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    Unassociated Document

VIA EDGAR

April 5, 2011

Mr. Rufus Decker

Division of Corporation Finance

Securities and Exchange Commission

100 F Street NE

Washington, D.C. 20549

Re:

Correspondence from you dated March 15, 2011 concerning Landec Corporation

Form 10-K for the Fiscal Year Ended May 30, 2010

Filed August 13, 2010

Forms 10-Q for the Fiscal Quarters Ended August 29, 2010 and November 28, 2010 Form 8-K Filed February 18, 2011

File No.  0-27446

Ladies and Gentlemen:

On behalf of Landec Corporation (“Landec” or the “Company”) this letter is being transmitted in response to comments received from the staff (the “Staff”) of the  Securities and Exchange Commission (the “Commission”) by letter dated March 15, 2011 with respect to the Company’s Annual Report on Form 10-K for the fiscal year ended May 30, 2010; filed on August 13, 2010, the Company’s Quarterly Reports on Form 10-Q for the Fiscal Quarters ended August 29, 2010 and November 28, 2010 and the Company’s Current Report on Form 8-K filed on February 18, 2011.  The numbering of the paragraphs below corresponds to the numbering of the comments which we have incorporated into this response letter.

Form 10-K for the Fiscal Year Ended May 30, 2010

Consolidated Statements of Changes in Stockholders’ Equity, page 56

1.

Comment:  We note your response to comment 9 in our letter dated February 24, 2011, in which you state that you will provide the disclosures required by ASC 810-10-50-1A beginning with your May 29, 2011 Form 10-K. Based on the guidance in ASC 810-10-65-1, it is unclear why you would not revise your presentation of the statement of changes in stockholders’ equity or provide the disclosures in the corresponding footnotes beginning with your February 27, 2011 Form 10Q. Please advise.

Rufus Decker

Accounting Branch Chief

United States Securities and Exchange Commission

April 5, 2011

Page 2

Response:  In addition to the Company’s current disclosure in the consolidated balance sheets and consolidated statements of income, the Company will further include a reconciliation at the beginning and the end of the period of the carrying amount of total equity, equity attributable to the parent, and equity attributable to the noncontrolling interest in future filings beginning with the Company’s Form 10Q for the period ended February 27, 2011.

2.  Acquisition of Lifecore Biomedical, Inc. page 71

2.

Comment:  We note your response to comment 11 in our letter dated February 24, 2011.  We have the following additional concerns as it relates to Lifecore’s technology and license agreement:

·

You state that there are no aspects of the manufacturing process that are subject to patent protection, as such you intend to remove “proprietary” from your disclosures in future filings.

o

It is unclear why patent protection for the technology is the only consideration for recognition of an identifiable intangible asset. In this regard, ASC 805-20-55-38 notes that unpatented technology is a technology-based intangible asset and is separable.  Please also refer to ASC 805-20-55-12.  Further, we note your disclosure on page 4 that states, “The Company has two proprietary polymer technology platforms: 1)Intelimer® polymers, and 2)Hyaluronan (“HA”) biopolymers.  The Company’s proprietary polymer technologies are the foundation, and a key differentiating advantage, upon which Landec has built its business.” On page 17, you state, “Until the introduction of Lifecore’s medical grade hyaluronan, the only commercial source for medical hyaluronan was through a process of extraction from rooster combs.  Please provide us with a more comprehensive explanation as to how you determined Lifecore’s “proprietary fermentation process in manufacture premium, pharmaceutical-grade hyaluronan, and proprietary aseptic filling capabilities” are not identifiable intangible assets that should be separately recognized as an asset.  As part of your response, please clarify for us with a view toward future disclosure what consideration you gave to Lifecore’s technology when deciding whether or not Lifecore was an appropriate acquisition.

o

Your characterization of Lifecore’s technology in your letter dated March 10, 2011, and your May 30, 2010 Form 10-K differ significantly.  In this regard, we note that you referred to Lifecore’s technology as being proprietary ten different times throughout the Business section of your Form 10-K.  As such, please tell us how you intend to clarify to investors this potential mis-communication of the nature of Lifecore’s technology and its significance to your business.  Considering the frequency in which you characterize Lifecore’s technology as proprietary, we are concerned that simply removing the term “proprietary” will not sufficiently clarify to investors the nature and significance of the acquired Lifecore technology.

Rufus Decker

Accounting Branch Chief

United States Securities and Exchange Commission

April 5, 2011

Page 3

·

You state that in connection with the acquisition, you and Lifecore’s management decided to change the focus of the arrangement with Cleveland Clinic Foundation (CCF) and that it is unlikely any value would come from the license.  These statements appear contradictory to the disclosures you have made on pages 11 and 13 of the May 30, 2010 Form 10K.  The disclosures in the Form 10-K appear to communicate to investors that you intend to derive future revenues from the world-wide exclusive license and development agreement with CCF.  We also note that the development activity associated with the license and agreement is expected to be conducted over several years.  Please provide us with a comprehensive explanation for the potential contradiction between your March 10, 2011 response letter and your May 30, 2010 Form 10-K disclosures.  Please also provide us with more comprehensive explanation as to how you determined identifiable intangible assets should not be recognized for the license and development agreement.

Response:

Manufacturing Process

The Company’s proposal in response to comment 11 in the Staff’s letter dated February 24, 2011 to remove the “proprietary” language from all future filings was an attempt to be responsive to the Staff’s concerns regarding the characterization of Lifecore’s manufacturing processes. The use of the word proprietary was not intended to infer that Lifecore’s manufacturing processes were subject to a patent or that Lifecore’s standard manufacturing processes or technology were deemed to have significant value to a market participant or the Company at the time of acquisition. However, the Company continues to believe that characterizing certain aspects of Lifecore’s business as “proprietary” in future filings is an appropriate descriptor. To further clarify, and assist the Staff in understanding the basis for our decision to utilize the term proprietary, we offer the following information and background about the Lifecore business.

Rufus Decker

Accounting Branch Chief

United States Securities and Exchange Commission

April 5, 2011

Page 4

In the early 1980’s, Lifecore developed the bacterial fermentation process to manufacture premium pharmaceutical-grade hyaluronan, and received patent protection in 1985. At that time, the only other source of medical grade hyaluronan to the best of our knowledge was through a rooster comb extraction process. Beginning in the mid-1990’s, Lifecore developed its capability to aseptically fill syringes with a viscous solution in a bubble-free fashion; an important consideration in the use of ophthalmic products. Lifecore’s fermentation process patent expired in 2002. From the mid-1980’s through the expiration of Lifecore’s patent in 2002, several other companies successfully produced hyaluronan either from a fermentation process not covered under Lifecore’s patent or from rooster comb extraction. Today, in addition to Lifecore, the Company is aware of at least nine other worldwide companies that manufacture and sell hyaluronan offerings from either fermentation or rooster comb extraction for use in ophthalmic and orthopedic applications. Lifecore’s market share in the supply of premium, pharmaceutical-grade hyaluronan is approximately 30%.

As described in further detail on pages 19 through 21 of our fiscal year 2010 Form 10-K filing, hyaluronan (HA) is subject to extensive regulatory specifications required to obtain the necessary Food and Drug Administration (FDA) approvals. HA is utilized as an ingredient in medical devices that require further approval by the FDA. As a result, HA production, whether manufactured by Lifecore or one of its competitors, is subject to stringent regulatory standards and requires not only specialized facilities, such as clean rooms, but also the ability to consistently manufacture product that has been approved within the FDA’s strict product specific standards.

Lifecore’s HA production efforts consist of two key elements; development of customer specific HA and the manufacturing of the customer and/or FDA approved HA for use in customer end product medical devices. The process of formulating HA for each of Lifecore’s customers involves a highly collaborative effort between Lifecore and its customers in which the customer directs the development of the HA to meet their specific technical requirements. The process also includes clinical trials and management of the FDA requirements necessary for the inclusion of Lifecore’s HA in the customer’s medical devices. It is this HA development effort that we consider to be proprietary, because by definition it is unique and the underlying formulations and details of the process and product are not made public. Once the HA is developed for a specific customer, which is the premium, pharmaceutical-grade hyaluronan mentioned in our Form 10-K, the ongoing manufacturing process entails a standard set of processes that are generally consistent with those utilized by all fermentation-based hyaluronan manufacturers.

Rufus Decker

Accounting Branch Chief

United States Securities and Exchange Commission

April 5, 2011

Page 5

As mentioned above, there are relatively few HA manufacturers in the worldwide market. This is driven by two factors: 1) there are relatively few companies that utilize HA for medical purposes, the majority of which use a single supplier due to the related regulatory environment, and 2) there is a high barrier to entry into the HA manufacturing industry. A high barrier to entry exists because changing of HA suppliers is rare. Changing of HA suppliers would require a new FDA approval process, which would involve significant time, cost and regulatory risks associated with re-commencement of collaborative development efforts on the part of the HA buyer.

Over the past several decades, Lifecore has consistently demonstrated an ability to efficiently navigate the regulatory process associated with the development of FDA approved HA and consistently manufactured premium pharmaceutical-grade HA to meet customer specific needs.

The Company acquired Lifecore to expand its business into the medical industry, which is characterized by higher growth opportunities and profitability. While the fact that Landec and Lifecore both make polymers gives rise to the possibility of future synergistic applications, at the time of acquisition there were no apparent applications that combined the two technologies or manufacturing processes. Further, the Company believes that a market participant would ascribe value to Lifecore as further discussed below.

At the time of Lifecore’s acquisition, the Company consulted ASC 805-20 in connection with its purchase accounting for Lifecore, including the separability criteria therein. Paragraph 805-20-25-10 establishes that an intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion.

The Company considered whether the manufacturing process was a separately identifiable intangible asset as follows:

·

Lifecore’s manufacturing process does not meet the contractual-legal criterion because it is not subject to patents or patented technology.

·

We did conclude, however, that the manufacturing process was separable as defined and clarified by ASC 805-20-55-5b.

“An acquiree owns a registered trademark and documented but unpatented technical expertise used to manufacture the trademarked product. To transfer ownership of a trademark, the owner is also required to transfer everything else necessary for the new owner to produce a product or service indistinguishable from that produced by the former owner. Because the unpatented technical expertise must be separated from the acquiree or combined entity and sold if the related trademark is sold, it meets the separability criterion.”

Rufus Decker

Accounting Branch Chief

United States Securities and Exchange Commission

April 5, 2011

Page 6

As the process used to manufacture Lifecore’s HA was deemed separable, the Company considered the value of the manufacturing process in allocating the purchase price. The Company concluded that there was nominal value to a market participant associated with the manufacturing process itself based upon the following:

·

Once an HA product has cleared FDA approval, the manufacturing process is subject to standard processes that are not dissimilar to those utilized by all fermentation-based HA manufacturers. The specific processes utilized by an HA producer to develop HA to meet its customer’s specific needs and FDA requirements are not unique beyond the technical requirements of the user and FDA. This is evidenced by the fact that Lifecore has current competitors that are able to develop and manufacture premium pharmaceutical-grade HA to meet the needs of users similar to Lifecore’s customer. As a result, the Company concluded that a market participant would not place significant value on Lifecore’s standard manufacturing processes.

·

The Company concluded that a market participant would attribute the value of Lifecore to its long-term customer relationships (and the related high “switching costs”), its pre-eminent name recognition in the industry and its well-trained and experienced workforce, which gives Lifecore the ability to efficiently and consistently navigate the regulatory requirements associated with developing HA to meet its customers’ needs and related high regulatory standards.

The Company concluded that there was value in Lifecore’s customer relationships and recognized a separate intangible assets for those relationships in purchase accounting. The basis of the value of Lifecore’s customer relationships was associated with: 1) Lifecore’s ability to develop customer specific HA products, in collaboration and at the direction of its customers, as described above, and 2) Lifecore’s ability to maintain consistently high standards in the manufacturing of hyaluronan which had fostered long-term customer relationships, some of which have extended more than 25 years. Lifecore’s ability to consistently produce premium pharmaceutical-grade hyaluronan to meet each customer’s specific needs, and the relatively rare loss of a customer as described above, were contemplated in estimating the value of Lifecore’s customer base at the time of acquisition.

At the acquisition date, Lifecore had a well established customer base for which customer specific and FDA approved HA products had already been developed. Today, Lifecore’s customer base remains consistent with the customer base at acquisition. Lifecore continues to conduct development efforts with each of its customers under which technical modifications are made to existing products or processes to meet changing customer specific needs. Such work can also lead to new products or processes that are utilized by the specific customer for which the technical modifications were being conducted.

Rufu