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Correspondence

Correspondence

AspenBio Pharma, Inc.

1585 South Perry Street
Castle Rock, CO, 80104

January 22, 2009

Jim B. Rosenberg
Senior Assistant
Chief Accountant
U.S. Securities and Exchange Commission
Mail Stop 6010
100 F. Street, NE

Washington, D.C.  20549

 Re:
AspenBio
Pharma, Inc.
Form 10-KSB for the Period Ended December 31, 2007

Form 10-Q for the Quarterly Period Ended September 30, 2008

File No. 001-33675

Dear Mr. Rosenberg:

        We
have received your letter dated December 15, 2008 commenting on AspenBio Pharma
Inc.’s (the “Company” or “AspenBio”) annual report on Form 10-KSB
for the year ended December 31, 2007 and quarterly report on Form 10-Q for the period
ended September 30, 2008. We appreciate the time you and the other members of the
Commission’s staff have taken in reviewing the Company’s periodic reports. The
response narratives below address your comments (which we have repeated in italic
type).

Form 10-KSB for the
Fiscal Year Ended December 31, 2007

Management’s
Discussion and Analysis or Plan of Operations

Results of Operations,
page 25

Comment 1:

 You disclose that you recorded “an allowance of approximately $43,000 for
 certain recombinant animal products in process where sales of such finished
goods prior to FDA approval have been voluntarily suspended by the Company.”
Please explain to us what product(s) comprise the $43,000 allowance and  clarify
for us whether you sold any of these products prior to FDA approval,  and if so,
how this is legally possible. In your response, please explain to  us how you could
sell EquiPure LH when you indicate on page 6 that this  product is on hold at the
FDA. In this regard, it is apparent from disclosure  in Exhibit 99.1 to a Form 8-K
dated April 9, 2007 that your EquiPure LH has  generated modest revenues through
sales by your marketing partner, Bioniche.

Jim B. Rosenberg
U.S. Securities and
Exchange Commission
January 22, 2009
Page 2

Response:

        The
recombinant animal product referred to in the disclosure is the EquiPure LH product for
treatment of horses. These products had a recorded cost of approximately $58,000 prior to
the recording of the reserve. Due to earlier advances, the equine product was the first
product that we commenced development of following the 2004 agreement to license the
technology from The Washington University in St. Louis. In the first quarter of 2007 we
commenced the process for FDA approval of this EquiPure LH product with the filing of an
INADA with the Center for Veterinary Medicine (“CVM”) at the FDA and received an
INADA letter and file number from the FDA (see March 29, 2005 press release).

        Unlike
the human drug process, in the animal drug approval process, in certain situations, once
the drug is in the process of being approved at the FDA, the drug can be sold under
restricted conditions. Such conditions include selling the product as a specially labeled
reagent to licensed veterinarians. These conditions are disclosed in the 10-KSB on page
16. The CVM also has the right to mandate ceasing such sales, but absent that such sales
are allowed. Under that basis AspenBio commenced selling limited quantities of the
EquiPure LH product in 2006 and early 2007.

        As
development of the appendicitis test accelerated in 2007 and the market opportunity for
other products, especially the bovine drugs became more clearly defined, the development,
production and marketing support for the EquiPure LH product was significantly curtailed.
This resulted in a decision in late 2007 to not renew the distribution agreement with
Bioniche and for an indefinite period of time to no longer sell the EquiPure LH product on
a reagent basis to veterinarians. We consistently disclosed in our 10-KSB’s that we
believed that the market for the equine products was small and that we expected our
development focus to be on other products (initially disclosed as the bovine products) due
to higher market potential. The “on-hold” status at the FDA disclosed on page 6
of the 10-KSB, was a business decision based upon development focus and allocation of
resources to advance development of the other higher value products and had nothing to do
with any actions or determinations by the FDA. All sales of EquiPure LH were made as
provided under the FDA CVM guidelines.

Jim B. Rosenberg
U.S. Securities and
Exchange Commission
January 22, 2009
Page 3

Form 10-Q for the
Quarterly Period Ended September 30, 2008

Condensed Financial
Statements

Statements of Cash Flows,
page 5

Comment 2:

 Please revise your cash flow statements to present your cash flows from
trading securities as an investing activity or explain to us why your
presentation is appropriate and reference for us the authoritative literature
you rely upon to support your position. In this regard, it appears that the
effectiveness of SFAS 159 has amended paragraph 18 of SPAS 115 to no longer
require that trading securities be automatically classified as operating cash
flow activities, but instead be classified based on the nature and purpose for
which the securities were acquired.

Response:

        The
Company believes that the disclosure of its trading securities as operating on the cash
flow statement, in accordance with the amended paragraph 18 of SFAS 115 (…Cash flows
from purchases, sales and maturities of trading securities shall be classified based on
the nature and purpose for which the securities were acquired) is appropriate. The purpose
of the investments, made with proceeds from the December 2007 offering, is to fund
research and development, product development, FDA approval related activities and general
corporate purposes.

        In
light of our rapidly accelerating development activities, management determined that the
investment funds must be available for use on very short notice and at the same time be
invested in a conservative and safe investment vehicle providing adequate returns on such
investment. We selected Zion’s Bank as the investment partner for such funds. Under
our investment guidelines Zion’s has maintained very short term and low risk
investments. In fact at September 30, 2008, approximately 60% of the investment account
was invested in instruments that approximate a three month average maturity and the
balance of the investments were invested in commercial paper with a then average maturity
of approximately four months.

        We
will continue to evaluate this classification in light of future investments and
investment purposes. If the facts are deemed to have changed we would then revise this
classification and include the appropriate disclosures.

Jim B. Rosenberg
U.S. Securities and
Exchange Commission
January 22, 2009
Page 4

Notes to Condensed
Financial Statements, page 6

Comment 3:

 Please provide us the fair value disclosures as required under paragraphs 32
 through 35 of SFAS 157 or tell us where you have provided the disclosures.

Response:

        The
requirements of paragraph 32 of SFAS 157 include disclosure of the fair value measurements
at the reporting date, the level of the fair value hierarchy in which the fair value
measurements fall, a reconciliation of the beginning and ending balances and total gains
and losses for the period, both realized and unrealized. Management believes that the
disclosures in the current Form 10-Q for the nine-month period ended September 30, 2008
are appropriate to meet the requirements of SFAS 157.

        The
trading securities are recorded at fair value and are included in current assets on the
balance sheet. In Note 1 to the financial statements, Significant Accounting
Policies, the Company discloses that the investments are highly liquid equity
investments of highly rated entities, implying that Level 1 inputs were used in
determining fair value. In addition, the disclosure notes that gains and losses are
reported as an element of other income (expense) on the income statement (the amount was
immaterial for the nine-month period, less than $500, and was therefore not disclosed).
The only other income items associated with the investments are either interest income or
accretion of purchased discounts for investments purchased at a discount or premium to
face amounts.

        Additional
disclosure regarding the investments is included in Liquidity and Capital Resources, where
the possible impact of recent market conditions are addressed relative to investments and
other related matters.

        Based
upon the nature and classification of the trading securities, as disclosed in the Form
10-Q for the period ended September 30, 2008 and as further discussed above under response
#2 above, we believe that the disclosures we have made are materially adequate. However in
light of continued issues in the market place, we plan to reconsider the disclosures in
drafting our Form 10-K for the year ended December 31, 2008 to ensure that the
presentation and disclosure of our investment activities are transparent to the users of
our financial statements.

Jim B. Rosenberg
U.S. Securities and
Exchange Commission
January 22, 2009
Page 5

Management’s
Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations,
page 13

Comment 4:

Your discussion appears to identify variations in various statement of
operations captions, but does not appear to explain the underlying causes of
these variations. For example, your disclosure that increases in stock-based
compensation, employee costs, legal public company expenses, non-income taxes,
travel and insurance are the result of higher levels of activity does not
explain why you were engaged in increased levels of activity. Please revise
your disclosure to discuss the underlying cause(s) for these increases.

Response:

        In
reviewing the Results of Operations disclosures that you point out, we believe that
overall the historical disclosures taken as a whole are generally reasonable and adequate.
However given our commitment to fair and full disclosure we plan to re-assess disclosures
such as this in our upcoming Form 10-K that we are currently drafting and would plan to
provide additional and expanded disclosures concerning the explanations of underlying
causes for variations.

Comment 5:

In light of the recent fluctuations in the financial market and the increase
 in your investment securities, please revise your discussions to better
explain the risks and uncertainties surrounding these investments. Your
discussions should include:

a.
The
description of the Board approved investment policy,

               b.

               The breakout of your investments by type. If you only invest in equity
               securities, you may  provide the breakout by the same investment
               diversification criteria  utilized in making the investment decisions
               (e.g. industry type,  market cap, gross revenues, etc);

c.
The
discussion of any significant concentration of credit risk;

d.

The
gross acquisitions, disbursements, gains, and losses; and,

e.

A
sensitivity analysis of the reasonably likely effects on net income, financial
position and liquidity of any known trends, events or uncertainties, including
changes in equity values.

Response:

        Our
discussion on page 15 includes a summary disclosure regarding the risks associated with
the current economic conditions and the current impacts, which have not been material to
the Company, and management’s plans in that regard. Given the short term nature and
composition of our investments (all short-term commercial paper investments of high
quality companies with none individually representing more than approximately 5% of the
total) and considering the disclosure currently provided we believe that a sensitivity
analysis for possible adverse changes is not currently necessary. Our determination that
no additional disclosure is necessary is due to management’s assessment of possible
adverse changes being remote.

Jim B. Rosenberg
U.S. Securities and
Exchange Commission
January 22, 2009
Page 6

        Management
believes that the current disclosure for the Quarterly Report on Form 10-Q is adequate;
however, in drafting our Form 10-K for the year ended December 31, 2008, we will further
consider and address the additional disclosure as identified in bullets a – e above.

Comment 6:

Please expand your disclosure by referring to the Division of Corporation
Finance “Current Issues and Rulemaking Projects Quarterly Update” under
section VIII –Industry Specific Issues – Accounting and Disclosure by
Companies Engaged in Research and Development Activities. You can find it at
the following website address: http://www.sec.gov/divisions/
corpfin/cfcrq032001.htm#secviii.

Please
disclose the following information for each of your major research and development
projects:

               a.

               The costs incurred during each period presented and to date on the project;

               b.

               The nature, timing and estimated costs of the efforts necessary to complete
               the project;

               c.

               The anticipated completion dates;

               d.

               The risks and uncertainties associated with completing development on
               schedule, and the  consequences to operations, financial position and
               liquidity if the  project is not completed timely; and finally

               e.

               The period in which material net cash inflows from significant projects are
               expected to  commence.

Regarding
a., if you do not maintain any research and development costs by project, disclose
that fact and explain why management does not maintain and evaluate research and
development costs by project. Provide other quantitative or qualitative disclosure
that indicates the amount of the company’s resources being used an the project

Regarding
b. and c., disclose the amount or range of estimated costs and timing to complete
the phase in process and each future phase. To the extent that information is not
estimable, disclose those facts and circumstances indicating the uncertainties
that preclude you from making a reasonable estimate.

Jim B. Rosenberg
U.S. Securities and
Exchange Commission
January 22, 2009
Page 7

Response:

        Historically
for the periods presented, the primary material research and development activities have
been the appendicitis test development and related matters. The condensed disclosures in
the Form 10-Q have been focused in that area. In light of the staff’s comment and
considering that during 2008 we signed a significant development agreement for the bovine
animal products that will involve activities and expenditures in 2009, we are currently
analyzing and considering the appropriate information needed as described by the
applicable literature including the Research and Development Activities disclosures
referred to in the Division of Corporation Finance guidelines referred to above. We expect
that the Form 10-K, that we are currently drafting, will provide additional and expanded
disclosures concerning the information for each major research and development project we
have underway.

Quantitative and
Qualitative Disclosures About Market Risk

Comment 7.

You identify yourself on your cover page as a non-accelerated filer. Please
revise your filing to provide the information required by Part I Item 3 of  Form
10-Q or demonstrate to us that you are a smaller reporting company under  Item
10(f) of Regulation S-K.

Response:

        The
Company’s fiscal year end is December 31. As of June 30, 2007 the Company’s
public float was less than $75 million. Although the smaller reporting company rules did
not become effective until February 2008, given the Company’s public float as of June
30, 2007 (the end of its previous second fiscal quarter) presumably under Rule 12b-2 and
It