CollaGenex Pharmaceuticals Signs License and Supply Agreement with MediGene for Marketing Rights to Oracea in EU and Certain Other Countries.

NEWTOWN, Pa. -- CollaGenex Pharmaceuticals, Inc. (NASDAQ:CGPI) today announced that it has signed a License and Supply Agreement with MediGene AG for marketing rights to Oracea(TM), CollaGenex's flagship dermatology product for the systemic treatment of rosacea, in the European Union, certain contiguous countries and Russia. MediGene is a German biopharmaceutical company that is developing novel pharmaceuticals for the treatment of dermatology, cancer and certain autoimmune conditions.

Under the License and Supply Agreement, MediGene receives the right to manufacture, register, market and sell Oracea in the European Union, certain contiguous countries and Russia. CollaGenex is entitled to an upfront fee of $5 million upon signing of the agreement as well as an additional $7.5 million in milestone payments upon the achievement of certain annual sales thresholds. In addition, CollaGenex will receive a royalty of 12% of annual net sales up to $10 million and 15% of annual net sales in excess of $10 million.

Colin Stewart, president and chief executive officer of CollaGenex, stated, "This partnership, with a company that shares many of our attributes, will allow us to access the market for prescription rosacea products in the EU and other specified countries. We believe that the total size of this market in these countries is approximately $100 million, and that MediGene is well-positioned to develop Oracea into a significant product within the total market. This agreement also further strengthens our balance sheet as we continue to focus on the development of our product portfolio within the dermatology market."

Dr. Peter Heinrich, chief executive officer of MediGene, commented, "We have been very impressed with the clinical results of Oracea and the results of the commercial launch in the U.S. Following regulatory approval, Polyphenon(R) E-Ointment, our topical prescription drug for the treatment of HPV-related genital warts, and Oracea will form the cornerstone for the development of our commercial dermatology business in Europe."

About Oracea

Oracea was developed by CollaGenex and is the only systemic drug in the U.S. approved by the FDA to treat rosacea. Oracea was launched to the U.S. dermatology community in July 2006 and addresses a $500 million prescription drug market. CollaGenex filed a Marketing Authorization Application (MAA) for Oracea with the United Kingdom's Medicines & Healthcare Products Regulatory Agency (MHRA) on February 24, 2006 and anticipates that it will receive approval during 2007. The U.K. will act as reference member state in this decentralized procedure. In June 2006, the European Patent Office issued Patent 02731267.7, which has a priority date of April 5, 2002 and covers the use of sub anti-microbial doxycycline in the treatment of acne and rosacea, including Oracea(TM).

About MediGene

MediGene AG is a publicly quoted (Frankfurt: Prime Standard: MDG) biotechnology company located in Martinsried/Munich, Germany, with subsidiaries in Oxford, UK and San Diego, USA. MediGene is the first German biotech company with a drug on the market. A second drug, Polyphenon(R) E Ointment, has been approved by the FDA and is pending approval in the EU for the treatment of HPV-related genital warts. In addition, several drug candidates are currently in clinical development. MediGene also possesses innovative platform technologies. MediGene focuses on indications of high medical need and great economic opportunities.

About CollaGenex

CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical company currently focused on developing and marketing innovative proprietary medical therapies to the dermatology market. In July 2006, CollaGenex launched Oracea(TM), the first FDA-approved systemic product for the treatment of rosacea, and is conducting a 300-patient, Phase II dose-finding study to evaluate its second dermatology candidate, incyclinide, for the treatment of acne. CollaGenex is also conducting Phase I clinical trials to evaluate COL-118, a topical compound based on the SansRosa(TM) technology, for the treatment of redness associated with rosacea and other skin disorders. CollaGenex's professional dermatology sales force also 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.

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 USA, Inc., the successor to Atrix Laboratories, Inc., for the treatment of adult periodontitis.

Research has shown that certain tetracyclines can be chemically modified to remove their antibiotic effects while retaining the 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(TM)" 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 license and supply agreement with MediGene, the potential for success of Oracea in Europe and the clinical results and commercial launch of Oracea, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. CollaGenex's 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 the most recent Form 10-Q for the quarter ended September 30, 2006 under the section "Risk Factors" 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's 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 or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Periostat(R) and Restoraderm(R) are registered trademarks and IMPACS(TM), SansRosa(TM) and Oracea(TM) are trademarks of CollaGenex Pharmaceuticals, Inc.

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

Pandel(R) is a registered trademark of Taisho Pharmaceuticals.

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