<PAGE>   1
                                                                   EXHIBIT 10.37



                          PHARMCHEM LABORATORIES, INC.
                           1997 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
                            (Incentive Stock Option)


        By this Agreement, PharmChem Laboratories, Inc., a California
corporation (the "Company") grants to [_____________], an employee of the
Company (the "Grantee"), an option (the "Option") to purchase shares of the
Company's common stock, no par value ("Stock"), subject to the terms and
conditions set forth below, in the attached Exhibit A hereto and in the
PharmChem Laboratories, Inc. 1997 Equity Incentive Plan, as may from time to
time be amended (as so amended, the "Plan"), all of which are an integral part
of this Agreement. A copy of the Plan may be obtained from the Company upon
request. Capitalized terms used but not defined in this Agreement have the
meaning specified in the Plan.


Grant Date . . . . . . . . . . . . . . .   [_________________]
Expiration Date. . . . . . . . . . . . .   [_________________]
Number of shares .  .  .  .  . . . . . .   [_________________]
Option exercise price  . . . . . . . . .   $[________________]
When first exercisable . . . . . . . . .   This Option shall become exercisable
                                           in installments as specified below,
                                           except as the Plan or this Agreement
                                           may allow exercisability at a
                                           different date:

<TABLE>
<CAPTION>
Calendar Quarter                        Percentage      No. of Shares      Cumulative
After Grant Date                        Exercisable     Exercisable        No. of Shares
----------------                        -----------     -----------        -------------
<S>                                       <C>            <C>                 <C>
Prior to first day of first                 0%                0                   0
calendar quarter after grant date

During first calendar quarter             6.25%          [________]          [________]
after grant date

During second calendar quarter            12.5%          [________]          [________]
after grant date

During third calendar quarter             18.75%         [________]          [________]
after grant date

During fourth calendar quarter             25%           [________]          [________]
after grant date

During fifth calendar quarter             31.25%         [________]          [________]
after grant date

During sixth calendar quarter             37.5%          [________]          [________]
after grant date

During seventh calendar quarter           43.75%         [________]          [________]
after grant date

During eighth calendar quarter             50%           [________]          [________]
after grant date

During ninth calendar quarter             56.25%         [________]          [________]
after grant date
</TABLE>


                                                              Employee Non-Qual.
                                                          Option Agreement 10/97

<PAGE>   2

<TABLE>
<CAPTION>
Calendar Quarter                        Percentage      No. of Shares      Cumulative
After Grant Date                        Exercisable     Exercisable        No. of Shares
----------------                        -----------     -----------        -------------
<S>                                       <C>            <C>                 <C>
During tenth calendar quarter             62.5%          [________]          [________]
after grant date

During eleventh calendar quarter          68.75%         [________]          [________]
after grant date

During twelfth calendar quarter            75%           [________]          [________]
after grant date

During thirteenth calendar                81.25%         [________]          [________]
quarter after grant date

During fourteenth calendar                87.5%          [________]          [________]
quarter after grant date

During fifteenth calendar quarter         93.75%         [________]          [________]
after grant date

During sixteenth calendar quarter          100%          [________]          [________]
after grant date
</TABLE>



        Please indicate your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it to the Chief
Financial Officer, within 30 days after the Company's mailing of this Agreement
to you.


                                        PHARMCHEM LABORATORIES, INC.


                                        By:  ___________________________________
                                                     David A. Lattanzio
                                                   Chief Financial Officer


               I ACKNOWLEDGE AND AGREE THAT THE VESTING OF SHARES PURSUANT TO
        THE SCHEDULE ON THE FIRST PAGE OF THIS AGREEMENT IS EARNED ONLY BY
        CONTINUING SERVICE AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE DIRECTOR
        AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
        GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). I FURTHER
        ACKNOWLEDGE AND AGREE THAT THIS OPTION, THE PLAN WHICH IS INCORPORATED
        HEREIN BY REFERENCE, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
        VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
        IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR
        THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE
        WITH MY RIGHT OR THE COMPANY'S RIGHT TO TERMINATE MY EMPLOYMENT OR


                                                              Employee Non-Qual.
                                                          Option Agreement 10/97

<PAGE>   3

        CONSULTING RELATIONSHIP, IF ANY, AT ANY TIME, WITH OR WITHOUT CAUSE.

               I ACKNOWLEDGE RECEIPT OF A COPY OF THE PLAN, A COPY OF WHICH IS
        ANNEXED HERETO, REPRESENT THAT I AM FAMILIAR WITH THE TERMS AND
        PROVISIONS THEREOF, AND HEREBY ACCEPT THIS OPTION SUBJECT TO ALL OF THE
        TERMS AND PROVISIONS THEREOF. I HAVE REVIEWED THE PLAN AND THIS OPTION
        IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF
        COUNSEL PRIOR TO EXECUTING THIS AGREEMENT AND FULLY UNDERSTAND ALL
        PROVISIONS OF THE OPTION. I HEREBY AGREE TO ACCEPT AS BINDING,
        CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE BOARD OF
        DIRECTORS OR OF THE COMMITTEE UPON ANY QUESTIONS ARISING UNDER THE PLAN.


ACCEPTED AND AGREED:


_______________________________

Name: _________________________

Dated: __________________, ____













                                                              Employee Non-Qual.
                                                          Option Agreement 10/97
<PAGE>   4



                                    EXHIBIT A
                                       TO
                            EMPLOYEE OPTION AGREEMENT


        1.     Manner of Exercise. This Option shall be exercised by delivery to
the Company (or its authorized agent), during the period in which such Option is
exercisable, of (i) written notice of your intent to purchase a specific number
of shares of Stock pursuant to this Option and (ii) full payment of the Option
Price for such specific number of shares. Payment may be made by any one or more
of the following means:

               (i)    certified or cashier's check or wire transfer, or

               (ii)   shares of Stock with a Fair Market Value on the effective
        date of such exercise equal to such Option Price and owned by you for at
        least six months (or such longer period as is determined by the Company
        required by applicable accounting standards to avoid a charge to the
        Company's earnings), or that you purchased on the open market.

Such exercise shall become effective on the earliest date on which both such
notice and full payment have been actually received by the Company (which date
must be before the Expiration Date). You shall not have any rights as a
shareholder of the Company with respect to the shares of Stock deliverable upon
exercise of this Option until a certificate for such shares is delivered to you.

        2.     Exercise After Termination of Employment. This Option may be
exercised only while you remain an employee of the Company or a Subsidiary,
except that this Option may also be exercised after the date on which you cease
to be employed by the Company or a Subsidiary ("Termination Date") as follows:

               (i)    if you cease to be employed by the Company or a Subsidiary
        on account of Disability, you may also exercise this Option at any time
        during the first 6 months after your Termination Date;

               (ii)   if you cease to be employed by the Company or a Subsidiary
        on account of death, the executor or administrator of your estate, your
        heirs or legatees or beneficiary designated in accordance with the Plan,
        as applicable, may also exercise this Option at any time during the
        first 6 months after your Termination Date; and

               (iii)  if you cease to be employed by the Company or a Subsidiary
        due to (a) your resignation after age 65 or 10 years of employment by
        the Company or any Subsidiary, provided after your resignation you are
        not employed or engaged by, and do not serve on the board of directors
        of, a competitor of the Company or a Subsidiary or (b) elimination of
        your position with the Company or a reduction in the Company's work
        force, you may exercise this Option to the extent this Option was
        exercisable immediately before such termination during the first 3
        months after your termination date;

provided, however, that under no circumstances can this Option be exercised
after the Expiration Date.

        3.     Option Non-Transferable. This Option is not transferable except
by will or the laws of descent and distribution. It is exercisable during your
lifetime only by you or your guardian or legal representative.



                                      A-1
<PAGE>   5

        4.     Incentive Option. This Option has been designated by the
Committee as an incentive stock option and therefore it shall be subject to the
additional conditions in this paragraph. If the aggregate option exercise price
with respect to a portion of this Option which is exercisable for the first time
during any calendar year ("Current Grant") and all incentive stock options
previously granted under the Plan and other employee stock option plans of your
employer or a parent or subsidiary of your employer which are exercisable for
the first time during a calendar year ("Prior Grants") would exceed $100,000
(the "$100,000 Limit"):

               (i)    the portion of the Current Grant which would, when added
        to any Prior Grants, be exercisable for shares of Stock which would have
        an aggregate exercise price in excess of the $100,000 Limit shall,
        notwithstanding any term to the contrary herein, be exercisable for the
        first time in the first subsequent calendar year or years in which it
        could be exercisable for the first time when added to all Prior Grants
        without exceeding the $100,000 Limit; and

               (ii)   if, viewed as of the Grant Date, any portion of this
        Option could not be exercised under paragraph (i) above during any
        calendar year commencing with the calendar year in which it is first
        exercisable through and including the last calendar year in which this
        Option may be exercised, such portion of this Option shall not be an
        incentive stock option, but shall be exercisable as a separate option at
        such dates provided herein.

        5.     Payment of Taxes. The Company is not required to issue shares of
Stock upon the exercise of this Option unless you first pay to the Company such
amount, if any, as may be requested by the Company to satisfy any liability it
may have to withhold federal, state, or local income or other taxes relating to
such exercise.

        6.     Early Disposition of Stock. If you dispose of any shares of Stock
received under this Option within two (2) years after the date of this Agreement
or within one (1) year after such shares were transferred to you, you will be
treated for federal income tax purposes as having received ordinary income at
the time of such disposition in an amount generally measured as the difference
between the price paid for the shares and the lower of the fair market value of
the shares at the date of exercise or the fair market value of the shares at the
date of disposition. The amount of such ordinary income may be measured
differently if you are an officer, director or 10% shareholder of the Company,
or if the shares were subject to a substantial risk of forfeiture at the time
they were transferred. Any gain recognized on such a premature sale of the
shares in excess of the amount treated as ordinary income will be characterized
as capital gain. You hereby agree to notify the Company in writing within thirty
(30) days after the date of any such early disposition. If you dispose of such
shares at any time after the expiration of such two-year and one-year holding
periods, any gain on such sale will be treated as long-term capital gain.

        7.     Tax Consequences. The exercise of an incentive stock option may
subject you to the alternative minimum tax ("AMT"). AMT is payable only if it
exceeds your regular tax liability. The AMT is calculated by applying a minimum
tax rate of 26% to your alternative minimum taxable income. To compute
alternative minimum taxable income, you must include the excess of the fair
market value of shares purchased pursuant to the exercise of an incentive stock
option over the purchase price paid for such shares. You understand that any of
the foregoing references to taxation are based on federal income tax laws and
regulations now in effect. By exercising this Option, you will be representing
that you have reviewed with your own tax advisors the federal, state, local and
foreign tax consequences of the transactions contemplated by this Agreement,
that you are relying solely on such advisors and not on any statements or
representations of the Company or any of its agents, and that you understand
that you (and not the Company) shall be responsible for your own tax liability
that may arise as a result of the transactions contemplated by this Agreement.



                                      A-2
<PAGE>   6

        8.     Amendments. This Agreement may be amended only by a writing
executed by the Company and you which specifically states that it is amending
this Agreement; provided that this Agreement is subject to the power of the
Board (as defined in the Plan) to amend the Plan as provided therein, except
that no such amendment shall adversely affect your rights under this Option
without your consent.

        9.     Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of its Secretary. Any
notice to be given to you shall be addressed to you at the address listed in the
Company's records. By a notice given pursuant to this Section, either party may
designate a different address for notices. Any notice shall have been deemed
given when actually delivered.

        10.    Severability. If any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any part of this Agreement not declared
to be unlawful or invalid. Any part so declared unlawful or invalid shall, if
possible, be construed in a manner which gives effect to the terms of such part
to the fullest extent possible while remaining lawful and valid.

        11.    Applicable Law. This Agreement shall be governed by the
substantive laws (excluding the conflict of laws rules) of the State of
California.

        12.    Headings. Headings are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.







                                      A-3