SecProbe.io

February 29, 2012
Via E-Mail
Frank Oakes President and Chief Executive Officer Stellar Biotechnologies, Inc. 332 E. Scott Street Port Hueneme, California 93041
Re: Stellar Biotechnologies, Inc.
Registration Statement on Form 20-F Filed February 3, 2012
  File No. 000-54598

Dear Mr. Oakes:

We have reviewed your registration statem ent and have the following comments.  In
some of our comments, we may ask you to provi de us with information so we may better
understand your disclosure.
 Please respond to this letter within te n business days by amending your registration
statement and providing the requested information.  If you do not believe our  comments apply to
your facts and circumstances or do not believe an  amendment is appropriate, please tell us why
in your response.
 After reviewing any amendment to your re gistration statement and the information you
provide in response to these comments, we may have additional comments.

Registration Statement on Form 20-F

 General

1. Please note that your registration statement will become effective automatically by
operation of law 60 days from the date you file d it.  Upon effectiveness, you will become
subject to the reporting requireme nts of the Exchange Act, even if we have not completed
the review process of your filing.  To the ex tent this is a voluntary filing, if you do not
wish to incur these obligations  until all of the following issues are resolved, you should
withdraw your registration statement prio r to the sixtieth day and resubmit a new
registration statement when you have revised your document.

2. Please note that where we provide examples to illustrate what we mean by our comments,
they are examples and not complete lists.  If  our comments are appli cable to portions of
the filing that we have not cited as examples, please make the appropriate changes in
compliance with our comments.

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 2

3. Please update the discussion in your prospect us to the most recent date practicable.
 Business of Stellar Biot echnologies, Inc., page 4

4. Please define the term Keyhole Limpet and KLH subunit the first time you use the terms.

5. Please expand the discussion to clarify whether you develop and manufacture the
vaccines or whether you raise and harvest th e limpets from which a component of the
vaccine is derived.
Statement of Capitalization and Indebtedness, page 7

6. Please revise to include a statement of cap italization and indebte dness in dollar amounts
or tell us how your statement complies with Item 3B of Form 20-F.

Risk Factors – General

7. Please include a risk factor addressing competition in the production and marketing of
KLH and the development of therapeutic va ccines, respectively, if material.  If
applicable, the discussion should also addre ss whether your KLH is unique relative to the
KLH produced by other companies.

8. Please include a risk factor that addresses th e risks posed by the diminishing supply of M.
crenulata in the wild due to the lack of regulation limiting th e fishery of limpets and the
risk that the company’s aquaculture facil ity may not be sufficient to meet demand.
 “The Company faces uncertainties rela ted to regulatory approval.” page 9

9. Please discuss the specific regulatory approvals  that the company must obtain to market
and sell its current products and the status of such approvals.

10. Please clarify the extent to which you have c onducted the preclinical testing and clinical
trials for products developed by others  which products utilize your KLH.
 “Even if the Company obtains marketing approval…,” page 9

“The Company has limited marketing, sale s and distribution experience,” page 9

11. Please expand the discussion in these risk fact ors to clarify whether you are referring to
your KLH product or the vaccines develope d by others which use your KLH as a
component.

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 3

 “The Company is subject to the risk of product liability claims…,” page 10

12. Please expand the disclosure to state whethe r or not you currently maintain liability
insurance, the amount of such coverage, and, if material, th e cost of such coverage.
Similar risk factor disclosure  should also be provided w ith respect to environmental
and/or hazardous waste li ability, if material.
 “The Company has a history of net losses and limited cash flow…,’ page 10

13. Please expand the discussion to include the amount  of net losses for ea ch of the last two
years and your cumulative losses.
 “The Company will require additional financing…,” page 10

14. Please disclose whether your existing resource s will be sufficient to  fund your operations
for the next twelve months.  If not, please disclose how long your existing resources will
fund your operations.  In additi on, please expand the discussion to quantify the amount of
additional financing required for your budgeted expenditures, the nature of the
expenditures, and when you will need the additional financing.

“The Company has a dependence upon key management employees…,” page 11

15. Please expand the discussion to indicate th e extent to which you have employment
contracts with your key employees.  In addition, if applicable, please di scuss the extent to
which you have previously experienced diffi culty in attracting a nd retaining qualified
personnel.
 Corporate Background, page 13

16. Please expand the discussion to define th e terms “Capital Pool Corporation” and
“qualifying transaction.”

17. Please describe the nature and extent of th e company’s activities prior to the reverse
merger with Stellar CA.
History and Development of  the Business, page 13

18. Please discuss the conditions under which the 10 million performance shares were
issuable and the extent to which any such shares have been issued.

19. We note the reference to the filing of pate nts in September 2010.  Since Stellar CA was
formed in 1999, please expand the discussion to cl arify the extent to which Stellar CA or
its predecessors filed patents prior to September 2010 and when  such patents were filed.

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 4

20. We note the reference to the new facility wi th a spawning capacity of two million larvae,
designed production of 50,000 juvenile limpets pe r year, and future production capacity
of 20,000 grams of KLH annually.  Please expand  the discussion to explain the apparent
discrepancy between spawning capacity and th e amount of designed production, i.e. do
all but 50,000 of the larvae die before reaching juvenile stage or do you sell or intend to sell the larvae you do not use for your own production requirements.
Capital Expenditures, page 15

21. Please expand the discussion to indicate your current KLH production capacity, the
number of grams of KLH your  actually produce currently, a nd the number of grams of
KLH you sold in the last fiscal year.  In  addition, please expand the discussion of KLH
where appropriate in the document to indicate the storage properties and “shelf life”, if
any, for KLH.
 Business Overview, page 16

22. We note the statement that pharmaceutical fo rmulations of KLH typically sell for $5000
to $200,000 per gram.  Please discuss the va riables for this range of pricing.

23. We note for the year ended August 31, 2011 you had revenues of approximately $79,000
from contract revenue and commercial sales.  Assuming all of this revenue was derived
from the sale of KLH, at the minimum price of $5000 per gram, it appears you sold approximately 16 grams of KLH.  If so, pl ease explain the reason(s) for increasing your
production capacity to 20,000 grams.  We may have additional comments.

Aquaculture, page 17

24.  Please expand the discussion to indicate the approximate number of mature Giant
Keyhole Lympets you currently have at your facility.  In addition, please describe the approximate duration a mature Giant Keyhol e Lympet can be expected to produce
hemolymph for your purposes.
 Company Products and Development, page 19

25. Please explain what you mean by the phrase “s upported by an FDA drug master file” and
the significance of such information.

26. Please expand the discussion to describe whet her the immuno-toxicity  diagnostic test you
are developing requires regulatory approval and, if so, the nature of the requirements and
your status in the approval process.

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 5

 Patents, page 21

27. Please include here a discussion of your September 9, 2010 patent filings for your
inventions related to your native imm unogenic KLH technology pl atform and immune
status monitoring product portfolio and cl arify the status of these filings.

28. Please expand the discussion to explain what you mean by the term “provisional patents.”

29. Please clarify whether the patent pertaining to non-lethal extraction me thods is the patent
that was assigned to you from Mr. Oakes.
30. Please expand your disclosure to indicate the jurisdiction(s) for the granted and
provisional patents.
31. Please provide the expiration date of the granted patent and with respect to the
provisional patents, please e xpand the disclosure to describe  what the patents or patent
applications cover.
New drug development, page 21

32. Please expand your disclosure to clarify whethe r the discussion pertains to the company’s
activities related to new drugs and vaccines or to the activities of the companies to which Stellar sells its KLH.
 Results of Operations

Year Ended August 31, 2011 vs. Year  Ended August 31, 2010, page 23

33. Please expand the discussion to explain what  you mean by the phrase “contract revenue
of $60,000 from one customer for maintaining dedicated inventory.”

34. Please clarify whether the commercial sale s of $18,988 represents your entire sales of
KLH for the year.  If so, the sections enti tled “Business of Stella r Biotechnologies, Inc.”
on page 4 and “History and Development of the Business” on page 13 should be
expanded to quantify the limited amount of re venues you currently derive from your sales
of KLH.
35. Please explain the reason why commercial sales dec lined from $299,700 in 2010 to
$18,988 for the year ended 2011.
Liquidity and Capital Resources, page 26

36. We note your statement that “management believes the current working capital, as well
as anticipated revenue, is su fficient to meet the Company’ s contractual obligations and

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 6

 anticipated research and development expendi tures in Fiscal 2011.”  Please update this
disclosure for the current fiscal year.
Audit Committee, page 44

37. We note the statement that the audit committ ee charter has been filed as an exhibit,
however the charter is not included in the list  of exhibits and it doe s not appear that the
charter has been filed.  Please advise or revise.
 Item 8. Financial Information, page 48

38. Please include the more current interim fina ncial information published on February 28,
2012 in the filing.  Please refer to Item 8A5 of  Form 20-F and the related instructions.

Current Legal Proceedings, page 49

39. Please expand the disclosure to indicate when  the company filed its request to waive any
penalties and when the revised discharge permit was issued.
 Shareholder Rights Plan, page 60

40. Please update the discussion to include the resu lts of the special meeting held on January
17, 2012.
 Exhibits, page 75

41. Please file the following documents or provi de us with your basis for not filing as
exhibits the following documents pursuant to th e Instructions for exhibits to Form 20-F:
 The Bayer Innovation GmbH collaborative and license agreement(s) (page 14);
 Therapeutic Discovery Project Program grants (page 14);
 SAFC marketing and sale s agreement (page 14);
 National Science Foundati on grant (page 14); and
 The October 2011 agreement with Li fe Diagnostics, Inc. (page 14).

Combined Statements of Cash Flows, page 81

42. Please revise your statement of cash flow to s how the effect of exchange rate changes on
cash balances held in a foreign currency as a separate part of the reconciliation of the
change in cash and cash equivalents.
43. Please tell us why the net assets assumed on recapitalization represent cash provided by
financing activities when the cash acquired fr om the recapitalization of approximately
$84 thousand is netted against other assets and liabilities acquired in the transaction.

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 7

 Please revise your statement of cash flow di sclosure to clarify that $84,012 in cash was
acquired in the transaction.

Notes to Consolidated Financial Statements

 Note 3. Merger Transaction, page 87

44. Your disclosure of the transaction appears to  be inconsistent.  Y ou disclose that the
acquisition has been treated for accounting purposes as a recapit alization and then
disclose in (b) that the tran saction has been accounted as a purchase of the assets and
liabilities of the Company, which have been re corded at their fair values.  Please revise
your disclosure to state, if true, that CAG Capital, Inc.  was non-operating and had only
monetary assets and lia bilities at the date of the merger transaction, and there was no
revaluation to fair value or tell us th e basis for your current disclosure.
45. You disclose in other sections of the f iling that 16,207,401 shares were issued in the
merger agreement.  This appears to be incons istent with your disclo sure that CAG issued
10,000,000 shares to Stellar CA shareholders completing the revers e takeover of the
Company.  Please revise your disclosure  to eliminate all inconsistencies.

Note 7. Licensing Rights, page 91

46. Please revise your disclosure to describe th e significant terms of your Bayer Innovation
GmbH agreement including potential future mile stones.  Also in the appropriate section
of the notes describe the significant terms of  other agreements, such as the agreements
disclosed in Item 4.

Note 10.  Share Capital, page 92

47. Please revise your tabular disclosure informa tion for periods prior to the reverse merger,
so that the equity of the legal parent is the historical equity of Stellar CA prior to the
transaction, retroactively restated to reflect the number shares Stellar CA received in the
transaction.  In addition, refl ect the reverse merger as a line item during fiscal 2010 by
showing the number of shares of the legal pa rent outstanding prior th e transaction. Revise
your disclosure in Note 16 as appropriate.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Securities Act rules require.  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.

Mr. Frank Oakes Stellar Biotechnologies, Inc. February 29, 2012 Page 8

 In responding to our comments, please provi de a written statement from the company
acknowledging that:
In responding to our comments, please provi de a written statement from the company
acknowledging that:
 the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;

 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 federa l securities laws of  the United States.

You may contact Dana Hartz, Staff Accountant, at (202) 551 -3648 or Don Abbott, Senior
Accountant, at (202) 551-3608, if you have que stions regarding