CollaGenex Pharmaceuticals, Inc. Signs Marketing and Supply Agreement for Periostat for Japan.

Business Editors/Medical Writers

NEWTOWN, Pa--(BUSINESS WIRE)--Aug. 9, 2000

CollaGenex Pharmaceuticals, Inc. (Nasdaq: CGPI) today announced that it had signed an exclusive marketing and supply agreement for Periostat(R) in Japan with the Japanese pharmaceutical company Showa Yakuhin Kako Co. Ltd.

The agreement includes an option for Showa to extend its rights to other countries in South East Asia.

"This is our first agreement in Asia, and represents a major opportunity to extend the worldwide market for Periostat," said Brian M. Gallagher PhD, chairman, president and chief executive officer of CollaGenex. "Japan is the second largest pharmaceutical market in the world, and Showa is well positioned to exploit the Periostat opportunity in this critical market. Furthermore, with Showa's experience in other countries in South East Asia, we can anticipate an integrated sales and marketing approach to some of the most rapidly growing pharmaceutical markets in the world."

"Our company has already developed a dominant position in the sales of local anesthetics to dentists throughout Japan," noted Izumi Nomura, President of Showa Yakuhin Kako Co. Ltd. "Periostat is a unique product which will help position Showa as the leading supplier of high quality, innovative pharmaceutical products to dentists in Japan, and ultimately throughout the major countries of South East Asia"

Financial details of the agreement were not disclosed. Showa will pay milestone fees associated with the development and regulatory approvals of Periostat in Japan, will coordinate the clinical and regulatory development of Periostat required for marketing authorization by the Japanese authorities, and either purchase Periostat from CollaGenex or develop its own manufacturing capability in Japan, in which case it will pay a royalty on net sales to CollaGenex. Showa also has an option to an exclusive license to market Periostat in other countries of South East Asia, based on an analysis of market opportunity.

CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on providing innovative medical therapies to the dental market. The company's lead product, Periostat, was approved by the U.S. Food and Drug Administration in September 1998 and by the U.K. Medicines Control Authority in February 2000. It is the first and only prescription pharmaceutical product to treat periodontal disease by inhibiting the enzymes that destroy periodontal support tissues. Periostat is marketed to the dental community in the United States by CollaGenex through a professional pharmaceutical sales force composed of approximately 135 sales representatives and managers. Currently, the company's sales force is also marketing VIOXX(R), a Merck & Co. drug that the company promotes for the treatment and relief of acute dental pain, and Denavir(R), a SmithKline Beecham Consumer product for the treatment of cold sores.

Research has shown that the enzyme-suppressing technology underlying Periostat may also be applicable to other diseases involving destruction of the body's connective tissues, including cancer metastases (Metastat(R)) and a broad range of inflammatory diseases. CollaGenex is developing a series of novel, proprietary compounds known as IMPACS(R) (Inhibitors of Multiple Proteases And Cytokines) to address these applications. The company intends to pursue further research and development of this technology primarily through partnerships with third parties.

For additional information on CollaGenex, please visit the company's website at www.collagenex.com, which is not part of this press release.

Showa Yakuhin Kako Co. Ltd. has been engaged in the production and sale of high-quality pharmaceuticals, dental drugs and materials mainly in Japan since 1948. During the last three years, Showa has restructured its business operations to focus on the dental market. The company has achieved particular success in the Japanese market through the manufacture and sale of dental local anesthetic products, with a four-fold increase in sales of these products during the last three years. This success has been achieved through a rapid expansion of the company's dental sales effort, with approximately 70 professional sales representatives now serving the dental market. Showa has been developing a product portfolio that focuses on the two major diseases of the dentition which are prevalent in an aging population: caries and periodontal diseases. In this context, Showa believes that Periostat represents an innovative and valuable adjunctive therapeutic approach for adult periodontitis, approved for marketing by both the US FDA and the UK MCA, and that the product will provide a significant contribution to the growth and success of its dental business in the future.

This news release contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended. Investors are cautioned that forward-looking statements involve risks and uncertainties which may affect the company's business and prospects. The Company's business of selling, marketing and developing pharmaceutical products is subject to a number of significant risks, including risks relating to the implementation of the company's sales and marketing plans; risks inherent in research and development activities; risks associated with conducting business in a highly regulated environment and uncertainty relating to clinical trials of products under development, all as discussed in the Company's periodic filings with the US Securities and Exchange Commission.

Periostat(R), Metastat(R) and IMPACS(R) are trademarks of CollaGenex Pharmaceuticals, Inc. CollaGenex(R) and Periostat(R) are trademarks of CollaGenex International Limited. VIOXX(R) is a trademark of Merck & Co, Inc. Denavir is a trademark of SmithKline Beecham, Inc.