Exhibit 10.7

                                                         Prepared by:

                                                         -----------------------
                                                         T. Thomas Van Dam, Esq.

                   MODIFICATION OF MORTGAGE AND SECURITY AGREEMENT

               This   modification   of   Mortgage    and   Security   Agreement
("Modification")  made  effective  as of the 5th  day of  August,  1999,  by and
between  UNIGENE  LABORATORIES,  INC., a Delaware  corporation  authorized to do
business in New Jersey, having  office at 110 Little Falls Road, Fairfield,  New
Jersey  07004 (the  "Mortgagor")  and JAY LEVY,  with an address at 2150  Center
Avenue, Fort Lee, New Jersey 07024 (the "Mortgagee").

               WHEREAS,  on July  13,  1999  the  Mortgagee  provided  a loan to
Mortgagor in the principal amount of ONE MILLION SIX HUNDRED THOUSAND and 00/100
($1,600,000.00)  DOLLARS  (the  "Loan") as  evidenced  by a certain  Amended and
Restated Secured Note dated July 13, 1999 (the "Note"); and

               WHEREAS,  in connection with the Loan the Mortgagor  executed and
delivered a Mortgage and Security Agreement to the Mortgagee dated July 13, 1999
which has been  forwarded to the Essex County  Register's  office for  recording
(the "Mortgage"), with respect to property located in the Township of Fairfield,
County  of Essex  and  State of New  Jersey  as  particularly  described  in the
Mortgage (the "Premises"); and

               WHEREAS,   Mortgagee  provided   additional  loans  to  Mortgagor
evidenced  by a Secured  Note  dated  July 30,  1999 in the  amount  of  SEVENTY
THOUSAND and 00/100 ($70,000.00) DOLLARS and a Secured Note dated August 5, 1999
in the amount of TWO HUNDRED THOUSAND and 00/100  ($200,000.00)  DOLLARS made by
Mortgagor to Mortgagee (the "Additional Loans").

               WHEREAS,  as a  condition  of  the  Additional  Loans,  Mortgagee
required  that the  Mortgagor  amend the  Mortgage to secure the  Secured  Notes
evidencing the Additional Loans.

               NOW, THEREFORE, the parties agree as follows:

               1.  Modification  of  Mortgage.  The  Mortgage  shall  be  deemed
modified to secure the  Additional  Loans as evidenced by the Secured Note dated
July 30, 1999 in the amount of Seventy Thousand and 00/100 ($70,000.00)  Dollars
and  the  Secured  Note  in  the  amount  of Two  Hundred  Thousand  and  00/100
($200,000.00) Dollars dated August 5, 1999, and accordingly the total amount due
Mortgagee by Mortgagor  and secured by the Mortgage as hereby  amended  shall be
the  amount  of  One  Million   Eight  Hundred   Seventy   Thousand  and  00/100
($1,870,000.00) Dollars.
<PAGE>
               2. Mortgagor's Estoppel. Mortgagor does hereby represent, warrant
and confirm  that there are no set-offs,  rights,  claims or causes of action of
any nature  whatsoever which Mortgagor has or may assert against  Mortgagee with
respect to the  Mortgage  as amended  and the  indebtedness  secured  thereby as
aforesaid.

               3.  Affirmation  of Validity of Loan  Documents.  Mortgagor  does
hereby affirm the extent and validity of the Mortgage, as amended, and the Notes
secured  thereby,   and  does  confirm  that  all  loan  documentation   remains
enforceable,  and in full force and effect as of the date of  execution  hereof,
and that the Mortgage,  as modified by the within Agreement,  shall constitute a
continuing,  valid lien upon the Mortgaged  Premises,  to secure  payment of the
indebtedness evidenced by the Notes as aforesaid.

               4. Binding Effect. The within Agreement shall be binding upon the
parties hereto, their successors and assigns.

               5.  Governing  Law. The within  Agreement  shall be construed and
enforced in accordance with the laws of the State of New Jersey.

               6.  Copy  Acknowledge.  The  undersigned  Mortgagor  acknowledges
receipt of a true copy of this document without charge.
<PAGE>
               IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this
Modification  of Mortgage  and  Security  Agreement as of the day and year first
above written.

Attest:                                            Unigene Laboratories, Inc.

                                                   By
                                                     ---------------------------
Ronald S. Levy, Secretary                          Warren P. Levy, President


Witness:

<PAGE>

STATE OF NEW JERSEY )
                    )ss:
COUNTY OF ESSEX     )

               I certify  that on August  , 1999 Ronald S. Levy personally  came
before me and this person acknowledged under oath, to my satisfaction, that:

               (a)  this person is the Secretary of Unigene Laboratories,  Inc.,
                    the corporation named in this document;

               (b)  this person is the attesting  witness to the signing of this
                    document by the proper corporate officer who is Warren Levy,
                    the President of the corporation;

               (c)  this document was signed and delivered by the corporation as
                    its voluntary act duly authorized by a proper  resolution of
                    its Board of Directors;

               (d)  this person knows the proper seal of the  corporation  which
                    was affixed to this document; and

               (e)  this  person  signed  this  proof to  attest to the truth of
                    these facts.


                                                    ----------------------------
                                                    Ronald S. Levy

Sworn and Subscribed to this
  day of August, 1999

----------------------------