##### Table of Contents



U.S. SECURITIES AND EXCHANGE
 COMMISSION


Washington D.C. 20549


FORM 10-Q



|(Mark One)                                                                     
|-------------------------------------------------------------------------------
|                                                                               
|x                                                                              
|                                                                               
|For the quarterly period ended September 30, 2002.                             
|                                                                               
|o                                                                              
|                                                                               
|Commission file number 0-22170                                                 
|                                                                               
|Epoch Biosciences, Inc.
(Exact name of Registrant as
 specified in its charter)

|Delaware(State or other jurisdiction of
 incorporation or organization)                                 |  | 91-1311592(I.R.S. Employer
 Identification No.)
|------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|                                                                                                       
|21720 23rd Drive SE, #150, Bothell, WA 98021(Address of principal executive office, including zip code)
|                                                                                                       
|(425) 482-5555(Issuer's telephone number, including area code)                                         
|                                                                                                       
|Not Applicable                                                                                         
|                                                                                                       
|(Former name, former address and former fiscal year, if changed since last report)                     

Check whether the issuer (1) filed all
 reports to be filed by Section 13 or 15(d) of the Exchange Act 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
o

State the number of shares outstanding of
 each of the issuer's classes of common equity as of the latest practicable date.



|Class                         |  | Outstanding at October 21, 2002
|----------------------------- |  | -------------------------------
|                              |  |                                
|Common Stock,
 $.01 par value |  | 25,683,589                     



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TABLE OF CONTENTS



|                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I. Financial Information
|                              | Item 1. Financial Statements                                                                 
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                              | Item 4. Controls and Procedures                                                              
|Part II. Other Information   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 6. Exhibits and Reports on Form 8K                                                      
|Signatures                   
|Certifications               
|EXHIBIT INDEX                
|EXHIBIT 10.32                
|EXHIBIT 10.33                
|EXHIBIT 99.1                 
|EXHIBIT 99.2                 



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##### Table of Contents



Epoch Biosciences, Inc.
Index To Form 10-Q



|                                                                                               | Page Number
|---------------------------------------------------------------------------------------------- | -----------
|Part I. Financial Information                                                                  |            
|Item 1. Financial Statements                                                                   | 3          
|Item 2. Management's Discussion and Analysis
 of Financial Condition and Results of Operations | 9          
|Item 3. Quantitative and
Qualitative Disclosures About Market Risk                             | 19         
|Item 4: Controls and Procedures                                                                | 20         
|Part II. Other Information                                                                     |            
|Item 1. Legal Proceedings                                                                      | 21         
|Item 6. Exhibits and Reports on Form 8-K                                                       | 22         
|Note: Items 2, 3, 4, and 5 are omitted, as
 they are not applicable.                           |            
|Signature                                                                                      | 23         
|Certifications                                                                                 | 24         

2



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##### Table of Contents









Part I. Financial Information

Epoch Biosciences, Inc.
Balance Sheets
(unaudited)

Assets



|                                                                                                 | December 31,2001 |             | September 30,2002
|------------------------------------------------------------------------------------------------ | ---------------- | ----------- | -----------------
|                                                                                                 |                  |             |                  
|Current assets:                                                                                  |                  |             |                  
|Cash and cash equivalents                                                                        | $                | 7,489,399   |                  
|Restricted cash                                                                                  |                  | 98,891      |                  
|Accounts receivable                                                                              |                  | 353,590     |                  
|Inventory                                                                                        |                  | 157,700     |                  
|Prepaid expenses and other assets                                                                |                  | 338,288     |                  
|                                                                                                 |                  |             |                  
|Total current assets                                                                             |                  | 8,437,868   |                  
|Property and equipment, net                                                                      |                  | 3,852,359   |                  
|Identifiable intangible assets, net                                                              |                  | 2,263,130   |                  
|Goodwill                                                                                         |                  | 2,151,846   |                  
|Restricted cash                                                                                  |                  | 575,755     |                  
|Other assets                                                                                     |                  | 25,265      |                  
|                                                                                                 |                  |             |                  
|Total assets                                                                                     | $                | 17,306,223  |                  
|                                                                                                 |                  |             |                  
|Liabilities and Stockholders' Equity                                                            
|Current liabilities:                                                                             |                  |             |                  
|Current portion of long term obligations                                                         | $                | 12,732      |                  
|Accounts payable                                                                                 |                  | 226,686     |                  
|Accrued liabilities                                                                              |                  | 1,332,331   |                  
|Deferred revenue  current portion                                                               |                  | 620,043     |                  
|                                                                                                 |                  |             |                  
|Total current liabilities                                                                        |                  | 2,191,792   |                  
|Long term obligations, less current portion                                                      |                  | 4,613       |                  
|Deferred revenue, less current portion                                                           |                  | 3,026,012   |                  
|Deferred rent                                                                                    |                  | 143,503     |                  
|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; shares issued and outstanding:      |                  |             |                  
|25,651,677 at December 31, 2001 and 25,668,589
 at September 30, 2002                            |                  | 256,517     |                  
|Additional paid-in capital                                                                       |                  | 82,687,749  |                  
|Accumulated deficit                                                                              |                  | (71,003,963 | )                
|                                                                                                 |                  |             |                  
|Total stockholders' equity                                                                       |                  | 11,940,303  |                  
|                                                                                                 |                  |             |                  
|Total liabilities and stockholders' equity                                                       | $                | 17,306,223  |                  
|                                                                                                 |                  |             |                  

See accompanying notes to
 financial statements.

3



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Epoch Biosciences, Inc.
Statements of Operations
(unaudited)



|                                                                          | Three Months EndedSeptember 30, |            | Nine Months EndedSeptember 30,
|------------------------------------------------------------------------- | ------------------------------- | ---------- | ------------------------------
|                                                                          |                                 |            |                               
|                                                                          | 2001                            |            | 2002                          
|                                                                          |                                 |            |                               
|Revenue:                                                                  |                                 |            |                               
|Product sales                                                             | $                               | 1,358,523  |                               
|License fees and royalty income                                           |                                 | 51,444     |                               
|Contract research revenue                                                 |                                 | 539,098    |                               
|                                                                          |                                 |            |                               
|Total revenue                                                             |                                 | 1,949,065  |                               
|Operating expenses:                                                       |                                 |            |                               
|Cost of product sales                                                     |                                 | 869,753    |                               
|Research and development                                                  |                                 | 1,079,344  |                               
|Sales and marketing                                                       |                                 | 157,515    |                               
|General and administrative                                                |                                 | 1,077,542  |                               
|                                                                          |                                 |            |                               
|Total operating expenses                                                  |                                 | 3,184,154  |                               
|Operating loss                                                            |                                 | (1,235,089 | )                             
|Interest income, net                                                      |                                 | 88,165     |                               
|                                                                          |                                 |            |                               
|Net loss                                                                  | $                               | (1,146,924 | )                             
|                                                                          |                                 |            |                               
|Net loss per share - basic and diluted                                    | $                               | (0.04      | )                             
|                                                                          |                                 |            |                               
|Weighted average number of common shares
 outstanding - basic and diluted |                                 | 25,639,873 |                               

See accompanying notes to
 financial statements.

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Epoch Biosciences, Inc.
Statements of Cash Flows
(unaudited)



|                                                                             | Nine
 Months Ended September30,
|---------------------------------------------------------------------------- | -------------------------------
|                                                                             |                                
|                                                                             |                                
|                                                                             |                                
|Cash flows from operating activities:                                        |                                
|Net loss                                                                     | $                              
|Adjustments to reconcile net loss
 to net cash used in operating activities: |                                
|Depreciation and amortization:                                               |                                
|Property and equipment                                                       |                                
|Intangible assets                                                            |                                
|Deferred stock compensation                                                  |                                
|Issuance of common stock warrants for services                               |                                
|Interest accrued on restricted cash                                          |                                
|Deferred revenue                                                             |                                
|Deferred rent                                                                |                                
|Changes in operating assets and
 liabilities, net of acquisition:            |                                
|Accounts receivable                                                          |                                
|Inventory                                                                    |                                
|Prepaid expenses and other assets                                            |                                
|Accounts payable                                                             |                                
|Accrued liabilities                                                          |                                
|                                                                             |                                
|Net cash used in operating activities                                        |                                
|                                                                             |                                
|Cash flows from investing activities:                                        |                                
|Release of security deposit on facilities                                    |                                
|Investment in license rights                                                 |                                
|Acquisition of property and equipment                                        |                                
|Acquisition of Synthetic Genetics                                            |                                
|                                                                             |                                
|Net cash used in investing activities                                        |                                
|                                                                             |                                
|Cash flows from financing activities:                                        |                                
|Repayment of long term obligations                                           |                                
|Proceeds from bank loan                                                      |                                
|Proceeds from exercise of warrants                                           |                                
|Proceeds from exercise of stock options                                      |                                
|                                                                             |                                
|Net cash provided by financing activities                                    |                                
|                                                                             |                                
|Net decrease in cash and cash equivalents                                    |                                
|Cash and cash equivalents at beginning of period                             |                                
|                                                                             |                                
|Cash and cash equivalents at end of period                                   | $                              
|                                                                             |                                
|Supplemental disclosure
 of cash flow information - Interest payments        | $                              
|                                                                             |                                

See accompanying notes to
 financial statements.

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Epoch Biosciences, Inc.
Notes to Financial Statements
September 30, 2002
(unaudited)

1.      Summary
 of Significant Accounting Policies

(a)     Nature of Business

Epoch
 Biosciences, Inc. is a biotechnology company developing technologies and making products
 to help scientists around the world perform genetic research to improve our lives and our environment.
 Genetic analysis has become a pervasive activity in academic, biopharmaceutical, clinical, agricultural,
 veterinary and forensic laboratories. Our technologies facilitate rapid, accurate and cost-effective
 genetic analysis at the scale necessary to generate the massive amounts of
 genetic information being studied
 today.

As
 the human genome and other animal and plant genomes are sequenced, the task of
 understanding the structure and function of genes lies before us (genomics). Researchers want to know
 when and why a gene switches on and begins producing its protein (gene expression) and what the gene's
 protein does in the body (proteomics). Finally, researchers want to know what people's genetic similarities
 and differences mean for their health and susceptibility to disease. For example, single nucleotide
 polymorphisms, or SNPs, are tiny differences in our DNA that make humans different from one another.
 SNPs have been linked to good and bad traits, including hereditary and acquired diseases, and to people's
 response to medications.

Because of the implications of understanding
 gene function on human health and disease, institutions have moved quickly to
 design and manufacture automated genetic analysis systems. We develop patented
 technologies that improve the output of these systems. Our technologies are compatible with
 many of the genetic analysis systems currently in use or in development. Just as
 microprocessors are found in essentially all electronic appliances, our
 chemistries and technologies have the potential to be incorporated in nearly all
 genetic analysis systems.

(b)     Basis of Presentation

The
 unaudited financial statements have been prepared in accordance with accounting principles
 generally accepted in the United States for interim financial information and with the instructions to Form
 10-Q. Accordingly, they do not include all of the information and footnotes required to be presented for
 complete financial statements. The accompanying financial statements include all adjustments (consisting
 only of normal recurring accruals), which are, in the opinion of management, necessary for a fair
 presentation of the results for the interim periods presented. Certain 2001 balances have been reclassified
 to conform with the 2002 presentation.

The
 financial statements and related disclosures have been prepared with the presumption that
 users of the interim financial information have read or have access to the audited financial statements for
 the preceding fiscal year. Accordingly, these financial statements should be read in conjunction with the
 audited financial statements and the related notes included in Epoch's 2001 Annual Report on Form 10-K
 as filed with the Securities and Exchange Commission.

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(c)     Loss Per Share

Basic
 loss per share is computed based on weighted average shares outstanding during the
 reporting period and excludes any potential dilution. Diluted per share amounts reflect potential dilution
 from the exercise or conversion of securities into common stock or from other contracts to issue common
 stock. Our capital structure includes common stock options and common stock warrants, all of which have
 been excluded from net loss per share calculations as they are antidilutive, as follows:



|                     | At September 30,
|-------------------- | ----------------
|                     | 2001            
|                     |                 
|Outstanding options  | 2,296,134       
|Outstanding warrants | 383,333         

(d)     Concentration
 of Credit Risk

Credit
 is extended based on an evaluation of a customer's financial condition and collateral is
 generally not required. The majority of revenues are derived from private and public companies and public
 enterprises in the research market in the United States.

The
 table below summarizes the revenue and accounts receivable of our customers where our
 risk is significantly concentrated.



|         | Percent of
 Revenues             |  | Accounts
 Receivable          
|-------- | -------------------------------- |  | ------------------------------
|         |                                  |  |                               
|Customer | Three months
 endedSeptember 30, |  | Nine
 months endedSeptember 30
|         |                                  |  |                               
|         | 2001                             |  | 2002                          
|         |                                  |  |                               
|A        | 53%                              |  |                               
|B        | 6%                               |  |                               
|C        | 21%                              |  |                               
|D        | -%                               |  |                               

(e)     Intangible
 Assets

In
 July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial
 Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. Under SFAS No. 142,
 goodwill and other indefinite-lived intangible assets, including any such intangibles recorded in past
 business combinations, are not amortized beginning January 1, 2002. SFAS No. 142 also requires the
 assets to be written down with a goodwill impairment charge against current earnings whenever the
 recorded values exceed their fair values. We adopted SFAS No. 142 on January 1, 2002 and accordingly
 have not recorded any amortization of our goodwill and other indefinite-lived intangible assets during the
 nine months ended September 30, 2002. If this standard had been implemented as of January 1, 2001,
 amortization expense for the three months ended September 30, 2001 would have been reduced by
 $39,000, and amortization expense for the nine month period ended September 30, 2001 would have been
 reduced by $116,000.

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(f)     Bank Financing Agreements

In
 September 2002, we finalized a
 term loan of up to $2,500,000 to finance manufacturing equipment and other assets and a working
 capital line of credit of up to $750,000 from a commercial bank. Funds
 may be drawn on the equipment facility at any time through June 30, 2003, and on
 the working capital line of credit at any time through August 2004, provided that
 we are in compliance with the following covenants:



| | We maintain
 an Adjusted Quick Ratio of 1.3:1. Adjusted Quick Ratio is defined as the sum of
 unrestricted cash and cash equivalents and trade accounts receivable divided by
 the sum of current liabilities, excluding current deferred revenues, and bank debt.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                   
| | We maintain
 Minimum Tangible Net Worth of $1,500,000. Minimum Tangible Net Worth is defined
 as total equity in accordance with generally accepted accounting principles less
 intangible assets.                                                                
|  |                                                                                                                                                                                                                                                                   
| | We maintain
 with the bank our primary operating accounts and a minimum of 50% of our investment
 funds.                                                                                                                                                          

We are currently
 in compliance with each of these covenants. Advances under the term loan and working
 capital line of credit are secured by a first position security interest in our
 assets excluding intellectual property. On the term loan, amounts advanced are
 repayable in 36 monthly payments of principal and interest at the banks prime
 rate plus 0.5%. On the working capital line of credit, interest is payable monthly
 on any unpaid balances at the banks prime rate plus 0.5%, with principal payable
 in full in September 2004. The banks prime rate on November 8, 2002 was 4.25%.
 As of September 30, 2002, we have drawn $638,000 against the term loan. We have
 not drawn on the working capital line of credit as of this time.

(g)         Legal Proceedings

Mordecai
 Jofen, as Trustee of the Harbor Trust, f/k/a The Edward Blech Trust v. Epoch Biosciences,
 Inc., United States District Court for the Southern District of New York, Case No.
 01 CV 4129.

The Harbor
 Trust (formerly the Edward Blech Trust) filed a complaint against us on May 16,
 2001, alleging the breach of a March 29, 1996 letter agreement between us and David
 Blech. Pursuant to the letter agreement, upon payment of a pre-existing debt owed
 to us by Blech (the Ribonetics Debt), we were to release from escrow
 to Blech warrants to purchase 500,000 shares of our stock. Blech assigned all of
 his rights under the letter agreement to the Harbor Trust. The Harbor Trusts
 claim is based on our alleged failure to timely register the common stock underlying
 the warrants, allegedly resulting in damages to Blech and/or the Trust of at least
 $10 million, based on the peak trading value of our stock.

We filed a
 motions to dismiss the complaint based on, among other things, the positions that:
 (1) Blech and the Harbor Trust have never had rights to receive or exercise the
 warrants because Blech failed to perform a condition precedent, i.e., payment of
 the Ribonetics Debt; and (2) we had no obligation to register the stock unless and
 until Blech was entitled to the warrants. Further, the warrants expired pursuant
 to the letter agreement in June 2000. In July 2002, the Court decided in our favor
 and granted our motion to dismiss without leave to file an amended complaint.

In August
 2002 the Harbor Trust appealed the Courts dismissal of its case to the United
 States Court of Appeal for the Second Circuit. The appeal is likely to be resolved
 in the first quarter or early second quarter of 2003. While we believe we have
 a strong position, it is not possible at this time to state the likelihood of an
 unfavorable outcome because of the inherent uncertainties of litigation.

8



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Item 2.          Managements Discussion
 and Analysis of Financial Condition and Results of Operations

This Quarterly
 Report on Form 10-Q includes forward-looking statements within the meaning of
 the Private Securities Litigation Reform Act of 1995. That Act provides a safe
 harbor for forward-looking statements to encourage companies to provide prospective
 information about themselves so long as they identify these statements as forward-looking
 and provide meaningful, cautionary statements identifying important factors that
 could cause actual results to differ from the projected results.

Other than
 statements of historical fact, all statements in this Quarterly Report on Form 10-Q
 and, in particular, any projections of or statements as to our expectations or beliefs
 concerning our future financial performance or financial position or as to future
 trends in our business or in our markets, are forward-looking statements. Forward-looking
 statements reflect our current expectations and are inherently uncertain and our
 actual results in future periods may differ materially from our expectations concerning
 our projections of those results or of future business trends described in this
 Quarterly Report on Form 10-Q. The sections below entitled Certain Factors
 that May Affect Our Business and Future Results under Item 2, Managements
 Discussion and Analysis of Financial Condition and Results of Operations, 
 describe some, but not all, of the factors, risks and uncertainties that could
 cause these differences, including but not limited to the possibility that potential
 products utilizing the Companys technology may be ineffective or, although
 effective, may be uneconomical to market; that third parties hold proprietary rights
 that preclude Epoch or its licensees from marketing its products; or that third
 parties may market superior products. Readers of this Quarterly Report on Form
 10-Q are urged to read those sections in their entirety. 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 our objectives or plans will be achieved. The forward-looking
 statements contained in this Quarterly Report on Form 10-Q are made only as of the
 date of this Quarterly Report on Form 10-Q and Epoch undertakes no obligation to
 update or revise the forward-looking statements, whether as a result of new information,
 future events or otherwise.

The following
 discussion of Epochs financial condition and results of operations should
 be read in conjunction with the financial statements and the related notes thereto
 included elsewhere in this Quarterly Report on Form 10-Q and other documents Epoch
 files from time to time with the Securities and Exchange Commission, including subsequent
 Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on
 Form 10-K.

Results of Operations

Overview

We develop
 proprietary products with commercial applications in the fields of genomics and
 molecular diagnostics, including specialty chemistries, probes and other genomic
 detection systems. We sell our products to distributors and to end users, and also
 provide chemical intermediate products that are utilized by our collaborative partners
 and other parties in the manufacture of products to be sold to end-users by those
 parties. Sales of chemical intermediates began in December 1999, and have continued
 to grow steadily as our technologies become better known and validated, and as we
 executed collaborative agreements with Applied Biosystems and others. In November
 2000, we acquired the assets of Synthetic Genetics, a manufacturer of specialty
 probes, in a transaction accounted for using the purchase method of accounting.
 In 2001, we launched MGB Eclipse Probe Systems, which incorporate the performance
 and advantages of our proprietary technologies.

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In July 2002,
 we appointed Amersham Biosciences Corp., the life sciences business of Amersham
 plc, the exclusive worldwide sales and marketing partner to the research field of
 our MGB Eclipse Probe Systems for gene expression and SNPs, and the co-exclusive
 worldwide sales and marketing partner to the research field relating to gene expression
 without SNPs. Under the terms of the distribution agreement, Amersham will promote
 and market MGB Eclipse products as part of its genomics product portfolio to researchers
 in the life sciences industry and to pharmaceutical companies conducting internal
 research. Amersham will need to meet minimum sales levels to retain its exclusive
 distributor status.

Amershams
 sales force will offer MGB Eclipse catalogue and custom probe sets and will receive
 technical support and sales coordination from us in the initial stages of the relationship.
 We will also make our MGB Eclipse Design Software available from the Amersham
 Biosciences web site to enable customers to rapidly design and order MGB Eclipse
 probes and primers specifically for a sequence of interest. We will be the sole
 manufacturer of the MGB Eclipse product line.

Critical Accounting Policies

Our accounting
 policies are more fully described in Note 1 to our annual financial statements for
 the year ended December 31, 2001. However, certain of our accounting policies are
 particularly important to the portrayal of our financial position and results of
 operations and require the application of significant judgment by our management.
 As a result they are subject to an inherent degree of uncertainty. In applying
 those policies, our management uses its judgment to determine the appropriate assumptions
 to be used in the determination of the estimates. Those estimates are based on
 our historical experience, terms of existing contracts, our observance of trends
 in the industry, information provided by our customers and information available
 from other outside sources, as appropriate. Our critical accounting policies, which
 have not changed significantly from December 31, 2001, are as follows:



| | revenue recognition;
 and    
|- | -----------------------------
|  |                              
| | accounting
 for income taxes.

Revenue
 recognition. We earn product revenues through sales of chemical products and reagents
 to manufacturers for incorporation into their products, from the sale of specialty
 oligonucleotides and value added reagents to end users in the research fields of
 genomics and molecular diagnostics, from license fees for the use of our proprietary
 technology and know-how, and by providing services to third parties for performing
 research and development on their behalf. We also have product royalty agreements
 that result in royalties to us upon ultimate sales of products by our partners.



| | Revenues from
 product sales that require no ongoing obligations are recognized when shipped to
 the customer and title has passed.                                                                                                                                                                                                                                                 
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                     
| | Up front license
 fees are recognized over the term of the agreement to which the license fees correspond,
 which may extend to the expiration of the underlying patents, and based on the terms
 and future performance obligations in the underlying agreements. Deferred revenue
 principally represents license fees received in advance and prepayments for product
 purchases.
|  |                                                                                                                                                                                                                                                                                                                                                                                     
| | Contract research
 revenues are recognized as research and development activities are performed under
 the terms of commercial collaboration and supply agreements and government grants.
 Direct costs related to these contracts and grants are reported as research and
 development expenses.                                                                                   

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| | Royalty revenues
 are recognized when earned under the terms of the related agreements, which is generally
 upon sale of products by our partner containing our component products.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Accounting
 for 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 bases.
 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.

The gross
 deferred tax assets as of December 31, 2001 were approximately $26 million, and
 have been fully reserved based on our history of operating losses.

Revenues

Product
 Sales. Product sales increased 45% to $1,975,000 in the quarter ended September
 30, 2002 from $1,359,000 in the comparable quarter of the prior year. Growth in
 custom oligonucleotide sales including MGB Eclipse Probe Systems drove this quarters
 increased product sales. Product sales increased 48% to $5,199,000 for the
 nine month period ended September 30, 2002 from $3,515,000 in the prior year period
 as a result of the same growth in sales of custom oligonucleotides including MGB
 Eclipse Probe Systems, and growth in chemical intermediate shipments to our collaborative
 and distribution partners.

The growth
 in the custom oligonucleotide business this quarter was primarily due to sales to
 two customers. Sales to one customer increased to $405,000 in the quarter ended
 September 30, 2002 from $117,000 in the comparable quarter of the prior year. Sales
 to this customer similarly increased to $813,000 for the nine month period ended
 September 30, 2002 from $267,000 in the prior year period. During September and
 October, orders from this customer have slowed, and we currently expect revenues
 in our fourth quarter from this customer to be less than in the third quarter.
 Also, in the quarter ended September 30, 2002, we completed the first shipments
 of MGB Eclipse catalog products to Amersham under the distribution agreement entered
 into in July 2002. We recognized $369,000 in revenue from these shipments.

License
 Fees and Royalties. License fees and royalties increased to $277,000 in the quarter
 ended September 30, 2002 from $51,000 in the comparable quarter of the prior year,
 indicative of the growth in the product revenues of our corporate partners. License
 fees and royalties similarly increased to $710,000 for the nine month period ended
 September 30, 2002 from $214,000 in the prior year period also reflecting the growth
 in the product revenues of our corporate partners.

Contract
 Research. Contract research revenue decreased to $407,000 in the quarter ended
 September 30, 2002 from $539,000 in the comparable period of the prior year. The
 decrease was the result of the contractual expiration of our research programs with
 Applied Biosystems in August 2002, and a cessation in payments from Third Wave Technologies
 who notified us that it suspended all research programs with us. The term of our
 development program with Third Wave technologies extends to December 31, 2003, and,
 as provided for in our collaborative agreement, we are currently in binding arbitration
 proceedings with Third Wave regarding the cessation of research payments during
 2002 and future research funding commitments. Currently, we are not recognizing
 any contract research

11



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##### Table of Contents



revenues from Third Wave Technologies, and we do not expect
 resolution of the arbitration proceedings until 2003. During the quarter ended
 September 2002, these decreases were offset by revenues from shorter-term research
 activities centered on possible applications for our MGB Eclipse Probe Systems.
 Contract research revenue decreased from $1,520,000 for the nine-month period ended
 September 30, 2002 from $1,539,000 in the prior year period as a result of the same
 changes.

Operating Expenses

Cost of
 Product Sales. Cost of product sales increased to $1,053,000 in the quarter ended
 September 30, 2002 from $870,000 in the comparable quarter of the prior year primarily
 as a result of the increase in product sales. Costs as a percentage of product
 sales decreased from 64% in third quarter 2001 to 53% this quarter.

The cost of
 product sales increased to $3,347,000 in the nine month period ended September 30,
 2002 compared to $2,497,000 in the comparable period of the prior year. Costs as
 a percentage of product sales decreased from 71% for the nine month period ended
 September 30, 2001 to 64% for the current years period.

Increases
 in costs of product sales are generally tied to the increases in revenues, while
 the changes in costs as a percentage of product sales are generally impacted by
 the product mix and economies of scale resulting from higher volumes. The selling
 prices of our chemical intermediates, for example, are determined by contracts and
 are tied to fully burdened manufacturing costs, which means our gross margin is
 fixed at levels below those generally found in the commercial marketplace. The
 costs of our specialty oligonucleotides are impacted by our San Diego manufacturing
 operations where we continue to invest in capital equipment and staff as we increase
 our capacity to support our expected revenue growth.

The decrease
 in costs as a percentage of product sales we are currently experiencing are more
 specifically the result of three factors: 1) economies of scale driven by the increase
 in product sales; 2) a different product mix, specifically higher MGB Eclipse revenues;
 and 3) the impact of changes in manufacturing processes which are resulting in lower
 costs.

Research
 and Development. Research and development expenses decreased to $1,051,000 in the
 quarter ended September 30, 2002 from $1,079,000 in the comparable quarter of the
 prior year due primarily to a higher allocation of research and development personnel
 and other costs to the manufacture of chemical intermediates, offset by higher personnel
 costs and patent expenses. A similar allocation of resources to the manufacture
 of chemical intermediates versus research and development activities resulted in
 a reduction of research and development expenses, also offset by higher personnel
 costs and patent expenses, for the nine months ended September 30, 2002 to $3,237,000
 from $3,405,000 in the comparable period of 2001.

Sales and
 Marketing. Sales and marketing expenses increased to $285,000 in the quarter ended
 September 30, 2002 from $158,000 in the comparable quarter of the prior year. The
 primary reason for the increase is an effort in the current year on our part to
 market and sell our products, including an expanded direct sales group, the establishment
 of an internal product and corporate marketing function, and expanded print advertising
 activities. Similarly, sales and marketing expenses for the nine month period increased
 to $986,000 from $331,000 in the prior year period.

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General
 and Administrative. General and administrative expenses increased to $1,151,000
 in the quarter ended September 30, 2002 from $1,078,000 in the comparable quarter
 of the prior year due primarily to increased personnel, licensing and insurance
 costs, partially offset by decreased recruiting and relocation expenses and a reduction
 in amortization expense on goodwill in accordance with SFAS No. 142, in 2002. Similarly,
 general and administrative expenses for the nine month period increased to $3,220,000
 from $3,042,000 in the prior year period, again primarily due to increased personnel
 costs partially offset by decreased recruiting and relocation expenses, and a reduction
 of amortization expense on goodwill in 2002.

Interest
 Income, Net. Interest income, net, decreased to $19,000 in the third quarter of
 2002 compared to $88,000 in the third quarter of 2001, and also decreased for the
 nine month period ended September 30, 2002 to $81,000 from $365,000 in the comparable
 period of the prior year, as a result of lower average cash balances available for
 investment, lower realized interest rates, and the recognition of interest expense
 on the term loan. Interest expense on the term loan was approximately $1,000 in
 the quarter ended September 30, 2002, during which the loan was outstanding for
 only a few weeks. Interest expense will increase in the future as the loan will
 be outstanding for the full periods and as we make additional draws under these
 loans.

Liquidity and Capital
 Resources

Cash and cash
 equivalents amounted to $3,888,000 at September 30, 2002, a $3,602,000 decrease
 from December 31, 2001 balances.

Cash used
 in operations during the nine month period ended September 30, 2002 amounted to
 $3,563,000 primarily as a result of our net loss of $3,279,000 adjusted for certain
 non-cash reconciling items and fluctuations in working capital accounts. The most
 significant changes in working capital accounts that impacted cash used in operations
 were increases in accounts receivable of $703,000 and inventories of $315,000 to
 support our increased product sales, offset by an increase in accounts payable of
 $370,000, which is a normal fluctuation resulting from the increased activity.
 Changes in deferred revenue, representing up front license payments subject to recognition
 over the terms of the underlying agreements and prepayments for royalties and product
 purchases, also impacts cash flow from operations. Approximately $519,000 in product
 sales and royalties recognized during the nine months ended September 30, 2002,
 had been received in advance and recorded as deferred revenue and therefore didnt
 generate cash in the current period. The amounts and timing of these offsets
 are based on contracts with our partners. During the comparable nine month period
 of 2001, $225,000 in product sales and royalties which were recognized in revenue
 had been previously received in advance and therefore didnt generate cash
 in the current period, and we received a $1,000,000 advance payment for product
 purchases and a $500,000 license fee, both of which provided cash in the period
 and were recorded as deferred revenue.

Cash used
 in investing activities amounted to $680,000 in the nine months ended September
 30, 2002. Acquisition of property and equipment totaling $780,000, primarily for
 increased manufacturing capacity, was offset by $100,000 in security deposits on
 our Bothell facility being returned to us for general use. We continue to invest
 in manufacturing equipment as we prepare for anticipated growth in demand for our
 products and we expect that capital expenditures in the fourth quarter will be slightly
 lower than the third quarter. In addition to increased manufacturing capacity,
 we will also continue to make other investments to support our operational growth.
 We may also require a larger inventory of raw materials and products to provide
 better service to our customers. We may finance these purchases from our cash and
 cash equivalents on hand, cash generated from our operations, borrowings, equity
 offerings, or a combination thereof.

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Cash provided
 by financing activities in the period was $641,000, the result of $638,000 in proceeds
 from the new term loan, and $11,000 received from the exercise of stock options,
 offset by repayments on capital leases of $8,000.

As of September
 30, 2002, we have $1,862,000 of available financing under our new term loan and
 $750,000 available from a working capital line of credit.

We anticipate
 that existing cash balances, projected cash from operations and unused borrowing
 capacity under existing bank loans, will be sufficient to meet our anticipated working
 capital and capital expenditure needs through at least the next 12 months. However,
 it is possible that we may need to raise additional capital to fund our activities,
 to maintain our listing on Nasdaq, and/or to consummate acquisitions of other businesses,
 products or technologies. We may be able to raise such funds by selling more stock
 to the public or to selected investors, or by borrowing money. In addition, even
 though we may not need additional funds, we may still elect to sell additional equity
 securities or obtain credit facilities for other reasons. We may not be able to
 obtain additional funds on terms that would be favorable to our shareholders and
 us, or at all. If we raise additional funds by issuing additional equity or convertible
 debt securities, the ownership percentages of existing shareholders would be reduced.
 In addition, the equity or debt securities that we issue may have rights, preferences
 or privileges senior to those of the holders of our common stock.

Subsequent Event

In November
 2002, we named Qiagen N.V. our co-exclusive worldwide sales and marketing partner
 to the research field for products that incorporate our MGB Eclipse Probe Systems
 for gene expression. We will supply components to Qiagen and Qiagen will offer
 custom and catalogue probe systems as part of its gene expression product offerings.
 Under terms of the agreement, Qiagen received a non-exclusive license to our component
 technologies and we will receive technology access fees and royalties on sales of
 catalogue products by Qiagen. We will be the sole manufacturer of MGB Eclipse probes
 and primers used by Qiagen. Qiagen will need to meet minimum sales levels to retain
 its co-exclusive distributor status.

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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.

We may be unable to maintain our listing
 on Nasdaq, which could cause our stock price to fall materially and decrease the
 liquidity of our common stock

Our common
 stock is currently listed on The Nasdaq National Market. To maintain the listing,
 we must continue to satisfy Nasdaqs ongoing compliance requirements, which,
 prior to November 1, 2002, included a requirement that we have at least $4 million
 in net intangible assets, which means our total assets, excluding goodwill, minus
 our total liabilities. Effective November 1, 2002, however, the net tangible asset
 requirement was replaced by Nasdaq with a requirement that we maintain a minimum
 of $10 million in stockholders equity. Another Nasdaq continued listing requirement
 is that our common stock must have a minimum bid price of $1.00 per share. In the
 third quarter of 2002 our stock traded below the $1 minimum for periods of a few
 days.

At September
 30, 2002, we had approximately $6.5 million in net tangible assets and $8.7 million
 in stockholders equity. On August 1, 2002, and September 9, 2002, we received
 initial warning letters from Nasdaq stating that based on our most recent public
 filings, we may not qualify under the new minimum stockholders equity standard
 which became effective on November 1, 2002, and we expect to receive another letter
 from Nasdaq informing us that we do not meet those new listing requirements and
 asking for our plan to regain compliance. If we satisfy Nasdaq that we have in
 process a plan to increase our stockholders equity to above $10 million, Nasdaq
 may grant an extension of up to 60 days to implement such plan. We anticipate that
 such a plan would involve the issuance of additional equity securities, which could
 dilute the interests of existing stockholders.

If Nasdaq
 does not accept our plan, or if it accepts our plan and we fail to implement the
 plan within the extension period granted to us, Nasdaq would initiate delisting
 procedures, at which time we could apply for listing of our common stock on the
 Nasdaq Small Cap market, or initiate an appeal with Nasdaq in order to remain qualified
 to be listed on The Nasdaq National Market pending the final disposition of the
 appeal. If our common stock is delisted for any reason, and any appeal we might
 file receives an unfavorable determination by Nasdaq, our common stock would be
 removed from listing on The Nasdaq National Market, and to be relisted we would
 need to meet listing standards that are more difficult to satisfy than the continued
 listing standards described above.

If our common
 stock is delisted from trading on The Nasdaq National Market and is neither relisted
 thereon nor listed for trading on The Nasdaq SmallCap Market, we would likely seek
 listing of our common stock on the over-the-counter market, which is viewed by many
 investors as a less liquid marketplace. As a result, the price per share of our
 common stock would likely decrease materially and,

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the trading market for our common
 stock, our ability to issue additional securities and our ability to secure additional
 financing would likely be materially and adversely affected.

We have never been profitable and anticipate
 future losses, and we may require additional capital

We have never
 been profitable. Since our formation in 1985, we have generated limited revenues.
 As of September 30, 2002, we had an accumulated deficit of approximately $74 million.
 While we are commercializing our products and technologies, and prior to adequate
 revenues being generated from these activities, we expect to incur additional losses
 as we expand our manufacturing capacity, continue our research and development activities
 and fund our product commercialization efforts. There is no assurance that we will
 ever become profitable or that we will sustain profitability if we do become profitable.
 Should we experience continued or unforeseen operating losses, our capital requirements
 would increase and our stock price would likely decline.

Additionally,
 as of September 30, 2002 we had $3,888,000 in cash and cash equivalents and have
 a commitment from a bank for a secured term loan of $2,500,000 of which $638,000
 has been drawn, and also a working capital line of credit of $750,000 which has
 not been drawn upon. We currently anticipate that our current cash balances, cash
 from operations, and borrowing capacity will be sufficient to meet our cash needs
 through at least the next twelve months. However, we may need to seek additional
 equity and/or debt capital, and there can be no assurance that such capital will
 be available to us on favorable terms, or at all. If additional funds are not available,
 we would be required to delay, reduce, or eliminate expenditures for some or all
 of our programs or products.

There is a risk that our technology may
 not be effective or might not work

The science
 and technology of synthetic DNA-based products is rapidly evolving. While we are
 beginning to produce and supply products to customers for commercial use, the majority
 of our products and proposed products are in the discovery or early development
 stage. The proposed products will require significant further research, development,
 and testing. We face the risk that any or all of our products and proposed products
 could prove to be ineffective or unsafe, or be an inferior product to products marketed
 by others because our products are based on new and unproven innovative technologies.
 Some of our current research and development activities may not result in any commercially
 viable products. If we do not have commercially viable products, we will not be
 able to sell our products, we will not be able to attract partners, and we will
 not be able to generate funds internally to support operations.

We have limited manufacturing experience

While we have
 experience in researching and developing unique, proprietary technologies to enhance
 the study of genes, and in manufacturing oligonucleotides at relatively small scales,
 our experience in manufacturing other chemical reagent products is relatively limited.
 While we are producing and supplying products to customers for commercial use,
 we do not currently have the capacity for high-volume production of our reagents,
 nor do we currently have the capacity to meet our projected sales of specialty oligonucleotides.
 We will need to expand or outsource our reagent and oligonucleotide manufacturing
 capacity in connection with the continued development and commercialization of our
 products. Any delay or inability to expand our manufacturing capacity could materially
 adversely affect our manufacturing ability.

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There is a risk that we do not own exclusive
 rights to our technology, or that our competition may have access to our technology
 which may prevent us from selling our products

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 November 2019.
 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 covered by our issued patents or pending applications will be free
 from challenges by competitors. Further, third parties may hold proprietary rights
 which precede our claims and could therefore prohibit us from marketing the proposed
 products.

Some of our technology might infringe
 on the rights of others, which may prevent us from selling our products

There is a
 great deal of litigation regarding patents and other intellectual property rights
 in the biomedical industry. We were defendants in one action of this kind, which
 we settled prior to 1997. Although patent and intellectual property disputes in
 the biomedical area are sometimes settled through licensing or similar arrangements,
 this kind of solution can be expensive, if a license can be obtained at all. 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 business.

We face numerous competitors and changing
 technologies which could make our products obsolete

Many companies
 do research and development and market products designed to analyze genes and diagnose
 conditions based on a number of technologies and are developing additional products
 using gene-based technologies. 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, the specific
 field in which we operate is subject to significant and rapid technological change.
 Even if we successfully introduce our products or proposed products, our technologies
 could be replaced by new technologies or our products or proposed products might
 be obsolete or non-competitive.

We will be dependent upon our Agreement
 with Applied Biosystems for a significant portion of our revenues for 2002, and
 a reduction of sales under or early termination of this Agreement would seriously
 harm our revenues and operating results and would likely cause our stock price to
 decline

In January
 1999, Epoch and Applied Biosystems entered into a License and Supply Agreement pursuant
 to which we licensed some of our technology to Applied Biosystems for use in its
 TaqMan® 5-nuclease real-time PCR assays, or tests (TaqMan®
 is a registered trademark of Roche Molecular Systems, Inc.). In July
 1999, we licensed our proprietary software, which speeds the design of oligonucleotide
 probes used in the study of genes, to Applied Biosystems. In August 2000, the agreement
 was amended to provide for Epoch manufacturing product for Applied Biosystems.
 In October 2001, we further amended our agreement with Applied Biosystems. Under
 the terms of this amendment, Applied Biosystems will either purchase a specified
 minimum number of probes from us each quarter at a specified price, or pay us a
 lesser amount per probe for any probes not ordered below the minimum. This agreement
 is effective from October 2001 through December 2002. In July 2002 this agreement
 was further amended to remove the manufacturing minimums from the contract effective
 October 2002,

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redefine product categories,
 increase the minimum royalties and royalty
 rates, and establish that minimum royalties are measured and paid quarterly. We
 will depend upon product sales and royalties from Applied Biosystems sales
 of its TaqMan® assays under this agreement for a significant portion
 of our revenues in the fourth quarter of 2002 and future periods.

Either party
 may terminate the agreement upon 180 days written notice. In the event that this
 agreement is terminated, our revenues, financial condition and operating results
 would be adversely affected and our stock price would likely decline.

We will be dependent on our agreement with
 Amersham for the distribution of our MGB Eclipse products and the resultant revenues.
 Lower than expected sales, or early termination of this agreement would seriously
 harm our projected revenues and operating results and would likely cause our stock
 price to decline.

In July 2002,
 Epoch and Amersham entered into an agreement under which Amersham became the exclusive
 worldwide sales, marketing and distribution partner to the research field of our
 MGB Eclipse Probe Systems for gene expression and SNPs, and the co-exclusive worldwide
 sales and marketing partner to the research field relating to gene expression without
 SNPs. We will depend upon product sales from Amersham under this agreement for
 a significant portion of our revenues in the fourth quarter of 2002 and future periods.

In the event
 that this agreement is terminated, our revenues, financial condition and operating
 results would be adversely affected and our stock price would likely decline.

Some of our customers may experience
 financial difficulties, which could adversely impact our collection of accounts
 receivable

Although historically
 we have experienced limited credit losses from our trade receivables, our experience
 is limited. At September 30, 2002, our allowance for doubtful accounts was $25,000.
 We regularly review the collectibility and credit worthiness of our customers and
 the receivables to determine an appropriate allowance for doubtful accounts, however
 future uncollectable accounts could exceed our current or future allowances.

The loss of key personnel could adversely
 affect operations by impairing our research and our efforts to commercialize and
 license our products

Our performance
 is greatly dependent upon our key management including our Chief Executive Officer,
 Dr. William Gerber, and technical personnel and consultants. Our future success
 will depend in part upon our ability to retain these people 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 these highly qualified personnel or hire
 additional qualified personnel. We currently maintain no key man life insurance
 on any of our management or technical personnel.

The value of our common stock could change
 significantly in a very short time

The market
 price of our common stock may fluctuate significantly. For example, in the year
 2001 our stock traded as high as $6.31, and recently closed at $0.85 in October
 2002. The rapid price

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changes Epoch has experienced recently, and throughout our
 history, place your investment in our common stock at risk of total loss over a
 short period of time. 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.

Public opinion regarding ethical issues
 surrounding the use of genetic information may adversely affect demand for our products

Public opinion
 regarding ethical issues related to the confidentiality and appropriate use of genetic
 testing results may influence governmental authorities to call for limits on, or
 regulation of the use of, genetic testing. In addition, these authorities could
 prohibit testing for genetic predisposition to certain conditions, particularly
 for those that have no known cure. Furthermore, adverse publicity of public opinion
 relating to genetic research and testing, even in the absence of any governmental
 regulation, could harm our business. Any of these scenarios could reduce the potential
 markets for our products and technologies, which could materially and adversely
 affect our revenues.

Government regulation of genetic research
 or testing may adversely affect the demand for our products and impair our business
 and operations

Federal, state
 and local governments may adopt regulations relating to the conduct of genetic research
 and genetic testing. These regulations could limit or restrict genetic research
 activities as well as genetic testing for research or clinical purposes. In addition,
 if state and local regulations are adopted, these regulations may be inconsistent
 with, or in conflict with, regulations adopted by other state or local governments.
 Regulations relating to genetic research activities could adversely affect our
 ability to conduct our research and development activities. Regulations restricting
 genetic testing could adversely affect our ability to market and sell our products
 and our technologies. Accordingly, any regulations of this nature could harm our
 business.

Health care cost containment initiatives
 could limit the adoption of genetic testing as a clinical tool, which would harm
 our revenues and prospects

In recent
 years, health care payers as well as federal and state governments have focused
 on containing or reducing health care costs. We cannot predict the effect that
 any of these initiatives may have on our business, and it is possible that they
 will adversely affect our business. In particular, gene-based therapeutics, if
 successfully developed and commercialized, are likely to be costly compared to currently
 available drug therapies. Health care cost containment initiatives focused either
 on gene-based therapeutics or on genetic testing could cause the growth in the clinical
 market for genetic testing to be curtailed or slowed. In addition, health care
 cost containment initiatives could also cause pharmaceutical companies to reduce
 research and development spending. In either case, our business and our operating
 results would be harmed.




Item 3.         Quantitative and Qualitative
 Disclosures About Market Risk

Our financial
 instruments include cash, short-term investment grade debt securities, a working
 capital line of credit, and term loans. At September 30, 2002 the carrying values
 of our financial instruments approximated their fair values based on current market
 prices and rates. It is our policy not

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to enter into derivative financial instruments.
 We do not currently have material foreign currency exposure as the majority of our
 international transactions are denominated in U.S. currency. Accordingly, we do
 not have a significant currency exposure at September 30, 2002.




Item 4.         Controls and Procedures

Evaluation of disclosure controls and
 procedures

The Company
 maintains disclosure controls and procedures that are designed to ensure that information
 required to be disclosed in the Companys reports under the Securities Exchange
 Act of 1934, as amended, is recorded, processed, summarized and reported within
 the time periods specified in the SECs rules and forms, and that such information
 is accumulated and communicated to the Companys management, including its
 Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
 decisions regarding required disclosure. In designing and evaluating the disclosure
 controls and procedures, management recognized that any controls and procedures,
 no matter how well designed and operated, can provide only reasonable assurance
 of achieving the desired control objectives, and management necessarily was required
 to apply its judgment in evaluating the cost-benefit relationship of possible controls
 and procedures.

Within 90
 days prior to the date of this report, the Company carried out an evaluation, under
 the supervision and with the participation of the Companys management, including
 the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness
 of the Companys disclosure controls and procedures pursuant to
 Rule 13a14(c) under the Securities Exchange Act of 1934, as amended. Based
 on that evaluation, the Companys Chief Executive Officer and Chief Financial
 Officer have concluded that as of the date of the evaluation, the Companys
 disclosure controls and procedures were adequate to timely alert them of material
 information relating to the Company required to be included in the Companys
 periodic SEC filings.

Changes in internal controls

There were
 no significant changes in the Companys internal controls, or to the Companys
 knowledge, in other factors that could significantly affect the Companys
 disclosure controls and procedures subsequent to the date of our most recent evaluation.

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Part II. Other Information




Item 1.         Legal Proceedings

Mordecai
 Jofen, as Trustee of the Harbor Trust, f/k/a The Edward Blech Trust v. Epoch Biosciences,
 Inc., United States District Court for the Southern District of New York, Case No.
 01 CV 4129.

The Harbor
 Trust (formerly the Edward Blech Trust) filed a complaint against us on May 16,
 2001, alleging the breach of a March 29, 1996 letter agreement between us and David
 Blech. Pursuant to the letter agreement, upon payment of a pre-existing debt owed
 to us by Blech (the Ribonetics Debt), we were to release from escrow
 to Blech warrants to purchase 500,000 shares of our stock. Blech assigned all of
 his rights under the letter agreement to the Harbor Trust. The Harbor Trusts
 claim is based on our alleged failure to timely register the common stock underlying
 the warrants, allegedly resulting in damages to Blech and/or the Trust of at least
 $10 million, based on the peak trading value of our stock.

We filed a
 motions to dismiss the complaint based on, among other things, the positions that:
 (1) Blech and the Harbor Trust have never had rights to receive or exercise the
 warrants because Blech failed to perform a condition precedent, i.e., payment of
 the Ribonetics Debt; and (2) we had no obligation to register the stock unless and
 until Blech was entitled to the warrants. Further, the warrants expired pursuant
 to the letter agreement in June 2000. In July 2002, the Court decided in our favor
 and granted our motion to dismiss without leave to file an amended complaint.

In August
 2002 the Harbor Trust appealed the Courts dismissal of its case to the United
 States Court of Appeal for the Second Circuit. The appeal is likely to be resolved
 in the first quarter or early second quarter of 2003. While we believe we have
 a strong position, it is not possible at this time to state the likelihood of an
 unfavorable outcome because of the inherent uncertainties of litigation.

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Item 6.         Exhibits and Reports on Form 8K

| | (a)            | Exhibits            |                                                                                                                                                                                                                                                                                                                                     
| | -------------- | ------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| | Exhibit Number | Description        
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| | 10.32          |                     | Loan and Security Agreement
 between Epoch and Silicon Valley Bank, dated September 17, 2002.                                                                                                                                                                                                                                       
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| | 10.33          |                     | Exclusive
 Distribution and License Agreement between Epoch and Amersham Biosciences Corp.,
 dated July 25, 2002. (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).
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| | 99.1           |                     | Certification
 of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As
 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| | 99.2           |                     | Certification
 of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| | (b)            | Reports on
 Form 8K
| |                |                     |                                                                                                                                                                                                                                                                                                                                     
| |                | None.               |                                                                                                                                                                                                                                                                                                                                     

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Signatures

In
 accordance with the requirements of the Exchange Act, the registrant caused this
 report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |     | Epoch Biosciences, Inc.                    
|----------------------- | --- | -------------------------------------------
|                        |     |                                            
|                        |     |                                            
|Date: November 13, 2002 | By: | /s/ Bert W. Hogue                          
|                        |     |                                            
|                        |     | Bert W. Hogue                              
|                        |     | Vice President and Chief
 Financial Officer

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Certifications

Certification Pursuant to
 Rule 15D-14 of the Securities Exchange Act of 1934, as Mended as Adopted Pursuant
 to Section 302 of the Sarbanes-Oxley Act of 2002

I, William G. Gerber, President
 and Chief Executive Officer of Epoch Biosciences, Inc. (the Company), certify that:



|1. | I have reviewed
 this quarterly report on Form 10-Q of the Company;                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Based on my knowledge, this
 quarterly report does not contain any untrue statement of a material fact or
 omit to state a material fact necessary to make the statements made, in light of the
 circumstances under which such statements were made, not misleading with respect to the period
 covered by this quarterly report;                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|3. | Based on my
 knowledge, the financial statements, and other financial information included in this
 quarterly report, fairly present in all material respects the financial condition, results
 of operations and cash flows of the registrant as of, and for, the periods presented in this
 quarterly report;                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|4. | The registrants other
 certifying officers and I are responsible for establishing and maintaining disclosure controls
 and procedures (as defined in Rules 13a-14 and 15d-14 of the Exchange Act) for
 the registrant and we have:                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | a) designed such
 disclosure controls and procedures to ensure that material information relating to
 the registrant, including its consolidated subsidiaries, is made known to us by
 others within those entities, particularly during the period in which this quarterly
 report is being prepared;                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | b) evaluated the
 effectiveness of the registrants disclosure controls and
 procedures as of a date within 90 days prior to the filing date of this quarterly
 report (the Evaluation Date); and                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | c) presented in this
 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures
 based on our evaluation as of the Evaluation Date;                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|5. | The registrants other
 certifying officers and I have disclosed, based on our most recent evaluation, to the
 registrants auditors and the audit committee of registrants board of directors
 (or persons performing the equivalent function):                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | a) all significant
 deficiencies in the design or operation of internal controls which could adversely affect
 the registrants ability to record, process, summarize and report financial data and have
 identified for the registrants auditors any material weaknesses in
 internal controls; and                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | b) any fraud, whether or
 not material, that involves management or other employees who have a significant role in the
 registrants internal controls; and                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|6. | The registrants other certifying
 officers and I have indicated in this quarterly report whether or not there were significant changes in
 internal controls or in other factors that could significantly affect internal controls subsequent to
 the date of our most recent evaluation, including any corrective actions with regard to significant
 deficiencies and material weaknesses.

|                           |     |                                       
|-------------------------- | --- | --------------------------------------
|Date:    November 13, 2002 | By: | /s/ William G. Gerber                 
|                           |     |                                       
|                           |     | William G. Gerber                     
|                           |     | President and Chief Executive
 Officer

24



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##### Table of Contents



Certification Pursuant to Rule
 15D-14 of the Securities Exchange Act of 1934, as Mended as Adopted Pursuant to
 Section 302 of the Sarbanes-Oxley Act of 2002

I, Bert W. Hogue, Chief Financial Officer of Epoch
 Biosciences, Inc. (the Company), certify that:



|1. | I have reviewed this quarterly
 report on Form 10-Q of the Company;                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Based on my knowledge, this quarterly
 report does not contain any untrue statement of a material fact or omit to state a material fact
 necessary to make the statements made, in light of the circumstances under which such statements
 were made, not misleading with respect to the period covered by this quarterly report;                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|3. | Based on my knowledge, the financial
 statements, and other financial information included in this quarterly report, fairly present in all
 material respects the financial condition, results of operations and cash flows of the registrant
 as of, and for, the periods presented in this quarterly report;                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|4. | The registrants other certifying
 officers and I are responsible for establishing and maintaining disclosure controls and procedures
 (as defined in Rules 13a-14 and 15d-14 of the Exchange Act) for the registrant and we have:                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | a) designed such disclosure
 controls and procedures to ensure that material information relating to the registrant, including
 its consolidated subsidiaries, is made known to us by others within those entities, particularly
 during the period in which this quarterly report is being prepared;                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | b) evaluated the
 effectiveness of the registrants disclosure controls and procedures as of a date within
 90 days prior to the filing date of this quarterly report (the Evaluation Date); and                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | c) presented in this quarterly report our
 conclusions about the effectiveness of the disclosure controls and procedures based on our
 evaluation as of the Evaluation Date;                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|5. | The registrants other
 certifying officers and I have disclosed, based on our most recent evaluation, to the
 registrants auditors and the audit committee of registrants board of directors (or
 persons performing the equivalent function):                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | a) all significant deficiencies in
 the design or operation of internal controls which could adversely affect the registrants
 ability to record, process, summarize and report financial data and have identified for the
 registrants auditors any material weaknesses in internal controls; and                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | b) any fraud, whether or not
 material, that involves management or other employees who have a significant role in
 the registrants internal controls; and                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|6. | The registrants other
 certifying officers and I have indicated in this quarterly report whether or not there were significant
 changes in internal controls or in other factors that could significantly affect
 internal controls subsequent to the date of our most recent evaluation, including any
 corrective actions with regard to significant deficiencies and material weaknesses.

|                           |     |                                            
|-------------------------- | --- | -------------------------------------------
|Date:    November 13, 2002 | By: | /s/ Bert W. Hogue                          
|                           |     |                                            
|                           |     | Bert W. Hogue                              
|                           |     | Vice President and
 Chief Financial Officer

25



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##### Table of Contents






EXHIBIT INDEX



|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                        
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                                                                                    
|10.32          | Loan and Security Agreement
 between Epoch and Silicon Valley Bank, dated September 17, 2002.                                                                                                                                                                                                                                      
|               |                                                                                                                                                                                                                                                                                                                                    
|10.33          | Exclusive Distribution and
 License Agreement between Epoch and Amersham Biosciences Corp., dated July 25, 2002. (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).
|               |                                                                                                                                                                                                                                                                                                                                    
|99.1           | Certification of Chief
 Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
 the Sarbanes-Oxley Act of 2002.                                                                                                                                                                               
|               |                                                                                                                                                                                                                                                                                                                                    
|99.2           | Certification of Chief
 Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
 the Sarbanes-Oxley Act of 2002.                                                                                                                                                                               
|               |