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Leerink Swann Lowers Revenue Estimate, Cuts Price Target on Helicos' Stock

NEW YORK (GenomeWeb News) – Investment bank Leerink Swann has cut its 12-month price target for Helicos BioSciences’ stock to $6 from $10 and has roughly halved its revenue estimates for the firm for fiscal years 2008-2010.
Leerink Swann analyst John Sullivan in a research note cited “execution problems” in the second quarter for Helicos, as well as limited “commercial visibility” in the near-term for the firm’s flagship product, the HeliScope single molecule sequencer.
Earlier this month, Helicos reported that its grant revenue for the second quarter grew sharply, but it has yet to report commercial revenues.
"In the quarter, we experienced a delay in converting our increasingly robust sales pipeline into actual, deliverable orders," Helicos President and CEO Steve Lombardi said during the firm's conference call at the time. "Specifically, we identified reagent stability issues that impacted sequencing performance and limited our ability to generate data to secure orders. We believe we have rectified the issue and now have a clear path forward."
The Cambridge, Mass.-based firm also announced in early August the second order for its Genetic Analysis System, including the HeliScope instrument, since earlier this year. The unnamed cancer research center will use the system in a research program involving cancer stem cell biology, said Helicos.
Though Leerink Swann has maintained an “outperform” rating on the stock, Sullivan cut his revenue targets for Helicos through fiscal 2010. He now expects 2008 revenues to be around $4.6 million, compared to his previous estimate of $9.5 million; he lowered his 2009 forecast to $32.2 million from $60.1 million, and his 2010 estimate to $62.7 million from $112.5 million.
“We’ve pushed out our HLCS commercialization ramp by a few quarters, over the slower-than-we-expected process of placing and bringing to full productivity the first few HeliScope instruments, the fewer orders to date than we had expected, and the ongoing productivity gains of competing [next-generation sequencing] platforms,” Sullivan wrote.
He is predicting Helicos will place 21 systems in 2009 and 35 placed in 2010, compared to earlier estimates of 39 instruments in 2009 and 66 in 2010.
In early afternoon trade on the Nasdaq, Helicos’ shares were down 1 percent at $3.95, near its all-time low of $3.74, which was reached earlier this week.
The firm went public in May 2007 at an offering price of $9 per share. Its all-time high of $18.60 was achieved on Jan. 16.

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