CollaGenex Pharmaceuticals Amends Terms of Series D Cumulative Convertible Preferred Stock.

NEWTOWN, Pa. -- CollaGenex Pharmaceuticals, Inc. (NASDAQ:CGPI) today announced that it had reached agreement with each of the holders of its Series D Cumulative Convertible Preferred Stock (the "Preferred Stockholders"), including OCM Principal Opportunities Fund, L.P. ("OCM"), to amend the terms of such Preferred Stock. Through an exchange of their shares of Series D Preferred Stock for shares of Series D-1 Preferred Stock, the Preferred Stockholders agreed permanently to waive their right to approve research and development expenditures in excess of $7 million annually in exchange for a reduction in the conversion price of the Preferred Stock from $9.89 per share to $8.50 per share. The Preferred Stockholders also agreed to reduce the mandatory conversion price from $19.78 per share to $17.00 per share, and to reduce the number of consecutive trading days during which the closing price of the Company's common stock exceeds $17.00 from 40 days to 30 days before the Company can require conversion of the Series D Preferred Stock into common stock. The Series D Preferred Stock was issued in 1999 and has a liquidation value, excluding accrued dividends, of $20 million.

Nancy C. Broadbent, chief financial officer of CollaGenex, said, "This restructuring of our Preferred Stock is essential to our ability to continue to invest in our robust R&D pipeline and to build CollaGenex into a leading R&D-based dermatology company. We are also pleased that we were able to improve the terms for requiring conversion of the preferred stock into common stock, which could ultimately reduce our total preferred stock dividend payments. In connection with this amendment, we will record a non-cash charge of approximately $3.5 million to $3.7 million to the determination of net income available to common stockholders during the fourth quarter."

CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical company currently focused on developing and marketing proprietary, innovative medical therapies to the dermatology market. CollaGenex's professional dermatology sales force markets Pandel(R), a prescription topical corticosteroid licensed from Altana, Inc., Alcortin(TM) (1% iodoquinol and 2% hydrocortisone), a prescription topical antifungal steroid combination, and Novacort(TM) (2% hydrocortisone acetate and 1% pramoxine HCl), a prescription topical steroid and anesthetic. Alcortin and Novacort are marketed by the Company under a Promotion and Cooperation agreement with Primus Pharmaceuticals, Inc. In addition, CollaGenex has filed an NDA for Oracea(TM), the first systemic compound for the treatment of rosacea, which is currently under evaluation by the FDA, and is conducting a 300-patient, Phase II dose-finding study to evaluate its second dermatology candidate, incyclinide, for the treatment of acne. CollaGenex also currently sells Periostat(R), which the Company developed as the first pharmaceutical to treat periodontal disease by inhibiting the enzymes that destroy periodontal support tissues and by enhancing bone protein synthesis, and Atridox(R), Atrisorb FreeFlow(R) and Atrisorb-D FreeFlow(R), which are products of QLT, Inc., the successor to Atrix Laboratories, Inc., for the treatment of adult periodontitis.

Research has shown that certain tetracyclines can be chemically modified to retain non-antibiotic properties that may make them effective in treating diseases involving inflammation and/or destruction of the body's connective tissues. CollaGenex is evaluating various chemically modified tetracyclines (so called "IMPACS" compounds because they are Inhibitors of Multiple Proteases And CytokineS") to assess whether they are safe and effective in these applications. The Company has a pipeline of innovative product candidates with possible applications in dermatology and other disease states. In addition, CollaGenex has acquired the Restoraderm(R) technology, a unique, proprietary dermal drug delivery system, and plans to develop a range of topical dermatological products with enhanced pharmacologic and cosmetic properties.

To receive additional information on the Company, please visit our Web site at www.collagenex.com, which does not form part of this press release.

Forward-Looking Statements

Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating to the Company's arrangements with its preferred stockholders, future development efforts, including research and development plans, clinical trials, development programs and expenses in building its dermatology franchise, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. CollaGenex' actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including those factors contained in CollaGenex' Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 under the section "Additional Factors That May Affect Future Results" as well as other documents that may be filed by CollaGenex from time to time with the Securities and Exchange Commission. Forward-looking statements include statements regarding CollaGenex' expectations, beliefs, intentions, goals strategies, plans or prospects regarding the future and can be identified by forward-looking words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "should", "will", and "would" or similar words. CollaGenex assumes no obligations to update the information included in this press release.

Periostat(R) and Restoraderm(R) are registered trademarks and Oracea(TM) is a trademark of CollaGenex Pharmaceuticals, Inc.

All other trade names, trademarks or service marks are the property of their respective owners and are not the property of CollaGenex Pharmaceuticals, Inc. or any of our subsidiaries.

Novacort(TM) and Alcortin(TM) are trademarks of Primus Pharmaceuticals, Inc.

Pandel(R) is a trademark of Taisho Pharmaceuticals.

Atridox(R), Atrisorb(R) and Atrisorb-D(R) are registered trademarks of QLT USA, Inc.