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CORRESP
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    Via
Edgar

    February
3, 2011

    Jeffrey
Riedler, Assistant Director

    Securities
and Exchange Commission

    100 F
Street, N.E.

    Washington
D.C. 20549

                  Re:

                  Bacterin
      International Holdings, Inc.

                  Registration
      Statement on Form S-1/A

                  Filed  January
      7, 2011

                  File
      No. 333-169620

    Dear Mr.
Riedler:

    This letter is in response to your comment letter dated
January 20, 2011 to our Registration Statement on Form S-1/A filed January 7,
2011 (“Registration Statement”).  For your convenience, your questions
and comments are restated below in italics, followed by our
response.  The numbering corresponds with the comments in your
letter.

    We have concurrently filed via Edgar Amendment No. 3 to
our Registration Statement, which includes revisions to our Registration
Statement based on your comment letter, as well as other updated
information.

    Results of
Operations

    Comparison
of Nine Months Ended September 30, 2010 and September 30,
2009

    Cost of
tissue sales, page 18

              1.

              Please
      revise the discussion you provided in response to comment five to explain
      why you did not write off biologics inventories until they
      expired.  Your discussion should clarify why you were unable to
      estimate the inventories expiring and support why it was not necessary to
      recognize it earlier.

    Response:
We have performed additional research into the reasons for the 2009 Cost
of tissue sales adjustment (no current accounting or finance personnel were
employed by the Company at that time and the initial stated reasoning was
incorrect).  Accordingly, we have clarified and revised our discussion
regarding the third quarter 2009 adjustment in response to your comment as
outlined below.

      During the third quarter
of 2009, the Company recorded an adjustment which increased Cost of tissue sales
and decreased the Company’s inventory value by approximately $669,000. During
the quarter, the Company implemented an enterprise accounting system which
enabled the Company to more accurately track each inventory item and assign a
specific cost per item compared to the prior system which utilized an average
cost per lot item produced for 2009. Accordingly, as a result of the information
derived from the new system, the Company treated the adjustment as a change in
accounting estimate which resulted in an increase of Cost of tissue sales for
2009 of approximately $669,000, primarily
related to the Company’s OsteoSponge product, which had a large increase in
sales in 2009.

    Financial
Statements for the Quarterly Period Ended September 30,
2010

    (12)
Stock-Based Compensation, page F-11

              2.

              Please
      tell us where you have disclosed the feature that triggered the derivative
      accounting in response to comment 11.  For example, if the
      derivative accounting is triggered by an exercise price adjustment
      feature, describe the events that would trigger the exercise price
      adjustment and how the new exercise price will be
      calculated.  Furthermore, please explain to us why you believe
      Black Scholes is the most appropriate method in calculating the warrants’
      fair value as the Black Scholes method does not take into account changes
      to the exercise price.

    Response:
The feature that triggered the derivative accounting in response to
comment 11 was the price protection provision.  We have expanded and
modified our description of the feature in footnote #12 on page F-13 as outlined
below.

      The
Company utilizes a lattice model to determine the fair market value of the
warrants. The 1,482,256 warrants issued in connection with the bridge financing
were accounted for as derivative liabilities in connection with the price
protection provisions of the warrants in compliance with ASC 815. The lattice
model accomodates the probability of exercise price adjustment features as
outlined in the warrant agreements.

      Under the
terms of the warrant agreement, at any time while the warrant is outstanding,
the exercise price per share can be reduced to the price per share of future
subsequent equity sales of the Company’s common stock or common stock
equivalents that is lower than the exercise price per share as stated in
the warrant agreement.

    Financial
Statements for the Year Ended December 31, 2009

    (1)
Business Description and Summary of Significant Accounting
Policies

    Inventories,
page F-26

              3.

              Given
      the significance of inventory obsolescence recognized during the quarter
      ended September 30, 2010, please disclose your policy in recognizing
      inventory reserves and write-offs.  In your disclosure, please
      quantify the average shelf life of your
  inventories.

    Response:
We have disclosed our policy in recognizing inventory reserves and write-offs,
and we have quantified the average shelf life of our inventories. The Company
has set up an inventory reserve account equal to approximately 1.2% of the
inventory value at each period end based upon historical data. The average shelf
life of the Company’s putty products is 1.5 years and 5 years for all other
biologics products.

    *   *   *   *   *

    Should you have any questions or comments regarding our
responses to your comment letter or Amendment No. 3 to our Registration
Statement, please do not hesitate to call me at (406)
388-0480.

                Very
      truly yours,

                Bacterin
      International Holdings, Inc.

                By:  /s/
      John P. Gandolfo

                Name:  John
      P. Gandolfo

                Title:    Chief
      Financial Officer