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    Unassociated Document

                SNR Denton US
      LLP

                Two
      World Financial Center

                225
      Liberty Street

                New
      York, NY 10281-2699 USA

                Ira
      L. Kotel

                Partner

                ira.kotel@snrdenton.com

                D    +1
      212 398 5787

                T    +1
      212 768 6700

                F    +1
      212 768 6800

                snrdenton.com

      VIA EDGAR
AND FAX

      202-772-9217

      October
1, 2010

      Mr. Jim
B. Rosenberg

      Senior
Assistant and Chief Accountant

      Division
of Corporation Finance

      United
States Securities and Exchange Commission

      100 F
Street, N.E.

      Washington,
D.C. 20549

                Re:

                Discovery
      Laboratories, Inc.

                Form
      10-K for the Year Ended December 31, 2009 (“2009 10-K”)

                Form
      10-K/A for the Year Ended December 31, 2009

                Forms
      10-Q for the Quarterly Periods Ended March 31 and June 30,
      2010

                File
      No. 000-26422

      Dear Mr.
Rosenberg

      We write
on behalf of our client, Discovery Laboratories, Inc. (the “Company”) in
response to the letter dated September 17, 2010 (the “2010 Comment Letter”) in
which the staff (the “Staff”) of the Securities and Exchange Commission (the
“Commission”) provided comments on the Company’s Annual Report on Form 10-K for
the Year Ended December 31, 2009 (“2009 10-K”), the amendment to such Annual
Report on Form 10-K/A and the Quarterly Reports on Form 10-Q for the Periods
Ended March 31 and June 30, 2010.  This letter sets forth the
Company’s responses to the 2010 Comment Letter.  For your convenience,
we have reproduced below in italics each comment and have provided the Company’s
response immediately below the comment.

      Form 10-K for the fiscal
year ended December 31, 2009

      Item
1.  Business

      Business
Operations

      Strategic Alliances and
Collaboration Arrangements

      Laboratorios del Dr. Esteve,
S.A.

      Philip Morris USA Inc. and
Philip Morris Products S.A., page 21

                Comment
      1.

                Please
      expand your disclosure of your agreement with Laboratorios del Dr. Esteve,
      S.A. to disclose the aggregate milestone payments, term and termination
      provisions of this agreement as these appear to be material terms of this
      agreement.  Similarly, please expand your disclosure of your
      agreements with Philip Morris USA Inc. and Philip Morris Products S.A. to
      disclose the termination provisions of these agreements and with Johnson
      & Johnson, Ortho Pharmaceutical Corporation and The Scripps Research
      Institute to disclose a range of royalty payments (e.g. low single digits
      or a range not to exceed ten percent), term and termination provisions of
      this agreement.

        Securities
and Exchange Commission

        October
1, 2010

        Page
2

      Response:                                The
Company acknowledges the Staff’s comment concerning its license agreements with
Laboratorios del Dr. Esteve, S.A. Philip Morris USA Inc., Philip Morris Products
S.A., and Johnson & Johnson (J&J) and Ortho Pharmaceutical Corporation
(Ortho), in the 2009 10-K,  and intends to provide additional disclosure
addressing the Staff's comment in its Form 10-Q for the fiscal quarter
ending September 30, 2010.  The Company wishes to point out to the
Staff that, although the Company's KL4 surfactant technology was
invented at The Scripps Research Institute (Scripps), it was licensed and
further developed by J&J.  The Company’s license agreement is with
J&J and its wholly-owned subsidiary, Ortho. Scripps is not a party to such
agreement.

      Management’s Discussion and
Analysis of Financial Condition and Results of Operations Research and
Development Expenses, page 49

                Comment
      2.

                For
      each of your pipeline projects as disclosed in Business beginning on page
      5 that you deem significant, disclose the following
      information.

      ·

                The
      costs incurred by you during each period presented and to date on the
      project;

      ·

                The
      nature, timing and estimated costs to be incurred by you necessary to
      complete the project;

                                                        ·

                The
      period in which material net cash inflows from significant projects are
      expected to commence; and

      ·

                The
      risks and uncertainties associated with completing development on schedule
      and the consequences to your operations, financial position and liquidity,
      if the project is not completed on a timely
  basis.

      Include
a description of your criteria for deeming a project to be
significant.  For those pipeline projects that you do not consider
significant, summarize the amounts charged to expense for each period by
therapeutic category.  Also, provide a general estimate of the nature,
timing and costs necessary to complete these projects.

        Securities
and Exchange Commission

        October
1, 2010

        Page
3

      Response:                                In
response to the Staff’s comment, we offer the following background:

      In
response to the Staff’s comment letter dated September 24, 2004 (the “2004
Comment Letter”), the Company added new disclosure to its Management’s
Discussion and Analysis (“MD&A”) that was intended to provide additional
information regarding its research and development activities and related
costs.  These changes were implemented in the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2004.

      Over the
next few years, the Company sought to reduce numerous redundancies that appeared
in its Annual Reports on Form 10-K, including in Business; MD&A – Research
and Development, – Plan of Operations, and – Results of Operations; and Risk
Factors.  Some disclosures were repeated several times in those
sections, as well as in the notes to the financial statements.  The
Company believed that these redundancies were potentially overly burdensome and
confusing to its stockholders.  In reviewing the 2009 10-K in response
to the Staff’s 2010 Comment Letter, however, it appears that certain information
previously intended to respond to the 2004 Comment Letter was inadvertently
omitted from MD&A, because it largely repeated disclosure
elsewhere in the 2009 10-K.

      Accordingly,
consistent with the approach that we took in response to the 2004 Comment
Letter, the Company proposes to add disclosure to “Research and Development
Expense” in its MD&A, including a new subpart titled “Research and
Development Projects”, that will address the Staff’s comments regarding the
Company’s research and development costs and related activities.

      As
further background, the Company notes that its research and development
activities generally form a foundation for the development of the Company’s
KL4
surfactant technology platform.  For the most part, the Company’s
research and development activities relate to, and benefit, all of the Company’s
surfactant projects.  For that reason, the Company’s research and
development expenses generally are incurred, and cannot be meaningfully
allocated, on a project-by-project basis.  The Company believes that
tracking such expenses by category is a more accurate method of accounting for
these activities.  Moreover, given the significant risks and
uncertainties inherent in the clinical development and regulatory approval
processes, the nature, timing and costs of the efforts necessary to complete
individual projects in development are not reasonably estimable.  In
developing its project plans, the Company anticipates project-based development
milestones and includes those milestones in its business strategy discussion,
but qualifies this disclosure by reference to the multiple risk factors that may
affect the timing or feasibility of such events.  The Company also
discloses throughout its Annual Report on Form 10-K, including in MD&A and
Risk Factors, that if it is not successful in gaining regulatory approval of its
drug product candidates, it will not be able to commercialize, or generate any
revenues from the sale of, its products and, as result, the value of the Company
and its financial condition and results of operations will be substantially
harmed.

        Securities
and Exchange Commission

        October
1, 2010

        Page
4

      For the
Staff’s review, we have set forth immediately below draft language using
historical information that illustrates by way of example the Company’s proposed
approach to revising the section on Research and Development Expenses in its
MD&A, including the additional “Research and Development Projects” subpart
that would be disclosed in the Company’s Annual Reports on Form 10-K, beginning
with the Annual Report on Form 10-K for the fiscal year ending December 31,
2010.  The Company would retain the new “Research and Development
Projects” subpart in its subsequent Forms 10-Q and provide appropriate updates
as required.   For the Staff’s convenience, the new language is
underlined .

      ______________________________

      Research
and Development Expenses

      Our
research and development expenses are charged to operations as incurred and we
track such costs by category rather than by project.  As many of our
research and development activities form a foundation for the development of our
KL4 surfactant technology platform, they benefit more than a single
project.  For that reason, we cannot reasonably estimate the costs or
our research and development activities on a project-by-project
basis.  We believe that tracking our expenses by category is a more
accurate method of accounting for these activities.  Our research and
development costs consist primarily of expenses associated with (a)
manufacturing development, (b) development operations, and (c) direct
pre-clinical and clinical programs.  We also track our research and
development expenses by category, including (i) salaries and benefits, (ii)
contracted services, (iii) rents and utilities, (iv) raw materials and supplies,
(v) stock-based compensation and (vi) other.

      Research
and development expenses for the years ended December 31, 2009, 2008 and 2007
were $19.1 million, $26.6 million and $26.2 million, respectively, as
follows:

                (Dollars
      in thousands)

                Year
      Ended December 31,

                Research
      and Development Expenses:

                2009

                2008

                2007

                Manufacturing
      development

              $
              9,118

              $
              14,165

              $
              11,888

                Development
      operations

              7,100

              9,113

              10,196

                Direct
      pre-clinical and clinical programs

              2,859

              3,288

              4,116

                Total
      Research and Development Expenses (1)

              $
              19,077

              $
              26,566

              $
              26,200

      Manufacturing
Development

      Manufacturing
development includes the cost of our manufacturing operations, quality assurance
and analytical chemistry capabilities to assure adequate production of clinical
and potential commercial drug supply for our KL4 surfactant products, in
conformance with current good manufacturing practices (cGMP).  These
costs include employee expenses, facility-related costs, depreciation, costs of
drug substances (including raw materials), supplies, quality control and
assurance activities and analytical services, etc.  Additionally, in
2008 costs included activities to address issues identified in an Approvable
Letter that we received from the FDA with respect to Surfaxin in May 2008 (May
2008 Approvable Letter).

        Securities
and Exchange Commission

        October
1, 2010

        Page
5

      The
decrease in manufacturing development expenses in 2009 as compared to 2008 is
primarily due to our efforts in 2009 to conserve financial resources following
receipt of the April 2009 Complete Response Letter.

      The
increase in manufacturing development expenses in 2008 as compared to 2007 is
primarily due to: (i) expenditures in 2008 to support our quality assurance
and analytical chemistry capabilities, including implementation and validation
of analytical methods and quality testing of drug product for our development
programs; (ii) activities related to preparation of the Complete Response to the
May 2008 Approvable Letter; and (iii) purchases of active ingredients for the
production of Surfaxin.

      Manufacturing
development expenses included charges of $0.4 million, $0.8 million and $0.7
million associated with stock-based employee compensation for the years ended
December 31, 2009, 2008, and 2007, respectively.

      Development
Operations

      Development
operations includes: (i) medical, scientific, clinical, regulatory, data
management and biostatistics activities in support of our KL4 surfactant
development programs; (ii) medical affairs activities to provide scientific
and medical education support in connection with our KL4 surfactant technology
pipeline programs; (iii) design and development for the manufacture of our
novel capillary aerosolization systems, including an aerosol generating device,
the disposable dose delivery packets and patient interface system necessary to
administer Aerosurf for our planned Phase 2 clinical trials and;
(iv) pharmaceutical development activities, including development of a
lyophilized (dry powder) formulation of our KL4 surfactant.  These
costs include personnel, expert consultants, outside services to support
regulatory, data management and device development activities, symposiums at key
neonatal medical meetings, facilities-related costs, and other costs for the
management of clinical trials.

      The
decrease in development operations expenses in 2009 as compared to 2008 is
primarily due to our efforts in 2009 to conserve financial resources and limit
investment in our KL4 respiratory pipeline programs following receipt of the
April 2009 Complete Response Letter.  The decrease in development
operations expenses in 2008 as compared to 2007 is primarily due to cost
reductions resulting from the relocation of our analytical testing and
pharmaceutical development activities previously performed at our laboratories
located in Doylestown, Pennsylvania, and Mountain View, California, and
consolidation of those activities into our new laboratory space in Warrington,
Pennsylvania, in the fourth quarter of 2007.  The decrease in 2008
from 2007 was partially offset by expenditures in  2008 associated
with our medical affairs capabilities, including medical science liaisons and
symposiums at key pediatric medical meetings in anticipation of the potential
approval and commercial launch of Surfaxin in May 2008.  Expenses
associated with medical affairs activities were $0.6 million, $2.0 million and
$0.8 million for the years ended December 31, 2009, 2008 and 2007,
respectively.

          Securities
and Exchange Commission

          October
1, 2010

          Page
6

      Development
operations expenses included charges of $0.3 million, $0.7 million and $0.9
million associated with stock-based employee compensation for the years ended
December 31, 2009, 2008, and 2007, respectively.

      Direct
Pre-Clinical and Clinical Programs

      Direct
pre-clinical and clinical programs include: (i) pre-clinical activities,
including toxicology studies and other pre-clinical studies to obtain data t