SECURITY AGREEMENT

Exhibit 10.7

SECURITY AGREEMENT

THIS SECURITY AGREEMENT is made as of the 28 ^th day of March, 2008 between Drug Royalty LP2, a limited partnership organized and existing under the laws of the State of Delaware (“ Secured Party ”), and Epoch Biosciences, Inc., a corporation organized and existing under the laws of the State of Delaware (“ Debtor ”), with its principal executive offices at 10398 Pacific Center Court, San Diego, CA 92121.

WHEREAS Secured Party and Debtor have entered into a Royalty Interest Assignment Agreement dated as of the date hereof (as such agreement may be amended or supplemented from time to time, the “ Assignment Agreement ”);

AND WHEREAS this Agreement is entered into pursuant to Section 6.2(c) of the Assignment Agreement;

NOW THEREFORE in consideration of the respective covenants, promises and agreements of the parties herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties agree as follows:

ARTICLE 1

INTERPRETATION

Capitalized terms that are defined in the Assignment Agreement and not otherwise defined herein have, unless the context otherwise requires, the respective meanings given to them in the Assignment Agreement and, in addition, the following terms have the following meanings (and grammatical variations of such terms shall have corresponding meanings):

“ Agreement ” means this Security Agreement, the recitals, all attached exhibits and schedules, and any agreement, exhibit or schedule supplementing or amending this Agreement. All uses of the words “hereto”, “herein,” “hereof,” “hereby” and “hereunder” and similar expressions refer to this Agreement and not to any particular Section or portion of it;

“ Assignment Agreement ” has the meaning set out in the recitals;

“ Collateral ” means the License Agreement, the Know-How and the Patents (whether now or hereafter acquired) and includes Proceeds therefrom and, where the context permits, any reference to “ Collateral ” shall be deemed to be a reference to “ Collateral or any part thereof ”;

“ Event of Default ” under this Agreement means the occurrence of any one or more of the following events:

“ Financing Statement ” has the meaning set out in Section 3.1(f);

“ including ”, when used herein or in any Closing Document, means “including without limitation” and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it;

“ Know-How ” means Licensed Know-How, as that term is defined in the License Agreement;

“ License Agreement ” means the Second Amended and Restated Collaboration, License and Supply Agreement between Debtor and Applera Corporation dated as of August 17, 2000, as amended by the First Side Agreement dated October 31, 2001, the Amendment No. 1 to the Second Amended and Restated Collaboration, License and Supply Agreement dated July 26, 2002 and Amendment No. 2 to the Second Amended and Restated Collaboration, License and Supply Agreement dated as of December 31, 2005, as it may be further amended from time to time after the date hereof;

“ Obligations ” means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of Debtor to Secured Party arising pursuant to the Assignment Agreement or arising pursuant hereto upon the occurrence of an Event of Default;

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“ Patents ” means the Licensed Patents and Related Patents, as those terms are defined in the License Agreement, including those Patents and patent applications set forth on Exhibit A attached hereto;

“ Proceeds ” means property in any form derived, directly or indirectly, from any dealing with the Collateral or other Proceeds (together with any reissue, continuation, continuation-in-part or extension of the Patents) and includes any accounts arising from any sale, transfer, license, lease or other dealing in any of the Collateral and any payment representing indemnity or compensation for loss or damage to the Collateral or other Proceeds, including insurance proceeds and proceeds (as such term is defined in the UCC);

“ Security Interest ” has the meaning set out in Section 2.1;

“ Transaction Documents ” has the meaning set out in Section 2.2;

“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York or any legislation that may be substituted therefor (as any such substituted legislation may be amended from time to time); provided that, if, with respect to any Financing Statement or by reason of any provisions of law, the perfection or the effect of perfection or non-perfection of the Security Interest granted pursuant to the Assignment Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of the Assignment Agreement and any Financing Statement relating to such perfection or effect of perfection or non-perfection; and

“ US PTO ” means the United States Patent and Trademark Office and any successor office.

All terms used herein and not otherwise defined pursuant to Section 1.1 (including any definitions incorporated herein by reference to the Assignment Agreement) and which are defined in the UCC shall, unless the context otherwise requires, have the respective meanings assigned to such terms in the UCC.

The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement.

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This Agreement shall be governed by and construed, interpreted and enforced in accordance with, the laws of the State of New York and the federal laws of the United States, without giving effect to the principles of conflicts of law thereof except as set forth in Section 5-1401 of the New York General Obligations Law.

EACH PARTY HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION HEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

Each of Debtor and Secured Party (a) hereby irrevocably submits to the jurisdiction of the United States District Court for the Southern District of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and to the extent that such United States district court lacks jurisdiction despite the consent herein, to the jurisdiction of the courts of the State of New York sitting in New York County and the appellate courts therefrom, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of Debtor and Secured Party consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under the Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 1.5 shall affect or limit any right to serve process in any other manner permitted by law.

To the extent permitted by law, if any provision herein is determined to be void, voidable or unenforceable, in whole or in part, such determination shall not affect or impair or be deemed to affect or impair the validity of any other provision hereof and all the provisions hereof are hereby declared to be separate, severable and distinct.

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ARTICLE 2

SECURITY INTERESTS

To secure the prompt, punctual and faithful payment and performance of the Obligations, Debtor hereby grants to Secured Party, for the benefit of Secured Party, a continuing security interest (the “ Security Interest ”) in and to the Collateral. Nothing contained in the foregoing definition shall be construed to afford Secured Party any recourse to the Patents or any other Collateral prior to the occurrence of an Event of Default.

This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until terminated. All rights of Secured Party and the Security Interest granted hereunder, and all obligations of Debtor hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of:

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF DEBTOR