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                                                                    EXHIBIT 1.29

                               SEVERANCE AGREEMENT

         This Agreement (the "Agreement") dated as of May 22, 2003 is entered
into between Richard E. Bagley (the "Executive"), and AltaRex Corp., a company
incorporated under the laws of Alberta, Canada (the "Company"). For purposes of
this Agreement, the term "the Company" shall also refer to the subsidiaries of
the Company, where applicable.

         WHEREAS, the parties wish (1) to resolve amicably the Executive's
resignation from his employment and his positions as President and Chief
Executive Officer and Director of the Company, and (2) to establish the terms of
the Executive's severance arrangement;

         WHEREAS, the Executive is advised that (1) he has a period of
twenty-one (21) days to consider this Agreement, (2) he should consult with his
own attorney prior to signing this Agreement, (3) he may revoke the Agreement
for a period of seven (7) days after signing and (4) the Agreement shall not be
effective or enforceable until the expiration of the seven (7) day revocation
period;

         WHEREAS, the Executive and the Company are party to letter agreements
dated February 18, 1998, June 1, 1999 and December 22, 1999 setting forth the
terms of the Executive's employment, as amended on April 25, 2003 (the
"Employment Arrangements"), and the Company and the Executive have agreed that
the Executive's employment with the Company under such Employment Arrangement
shall terminate;

         NOW, THEREFORE, in consideration of the promises and conditions set
forth herein, the sufficiency of which is hereby acknowledged, the Company and
the Executive agree as follows:

         1.       Resignation Date. The Executive hereby resigns from employment
with the Company, resigns his positions as President and Chief Executive Officer
and Director of the Company and resigns all other positions that he holds with
the Company and its subsidiaries, all effective as of May 15, 2003 (the
"Resignation Date").

         2.       Accrued Benefits. Prior to or on the date of this Agreement,
the Executive shall have received payment for all wages earned through the
Resignation Date and U.S. $29,596.15 (representing 28.5 days of vacation at the
Executive's base salary as of the Resignation Date) as payment for all accrued
but unused vacation through the Resignation Date, less, in each case, all
applicable withholding for income and employment taxes.

         3.       Severance Compensation and Benefits. In return for the
execution of this Agreement, the Company agrees to provide the Executive with
the following compensation and benefits provided the Executive has not revoked
this Agreement or the Release of Claims set forth as Exhibit A attached hereto
within seven (7) days following the execution of this Agreement and the Release
of Claims:

                  (a)      Severance Payments. The Company shall make the
following payments (the "Severance Payments") to the Executive:

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                           (i)      The Company shall pay the Executive in one
lump sum amount on the day that is eight (8) days after the date hereof
US$67,500 (representing one-quarter of the Executive's base salary as of the
Resignation Date); and

                           (ii)     Subject to the acceleration provided below,
the Company shall pay the Executive a total of US $202,500 (representing
three-quarters of the Executive's base salary as of the Resignation Date) in
installments for a period of 12 months commencing with the Resignation Date (the
"Severance Period"), such payments to be made on the 15th and 30th day of each
month in the manner paid to the Executive immediately prior to the Resignation
Date.

The Severance Payments shall be less all applicable withholding for income and
employment taxes. The parties agree that the Severance Payments shall be in lieu
of any compensation or benefits otherwise payable to the Executive for periods
following the Resignation Date under the Employment Arrangements.
Notwithstanding the foregoing, in the event that during the Severance Period,
(x) a Change in Control (as defined below) shall occur or (y) the Company,
through the sale of debt or equity at one of more closings and in one or more
financings, raises at least CDN $2,000,000 in gross proceeds, then upon either
such event the Company shall promptly pay to the Executive all of the Severance
Payments remaining to be paid to the Executive in cash in one lump sum.

For purposes of this Section 3(a), a "Change in Control shall mean (I) the
acquisition by an individual, entity or group (a "Person") of beneficial
ownership of any common shares of the Company if, after such acquisition, such
Person beneficially owns 50% or more of the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities"); or (II) the
consummation of a merger, amalgamation, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), unless, immediately following such Business
Combination, all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the combined voting power of the then outstanding securities
entitled to vote generally in the election of directors of the resulting or
acquiring corporation in such Business Combination (which shall include, without
limitation, a corporation which as a result of such transaction owns the Company
or substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership of
the Outstanding Company Voting Securities immediately prior to such Business
Combination.

                  (b)      Medical Insurance. The Executive may elect to
continue group medical insurance pursuant to the federal "COBRA" law, 29
U.S.C. Section 1161 et seq. for so long as COBRA continuation is available to
the Executive. All premium costs for COBRA continuation shall be paid by the
Executive.

                  (c)      Stock Options. Subject to regulatory approval, as of
the date that is eight (8) days after the date hereof, options to purchase a
total of 1,541,562 of the Company's common shares ("Options") held by the
Executive (which represent all of the options to purchase common shares held by
the Executive) shall be modified to provide that such Options shall be

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exercisable in full, as of the Resignation Date and shall remain exercisable in
accordance with their terms until the first anniversary of the Resignation Date.

                  (d)      Other Benefits. Except as expressly provided above,
the Executive shall cease to participate in all of the Company's employee
benefit plans and programs on the Resignation Date. Notwithstanding the
foregoing, the Executive shall be entitled to all accrued benefits through the
Resignation Date under all of the Company's employee benefit plans.

         4.       Unemployment Claims. The Company shall not contest any
unemployment claims made by the Executive.

         5.       Non-Competition, Non-Solicitation and Non-Disclosure. The
Executive acknowledges and reaffirms his obligations to the Company under the
Non-Competition, Non-Solicitation, and Non-Disclosure Agreement between the
Company and the Executive dated as of May 18, 1998. Notwithstanding the
foregoing, the parties hereby agree that Section 1 of such agreement shall cease
to be binding upon the Executive in the event that the Company materially
breaches this Agreement.

         6.       Release of Claims. Prior to and as a condition to the Company
making any Severance Payments under Section 2(a) of this Agreement, the
Executive shall execute on the Resignation Date the Release of Claims set forth
as Exhibit A hereto.

         7.       Company Release. In consideration of the Executive entering
into this Agreement and the promises and benefits provided in this Agreement,
provided the Executive has not revoked this Agreement or the Release of Claims
set forth as Exhibit A attached hereto within seven (7) days following the
execution of this Agreement and the Release of Claims, the Company hereby fully,
forever, irrevocably and unconditionally releases, remises and discharges the
Executive from any and all claims, charges, complaints, demands, actions, causes
of action, suits, rights, debts, sums of money, costs, accounts, covenants,
contracts, agreements, promises, doings, omissions, damages, executions,
obligations, liabilities and expenses (including attorneys' fees and costs), of
every kind and nature which the Company ever had or now has as of the date of
this Agreement against the Executive for any actions or inactions taken by the
Executive within the scope of his employment by the Company or of which the
Board of Directors of the Company is aware as of the date of this Agreement;
provided, however, that nothing in this Section 7 shall be construed or deemed
to release or waive any claim that the Company may have with respect to the
Executive's obligations under this Agreement.

         8.       Cooperation.

                  (a)      The Executive agrees to reasonably cooperate with the
Company in the defense or prosecution of any claims or actions which already
have been brought or threatened, or any claims which may be alleged or brought
in the future against or on behalf of the Company, whether before a state or
federal court or any state or federal government agency, including without
limitation the dispute between the Company and ICN Pharmaceuticals, Inc. The
Executive's cooperation in connection with such claims or actions shall include,
but not be limited to, his being available to meet with counsel at reasonable
times and places to prepare its claims or defenses, to prepare for trial or
discovery or an administrative hearing, and to act as a witness when requested
by the Company at reasonable times and places as are mutually agreed upon by the
Company and the Executive. The Executive agrees that unless prohibited by law,
he

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will notify the Company promptly in the event that he is served with a subpoena
or in the event that he is asked to provide a third party with information
concerning any actual complaint or claim filed against the Company. Upon
presentation of reasonably satisfactory documentation, the Company will promptly
(and in no event later than 10 days after presentation of such documentation)
reimburse the Executive for reasonable travel and legal expenses incurred by him
in complying with this section or will prepay any such anticipated expenses. In
addition, the Company shall pay to the Executive U.S. $100 for each hour spent
by the Executive aiding the Company pursuant to this Section 8(a) as a result of
a claim or action hereunder, within 15 days of delivery of a written invoice
from the Executive. The parties agree that no such payments shall be made for
time spent by the Executive giving testimony or meeting with his counsel and
that the Executive shall not be obligated by the Company to spend more than 40
hours per month under this Section 8.

                  (b)      The Executive further agrees that, other than
truthfully testifying if compelled to do so by subpoena or in cooperation with a
state or federal government agency, he will not assist or cooperate with any
person or entity in any claims or actions which already have been brought or
threatened, or any claims which may be alleged or brought in the future against
the Company by such person or entity, whether before a state or federal court or
any state or federal government agency.

         9.       Notices. All notices and other communications required
hereunder shall be in writing and shall be given either by personal delivery or
by mailing the same by certified or registered mail, return receipt requested,
postage prepaid to the addresses listed below. Notices shall be effective upon
receipt.

         If to the Company:         AltaRex Corp.
                                    1123 Dentistry Pharmacy Building
                                    University of Alberta
                                    Edmonton, AB
                                    T6G 2N8
                                    Attention: President

         If to the Executive:       Richard E. Bagley
                                    150 Wellesley Street
                                    Weston, MA 02493

         With a copy to:            H. David Henken, P.C.
                                    Goodwin, Procter LLP
                                    Exchange Place
                                    Boston, MA 02109

         10.      Return of Company Property. The Executive agrees to return
within seven (7) days of the Resignation Date all Company property including,
but not limited to, keys, files, records (and copies thereof), equipment
(including, but not limited to, computer hardware, software and printers,
wireless handheld devices, cellular phones, pagers and similar items), Company
identification, Company vehicles and any other Company-owned property in his
possession or control. The Executive further agrees to leave intact all
electronic Company documents, including those that he developed or helped
develop during his employment. The

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Executive also agrees to cancel within seven (7) days of the Resignation Date
all accounts for his benefit, if any, in the Company's name, including but not
limited to, credit cards, telephone charge cards, cellular phone and/or pager
accounts and computer accounts. Notwithstanding the foregoing, the Company
agrees that the Executive may retain his cell phone at his expense and retain
his computer.

         11.      Legal Fees. The Company shall reimburse the Executive for the
reasonable fees and expenses of his counsel, not to exceed $2,500 in the
aggregate, in connection with the negotiation of this Agreement and all related
agreements.

         12.      Amendment. This Agreement shall be binding upon the parties
and may not be modified in any manner, except by an instrument in writing of
concurrent or subsequent date signed by duly authorized representatives of the
parties hereto.

         13.      Assignment. The rights and obligations of the Company shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company. The rights and obligations of the Executive are not assignable
except only those payments payable to the Executive after the Executive's death
shall be made to the Executive's estate.

         14.      Waiver of Rights. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or
any other right. A waiver or consent given by the Company on any one occasion
shall be effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.

         15.      Validity. Should any provision of this Agreement be declared
or be determined by any court of competent jurisdiction to be illegal or
invalid, the validity of the remaining parts, terms or provisions shall not be
affected thereby and said illegal or invalid part, term or provision shall be
deemed not to be a part of this Agreement.

         16.      Confidentiality. The Executive and the Company understand and
agree that the terms and contents of this Agreement, and the contents of the
negotiations and discussions resulting in this Agreement, shall be maintained as
confidential by the Executive, the Company and their agents and representatives
and shall not be disclosed except to the extent required by federal or state law
or as otherwise agreed to in writing by the Company and the Executive.

         17.      Nature of Agreement. The Executive understands and agrees that
this Agreement is a severance agreement and does not constitute an admission of
liability or wrongdoing on the part of the Company.

         18.      Voluntary Assent. The Executive affirms that no other promises
or agreements of any kind have been made to or with him by any person or entity
whatsoever to cause him to sign this Agreement, and that he fully understands
the meaning and intent of this Agreement. The Executive further represents that
he has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney, and understand the contents herein.

         19.      Applicable Law. This Agreement shall be interpreted and
construed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions. The Executive and the Company hereby irrevocably
submit to and acknowledge and recognize the jurisdiction of the courts of the
Commonwealth of Massachusetts or, if appropriate, a federal

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court located in Massachusetts (which courts, for purposes of this Agreement,
are the only courts of competent jurisdiction), over any suit, action or other
proceeding arising out of, under or in connection with this Agreement or the
subject matter hereof.

         20.      Entire Agreement. This Agreement contains and constitutes the
entire understanding and agreement between the parties hereto with respect to
severance benefits and the settlement of claims against the Company and the
Executive and cancels all previous oral and written negotiations, agreements,
commitments and writings in connection therewith.

         21.      Captions. The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.

         22.      Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but not all of which
taken together shall constitute one and the same instrument.

         23.      Acknowledgments. The Executive acknowledges that he has been
given at least twenty-one (21) days to consider this Agreement and the Release
of Claims and that the Company advised him to consult with an attorney of his
own choosing prior to signing this Agreement and the Release of Claims. He
further understands that he may revoke this Agreement and the Release of Claims
for a period of seven (7) days after he signs them, and this Agreement and the
Release of Claims shall not be effective or enforceable until the expiration of
this seven (7) day revocation period, except for the resignations in Section 1
which shall take effect upon execution of this Agreement. Finally, the Executive
understands and agrees that by entering into this Agreement and the Release of
Claims he is waiving any and all rights or claims he might have under The Age
Discrimination in Employment Act, as amended by The Older Workers Benefit
Protection Act, and that he has received consideration beyond that to which he
was previously entitled.

         24.      Indemnification; Insurance. The Company agrees that it shall
indemnify the Executive in accordance with and to the fullest extent provided by
the Bylaws of the Corporation. In addition, the Company agrees that, for a
period of three years following the Resignation Date, the Executive shall be
covered by the directors' and officers' liability insurance that the Company
maintains, if any, to cover the Company's then current directors and officers.

                    [remainder of page intentionally omitted]

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         THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT
AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

         IN WITNESS WHEREOF, all parties have set their hand and seal to this
Agreement as of the date written above.

                                            /s/ Richard E. Bagley
                                            ------------------------------------
                                            Richard E. Bagley

                                            ALTAREX CORP.

                                            By: /s/ Jacques LaPointe
                                                --------------------------------
                                                    Jacques LaPointe
                                                    Chairman of the Board

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                                                                       EXHIBIT A

                                RELEASE OF CLAIMS

         In consideration of AltaRex Corp., a company incorporated under the
laws of Alberta, Canada ("the Company"), entering into that certain Severance
Agreement, by and between the Company and the undersigned (the "Executive"),
dated May 22, 2003 (the "Agreement") and the payment of severance benefits
thereunder, and the promises and benefits provided in the Agreement, which the
Executive acknowledges he would not otherwise be entitled to receive, he
Executive hereby fully, forever, irrevocably and unconditionally releases,
remises and discharges the Company and its current and former officers,
directors, shareholders, affiliates, subsidiaries, parent companies,
predecessors, agents, employees and attorneys, each in their individual and
corporate capacities (the "Released Parties"), from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights, debts, sums of
money, costs, accounts, covenants, contracts, agreements, promises, doings,
omissions, damages, executions, obligations, liabilities and expenses (including
attorneys' fees and costs), of every kind and nature which the Executive ever
had or now has as of the date the Executive executes this Release of Claims
against the Released Parties including, but not limited to, all - claims arising
out of the Executive's employment with and/or separation from the Company,
including, but not limited to: all employment discrimination claims under Title
VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e et seq., the
Americans With Disabilities Act of 1990, 42 U.S.C., Section 12101 et seq., the
Age Discrimination in Employment Act, 29 U.S.C. Section 621 et seq., as amended
by The Older Workers Benefit Protection Act; the Family and Medical Leave Act of
1993, 29 U.S.C. Section 2601 et seq., the Massachusetts Fair Employment
Practices Act, M.G.L. c.151B, Section 1 et seq. and any and all other similar
applicable federal and state statutes, all as amended; all claims arising out of
the Fair Credit Reporting Act, 15 U.S.C. Section 1681 et seq., the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Section 1001 et
seq., the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section
2101 et seq., the Massachusetts Civil Rights Act, M.G.L. c.12, Sections 11H and
11I, the Massachusetts Equal Rights Act, M.G.L. c.93, Section 102 and M.G.L.
c.214, Section 1C, the Massachusetts Labor and Industries Act, M.G.L. c.149,
Section 1 et seq. and the Massachusetts Privacy Act, M.G.L. c.214, Section 1B,
all as amended; all claims for benefits under the Company's benefits plans and
programs, except as specifically provided for in the Agreement; and all common
law claims including, but not limited to, actions in tort, defamation and breach
of contract and any claim or damage arising out of the Executive's employment
with or change of employment status with the Company (including a claim for
retaliation) under any common law theory or any federal, state or local statute
or ordinance not expressly referenced above; provided, however, that nothing in
the Agreement prevents the Executive from filing, cooperating with, or
participating in any proceeding before the Equal Employment Opportunity
Commission or a state Fair Employment Practices Agency (except that the
Executive acknowledges that he may not be able to recover any monetary benefits
in connection with any such claim, charge or proceeding), and provided further
that nothing in this Release shall be construed or deemed to release or waive
any claims that the Executive may have with respect to the Company's obligations
under the Agreement.

         The Executive acknowledges that he has been given at least twenty-one
(21) days to consider this Release of Claims, and that the Company advised him
to consult with an attorney of his own choosing prior to signing the Agreement
and this Release of Claims. He further understands that he may revoke this
Release of Claims for a period of seven (7) days after he signs it, and this
Release of Claims shall not be effective or enforceable until the expiration of
this seven (7) day revocation period. Finally, the Executive understands and
agrees that by entering into this Release of Claims he is waiving any and all
rights or claims he might have

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under The Age Discrimination in Employment Act, as amended by The Older Workers
Benefit Protection Act, and that he has received consideration beyond that to
which he was previously entitled.

         This Release of Claims is dated as of May 22, 2003.

                                                  EXECUTIVE

                                                  /s/ Richard E. Bagley
                                                  ------------------------------
                                                  Richard E. Bagley

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