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                                                                   EXHIBIT 10.29

                              EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 7th day of January, 2002, by and between EPOCH BIOSCIENCES, INC., a
Delaware corporation (the "Employer"), and Dr. Walter Mahoney, an individual
(the "Employee").

                                   WITNESSETH:

        WHEREAS Employer desires to employ Employee in the capacity hereinafter
stated, and the Employee desires to enter into the employ of the Employer in
that capacity for the period and pursuant to the terms and conditions set forth
herein.

        NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the Employer and the Employee,
intending to be legally bound, hereby agree as follows:

        1. EMPLOYMENT/POSITION AND DUTIES. Effective upon the date of this
Agreement Employer shall employ Employee as the Senior Vice President of
Research and Development of Employer and Employee shall accept such employment.
During the term of this Agreement, Employee agrees to devote substantially all
of Employee's skills and efforts to the performance of, and to perform
diligently and on a timely basis, such duties as shall be assigned to Employee
from time to time by the Employer's Chief Executive Officer. Employee shall
perform his duties principally at Employer's headquarters in Bothell,
Washington.

        2. TERM. The term of the Employee's employment hereunder shall commence
on the date hereof. The Employer is an at-will employer, and does not guarantee
employment for any specific duration. Employee's employment can be terminated at
any time by Employer or the Employee, as hereinafter specified in Section 4.

        3. COMPENSATION.

                3.1 Base Salary. As compensation for all services to be rendered
by the Employee, the Employee shall accrue a base salary at the rate of Two
Hundred Fifty Thousand Dollars ($250,000) per year, which shall be payable by
Employer to Employee on a regular basis in accordance with Employer's normal
payroll procedures and policies. Such amount, as may be increased from time to
time, is hereinafter "Base Salary."

                3.2 Bonus Compensation. During the Term of this Agreement
Employee shall be eligible to receive annual incentive compensation of up to
thirty percent (30%) of Employee's Base Salary upon the achievement of certain
performance goals set by the Board of Directors and participate in any other
incentive compensation or bonus program adopted for management employees of the
Employer. The terms on which Employee shall be eligible to participate in any
such incentive compensation or bonus program shall be comparable to the terms
that shall apply to other management employees of the Employer or its
subsidiaries that are employed in positions that are comparable to the position
in which Employee is employed by the Employer. Employee understands that
adoption of any management incentive compensation or bonus program by the
Employer requires the prior approval of the Board of Directors of the Employer.
Employee's


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participation in any such program that is approved by the Board of Directors of
the Employer shall be subject to the provisions, rules and regulations of any
such program.

                3.3 Stock Option. Concurrent herewith, Employer shall grant
Employee a stock option to purchase One Hundred Fifty Thousand (150,000) shares
of Employer's Common Stock (the "Employee Options") pursuant to the terms and
conditions of that certain Stock Option Agreement of even date herewith, at the
exercise price set forth in such Stock Option Agreement (which shall be the
closing price of Employer's Common Stock on the date hereof), which shall vest
according to the Employer's standard vesting program and schedule as determined
by the Employer's Board of Directors. Such options shall be incentive stock
options under the Internal Revenue Code to the maximum extent possible and the
balance shall be non-qualified stock options.

                3.4 Participation in Benefit Plans. The Employee shall be
entitled to participate in all employee benefit plans or programs (including
vacation time, sick leave and holidays) generally available to all employees of
the Employer, to the extent that Employee's position, title, tenure, salary,
age, health and other qualifications make Employee eligible to participate
therein. The Employee's participation in any such plan or program shall be
subject to the provisions, rules and regulations thereof that are generally
applicable to all participants therein.

                3.5 Expenses. In accordance with the Employer's policies
established from time to time, the Employer will pay or reimburse the Employee
for all reasonable and necessary out-of-pocket expenses incurred by Employee in
the performance of Employee's duties under this Agreement, subject to the
presentment of appropriate documentation confirming the amount and nature and
the business purposes of such expenses.

        4. TERMINATION AND COMPENSATION UPON THE TERMINATION OF THE EMPLOYEE'S
EMPLOYMENT BY THE EMPLOYER. In the event of a termination of Employee's
employment with the Employer in accordance with the provisions hereof, this
Agreement shall also terminate concurrently therewith.

                4.1 Termination Without Cause. The Employer may terminate
Employee's employment at any time during the Term of this Agreement without
Cause (as hereinafter defined), for any reason or no reason, including
Employee's death or total disability (as hereinafter defined). A termination
without Cause shall be effective upon thirty (30) days prior written notice to
Employee, except that such termination shall be effective immediately and
without the necessity of any notice in the case of Employee's death and on
delivery of written notice of termination to Employee in the case of Employee's
total disability (as hereinafter defined) (the "Employment Termination Date").
In the event of any such termination, the Employer's sole obligation and
liability to Employee shall be as follows:

                        (a) To pay to Employee (or in the case of death, to his
estate) the portion of his Base Salary and vacation and sick time that, as of
the Termination Date, had accrued for services rendered up to, but was unpaid as
of, such Employment Termination Date;

                        (b) The amount of any bonus or incentive compensation
that had become Vested (as hereinafter defined) prior to the Employment
Termination Date. If (A) a bonus had been awarded to Employee prior to the
Employment Termination Date (a "Bonus Award"), under any management incentive or
bonus program described in Paragraph 3.2 above in which Employee was a
participant at or prior to the Employment Termination Date, and (B) any
conditions precedent (such



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as those described below) to Employee's right to receive the payment of such
Bonus Award had been satisfied or had been waived, in writing, by the Employer
prior to such Employment Termination Date, then, the unpaid portion of such
Bonus Award that had become payable prior to the Employment Termination Date as
a result of the satisfaction or waiver of any such conditions precedent shall be
deemed to have become vested ("Vested") and shall be paid to Employee (or
Employee's estate, in the case of Employee's death) in the manner and times
provided below. By way of example, conditions precedent to the payment of a
Bonus Award may include, but shall not be limited to, any requirement that
Employee shall have remained in the Employer's employ continuously to a specific
date, or that specified operating results shall have been achieved, or specified
performance goals shall have been satisfied by the Employer, or the Employee (as
the case may be).

                        (c) In the event of a termination by Employer without
Cause for reasons other than death or disability, Employer shall pay to the
Employee a severance compensation amount equal to twelve (12) months of
Employee's monthly Base Salary which shall be payable in the manner and times
provided below.

                        (d) In the event of a termination by Employer without
Cause for reasons other than death or disability, or termination by Employee for
Good Reason (as hereinafter defined, and provided that Employee follows the
procedures set forth in Section 4.3 hereof), provided that such termination
without Cause or for Good Reason is within twelve (12) months of a Change in
Control (as hereinafter defined):

                                (i) instead of the payment set forth in
subsection (c) hereof, Employer shall pay Employee severance compensation in an
amount equal to the portion of Base Salary that would have been payable to
Employee during the next twelve (12) months following such termination based
upon Employee's monthly Base Salary prior to the Change in Control, which shall
be payable in the manner and times provided below; and

                                (ii) all stock options then held by Employee
shall accelerate and become fully vested and exercisable.

                The compensation set forth in subsection (c) above, or if
applicable, subsection (d)(i) and (d)(ii) above are hereinafter referred to as
the "Severance Compensation".

                        (e) For the purposes of this Agreement, a "Change in
Control" shall mean (i) the acquisition, directly or indirectly, by any person
or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended), other than beneficial or record owners of Employer's
securities who acquired such ownership on or prior to the date hereof, of the
beneficial ownership of securities of Employer possessing more than fifty
percent (50%) of the total combined voting power of all outstanding securities
of Employer; (ii) a merger or consolidation in which Employer is not the
surviving entity, except for a transaction in which the holders of the
outstanding voting securities of Employer immediately prior to such merger or
consolidation hold, in the aggregate, securities possessing more than fifty
percent (50%) of the total combined voting power of all outstanding voting
securities of the surviving entity immediately after such merger or
consolidation; (iii) a reverse merger in which Employer is the surviving entity
but in which securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of Employer are
transferred to or acquired by a person or persons different from the persons
holding those securities immediately prior to such merger; (iv) the sale,
transfer or other



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disposition (in one transaction or a series of related transactions) of all or
substantially all of the assets of Employer; or (v) approval by the stockholders
of a plan or proposal for the liquidation or dissolution of Employer.

                        (f) For the purposes of this Agreement, "Good Reason"
shall mean the assignment of Employee to a position within Employer, upon or
within twelve (12) months following a Change in Control, which (i) is not
equivalent in all material respects with the Employee's position with Employer
prior to such Change in Control (taking into account the relative size of
Employer prior to such Change in Control and the size of the acquiring entity,
and other than actions that are not taken in bad faith and are remedied by
Employer within five (5) business days after receipt of notice thereof from the
Employee) or (ii) results any reduction in the Employee's Base Salary.
Notwithstanding the foregoing, in the event the Board of Directors reassigns
Employee to another senior executive officer position with Employer, such
reassignment shall not constitute "Good Reason" hereunder.

                        (g) All payments required to be made by the Employer to
the Employee pursuant to this Subsection 4.1, including, without limitation, any
Severance Compensation and any incentive or bonus compensation, shall be paid in
a single lump sum, promptly after a termination giving rise to such payments

                        (h) For purposes of this Subsection 4.1, the term
"totally disabled" or "total disability" shall mean an inability of Employee,
due to a physical or mental illness, injury or impairment, to perform the
essential functions of his position even with reasonable accommodation as
required by law, for a period of 120 consecutive days, or for non-consecutive
periods aggregating more than 180 days in any period of 12 consecutive months,
as determined by a medical physician mutually selected by the Employee (or his
guardian) and the Employer; provided, however, that if the two parties cannot
agree on a physician, then each party shall select a physician and the two
physicians shall select a third physician who will make the determination.

                4.2 Termination for Cause. The Employer may terminate Employee's
employment at any time for "Cause" (as hereinafter defined), effective
immediately upon written notice to Employee. As used herein, the term "Cause"
shall mean Employee's:

                        (a) commission of a material breach of this Agreement or
of Employee's duty of loyalty to the Employer, including, but not limited to, a
breach of any of Employee's obligations under any of Sections 5, 6, 7 or 8
hereof;

                        (b) commission of an act that, under applicable law or
government regulations, could be held to constitute the commission of a felony,
or a misdemeanor involving moral turpitude, or could subject the Employer to
civil or criminal penalties or fines;

                        (c) commission of an act that, in the sole judgment of
the Board of Directors of the Employer could adversely affect, or has adversely
affected, the reputation of the Employer, or the relationship of the Employer
with any federal, state or local government agency or any client of the
Employer, the loss of which could reasonably be expected to materially affect
the Employer or its business;

                        (d) refusal or failure to perform any of Employee's
material duties to the reasonable satisfaction of the Board of Directors of the
Employer.



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                Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for cause without (i) reasonable notice to Employee setting
forth the reason for Employer's intention to terminate for cause, and (ii)
reasonable opportunity for Employee to cure.

        If Employee's employment is terminated for Cause, the Employee shall not
be entitled to any compensation (including any Severance Compensation), nor
shall the Employer have any obligation to pay any sum or have any liability to
Employee, whether as compensation for Employee's services or as a result of such
termination of employment, other than the unpaid portion of Employee's Base
Salary and vacation and sick time that have accrued for services rendered by
Employee to the Employer through the effective date of such termination for
Cause. All payments required to be made by the Employer to the Employee pursuant
to this Subsection 4.2 shall be paid in such installments in which such
compensation would otherwise have been paid to Employee had there been no such
termination of employment and in accordance with the Employer's normal payroll
procedures and policies.

                4.3 Termination by Employee for Employer Breach. In the event of
a breach by the Employer of any of its material obligations to Employee under
this Agreement, then Employee shall be entitled (i) to give a written default
notice to the Employer identifying, in reasonable detail, the nature of such
breach and stating that Employee intends to terminate this Agreement and
Employee's employment with the Employer if such breach is not cured within the
succeeding thirty (30) days (the "Cure Period") and (ii) if the Employer fails
to cure such breach in all material respects within the Cure Period, to
terminate Employee's employment with the Employer by a written termination
notice delivered to the Employer no later than the 15th day after the end of
such Cure Period. In the event of any such breach by the Employer and the
termination by Employee of Employee's employment pursuant to this Subsection
4.3, the Employer's sole liability and obligation to Employee shall be to pay to
Employee the same compensation, on the same payment schedule, that applies to a
termination of Employee's employment without Cause, as provided in Subsection
4.1(a), 4.1(b) and 4.1(c) hereof and, in the event that such breach occurs upon
or within twelve (12) months following a Change in Control, then Section 4.1(d)
hereof in lieu of Section 4.1(c) hereof. If Employee fails to exercise
Employee's right of termination hereunder within the 15 day period specified
above, then, notwithstanding anything to the contrary contained herein, the
Employer's breach and its failure to cure such breach shall be deemed to have
been waived by Employee, Employee's employment shall continue hereunder and
Employee shall not be entitled to terminate this Agreement or Employee's
employment or to receive any amounts or other payments from the Employer by
reason of such breach and failure to cure on the part of the Employer.



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        5. VENTURES AND ACQUISITIONS. If, during the term of this Agreement,
Employee is engaged in or associated with the planning or implementing of any
project, program or venture involving the Employer and a third party or parties
(a "Venture"), or any discussions, analyses or negotiations with respect to an
investment in, merger, acquisition or purchase, directly or indirectly, of the
stock, assets or business of any entity (an "Acquisition"), all rights in the
Venture and the Acquisition and any opportunity to make any investment in the
entity to be so acquired (the "Target") shall belong to the Employer and shall
constitute a corporate opportunity belonging exclusively to the Employer. Except
as approved by the Employer's Board of Directors, the Employee shall not be
entitled to any interest in any such Venture or to invest or solicit any third
party to invest in the Target or consummate the Acquisition, or to receive any
commission, finder's fee or other compensation in connection therewith other
than the salary to be paid to Employee as provided in this Agreement.

        6. CONFIDENTIAL INFORMATION. At all times during and after the Term of
this Agreement, Employee will hold in strict confidence and, without the express
prior written authorization of the Employer's Board of Directors, Employee shall
not disclose to any person or entity, any financial or marketing data of the
Employer (including, without limitation, financial statements of the Employer),
or any technique, process, formula, developmental or experimental work, work in
progress, business methods, business or marketing plans or trade secrets of or
used in the business of the Employer, or any other proprietary or confidential
information relating to the Employer or the services, business affairs of the
Employer, including, without limitation, any information relating to inquiries
made by the Employer or negotiations with respect to any Venture or Acquisition,
as such terms are defined in Section 5 above (collectively, the "Confidential
Information"). Employee agrees that Employee will not make use of any of the
Confidential Information during the Term of this Agreement other than for the
exclusive benefit of the Employer and that Employee shall not make any use
whatsoever of the Confidential Information at any time after termination of
Employee's employment with the Employer. Upon termination of such employment,
Employee shall deliver to the Employer (i) all documents, records, notebooks,
work papers and all similar repositories containing any Confidential Information
or any other information concerning the Employer, whether prepared by Employee,
the Employer or anyone else and (ii) all tangible personal property belonging to
the Employer that is in Employee's possession. The foregoing restrictions shall
not apply to (a) information which is or becomes, other than as a result of a
breach of this Agreement, generally available to the public, (b) information
related to the terms of Employee's compensation or benefits as an employee of
the Employer, or (c) the disclosure of information required pursuant to a
subpoena or other legal process; provided that the Employee shall notify the
Employer, in writing, of the receipt of any such subpoena or other legal process
requiring such disclosure immediately after receipt thereof and the Employee
shall assist the Employer in any efforts it may undertake to quash such subpoena
or other legal process or obtain an appropriate protective order prior to any
such disclosure by the Employee.

        7. COVENANTS AGAINST ACTIONS DAMAGING THE EMPLOYER. The Employee agrees
that Employee will not, during Employee's employment by the Employer hereunder,
and for a period of two (2) years following the termination of such employment
(whether by the Employer or by Employee and regardless of the reason for such
termination), (i) make any claim that the Employee has any right, interest or
title, of any kind or nature whatsoever, in or to any proprietary products,
services methods, practices, processes, discoveries, ideas, improvements,
devices, creations, business or marketing plans or systems, or, subject to
applicable labor laws, inventions relating to the business of the Employer, or
(ii) for Employee or on behalf of or in



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conjunction with any third party, hire any employee of the Employer or induce or
entice any employee of the Employer to leave his or her employment with the
Employer.

        8. NON-COMPETITION. Employee agrees that, during the term of Employee's
employment with the Employer, Employee will not engage or participate, in any
capacity (whether as an owner, shareholder, partner, lender, director, officer,
employee or independent contractor or consultant or advisor) in, or provide any
services (financial, advisory or other) to, any Person or business (including
any sole proprietorship, partnership, limited liability company, corporation,
unincorporated association or other entity) that develops proprietary
chemistries and reagents with commercial applications in the genomics and
molecular diagnostic fields. Nothing herein shall prevent Employee from holding,
for investment purposes only, no more than five (5) percent of any class of
equity securities of a company engaged in activities that are the same as,
substantially similar to, or competitive with the Employer if such class of
equity securities is traded on a national securities exchange or on the Nasdaq
National Market.

        9. OTHER EMPLOYEE AGREEMENTS. Employee agrees to execute and deliver all
other agreements customarily entered into by Employer with its executive level
employees, including, without limitation, proprietary rights and invention
assignments.

        10. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Employer may, without the consent of the Employee, assign its rights
and delegate its obligations under this Agreement to an Affiliate; or to any
unaffiliated corporation, firm or other business entity (i) with or into which
the Employer may merge or consolidate, or (ii) to which the Employer may sell or
transfer all or substantially all of its assets. After any such assignment by
the Employer, the Employer shall be discharged from all further liability
hereunder and such assignee shall thereafter be deemed to be the Employer for
the purposes of all provisions of this Agreement including this Section 10.

        11. SURVIVAL; REMEDIES.

                11.1 Survival. Any payment obligations of the Employer to
Employee that arise under Section 4 by reason of a termination of Employee's
employment in accordance with Section 4 hereof shall survive any such
termination until such obligations have been satisfied and Sections 5, 6, 7, and
8 of this Agreement shall survive the expiration of the Term of this Agreement
and any termination of Employee's employment with the Employer.

                11.2 Remedies. Employee acknowledges and agrees that Employee's
covenants and the restrictions on Employee contained in the foregoing Sections
5, 6, 7, and 8 of this Agreement are reasonable and necessary in order to
protect the legitimate interests of the Employer, and that any violation thereof
by Employee would result in irreparable injuries to the Employer. Therefore,
Employee acknowledges and agrees that, in the event of a violation by Employee
of any of those covenants or any of those restrictions the Employer shall be
entitled to obtain, from any court of competent jurisdiction, temporary,
preliminary and permanent injunctive relief to prevent a threatened breach or to
obtain a halt to an actual breach by Employee of any of Employee's covenants
contained in any of Sections 5, 6, 7, and 8 of this Agreement, in addition to
any other rights or remedies to which the Employer may be entitled at law or in
equity by reason of any such breach or threatened breach of this Agreement.



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        12. MISCELLANEOUS.

                12.1 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
Washington.

                12.2 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.

                12.3 Withholding Taxes. The Employer shall withhold from any
salary and benefits payable under this Agreement all federal, state, city or
other taxes or amounts as shall be required to be withheld pursuant to any law
or governmental regulation or ruling.

                12.4 Amendments; Waiver. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto. No waiver of any provision hereof shall be construed as a further or
continuing waiver of such provision or any other provision hereof.

                12.5 Severability. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.

                12.6 Definitions. The following terms used in this Agreement
shall have the meanings set forth below:

                        (a) "Affiliate" when used with reference to the
Employer, means any Person that controls is controlled by or is under common
control of the Employer and shall include any corporation, limited liability
company or partnership (including a joint venture in partnership form) at least
fifty (50) percent of the voting stock or membership or partnership interests of
which are owned by the Employer, directly or through the ownership by either of
them of at least fifty (50) percent of the voting stock or membership or
partnership interests of any other corporation, limited liability company or
partnership.

                        (b) "Person" shall mean any natural person, sole
proprietorship, firm, corporation, limited liability company, partnership, joint
venture or unincorporated association or any other business entity.

                12.7 Interpretation; Headings. This Agreement is the result of
arms'-length negotiations between the parties hereto and no provision hereof,
because of any ambiguity found to be contained therein or otherwise, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision. Unless otherwise indicated
elsewhere in this Agreement, (i) the term "or" shall not be exclusive; (ii) the
term "including" shall mean "including, but not limited to," and (iii) the terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear. The section,
subsection and any paragraph headings contained herein are for the purpose of
convenience only and are not intended to define or limit or affect, and shall
not be considered in connection with, the interpretation of any of the terms or
provisions of this Agreement.



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                12.8 Counterpart Execution. This Agreement may be executed by
facsimile and in counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute but one and the same instrument.



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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.

                                            "EMPLOYER"

                                            EPOCH BIOSCIENCES, INC.,
                                            a Delaware corporation

                                            By: /s/ William G. Gerber
                                               ---------------------------------
                                                William G. Gerber
                                                Its: Chief Executive Officer

                                            "EMPLOYEE"

                                                  /s/ Dr. Walter Mahoney
                                            ------------------------------------
                                            Dr. Walter Mahoney



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