Stellar Signs Collaboration Agreement to Expand KLH Aquaculture Operations

Stellar Biotechnologies, Inc. has announced that the Company has entered into a collaboration agreement with Ostiones Guerrero SA de CV to secure a unique strategic site in Baja California, Mexico for the development of an additional aquaculture locale and expansion of Stellar KLH™ production to meet the increasing needs of its customers.

Stellar provides clinical-stage biotechnology companies with KLH, an immune-stimulating protein that is an essential ingredient in a number of human immunotherapies in various stages of clinical development. KLH can only be obtained from a scarce marine mollusk, the Giant Keyhole Limpet, which is native to a limited stretch of Pacific Ocean coastline.

Stellar and Ostiones both have expertise and specialization in marine-based industries. Stellar is the leader in the sustainable manufacture of KLH for use in the pharmaceutical industry, with proprietary aquaculture capabilities. Ostiones is a Baja California-based commercial shellfish aquaculture and fishing corporation focused on seafood production and protection of sensitive marine ecosystems, which holds federal permits to an extensive Pacific marine habitat for limpet colonies.

Under the terms of the Agreement, Stellar and Ostiones will collaborate on the design, expansion and development of marine aquaculture resources and KLH production facilities in Baja California, Mexico to provide, exclusively for Stellar, an additional site for hatchery and maturation of keyhole limpets and production of KLH. The venture will provide Ostiones with access to advanced aquaculture techniques, proprietary expertise, support services and training that will form the basis for expanding its seafood production business.

Additionally, the companies are joining forces to share their vision of protecting the natural resources of the Pacific Ocean. Stellar has developed a proprietary process for KLH harvesting that does not harm the Giant Keyhole Limpets. Similarly, Ostiones is committed to sustaining ocean wildlife populations. The companies are committed to marine ecosystem sustainability as a commercial priority.

"This collaboration has far-reaching, positive implications for Stellar," said Frank Oakes, President and CEO of Stellar Biotechnologies, Inc. "In addition to the clear operational security offered by a second site, the partnership with Ostiones Guerrero provides Stellar the opportunity to extend our leadership in the sustainable manufacture of KLH while ensuring protection of a valuable ocean resource and natural habitat. We expect demand for reliable sources of KLH to grow, both from our existing partners and the broader biotech industry, as the clinical use of novel immunotherapies increases. We believe this collaboration will better position Stellar to accelerate its production strategy to accommodate the anticipated growth in the industry."

"We are excited about the synergies and economic potential of this alliance," added Reyes Guerrero Sandoval, President of Ostiones Guerrero SA de CV. "Stellar Biotechnologies' contributions validate the importance of the marine resources in our region, which now includes marine biotechnology in the expanding markets for our operations and for Baja California."

In June 2015, Ostiones leased to Stellar certain undeveloped land to assess as a potential second manufacturing and production site subject to a suitability study to be conducted over the next three years. Under the terms of the Agreement, Stellar will be responsible for certain leasehold improvements and construction of structures and utilities, to be owned by Stellar, at Ostiones' Baja California, Mexico facility.

Ostiones will provide labor and operational support, the reasonable costs of which will be reimbursed by Stellar. The companies expect to enter into separate usage and supply agreements covering the use of site resources and utilities such as seawater and power, and for the production of keyhole limpets by Ostiones exclusively for Stellar.