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                                                                    EXHIBIT 10.7

                               CELL PATHWAYS, INC.

                 1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                           ADOPTED ON OCTOBER 14, 1997

                           AMENDED AS OF JUNE 22, 1998

                           AMENDED AS OF MAY 29, 2002

1.       Purpose.

         (a)      The purpose of the 1997 Non-Employee Directors' Stock Option
Plan (the "Plan") is to provide a means by which each director of Cell Pathways,
Inc., a Delaware corporation (the "Company") who is not otherwise an employee of
the Company or of any Affiliate of the Company (each such person being hereafter
referred to as a "Non-Employee Director") will be given an opportunity to
purchase stock of the Company.

         (b)      The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").

         (c)      The Company, by means of the Plan, seeks to secure and retain
the services of persons capable of serving as Non-Employee Directors of the
Company, and to provide incentives for such persons to exert maximum efforts for
the success of the Company.

2.       Administration.

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         (a)      The Plan shall be administered by the Board of Directors of
the Company (the "Board").

         (b)      The Board may delegate administration of the Plan to a
committee composed of one (1) or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

3.       Shares Subject to the Plan.

         (a)      Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate Nine Hundred
Three Thousand Nine Hundred Twenty-Five (903,925) shares of the Company's common
stock. If any option granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the stock not
purchased under such option shall again become available for the Plan.

         (b)      The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

4.       Eligibility.

         Options shall be granted only to Non-Employee Directors of the Company.

5.       Non-Discretionary Grants.

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         (a)      Each person who is a Non-Employee Director on the date that
the registration of the initial offering of the Company's common stock for sale
to the public becomes effective (the "Effective Date") automatically shall be
granted an option to purchase Five Thousand Four Hundred Forty-Seven (5,447)
shares of common stock of the Company on the terms and conditions set forth
herein.

         (b)      Each person who is, after the Effective Date and before the
2002 Amendment Date (as defined below), elected for the first time to be a
Non-Employee Director automatically shall, upon the date of his or her initial
election to be a Non-Employee Director by the Board or stockholders of the
Company, be granted an option to purchase Eighteen Thousand One Hundred
Fifty-Seven (18,157) shares of common stock of the Company on the terms and
conditions set forth herein.

         (c)     On the date of each Annual Meeting of Stockholders of the
Company, commencing with the Annual Meeting of Stockholders occurring in 1998,
and before the 2002 Amendment Date, each person who has then been a Non-Employee
Director for a period of at least three hundred sixty five (365) days
automatically shall be granted an option to purchase Five Thousand Four Hundred
Forty-Seven (5,447) shares of common stock of the Company on the terms and
conditions set forth herein.

         (d)      Each person who, on or after the date on which the
stockholders approve the 2002 amendment of the Plan (the "2002 Amendment Date"),
is elected for the first time to be a Non-Employee Director automatically shall,
upon the date of his or her initial election to be a Non-Employee Director by
the Board or stockholders of the Company, be granted an option to purchase Fifty
Thousand (50,000) shares of common stock of the Company on the terms and
conditions set forth herein.

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         (e)      Each person who is serving as a Non-Employee Director prior to
and as of the 2002 Amendment Date and who is to continue as a Non-Employee
Director after the 2002 Amendment Date shall receive an option on the 2002
Amendment Date to purchase Thirty-One Thousand Eight Hundred Forty Three
(31,843) shares of common stock of the Company on the terms and conditions set
forth herein.

         (f)      On the date of each Annual Meeting of Stockholders of the
Company, commencing with the Annual Meeting of Stockholders occurring on the
2002 Amendment Date, each person who has then been a Non-Employee Director for a
period of at least three hundred sixty-five (365) days automatically shall be
granted an option to purchase Ten Thousand (10,000) shares of common stock of
the Company on the terms and conditions set forth herein.

6.       Option Provisions.

         Each option shall contain the following terms and conditions:

         (a)      The term of each option commences on the date it is granted
and, unless sooner terminated as set forth herein, expires on the date
("Expiration Date") ten (10) years from the date of grant. If the optionee's
continuous service with the Company, whether as a Director, or if his or her
status changes, as an employee of or consultant to the Company or any Affiliate
of the Company, terminates for any reason or for no reason, the option shall
terminate on the earlier of the Expiration Date or the date twelve (12) months
following the date of termination of service. In any and all circumstances, an
option may be exercised following termination of the optionee's service with the
Company and all Affiliates of the Company only as to that number of shares as to
which it was exercisable on the date of termination of such service under the
provisions of subparagraph 6(e).

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         (b)      The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted. For purposes of the Plan, "fair market value" means, as
of any date, the value of the common stock of the Company determined as follows:

                  (i)      If the common stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the fair market value of a share of common stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in the Company's common stock) on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable.

                  (ii)     In the absence of such markets for the common stock,
the fair market value shall be determined in good faith by the Board.

                  Notwithstanding the foregoing, for purposes of options granted
pursuant to subparagraph 5(a), "fair market value" shall mean the price per
share at which shares of common stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering.

         (c)      The optionee may elect to make payment of the exercise price
under one of the following alternatives:

                  (i)      Payment of the exercise price per share in cash at
the time of exercise; or

                  (ii)     Provided that at the time of the exercise the
Company's common stock is publicly traded and quoted regularly in the Wall
Street Journal, payment by delivery of shares of

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common stock of the Company already owned by the optionee, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interest, which common
stock shall be valued at fair market value on the date preceding the date of
exercise; or

                  (iii)    Payment by a combination of the methods of payment
specified in subparagraph 6(c)(i) and 6(c)(ii) above.

         Notwithstanding the foregoing, this option may be exercised pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company prior to
the issuance of shares of the Company's common stock.

         (d)      An option shall not be transferable except by will or by the
laws of descent and distribution, and shall be exercisable during the lifetime
of the person to whom the option is granted only by such person or by his or her
guardian or legal representative, unless otherwise specified in the option, in
which case the option may be transferred upon such terms and conditions as are
set forth in the option, as the Board or the Committee shall determine in its
discretion, including (without limitation) pursuant to a "domestic relations
order." Notwithstanding the foregoing, the person to whom an option is granted
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the optionee,
shall thereafter be entitled to exercise the option.

         (e)      Options granted under the Plan shall vest and become
exercisable as follows:

                  (i)      An option granted pursuant to subparagraph 5(a) shall
be fully vested and exercisable on March 31, 1998, provided that the optionee
has, during the entire period prior to

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such vesting date, continuously served as a Director of the Company or as an
employee of or consultant to the Company or any Affiliate of the Company,
whereupon such option shall become fully vested and exercisable in accordance
with its terms.

                  (ii)     An option granted pursuant to subparagraph 5(b), 5(d)
or 5(e) shall become vested and exercisable in three equal annual installments
occurring on the first through third anniversary dates of the date of grant of
the option, provided that the optionee has, during the entire period prior to
such vesting date, continuously served as a Director of the Company or as an
employee of or consultant to the Company or any Affiliate of the Company,
whereupon such option shall become vested and exercisable with respect to such
installment in accordance with its terms.

                  (iii)    An option granted pursuant to subparagraph 5(c) or
5(f) shall be fully vested and exercisable one year after the date of grant of
the option, provided that the optionee has, during the entire period prior to
such vesting date, continuously served as a Director of the Company or as an
employee of or consultant to the Company or any Affiliate of the Company,
whereupon such option shall become fully vested and exercisable in accordance
with its terms.

         (f)      The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-

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currently-effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii), as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then-applicable securities laws.

         (g)      Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.

7.       Covenants of the Company.

         (a)      During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of stock required
to satisfy such options.

         (b)      The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option granted
under the Plan, or any stock issued or issuable pursuant to any such option. If
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such options.

8.       Use of Proceeds from Stock.

         Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.

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9.       Miscellaneous.

         (a)      Neither an optionee nor any person to whom an option is
transferred under subparagraph 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for exercise
of the option pursuant to its terms.

         (b)      Nothing in the Plan or in any instrument executed pursuant
thereto shall confer upon any Non-Employee Director any right to continue in the
service of the Company or any Affiliate or shall impair any right of the
Company, its Board or stockholders or any Affiliate to terminate the service of
any Non-Employee Director.

         (c)      No Non-Employee Director, individually or as a member of a
group, and no beneficiary or other person claiming under or through such
Non-Employee Director, shall have any right, title or interest in or to any
option reserved for the purposes of the Plan except as to such shares of common
stock, if any, as shall have been reserved for such Non-Employee Director
pursuant to any previous option grant.

         (d)      In connection with each option made pursuant to the Plan, it
shall be a condition precedent to the Company's obligation to issue or transfer
shares to a Non-Employee Director, or to evidence the removal of any
restrictions on transfer, that such Non-Employee Director make arrangements
satisfactory to the Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or transfer,
or such removal, is made available to the Company for timely payment of such
tax.

10.      Adjustments upon Changes in Stock.

         (a)      If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan, without the receipt of
consideration by the Company (through merger,

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consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan, and the outstanding options will be appropriately adjusted in the
class(es) and number of shares and price per share of stock subject to such
outstanding options. Such adjustments shall be made by the Board or the
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company".)

         (b)      In the event of: (1) a dissolution, liquidation or sale of all
or substantially all of the assets of the Company; (2) a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
(a) where no person within the meaning of subsection (3) below becomes the
"beneficial owner" (as defined below) of 20% or more of the resulting voting
power and where the voting securities of the Company outstanding immediately
prior thereto continue to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or controlling entity) more
than 50% of the combined voting power of the voting securities of the Company or
such surviving or controlling entity outstanding immediately after such merger
or consolidation or (b) (without derogating from the power of the Board or
Committee in other situations) which the Board or Committee determines should
not, because of the nature and purpose of the transaction, have the effect of
accelerating the vesting, exercisability and termination of options under this
subsection, or (3) the acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,

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sponsored or maintained by the Company or any Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least twenty percent (20%) of the combined voting power entitled
to vote in the election of directors, then the vesting and exercisability of all
outstanding options shall be accelerated prior to such event and the options
terminated if not exercised (if applicable) after such acceleration and at or
prior to such event.

11.      Amendment of the Plan.

         (a)      The Board at any time, and from time to time, may amend the
Plan. Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy any Nasdaq or securities exchange listing requirements.

         (b)      Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.

12.      Termination or Suspension of the Plan.

         (a)      The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the tenth (10th)
anniversary of its adoption by the Board. No options may be granted under the
Plan while the Plan is suspended or after it is terminated.

         (b)      Rights and obligations under any option granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted.

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         (c)      The Plan shall terminate upon the occurrence of any of the
events described in Section 10(b) above.

13.      Effective Date of Plan; Conditions of Exercise.

         (a)      The Plan shall become effective upon adoption by the Board of
Directors, approval by the Stockholders of the Company and the Effective Date of
the Initial Public Offering.

         (b)      No option granted under the Plan shall be exercised or
exercisable unless and until the condition of subparagraph 13(a) above has been
met.

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