinic.




Page
          15
          of 24





**Results
      of Operations - Three Months Ended March 31, 2007 versus Three Months Ended
      March 31, 2006**


Progesterone
      Products are:


·
            CRINONE®8%, PROCHIEVE®8% and PROCHIEVE®4% (progesterone gels) and CRINONE®sold to Merck Serono for foreign
                markets;





Other
      Products/Revenue are:


·
            STRIANT®(testosterone buccal system) marketed by the Company in the U.S.


·
            STRIANT®sold to our partners for foreign markets;


·
            Replens®Vaginal Moisturizer sold to Lil’ Drug Store Products, Inc. (“Lil’ Drug
                Store”) for foreign markets;


·
            RepHresh®Vaginal Gel sold to Lil’ Drug Store on a worldwide basis;
                and,


·
            Royalty
                and licensing revenues.








Net
      revenues increased 47% in the three months ended March 31, 2007 to $6.7 million
      as compared to $4.5 million in the three months ended March 31, 2006.




Revenues
      from progesterone products increased 47% to $4.7 million in the three months
      ended March 31, 2007 as compared to $3.2 million in the three months ended
      March
      31, 2006, primarily as a result of the addition of the US CRINONE sales from
      marketing rights purchased from Merck Serono in December 2006. Revenues from
      other products increased 48% to $2.0 million in the three months ended March
      31,
      2007 as compared to $1.3 million in the three months ended March 31, 2006,
      primarily as a result of the increase in orders of RepHresh and
      STRIANT.





Gross
      profit as a percentage of revenues was 69% in the three months ended March
      31,
      2007 and 59% in the three months ended March 31, 2006. The
      10%
      increase in gross profit percentage from 2006 to 2007 was the result of the
      change in product mix to the higher margin CRINONE sales including the reduction
      of royalty expense formerly recognized under the license agreement with Merck
      Serono. In 2006, cost of goods sold for PROCHIEVE included a 30% royalty on
      net
      sales paid to Merck Serono that was terminated with the December 2006
      acquisition of the U.S. rights to CRINONE.





Selling
      and distribution expenses increased 26% to $1.9 million in the three months
      ended March 31, 2007, as compared to $1.5 million in the three months ended
      March 31, 2006. The primary reason for the increase was an increase in market
      research expenses to aid the Company in marketing CRINONE. Additional expenses
      included research on the preterm indication for PROCHIEVE 8% in women with
      a
      previous preterm birth, which was discontinued in February 2007. Selling and
      distribution expenses include payroll, employee benefits, equity compensation
      and other personnel-related costs associated with sales and marketing personnel,
      and advertising, market research, market data capture, promotions, tradeshows,
      seminars, other marketing-related programs and distribution costs. In 2007,
      both
      market research costs and sales force and management costs were $0.9 million
      each for the first quarter. The comparable costs for 2006 were $0.3 million
      for
      market research related costs and $1.1 million for sales force and management
      costs. Other sales and marketing costs approximated $0.1 million in both 2006
      and 2007.





General
      and administrative expenses 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 increased 25% to $2.0 million in the three months ended March 31, 2007 as
      compared to $1.6 million in the three months ended March 31, 2006. The increase
      in 2007 expenses is primarily the result in an increase in stock option expense
      of $0.3 million in the quarter over the prior year. The Company’s annual grant
      of stock options to employees as well as a retention grant were accelerated
      to
      February 2007 instead of following the annual stockholder’s meeting in May and
      25% of the options granted were vested immediately. The impact of the immediate
      vesting approximated $0.2 million of the increase.




Page
          16
          of 24




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 22% to $1.4 million in
      the
      three months ended March 31, 2007 as compared to $1.7 million in the three
      months ended March 31, 2006. The decrease is primarily related to the completion
      in early 2007 of the Company’s Phase III trial for PROCHIEVE® 8% in preventing
      recurrent preterm birth.





The
      Company purchased the marketing rights for U.S. sales of CRINONE 8%
      from Merck Serono in December of 2006 for $33 million. This non-cash charge
      is
      being amortized over 6.3 years Amortization of the acquisition cost for the
      CRINONE U.S. marketing rights for the quarter ended March 31, 2007 was $1.2
      million versus $0.0 for the comparable period in 2006.





Other
      income/expense for the quarter ended March 31, 2007 consisted primarily of
      interest expense of $2.1 million associated with the $40 million convertible
      note financing completed in December 2006 and the financing agreements with
      PharmaBio. Interest expense for the quarter ended March 31, 2006 was $0.7
      million.





As
      a
      result, the net loss for the three months ended March 31, 2007 was $3.7 million
      or $(0.08) per common share as compared to the net loss for the three months
      ended March 31, 2006 of $2.7 million or $(0.06) per common share.





**Liquidity
      and Capital Resources**





Cash
      and
      cash equivalents were $20.3 and $25.3 million at March 31, 2007 and December
      31,
      2006, respectively.





Cash
      provided by (used in) operating, investing and financing activities is
      summarized as follows:





Three
                Months EndedMarch
                31, 20072007
            
            2006Cash
                flows:Operating
                activities
            
            
            (4,843,873
            )
            
            (997,250
            )Investing
                activities
            
            
            -
            
            
            (9,500
            )Financing
                activities
            
            
            (157,110
            )
            
            28,943,148





Operating
      Activities:





Net
      cash
      used in operating activities in the 2007 period resulted primarily from
      increases in working capital. The net loss of $3.7 million included non-cash
      items for depreciation, amortization, stock-based compensation, provision for
      sales returns and non-cash interest expense, which total $3.5 million in
      aggregate, leaving a net cash loss, net of non-cash items, of $0.2 million
      for
      the first quarter of 2007. Accounts receivable grew by $2.6 million as a result
      of the increased sales during the quarter. Inventories also grew by $0.4 million
      during the period to cover CRINONE and STRIANT demands. Accounts payable and
      accrued expenses decreased by $0.3 and $1.1 million, respectively. The reduction
      in accrued expenses related to: bonuses paid in the amount of $0.5 million,
      sales returns of $0.5 million, and the balance being miscellaneous expenses,
      royalties and interest.




Page
          17
          of 24




Net
      cash
      used in operating activities in the 2006 period resulted primarily from the
      net
      loss ($2.7 million), net of non-cash items amounting to $1.2 million, resulting
      in a $1.5 million net cash loss. Changes in assets and liabilities generated
      $0.5 million in cash flow, leaving a net cash usage of $1 million from
      operations for the first quarter of 2006. Accounts payable increased by $1.4
      million primarily from investment banking fees and clinical trial fees. Accounts
      receivable decreased by $0.2 million, which was offset by lower accrued expenses
      of $0.8 million which represent a combination of royalty payments, sales returns
      usage and other expenses. For the period ending March 31, 2006 there were
      increased levels of inventory and prepaid expenses of $0.2 and $0.3 million,
      respectively.





Investing
      activities:





Net
      cash
      used in investing activities in the 2006 period was primarily attributable
      to
      the purchase of office equipment. There were no expenses in the 2007
      period.





Financing
      Activities:





Net
      cash
      used in financing activities in 2007 of $0.2 million represents payments under
      financing agreements with PharmaBio during the period and Series C preferred
      share dividends.





Net
      cash
      provided by financing activities in 2006 of $28.9 million was attributable
      to
      the receipt of $28.8 million in net proceeds from the issuance of Common Stock
      and $0.3 million from the exercise of stock options. Payments to PharmaBio
      and
      dividend payments totaled $0.1 million.





The
      Company has an effective registration statement that we filed with 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
      million. To date, the Company has sold approximately $56.4 million 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
      product candidates.





In
      connection with the 1989 purchase of the assets of Bio-Mimetics, Inc., which
      assets consisted of certain patents underlying the Company’s BDS, other patent
      applications and related technology, the Company pays Bio-Mimetics, Inc. a
      royalty equal to two percent (2%) of the net sales of products based on the
      assets purchased from Bio-Mimetics, Inc., 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 or 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 March 31, 2007, the Company has paid approximately
      $3.6
      million in royalty payments to Bio-Mimetics. Due to expiration in September
      2006
      of certain patents purchased from Bio-Mimetics, Inc., royalties to Bio-Mimetics,
      Inc. are no longer due on CRINONE, PROCHIEVE, or STRIANT products.




Page
          18
          of 24




As
      of
      March 31, 2007, the Company had outstanding exercisable options and warrants
      that, if exercised, would result in approximately $62.6
      million of additional capital and would cause the 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 and new indications for
      currently approved products.





As
      of
      March 31, 2007, the Company had available net operating loss carry forwards
      of
      approximately $129 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 carry forwards or that the net operating loss carry forwards
      will
      be available at that time.





In
      accordance with Statement of Financial Accounting Standards No. 109, as of
      March
      31, 2007 and December 31, 2006, other assets in the accompanying condensed
      consolidated balance sheets include deferred tax assets of approximately $48
      and
      $48 million, respectively (comprised primarily of a net operating loss carry
      forward), for which a full valuation allowance has been recorded since the
      realizability of the deferred tax assets are not determinable.





**Contractual
      Obligations, Commercial Commitments and Off-Balance Sheet
      Arrangements**





The
      Company’s contractual obligations, commercial commitments and off-balance sheet
      arrangements disclosures in its Annual Report on Form 10-K for the year ended
      December 31, 2006 have not materially changed since that report was
      filed.





**Recent
      Accounting Pronouncements**





Effective
      January 1, 2007, the Company adopted the provisions of FASB Interpretation
      No.
      48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation
      of FASB Statement No. 109.” FIN 48 provides detailed guidance for the financial
      statement recognition, measurement and disclosure of uncertain tax positions
      recognized in the financial statements in accordance with SFAS No. 109. Tax
      positions must meet a “more-likely-than-not” recognition threshold at the
      effective date to be recognized upon the adoption of FIN 48 and in subsequent
      periods. Upon the adoption of FIN 48, the Company had no unrecognized tax
      benefits. During the first quarter of 2007, the Company recognized no
      adjustments for uncertain tax benefits.




Income
      taxes are computed using the asset and liability method of accounting. Under
      the
      asset and liability method, a deferred tax asset or liability is recognized
      for
      estimated future tax effects attributable to temporary differences and
      carryforwards. The measurement of deferred income tax assets is adjusted by
      a
      valuation allowance, if necessary, to recognize future tax benefits only to
      the
      extent, based on available evidence, it is more likely than not such benefits
      will be realized. The Company’s deferred tax assets were fully reserved at March
      31, 2007 and December 31, 2006.





The
      Company recognizes interest and penalties, if any, related to uncertain tax
      positions in general and administrative expenses. No interest and penalties
      related to uncertain tax positions were accrued at March 31, 2007.





The
      Company has not been audited by the IRS to date. However, the Company expects
      no
      material changes to unrecognized tax positions within the next twelve
      months.




Page
          19
          of 24




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”), which clarifies the definition of fair value, establishes guidelines for
      measuring fair value, and expands disclosures regarding fair value measurements.
      SFAS 157 does not require any new fair value measurements and eliminates
      inconsistencies in guidance found in various prior accounting pronouncements.
      SFAS No. 157 is effective for fiscal years beginning after November 15, 2007
      and
      interim periods within those fiscal years. The Company is currently evaluating
      the impact of adopting SFAS 157 will have on our financial position, cash flows
      or results of operations.





**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 on Form 10-K for the year ended
      December 31, 2006, 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 to 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 are in excess of the amount to be received by the Company, the Company
      has recorded the money 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.





*Stock-Based
      Compensation - Employee Stock-Based Awards.* Commencing
      January 1, 2006 the Company adopted Statement of Financial Accounting Standards
      No. 123R, “Share Based Payment” (“SFAS 123R”), which requires all share based
      payments, including grants of stock options, to be recognized in the income
      statement as an operating expense, based on their fair values. In March 2005,
      the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) providing
      supplemental implementation guidance for SFAS 123(R). The Company has applied
      the provisions of SAB 107 in its adoption of SFAS 123(R).





**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 clinical research programs, sales, earnings or other
      future financial performance and liquidity, 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.




Page
          20
          of 24




Although
      the Company believes 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 CRINONE ® 8%,
      PROCHIEVE ® 8%,
      PROCHIEVE ® 4% and
      STRIANT ® in the
      U.S.; the timing and size of orders for out-licensed products from our marketing
      partners; the timely and successful development of products,  including
      the clinical and regulatory path for possible development of PROCHIEVE 8% for
      the prevention of preterm birth; the timely and successful completion of
      clinical studies, including the pharmacokinetic and Phase II cross-over studies
      of the vaginally-administered lidocaine product candidate; success in obtaining
      acceptance and approval of new products and indications for current products
      by
      the FDA and international regulatory agencies; 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.




**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**





**Evaluation
      of Disclosure Controls and Procedures**





We
      maintain “disclosure controls and procedures,” as such term is defined in Rule
      13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), that are designed to ensure that information required to be disclosed by
      us in reports that we file or submit under the Exchange Act is recorded,
      processed, summarized, and reported within the time periods specified in SEC
      rules and forms, and that such information is accumulated and communicated
      to
      our management, including our Chief Executive Officer and Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating our disclosure controls and procedures,
      management recognized that disclosure controls and procedures, no matter how
      well conceived and operated, can provide only reasonable, not absolute,
      assurance that the objectives of the disclosure controls and procedures are
      met.
      Additionally, in designing disclosure controls and procedures, our management
      necessarily was required to apply its judgment in evaluating the cost-benefit
      relationship of possible disclosure controls and procedures. The design of
      any
      disclosure controls and procedures also is based in part upon certain
      assumptions about the likelihood of future events, and there can be no assurance
      that any design will succeed in achieving its stated goals under all potential
      future conditions.




Page
          21
          of 24




Based
      on their evaluation as of the end of the period covered by this Quarterly Report
      on Form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded
      that our disclosure controls and procedures were effective.





**Changes
      in Internal Control over Financial Reporting**





There
      was no change in our internal control over financial reporting that occurred
      during the period covered by this Quarterly Report on Form 10-Q that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.





Page
          22
          of 24




**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 our financial position or results of operation.
      Additionally, the Company believes that it has reserves or 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 1A.
      Risk Factors**





There
      have been no material changes to the factors disclosed in Item 1A. Risk Factors
      in our Annual Report on Form 10-K for the year ended December 31,
      2006.





**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)
            
            Exhibits31.1
            
            Rule 13a-14(a)/15d-14(a) Certification
              of
              Chief Executive Officer of the Company.1/31.2
            
            Rule 13a-14(a)/15d-14(a) Certification
              of
              Chief Financial Officer of the Company.1/32.1
            
            Certification Pursuant to 18 U.S.C.
              Section
              1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002.1/32.2
            
            Certification Pursuant to 18 U.S.C.
              Section
              1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002.1/





1 / Filed
      herewith.




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          23
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**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.**/s/
              JAMES A. MEERJAMES A. MEER, Senior Vice President-
              Chief Financial Officer and
                Treasurer





DATE: May
      9,
      2007





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