COLLAGENEX PHARMACEUTICALS INC
EXHIBIT 10.5
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<TYPE>EX-10
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<DESCRIPTION>EXHIBIT 10.5
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<div  align="right"><font size="2" face="Times New Roman">Exhibit 10.5</font></div>

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<div><font size="2" face="Times New Roman">May 26, 2005</font></div>

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<div><font size="2" face="Times New Roman">BRIAN GALLAGHER<br>  3 MICHAEL WAY<br>  PENNINGTON, NJ&#160; 08534</font></div>

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<div><font size="2" face="Times New Roman">Dear BRIAN GALLAGHER:</font></div>

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<div><font size="2" face="Times New Roman">Pursuant to the terms and  conditions of the company&#146;s 1996 COLLAGENEX STOCK OPT PLAN (the &#147;Plan&#148;), you  have been granted a Non-Qualified Stock Option to purchase 12,000 shares (the  &#147;Option&#148;) of stock as outlined below.</font></div>

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  <div  align="right"><font size="2" face="Times New Roman">Granted To:</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BRIAN    GALLAGHER</font></div>
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  <div  align="right"><font size="2" face="Times New Roman">Grant Date:</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May    25, 2005</font></div>
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  <div  align="right"><font size="2" face="Times New Roman">Options Granted:</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12,000</font></div>
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  <div  align="right"><font size="2" face="Times New Roman">Option Price per Share:</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$4.5800    &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total    Cost to Exercise: $54,960.0000</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May    25, 2015</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25%    per year for 4 years</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,000    on 05/25/2006</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,000    on 05/25/2007</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,000    on 05/25/2008</font></div>
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  <div><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,000    on 05/25/2009</font></div>
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<div><font size="2" face="Times New Roman">By my signature below, I hereby  acknowledge receipt of this Option granted on the date shown above, which has  been issued to me under the terms and conditions of the Plan.&#160; I further acknowledge receipt of the copy of  the Plan and agree to conform to all of the terms and conditions of the Option  and the Plan.</font></div>

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  <div style="margin-left: 3%; text-indent:-3%"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;/s/ B<small>RIAN</small> G<small>ALLAGHER</small></font></div>
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  <div style="margin-left: 3%; text-indent:-3%"><font size="2" face="Times New Roman">Date:&#160; July 6, 2005</font></div>
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  <div style="margin-left: 3%; text-indent:-3%"><font size="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;BRIAN    GALLAGHER</font></div>
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<div  align="center"><font size="2" face="Times New Roman">Note: If there are any discrepancies in the name or address shown  above,<br>  please make the appropriate corrections on this form.</font></div>

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  <p><font size="2" face="Times New Roman">41 University Drive, Newtown, PA 18940<br>
    215-579-7388 (voice) &#149; 215-579-8577 (fax)</font></p>

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