SecProbe.io

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Mail Stop 6010

August 16, 2005

Ms. Jian Li
Vice President, Finance and Corporate Controller
Durect Corporation
10240 Bubb Road
Cupertino, CA 95014

      Re:	Durect Corporation
		Form 10-K for the fiscal year ended December 31, 2004
	File No. 000-31615

Dear Ms. Li:

	We have limited our review of your filing to those issues we
have addressed in our comments.  Where indicated, we think you
should
revise your documents in response to these comments.  If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.  In some of our comments, we ask
you
to provide us with supplemental information so we may better
understand your disclosure.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

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

Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 25

Results of Operations, page 29

1. We acknowledge your table included in the section entitled
"Product Research and Development Programs" on page 10. However,
we
believe that your disclosures about historical research and
development expenses and estimated future expenses related to your
major research and development projects could be enhanced for
investors.  Please refer to the Division of Corporation Finance
"Current Issues and Rulemaking Projects Quarterly Update" under
section VIII - Industry Specific Issues - Accounting and
Disclosure
by Companies Engaged in Research and Development Activities.  You
can
find it at the following website address:
http://www.sec.gov/divisions/corpfin/cfcrq032001.htm#secviii.

Please disclose the following information for each of your major
research and development projects:

a. The costs incurred during each period presented and to date on
the
project;
b. The nature, timing and estimated costs of the efforts necessary
to
complete the project;
c. The anticipated completion date;
d. 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 timely;
and,
finally
e. The period in which material net cash inflows from your
significant projects are expected to commence.

Regarding a., if you do not maintain research and development
costs
by project, please disclose why management does not maintain and
evaluate research and development costs by project.  Include other
quantitative or qualitative analyses that indicate the amount of
the
company`s resources being used on these projects.

Regarding b. and c., please disclose the amount or range of
estimated
costs and timing to complete the phase in process and each future
phase. To the extent that information is not estimable, please
disclose the facts and circumstances indicating the uncertainties
that preclude you from making a reasonable estimate.

Notes to Consolidated Financial Statements, page 63

Note 1. Summary of Significant Accounting Policies, page 66

2. We note, per your disclosure in the "Strategy" section on page
8
and the notes to your consolidated financial statements, that you
are
party to several collaboration/development agreements pursuant to
which you have received up-front license fees. For example, we
note
that you received a $10.0 million up-front fee from Endo
Pharmaceuticals related to your CHRONOGESIC license and
development
agreement. Please include disclosure for the periods presented,
that
outlines both the amount and accounting treatment related to each
up-
front fee that you have received under your significant
collaboration/development agreements. In the instances where you
have
recorded deferred revenue, please specify your amortization
methodology and disclose the facts that support your methodology,
including the recognition period.

3. Please disclose how you recognize milestone and royalty
revenues.
Stating that the amounts are "recognized as earned" is not clear.

Note 2. Strategic Agreements, page 69

4. We note that you issued stock and warrants to ALZA Corporation,
valued at $13.5 million, which you recorded to a contra-equity
account in your statement of stockholders` equity. Please provide
us
with additional information regarding the basis for your
accounting
treatment, including your valuation of the common stock and
warrants,
given that there was no market for your common stock at the time
of
the amendment to your development/commercialization agreement with
ALZA. Please reference the applicable literature under U.S. GAAP.
Additionally, please tell us what portion of this amendment
consideration related to a reduction in "up-front payments" and
specify your related accounting treatment, particularly given your
ongoing role in product development under this agreement.

*    *    *    *

       As appropriate, please amend your Form 10-K for the year
ended
December 31, 2004 and Forms 10-Q for the quarters ended March 31
and
June 30, 2005 and respond to these comments within 10 business
days
or tell us when you will respond.  You may wish to provide us with
marked copies of the amendment to expedite our review.  Please
furnish a cover letter with your amendment that keys your
responses
to our comments and provides any requested information.  Detailed
cover letters greatly facilitate our review.  You should file the
letter on EDGAR under the form type label CORRESP.  Please
understand
that we may have additional comments after reviewing your
amendment
and responses to our comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that they
have
provided all information required under the Securities Exchange
Act
of 1934 and that they have provided all information investors
require
for an informed investment decision.  Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.

	In connection with responding to our comments, please
provide,
in your letter, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

       In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.

      You may contact Amy Bruckner, Staff Accountant, at (202)
551-
3657 or Mary Mast, Senior Accountant, at (202) 551-3613 if you
have
questions regarding comments on the financial statements and
related
matters.  Please contact me at (202) 551-3679 with any other
questions.

      Sincerely,

							Jim B. Rosenberg
							Senior Assistant Chief
Accountant
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Jian Li
Durect Corporation
August 16, 2005
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