Two new cytotoxic tetronic acid derivatives with a rearranged drimane skeleton [1a and 1b], were isolated from the sponge Dactylospongia elegans, along with smenospongic acid [3], illimaquinone [4], dactylospongenones A, B, C, and D [5], and dictyoceratin C [6]. The structures of 1a and 1b were elucidated by spectroscopic and chemical methods. Treatment of 1 with base gave smenospongic acid [3], suggesting that this latter compound is an end-product of D. elegans metabolism. A biogenetic route from furoterpenes to the tetronic acids [1a and b] and smenospongic acid [3] is proposed.