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                                                                   Exhibit 10.34

ROSETTA

June 21, 1997

Dr. Stephen H. Friend, M.D., Ph.D.
Fred Hutchinson Cancer Research Center
110 Fairview Ave. N. MS M-477

Seattle, WA 98104

Dear Stephen:

         On behalf of Rosetta Biosystems, Inc. (the "COMPANY"), I am pleased to
offer you the position of Acting President and Chief Scientific Officer of the
Company. Speaking for myself, as well as the other members of the Company's
Board of Directors, we are all very impressed with the job you have done to get
the Company organized and financed and we look forward to your future success in
this position.

         The terms of your new position with the Company are as set forth below:

         1.       POSITION.

                  a. You will become the Acting President and Chief Scientific
Officer of the Company, working out of the Company's headquarters office in
Kirkland, Washington. As Acting President, you will have overall responsibility
for the operations of the Company. You will report to the Company's Board of
Directors. You understand that the Company intends to hire a full-time President
and/or Chief Executive Officer, and that at such time, your title and
responsibilities will be advised appropriately to, at a minimum, Senior Vice
President and Chief Scientific Officer.

                  b. You agree to the best of your ability and experience that
you will at all times loyally and conscientiously perform all of the duties and
obligations required of and from you pursuant to the express and implicit terms
hereof, and to the reasonable satisfaction of the Company. During the term of
your employment, you further agree that you will devote all of your business
time and attention to the business of the Company, the Company will be entitled
to all of the benefits and profits arising from or incident to all such work
services and advice, you will not render commercial or professional services of
any nature to any person or organization, whether or not for compensation,
without the prior written consent of the Company's Board of Directors, and you
will not directly or indirectly engage or participate in any business that is
competitive in any manner with the business of the Company. However, nothing in
this letter agreement will prevent you from -accepting speaking or presentation
engagements in exchange for honoraria or from serving on boards of charitable
organizations, or from owning no more than one percent (1%) of the outstanding
equity securities of a corporation whose stock is listed


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on a national stock exchange or from continuing to provide services necessary to
fulfill existing obligations to the Fred Hutchinson Cancer Research Center
(FHCRC).

         2. START DATE. Subject to fulfillment of any conditions imposed by this
letter agreement, you will commence this new position with the Company on July
1, 1997. It is understood that you are currently on a one-year leave of absence
from the Fred Hutchinson Cancer Research Center, and your continued involvement
in the Company's affairs after that time will be negotiated in good faith by
yourself and the Company.

         3. PROOF OF RIGHT TO WORK. For purposes of federal immigration law, you
will be required to provide to the Company documentary evidence of your identity
and eligibility for employment in the United States. Such documentation must be
provided to us within three (3) business days of your date of hire, or our
employment relationship with you may be terminated.

         4. COMPENSATION.

                  a. BASE SALARY. You will be paid a monthly salary of $12,500
(less applicable withholding), which is equivalent to $150,000 on an annualized
basis. Your salary will be payable in two equal payments per month pursuant to
the Company's regular payroll policy (or in the same manner as other officers of
the Company). On July 1, you will also be paid $15,000 in consideration of the
time you have spent involved in assisting with the formation and financing of
the Company.

                  b. BONUS. You will be eligible to receive an incentive in
accordance with the Company's policies in effect from time to time, as
determined by the Board of Directors.

                  c. ANNUAL REVIEW. Your base salary will be reviewed at the end
of each calendar year as part of the Company's normal salary review process.

         5. STOCK OPTIONS; FOUNDER'S STOCK.

                  a. INITIAL SHARES. In connection with the founding of the
Company, the Company sold you ____________ shares of the Company's Common Stock
("Shares").

                  b. SUBSEQUENT OPTION GRANTS. Subject to the discretion of the
Company's Board of Directors, you may be eligible to receive additional grants
of stock options or purchase rights from time to time in the future, on such
terms and subject to such conditions as the Board of Directors shall determine
as of the date of any such grant.

         6. BENEFITS.

                  a. INSURANCE BENEFITS. The Company will provide you with
standard medical and dental insurance benefits, as well as life insurance in an
amount equivalent to that which you currently receive at the Fred Hutchinson
Cancer Research Center. In addition, the Company currently indemnifies all
officers and directors to the maximum extent permitted by law, and you will be
requested to enter into the Company's standard form of Indemnification


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Agreement giving you such protection. Pursuant to the Indemnification Agreement,
the Company will agree to advance any expenses for which indemnification is
available to the extent allowed by applicable law.

                  b. VACATION. You will be entitled to paid vacation each year
in accordance with the Company's standard terms and conditions.

                  c. AUTO ALLOWANCE. You will also be entitled to a monthly car
allowance of $500.00 during the term of your employment.

         7. CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT. Your
acceptance of this offer and commencement of employment with the Company is
contingent upon the execution, and delivery to an officer of the Company, of the
Company's Confidential Information and Invention Assignment Agreement, a copy of
which is enclosed for your review and execution (the "Confidentiality
Agreement"), prior to or on your Start Date.

         8. SEVERANCE AGREEMENT. If your employment is terminated by the Company
or its successor for any reason other than cause, as determined by the Company's
Board of Directors, you will be entitled to receive continuation of your base
salary and insurance benefits for six months following the date of termination
of your employment.

         9. CONFIDENTIALITY OF TERMS. You agree to follow the Company's strict
policy that employees must not disclose, either directly or indirectly, any
information, including any of the terms of this agreement, regarding salary,
bonuses, or stock purchase or option allocations to any person, including other
employees of the Company; provided, however, that you may discuss such terms
with members of your immediate family and any legal, tax or accounting
specialists who provide you with individual legal, tax or accounting advice.

         10. AT-WILL EMPLOYMENT. Notwithstanding the Company's obligation
described in Section 8 above, your employment with the Company will be on an "at
will" basis, meaning that either you or the Company may terminate your
employment at any time for any reason or no reason, without further obligation
or liability.

         We are all delighted to be able to extend you this offer and look
forward to working with you. To indicate your acceptance of the Company's offer,
please sign and date this letter in the space provided below and return it to
me, along with a signed and dated copy of the Confidentiality Agreement. This
letter, together with the Confidentiality Agreement, set forth the terms of your
employment with the Company and supersede any prior representations or
agreements, whether written or oral. This letter may not be modified or amended
except by a written agreement, signed by the Company and by you.

Sincerely yours,                                     Accepted and Agreed:

/s/

John J. King, II                                              /s/
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Senior Vice President and                            Stephen H. Friend
Chief Operating Officer                              Date:    JULY 10, 1997
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