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Correspondence

 ELLENOFF GROSSMAN & SCHOLE LLP

 ATTORNEYS AT LAW

 370 LEXINGTON AVENUE

 NEW YORK, NEW YORK 10017

 TELEPHONE: (212) 370-1300

 FACSIMILE: (212) 370-7889

 www.egsllp.com

 June 10, 2005

 VIA EDGAR CORRESPONDENCE

 AND FEDERAL EXPRESS

 Ms. Amy Bruckner

 Mr. Joel Parker

 Mail Stop 03-09

 United State Securities and Exchange Commission

 Division of Corporate Finance

 450 Fifth Street, N.W.

 Washington, D.C. 20549

Re:
BioDelivery Sciences International, Inc. (the “Company”)

 Annual Report on Form 10-KSB

 File No. 001-31361

 Dear Ms. Bruckner and Mr. Parker:

 Further to our previous conversations, we hereby respectfully submit to you
the following on behalf of the Company:

 1. Current Report
on Form 8-K/A (Amendment No. 2): As requested, this amendment to the Company’s August and November 8-Ks relating to the Arius acquisition is made to change the characterization of Arius to that of a non-development stage company.

 2. Annual Report on Form 10-KSB/A (Amendment No. 2): As
requested, this amendment is being filed to make certain changes to the footnotes to the Company’s financial statements as you requested. The amendment also attaches, as an exhibit, a letter amendment, dated June 6, 2005, between the Company
and Accentia to the license agreement between such parties, which amendment is intended to clarify that the Company has no ongoing material obligations, monetary or otherwise, under such license agreement. The Company hereby confirms that no such
obligations exist under the agreement, as amended.

 3.
Registration Statement on Form SB-2/A (Amendment No. 2): This amendment is being filed to conform changes from the other amendments as well as to bring the document current (March financials, etc.) in anticipation of effectiveness.

 Ms. Amy Bruckner

 Mr. Joel Parker

 June 10, 2005

 Page 2 of 2

 We are transmitted
the foregoing via EDGAR and, for your convenience, we are sending two (2) clean and marked courtesy copies of each filing by Federal Express.

 In addition, per your request and for your records, we attach, as Exhibit A hereto, our correspondence to you dated May 26, 2005.

 We thank the Staff for their assistance on this matter. Please contact the
undersigned at (212) 370-1300 if you have any additional questions or comments.

 Very truly yours,

 /s/ Lawrence A. Rosenbloom

 Lawrence A. Rosenbloom

 Enclosures

cc:
Francis E. O’Donnell, Jr., M.D.

 Mark A. Sirgo, Ph.D.

 James A. McNulty, CPA

 Barry
I. Grossman, Esq.

 Douglas S. Ellenoff, Esq.

 Stacy Y. Patrick, CPA

 Exhibit A

 ELLENOFF GROSSMAN & SCHOLE LLP

 ATTORNEYS AT LAW

 370 LEXINGTON
AVENUE

 NEW YORK, NEW YORK 10017

 TELEPHONE: (212) 370-1300

 FACSIMILE: (212) 370-7889

 www.egsllp.com

 May 26, 2005

 VIA EMAIL (brucknera@sec.gov)

 Ms. Amy Bruckner

 Mr. Joel Parker

 Mail Stop 03-09

 United State Securities and Exchange Commission

 Division of Corporate Finance

 450 Fifth Street, N.W.

 Washington, D.C. 20549

Re:
BioDelivery Sciences International, Inc. (the “Company”)

 Annual Report on Form 10-KSB

 File No. 001-31361

 Dear Ms. Bruckner and Mr. Parker:

 Pursuant to your request, and in connection with the Staff’s comment
letter, dated April 14, 2005 (the “Comment Letter”) regarding the above-referenced annual report, and our subsequent telephone conversations regarding the same, we hereby respectfully submit to you a supplemental response and
supporting documentation regarding the matters described below. Please advise us if you require this correspondence to be filed via EDGAR and we will be happy to do so.

 1. Revenue Recognition Analysis Regarding Accentia Royalty Stream Asset Purchase

 Regarding comment 2 posed in the Comment Letter, you have asked for a
thorough revenue recognition analysis under SAB 104/Topic 13A of the $2.5 million received by the Company under its September 2004 Asset Purchase Agreement with Accentia Biopharmaceuticals, Inc., f/k/a Accentia, Inc. (“Accentia”)
and for a description of the Company’s ongoing obligations pursuant to the underlying license agreement and such asset purchase agreement (the “Accentia Agreements”).

 Ms. Amy Bruckner

 Mr. Joel Parker

 May 26, 2005

 Page 2 of 10

A.
Revenue Recognition Analysis

 In April 2004, the Company entered into a sublicensing agreement with Accentia pursuant to which the Company was entitled to a 12% to 14% royalty stream
from an oral compound for the treatment of chronic rhinosinusitis (“CRS”) and asthma. Under the terms of the license agreement, all development costs are paid by Accentia. The Company is entitled to that royalty stream based on
Accentia’s application of the Company’s encochleation technology to the subject pharmaceutical.

 In September 2004, in part to address the Company’s liquidity, the Company entered into an asset purchase agreement with Accentia whereby the Company
sold to Accentia an asset consisting of 50% of a portion of the future revenue stream under the Accentia license agreement relating to CRS (and a resulting reduction of future royalty payments) for a one-time non-refundable payment of $2.5 million,
which was paid in September and which is recognized as “other income” in the Company’s third quarter 2004 unaudited and fiscal year 2004 audited financial statements.

 In its revenue recognition analysis, the Company considered the SAB 104 criteria for revenue recognition in support of its
revenue recognition policy for this transaction, as follows:

•

Persuasive evidence of an arrangement exists. The asset purchase agreement by and between the Company and Accentia was entered into and effective September 8, 2004.

•

Delivery has occurred or services have been rendered. Upon execution of the agreement, the Company was no longer entitled to receipt of 50% of its royalty under the
sublicense agreement with respect to CRS products. As described in more detail below, the Company has no ongoing involvement or obligation to perform with respect to the development, commercialization or sale of the subject products.

 SAB 104 further provides guidance, with regard
to license fee revenue, that delivery for purposes of revenue recognition would begin upon commencement of the “license term.” As per the Staff’s point, even if this revenue could be deemed to be license fee revenue, the license term
for these purposes would be the date of execution of the agreement, so full recognition at that time is appropriate.

 SAB 104 also addresses non-refundable up-front fees. The Company considered this not to be analogous since, as discussed below, there are no further
services to be provided and this is a one-time only fee.

•

The seller’s price to the buyer is fixed or determinable. The asset purchase agreement provides for a fixed purchase price of $2.5 million.

 Ms. Amy Bruckner

 Mr. Joel Parker

 May 26, 2005

 Page 3 of 10

•

Collectibility is reasonably assured. The entire $2.5 million was received by the Company in full during September 2004.

B.
Description of Company’s Ongoing Obligations

 The Company’s has no material monetary or other obligations under the Accentia Agreements which would alter the Company’s revenue recognition
analysis described above. As you may recall, on April 25, 2005, the Company and Accentia amended the license agreement to eliminate any obligation of the Company to pay for supplies of soy PS. It is this obligation that was referenced by the Staff
in the Comment Letter, and, as a result of the amendment, the legal payment obligation no longer exists, as was the original intent of the parties and as has been effected in actual practice.

 In addition, the Company has analyzed the remainder of the license agreement
and, although the agreement has standard provisions inuring to the benefit of the Company as a licensor, the Company believes that there are no remaining affirmative obligations of the Company under such agreement as it relates to the development,
commercialization and/or sale of the subject products which would alter the Company’s previous revenue recognition under the September 2004 asset sale.

 Moreover, since the license agreement was entered into in April 2004, the actual course of dealings between the parties (which has been consistent with
the terms of the Accentia Agreements) has been such that the Company has not undertaken any responsibilities for development, commercialization and/or sales activities. In the Company’s discussions with the Staff on this point, the Staff raised
the concern that Company scientists or other personnel may be obligated to participate, or have actually been involved, in Accentia’s scientific, development or other activities under the license (including as it relates to supplies soy PS).
The Company hereby confirms that, under its reading of the license agreement and in accordance with actual practice, no such obligation exists and no such activity has occurred. Moreover, the Company hereby informs the Staff that no funds
represented under “Expenses” in the Company’s audited income statement were expended towards the Accentia license agreement. As a result of the foregoing, the Company affirms its prior revenue recognition treatment relating to the
asset sale to Accentia.

2.
Treatment of Arius Acquisition

 Regarding comment 3 posed in the Comment Letter, you have asked for an analysis of the Company’s recordation of goodwill in connection with the
Company’s August 2004 acquisition of Arius Pharmaceuticals, Inc. (“Arius”), in particular with reference to EITF 98-3 and SFAS 141. In its 2004 audited financial statements, the Company treated the acquisition of Arius as a
business combination, and the Staff has raised the concern that such acquisition should have been treated as a sale of assets. In particular, the Staff has raised two areas of principal concern, namely that: (i) in the Company’s acquisition
Form 8-K filing, dated November 5, 2004, the Company characterized Arius as a

 Ms. Amy Bruckner

 Mr. Joel Parker

 May 26, 2005

 Page 4 of 10

“development stage company” (which creates certain presumptions under EITF 98-3) and (ii) it appears to the Staff that, at the time of acquisition,
Arius had not commenced “planned principal operations” as required for business combination treatment under EITF 98-3. In addition to the requested analysis, we address these two concerns below.

A.
Analysis of Goodwill Recognition

 To address the Staff’s first comment regarding goodwill recordation, in connection with its accounting for the Arius acquisition, the Company
received an independent valuation report, dated November 17, 2004 (which is attached hereto as Exhibit A), prepared by The Financial Valuation Group, relating to the valuation of the Company Series A preferred stock issued in the Arius
acquisition (the “Valuation”). The Valuation assisted the Company in its overall accounting treatment of Arius, which treatment was first reflected in the Company’s Form 10-QSB for the quarter ended September 30, 2004. The
Company recorded goodwill of $2.7 million and licenses of $1.9 million and allocated $0.2 million to in-process research and development (“IPR&D”) according to the following analysis:

(i)
Valuation of Atrix License to BEMA Technology

 The BEMA technology is licensed from a third party and is recognized as an asset apart from goodwill as a Contract-Based Intangible Asset. The BEMA
license, which was obtained through lengthy, arm’s length negations by Arius some three months prior to its acquisition by the Company, grants Arius the right to exploit the BEMA technology in the United States. The Company’s
unadjusted projections for BEMA Fentanyl, the first BEMA product, call for net revenues from this product of $64 million in year five, peaking at $425 million in year eight. While market research by Medical Marketing Research, Inc. provided the
rationale for these projections, it is reasonable to believe that a willing buyer would not necessarily base a transaction price on the projections without subjecting the same to critical analysis. A probabilistic model was utilized to value this
asset.

 The fair value of the BEMA license was determined as
follows (see page 20 of the Valuation and Exhibit 5 thereto):

 Scenario

Preliminary
Fair Value
Indication

VC Haircut

Discount
Rate

 1

$
1,578,000

0
%

85
%

 2

2,063,000

10
%

80
%

 3

1,516,000

15
%

80
%

 4

2,511,000

20
%

75
%

 5

1,852,000

25
%

75
%

 Average

$
1,904,000

 Median

$
1,852,000

 Conclusion

$
1,900,000

 Ms. Amy Bruckner

 Mr. Joel Parker

 May 26, 2005

 Page 5 of 10

(ii)
Valuation of In-Process Research and Development

 In accounting for research and development costs, the following accounting pronouncements are applicable:

•

FASB Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs (SFAS 2)

•

FASB Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method (FIN 4)

•

FASB Statement of Financial Accounting Standards No. 86, Accounting for the costs of Computer Software to be Sold Leased or Otherwise Marketed (SFAS 86)

•

The AICPA Practice Aid (“Practice Aid”) Assets Acquired in a Business Combination to be Used in Research and Development Activities: A Focus on Software,
Electronic Devices, and Pharmaceutical Industries

 Generally, IPR&D is distinguished from developed technology based upon whether the IPR&D projects are measurable, have substance and are incomplete. IPR&D projects that have not been granted FDA approval are classified in the
Practice Aid as being incomplete.

 In order to comply with the
applicable pronouncements, management discussions were held regarding the status of on-going development and commercialization efforts, specifically with respect to the four products in the “pipeline” at the valuation date (i.e., the date
the acquisition).

 At the valuation date, Arius was working on
one product, Emezine, which could reasonably be classified as IPR&D. Emezine meets the qualification test for IPR&D as it has substance and is incomplete.

 A probabilistic model was utilized to estimate the fair value of the IPR&D related to Emezine. Using Arius’
forecasts as a baseline, the Valuation applies a “VC Haircut” (reduced revenue projections as a venture capitalist might) and capitalized the resulting revised cash flows. Importantly, after the VC Haircut, the adjusted forecasts are not
risk neutral; that is, the adjusted forecasts are still speculative and we used risk adjusted discount rates.

 Ms. Amy Bruckner

 Mr. Joel Parker

 May 26, 2005

 Page 6 of 10

 The fair value of the fair value of IPR&D for Emezine was determined as follows (see page 19 of
the Valuation and Exhibit 4 thereto):

 Scenario

Preliminary
Fair Value
Indication

VC Haircut

Discount
Rate

 1

$
251,000

0
%

40
%

 2

187,000

5
%

35
%

 3

123,000

10
%

30
%

 Average

$
187,000

 Median

$
187,000

 Conclusion

$
200,000

(iii)
Valuation of Goodwill

 Goodwill was calculated using the residual method and is concluded to be $2,715,000. Please refer to pages 2 and 12 of the Valuation for a summary of the
valuation calculations, which are further supported by exhibits to the Valuation showing the detailed calculations.

 B. Arius as a “Development Stage Company”

 The Staff has raised a concern that Arius was characterized as “development stage” in its audited financial statements, which, the Staff
informs, creates a negative presumption against business combination treatment under EITF 98-3. In response, the Staff is advised that Arius’ auditors have informed the Company that they made this characterization solely because, under Rule
1-02(h) of Regulation S-X (“Rule 1-02(h)”), Arius had not generated significant revenues at the time of acquisition and not because Arius had not commenced planned principal operations at the time of acquisition. Under Rule 1-02(h):

 “A developme