Collagen Corp. suffered a $2.5 million loss in the last quarter,primarily as a result of continuing legal and regulatorytravails involving its injectable collagen products, thecompany said Monday.

The Palo Alto, Calif., company lost 25 cents a share in its firstquarter ended Sept. 30, compared with earnings of $479,000,or a 5 cent gain per share in the comparable 1990 quarter. Netincome for the year prior period was reduced by $1.3 million incharges associated with discontinued operations.

Product sales fell nearly 10 percent to $13.9 million in thecurrent quarter from $15.4 million in the year-earlier period.

The company also said gross margins had been squeezed byhigher operating costs of its new manufacturing plant and anincreased proportion of sales coming from catheter productsfor treatment of neurovascular disorders.

Collagen (NASDAQ:CGEN) closed Monday at $19.75, down $1.

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