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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. 2)
Strategic Diagnostics Inc.
(Name of Issuer)
Common Stock
- -------------------------------------------------------------------
(Title of Class of Securities)
862700101
(CUSIP Number)
Check the following box if a fee is being paid with the statement
/ /. (A fee is not required only if the reporting person: (1) has
a previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
SEC 1746 (2-92)<PAGE>
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SCHEDULE 13G
CUSIP No. 862700101 Page 2 of 5 Pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Palo Alto Investors
IRS No.: 94-3088699
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a)/ / (b)/ /
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3 SEC USE ONLY
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4 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 5 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -----------------------------------------
OWNED BY 6 SHARED VOTING POWER
EACH 2,193,500
REPORTING -----------------------------------------
PERSON 7 SOLE DISPOSITIVE POWER
WITH -0-
-----------------------------------------
8 SHARED DISPOSITIVE POWER
2,193,500
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9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,193,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN
SHARES*
/ /
- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)
16.7%
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14 TYPE OF REPORTING PERSON*
IA
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*SEE INSTRUCTIONS BEFORE FILLING OUT!<PAGE>
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SCHEDULE 13G
CUSIP No. 862700101 Page 3 of 5 Pages
ITEM 1.
(a) The name of the issuer is Strategic Diagnostics Inc.
("SDI").
(b) The principal executive office of SDI is located at 128
Sandy Drive, Newark, DE 19713.
ITEM 2.
(a) The name of the person filing this statement is Palo Alto
Investors ("PAI").
(b) The principal business office of PAI is located at 431
Florence Street, Suite 200, Palo Alto, CA 94301.
(c) PAI is a California corporation.
(d) This statement relates to shares of common stock ("Common
Stock") of SDI and options to purchase shares of Common Stock
(collectively, the "Securities").
(e) The CUSIP number of the Common Stock is 862700101.
ITEM 3. IF THIS STATEMENT IS FILED PURSUANT TO RULE 13D-1(B), OR
13D-2(B), CHECK WHETHER THE PERSON FILING IS A:
(a) / / Broker or Dealer registered under Section 15 of the
Act.
(b) / / Bank as defined in section 3(a)(6) of the Act.
(c) / / Insurance Company as defined in section 3(a)(19) of
the Act.
(d) / / Investment Company registered under section 8 of
the Investment Company Act.
(e) /XX/ Investment Adviser registered under section 203 of
the Investment Advisers Act of 1940.
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SCHEDULE 13G
CUSIP No. 862700101 Page 4 of 5 Pages
(f) / / Employee Benefit Plan, Pension Fund which is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 or Endowment Fund; see section 240.13d-
1(b)(1)(ii)(F).
(g) / / Parent Holding Company, in accordance with section
240.13d-1(b)(1)(ii)(F)
(h) / / Group, in accordance with section 240.13d-
1(b)(1)(ii)(H)
ITEM 4. OWNERSHIP.
(a) Palo Alto Investors beneficially owns 2,193,500 shares of
the Securities.
(b) Palo Alto Investors beneficially owns 16.7% of the
Securities outstanding.
(c) (i) Palo Alto Investors has the sole power to vote or
to direct the vote of 0 shares of the Securities.
(ii) Palo Alto Investors has the shared power to vote
or to direct the vote of 2,193,500 shares of the Securities.
(iii) Palo Alto Investors has the sole power to dispose
or to direct the disposition of 0 shares of the Securities.
(iv) Palo Alto Investors has the shared power to
dispose or to direct the disposition of 2,193,500 shares of the
Securities.
ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS
If this statement is being filed to report the fact that as of the
date hereof the reporting person has ceased to be the beneficial
owner of more than five percent of the class of securities, check
the following / /.
Instruction: Dissolution of a group requires a response to this
item.
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SCHEDULE 13G
CUSIP No. 862700101 Page 5 of 5 Pages
ITEM. 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER
PERSON
Palo Alto Investors is a registered investment adviser whose
clients have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the
Securities. The only individual client whose holdings of the
Securities are more than 5 percent of the class is Banner Partners,
a California limited partnership that has filed a Schedule 13D with
respect to the Securities.
ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH
ACQUIRED THE SECURITY BEING REPORTED ON BY THE PARENT HOLDING
COMPANY
Not applicable.
ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP
Not applicable.
ITEM 9. NOTICE OF DISSOLUTION OF GROUP
Not applicable.
ITEM 10. CERTIFICATION
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired in the
ordinary course of business and were not acquired for the purpose
of and do not have the effect of changing or influencing the
control of the issuer of such securities and were not acquired in
connection with or as a participant in any transaction having such
purposes or effect.
SIGNATURES
After reasonable inquiry and to the best of my knowledge, I
certify that the information set forth in this statement is true,
complete and correct.
DATED: November 17, 1997
Palo Alto Investors
By: /s/ William L. Edwards
William L. Edwards, President
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