EXHIBIT 10.39

[PHARMCHEM INC. LETTERHEAD]

June 30, 2003

VIA FEDERAL EXPRESS

Mr. Richard D. Irwin
23 Wild Duck Road
Wilton, CT 06897

Re: Repayment of Subordinated Promissory Note

Dear Mr. Irwin:

         PharmChem, Inc. (the "Company") borrowed $375,000.00 (the "Loan") from
you pursuant to an Unsecured Subordinated Note and Warrant Purchase Agreement
dated September 19, 2001 and as evidenced by that certain Unsecured Subordinated
Promissory Note for $375,000.00 dated September 21, 2001 (the "Note"). In
connection with the Loan, the Company issued to you a warrant for 37,500 shares
of the Company's common stock (the "Original Warrant") at an exercise price of
$3.00 per share. The Company has agreed to repay the Loan prior to the original
maturity date and you have agreed to accept $187,500.00 (the "Repayment Amount")
as payment in full for the original principal amount of the Note, and unpaid
interest thereon of $25,312.50.

         Upon receipt of the Repayment Amount, you will mark the Note "paid in
full" and promptly return the Note to the Company.

         It is understood that the repayment of the Loan as described above is
contingent upon the Company successfully completing the new financing with
Silicon Valley Bank.

         In connection with the Company's repayment of the Loan, the Company has
further agreed to reissue the Original Warrant with a new per share exercise
price of $____, i.e., the average closing price of a share of the Company's
common stock for the thirty day period ending June 26, 2003 (the "New Warrant").
As a condition to our issuance of the New Warrant, you will need to return to
the Company the Original Warrant in the postage-paid, preaddressed envelope
provided herewith for that purpose and, upon our receipt of the Original
Warrant, we will issue to you the New Warrant.



Repayment of Subordinated Promissory Note
Richard D. Irwin
June 30, 2003
Page 2

         BY YOUR SIGNING BELOW AND RETURNING THIS LETTER TO ME, FIRST, BY FAX AT
(817) 605-6402 AND, SECOND, BY OVERNIGHT MAIL USING THE ENCLOSED ENVELOPE,
INDICATING YOUR AGREEMENT TO AND APPROVAL OF THE ABOVE, PHARMCHEM WILL THEN
OVERNIGHT A CHECK TO YOU IN THE AMOUNT OF $212,812.50.

                                   Sincerely,

                                   PharmChem, Inc.

                                   /s/ David A. Lattanzio
                                   -----------------------------------
                                   David A. Lattanzio
                                   Vice President,
                                   Chief Financial Officer and
                                   Secretary

AGREED AND APPROVED:

/s/ Richard D. Irwin

Richard D. Irwin

By: Richard D. Irwin
Name: Richard D. Irwin
Title: __________________________

Dated: June 26, 2003