EXHIBIT 10.3

                             TANOX BIOSYSTEMS, INC.
                 1992 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

                             I. Purpose of the Plan

     The 1992 Non-Employee Directors Stock Option Plan (the "Plan") is intended
to provide ownership of the capital stock of Tanox Biosystems, Inc., a Texas
Corporation (the "Company"), to non-employee members of the Company's Board of
Directors ("Board") in order to attract and retain highly qualified individuals
to serve as directors of the Company; to provide competitive remuneration for
Board service; and to strengthen the commonality of interest between directors
and shareholders of the Company. Accordingly, the Company may grant to certain
non-employee members of the Board options ("Options") to purchase shares of the
common stock, $.01 par value, of the company ("Stock") in accordance with the
terms and conditions of the Plan. Options granted under the Plan shall not be
incentive stock options within the meaning of section 422 (a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Plan is intended to conform
to the provisions of Rule 16b-3 ("Rule 16b-3") of the Securities Exchange Act of
1934 (the "1934 Act") as presently in effect.

                               II. Administration

     The Plan shall be administered by a Committee (the "Committee") consisting
of two or more members of the Board who are employees of the Company. Members of
the Committee and employee members of the Board shall not be eligible to
participate in the Plan. The Committee shall have sole authority to select the
non-employee members of the Board who are to be granted Options from among those
eligible under the Plan and to establish the number of shares which may be
issued under each of the Options. The Committee is authorized to interpret the
Plan and may from time to time adopt such rules and regulations, not
inconsistent with the provisions of the Plan, as it may deem advisable to carry
out the Plan. Without intending to limit its authority, the Committee is
specifically authorized to adopt such limitations and requirements in connection
with the exercise of

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Options granted under the Plan and have such information prepared for
distribution to persons receiving such Options as may be necessary or
appropriate to qualify the exercise of such Options and issuance of the stock
Pursuant thereto for exemption from registration under applicable federal and
state securities laws or, if desired, to register such stock under such
securities laws. All decisions made by the Committee in selecting the
non-employee members of the Board to whom Options shall be granted, in
establishing the number of shares which may be issued under each Option, and in
construing the provisions of the Plan shall be final.

                             III. Option Agreements

     Each Option shall be evidenced by an option agreement ("Option Agreement")
and shall contain such terms and conditions, and may be exercisable for such
periods, as may be approved by the Committee. Unless otherwise provided by the
Committee on the grant of an Option, an Option shall become exercisable annually
as to one-third of the number of shares of Stock covered by such Option. The
terms and conditions of the respective Option Agreements need not be identical.
For all purposes under the Plan, the fair market value of a share of Stock on a
particular date shall be determined by the Committee in such a manner as it
deems appropriate. If, however, the stock is publicly traded at the time a
determination of its fair market value is required to be made, fair market value
of a share of Stock on a particular date shall be the average of (i) the closing
bid and ask price of the Stock on the most recent date the Stock was publicly
traded or, (ii) if the Stock is publicly traded on a securities exchange, the
high and low quoted selling price of the Stock on the most recent date the Stock
was publicly traded. The Option and the rights granted under the Option shall
not be transferable other than by will or the laws of descent and distribution,
and shall be exercisable only by the optionee during the optionee's lifetime or
at the optionee's death only by the optionee's guardian or legal representative;
subject, however, to any restrictions on transfer of, or any options of the
Company or other shareholders to reacquire, any shares purchased by the optionee
or the optionee's guardian or legal representative under the terms of any
buy-sell or other agreement which the Company may require the optionee or

                                   EXHIBIT A
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the optionee's guardian or legal representative to execute prior to exercise of
the option rights hereunder.

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                           IV. Eligibility of Optionee

     Options may be granted only to individuals who are non-employee members of
the Board at the time the Option is granted. Options may be granted to the same
person on more than one occasion. An optionee shall not be required to exercise
Options granted hereunder in the order that they were granted and may exercise
Options in such order as the optionee may determine.

                          V. Shares Subject to the Plan

     The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 100,000 shares of stock. Such shares may consist
of authorized but unissued shares of Stock or previously issued shares of Stock
reacquired by the Company. Any of such shares which remain unissued and which
are not subject to outstanding Options at the termination of the Plan shall
cease to be subject to the Plan, but, until termination of the Plan, the Company
shall at all times make available a sufficient number of shares to meet the
requirements of the Plan. If any Option should expire or terminate prior to its
exercise in full, the shares previously subject to such Option may again be
subject to an Option granted under the Plan. The aggregate number of shares
which may be issued under the Plan shall be subject to adjustment as provided in
Paragraph VIII hereof. Exercise of an Option in any manner, shall result in a
decrease in the number of shares of Stock which may thereafter be available,
both for purposes of the Plan and for sale to anyone director, by the number of
shares as to which the Option is exercised.

                             VI. Method of Exercise

     (a) An option granted under the Plan shall be deemed exercised when the
person entitled to exercise the Option (i) delivers written notice to the
President of the Company of the decision to exercise, (ii) concurrently tenders
to the Company full payment for the Shares to be purchased pursuant to the
exercise, and (iii) complies with such other reasonable requirements as the
Committee may establish. Payment for Shares with respect to which an

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Option is exercised may be in cash, or by certified check, or wholly or
partially in the form of unrestricted shares of Common Stock, as the Committee
may determine; provided that such Common Stock has been held by the optionee for
more than six months and has a fair market value equal to the exercise price.
The Common Stock covered by any Option or portion thereof, as to which the right
to exercise shall have been so surrendered, shall not again be available for the
purposes of the Plan.

     (b) If the optionee ceases to be a director for any reason other than a
Corporate Change (as defined below), voluntary resignation, death or disability,
all Options held by the optionee shall lapse at the earlier of the end of the
exercise period for such Options or 60 days after the last day that the optionee
serves as a director; provided, however, the Option may be exercised only for
the number of shares of Stock for which it could have been exercised on such
cessation of service, subject to any provision to the contrary contained in the
Option Agreement.

     (c) In the case of death of the optionee, the beneficiaries designated by
the optionee shall have 180 days from the optionee's demise or to the end of the
exercise period, whichever is earlier, to exercise the Option; provided,
however, the Option may be exercised only for the number of shares of Stock for
which it could have been exercised at the time the optionee died, subject to any
provision to the contrary contained in the Option Agreement.

     (d) If the optionee ceases to serve as a director due to total and
permanent disability (within the meaning of Section 22(e)(3) of the Code) the
Option shall lapse at the earlier of the end of the exercise period or 180 days
after the date of such cessation of service; provided, however, the Option may
be exercised only for the number of shares of Stock for which it could have been
exercised at the time the optionee became disabled, subject to any provision to
the contrary contained in the Option Agreement.

     (e) If the optionee voluntarily resigns as a director, all Options shall
lapse upon such

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resignation.

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                               VII. Term of Plan

     The Plan shall be effective upon the date of its adoption by the
shareholders of the Company and no Options shall be exercisable unless and until
the shareholders of the Company approve the Plan. In addition, no Option shall
be exercisable until the information required by Rule 16b-3(b)(2) with respect
to the Plan is disseminated in accordance with the provisions of such Rule on or
prior to the date of the first annual meeting of shareholders held after the
first registration of an equity security of the Company under Section 12 of the
1934 Act. Except with respect to Options then outstanding, if not sooner
terminated under the provisions of Paragraph IX hereof, the Plan shall terminate
upon, and no further Options shall be granted after, the expiration of ten years
from the date of its adoption by the Board of Directors.

                    VIII. Recapitalization or Reorganization

     (a) The existence of the Plan and the Options granted hereunder shall not
affect in any way the right or power of the Board of Directors or the
shareholders of the Company to make or authorize (i) any adjustment,
recapitalization, reorganization, or other change in the Company's capital
structure or its business, (ii) any merger or consolidation of the Company,
(iii) any issue or debt or equity securities with priority to or affecting Stock
or the rights thereof, (iv) the dissolution or liquidation of the Company or any
sale or transfer of all or any part of its assets or business, or (v) any other
corporate as or proceeding. The Committee shall be authorized to increase the
number of shares which may be issued under the Plan, as set forth in Paragraph
V, if necessary to permit any adjustment in the number of shares under this
Paragraph VIII, as long as sufficient authorized, unissued or otherwise
unencumbered shares are available to permit such increase.

     (b) The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option previously granted, the Company shall effect a subdivision or
consolidation of shares of Stock

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or the payment of a stock dividend on Stock without receipt of consideration by
the Company, then the number of shares of Stock with respect to which such
Option may thereafter be exercised (i), in the event of an increase in the
number of outstanding shares, shall be proportionately increased and the
purchase price per share shall be proportionately reduced and (ii), in the event
of a reduction in the number of outstanding shares, shall be proportionately
reduced and the purchase price per share shall be proportionately increased.

     (c) If the Company recapitalizes or otherwise changes its capital
structure, thereafter, upon any exercise of an Option previously granted, the
optionee shall be entitled to purchase under such Option, in lieu of the number
of shares of Stock as to which such Option shall then be exercisable, the number
and class of shares of stock and securities to which the optionee would have
been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the optionee had been the holder of record of
the number of shares of Stock as to which such Option is then exercisable.

     If (i) the Company shall not be the surviving entity in any merger or
consolidation (or survives only as a subsidiary of another entity), (ii) the
Company is to sell all or substantially all of its assets to any other person or
entity (other than a wholly-owned subsidiary), (iii) any person or entity
(including a "group" as contemplated by Section 13(d)(3) of the Securities
Exchange Act of 1934) acquires or gains ownership or control of (including,
without limitation, power to vote) more than 50% of the outstanding shares of
Stock, (iv) the Company is to be dissolved and liquidated, or (v) as a result of
or in connection with a contested election of directors, the persons who were
directors of the Company before such election shall cease to constitute a
majority of the Board (each such event is referred to herein as a "Corporate
Change"), then the Committee, acting in its sole discretion without the consent
or approval of any optionee, shall effect one or more of the following
alternatives (only to the extent permitted by Rule 16b-3), which may vary among
individual optionee:

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     (1) acceleration of the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate Change) fixed
by the Committee, after which specified date all unexercised Options and all
rights of optionee thereunder shall terminate;

     (2) require the mandatory surrender to the Company by selected optionee of
each outstanding Option held by such optionee (irrespective of whether such
Options are then exercisable under the provisions of the Plan) as of a date,
before or after such Corporate Change, specified by the Committee, and in such
event the Committee shall cancel such Options as soon as reasonably possible and
pay to each optionee an amount of cash equal to the excess of the fair market
value of the aggregate shares subject to such Option over the aggregate option
price of such shares;

     (3) make such adjustments to Options then outstanding as the Committee
deems appropriate to reflect such Corporate Change; provided, however, that the
Committee in its sole discretion, may determine that no adjustment is necessary
to Options then outstanding; or

     (4) provide that, upon any subsequent exercise of an Option theretofore
granted, the optionee shall be entitled to purchase under such Option, in lieu
of the number of shares of Stock as to which such Option shall then be
exercisable, the number and class of shares of stock and securities to which the
optionee would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior to
such merger, consolidation or sale of assets and dissolution, the optionee had
been the holder of record of the number of shares of Stock as to which such
Option is then exercisable.

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     Such actions shall be taken and be effective as of a date selected by the
Committee within (a) ten days after the approval by the shareholders of the
Company of any such merger, consolidation, sale of assets or dissolution or (b)
thirty days of any such change of control, as provided in (i) through (v) above.
The Committee for purposes of the Corporate Changes described in (iii) and (v)
above shall be the Committee as constituted prior to the occurrence of such
Corporate Change.

     (d) Any adjustment provided for in Subparagraphs (b) and (c) above shall be
subject to any required shareholder action.

     (e) Except as otherwise provided in this Plan, the issuance by the Company
of shares of Stock, or any class of securities convertible into shares of stock
of any class, for cash, property, labor, or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities and, in any case, whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Options previously granted or the purchase price per
share.

     (f) Notwithstanding anything herein to the contrary, Options shall always
be granted and exercised in a manner conforming to the provisions of Rule 16b-3,
or any replacement rule adopted pursuant to the 1934 Act, as the same now exists
or may, from time to time, be amended.

                   IX. Amendment or Termination of the Plan

     The Board of Directors in its discretion may terminate the Plan at any time
with respect to any shares for which Options have not been granted prior to such
termination. The Board of Directors shall have the right to alter or amend the
Plan or any part of the Plan from time to time; provided, however, that no
change in any Option granted before such alteration or amendment may be made
which would impair the rights of the optionee

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without the consent of such optionee; and provided, further, that, the Board of
Directors may not make any alteration or amendment which would (i) materially
increase the benefits accruing to participants under the Plan, (ii) increase the
aggregate number of shares which may be issued pursuant to the provisions of the
Plan, (iii) expand or otherwise change the class of persons eligible to receive
Options under the Plan, or (iv) extend the term of the Plan. In addition, the
provisions of the Plan may not be amended more frequently than permitted by Rule
16b-3.

                            X. Miscellaneous Matters

     (a) Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any director for reelection by the Company's
shareholders, nor confer upon any director the right to remain a member of the
Board for any period of time, or at any particular rate of compensation.

     (b) The Plan shall be governed by and construed in accordance with the laws
of the State of Texas.

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TANOX, INC.

By:________________________________                _____________________________
      Nancy T. Chang, President                    Agent
      and Chief Executive Officer

                                                   Address:

                                                   _____________________________

                                                   _____________________________

                                                   _____________________________

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