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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
EMBREX INC.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
290817105
(CUSIP Number)
Benjamin L. Douglas, 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)
March 17, 1999
(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 / /.
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)
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CUSIP No. 290817105 Page 2 of 6 Pages
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1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Palo Alto Investors
IRS No.: 94-3088699
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a)/X/ (b)/ /
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------------------------------------------------------------
5 CHECK 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 1,075,000
REPORTING -----------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-----------------------------------------
10 SHARED DISPOSITIVE POWER
1,075,000
- ------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,075,000
- ------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.0%
- ------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO, IA
- ------------------------------------------------------------------
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CUSIP No. 290817105 Page 3 of 6 Pages
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
William Leland Edwards
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a)/X/ (b)/ /
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, PF
- ------------------------------------------------------------------
5 CHECK 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 32,400
BENEFICIALLY -----------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 1,075,000
REPORTING -----------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 32,400
-----------------------------------------
10 SHARED DISPOSITIVE POWER
1,075,000
- ------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,107,400
- ------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.4%
- ------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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CUSIP No. 290817105 Page 4 of 6 Pages
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of Common Stock (the "Stock") of Embrex
Inc. (the "Issuer"). The principal executive office of the Issuer is
located at P.O. Box 13989, Research Triangle Park, NC 27709-3989.
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) The names of the persons filing this statement are Palo Alto
Investors ("PAI") and William Leland Edwards ("Edwards") (collectively, the
"Filers").
(b) The business address of the Filers is located at 470 University
Avenue, Palo Alto, CA 94301.
(c) PAI is an investment adviser registered under the Investment
Advisers Act of 1940. Edwards is the President and principal shareholder
of PAI.
(d) During the last five years, neither of the Filers has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither 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) PAI is a California corporation. Edwards is a citizen of the
United States of America.
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
PAI Funds Under Management* $6,706,882.89
Edwards Working Capital $ 204,867.00
* Includes funds of PAI's advisory clients invested in the Stock.
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CUSIP No. 290817105 Page 5 of 6 Pages
ITEM 4. PURPOSE OF TRANSACTION.
PAI's principal purpose for acquiring the Stock is equity investment.
Because of the current market price of the Stock, PAI has asked the Issuer
to include in its proxy a shareholder proposal (the "Proposal")
recommending that the Issuer's Board of Directors retain a nationally
recognized investment banking firm to recommend and evaluate the Issuer's
options to increase shareholder value, including, without limitation, an
issuer tender offer.
On March 22, 1999, PAI, on behalf of one of its advisory clients, submitted
letters to the Issuer that (a) informed the Issuer that Edwards would
attend the Issuer's annual shareholders meeting to be held in May 1999 to
present the Proposal and (b) requested, pursuant to North Carolina law,
that the Issuer make available certain records of the Issuer for the
purpose of considering whether to solicit proxies to elect different
directors of the Issuer (the "Election"). In addition, PAI may hire a
proxy solicitor in connection with the Proposal or the Election.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Each Filer's beneficial ownership of the Stock at the date hereof is
reflected on the cover sheet for that Filer.
The Filers have effected the following transactions in the Stock since
January 16, 1999:
Purchase Number Price Type of
Name or Sale Date of Shares Per Share($) Transaction
PAI P 2/10/99 500 4.99 Open market purchase
PAI P 2/10/99 500 4.99 Open market purchase
Edwards P 2/11/99 1,000 5.07 Open market purchase
Edwards P 2/11/99 1,000 5.07 Open market purchase
Edwards P 2/11/99 1,000 5.07 Open market purchase
Edwards P 2/11/99 1,000 5.07 Open market purchase
PAI P 3/10/99 5,500 4.94 Open market purchase
PAI P 3/10/99 500 4.99 Open market purchase
PAI P 3/10/99 9,000 4.94 Open market purchase
PAI P 3/10/99 5,000 4.94 Open market purchase
PAI P 3/11/99 2,000 4.95 Open market purchase
PAI P 3/11/99 2,400 4.95 Open market purchase
PAI P 3/11/99 1,300 4.94 Open market purchase
PAI P 3/12/99 8,000 4.94 Open market purchase
PAI P 3/12/99 900 4.96 Open market purchase
PAI P 3/12/99 1,600 4.95 Open market purchase
PAI P 3/12/99 6,000 4.94 Open market purchase
PAI P 3/12/99 6,000 4.94 Open market purchase
PAI P 3/15/99 4,000 4.94 Open market purchase
PAI P 3/15/99 500 4.99 Open market purchase
PAI P 3/15/99 3,000 4.94 Open market purchase
PAI P 3/15/99 2,500 4.94 Open market purchase
PAI P 3/16/99 1,500 4.95 Open market purchase
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CUSIP No. 290817105 Page 6 of 6 Pages
PAI P 3/16/99 300 5.02 Open market purchase
PAI P 3/16/99 500 4.99 Open market purchase
PAI P 3/16/99 1,000 4.94 Open market purchase
PAI P 3/17/99 3,000 4.94 Open market purchase
PAI P 3/17/99 500 4.99 Open market purchase
PAI P 3/17/99 1,000 4.96 Open market purchase
PAI P 3/17/99 3,000 4.94 Open market purchase
PAI P 3/17/99 2,500 4.94 Open market purchase
PAI 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 Stock. No individual client's holdings of
the Stock are more than 5% of the class.
ITEM. 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
PAI 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 various securities in which their assets are
invested, including the Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Not applicable.
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: March 22, 1999
Palo Alto Investors
By:
/s/ William L. Edwards
William L. Edwards, President
/s/ William L. Edwards
William L. Edwards
BLD\4325\011\1036122
BLD\4325\011\1036122.01 3/22/1999 5:00
