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Helicos Considers Next Moves as Remaining Patent in Illumina Suit Is Deemed Invalid

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A patent held by Helicos that was the subject of a lawsuit against Illumina was deemed invalid last week, effectively ending a two-year suit that originally involved Illumina, Pacific Biosciences, and Life Technologies.

Also this week, Helicos revised an agreement with its lenders, which will waive defaults arising from failure to pay risk premium payments.

District Judge Sue Robinson of the US District Court for the District of Delaware last week granted Illumina's motion for summary judgment and declared US Patent No. 7,593,109, "Apparatus and methods for analyzing samples," held by Helicos, invalid for "lack of written description."

Helicos had licensed the '109 patent, along with six others, to Intelligent Bio-Systems for a one-time fee of $1.6 million earlier this month.

Qiagen, which acquired IBS in June (IS 6/26/2012), said it could not comment on ongoing legal matters.

The '109 patent was the last of three patents that Helicos had accused Illumina of infringing. Illumina said that Helicos voluntarily dismissed the other two patents earlier this year. Those patents were US Patent No. 7,037,687, "Method of determining the nucleotide sequence of oligonucleotides and DNA molecules," and US Patent No. 7,169,560, "Short cycle methods for sequencing polynucleotides."

Helicos CEO Ivan Trifunovich declined to comment, but in a document filed last week with the US Securities and Exchange Commission, the company said that it "disagrees" with the court's decision and is "considering its options with respect to an appeal thereof."

Illumina was the last remaining defendant in a patent dispute that Helicos first brought against PacBio in 2010, claiming that the company infringed four of its patents: the '687 and '560 patents, as well as US Patent No. 7,645,596, "Method of determining the nucleotide sequence of oligonucleotides and DNA molecules" and US Patent No. 7,767,400, "Paired-end reads in sequencing by synthesis."

It settled its suit with PacBio in May for an undisclosed amount, in an agreement that gave PacBio "worldwide, non-exclusive licenses to the Helicos patents (IS 5/8/2012).

Then in July, it dropped its suit against Life Tech, which involved the '596, '687, and '560 patents. At the time, Trifunovich told In Sequence that the litigation against Life Tech had to do with its "Starlight" technology for single-molecule sequencing, which Life Tech no longer plans to commercialize (IS 7/10/2012).

New Agreement with Lenders

The same week the court ruled the '109 patent invalid, Helicos said that it had revised an agreement with its lenders to waive defaults arising from Helicos' failure to pay certain risk premium payments in connection with prior liquidity transactions.

In November 2010, Helicos entered into a risk premium payment agreement with Atlas Venture and Flagship Ventures. Helicos currently owes its lenders around $1.8 million in risk premium payments from transactions associated with the settlement of the suit with PacBio, the $1.6 million license agreement with Intelligent Bio-Systems, and an agreement it signed in April with Sequenom in which it received $1.3 million for patent applications related to detecting fetal DNA and diagnosing fetal abnormalities (CSN 4/18/2012).

Under the revised agreement with its lenders, defaults will be waived, but any payments that are deferred will have a 10 percent interest rate.

It is unclear what the company's next move will be as its revenues decline and its patent litigation suits wind down.

During the second quarter of 2012, Helicos generated $577,000 in revenue, a decline of 29 percent from $809,000 from the same period a year ago. The firm's net loss was $459,000.

As of Aug. 9, Helicos held $2.1 million in cash and cash equivalents. The company said in its quarterly filing with the SEC that these resources are "not sufficient" to fund operations for the next twelve months and that this lack of capital resources raises "substantial doubt about its ability to continue."

As a result, Helicos is "exploring a variety of strategic transactions, including the sale, license, or other disposition of a portion of its assets in order to raise funding, or the potential sale of all or substantially all its assets or a sale of the company."

As of the end of the second quarter, Helicos had eight full and part-time employees. Two of its board members — Noubar Afeyan and Peter Barrett, who hold positions with Helicos' lenders Flagship Ventures and Atlas Ventures, respectively — resigned in late August (see Paired Ends, this issue).

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