Stellar Biotechnologies Reports Third Quarter 2015 Financial Results and Operational Highlights

PORT HUENEME, CA--(Marketwired - Aug 10, 2015) - Stellar Biotechnologies, Inc. ("Stellar" or "the Company") (OTCQB: SBOTF) (TSX VENTURE: KLH), the leader in sustainable manufacture of Keyhole Limpet Hemocyanin ("KLH"), an important immune-stimulating protein used in wide-ranging immunotherapy markets, today announced its financial results for the third fiscal quarter ended June 30, 2015.

Operational Highlights

• Revenues for the third quarter and nine months ended June 30, 2015 increased 117% and 127%, respectively, over the comparable periods in 2014 driven primarily by an increase in product sales period-over-period.
• Net income for the third quarter of fiscal 2015 was $463,986, or $0.01 per basic and diluted share compared to a net income of $3.4 million, or $0.04 per basic and diluted share, for the quarter ending June 30, 2014. Net loss for the nine months ended June 30, 2015 was $1.3 million, or ($0.02) per basic and diluted share, as compared to a net loss of $3.6 million, or ($0.05) per basic and diluted share in 2014. Net income (loss) was positively impacted by noncash gains in the fair value of warrant liability, increased revenue and decreased research and development expenses.
• Entered into collaboration with Ostiones Guerrero SA de CV to secure an exclusive, strategic site in Baja California, Mexico for the potential development of a supplementary aquaculture locale and for the expansion of Stellar KLH™ production to meet the rising demand for the protein, subject to a three-year site suitability study.
• Expanded supply agreement with Neovacs S.A to meet requirements for Keyhole Limpet Hemocyanin (KLH) as a key component of Neovacs proprietary Kinoid immunotherapy drug for the treatment of Lupus.
• Presented "Measuring the Properties of Different Forms of Keyhole Limpet Hemocyanin (KLH) Reveals Important Differences" at 2015 Annual Meeting of the American Association of Immunologists (AAI).

"Market demand for high-quality, sustainable sources of GMP-grade KLH increases as many biotechnology companies expand their pipelines of immunotherapies based on KLH protein. These companies are seeing success in their ongoing clinical trials in a wide variety of disease indications -- like our collaborator Neovacs targeting lupus, and others in the industry such as Axon and its recent progress with a KLH-based Alzheimer's vaccine to name another," said Frank Oakes, Chief Executive Officer of Stellar Biotechnologies.

"Our strategic collaboration with Ostiones Guerreros SA de CV, which we believe has transformative potential for the Company, was spurred in part by this increasing demand. With this agreement in place, we look forward to being the only company with a reliable and scalable supply of KLH as an ever-growing roster of customers and new clients with successful therapeutic candidates approach FDA approval, and eventually, commercialization."

Third Quarter and Nine Months Ended June 30, 2015 Results:

Revenue: Stellar generated revenue of $157,748 and $558,036 for the third quarter and nine months ended June 30, 2015, respectively, compared to $72,538 and $245,734 for the same periods in 2014. The increase in revenue resulted from improved product sales of $112,748 and $408,036 for the third quarter and nine months ended June 30, 2015, respectively, compared to $12,538 and $70,994 for the same periods in 2014. The increase is due to larger order size and an increase in the number of customers. Contract services revenue was $45,000 and $150,000 for the third quarter and nine months ended June 30, 2015, respectively, compared to $60,000 and $147,000 for the same periods in 2014 as a result of new services performed under a collaboration agreement beginning mid-December 2013 and the completion of services related to a supply agreement which expired in December 2014.

R&D Expenses: Research and development expenses were $129,710 in the third quarter and $830,115 for the nine months ended June 30, 2015, compared to $543,233 and $1.8 million in the same periods in 2014. The decreases in R&D expenses were primarily the result of a shift in resources from expansion of internal research to manufacturing scale-up and marketing of our proprietary Stellar KLH™ protein in response to market demand.

Other Operating Expenses: Other operating expenses, which include cost of revenues and general and administration, totaled $903,623 for the third quarter and $3.1 million for the nine months ended June 30, 2015, compared to $801,450 and $2.8 million for the same periods in 2014. Cost of revenues increased due to additional manufacturing activities required for increased product demand. General and administration expenses increases were related to compliance with SEC domestic-issuer reporting requirements rather than those applicable to a foreign private issuer, partially offset by decreases in share-based compensation expense.

Net Income (Loss): The net income for the third quarter ended June 30, 2015 was $463,986, or $0.01 per basic and diluted share, compared to a net income of $3.4 million, or $0.04 per basic and diluted share, for the quarter ending June 30, 2014. The year-over-year decrease in net income was primarily due to fluctuations in noncash gains in the fair value of warrant liability, increased revenue and decreased research and development expenses.

The net loss for the nine months ended June 30, 2015 was $1.3 million, or ($0.02) per basic and diluted share, as compared to a net loss of $3.6 million, or ($0.05) per basic and diluted share, for the nine months ended June 30, 2014. The period-over-period decrease in net loss was primarily due to significant noncash gains in the fair value of warrant liability, increased revenues and decreased research and development expenses, net of increased noncash foreign exchange loss.

Cash Position: Cash and cash equivalents as of June 30, 2015 were $10.2 million, compared to $13.8 million at September 30, 2014. Net cash used in operating activities for the nine months ended June 30, 2015 was $3.5 million, compared to $3.7 million for the same period in 2014. We expect our current cash position will continue to fund our operating and development programs as well as upgrades to our facilities in the coming months; however, we may seek additional capital through debt or equity raises to accelerate the development of our programs in response to market demand and/or to exploit new opportunities to expand our business.

Shareholders' Equity: As of June 30, 2015, Stellar had positive shareholders' equity of $9.4 million and approximately 79.55 million shares outstanding, compared to shareholders' equity of $10.5 million and approximately 79.42 million shares outstanding at September 30, 2014.

Stellar Biotechnologies will file its Form 10-Q for the period ending June 30, 2015 with the Securities and Exchange Commission ("SEC") on Monday, August 10, 2015. To view the Company's filings under Form 20-F, Form 10-K, 10-Q and 8-K, please visit the U.S. SEC website (www.sec.gov/edgar). To view the Company's filings with the Canadian Securities Administrators ("CSA"), including the Management Discussion and Analysis and related consolidated financial statements, please visit the CSA's SEDAR website (www.sedar.com).

About Stellar Biotechnologies, Inc.

Stellar Biotechnologies, Inc. (OTCQB: SBOTF) (TSX VENTURE: KLH) is the leader in sustainable manufacture of Keyhole Limpet Hemocyanin (KLH), an important immune-stimulating protein used in wide-ranging therapeutic and diagnostic markets. KLH is both an active pharmaceutical ingredient (API) in many new immunotherapies (targeting cancer, immune disorders, Alzheimer's and inflammatory diseases) as well as a finished product for measuring immune status. Stellar Biotechnologies is unique in its proprietary methods, facilities, and KLH technology. We are committed to meeting the growing demand for commercial-scale supplies of GMP grade KLH, ensuring environmentally sound KLH production, and developing KLH-based active immunotherapies.

Visit www.stellarbiotech.com and the KLH knowledge base www.klhsite.org.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "may," "will," "would," "could," "should," "might," "potential," or "continue" and variations or similar expressions. Readers should not unduly rely on these forward-looking statements, which are not a guarantee of future performance. There can be no assurance that forward-looking statements will prove to be accurate, as all such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results or future events to differ materially from the forward-looking statements. Such risks include, but may not be limited to: general economic and business conditions; technology changes; competition; changes in strategy or development plans; governmental regulations and the ability or failure to comply with governmental regulations; the timing of anticipated results; and other factors referenced in the Company's filings with securities regulators. For a discussion of further risks and uncertainties related to the Company's business, please refer to the Company's public company reports filed with the TSX Venture Exchange and the U.S. Securities and Exchange Commission. All forward-looking statements are made as of the date hereof and are subject to change. Except as required by law, the Company assumes no obligation to update such statements. This press release does not constitute an offer or solicitation of an offer for sale of any securities in any jurisdiction, including the United States. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the information contained in this press release.

Consolidated Balance Sheets
(Expressed in US Dollars )
				June 30,			September 30,			August 31,
				2015			2014			2014
Assets:
	Cash and cash equivalents			$	10,161,458		$	13,769,953		$	13,427,404
	Other current assets				563,733			653,522			643,266
	Noncurrent assets				487,827			404,240			403,292
		Total Assets		$	11,213,018		$	14,827,715		$	14,473,962
Liabilities and Shareholders' Equity:
	Accounts payable, accrued liabilities and deferred revenue			$	544,533		$	671,714		$	541,626
	Warrant liability, including current portion				1,235,905			3,691,266			6,231,703
	Shareholders' equity				9,432,580			10,464,735			7,700,633
		Total Liabilities and Shareholders' Equity		$	11,213,018		$	14,827,715		$	14,473,962

Consolidated Statements of Operations
(Expressed in US Dollars )
				Three Months Ended						Nine Months Ended
				June 30,			June 30,			June 30,				June 30,
				2015			2014			2015				2014
Revenues:
	Contract services revenue			$	45,000		$	60,000		$	150,000			$	147,000
	Product sales				112,748			12,538			408,036				70,994
	Grant revenue				-			-			-				27,740
		Total Revenues			157,748			72,538			558,036				245,734
Expenses:
	Costs of revenues				285,438			188,982			772,535				549,299
	Research and development				129,710			543,233			830,115				1,824,554
	General and administration				618,185			612,468			2,346,019				2,280,268
		Total Expenses			1,033,333			1,344,683			3,948,669				4,654,121
Other Income (Loss):
	Foreign exchange gain (loss)				77,468			146,302			(391,190	)			(52,527	)
	Gain (loss) in fair value of warrant liability				1,254,029			4,528,450			2,455,361				833,862
	Other income				17,074			14,719			48,607				45,534
Income tax expense					9,000			9,000			27,800				21,200
Net Income (Loss)				$	463,986		$	3,408,326		$	(1,305,655	)		$	(3,602,718	)
Income (loss) per common share - basic and diluted				$	0.01		$	0.04		$	(0.02	)		$	(0.05	)
Weighted average number of common shares outstanding - basic					79,546,650			76,237,455			79,517,791				76,299,105
Weighted average number of common shares outstanding - diluted					85,020,352			86,898,996			79,517,791				76,299,105

Consolidated Statements of Cash Flows
(Expressed in US Dollars )
				Nine Months Ended
				June 30,				June 30,
				2015				2014
Cash Flows Used In Operating Activities:
	Net loss			$	(1,305,655	)		$	(3,602,718	)
	Items not affecting cash:
		Depreciation and amortization			119,410				120,507
		Share-based payments			244,781				770,777
		Foreign exchange (gain) loss			391,190				52,527
		(Gain) loss in fair value of warrant liability			(2,455,361	)			(833,862	)
	Changes in working capital items				(491,658	)			(167,535	)
Net cash used in operating activities					(3,497,293	)			(3,660,304	)
Net cash provided by (used in) investing activities					216,286				(278,401	)
Net cash provided by financing activities					28,719				2,963,162
Effect of exchange rate changes on cash and cash equivalents					(356,207	)			(60,321	)
Net change in cash and cash equivalents					(3,608,495	)			(1,035,864	)
Cash and cash equivalents - beginning of period					13,769,953				15,478,038
Cash and cash equivalents - end of period				$	10,161,458			$	14,442,174