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Correspondence

June 20, 2006

Ms. Sasha Parikh

Staff Accountant

Division of Corporation Finance

United States Securities and Exchange Commission

450 Fifth Street, N.W., Stop 4-5

Washington, D.C. 20549-7010

Re:

Bioanalytical Systems, Inc.

Form 10-K for Fiscal Year Ended September 30, 2005

Filed January 18, 2006

File No. 0-23357

Dear Ms. Parikh:

        In response to your voice mail
comments on June 6, 2006, we herewith supply the attached additional
information. Your initial comment was as follows:

Please provide us, in disclosure type format, your basis for determining that
the regulated facility/FDA compliant laboratory sites acquired from LC
Resources, Inc. and PharmaKinetics Laboratories, Inc. are indefinite
lived assets not subject to amortization.

        In your phone conversation, you
asked us to comment on how we came to the conclusion that the amounts of
amortization that would have been recorded was immaterial, had the above
intangibles been treated in earlier periods as we treated them in the
Bioanalytical Systems, Inc. (“BASi”) Quarterly Report on Form 10Q for
the quarter ended March 31, 2006 (the “Form 10-Q”). In the discussion
below, we will summarize our thinking, particularly as it relates to the
guidance given in Staff Accounting Bulletin 99 (“SAB 99”).

        The Staff quotes the Supreme
Court in SAB 99 that a fact is material if there is “a substantial
likelihood that the…fact would have been viewed by the reasonable investor
as having significantly altered the ‘total mix’ of information made
available.” It is our belief that $12,000 of quarterly pre-tax amortization
of replacement costs of an FDA compliant facility would not be so viewed by the
reasonable investor, for the reasons stated below.

        When compared to the Contract
Research Organizations (“CRO’s”) that are publicly traded, BASi
is valued, on a comparative basis, much lower than the sector. Other CRO’s
are capitalized at over one time to nearly four times sales, whereas BASi is
capitalized at 70% of sales. As a ratio of market value to tangible book value,
the CRO sector ranges from over three to over seven times book value, whereas
BASi currently trades at less than twice its tangible book value. Only on
price/earnings ratios do we beat market valuations for CRO’s. In that
regard, we do not believe the market is valuing our company on our historical
earnings, as we have had losses in the year-to-date and fiscal years 2004 and
2005, and such meager earnings in fiscal 2003 as to be considered break-even.
Our failure to achieve consistent financial results has already been factored
into our perception in the market; we do not believe that the $12,000 quarterly
pre-tax amortization is material to that perception.

        In
the quarter ended March 31, 2006, we recorded $132,000 pre-tax of amortization expense
related to periods prior to that quarter. While that amount is over 10% of our pre-tax
income for that quarter, our year-to-date results through March 31, 2006 was a loss, and
would have been a loss without the amortization. We fully disclosed this amortization in
both the Form 10-Q and our quarterly earnings release. Our stock price before and after our
earnings release remained in the same trading range. While we cannot predict with accuracy
our final results for the current fiscal year in judging materiality on interim statements
in accordance with Accounting Principles Board Opinion 28, we anticipate both revenues and
expenses will exceed $40 million in the current year. Regardless of our final net income
or loss, a variation of $120,000 of pre-tax expenses in the current year as a result of
recording amortization relating to earlier periods would not, in our opinion, be material
to the “reasonable investor.”

        In
SAB 99, the Staff repeatedly makes the point, including cites from the Supreme Court and
the FASB, that magnitude alone does not determine the materiality of an item. While that
argument is used to negate a formulaic approach that would rule a small percentage
misstatement immaterial, we believe the same logic must be applied when a financial
misstatement item is greater than the usual formulaic amounts.

        Other
than net earnings, much of our financial results are unchanged by the treatment of this
intangible. Our EBITDA and cash flow are unchanged by whether or not the intangible is
amortized. Likewise, our tangible net worth, current ratio and other key financial ratios
are minimally impacted, if at all. Our bank loan covenants totally eliminate the existence
and treatment of intangibles in determining our compliance. We believe these facts are
additional support that this misstatement is immaterial.

        Other
criteria set forth included in SAB 99 for determining the materiality of a misstatement
are:

•
Whether
the misstatement masks a change in earnings or other trends

Omission of the
amortization did not mask a change in earnings or other trends. The impact of not
recording the accrual in prior periods would not significantly change the actual results
in relation to historical trends we have realized. The Company does not issue earnings
expectations. Thus, the unfavorable earnings impact to the second quarter of fiscal 2006
of $(0.02) per diluted share as a result of correcting the previous error is not likely to
mislead or mask a change in BASi’s earnings trends. Similarly, the impact on earnings
per share of $0.00, $0.01 and $0.01 in 2003, 2004 and 2005, respectively, from failing to
record amortization, would not have changed trends in the previously reported full year
earnings per share of $0.02, $(0.04) and $(0.02), respectively.

•

Whether the misstatement hides a failure to meet analysts' consensus
expectations for the enterprise

As discussed above, the
Company does not issue earnings guidance. Additionally, the Company has no analyst
coverage.

•

Whether the misstatement changes a loss to an income or visa
versa

The amount of
amortization related to each prior fiscal year would not change a loss to an income or
visa versa.

•

Whether the misstatement affects the registrant's compliance with regulatory
requirements or loan covenants and other contractual
requirements

The misstatement does
not affect our compliance with any regulatory requirement, loan covenants or other
contractual requirements.

•

Whether the misstatement has the effect of increasing management's
compensation

The impact of the
misstatement had no impact on management’s compensation as all bonuses are
discretionary, and no management bonuses were paid in the periods that would have been
impacted.

•

Whether the misstatement involves concealment of an unlawful
transaction

The misstatement does
not involve the concealment of an unlawful transaction and management would have no
motivation to conceal the misstatement.

•

Whether management has intentionally misstated items in the financial statements
to "manage" earnings

This was not the result
of an intentional misstatement. This was an error based on misapplication of FAS 142.

        The Company acknowledges that:

        •
the Company is responsible for the adequacy and accuracy of the disclosure in
the Form 10-K;

        •
staff comments or changes to disclosure in response to staff comments do not foreclose the
Commission from taking any action with respect to the Form 10-K; 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,

        We appreciate your review of our
responses to your comments. Should you have additional comments or questions,
please contact me at (765) 497-5829 or, if you prefer, my fax number is (765)
497-8483.

Very truly yours,

BIOANALYTICAL SYSTEMS, INC.

/s/ Michael R. Cox

Michael R. Cox

Vice President-Finance