Mail Stop 0510

      February 9, 2005


via U.S. mail and facsimile

Mr. Ronald G. Lee
Chief Executive Officer and Chief Financial Officer
Lee Pharmaceuticals
1444 Santa Anita Avenue
South El Monte, California 91733


	RE: Form 10-KSB for the fiscal year ended September 30, 2004
                   File No. 1-7335

Dear Mr. Lee:

	   We have reviewed these filings and have the following
comments.  If you disagree with a comment, 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 may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

	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-KSB FOR THE YEAR ENDED SEPTEMBER 30, 2004

Comment applicable to your overall filing
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like.  These revisions should be
included in your future filings beginning, to the extent
practical,
with your report on Form 10-QSB for December 31, 2004.

Item 1. Description of Business, page 2

2. Please expand your disclosure of patents that are material to
your
business to identify the patents by name and number and to
indicate
their duration.  In addition, please enhance the description of
your
business disclosures, including a description of your agreement
with
the Monticello Drug Company.  Please refer to Item 101 of
Regulation
S-B.

Management`s Discussion and Analysis or Plan of Operations, page
10

3. Please discuss the amount and percentage of your gross profit
and
the reasons for any variation in your gross profit in the 2004 and
2003 fiscal years.  Please also disclose the reasons why your
freight
expense and product liability expense declined in relation to the
prior year.

4. Management`s Discussion and Analysis should discuss the
judgments
and uncertainties that affect the application of your critical
accounting policies and the likelihood that materially different
amounts could be reported under different conditions or using
different assumptions.  Please note that repeating the summary of
accounting policies footnote from your financial statements, in
full
or in part, is not consistent with the guidance concerning the
disclosure of critical accounting estimates.  See SEC Release 33-
8040.

5. With respect to your critical accounting policies, please
indicate
whether you have discussed your critical accounting estimates with
your audit committee.  Additionally, for each critical accounting
policy or estimate, please discuss the likelihood of materially
different reported results if different assumptions or conditions
were to prevail.  To the extent practicable and meaningful, you
should also quantify the effect changes in assumptions and
estimates
would have on your overall financial performance.  See SEC
Releases
33-8040 and 33-8098.

6. Please tell us why the audit committee is not governed by an
audit
committee charter.  Please tell us if you are considering the
adoption of a charter in the future.


Liquidity and Capital Resources, page 11

7. Please provide a detailed discussion of your expected sources
and
uses of cash.  Please disclose that the majority of your debt is
due
by December 1, 2005.  Please discuss the impact of your projected
interest payments and your projected capital expenditures on your
liquidity.  Please also discuss your bank overdraft position, the
violations of your bank covenants and the subsequent waiver of the
violations by your lender, and how you expect to remedy these
issues.
Refer to Item 303(a) of Regulation S-B.

8. Please disclose the impact on liquidity and the reasons for the
increase in your accounts receivable from $580,000 at September
30,
2003 to $1,012,000 at September 30, 2004 after considering your 3%
decrease in revenues.  Please also explain the reasons for your
lower
bad debt expenses of $102,000 after considering the large increase
in
your accounts receivable.   Please also explain why the number of
day`s sales in averaged accounts receivable improved to 28 days in
2004 from 29 days in 2003 given the large increase in your
accounts
receivable and the slight decline in sales.

9. Please provide a more rigorous description of your plan to
improve
profitability through increased sales, reduction of expenses and
securing of additional financing from outside lenders.  It is
insufficient to just mention these factors without providing
supporting detail.  See SEC Financial Reporting Codification
section,
607.02, Uncertainty about an Entity`s Continued Existence.

Financial Statements

10. Please provide the enterprise-wide product line disclosures
required by paragraph 37 of SFAS 131.

Statements of Cash Flows, page 17

11. Bank overdraft related cash inflows and outflows represent
financing activities.  Please reclassify the decrease or increase
in
the bank overdraft account in your statements of cash flows from
cash
flows provided by operating activities to cash flows from
financing
activities.

Note 1 -  Summary of Significant Accounting Policies, page 18

12. Please disclose your revenue and expense recognition policy
for
shipping and handling amounts billed to customers in accordance
with
EITF 00-10.  If you do not include all of your actual costs for
shipping and handling in cost of goods sold, disclose the amount
of
shipping and handling costs excluded from cost of goods sold for
each
period presented as required by paragraph 6 of EITF 00-10.

13. Please disclose the types of expenses that you include in the
cost of goods sold line item and the types of expenses that you
include in the selling and advertising and general and
administrative
expenses line item.  Please also tell us whether you include
inbound
freight charges, purchasing and receiving costs, inspection costs,
warehousing costs, internal transfer costs, and the other costs of
your distribution network in the cost of goods sold line item.
With
the exception of warehousing costs, if you currently exclude a
portion of these costs from cost of goods sold, please disclose:
* in a footnote the line items that these excluded costs are
included
in and  the amounts included in each line item for each period
presented, and
* in MD&A that your gross profit margins may not be comparable to
those of other entities, since some entities include all of the
costs
related to their distribution network in cost of goods sold and
others like you exclude a portion of them from gross profit
margin,
including them instead in another line item, such as operating
expenses.

14. Please disclose your accounting policy with respect to your
cooperative advertising with your retailers.  Please also disclose
your accounting policy with respect to other sales incentives,
such
as discounts, coupons, slotting fees, rebates and buydowns.
Please
refer to EITF 01-9.

15. Please disclose the accounting policy for your distribution
agreement with the Monticello Drug Company.  Please clarify how
amounts warehoused, billed, shipped and collected for Monticello
Drug
Company owned products are accounted for in your financial
statements.  Please also disclose your accounting policy for the
service fee charged to the Monticello Drug Company.

Accounts Receivable

16. Please disclose why it is reasonably possible that your
estimate
of the allowance for doubtful accounts and returned merchandise
may
change in the future due to your distribution agreement with the
Monticello Drug Company.  Please consider whether the
determination
of these reserves should be considered one of your critical
accounting policies.

17. Please disclose your accounting policy for sales return
allowances.  Please also disclose the sales return policy of the
Monticello Drug Company under your distribution agreement and tell
us
the amount of sales return allowances accrued for this account at
year-end.  Explain to us any differences between your general
return
policy disclosed in Item 1 - Description of Business and in your
Summary of Significant Accounting Policies, and the return policy
offered to the Monticello Drug Company.  Please tell us the type
of
historical experience that you have accumulated with respect to
this
distribution agreement that enables you to reasonably estimate the
amount of future returns.  Please also disclose separately your
return policy under private label programs and supplementally tell
us
the amount of reserves for potential returns under these programs.
Please refer to SFAS 48.

Inventories

18. Please disclose your accounting policy for establishing
reserves
for inventory obsolescence. Given the high level of inventory
reserves ($850,000 at September 30, 2004, including a provision of
$456,000 in fiscal 2004) and their significant impact on your
gross
profit and operating results during 2004, please consider the
determination of reserves for inventory obsolescence as one of
your
critical accounting policies.  Please also tell us,
supplementally,
the reasons for the high level of reserves for inventory
obsolescence
and what internal controls are in place to minimize obsolete
inventory in the future.

19. At September 30, 2003, the reserve for inventory obsolescence
was
$441,000 as compared to $850,000 at September 30, 2004 with a
provision of $456,000 recorded during fiscal year 2004.  Please
tell
us the gross amount of obsolete inventory at September 30, 2004,
the
amount of revenue recognized in fiscal years 2003 and 2004 from
the
sale of obsolete inventory and the amount of related gain or loss
in
each period.  In addition, tell us where the revenue from the sale
of
obsolete inventory is reflected in the statement of operations.

Depreciation and Amortization

20. Please tell us why you estimated a 10 year useful life for
leasehold improvements given that all of your leases appear to
expire
by November 2005.  Please tell us if the leases have renewal
options
and if you intend to renew these leases.  Please refer to SEC
website
for letter dated February 7, 2005 concerning lease accounting.

Customer concentration and vendors

21. Please disclose your typical credit terms for your accounts
receivable.  Please tell us the name of the customer who owes you
$209,000 and your evaluation of the collectibility of the amount
due
from this customer.  Please also explain to us and disclose any
disparity between your typical credit terms and the amounts due
from
this customer.  With respect to your disclosure that one customer
generated 12% of your revenues and that five customers generated
36%
of revenues, please identify for the staff each of the five
customers
and the related amounts of revenue.

Note 4 - Intangible Assets, page 21

22. Please supplementally provide us with a listing of the
respective
product lines that comprise your product line intangible amount of
$963,000.  Please tell us why the product line intangible asset
does
not meet the criteria for separate recognition apart from goodwill
and is not subject to annual amortization expense.  Please refer
to
SFAS 141.

Note 6 - Accrued Liabilities, page 22

23. Please disclose the nature and amount of any material items
included in Other accrued liabilities.

Note 11 - Debt Maturities Schedule, page 24

24. Please revise your debt maturities schedule in your next
quarterly report.  Based on the note that you modified on
September
1, 2004, $2,176,249 is not due until December 1, 2005 which is
part
of the 2006 fiscal year.  However, you disclose $656,000 of debt
due
in the 2006 fiscal year in your debt maturities schedule.

Note 13 - Commitments and Contingencies, page 25

25. SAB Topic 5:Y states that environmental liabilities are of
such
significance that detailed disclosures regarding the judgments and
assumptions underlying the recognition and measurement of the
liabilities are necessary to inform readers fully regarding the
range
of reasonably possible outcomes that could have a material effect
on
your financial condition, results of operations, or liquidity.
Please clarify your disclosures to state whether any amounts have
been accrued if there is a reasonable possibility that a loss
exceeding amounts already recognized may have been incurred and
the
amount of that additional loss.  Please disclose the estimated
additional loss, or range of loss, or state that such an estimate
cannot be made as required by paragraph 10 of SFAS 5.  Please
provide
the disclosures called for by SAB Topic 5:Y.  Please also
supplementally tell us the present status of this matter,
including
the most recent regulatory activity.

Note 16 - Income Taxes, page 29

26. Please disclose the annual expiration date of the net
operating
loss carryforwards through the 2009 fiscal year.  Refer to
paragraph
48 of SFAS 109.

Note 18 - Acquisitions, page 30

27. Please disclose the amount paid by the Monticello Drug Company
for your remaining 20% interest in one of their product lines in
June
2003 and the resulting gain or loss on the transaction.




Note 20 - Distribution Agreement, page 30

28. Please tell us why you classified the service fee from the
marketing and distribution agreement with the Monticello Drug
Company
in other income below operating loss in your statement of
operations.
Given that you have a material, five-year distribution rights
agreement that should generate recurring annual earnings, the
service
fee should be presented as part of continuing operations.

Note 21 - Subsequent Event, page 30

29. Please file a Form 8-K report to disclose the sale of your
Nose
Better product line.  Please refer to SEC release 33-8400 dated
March
14, 2004 which include additional disclosure requirements on Form
8-
K.

Item 8A.  Controls and Procedures, page 31

30. Please supplementally advise the staff of the specific
internal
controls and procedures implemented to ensure that products are
not
invoiced prior to their shipment or double shipped to certain
customers.  Please also tell us supplementally, the dollar amount
of
revenues invoiced before shipment and double shipped to customers
by
quarter during each of the last two fiscal years.  Please also
tell
us if the errors were discovered by you or by your auditor and
whether the errors remain uncorrected in quarterly financial
statements.  Please reevaluate your certification in Exhibit 31.1
regarding the design and effectiveness of your internal controls
based on these responses.

Other Items

31. Please file the distribution agreement with the Monticello
Drug
Company as an exhibit to the Form 10-KSB.

32. Please address and fax a letter to Edgar Filer Support at
(202)
504 - 2474 in order to receive a new commission file number
stating
that you were de-listed from the American Stock Exchange effective
January 1996 and that you should be reporting under Section 12(g)
of
the Securities Exchange Act of 1934.  Your current commission file
number indicates that you are filing under Section 12(b).



*    *    *    *



      Please respond to these comments within 10 business days, or
tell us when you will provide us with a response.  Please provide
us
with a supplemental response letter that keys your responses to
our
comments and provides any requested supplemental information.
Detailed letters greatly facilitate our review.  Please file your
supplemental response on EDGAR as a correspondence file.  Please
understand that we may have additional comments after reviewing
your
responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed 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 writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* 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.

      If you have any questions regarding these comments, please
direct them to Gus Rodriguez, Staff Accountant, at (202) 824-5524
or,
in his absence, Nathan Cheney, Assistant Chief Accountant, at
(202)
942-1804 or, to the undersigned, at (202) 942-1774.


    						Sincerely,



							Rufus Decker
*							Branch Chief
??

??

??

??

Mr. Ronald G. Lee
February 8, 2005
Page 1 of 8



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510

         DIVISION OF
CORPORATION FINANCE