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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
PharmChem Laboratories, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
717133102
(CUSIP Number)
Carolyn R. Klasco, Esq.
Shartsis Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
(415) 421-6500
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 9, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box /XX/.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
* 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).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form
displays a currently valid OMB control number.
SEC 1746 (10-97)
<PAGE>
CUSIP No. 717133102 13D Page 2 of 12 Pages
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1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Palo Alto Investors
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
--------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
--------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
--------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 1,369,000
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,369,000
--------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,369,000
--------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
--------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.0%
--------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IA and OO
<PAGE>
CUSIP No. 717133102 13D Page 3 of 12 Pages
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1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Micro Cap Partners, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
--------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 514,500
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
514,500
--------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
514,500
--------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
--------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
--------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
CUSIP No. 717133102 13D Page 4 of 12 Pages
--------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
William Leland Edwards
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
--------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
--------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
--------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 70,935
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 1,369,000
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 70,935
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,369,000
--------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,439,935
--------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
--------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25%
--------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
<PAGE>
CUSIP No. 717133102 13D Page 5 of 12 Pages
--------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Banner Partners Minaret
--------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
--------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
--------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 379,100
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
379,100
--------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,369,000
--------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
--------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7%
--------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
CUSIP No. 717133102 13D Page 6 of 12 Pages
--------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
William C. Edwards
--------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
--------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
--------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
--------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 447,643
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
447,643
--------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
447,643
--------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
--------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8%
--------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
<PAGE>
CUSIP No. 717133102 13D Page 7 of 12 Pages
--------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Alan R. Brudos
--------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
--------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
--------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
--------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 447,643
REPORTING -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
447,643
--------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
447,643
--------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
/ /
--------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8%
--------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
CUSIP No. 717133102 13D Page 8 of 12 Pages
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of Common Stock (the "Stock") of
PharmChem Laboratories, Inc. (the "Issuer"). The principal executive
office of the Issuer is located at 1505A O'Brien Drive, Menlo Park, CA
94025.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this statement and the persons enumerated in
Instruction C of Schedule 13D and, where applicable, their respective
places of organization, general partners, directors, executive officers
and controlling persons, and the information regarding them, are as
follows:
(a) Micro Cap Partners, L.P., a Delaware limited partnership, Palo
Alto Investors ("PAI"), a California corporation, William Leland Edwards
("W.L. Edwards"), Banner Partners Minaret ("Banner"), a California limited
partnership, William C. Edwards ("W.C. Edwards") and Alan R. Brudos
("Brudos") (collectively, the "Filers").
(b) The business address of Micro Cap Partners, L.P., PAI and W.L.
Edwards is 470 University Avenue, Palo Alto, CA 94301. The business
address of Banner, W.C. Edwards and Brudos is 3000 Sand Hill Road, Bldg.
1, Ste. 190, Menlo Park, CA 94025.
(c) Micro Cap Partners, L.P. is an investment limited partnership,
the securities holdings of which are managed by PAI. PAI is an investment
adviser registered as such with the Securities and Exchange Commission and
serves as the general partner of and investment adviser to Micro Cap
Partners, L.P. W.L. Edwards is the President and controlling shareholder
of PAI.
W.C. Edwards and Brudos are the general partners of Banner. A
portion of Banner's assets is managed by PAI pursuant to an investment
management agreement, and this filing pertains only to that portion of
Banner's assets managed by PAI.
(d) During the last five years, none of the Filers has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) During the last five years, none of the Filers was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) W.L. Edwards and W.C. Edwards are citizens of the United States
of America.
<PAGE>
CUSIP No. 717133102 13D Page 9 of 12 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of funds used in purchasing the Stock were as
follows:
Purchaser Source of Funds Amount
Micro Cap Partners, L.P. Working Capital $1,615,313.27
PAI Funds Under Management $4,692,800.66
W.L. Edwards Personal Funds $ 251,585.84
Banner Working Capital $1,333.349.48
ITEM 4. PURPOSE OF TRANSACTION.
W.L. Edwards recently contacted the chief executive officer of the Issuer
to discuss the possibility of acquiring additional shares of the Issuer's
common stock. No agreement with respect to the additional acquisitions
was reached. W.L. Edwards also expressed to the chief executive officer
his views and offered his assistance regarding alternatives to maximize
shareholder value.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The beneficial ownership of the Stock by each Filer at the date hereof is
reflected on that Filer's cover page. PAI is an 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 Stock. No single
client, other than Micro Cap Partners, L.P. and Banner, holds more than 5%
of the outstanding Stock.
<PAGE>
CUSIP No. 74835F102 13D Page 10 of 12 Pages
PAI, on behalf of client accounts other than Micro Cap Partners and
Banner, effected the following transactions in the Stock in open market
transactions on the NASDAQ stock market on the dates indicated, and such
transactions are the only transactions in the Stock by the Filers since
April 4, 2000:
Purchase Number Price
or Sale Date of Shares Per Share
P 4/4/00 3,000 3.5000
P 4/5/00 3,000 3.5000
P 4/6/00 18,000 3.5000
P 4/7/00 5,000 3.5000
P 4/11/00 700 3.5000
P 4/14/00 2,000 3.5000
P 4/17/00 3,600 3.5000
<PAGE>
CUSIP No. 74835F102 13D Page 11 of 12 Pages
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
PAI is the general partner of Micro Cap Partners, L.P. pursuant to an
Agreement of Limited Partnership providing to PAI the authority, among
other things, to invest the funds of Micro Cap Partners in the Stock, to
vote and dispose of the Stock and to file this statement on behalf of
Micro Cap Partners. Pursuant to such Agreement of Limited Partnership,
the general partner of Micro Cap Partners is entitled to allocations based
on assets under management and realized and unrealized gains.
W.C. Edwards and Brudos are the general partners of Banner pursuant to an
Agreement of Limited Partnership providing to Messrs. Edwards and Brudos
the authority, among other things, to invest the funds of Banner in the
Stock, to vote and dispose of the Stock and to file this statement on
behalf of Banner. Pursuant to such Agreement of Limited Partnership, the
general partners of Banner are entitled to allocations based on assets
under management and realized and unrealized gains.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G.
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: June 16, 2000
PALO ALTO INVESTORS BANNER PARTNERS, L.P.
By: /s/ William L. Edwards By: /s/ William C. Edwards
William L. Edwards, President William C. Edwards, General
Partner
By: /s/ Alan R. Brudos
/s/ William L. Edwards Alan R. Brudos, General Partner
William L. Edwards
/s/ William C. Edwards
William C. Edwards
MICRO CAP PARTNERS, L.P.
/s/ Alan R. Brudos
By: Palo Alto Investors Alan R. Brudos, General Partner
General Partner
By: /s/ William L. Edwards
William L. Edwards
President
<PAGE>
CUSIP No. 74835F102 13D Page 12 of 12 Pages
EXHIBIT A
AGREEMENT REGARDING JOINT FILING
OF STATEMENT ON SCHEDULE 13D OR 13G
The undersigned agree to file jointly with the Securities and Exchange
Commission (the "SEC") any and all statements on Schedule 13D or Schedule
13G (and any amendments or supplements thereto) required under section
13(d) of the Securities Exchange Act of 1934, as amended, in connection
with transactions by the undersigned of the common stock of PharmChem
Laboratories, Inc. For that purpose, the undersigned hereby constitute
and appoint Palo Alto Investors, a California corporation, as their true
and lawful agent and attorney-in-fact, with full power and authority for
and on behalf of the undersigned to prepare or cause to be prepared, sign,
file with the SEC and furnish to any other person all certificates,
instruments, agreements and documents necessary to comply with section
13(d) and section 16(a) of the Securities Exchange Act of 1934, as
amended, in connection with said transactions, and to do and perform every
act necessary and proper to be done incident to the exercise of the
foregoing power, as fully as the undersigned might or could do if
personally present.
DATED: June 16, 2000
PALO ALTO INVESTORS BANNER PARTNERS, L.P.
By: /s/ William L. Edwards By: /s/ William C. Edwards
William L. Edwards, President William C. Edwards, General
Partner
By: /s/ Alan R. Brudos
/s/ William L. Edwards Alan R. Brudos, General Partner
William L. Edwards
/s/ William C. Edwards
William C. Edwards
MICRO CAP PARTNERS, L.P.
/s/ Alan R. Brudos
By: Palo Alto Investors Alan R. Brudos, General Partner
General Partner
By: /s/ William L. Edwards
William L. Edwards
President
CRK\4325\002\1104120.01
