<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
     [X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1999

                                       OR

     [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

          For the transition period from _____________ to _____________

                         Commission file number 0-22170

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

                           EPOCH PHARMACEUTICALS, INC.
--------------------------------------------------------------------------------
                 (Name of Small Business Issuer in its charter)


               Delaware                                 91-1311592
   -------------------------------        ------------------------------------
   (State or other jurisdiction of        (I.R.S. Employer Identification No.)
    incorporation or organization)

12277 134th Court N.E., Suite 110, Redmond, Washington             98052
      (Address of principal executive offices)                   (Zip Code)

                                 (425) 821-7535
                (Issuer's telephone number, including area code)

<TABLE>
<S>                                                         <C>
Securities registered pursuant to Section 12(b) of the Act:              None
Securities registered pursuant to Section 12(g) of the Act:          Common Stock
                                                            Common Stock Purchase Warrants
                                                                   (Title of class)
</TABLE>

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports); and (2) has been subject to such filing requirements for the past 90
days. YES [X] NO [ ]

         Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [X]

         Issuer's revenues for its most recent fiscal year were $181,094.

         As of March 28, 2000, the aggregate market value of the voting stock
held by non-affiliates, computed by reference to the price at which the stock
was sold on such date, was approximately $219,854,496.

      23,712,946 shares of Common Stock were outstanding at March 28, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>   2

                                INTRODUCTORY NOTE

         This Annual Report on Form 10-KSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 and we intend that these
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements include, without limitation, the development and
commercialization of the Registrant's technology.

         The forward-looking statements included in this document are based on
current expectations that involve a number of risks and uncertainties. These
forward-looking statements are based on assumptions that Epoch's technology will
continue to be developed, and will not be replaced by new technology, that we
will retain key technical and management personnel, and that there will be no
material adverse change in our operations or business. Assumptions relating to
the foregoing involve judgments with respect to, among other things, future
technology, economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our control. Although we believe that the assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance that the
results contemplated in forward-looking statements will be realized. In
addition, our business and operations are subject to substantial risks which
increase the uncertainty inherent in these forward-looking statements. In light
of the significant uncertainties inherent in the forward-looking information
included in this document, the inclusion of information should not be regarded
as a representation by us or any other person that the objectives or plans of
Epoch will be achieved.


                                       1
<PAGE>   3

                                     PART I

ITEM 1.  BUSINESS

THE COMPANY

         Epoch Pharmaceuticals, Inc. is developing and commercializing unique,
proprietary technologies to enhance the study of genes. Epoch scientists are
applying their expertise in nucleic acid chemistry to develop products that
improve current methods of studying the genetic sequence (genomes) of humans,
animals and plants. Our technology is based on our expertise in designing and
synthesizing oligonucleotides (synthetic DNA strands) bearing modifications that
more selectively bind to and interact with their target genes. Using our DNA
technology, Epoch is developing molecular tools and reagents for improved
genetic sequence analysis.

         Previously, we discovered that compounds and techniques being developed
for our gene modification therapeutic program could be adapted to several gene
sequencing analysis systems currently in use or being developed by others. Our
technology has broad application potential in the developing fields of molecular
diagnostics and genomics, including the detection of infectious diseases,
inheritable diseases through prenatal testing, screening populations to identify
genetic markers that correlate with disease risk or drug response, as well as
any other genetic analysis based on DNA sequence determination.

         Our technologies are compatible with many methods and formats used to
perform genetic analysis.

         Epoch was incorporated in Delaware in 1985 as MicroProbe Corporation
and we changed our name in 1995 to Epoch Pharmaceuticals, Inc.

BACKGROUND

         Nucleic acids are found in all living organisms and are the sole
carriers of the genetic code that specifies an organism's makeup. There are two
types of closely related nucleic acids, deoxyribonucleic acid (DNA) and
ribonucleic acid (RNA). DNA carries the permanent genetic information for
construction of all proteins in higher living organisms, while RNA carries a
temporary copy of this information to direct protein synthesis. Proteins perform
most of the normal physiological functions of living organisms, and aberrant
production or activity of proteins may cause numerous diseases.

         DNA is comprised of two linear strands that are formed in a double
helix. Each strand is a sequential array of four nucleotide bases: adenine (A),
guanine (G), thymine (T) and cytosine (C), which are linked together in DNA by a
sugar and phosphate backbone. Every gene contains unique sequences of these
bases and it is these unique sequences which constitute the genetic information
or code which guides all cellular processes. The two chains, or strands,
normally comprising DNA are held together by chemical attractions between
opposing paired bases according to certain rules: A always pairs with T, G
always pairs with C. Figure 1 is a schematic diagram of double-stranded DNA
showing this highly specific interaction between the bases in the two strands.
This process of base pairing, called hybridization, can occur between DNA
strands of any size, as long as the segments hybridizing are complementary.


                                       2
<PAGE>   4

         Hybridization can also occur between a DNA strand and a complementary
RNA strand or two complementary RNA strands. RNA occurs in several forms in
cells, and each of these forms has a different function. Messenger RNA (mRNA) is
copied, or transcribed, from the DNA comprising a gene and carries the genetic
code which is translated into the proteins synthesized by the cell. Transfer RNA
(tRNA) transports the necessary building block amino acids to ribosomes, complex
intracellular structures where protein synthesis occurs through the
"translation" of the mRNA message. Ribosomal RNA (rRNA) functions to bring mRNA
and tRNA together so protein synthesis can occur. The process of transcription
and translation which results in protein synthesis is called gene expression.

 [Figure 1. Segment of Double-Stranded DNA Showing the Base Pair Relationship]

         Oligonucleotides are well suited for development as pharmaceuticals and
diagnostic probes because they can be designed to bind selectively to, and
inhibit or inactivate specific sequences in DNA, RNA or the proteins they
produce. Our expertise in the chemistry, design and synthesis of
oligonucleotides forms the basis of our research and development activities on
compounds and techniques for gene sequencing analysis.

OVERVIEW

         Genetic analysis has become the most important laboratory tool in the
life sciences. The massive effort to sequence the human genome is paralleled by
projects to sequence the genomes of infectious organisms, research animals
(including yeast, fruit flies, worms and rats), and important food crops and
animals. It has been estimated that over $3 billion was spent worldwide in 1999
on industrial and academic healthcare research to understand human gene
function. This research effort is revolutionizing the pharmaceutical and
diagnostic industries, as well as the fields of crop science, animal breeding
and veterinary medicine. In the area of human health, genetic analysis promises
to identify the mutations that cause hereditary diseases, to elucidate the
genetic events that lead to cancer and determine the relative malignancy of
tumors, and to identify our individual risk for developing chronic illnesses
such as heart disease and arthritis.

         This future promise of genetic analysis and a rapid surge in research
activity has created a demand for new technologies and systems to accelerate the
pace and accuracy of genetic research. Techniques to study gene expression
levels and detect differences in gene sequences are rapidly evolving. As the
amount of data being generated grows, the demand for simple, accurate, high
throughput formats is increasing. New formats like the TaqMan(R) assay (PE
Biosystems), based on the polymerase chain reaction (PCR) method, and DNA
microarrays are being widely adopted. New technologies like primer extension
(Orchid Biocomputer) and the InvaderTM assay (Third Wave Technologies) are under
development and generating great interest.

         We have developed reagents that broadly facilitate genetic analysis.
Our chemistries include minor groove binders, modified nucleotides, novel
fluorescent molecules and non-fluorescent quenchers, and a unique chemistry to
attach oligonucleotides to solid surfaces. These reagents enhance methods to
measure gene expression and to detect single nucleotide polymorphisms (SNPs).
They are compatible with multiple technologies, including PCR and alternative
nucleic acid amplification technologies; with multiple formats, including high
throughput systems and microtiter plate formats; and they can be used in
solution-based or solid phase reactions, including microarrays.


                                       3
<PAGE>   5

         We are seeking partners and collaborators who are interested in
improving the speed, accuracy, and simplicity of their assays and applications
by using our proprietary nucleic acid-related chemistries. We have a strategic
partnership with PE Biosystems, where our technology is being incorporated into
PE's TaqMan 5'-nuclease real-time PCR assays. Other partners are being sought to
commercialize products for genetic analysis that incorporate our technologies.

GENETIC ANALYSIS OVERVIEW

         As of early 2000, the Human Genome Project has sequenced over 1/3 of
the entire human genome, about one billion bases, and all of chromosome 22. The
NIH-sponsored project is expected to be complete by 2003, although Celera has
predicted that they will finish by mid-2000. At the same time, Incyte
Pharmaceuticals and Human Genome Sciences have identified partial sequences for
the majority of human genes.

         Sequencing the human genome has been likened to the discovery of the
elements and their arrangement in the periodic table: it only reveals the
underlying structure and order of the system. When the human genome has been
completely sequenced, we will know how many genes our chromosomes contain and
where the genes are located on the chromosomes. However, that information will
generate many more questions than it will answer. Searching for the answers to
those questions will result in a rapid growth in the field of genetic analysis,
with a parallel growth in technologies and products that facilitate that effort.

        Among the most important issues that genetic research will address in
the next few decades are:

         o        How does our genetic diversity - the differences in the
                  sequence of the four bases that make up our DNA - affect our
                  response to drugs, and contribute to our susceptibility to
                  chronic diseases, including cancer and cardiovascular disease?

         o        How do differences in the expression of genes in our various
                  tissues affect development and contribute to health and
                  illness?

SNP Detection

         Our genetic material is made up of nucleotide bases that are formed
into chains that comprise the DNA of our chromosomes. The sequence of the four
nucleotides (A,G,T,C) determines our genetic makeup. Differences in this
sequence, in large part, determine the uniqueness of each individual. Sites in
the sequence at which heritible differences occur are called allelic
polymorphisms. One type of polymorphism is due to a single change in the genetic
(DNA) sequence so that one nucleotide is substituted or missing. These
differences, single base polymorphisms or SNPs, are stable, inherited and occur
frequently enough along our DNA so that they can be used to generate a "map" of
sequence differences. This map can be used to localize traits (e.g.
hypertension, diabetes, sensitivity to therapeutic drugs, etc) by identifying
SNPs (i.e. one of a pair of polymorphic alleles) that occur at a higher
frequency in individuals with the trait than those without the trait. Knowing
where the SNPs associated with the trait occur, one can look for nearby genes
responsible for the trait, thus leading to a genetic understanding of the trait
and directing efforts for treatment. Some SNPs have been shown to cause disease,
or associate with risk for disease or adverse drug response. Presumably, a high
proportion of genetically controlled disease will be caused by or influenced by
SNPs. Research on SNPs has proceeded in two phases, (1) discovery by comparing
DNA sequences of different individuals and (2) analysis by studying populations
with or without a given trait. The second phase requires testing many SNPs
(thousands) in hundreds of individuals and requires accurate, high through put
testing methods using systems such as those developed at our company.


                                       4
<PAGE>   6

Gene Expression

         The second issue is being addressed by comparing the level of
expression of genes in different tissues, in healthy versus diseased tissues,
and at different times during development. This approach has been accelerated by
the development of DNA microarrays, or biochips, which contain hundreds or
thousands of sites on their surface to which messenger RNAs expressed by
different genes will bind, allowing their relative levels to be measured.

         Today, genetic analysis is primarily a research activity carried out in
thousands of academic, industrial, and government laboratories. Within a few
years, these analyses will be used not only in research, but also in doctors'
offices and clinics, on farms and ranches, at food-processing plants, in
factories, at crime scenes, and on the battlefield. Simple, inexpensive DNA
tests have a future in almost every aspect of everyday life.

Hybridization Assays

         Essentially all of the technologies and products useful for genetic
analysis rely on the binding of two single strands of nucleic acid to form a
double-stranded duplex. The four bases, or nucleotides, that make up the two
strands bind to each other selectively - A to T, and C to G. The bond between
the strands is most stable if the sequence of the bases on the two strands is
perfectly complementary; for example, an A on one strand is positioned across
from and binds to a T on the other strand.

         This property of complimentarity is exploited in the design of
hybridization assays, which use a synthetic DNA strand, or probe, to bind to a
target DNA strand that is being detected. If the sequences of the two strands
are perfectly complementary, the duplex remains stable at an elevated
temperature. If they are not, the strands separate, or dissociate. The assay is
designed to detect the presence of the bound, or hybridized, nucleic acid
target.

         One of the greatest challenges facing scientists in developing
hybridization assays is that the sequence of the target DNA can complicate the
design and hybridization temperature of the probe. The process of choosing the
optimum region on the target strand to design the probe to can be time-consuming
and tedious. In multiplex formats, where multiple targets are being probed in
the same assay, designing probes that hybridize to their target at similar
temperatures can further complicate the problem.

         Our technologies facilitate genetic analysis by making the process of
hybridization more efficient, hybridization assays simpler to design, and
detection of the hybridized product easier. Our technologies are compatible with
many of the genetic analysis systems currently in use or being developed. Just
as microprocessors are found in essentially all electronic appliances, our
chemistries and technologies have the potential to be incorporated in all
genetic analysis systems.

DIAGNOSTIC RESEARCH AND DEVELOPMENT

         A probe molecule is designed to be complimentary to a unique sequence
of bases in the DNA or RNA of the target cell or organism. This probing is
usually done with short pieces of DNA (oligonucleotides) of known sequence.
However, short oligonucleotides (10 to 18 nucleotides) do not form (as a group)
very stable duplexes and longer oligonucleotides can form stable duplexes that
are not perfect complements (i.e., that have mismatches) leading to errors in
sequence determination. The ability to overcome these issues is the key to our
technology.

         Certain naturally occurring antibiotics have a shape which allows them
to "fold" into the "minor groove" of the DNA helix. We have found that we can
direct the binding of these "minor groove binders"


                                       5
<PAGE>   7

("MGB") to a specific site on DNA by coupling it to a short DNA molecule (an
oligonucleotide). Experiments showed that after such an oligonucleotide reacted
with its complement, the MGB folded into the minor groove of the duplex formed
by the oligonucleotide and its complement, and the MGB-oligonucleotide duplex
could not be disassociated at temperatures that would normally separate the two
strands. When the MGB was coupled to oligonucleotides as short as seven
nucleotides, the duplex formed with its complement was stable at temperatures
15(degree) to 30(degree)C higher than the non-MGB oligonucleotide. However, the
duplex was stabilized to this extent only if a perfect duplex (i.e., with no
mismatches) was formed. This finding enabled us to develop MGB-oligonucleotides
into DNA sequence probes that we believe offer the best solutions yet found for
the following situations:

         o        Single base mismatch discrimination at high temperatures with
                  short oligonucleotides;

         o        Enhancement and sequence-independent equalization of
                  oligonucleotide hybrid stability concurrently; and

         o        Mismatch "hiding" with longer oligonucleotide conjugates.

         We believe that the ability of oligonucleotides to precisely bind to
matching DNA sequences will have broad use in the developing fields of molecular
diagnostics and genomics. Applications which could benefit from improved
hybridization sensitivity include:

         o        Sensitive detection of mutations by PCR or hybridization

         o        Identifying infectious organisms including genotyping and
                  quantitating HIV viruses resistant to reverse transcriptase or
                  protease inhibitors

         o        Diagnosing and determining the prognosis of cancers and their
                  therapies

         Epoch's technology also has potential applications to the emerging area
of genetic testing. The correlation of an individual's genetic sequence with
their phenotypic (physically evident) characteristics, or genomics is a
developing field. Genetic markers, which are variations in the sequence of DNA
at specific locations which can be linked either directly (e.g., sickle cell
trait and cystic fibrosis) or indirectly (e.g., Alzheimer's disease, Type II
diabetes) to disease traits. Genetic markers with single nucleotide changes,
single nucleotide polymorphisms (SNPs), have been identified. However, an
estimated hundred thousand more of these sites exist throughout the human
genome. True SNPs are stable genetic markers, likely established thousands of
years ago. As these changes are characterized, they are being linked to genetic
traits. This linking or maping of genetic markers will allow the prediction of,
for instance, the individual's propensity to a given disease or responsiveness
to a given drug. The field of genomics is rapidly growing and depends upon
screening populations to correlate known physical traits with sets (one or more)
of SNPs. In practice, potential SNPs will be discovered as differences in gene
sequences among a few individuals. However, in order to definitively identify
these differences as true allelic polymorphisms, and to link them to relevant
characteristics (disease propensity, drug response, diagnosis and prognosis in
cancer therapy, etc.), large populations must be screened for the sequence
differences. Current sequencing methods are too slow and costly to be effective
for this effort. We believe that we will be able to deliver improved analytical
tools on a cost-effective basis, thus making our technology the method of choice
in SNP screening.

         As correlations between mutations and variations in the DNA sequence of
individuals and disease are made and established, we believe our technology can
be used to make tests designed to detect and monitor these disease states more
sensitive and specific.

SALES AND MARKETING

         We have no recent experience in marketing products and anticipate that
we will seek to enter into collaborative arrangements with companies to market
our products. We entered into a license agreement


                                       6
<PAGE>   8

for certain of our enabling genetic analysis technology with the PE Biosystems
division of PE Corporation in January 1999. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." There can be no
assurance that we will be able to enter into any additional collaborative
arrangements on favorable terms or at all.

MANUFACTURING AND SUPPLY

         We believe that raw materials and other components are available in
sufficient quantities to meet production requirements. Our current plan for
operations is to produce chemical reagent products and small quantities of
oligonucleotide products in our Redmond facility. The longer-term plan for
operations is to enter into collaborative arrangements with other companies to
manufacture our oligonucleotide products. To date, we have not entered into any
collaborative arrangements for any proposed products and there can be no
assurance that we will be able to enter into any such arrangements on favorable
terms if at all.

RESEARCH AND DEVELOPMENT

         We conduct the majority of our research and development activities
through our own staff and facilities. We have assembled a scientific staff with
a variety of complementary skills in a broad range of advanced research
technologies. As of December 31, 1999, we had 19 employees engaged in research
and development, including 10 with Ph.D.'s. These 19 employees were engaged in
research and development related to technology applications. Our in-house
research and development efforts are focused primarily on the development of DNA
probes, probe labeling and detection techniques and reagent chemistries.

         In addition to our in-house research programs, we collaborate with
academic and research institutions to support research in areas of interest to
us.

         Research and development expenses totaled approximately $2,759,000 for
1998 and $2,546,000 for 1999.

PATENTS AND PROPRIETARY TECHNOLOGY

         Our core technologies are covered by seven issued patents, two
applications with notices of allowance from the US Patent Office, and we have
filed eight additional patent applications. To our knowledge, there are no
competing patents on our technology. The expiration dates of these patents range
from January 2010 to June 2015.

         The patent position of biomedical companies, including our own, is
uncertain and may involve complex legal and factual issues. Consequently, we do
not know whether any of our patent applications will result in the issuance of
any further patents, or whether issued patents will provide significant
proprietary protection or will not be circumvented or invalidated. We cannot be
certain that we were the first creator of inventions covered by pending patent
applications or that we were the first to file patent applications for such
inventions, largely because patent applications in the U.S. are maintained in
secrecy until patents issue, and because publications of discoveries in the
scientific or patent literature tend to lag behind actual discoveries by several
months. Moreover, we may have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office to determine the priority of
inventions, which could result in substantial costs. We cannot provide assurance
that our patent applications will result in further issued patents or that our
issued patents will offer protection against competitors with similar
technology. Additionally, we cannot provide assurance that any manufacture, use
or sale of our technology or products will not infringe on patents or
proprietary rights of others, and we may be unable


                                       7
<PAGE>   9

to obtain licenses or other rights to these other technologies that may be
required for the commercialization of our proposed products.

         We require our employees, consultants and advisors to execute
confidentiality agreements upon the commencement of an employment or consulting
relationship with us. Each agreement provides that all confidential information
developed or made known to the individual during the course of the relationship
will be kept confidential and not disclosed to third parties except in specified
circumstances. In the case of employees, the agreements provide that all
inventions conceived by an individual shall be our exclusive property, other
than inventions unrelated to our business and developed entirely on the
employee's own time. We cannot provide assurance, however, that these agreements
will provide meaningful protection or adequate remedies for misappropriation of
trade secrets in the event of unauthorized use or disclosure of this
information.

COMPETITION

         Competition in the development and marketing of diagnostics and
genomics, including the detection of infectious diseases using a variety of
technologies is intense. There are many pharmaceutical, diagnostic and
biotechnology companies, public and private universities and research
organizations engaged in the research and development of diagnostic products.
Most of these organizations have financial, manufacturing, marketing and human
resources greater than ours.

EMPLOYEES

         As of December 31, 1999, we had 24 full-time employees, of which 19
were devoted to research and development activities, and 5 were devoted to
general and administrative activities. We believe we have been successful in
attracting skilled employees with experience in the biomedical industry, but we
cannot provide assurance that we will continue to do so in the future. None of
our employees is covered by a collective bargaining agreement. Management
considers relations with its employees to be good.

CERTAIN FACTORS THAT MAY AFFECT OUR BUSINESS AND FUTURE RESULTS

Forward Looking Statements

         Some of the information included herein contains forward-looking
statements. These statements can be identified by the use of forward-looking
terms such as "may," "will," "expect," "anticipates," "estimate," "continue," or
other similar words. These statements discuss future expectations, projections
or results of operations or of financial condition or state other
"forward-looking" information. When considering these forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements we make. These risk factors could cause our actual results to differ
materially from those contained in any forward-looking statement. If any of the
following risks actually occur, our business could be harmed and the trading
price of our common stock could decline.

History of Operating Losses; Anticipated Future Losses.

         Since our formation in 1985, we have generated limited revenues from
the sale of diagnostic products and from research and development grants. In
1995, we sold substantially all of the then existing diagnostic assets that were
used to generate these product revenues. At the end of 1999, we had an
accumulated deficit of approximately $62 million. We expect to incur additional
losses as we expand our research and development efforts. We make no guarantee
that we will ever become profitable. We will need additional funds to continue
our research and development activities. See "Management's


                                       8
<PAGE>   10

Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

Dependence upon New and Unproven Technology.

         The science and technology of oligonucleotide-based products is rapidly
evolving. Our proposed products are in the discovery or early development stage.
The proposed products will require significant further research, development,
and testing and are subject to the risks of failure inherent in the development
of products based on innovative technologies. We also face the risk that any or
all of our proposed products could prove to be ineffective or unsafe, be
unmarketable because third parties hold proprietary rights which prohibit us
from marketing the proposed products, or be an inferior product to products
marketed by others. Accordingly, we cannot predict whether our research and
development activities will result in any commercially viable products.

Reliance on Patent and Proprietary Technology; Risk of Patent Infringement.

         We attempt to protect our proprietary technology by relying on several
methods including United States patents. We also have international patent
applications that correspond to many of the U.S. patents and patent
applications. The issued patents and pending patent applications cover
inventions relating to the components of our core technologies. The expiration
dates of these patents range from January 2010 to June 2015. We make no
guarantee that any issued patents will provide us with significant proprietary
protection, that pending patents will be issued, or that products incorporating
the technology from our issued patents or pending applications will be free from
challenges by competitors.

         The biomedical industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. We were defendants in
one such action which has been settled. Although patent and intellectual
property disputes in the biomedical area have often been settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial. Further, we make no guarantee that we will obtain necessary
licenses on satisfactory terms or at all. Accordingly, an adverse determination
in a judicial or administrative proceeding or our failure to obtain necessary
licenses could prevent us from manufacturing and selling our products. This
would substantially hurt our operating results, financial condition and
ultimately our business.

Competition and Changing Technology

         Many companies do research and development and market products designed
to diagnose infectious diseases based on a number of technologies and are
developing additional DNA probe-based products. Many of these companies have
substantially greater capital resources, larger research and development and
marketing staffs and facilities and greater experience in developing products
than we have. Furthermore, our specific field in which we operate is subject to
significant and rapid technological change. Accordingly, even if we successfully
introduce our products or proposed products, we risk that our technologies will
be replaced by new technologies or that our products or proposed products will
be obsolete or non-competitive.

Dependence on Key Personnel

         We are dependent upon our key management and technical personnel and
consultants, and our future success will depend in part upon our ability to
retain these persons and to recruit additional qualified personnel. We must
compete with other companies, universities, research entities and other
organizations in order to attract and retain highly qualified personnel.
Although we have entered into agreements with our key executive officers, we
make no guarantee that we will retain such highly


                                       9
<PAGE>   11

qualified personnel or hire additional qualified personnel. We currently
maintain no key man life insurance on any of our management or technical
personnel.

Lack of Listing on an Exchange or on the Nasdaq System; Restrictions on Our
Stock

         Our common stock is neither listed on any exchange nor on the Nasdaq
System, although we did apply for listing on the Nasdaq in March of 2000. Our
common stock is reported on the OTC Bulletin Board. Because our shares are not
listed on the Nasdaq System, they are subject to the regulations regarding
trading in "penny stocks" which are those securities trading for less than $5.00
per share.

         As a result of our securities not being listed on an exchange or the
Nasdaq System and the rules regarding penny stock transactions, your ability to
convert shares of our common stock into cash or to sell to a third party may be
very limited. We make no guarantee that our current market-makers will continue
to make a market in our securities, or that any market for our securities will
continue.

No Dividends Paid and None Anticipated

         We have never paid dividends on our common stock and do not plan to in
the foreseeable future, as any earnings will be invested in the further
expansion of our business.

Volatility of Stock Price

         The market price of our common stock may fluctuate significantly. We
are in the biotechnology industry and the market price of securities of
biotechnology companies have fluctuated significantly and these fluctuations
have often been unrelated to the companies' operating performance. Announcements
by us or our competitors concerning technological innovations, new products,
proposed governmental regulations or actions, developments or disputes relating
to patents or proprietary rights, and other factors that affect the market
generally could significantly impact our business and the market price of our
securities. Sales of our securities by existing security holders could also
significantly impact the market price of our securities.

Shares Eligible for Future Sale; Dilution.

         Sales of substantial numbers of shares of our common stock in the
public market could substantially reduce the prevailing market price of our
common stock. As of December 31, 1999, 19,382,410 shares of our common stock
were outstanding; 5,434,910 shares of our common stock were issuable upon
exercise of outstanding warrants at exercise prices ranging from $0.50 to $2.50
per share; and an additional 1,635,370 shares of our common stock were issuable
upon exercise of outstanding options at exercise prices ranging from $0.30 to
$5.88 per share. We issued a redemption notice on 3,801,812 of the outstanding
warrants in February 2000. See "Liquidity and Capital Resources." Of the
outstanding shares of common stock and shares issuable upon exercise of warrants
and options, substantially all are freely tradable by the holders of such
securities without restriction. If these holders sell a large number of shares
of our common stock in the public market, such sales could substantially reduce
the prevailing market price of our common stock. To the extent the trading price
of our common stock exceeds the exercise price of options or warrants at the
time such options or warrants are exercised, such exercise will have a dilutive
effect on the other stockholders.

ITEM 2.  PROPERTIES

         Our principal administrative office and research laboratories are
located in Redmond, Washington, where we sub-lease and occupy approximately
13,000 square feet. The current lease term


                                       10
<PAGE>   12

will expire in April 2000, after which the lease will continue on a
month-to-month basis with a 120 day notification of termination by either party.

          In February 2000 we entered into a 12-year non-cancelable lease for a
25,000 square foot facility in Bothell, Washington. We anticipate completing
tenant improvements on approximately 19,000 square feet of this space with the
remaining 6,000 reserved for future growth. Tenant improvements should begin in
June 2000 and we intend to occupy the new facility late in 2000.

         We cannot provide assurance that we will be able to relocate to the new
facilities, to manage the relocation successfully or that the relocation will
not significantly disrupt our operations.

ITEM 3.  LEGAL PROCEEDINGS

         We are not a party to any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


                                       11
<PAGE>   13

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

       Our common stock trades on the OTC Bulletin Board under the symbol
"EPPH." The following table presents quarterly information on the high and low
bid prices on the OTC Bulletin Board, which reflects inter-dealer prices,
without retail mark-up, mark down or commission and may not represent actual
transactions:

<TABLE>
<CAPTION>
         FISCAL YEAR ENDED DECEMBER 31, 1999         HIGH            LOW
                                                  ---------      ----------
<S>                                               <C>            <C>
         Fourth quarter                           $    3.25      $    1.187
         Third quarter                                 2.93           1.75
         Second quarter                                3.56           2.00
         First quarter                                 2.75            .52

<CAPTION>
         FISCAL YEAR ENDED DECEMBER 31, 1998         HIGH            LOW
                                                  ---------      ----------
<S>                                               <C>            <C>
         Fourth quarter                           $    0.72      $    0.48
         Third quarter                                 0.76           0.57
         Second quarter                                0.93           0.70
         First quarter                                 0.94           0.56
</TABLE>

         On December 31, 1999, the last reported sale price for our common stock
on the OTC Bulletin Board was $3.25 per share. As of January 31, 2000, there
were approximately 1,159 stockholders of record of our common stock. We have not
paid any dividends on our common stock since our inception and do not anticipate
paying any dividends in the foreseeable future. Any earnings generated in the
foreseeable future will be used for the further expansion of the business.

         The following is a summary of our transactions during 1999 involving
sales of our securities that were not registered under the Securities Act.
Exemption from the registration requirements of the Securities Act for the sales
of the securities described above was claimed under Section 4(2) of the
Securities Act, among others, on the basis that such transactions did not
involve any public offering and the purchasers were sophisticated with access to
the kind of information registration would provide. No underwriting or broker's
commissions were paid in connection with the following transactions.

         In November 1999, we concluded $7 million of private equity financing.
The financing included:

         The sale of 1,200,000 shares of common stock for $3,000,000 in cash at
$2.50 per share.

         The conversion by Bay City Capital of $1.2 million of its $3 million
loan to Epoch into 480,000 shares of our common stock at $2.50 per share.

         The application by Bay City Capital of $1.8 million of its $3 million
loan to Epoch to the purchase of 2 million shares of our common stock at $.90
per share pursuant to a warrant issued to Bay City Capital in connection with
the $3 million loan.

         The conversion of $1 million of prepayments under the license agreement
with PE Biosystems to 400,000 shares of our common stock at $2.50 per share.

         The $2.50 price per share of common stock received by us in the private
equity financing represented a premium to the trading price of our common stock
as of the close of the transaction.


                                       12
<PAGE>   14

Investors who purchased the 1,200,000 shares included PE Corporation (the parent
company of PE Biosystems), Bay City Capital, Grace Brothers Ltd. and Hilspen
Capital Management.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following discussion of the financial condition and results of
operations should be read in conjunction with the financial statements and
related notes included in the financial section of this form 10-KSB.

         In January 1999, Epoch and PE Biosystems entered into a License and
Supply Agreement pursuant to which we licensed certain of our enabling genetic
analysis technology to PE Biosystems. Under the terms of the agreement, PE
Biosystems' made payments to us for initial fees on licensed technology and
proprietary know how, and will make ongoing payments for chemical intermediate
purchases as well as royalties on sales of product which use the licensed
technology.

         In July 1999, we licensed our proprietary probe design software to PE
Biosystems. This agreement increased the scope of the licensing agreement
entered into in January 1999 with PE Biosystems to include software that allows
for the efficient custom design of Taqman(R) probes by the end user. The
software is incorporated into PE Biosystems' Primer Express(TM) software which
is sold with its 7700 Sequence Detection System. In addition to license fees, we
will receive a royalty on all products that PE Biosystems sells which
incorporate the software.

         In November 1999, PE Biosystems converted $1,000,000 of prepayments
made by it pursuant to the License and Supply Agreement into 400,000 shares of
our common stock. In order to secure any unused portion of the purchased product
prepayments, we granted to PE Biosystems a security interest in the patents
related to the enabling genetic technology under the terms of a security
agreement. The security interest automatically terminates when any unused
portion of the purchased product prepayments is $50,000 or less. Although no
security interest was granted with respect to the royalty prepayments, if such
royalty payments do not become due under the agreement, we will also be required
to refund any unused prepayments to PE Biosystems.

         Under the terms of the agreement, if PE Biosystems terminates the
agreement upon 60 days written notice to us, or if we terminate the agreement
following a material breach by PE Biosystems, PE Biosystems will release its
security interest in the patents and forfeit any unused portion of the
prepayments. However, if we and PE Biosystems mutually agree to terminate the
agreement, or if PE Biosystems terminates the agreement as a result of a
material breach by us, then we must reimburse PE Biosystems the difference
between the unused portion of the purchased product prepayments and $50,000.

         Through December 1999, we received $2,552,000 under the agreements,
$1,000,000 of which was converted to equity in November 1999. See item 5. A
portion of the receipts represent prepayments to be credited against future
product purchases and royalty payments.

         We expect to incur substantial operating losses for the next year as we
continue research and development spending in applying our oligonucleotide-based
technology to the expanding areas of genomics and molecular diagnostics.

RESULTS OF OPERATIONS

         The following discussion of results of operations reflects Epoch's
diagnostics division as discontinued operations.


                                       13
<PAGE>   15

Years Ended December 31, 1998 and 1999

         License Fees. License fees reflect the amortization of initial payments
for technology and know how transfers. These amounts are amortized over the life
of the contract.

         Research Contract Revenue. Research contract revenue reflects revenue
from U.S. government grants and contracts and subcontracts.

         Research and Development. Research and development expenses decreased
by $214,000 in 1999. This decrease was the result of a reduction in staffing in
1999 from 1998 levels, as well as normal business fluctuations. The reduction in
staffing was the result of normal attrition, but due to low financial resources
during 1999 the positions were not replaced. With new funding received in the
first quarter of 2000, we replaced one of these positions and are actively
recruiting for another.

         General and Administrative. General and administrative expenses
decreased $600,000 in 1999 from the prior year. The decrease was primarily the
result of the expenses incurred in 1998 relative to the abandonment of a
proposed facility, which resulted in the recognition of $472,000 in costs during
1998. Also included in 1998 was $88,000 in expenses associated with the move to
a new building in Redmond, Washington.

         General legal expense was $55,000 less in 1999 than in 1998. This
decrease was the result of fewer business transactions requiring legal counsel.
An additional decrease in expenditures resulted from a reduction of filings of
patents on new technologies. During 1998, we expended $212,000 for patent
filings on new technologies, as compared to $150,000 in 1999. We are presently
working on several new patents and this expense is expected to increase in 2000.

         Additional variations in general and administrative expenses are the
result of normal business fluctuations.

         Interest Income. Interest income in 1999 is less than 1998 due to lower
cash balances available for investment.

         Interest and Financing Expense. Interest and financing expense in the
current year increased over the prior year primarily as a result of including
the amortization of $818,000 of deferred financing expense in 1999 as compared
to $516,000 in 1998. Deferred financing expense in 1999, in addition to the
normal amortization, included the charge off of all remaining unamortized
amounts when the loan was converted to equity in November 1999.

         Other Income. Other income in 1998 represents payments received from a
sub-lease and administrative support agreement. This agreement was terminated in
April 1998 and, consequently, there is no income from this source after April
1998.

         Gain on Disposal. The gain on disposal of discontinued operations
represents only that portion of the gain for which cash payments were received
during the reporting periods.

LIQUIDITY AND CAPITAL RESOURCES

         We have experienced recurring losses from operations and had a total
stockholders' equity of approximately $175,000 at December 31, 1999.


                                       14
<PAGE>   16

         At December 31, 1999, we had cash and cash equivalents of approximately
$1,772,000. In February 2000, we received $10,000,000 through the sale of common
stock in a private placement. We also received a total of $6,500,000 from the
exercise of warrants through March 14, 2000 and anticipate receipts of an
additional $3,000,000 by the end of the first quarter, 2000. Under the licensing
and supply agreement with PE Biosystems, we will receive an ongoing royalty
stream based on licensee sales and earn revenues from the sale of chemical
intermediates to PE Biosystems. We estimate these cash resources provide
sufficient working capital to operate through 2001.

         Cash increased by $1,114,000 from December 31, 1998 to December 31,
1999. The increase was primarily the result of $4,211,000 received from the sale
of stock and the exercising of warrants and options to purchase common stock,
and $1,552,000 received from PE Biosystems under the license and supply
agreement. These receipts were offset by the payment of $431,000 in accrued
interest to Bay City, the purchase of $241,000 of capital equipment, and normal
expenditures on operations. In the prior year cash decreased $827,000 due to
normal expenditures on operations offset by the proceeds of the $3,000,000 loan
from Bay City Capital which was repaid in November 1999.

          Prior to September 1998, we had been in negotiations for a lease on
approximately 21,000 square feet in the general vicinity of our then current
facility in Bothell, Washington. A design build team had been selected and was
working on plans for the new space. In September 1998, the project was canceled.
Costs for architectural fees and long lead equipment items incurred prior to
cancellation of the project were estimated at $472,000, which were included in
general and administrative expenses in 1998. Of these expenses, $391,000
remained in accrued liabilities at year end. These accrued obligations were
satisfied in 1999.

         Further variances in accounts payable and other accrued liabilities in
1999 and 1998 are the result of normal business fluctuations.

PLAN OF OPERATIONS

         Using the proceeds of the February 2000 financing, the warrant
redemption, and the PE Biosystems licensing agreement, we plan to further
develop and verify applicability of our compounds and techniques in the
developing fields of molecular diagnostics and genomics and to further
commercialize these technologies.

         We are focused on the development and commercialization of our products
with the goal of entering into corporate partnering arrangements to further
commercialize the technology. Our primary future needs for capital are for
continued research and development, as well as relocation expenses anticipated
to be incurred in a move to new facilities. Our working capital requirements may
vary depending upon numerous factors including the progress of our research and
development, competitive and technological advances, relocation expenses and
other factors. We anticipate operating with approximately 25 employees.

         We will require additional funds to continue our operations and, over
the longer term, will require substantial additional funds to maintain and
expand our research and development activities and to further commercialize,
with or without the assistance of corporate partners, any of our proposed
products. We will seek collaborative or other arrangements with larger
pharmaceutical companies, under which such companies would provide additional
capital in exchange for an exclusive or non-exclusive license or other rights to
certain of the technologies and products we are developing. However, the
competition for such arrangements with major pharmaceutical companies is
intense, with a large number of biopharmaceutical companies attempting to
satisfy their funding requirements through such arrangements. We cannot provide
assurance that an agreement or agreements will arise from these


                                       15
<PAGE>   17

discussions in a timely manner, or at all, or that revenues that may be
generated thereby will offset operating expenses sufficiently to reduce our
long-term funding requirements.

NEW ACCOUNTING BULLETIN

         The United States Securities and Exchange Commission recently issued
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements, which is effective beginning in our second fiscal quarter in 2000.
The interpretation of SAB No. 101 is currently uncertain as it relates to
biotechnology companies and, consequently, the impact on our financial
statements is unknown. We are in the process of determining the potential impact
on our financial statements.

YEAR 2000 COMPLIANCE

         We completed remediation programs to deal with year 2000 issues in
December 1999. The cost of correcting potential problems was approximately
$42,000. Our systems have functioned normally in 2000 and there have been no
interruptions of service from suppliers or vendors.

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements required by this item begin on Page F-1 of
this Report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not applicable.


                                       16
<PAGE>   18

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF  THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

         The directors and executive officers of Epoch are as follows:

<TABLE>
<CAPTION>
NAME                           AGE     POSITION
----                           ---     --------
<S>                            <C>     <C>
Fred Craves, Ph.D.             54      Chairman of the Board of Directors
Richard L. Dunning             54      Director
William G. Gerber, M.D.        53      Chief Executive Officer
Herbert L. Heynecker, Ph.D.    56      Director
Kenneth L. Melmon, M.D.        65      Director
Riccardo Pigliucci             53      Director
Sanford S. Zweifach            44      President, Chief Financial Officer, Secretary and Director
</TABLE>

         Dr. Craves joined Epoch as Chairman of the Board of Directors in July
1993 and became Chief Executive Officer in April 1994. In September 1999, Dr.
Craves turned over the duties of Chief Executive Officer to Dr. Gerber, who
joined Epoch in September 1999. Dr. Craves will continue as the Chairman of the
Board of Directors. Since January 1997, Dr. Craves has been Chairman of Bay City
Capital, a merchant bank specializing in life sciences. From January 1994 until
January 1997, Dr. Craves was a principal of the consulting firm, Burrill &
Craves. From January 1991 to May 1993, he was President and Chief Executive
Officer of Berlex Biosciences, a division of Schering A.G., and Vice President
of Berlex Laboratories, Inc., the U.S. subsidiary of Schering A.G. From 1981 to
1982, Dr. Craves was Chief Executive Officer and, from 1982 to June 1990, was
Chairman, Chief Executive Officer and President of Codon, a biotechnology
company. Following Codon's acquisition by Schering A.G., Dr. Craves was
President and Chief Executive Officer of Codon from June 1990 to December 1990.
From 1981 to 1983, Dr. Craves was also a co-founder and director of Creative
BioMolecules. From 1979 to 1981, he was a sales and marketing representative for
Millipore Corporation. Dr. Craves received his Ph.D. in Pharmacology and
Experimental Toxicology from the University of California, San Francisco. Dr.
Craves is also Chairman of the Board of Directors of NeoRx Corporation and a
director of Incyte Pharmaceuticals, Inc, EOS and Medarex, Inc.

         Mr. Dunning has been a Director of Epoch since October 1996. Since
April 1996, Mr. Dunning has served as the President and Chief Executive Officer
of Nexell Pharmaceuticals, Inc., and was elected to the Board of Directors of
Nexell in May 1999. From 1991 to 1996, Mr. Dunning served as Executive Vice
President and Chief Financial Officer of the Dupont Merck Pharmaceutical
Company. Mr. Dunning also serves as a director of Endorex Corp.

         Dr. Gerber has served as Chief Executive Officer of Epoch
Pharmaceuticals, Inc. since September 1999. From April 1998 until July 1999, Dr.
Gerber served as President and Chief Executive Officer of diaDexus LLC, a joint
venture established by Incyte Pharmaceuticals and SmithKline Beecham to apply
genomic information and technologies to the discovery of novel diagnostic
products. Dr. Gerber served as Vice President and Chief Operating Officer of
Onyx Pharmaceuticals, a biotechnology firm involved in the discovery of novel
cancer therapeutics from June 1995 until April 1998; as President of Chiron
Diagnostics from December 1991 until June 1995. Previously, he was Senior Vice
President and General Manager of the PCR Division with Cetus Corporation. Dr.
Gerber also has medical practice and managerial experience in emergency medicine
and founded an urgent care center management company. He served on and was
President of the Board of Medical Quality Assurance, State of California. He


                                       17
<PAGE>   19

received his M.D. and B.S. from the University of California, San Francisco
Medical Center after attending Dartmouth College. Dr. Gerber is also on the
Board of Directors of Sangamo BioSciences, Inc.

         Dr. Heyneker is the Chief Technology Officer of EOS Biotechnology,
Inc., a company focused on drug target discovery, where he has been since its
inception in 1997. Prior to joining EOS, Dr. Heyneker was involved with Array
Technologies, Inc., a company devoted to the development of oligonucleotide and
cDNA arrays, which he co-founded in 1996. From 1994 to 1996, Dr. Heyneker served
as Chairman of the Board of ProtoGene Laboratories, Inc. which he co-founded.
Dr. Heyneker was also a founder and Chief Executive Officer of GlycoGen, Inc.,
which later merged with Cytel Corporation. Dr. Heyneker became the first Vice
President of Research of Genecor International, Inc., a joint venture between
Genetech and Corning, after joining Genetech as a senior scientist in 1978. He
is a Director of IntroGene, B.V., Chairman of the Scientific Advisory Board of
Pharming, B.V., and as advisor for Genencor and Energy Biosystems Corp. Dr.
Heyneker received his undergraduate degree and Ph.D. from the University of
Leiden, The Netherlands.

         Dr. Melmon has been a Director of Epoch since November 1991. Dr. Melmon
is Professor of Medicine at Stanford University School of Medicine, where he
joined the faculty in 1978. He was previously on the faculty at the University
of California, San Francisco, specializing in clinical pharmacology. He is a
member of the Institute of Medicine-National Academy of Sciences, and a past
president of the American Federation for Clinical Research and the American
Association of Clinical Investigation. He holds an M.D. from the University of
California Medical Center. He is also on the Board of Directors of Vysis.

         Mr. Pigliucci became a director of Epoch in February 2000. Mr.
Pigliucci is Chairman and Chief Executive Officer of Discovery Partners
International, a San Diego, CA-based corporation providing platforms, services,
and information to augment the internal drug discovery efforts of pharmaceutical
and biopharmaceutical companies. Before joining Discovery Partners, Mr.
Pigliucci was Chief Executive Officer of Life Sciences International PLC from
1996 to 1997, a global supplier of scientific equipment and consumables to
research, clinical and industrial markets based in London (England). Prior to
that, during a 23-year career at the Perkin-Elmer Corporation, he held numerous
management positions including President and Chief Operating Officer. Mr.
Pigliucci received his degree in Chemistry in Milan, Italy and is a graduate of
the Management Program of Northeastern University, Boston, Massachusetts. Mr.
Pigliucci is director of Biosphere Medical and Dionex Corporation and a trustee
of The Worcester Foundation for Biomedical Research.

         Mr. Zweifach joined Epoch in January 1995 as President and Chief
Financial Officer. From July 1994 to September 1994, and since September 1996,
Mr. Zweifach also served as a director of Epoch. Mr. Zweifach has served as the
Chief Financial Officer since 1997, and as the Managing Director since January
of 1999 of Bay City Capital. Mr. Zweifach previously served as a Managing
Director of The Olmsted Group, L.L.C., a merchant-banking firm since January
1995. Mr. Zweifach was a Managing Director of D. Blech & Co. from 1991 to
September 1994, and prior to 1991, he was a Vice President of J.S. Frelinghuysen
& Co., Inc., a risk capital and merchant banking firm. He is a Certified Public
Accountant and holds an M.S. in Human Physiology from the University of
California, Davis.

         Dr. Craves and Mr. Zweifach are also employed by other entities and,
although they devote a substantial portion of their time to Epoch, they also
devote a portion of their time to their positions at the other entities. Both
Dr. Craves and Mr. Zweifach have been engaged by Epoch pursuant to Consulting
Agreements.


                                       18
<PAGE>   20

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

         Based upon our review of the copies of reporting forms furnished to us,
we believe that all filing requirements were satisfied under Section 16(a) of
the Securities Exchange Act of 1934 applicable to our directors, officers and
any persons holding ten percent or more of our common stock with respect to our
fiscal year ended December 31, 1999, were satisfied.

ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

         The following table sets forth summary information concerning
compensation paid or accrued by us for services rendered during 1997, 1998 and
1999, to our Chief Executive Officer, and our other executive officers:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                      Long Term
                                                                                     Compensation
                                                Annual Compensation                     Awards
                                  ------------------------------------------------   ------------
                                                                                      Securities
           Name and                                                 Other Annual      Underlying      All Other
      Principal Position          Year    Salary($)     Bonus($)   Compensation($)    Options(#)     Compensation
      ------------------          ----    ---------     --------   ---------------   ------------    ------------
<S>                               <C>     <C>          <C>         <C>               <C>             <C>
Fred Craves                       1999    $100,000     $      --      $      --              --       $       --
    Chairman of the Board         1998     100,000            --             --              --               --
       of Directors               1997     100,000            --             --              --               --

William G. Gerber
    Chief Executive Officer       1999      78,688            --             --         100,000               --

Sanford S. Zweifach               1999     135,000            --             --              --               --
    President and                 1998     135,000            --             --              --               --
      Chief Financial Officer     1997     140,625            --             --              --               --
</TABLE>

OPTION MATTERS

         The following table sets forth the options granted to those persons
listed in the Summary Compensation table above. Options granted have a term of
10 years, and are subject to earlier termination in certain situations related
to termination of employment.

                        OPTION GRANTS IN LAST FISCAL YEAR
                               (INDIVIDUAL GRANTS)

<TABLE>
<CAPTION>
                       Number of Securities      % of Total Options Granted    Exercise Price    Expiration
Name                Underlying Options Granted   to Employees in Fiscal Year     (%/Share)          Date
----                --------------------------   ---------------------------     ---------          ----
<S>                 <C>                          <C>                           <C>                <C>
William G. Gerber            100,000                         14.3%                 $1.87          9/8/2009
</TABLE>

         Dr. Gerber was granted options to purchase 100,000 shares of common
stock in September 1999 when he accepted the position of Chief Executive
Officer. The shares vest evenly over 12 months and have an exercise price of
$1.87.


                                       19
<PAGE>   21

         The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of December 31, 1999. Also
reported are the values for "in the money" options which represent the positive
spread between the exercise prices of any such existing stock options and the
fiscal year end price of our common stock $3.25 per share.

                 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                        Number of                   Value of
                                                                  securities underlying        unexercised in-the-
                                                                  unexercised options/           money options/
                                                                   SARs at FY-end(#)           SARs at FY-end($)
                             Shares acquired       Value              Exercisable/                Exercisable/
Name                          on exercise(#)    realized($)          Unexercisable               Unexercisable
------------------------------------------------------------------------------------------------------------------
<S>                          <C>                <C>               <C>                          <C>
Fred Craves                      160,741        $   246,482           616,666/0                    458,332/0

William G. Gerber                     --                 --            33,333/66,667                43,666/87,334

Sanford S. Zweifach                   --                 --           101,250/0                    278,438/0
</TABLE>

         Dr. Craves exercised 160,741 warrants in December 1999 at a total price
of $75,000.

CONSULTING AGREEMENTS

         In July 1993, Epoch entered into a one-year consulting agreement with
Dr. Craves. The agreement has been extended for successive one year periods and
the agreement is currently in effect through February 28, 2001 at a rate of
$7,500 per month.

         In January 1995, Epoch entered into a consulting agreement with Mr.
Zweifach. The agreement has been extended for successive one year periods and
the agreement is currently in effect through February 28, 2001 at a rate of
$7,500 per month.

         Dr. Melmon also serves as a consultant to Epoch and a member of our
Scientific Advisory Board and receives compensation in those capacities.

DIRECTORS' COMPENSATION

         Epoch pays all non-employee directors a fee of $1,000 for each board of
directors meeting attended in person. In July 1993, we adopted a Non-Employee
Directors Option Plan (the "Directors Plan") pursuant to which each non-employee
director (except Dr. Craves) was granted a fully-vested 10-year option to
purchase 10,000 shares of common stock at an exercise price of $4.00 per share.
In addition, upon each anniversary of the inception of the Directors Plans each
non-employee director receives fully-vested 10-year options to purchase 5,000
shares of common stock at the then current fair market value. Non-employee
directors who join the board of directors will receive, upon each anniversary of
joining the board of directors, fully-vested 10-year options to purchase 5,000
shares of common stock at the then current fair market value.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth as of December 31, 1999 certain
information about the beneficial ownership of Epoch's common stock by each
stockholder known by us to be the beneficial owner of more than 5% of Epoch's
common stock, each director, each of the executive officers named in the


                                       20


<PAGE>   22

summary compensation table, and all executive officers and directors as a group.
Except as indicated in the footnotes to this table and pursuant to applicable
community property laws, the persons named in this table have sole voting and
investment power with respect to all shares of common stock.

<TABLE>
<CAPTION>
                                                NUMBER OF SHARES
                                           BENEFICIALLY OWNED, SUBJECT      NUMBER OF SHARES         PERCENTAGE OF
NAME AND ADDRESS                             TO WARRANTS OR OPTIONS        BENEFICIALLY OWNED     OUTSTANDING SHARES
----------------                           ---------------------------     ------------------     ------------------
<S>                                        <C>                             <C>                    <C>
Grace Brothers Ltd.                                                               5,332,693              27.5%
    1560 Sherman Avenue
    Evanston, Illinois  60201

Fred Craves, Ph.D.(1)                                  700,000                    3,868,241              19.3%

Bay City Capital, LLC(2)                                                          2,880,000              14.9%
    750 Battery Street, Suite 600
    San Francisco, CA  94111

Richard L. Dunning(3)                                   15,000                      472,143              2.4%

Nexell Therapeutics, Inc.                                                           457,143              2.4%
    9 Parker
    Irvine CA 92618

Sanford S. Zweifach(4)                                 101,250                      126,250                *

William G. Gerber, M.D.                                100,000                      100,000                *

Kenneth L. Melmon, M.D.                                 85,999                       85,999                *

Herbert L. Heyneker, Ph.D.                                                              602                *

All executive officers and directors                 1,002,249                    1,316,092              6.5%
as a group (6 persons)(5)
</TABLE>

-------------
     * Less than one percent

(1)  Includes warrants to purchase 83,334 shares which are held by Burrill &
     Craves, of which Fred Craves is a general partner. Also includes 2,880,000
     shares which are held by Bay City Capital, LLC. See footnote (2). Fred
     Craves disclaims beneficial ownership of the Bay City Capital shares except
     to the extent of his pecuniary interest in Bay City Capital, LLC.

(2)  Represents 2,880,000 shares held by Bay City Capital Fund I, L.P. Bay City
     Capital, LLC, the general partner of Bay City Capital Fund I, L.P., is a
     merchant banking partnership formed by The Craves Group and The Pritzker
     Family business interest. Fred Craves, Ph.D., the chairman and chief
     executive officer of Epoch, is the majority owner and controlling person of
     The Craves Group. By virtue of their status as members of Bay City Capital,
     LLC, each of The Craves Group and The Pritzer Family may be deemed the
     beneficial owner of all of the shares held of record by Bay City Fund I,
     L.P. (the "Bay City Shares"). By virtue of his status as the majority owner
     and controlling person of The Craves Group, Fred Craves may also be deemed
     a beneficial owner of the Bay City Shares. Each of The Craves Group, The
     Pritzker Family and Fred Craves disclaims beneficial ownership of any Bay
     City Shares except to the extent, if any, of such persons actual pecuniary
     interest therein.

(3)  Includes 457,143 shares of common stock which are held by Nexell
     Therapeutics, Inc., of which Richard L. Dunning is the Chairman and CEO.
     Richard L. Dunning disclaims beneficial ownership of such shares of common
     stock except to the extent of his pecuniary interest in Nexell
     Therapeutics, Inc.

(4)  Includes 15,000 warrants with a strike price of $.50 were exercised on
     January 18, 2000.

(5)  Includes directors' and executive officers' shares listed above. Excludes
     2,880,000 warrants and the shares underlying such warrants held by Bay City
     Capital LLC. Excludes 457,143 shares of common stock held by VIMRx
     Pharmaceuticals, Inc.


                                       21


<PAGE>   23

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In November 1999, Epoch concluded $7 million of private equity
financing. Bay City Capital LLC, ("Bay City Capital"), San Francisco,
California, participated in the financing by paying $1 million in cash and
converting their $3 million note to equity. See Item 5.

         Bay City Capital, which manages BCC Fund I, is a merchant banking
partnership that was formed by The Craves Group and The Pritzker Family business
interests. The founding partner of The Craves Group, Fred Craves, Ph.D., is the
Chairman of Epoch. Sanford S. Zweifach, Epoch's President and Chief Financial
Officer, is also a Managing Director and Chief Financial Officer of Bay City
Capital.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         The following documents are filed as part of this Form 10-KSB:

         (a) Exhibits:

EXHIBIT LIST

<TABLE>
<CAPTION>

  EXHIBIT NO.    DESCRIPTION
  -----------    -----------
<S>              <C>
    3.1          Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3 of
                 the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998).

    3.2*         Bylaws of the Registrant, as currently in effect.

    5.0          Opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Counsel to the
                 Registrant (incorporated by reference to the same numbered exhibit to the Company's
                 Registration Statement on Form SB-2, No. 333-21353, filed February 7, 1997).

    10.1*        MicroProbe Corporation Incentive Stock Option, Nonqualified Stock Option And Restricted Stock
                 Purchase Plan--1991, as amended.

    10.2*        Form of Indemnification Agreement entered into with officers and directors of the Registrant.

    10.3         Letter Agreement between the Registrant and Fred Craves, dated August 3, 1993 (incorporated
                 by reference to Exhibit 10.12 of the Registrant's Registration Statement on Form SB-2,
                 Registration No. 33-66742, effective on September 29, 1993).

    10.4         Form of Common Stock Warrant issued December 31, 1991 (incorporated by reference to Exhibit
                 10.22 of the Registrant's Registration Statement on Form SB-2, Registration No. 33-66742,
                 effective on September 29, 1993).

    10.5         Second Amended and Restated Investment Agreement, dated April 28, 1992 among the Registrant
                 and certain investors (incorporated by reference to Exhibit 10.25 of the Registrant's
                 Registration Statement on Form SB-2, Registration No. 33-66742, effective on September 29,
                 1993).
</TABLE>


                                         22

<PAGE>   24
<TABLE>
<CAPTION>

  EXHIBIT NO.    DESCRIPTION
  -----------    -----------
<S>              <C>
    10.6         Common Stock and Warrant Purchase Agreement, dated April 28, 1992 as amended June 30, 1992
                 and July 31, 1992 (with form of warrant) among the Registrant and certain investors
                 (incorporated by reference to Exhibit 10.26 of the Registrant's Registration Statement on
                 Form SB-2, Registration No. 33-66742, effective on September 29, 1993).

    10.7         Form of Registration Agreement, dated February 12, 1993 among the Registrant and certain
                 investors (incorporated by reference to Exhibit 10.30 of the Registrant's Registration
                 Statement on Form SB-2, Registration No. 33-66742, effective on September 29, 1993).

    10.8         MicroProbe Corporation Incentive Stock Option, Nonqualified Stock Option and Restricted Stock
                 Purchase Plan--1993 (incorporated by reference to Exhibit 10.39 of the Registrant's
                 Registration Statement on Form SB-2, Registration No. 33-66742, effective on September 29,
                 1993).

    10.9         MicroProbe Corporation Non-Employee Directors Stock Option Plan (incorporated by reference to
                 Exhibit 10.40 of the Registrant's Registration Statement on Form SB-2, Registration No.
                 33-66742, effective on September 29, 1993).

    10.10*       Warrant Agreement between the Registrant and American Stock Transfer & Trust Company dated
                 April 29, 1997, (incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report
                 on 10-KSB for the year ended December 31, 1998).

    10.11        Purchase Agreement dated as of November 30, 1993, by and among the Registrant, Animal
                 Biotechnology Cambridge Limited, and Herbert Stradler (without exhibits) (incorporated by
                 reference to Exhibit 10.47 of the Registrant's Registration Statement on Form SB-2,
                 Registration No. 33-76446, effective on July 7, 1994).

    10.11.1      Amendment dated April 1, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.1
                 of the Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1993).

    10.11.2      Amendment dated April 27, 1994 to Put Agreement (incorporated by reference to the
                 Registrant's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1994).

    10.11.3      Amendment dated May 26, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.3
                 of the Registrant's Registration Statement on Form SB-2, Registration No. 33-76446, effective
                 on July 7, 1994).

    10.11.4      Amendment dated June 30, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.4
                 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1994).

    10.11.5      Amendment dated July 27, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.5
                 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1994).

    10.11.6      Amendment dated August 15, 1994 to Put Agreement (incorporated by reference to Exhibit
                 10.48.6 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September
                 30, 1994).
</TABLE>


                                        23

<PAGE>   25

<TABLE>
<CAPTION>

  EXHIBIT NO.    DESCRIPTION
  -----------    -----------
<S>              <C>

    10.11.7      Amendment dated August 30, 1994 to Put Agreement (incorporated by reference to Exhibit
                 10.48.7 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September
                 30, 1994).

    10.11.8      Amendment dated September 14, 1994 to Put Agreement (incorporated by reference to Exhibit
                 10.48.8 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September
                 30, 1994).

    10.11.9      Exercise Notice dated September 27, 1994 to Put Agreement (incorporated by reference to
                 Exhibit 10.48.9 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended
                 September 30, 1994).

    10.12        Put Agreement relating to Ribonetics GmbH dated as of December 1, 1993 between the Registrant
                 and David Blech, as amended December 3, 1993 and February 18, 1994 (incorporated by reference
                 to Exhibit 10.48 of the Registrant's Annual Report on Form 10-KSB for the year ended December
                 31, 1993).

    10.13        Registration Rights Agreement dated October 12, 1994 (incorporated by reference to Exhibit
                 10.57 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30,
                 1994).

    10.14        Consulting Agreement between the Registrant and Sanford S. Zweifach, dated January 18, 1995
                 (incorporated by reference to Exhibit 10.59 of the Registrant's Annual Report on Form 10-KSB
                 for the year ended December 31, 1995).

    10.15        Asset Purchase Agreement between the Registrant and Becton, Dickinson and Company, dated as
                 of September 29, 1995 (incorporated by reference to the form of such Asset Purchase Agreement
                 filed with the Registrant's Definitive Proxy Materials for its Special Meeting of
                 Stockholders held November 27, 1995).

    10.16        Consulting Agreement with David Blech dated March 29, 1996 (incorporated by reference to
                 Exhibit 10.65 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June
                 30, 1996).

    10.17        Form of Subscription Agreement with Private Placement Investors (incorporated by reference to
                 Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June
                 30, 1996).

    10.18        Warrant Agreement between the Registrant and American Stock Transfer and Trust Company dated
                 June 21, 1996, with form of Warrant (incorporated by reference to Exhibit 4.2 of the
                 Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1996).

    10.19        Bridge Financing Agreement dated as of February 25, 1998, with form of note and warrant,
                 between the Registrant and Bay City Capital, LLC (incorporated by reference to Exhibit 10.69
                 of the Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1997).

    10.20*       Sublease between the Registrant as Tenant and Bion Diagnostic Sciences, Inc. for premises
                 located in Redmond, Washington, dated September 25, 1998 (incorporated by reference to
                 Exhibit 10.20 of Registrant's Annual Report on 10-KSB for the year ended December 31, 1998).
</TABLE>


                                         24



<PAGE>   26

<TABLE>
<CAPTION>

  EXHIBIT NO.    DESCRIPTION
  -----------    -----------
<S>              <C>

    10.21*       License Agreement between the Registrant and Perkin-Elmer Corporation dated January 11, 1999
                 (portions of this Exhibit are omitted and were filed separately with the Secretary of the SEC
                 pursuant to the Registrant's application requesting confidential treatment under Rule 406 of
                 the Securities Act) (incorporated by reference to Exhibit 10.21 of Registrant's Annual Report
                 on Form 10-KSB for the year ended December 31, 1998).

    10.21.1      First Amendment to the License and Supply Agreement between the Registrant and Perkin-Elmer
                 Corporation dated January 11, 1999. (Portions of this Exhibit are omitted and were filed
                 separately with the Secretary of the SEC pursuant to the Registrant's application requesting
                 confidential treatment under Rule 406 of the Securities Act.) Incorporated by reference to
                 exhibit 10.21.1 of the Registrant's Registration Statement on Form SB-2, No. 333-88909, filed
                 on October 13, 1999.

    10.22        Stock Purchase Agreement dated November 1, 1999 by and between Epoch Pharmaceuticals, Inc.
                 and the purchasers set forth therein.

    10.23        Stock Purchase Agreement dated February 14, 2000 by and between Epoch Pharmaceuticals and the
                 purchasers set forth therein.

    23.2         Consent of Stradling Yocca Carlson & Rauth, a Professional Corporation (included in the
                 Opinion filed as Exhibit 5.0).

    23.1         Consent of KPMG LLP.

    25.0         Power of Attorney (included on the signature page).

    27.0         Financial Data Schedules (incorporated by reference to Exhibit 27 of Registrant's Quarterly
                 Report on Form 10-QSB for the quarter ended March 31, 1999).
</TABLE>


*   Incorporated by reference to the same numbered exhibit of the Registrant's
    Registration Statement on Form SB-2, No. 33-66742, effective on September
    29, 1993.

(b) Reports on Form 8-K:

         None


                                       25
<PAGE>   27

                           EPOCH PHARMACEUTICALS, INC.
                          INDEX TO FINANCIAL STATEMENTS

                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I. FINANCIAL INFORMATION PAGE NUMBER

        ITEM 1. FINANCIAL STATEMENTS

                Independent Auditors' Report..............................  F-1

                Balance Sheet as of December 31, 1999.....................  F-2

                Statements of Operations for the years ended
                     December 31, 1998 and 1999...........................  F-3

                Statements of Stockholders' Equity (Deficit) for the
                     years ended December 31, 1998 and 1999...............  F-4

                Statements of Cash Flows for the years ended
                     December 31, 1998 and 1999...........................  F-5

                Notes to Financial Statements.............................  F-6


<PAGE>   28

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Epoch Pharmaceuticals, Inc.

We have audited the accompanying balance sheet of Epoch Pharmaceuticals, Inc. as
of December 31, 1999, and the related statements of operations, stockholders'
equity (deficit), and cash flows for each of the years in the two-year period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Epoch Pharmaceuticals, Inc. as
of December 31, 1999, and the results of its operations and its cash flows for
each of the years in the two-year period ended December 31, 1999 in conformity
with generally accepted accounting principles.


KPMG LLP


Seattle, Washington
March 14, 2000


                                      F-1

<PAGE>   29

                           EPOCH PHARMACEUTICALS, INC.
                                  BALANCE SHEET

                                     ASSETS

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                             1999
                                                                         ------------
<S>                                                                      <C>
Current assets:
     Cash and cash equivalents ..............................            $  1,772,274
     Receivables ............................................                  20,073
     Prepaid expenses .......................................                  34,188
                                                                         ------------
         Total current assets ...............................               1,826,535

Equipment, net ..............................................                 399,705

Other assets ................................................                  39,344
                                                                         ------------

         Total assets .......................................            $  2,265,584
                                                                         ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable .......................................            $    102,884
     Accrued vacations ......................................                 119,014
     Other accrued liabilities ..............................                 274,646
     Deferred revenue .......................................                 277,742
                                                                         ------------

         Total current liabilities ..........................                 774,286
                                                                         ------------

Deferred revenue ............................................               1,316,129

Stockholders' equity:
     Preferred stock, par value $.01; 10,000,000
       shares authorized; no shares issued and outstanding ..                      --
     Common stock, par value $.01; 50,000,000 shares
       authorized; 19,382,410 shares issued and outstanding .                 193,824
     Additional paid-in capital .............................              61,625,990
     Deferred compensation expense ..........................                (111,874)
     Accumulated deficit ....................................             (61,532,771)
                                                                         ------------

         Total stockholders' equity .........................                 175,169
                                                                         ------------

Commitments and subsequent events

Total liabilities and stockholders' equity ..................            $  2,265,584
                                                                         ============
</TABLE>

                 See accompanying notes to financial statements.

                                      F-2

<PAGE>   30

                           EPOCH PHARMACEUTICALS, INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                        ---------------------------------
                                                            1998                 1999
                                                        ------------         ------------
<S>                                                     <C>                  <C>
Revenue:
     License fees ..............................        $         --         $     71,942
     Research contract revenue .................             159,917              109,152
                                                        ------------         ------------
                                                             159,917              181,094
Operating expenses:
     Research and development ..................           2,759,476            2,545,583
     General and administrative ................           2,014,571            1,414,587
                                                        ------------         ------------
         Total operating expenses ..............           4,774,047            3,960,170

                                                        ------------         ------------
         Operating loss ........................          (4,614,130)          (3,779,076)

Other income (expense):
     Interest income ...........................             104,985               52,069
     Interest and financing expense ............            (727,156)          (1,042,947)
     Other income ..............................              23,292                   --
                                                        ------------         ------------
         Loss from continuing operations .......          (5,213,009)          (4,769,954)

Discontinued operations -
     gain on disposal of diagnostics division ..             110,000               70,000
                                                        ------------         ------------

         Net loss ..............................        $ (5,103,009)        $ (4,699,954)
                                                        ============         ============

Loss per share from continuing operations --
     basic and diluted .........................        $      (0.35)        $      (0.31)
Income per share from discontinued operations --
     basic and diluted .........................                0.01                 0.01
                                                        ------------         ------------
         Net loss per share - basic and diluted         $      (0.34)        $      (0.30)
                                                        ============         ============

Weighted average number of common shares
     outstanding - basic and diluted ...........          14,818,960           15,607,934
</TABLE>

                 See accompanying notes to financial statements.

                                      F-3

<PAGE>   31

                           EPOCH PHARMACEUTICALS, INC.
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                         Common Stock                   Additional            Deferred
                                                    Shares            Amount          Paid-In Capital        Compensation
                                                   ----------        --------         ---------------      ----------------

<S>                                                <C>               <C>                <C>
Balance at December 31, 1997                       14,814,793        $148,148           52,930,787                  --

Exercise of stock options                               9,434              94                4,767
Warrants issued in debt financing                                                        1,333,361
Issuance of warrants to a consultant                                                       191,791            (191,791)
Amortization of deferred compensation                                                                           31,965
Amortization of deferred financing expense
Net loss
                                                   ----------        --------         ---------------      ----------------
Balance at December 31, 1998                       14,824,227         148,242           54,460,706            (159,826)

Exercise of stock options                             117,342           1,174               74,442
Exercise of warrants                                2,360,841          23,608            1,911,642
Private placement of stock                          1,600,000          16,000            3,984,000
Exchange of debt for equity                           480,000           4,800            1,195,200
Amortization of deferred compensation                                                                           47,952
Amortization of deferred financing expense
Net loss
                                                   ----------        --------    -----------------     ----------------
Balance at December 31, 1999                       19,382,410        $193,824           61,625,990            (111,874)
                                                   ==========        ========    =================     ================
</TABLE>


<TABLE>
<CAPTION>

                                                     Deferred                                    Total
                                                     Financing         Accumulated            Stockholders
                                                      Expense            Deficit            Equity (Deficit)
                                                    -----------       -------------         ----------------

<S>                                                 <C>               <C>                   <C>
Balance at December 31, 1997                                 --         (51,729,808)             1,349,127

Exercise of stock options                                                                            4,861
Warrants issued in debt financing                    (1,333,361)                                        --
Issuance of warrants to a consultant                                                                    --
Amortization of deferred compensation                                                               31,965
Amortization of deferred financing expense              515,567                                    515,567
Net loss                                                                 (5,103,009)            (5,103,009)
                                                    -----------        ------------            -----------
Balance at December 31, 1998                           (817,794)        (56,832,817)            (3,201,489)

Exercise of stock options                                                                           75,616
Exercise of warrants                                                                             1,935,250
Private placement of stock                                                                       4,000,000
Exchange of debt for equity                                                                      1,200,000
Amortization of deferred compensation                                                               47,952
Amortization of deferred financing expense              817,794                                    817,794
Net loss                                                                 (4,699,954)            (4,699,954)
                                                    -----------        ------------            -----------
Balance at December 31, 1999                                 --         (61,532,771)               175,169
                                                    ===========        ============            ===========
</TABLE>

                See accompanying notes to financial statements.


                                      F-4

<PAGE>   32

                           EPOCH PHARMACEUTICALS, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            YEARS ENDED DECEMBER 31,
                                                                        -------------------------------
                                                                           1998                 1999
                                                                        -----------         -----------
<S>                                                                     <C>                 <C>
Cash flows from operating activities
   Net loss ....................................................        $(5,103,009)        $(4,699,954)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
     Depreciation and amortization .............................             61,264             110,200
     Amortization of deferred financing expense ................            515,567             817,794
     Amortization of deferred compensation expense .............             31,965              47,952
     Changes in operating assets and liabilities:
       Receivables .............................................             24,984              18,230
       Prepaid expenses, and other assets ......................              4,159              26,174
       Accounts payable ........................................            (21,158)           (112,929)
       Accrued interest on note payable to related party .......            208,804            (208,804)
       Accrued expenses for canceled relocation ................            391,042            (391,042)
       Deferred revenue ........................................                 --           1,498,871
       Accrued vacation and other accrued liabilities ..........            129,485              37,627
                                                                        -----------         -----------
     Net cash used in operating activities .....................         (3,756,897)         (2,855,881)
                                                                        -----------         -----------

Cash used in investing activities -
   acquisition of equipment ....................................            (74,084)           (241,074)
                                                                        -----------         -----------

Cash flows from financing activities:
   Proceeds from notes payable .................................          3,000,000                  --
   Proceeds from sale of common stock ..........................                 --           4,000,000
   Exercise of warrants ........................................                 --             135,250
   Exercise of stock options ...................................              4,861              75,616
                                                                        -----------         -----------
   Net cash provided by financing activities ...................          3,004,861           4,210,866
                                                                        -----------         -----------

Net increase (decrease) in cash and cash equivalents ...........           (827,120)          1,113,911
Cash and cash equivalents at beginning of period ...............          1,485,483             658,363
                                                                        -----------         -----------
Cash and cash equivalents at end of period .....................        $   658,363         $ 1,772,274
                                                                        ===========         ===========
Supplemental disclosure of non-cash financing items:
   Debts extinguished through the issuance of common stock and
     the exercise of warrants ..................................        $        --         $ 3,000,000
   Equipment received pursuant to a license and supply agreement        $        --         $    95,000
   Warrants issued in debt financing ...........................        $ 1,333,361         $        --
                                                                        ===========         ===========

Supplemental disclosure of cash flow information -
   cash payments made during the year for interest .............        $     2,785         $   433,956
                                                                        ===========         ===========
</TABLE>

                 See accompanying notes to financial statements.

                                      F-5

<PAGE>   33

                           EPOCH PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1999


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

         Epoch Pharmaceuticals, Inc. ("Epoch" or "the Company") is a developer
of proprietary products with commercial applications in the fields of genomics
and molecular diagnostics. Our activities are focused on the further development
and commercialization of its technologies.

Discontinued Operations

         In 1995, we sold our then existing diagnostics division and in 1996 we
sold the remaining diagnostic technologies (see note 7). Accordingly, amounts
related to the diagnostics division have been reported as discontinued
operations.

Equipment

         Equipment is stated at cost. Depreciation is provided on the
straight-line method over the assets' estimated useful lives, generally three to
five years.

Impairment of Long-Lived Assets

         For long-lived assets including equipment, we evaluate the carrying
value of the assets by comparing the estimated future cash flows generated from
the use of the assets and their eventual disposition with the assets' reported
net book value. The carrying value of assets are evaluated for impairment when
events or changes in circumstances occur which may indicate the carrying amount
of the asset may not be recoverable.

Revenue Recognition

         License fees are recognized over the term of the agreement to which the
license fees correspond.

         Research contract revenue is recognized as research and development
activities are performed under the terms of related agreements.

         Deferred revenue represents unrecognized license and technology fees,
prepaid royalties, and prepayments for product purchases related to a license
and supply agreement. License fees, technology fees, and prepayments for product
purchases and royalties are recognized over the term of the agreement.

         As a general policy, revenues are not recognized if amounts received
are refundable or if there are related future performance obligations.


                                      F-6


<PAGE>   34

Income Taxes

         Deferred income taxes are provided based on the estimated future tax
effects of carryforward and temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those carryforwards and temporary differences are expected to be recovered or
settled. The effect on the deferred tax assets and liabilities of a change in
tax rates is recognized in the period that includes the enactment date. A
valuation allowance is recorded for deferred tax assets when it is more likely
than not that such deferred tax assets will not be realized.

Stock-Based Compensation

         Epoch applies APB Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations in measuring compensation costs for its
employee stock option plans. We disclose proforma net income (loss) and net
income (loss) per share as if compensation cost had been determined consistent
with Statement of Financial Accounting Standard (FAS) No. 123, Accounting for
Stock-Based Compensation.

Net Loss Per Share

         Basic earnings (loss) per share (EPS) is computed based on weighted
average shares outstanding and excludes any potential dilution. Diluted EPS
reflects potential dilution from the exercise or conversion of securities into
common stock or from other contracts to issue common stock. Epoch's capital
structure includes stock options and stock warrants. The assumed conversion and
exercise of these securities has been excluded from diluted EPS as their effect
would be anti-dilutive.

Cash Equivalents

         All highly liquid investments with a maturity of three months or less
at the date of purchase are considered to be cash equivalents. Cash equivalents
total $1,757,698 and consist of money market accounts and treasury bills.

Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


                                      F-7
<PAGE>   35

(2) FINANCIAL INSTRUMENTS

         Epoch has financial instruments consisting of cash and cash
equivalents, receivables, and accounts payable. The fair value of these
financial instruments approximates their carrying amount based on their short
term nature.

(3) EQUIPMENT

         Equipment consists of the following:

         Machinery and equipment............................  $ 1,709,950
         Furniture and fixtures.............................      214,301
                                                              -----------
                                                              $ 1,924,251
         Less accumulated depreciation......................   (1,524,546)
                                                              -----------
         Equipment, net.....................................  $   399,705
                                                              ===========

(4) RETIREMENT SAVINGS PLAN

         Epoch has a profit sharing plan, which is qualified under Section
401(k) of the United States Internal Revenue Code. The plan allows eligible
employees to contribute up to 20% of their salary. The Company, at its
discretion, makes matching contributions to the plan. No matching contributions
were made to the plan in 1998 or 1999.

(5) EQUITY

Options to Purchase Common Stock

         Epoch has Incentive Stock Option Plans, a Nonqualified Stock Option
Plan and a Restricted Stock Purchase Plan pursuant to which 1,936,470 shares of
common stock have been reserved for grants. Under the plans, incentive stock
options must have an exercise price at least equal to the fair market value of
the common stock on the date of grant. Nonqualified stock options and rights to
purchase restricted stock must have an exercise price at least equal to 85% of
the fair market value of the common stock on the date of grant. The options are
generally issued with a ten year term and vest over a period of four years. At
December 31, 1999, the shares granted under these plans exceeded the number
reserved for grants by 51,127 shares, therefore those grants in excess of the
authorized amount are subject to shareholder approval at the next annual
meeting.

         Epoch also has a Non-Employee Directors Option Plan (the "Directors
Plan") under which each non-employee director was granted a fully-vested 10-year
option to purchase 10,000 shares of common stock at the inception of the plan in
1993. Upon each anniversary of the inception of the Directors Plan, each
non-employee director receives fully-vested 10-year options to purchase 5,000
shares of common stock at the then current fair market value. Non-employee
directors who subsequently join the board of directors receive, upon each
anniversary of joining the board of directors, fully-vested 10-year options to
purchase 5,000 shares of common stock at the current fair market value.


                                      F-8
<PAGE>   36

         A summary of the stock option plans follows.

<TABLE>
<CAPTION>
                                                      1998                            1999
                                           ---------------------------   ------------------------------
                                                      WEIGHTED-AVERAGE                 WEIGHTED-AVERAGE
                                           SHARES      EXERCISE PRICE     SHARES       EXERCISE PRICE
                                         ---------    ----------------   ---------     --------------
<S>                                      <C>               <C>           <C>               <C>
Outstanding at beginning of year         1,248,516         $2.00         1,242,316         $2.11
Granted                                     29,000          0.70           697,513          1.74
Exercised                                   (9,434)         0.52          (117,342)         0.64
Forfeited                                  (25,766)         0.65          (187,117)         0.73
                                        ----------         -----        ----------         -----
Outstanding at end of year               1,242,316         $2.11         1,635,370         $2.14
                                        ==========         =====        ==========         =====
Options exercisable at year end            911,413         $1.96           957,299         $2.48
</TABLE>

         The following table summarizes information about stock options at
December 31, 1999:

<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING                                      OPTIONS EXERCISABLE
                          ---------------------------------------------------------    -----------------------------------
                              NUMBER        WEIGHTED-AVERAGE                                  NUMBER
RANGE OF EXERCISE         OUTSTANDING AT    REMAINING YEARS        WEIGHTED AVERAGE       EXERCISABLE AT   WEIGHTED-AVERAGE
PRICES                       12/31/99       CONTRACTUAL LIFE        EXERCISE PRICE           12/31/99       EXERCISE PRICE
-------------------       --------------    ----------------       -----------------      --------------   ----------------
<S>                       <C>               <C>                    <C>                    <C>              <C>
0.30 - 0.50                   79,758              5.1                     $0.35                  71,215          $0.34
0.53 - 0.78                  348,724              6.4                      0.61                 322,334           0.61
0.87 - 1.31                  256,388              9.2                      1.26                  43,750           1.08
1.87 - 2.31                  460,500              9.3                      1.92                  30,000           1.99
3.87 - 4.50                  470,000              4.1                      4.11                 470,000           4.11
5.87 - 5.88                   20,000              3.8                      5.88                  20,000           5.88
                           ---------             ----                     -----                 -------          -----
0.30 - 5.88                1,635,370              6.9                     $2.14                 957,299          $2.48
                           =========             ====                     =====                 =======          =====
</TABLE>

Warrants to Purchase Common Stock

         As part of a debt financing in February 1998, Epoch issued a fully
vested five year warrant to purchase 2,000,000 shares of common stock at $.90
per share (see note 9). This warrant was exercised in November 1999.

         In June 1996, Epoch announced that it intended to exchange for every
two Redeemable Common Stock Purchase Warrants, which were issued in conjunction
with Epoch's public offering in September 1993 at $6.50 per share (the "Public
Warrants"), one new warrant to purchase one share of common stock until June 20,
2001, that is exercisable at $2.50 per share (the "Exchange Warrants"). In June
1997 this exchange of warrants was completed, with 2,603,825 of the Public
Warrants being exchanged for 1,301,912 of the Exchange Warrants. Each Exchange
Warrant is redeemable by us at any time after eighteen months from the date that
they were issued at $0.05 per warrant, provided that the closing trading price
per share of common stock is at least $3.75 for twenty consecutive trading days.
These warrants were called in February 2000. See note 11.

         In June 1996, Epoch completed a private placement of units, each unit
consisting of one share of common stock and one warrant to purchase 0.5 shares
of common stock. We sold a total of 5 million units, for an aggregate purchase
price of $5 million to institutional and accredited


                                      F-9

<PAGE>   37

individual investors. The term of the warrants is five years, and they are
exercisable at $2.50 per share ( or $1.25 per 0.5 shares). Each warrant is
redeemable at any time after eighteen months from the date that they were issued
at $0.05 per warrant, provided that the closing trading price per share of
common stock is at least $3.75 for twenty (20) consecutive trading days. These
warrants were called in February 2000. See note 11.

         A summary of our outstanding warrants follows.

<TABLE>
<CAPTION>
                                                           1998                                       1999
                                              ----------------------------------        ---------------------------------
                                                                       EXERCISE                                EXERCISE
                                                SHARES               PRICE RANGE          SHARES              PRICE RANGE
                                              -----------            -----------        -----------           -----------
<S>                                           <C>                    <C>                <C>                   <C>
Outstanding at beginning of year                6,705,771            $0.30-10.40          7,798,875            $0.30-9.21
Granted                                         2,300,000             0.75- 0.90                 --                    --
Exercised                                              --               --    --         (2,360,841)            0.30-2.50
Expired                                        (1,206,896)            3.00-10.40             (3,124)                 9.21
                                              -----------            -----------         ----------            ----------
Outstanding at end of year                      7,798,875              0.30-9.21          5,434,910             0.50-2.50
                                              ===========             ==========         ==========            ==========
Warrants exercisable at year end                7,521,780             $0.30-2.50          5,330,044             0.50-2.50
Weighted average value of
exercisable warrants                                                       $1.65                                    $1.99
</TABLE>

         The outstanding warrants are fully vested at December 31, 1999 with the
exception of 104,866 warrants issued to a consultant which are vesting at a rate
of 6,597 warrant shares per month. All outstanding warrants will be fully vested
in 2002. The warrants have expiration dates that range to 2003.


                                      F-10

<PAGE>   38

Stock Based Compensation

         Had compensation cost for stock options and warrants issued to
employees been determined consistent with FAS No. 123, Epoch's net loss and loss
per share would have been increased to the pro forma amounts shown in the table
below. The fair value of each stock option and warrant grant is estimated on the
date of grant using the Black Scholes option-pricing model and the weighted
average assumptions listed below.

<TABLE>
<CAPTION>
                                                                 1998               1999
                                                              ------------      -----------
<S>                                           <C>             <C>               <C>
Loss from continuing operations               As reported     $(5,213,009)      $(4,769,954)
                                              Pro forma       $(5,443,207)      $(5,320,568)

Loss per share from continuing operations     As reported     $     (0.35)      $     (0.31)
                                              Pro forma       $     (0.37)      $     (0.34)

Net loss                                      As reported     $(5,103,009)      $(4,699,954)
                                              Pro forma       $(5,333,207)      $(5,250,568)

Net loss per share - basic and diluted        As reported     $     (0.34)      $     (0.30)
                                              Pro forma       $     (0.36)      $     (0.34)

Dividend yield                                                        0.0%              0.0%

Expected volatility                                                   123%              108%

Risk free interest rate                                              5.33%             5.59%

Expected life                                                    10 years           10 years
</TABLE>

(6) INCOME TAXES

         There was no income tax benefit attributable to net losses for 1998 and
1999. The difference between taxes computed by applying the U.S. Federal
corporate tax rate of 34% and the actual income tax provision in 1998 and 1999
is primarily the result of limitations on utilizing net operating losses.


                                      F-11

<PAGE>   39

         The tax effects of temporary differences and carryforwards that give
rise to significant portions of the deferred tax assets at December 31, 1999 are
presented below:

         Net operating loss carryforwards.......................   $ 15,898,739
         Research and development credit carryforwards..........      1,858,506
         Capitalized research and development...................      2,672,212
         Bad debt write-off ....................................      1,117,270
         Other .................................................        453,790
                                                                   ------------
         Total gross deferred tax assets........................     20,000,517
         Less deferred tax asset valuation allowance............    (20,000,517)
                                                                   ------------
         Net deferred tax assets................................   $         --
                                                                   =============

         The net change in the valuation allowance for 1998 and 1999 was an
increase of approximately $1,903,000 and $1,675,298 respectively, due primarily
to the inability to utilize net operating losses and research and development
credits.

         At December 31, 1999, Epoch had net operating loss carryforwards for
income tax purposes of approximately $46,761,000 and unused research and
development tax credits of approximately $1,859,000 available to offset future
taxable income and income taxes, respectively, expiring through 2019. Epoch's
ability to utilize net operating loss and credit carryforwards is limited
pursuant to the Tax Reform Act of 1986, due to cumulative changes in stock
ownership in excess of 50%.

(7) DISCONTINUED OPERATIONS

         In 1996, Epoch disposed of the remaining assets of its discontinued
diagnostics division receiving a $1,100,000 note. Collections on the note have
been sporadic and, due to uncertainties regarding ultimate collectibility, Epoch
has not recognized the receivable and recognizes only that portion of the gain
for which cash payments are received. At December 31, 1999, the unrecognized
balance on the note and the unrecognized gain was $979,000.

(8) RESEARCH GRANTS AND CONTRACTS

         Epoch earned approximately $160,000 and $109,000 of these funds in 1998
and 1999, respectively. At December 31, 1999, we did not have any active
research contracts.

(9) NOTE PAYABLE

         In February 1998, Bay City Capital LLC, ("Bay City Capital"), San
Francisco, California, loaned $3,000,000 to Epoch from Bay City Capital Fund I
LP ("BCC Fund I") as a bridge to the earlier of a public rights offering, other
financing, or February 25, 2000. The loan accrued interest at 8% per annum. In
partial consideration for the bridge loan and BCC Fund I's agreement to purchase
excess shares, if any, in a rights offering, BCC Fund I received a fully vested
five year warrant to purchase 2,000,000 shares of Epoch's Common Stock at a
price of $0.90 per share.


                                      F-12


<PAGE>   40

         In November 1999 Bay City Capital converted $1.2 million of this $3.0
million loan into 480,000 shares of Epoch's common stock at $2.50 per share and
Bay City Capital applied the remaining $1.8 million of its $3.0 million loan to
the purchase of 2 million shares of Epoch's common stock at $0.90 per share
pursuant to the warrant. Accrued interest on the note in the amount of $431,000
was paid in conjunction with the repayment.

         Bay City Capital, which manages BCC Fund I, is a merchant banking
partnership that was formed by The Craves Group and The Pritzker Family business
interests. The founding partner of The Craves Group, Fred Craves, Ph.D., is the
Chairman of Epoch. Sanford S. Zweifach, Epoch's President and Chief Financial
Officer, is also a Managing Director and Chief Financial Officer of Bay City
Capital.

         Epoch recorded additional paid-in capital and deferred financing
expense of approximately $1,333,000 in connection with the issuance of this
warrant in 1998. This deferred financing expense was being amortized over the
two year term of the note. Deferred financing expense recognized in 1998 was
approximately $516,000. Deferred financing expense in 1999 was $818,000. All
unamortized deferred financing expenses were expensed in November 1999 when the
Note was converted to equity.

(10) LEASES

         During 1999 we leased our facility in Redmond, Washington under a short
term operating lease which expires in April 2000 but continues thereafter on a
monthly basis with a four month notification of termination by the landlord or
Epoch.

         In February of 2000, we entered into a 12 year non-cancelable operating
lease for 25,000 square feet in Bothell, Washington, which we intend to occupy
in November of 2000. Future minimum payments under non-cancelable operating
leases, including the new lease in Bothell, are as follows:

               YEAR ENDING
               DECEMBER 31,
         ---------------------------------------------------
                   2000                        $    327,578
                   2001                             584,056
                   2002                             604,501
                   2003                             625,655
                   2004                             647,553
                Thereafter                        6,066,590
         ---------------------------------------------------
                                               $  8,855,933
                                              ==============

         Rental expense is recognized on the straight-line basis over the term
of the leases. Rent expense on operating leases was $283,000 in 1998 and
$224,000 in 1999.

(11) SUBSEQUENT EVENTS

         In February 2000, Epoch completed a private equity financing in which
the Company issued 1,428,577 shares of common stock in return for $10 million.

         In February 2000, Epoch exercised the redemption provision on
outstanding warrants at December 31, 1999, which were issued in a private
placement in 1996 and a warrant exchange in


                                      F-13

<PAGE>   41

1997, representing 3,801,812 shares of common stock. As a result of the exercise
of warrants, Epoch anticipates receiving $9.5 million in additional capital by
March 31, the redemption date. As of March 14, 2000, $6.5 million of these funds
had been received.

         In March 2000, Epoch applied for listing on The Nasdaq Stock Market(R).
The Nasdaq Stock Market informed Epoch the application would take approximately
six to eight weeks to process.



                                      F-14

<PAGE>   42

POWER OF ATTORNEY

         Each person whose signature appears below hereby authorizes Fred Craves
and/or Sanford Zweifach, as attorney-in-fact, to sign in his behalf and in each
capacity stated below, and to file, all amendments and/or supplements to this
Annual Report on Form 10-KSB.


SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: March 29, 2000                      EPOCH PHARMACEUTICALS, INC.
                                           (Registrant)

                                           By: /s/ Sanford S. Zweifach
                                               ---------------------------------
                                               Sanford S. Zweifach
                                               President/Chief Financial Officer

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons of the registrant in the capacities
and on the dates indicated.

<TABLE>
<CAPTION>

Signature                                Title                                                 Date
---------                                -----                                                 ----
<S>                                      <C>                                              <C>
   /s/ Frederick B. Craves               Chairman of the Board of Directors               March 29, 2000
-----------------------------------
Frederick B. Craves, Ph.D.


  /s/ William G. Gerber                  Chief Executive Officer                          March 29, 2000
-----------------------------------      and Director
William G. Gerber, M.D.


/s/ Sanford S. Zweifach                  President/Chief Financial Officer (Chief         March 29, 2000
-----------------------------------      Accounting Officer), and Director
Sanford S. Zweifach


  /s/ Richard L. Dunning                 Director                                         March 29, 2000
-----------------------------------
Richard L. Dunning
</TABLE>


                                      F-15

<PAGE>   43

<TABLE>

<S>                                      <C>                                              <C>
/s/ Herbert L. Heyneker                  Director                                         March 29, 2000
-------------------------------------
Herbert L. Heyneker, Ph.D.


 /s/ Kenneth L. Melmon                   Director                                         March 29, 2000
-------------------------------------
Kenneth L. Melmon, M.D.


 /s/ Riccardo Pigliucci                  Director                                         March 29, 2000
-------------------------------------
Riccardo Pigliucci
</TABLE>


                                      F-16

<PAGE>   44

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>

  EXHIBIT NO.    DESCRIPTION
  -----------    -----------
<S>              <C>
    3.1          Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3 of
                 the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998).

    3.2*         Bylaws of the Registrant, as currently in effect.

    5.0          Opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Counsel to the
                 Registrant (incorporated by reference to the same numbered exhibit to the Company's
                 Registration Statement on Form SB-2, No. 333-21353, filed February 7, 1997).

    10.1*        MicroProbe Corporation Incentive Stock Option, Nonqualified Stock Option And Restricted Stock
                 Purchase Plan--1991, as amended.

    10.2*        Form of Indemnification Agreement entered into with officers and directors of the Registrant.

    10.3         Letter Agreement between the Registrant and Fred Craves, dated August 3, 1993 (incorporated
                 by reference to Exhibit 10.12 of the Registrant's Registration Statement on Form SB-2,
                 Registration No. 33-66742, effective on September 29, 1993).

    10.4         Form of Common Stock Warrant issued December 31, 1991 (incorporated by reference to Exhibit
                 10.22 of the Registrant's Registration Statement on Form SB-2, Registration No. 33-66742,
                 effective on September 29, 1993).

    10.5         Second Amended and Restated Investment Agreement, dated April 28, 1992 among the Registrant
                 and certain investors (incorporated by reference to Exhibit 10.25 of the Registrant's
                 Registration Statement on Form SB-2, Registration No. 33-66742, effective on September 29,
                 1993).

    10.6         Common Stock and Warrant Purchase Agreement, dated April 28, 1992 as amended June 30, 1992
                 and July 31, 1992 (with form of warrant) among the Registrant and certain investors
                 (incorporated by reference to Exhibit 10.26 of the Registrant's Registration Statement on
                 Form SB-2, Registration No. 33-66742, effective on September 29, 1993).

    10.7         Form of Registration Agreement, dated February 12, 1993 among the Registrant and certain
                 investors (incorporated by reference to Exhibit 10.30 of the Registrant's Registration
                 Statement on Form SB-2, Registration No. 33-66742, effective on September 29, 1993).

    10.8         MicroProbe Corporation Incentive Stock Option, Nonqualified Stock Option and Restricted Stock
                 Purchase Plan--1993 (incorporated by reference to Exhibit 10.39 of the Registrant's
                 Registration Statement on Form SB-2, Registration No. 33-66742, effective on September 29,
                 1993).

    10.9         MicroProbe Corporation Non-Employee Directors Stock Option Plan (incorporated by reference to
                 Exhibit 10.40 of the Registrant's Registration Statement on Form SB-2, Registration No.
                 33-66742, effective on September 29, 1993).

    10.10*       Warrant Agreement between the Registrant and American Stock Transfer & Trust Company dated
                 April 29, 1997, (incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report
                 on 10-KSB for the year ended December 31, 1998).

    10.11        Purchase Agreement dated as of November 30, 1993, by and among the Registrant, Animal
                 Biotechnology Cambridge Limited, and Herbert Stradler (without exhibits) (incorporated by
                 reference to Exhibit 10.47 of the Registrant's Registration Statement on Form SB-2,
                 Registration No. 33-76446, effective on July 7, 1994).

    10.11.1      Amendment dated April 1, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.1
                 of the Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1993).

    10.11.2      Amendment dated April 27, 1994 to Put Agreement (incorporated by reference to the
                 Registrant's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1994).

    10.11.3      Amendment dated May 26, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.3
                 of the Registrant's Registration Statement on Form SB-2, Registration No. 33-76446, effective
                 on July 7, 1994).

    10.11.4      Amendment dated June 30, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.4
                 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1994).

    10.11.5      Amendment dated July 27, 1994 to Put Agreement (incorporated by reference to Exhibit 10.48.5
                 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1994).

    10.11.6      Amendment dated August 15, 1994 to Put Agreement (incorporated by reference to Exhibit
                 10.48.6 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September
                 30, 1994).
</TABLE>

<PAGE>   45

<TABLE>
<CAPTION>

  EXHIBIT NO.    DESCRIPTION
  -----------    -----------
<S>              <C>

    10.11.7      Amendment dated August 30, 1994 to Put Agreement (incorporated by reference to Exhibit
                 10.48.7 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September
                 30, 1994).

    10.11.8      Amendment dated September 14, 1994 to Put Agreement (incorporated by reference to Exhibit
                 10.48.8 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September
                 30, 1994).

    10.11.9      Exercise Notice dated September 27, 1994 to Put Agreement (incorporated by reference to
                 Exhibit 10.48.9 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended
                 September 30, 1994).

    10.12        Put Agreement relating to Ribonetics GmbH dated as of December 1, 1993 between the Registrant
                 and David Blech, as amended December 3, 1993 and February 18, 1994 (incorporated by reference
                 to Exhibit 10.48 of the Registrant's Annual Report on Form 10-KSB for the year ended December
                 31, 1993).

    10.13        Registration Rights Agreement dated October 12, 1994 (incorporated by reference to Exhibit
                 10.57 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30,
                 1994).

    10.14        Consulting Agreement between the Registrant and Sanford S. Zweifach, dated January 18, 1995
                 (incorporated by reference to Exhibit 10.59 of the Registrant's Annual Report on Form 10-KSB
                 for the year ended December 31, 1995).

    10.15        Asset Purchase Agreement between the Registrant and Becton, Dickinson and Company, dated as
                 of September 29, 1995 (incorporated by reference to the form of such Asset Purchase Agreement
                 filed with the Registrant's Definitive Proxy Materials for its Special Meeting of
                 Stockholders held November 27, 1995).

    10.16        Consulting Agreement with David Blech dated March 29, 1996 (incorporated by reference to
                 Exhibit 10.65 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June
                 30, 1996).

    10.17        Form of Subscription Agreement with Private Placement Investors (incorporated by reference to
                 Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-QSB for the quarter ended June
                 30, 1996).

    10.18        Warrant Agreement between the Registrant and American Stock Transfer and Trust Company dated
                 June 21, 1996, with form of Warrant (incorporated by reference to Exhibit 4.2 of the
                 Registrant's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1996).

    10.19        Bridge Financing Agreement dated as of February 25, 1998, with form of note and warrant,
                 between the Registrant and Bay City Capital, LLC (incorporated by reference to Exhibit 10.69
                 of the Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1997).

    10.20*       Sublease between the Registrant as Tenant and Bion Diagnostic Sciences, Inc. for premises
                 located in Redmond, Washington, dated September 25, 1998 (incorporated by reference to
                 Exhibit 10.20 of Registrant's Annual Report on 10-KSB for the year ended December 31, 1998).

    10.21*       License Agreement between the Registrant and Perkin-Elmer Corporation dated January 11, 1999
                 (portions of this Exhibit are omitted and were filed separately with the Secretary of the SEC
                 pursuant to the Registrant's application requesting confidential treatment under Rule 406 of
                 the Securities Act) (incorporated by reference to Exhibit 10.21 of Registrant's Annual Report
                 on Form 10-KSB for the year ended December 31, 1998).

    10.21.1      First Amendment to the License and Supply Agreement between the Registrant and Perkin-Elmer
                 Corporation dated January 11, 1999. (Portions of this Exhibit are omitted and were filed
                 separately with the Secretary of the SEC pursuant to the Registrant's application requesting
                 confidential treatment under Rule 406 of the Securities Act.) Incorporated by reference to
                 exhibit 10.21.1 of the Registrant's Registration Statement on Form SB-2, No. 333-88909, filed
                 on October 13, 1999.

    10.22        Stock Purchase Agreement dated November 1, 1999 by and between Epoch Pharmaceuticals, Inc.
                 and the purchasers set forth therein.

    10.23        Stock Purchase Agreement dated February 14, 2000 by and between Epoch Pharmaceuticals and the
                 purchasers set forth therein.

    23.2         Consent of Stradling Yocca Carlson & Rauth, a Professional Corporation (included in the
                 Opinion filed as Exhibit 5.0).

    23.1         Consent of KPMG LLP.

    25.0         Power of Attorney (included on the signature page).

    27.0         Financial Data Schedules (incorporated by reference to Exhibit 27 of Registrant's Quarterly
                 Report on Form 10-QSB for the quarter ended March 31, 1999).
</TABLE>


*   Incorporated by reference to the same numbered exhibit of the Registrant's
    Registration Statement on Form SB-2, No. 33-66742, effective on September
    29, 1993.