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Correspondence

 May 17, 2005

 VIA EDGAR AND FACSIMILE

 Mr. Jay Webb

 Mr. Eric Atallah

 Ms. Angela Crane

 Division of Corporate Finance

 United States Securities and Exchange Commission

 450 Fifth Street, N.W.

 Washington, D.C. 20549-0306

Re:

Nanogen, Inc.

Form 10-K for the fiscal year ended December 31, 2004

File No. 000-23541

 Ladies and Gentlemen:

 We submit this letter in response to the comments from the Staff (the “Staff”) of
the Securities and Exchange Commission (the “Commission”) to Nanogen, Inc. (the “Company”) contained in your letter dated May 2, 2005 to Robert Saltmarsh, Chief Financial Officer of the Company with respect to the Company’s
Form 10-K for the fiscal year ended December 31, 2004, File No. 000-23541 (“Form 10-K”).

 In response to your comments, as time permitted, we enhanced certain disclosures in our Form 10-Q for the quarter ended March 31, 2005 (the “1st quarter Form 10-Q”). As we believe in providing high quality and insightful financial disclosures to our investors, we look forward to resolving your
comments.

 In response to your letter, set forth below are the Staff’s
comments in italics and are followed by the Company’s responses.

 Mr. Jay Webb

 Mr. Eric
Atallah

 Ms. Angela Crane

 Division of Corporate Finance

 United States Securities and Exchange Commission

 May 17, 2005

 Page 2

 Form 10-K for the fiscal year ended December 31, 2004

 Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Page 33

Results of Operations – Page 38

 Years ended December 31, 2004, 2003 and 2002 – Page 38

1.
We note your discussion on page 30 of the License and Supply Agreement with Applied Biosystems that you acquired in connection with your acquisition of Epoch Biosciences, Inc. It
would appear that this is a significant agreement to you. In future filings please make more specific disclosures regarding the significant terms of this agreement including minimum royalty payments and the remaining life of the underlying
patents.

 Our License and
Supply Agreement with Applied Biosystems (“ABI agreement”) is a significant agreement to us. To enhance our disclosures and investors’ understanding of our royalty revenue, we will discuss the significant terms of the ABI agreement
the Management Discussion and Analysis (MD&A) section of our future filings. In the 1st quarter Form 10-Q, we
enhanced our discussion of the agreement in the overview section of the MD&A (emphasis added):

 “We receive significant royalty payments from Applied Biosystems in an agreement that we assumed with our acquisition of Epoch Biosciences in
December, 2004. This agreement provides for minimum quarterly royalties through the third quarter of 2005. Thereafter, we will receive royalty payments based on actual sales which may result in a significant reduction of royalties received. In
addition, the contract can be terminated with a 180 day notice, although we expect our relationship with Applied Biosystems to continue into the foreseeable future.”

 In the results of operations section of the MD&A of our 1st quarter Form 10-Q, we added an additional disclosure regarding known trends and our expectations going forward as to our license and royalty revenue
(emphasis added):

 “License fees include
nonrefundable fees generated from the licensing of our technology with third parties. License fees increased in the first quarter of 2005 as compared to the same quarter in 2004 due to the royalty bearing licensing agreement with Applied
Biosystems for the TaqMan® 5’-nuclease
real-time PCR assays.

 Mr. Jay Webb

 Mr. Eric
Atallah

 Ms. Angela Crane

 Division of Corporate Finance

 United States Securities and Exchange Commission

 May 17, 2005

 Page 3

 The future: We continually evaluate additional licensing opportunities for our intellectual property. Through our recent acquisition we obtained a
royalty bearing licensing agreement with Applied Biosystems, for the TaqMan® 5’-nuclease real-time PCR assays with contractual minimums through the third quarter of 2005 and thereafter we will receive royalty payments based on actual sales.
We expect license fee revenue to remain consistent through the third quarter of 2005. After the third quarter of 2005 we expect the licenses revenue to significantly decrease based on our current analysis of the historic sales of the
product.”

 We believe that these
disclosures in our 1st quarter Form 10-Q convey the information that our investors require in order to understand
the ABI agreement and the associated licenses and royalty revenue.

 We are currently researching the patents covered by the ABI agreement so that we can disclose the lives of these patents in future filing.

 Note 3 – Financial Statement Details – Page F-15

2.
We see that inventory reserves approximate 77% of inventory cost and that those reserves significantly increased on both an actual and percentage basis in 2004. MD&A should
include disclosure about why such a significant portion of inventory cost is reserved and your plans for disposition of the impaired inventory. For example, were any of written-off inventory items subsequently sold? If so, were they sold at prices
above their new cost basis? What was the impact of any such sales upon gross profit margins? Please revise future filings to address our concerns.

 Our inventory reserves significantly increased on both an actual and percentage basis in 2004. In response
to your comment, we enhanced our MD&A disclosures related to cost of product sales in our 1st quarter Form 10-Q
with the following (emphasis added):

 “In the
first quarter of 2005, we had an inventory reserve of $6.3 million primarily related to our first generation NanoChip® system as compared to $2.3 million in the first quarter of 2004. This inventory reserve was accumulated throughout 2004
during our quarterly evaluations of anticipated sales for the next twelve months. After our announcement of a second generation system in October, 2004 and evaluating actual sales during the year, we reserved (expensed) the net remaining carrying
value of all first generation NanoChip® systems without purchase

 Mr. Jay Webb

 Mr. Eric
Atallah

 Ms. Angela Crane

 Division of Corporate Finance

 United States Securities and Exchange Commission

 May 17, 2005

 Page 4

 orders as of December 31, 2004. During the first quarter of 2005, the reserve did not have a significant impact on our NanoChip® gross margins.
Going forward, future sales of our first generation system are highly uncertain in light of previous sales history and our anticipated release of a second generation system. Future sales of first generation NanoChip systems, if any, will have a
minimal cost of product sales.”

 We
will continue to discuss the activity related to the inventory reserves and its impact on our results of operations in the MD&A of our future filings to the extent its material to our results of operations.

 Note 4 – Business Combinations – Page F-18

3.
We note that a significant portion of your acquisition price related to the SynX and Epoch acquisitions was allocated to goodwill. In a supplemental response and in future
filings provide a description of the factors that contributed to a purchase price that resulted in recognition of such a significant goodwill asset. Additionally please tell us how you determined to allocate the excess purchase price between
goodwill, intangible assets and property, plant and equipment. Specifically discuss the reasons for not allocating more of the excess purchase price to intangible assets such as customer relationships, contracts, licenses, technology, etc. For
reference see EITF 02-17 and Appendix A of SFAS 141.

 Our business strategy includes acquiring companies, technologies and product lines to complement our internally developed products and expand our product offerings. During 2004, we identified SynX and Epoch as two
businesses operating in market niches that were complementary to our existing business and products and which we believed would offer us the ability to broaden our product line. We also believed that our existing sales and marketing infrastructure
would allow us to market and sell the current and future products of these companies within our current sales and marketing organization. Finally, we identified numerous operational and administrative functions which could be consolidated within the
combined company. These factors were among those that contributed to a purchase price resulting in the recognition of goodwill.

 We utilized an independent third party to perform a valuation analysis related to the purchase price in excess of the tangible assets and
liabilities held by SynX and Epoch’s as of their respective acquisition dates. We reviewed the assumptions, calculations and conclusions of this valuation analysis for accuracy and reasonableness. Pursuant to SFAS 141, we recognized identified
intangible assets in our acquisitions if we could identify an asset from contractual or other legal rights or if the asset is “separable” from the business. We considered an asset “separable” if it (a) was capable
of being sold, transferred, licensed, rented or exchanged or (b) can be transferred in combination with a related asset or liability. We then identified the intangible assets in SynX and Epoch in the following areas: marketing, customer
relationships, artistic creation, contracts and technologies. For technologies acquired, we considered the guidelines set forth in SFAS 2 and FASB Interpretation No. 4 (FIN4) to determine whether a technology is classified as complete or in-process
research and development (IPR&D). Pursuant

 Mr. Jay Webb

 Mr. Eric
Atallah

 Ms. Angela Crane

 Division of Corporate Finance

 United States Securities and Exchange Commission

 May 17, 2005

 Page 5

 to the above guidelines, we assessed the value and future applications of technology assets to be used in IPR&D projects. We expensed technologies
determined to have no alternative future use. Completed technology was recorded at its fair value and will be amortized over its estimated remaining useful life.

 With the assistance of an independent third party, we utilized three valuation approaches for the identified intangible
assets:

•

We used the “income approach” based on the assumption that the value of an asset can be determined by estimating the present value of the expected future cash flows
generated by an investment in that asset. This approach reflects the risk-return tradeoff faced by a rational investor with several different possible investment alternatives. This is achieved through a two-step procedure.

 The first step involves the creation of a forecast of the total monetary
benefits expected to result from this investment. The second step would be to discount these cash flows back to present value at a discount rate that incorporates the degree of risk specific to this particular investment. We believe, this analysis,
referred to as discounted cash flow analysis, is widely accepted and fundamental to a variety of different investment decisions.

 As mentioned below, in the valuation of intangible assets, we combined elements of the income approach and the market approach when a market investigation
establishes a current fair royalty, and this amount is then used as the basis for a projection of royalty savings to be discounted to present value in order to derive the value of the intangible asset.

 The income approach was used in arriving at the fair value of SynX’s
and Epoch’s completed technology, trade names/trade marks, royalty agreements, the customer relationships and contracts, and as well as in our analysis of the business enterprises values.

•

We used the “cost approach” based on the premise that value can be established by determining the cost of reproducing or replacing the subject asset (less any
measurable physical depreciation, and/or functional or economic obsolescence, if applicable). This approach is often used in the valuation of specific tangible assets, such as machinery and equipment. The cost approach was used to determine the
value of Epoch’s MGB Eclipse (internet based order placement) software. In addition, it was used to value Epoch’s and Synx’s property, plant and equipment.

•

We considered using the “market approach” which is used to develop a value indication of an asset (including a business, a business ownership interest, a single
asset, or a group of assets)

 Mr. Jay Webb

 Mr. Eric
Atallah

 Ms. Angela Crane

 Division of Corporate Finance

 United States Securities and Exchange Commission

 May 17, 2005

 Page 6

 using one or more methods that compare such assets to similar assets that have been sold in arm’s-length transactions. However, we found the market
approach difficult to apply to the valuation of our intangible assets due to the lack of comparable market data. Instead, market data available related to royalty and licensing payments made to the owners of specific intangible assets, such as trade
names or patented technology, was used in conjunction with the income approach, which is described above. Therefore, valuation using only the market approach was not employed.

 After the independent third party performed the above analysis, we reviewed the assumptions, calculations
and conclusions for reasonableness. We then allocated the purchase price to specific tangible and identified intangible assets with the remainder recorded to goodwill. We did not allocate more of the purchase price to assets, because we believe our
analysis captured the fair value of the tangible and identifiable intangible assets acquired.

 In our Form 10-Q for the quarter ended June 30, 2005 (the “2nd quarter 10-Q”) we anticipate
including a disclosure in the MD&A similar to the following:

 “Goodwill valuation:

 Our
business strategy includes acquiring companies, technologies and product lines to complement our internally developed products and expand our product offerings. During 2004, we identified SynX and Epoch as two businesses operating in market niches
that were complementary to our existing business and products and which we believed would offer us the ability to broaden our product line. We also believed that our existing sales and marketing infrastructure would allow us to market and sell the
current and future products of these companies within our current sales and marketing organization. Finally, we identified numerous operational and administrative functions which could be consolidated within the combined company. These factors were
among those that contributed to a purchase price resulting in the recognition of goodwill.

 We utilized an independent third party to perform a valuation analysis related to the purchase price in excess of the tangible assets and
liabilities held by SynX and Epoch’s as of their respective acquisition dates. We reviewed the assumptions, calculations and conclusions of this valuation analysis for accuracy and reasonableness. Pursuant to SFAS 141, we recognized identified
intangible assets in our acquisitions if we could identify an asset from contractual or other legal rights or if the asset is “separable” from the business. We considered an asset “separable” if it (a) was capable
of being sold, transferred, licensed, rented or exchanged or (b) can be transferred in combination with a related asset or liability. We then identified the intangible assets in SynX and Epoch in the following areas: marketing, customer
relationships, artistic creation, contracts and technologies. For technologies acquired, we considered the guidelines set forth in SFAS 2 and FASB Interpretation No. 4 (FIN4) to determine whether a technology is classified as complete or in-process
research and development (IPR&D). Pursuant to the above guidelines, we assessed the value and future applications of technology assets to be used in IPR&