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As Cash Runs Out, Helicos's Future Remains Uncertain Beyond Year End

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By Julia Karow

Faced with limited revenue, upcoming debt payments, and a dwindling amount of cash, Helicos BioSciences' outlook for 2012 remains bleak, despite the firm's recent cost-cutting measures.

Earlier this week, Helicos reported $725,000 in third-quarter revenue and a $798,000 net loss for the quarter. As of Nov. 1, it had $1.6 million in total available resources, including $275,000 in cash and equivalents and $1.33 million from a bridge debt financing facility it secured last year.

However, most of these resources will be eaten up by debt payments: by January 2012, the company needs to make $1.3 million in payments, including two $250,000 monthly principal payments for December and January and an $800,000 senior debt payment that is due in January.

To continue operations, Helicos will require "significant additional capital" in December, the company said in a filing with the US Securities and Exchange Commission. Potential funding sources are a $2 million uncommitted portion of its bridge debt financing facility or "other sources that have not yet been identified."

Helicos retains a staff of 10, after phasing out six business and research positions during the third quarter, including its chief scientific officer, Patrice Milos (IS 8/16/2011). It also recently reduced the size of its offices and laboratory in Cambridge, Mass., and delayed its plans to commercialize molecular diagnostic tests based on its single-molecule sequencing technology. Despite these measures, "we may not have sufficient funds to pursue our business priorities," the firm said this week.

Barring new funding, Helicos "may be forced to cease operations," according to the filing, although the firm did not say when exactly that might be the case.

Helicos booked $725,000 in total revenue for the third quarter, up from $636,000 during the same period last year.

Revenue consisted of $385,000 from its DNA and RNA sequencing service business, $224,000 from grant funding, and $116,000 from sales of products, primarily reagents to customers of its Helicos Genetic Analysis system. As of Sept. 30, the company was conducting research in connection with two ongoing grants.

R&D expenses totaled $490,000, down 90 percent from $5 million during the same quarter in 2010, mostly related to the firm's reduction in research personnel.

SG&A expenses were $785,000, down 67 percent from $2.3 million a year ago, again mostly related to personnel reductions.

Net loss for the quarter was $798,000, compared to $8.9 million during the third quarter last year.

The company had $550,000 in cash and cash equivalents as of Sept. 30, and $275,000 as of Nov. 1.

Helicos continues its litigation with Pacific Biosciences, Illumina, and Life Technologies, who it accuses of infringing its intellectual property. Several of its patents are currently under reexamination by the US Patent and Trademark Office (IS 10/25/2011), and PacBio and Life Tech have asked the court to stay the litigation until these reexaminations are resolved. The court recently rescheduled mediation conferences to resolve the dispute for early 2012 (IS 9/27/2011).

Under a contingency fee agreement with its outside intellectual property litigation counsel, Helicos will have to pay its counsel up to 40 percent of any proceeds it may receive from the litigation.

The company said that it believes the net proceeds from the litigation "could be substantial," but noted that even in the event of a favorable outcome it can't guarantee that there would be any proceeds remaining for common shareholders, "as a result of various arrangements in place with professional service providers, bridge lenders, licensors, and others."


Have topics you'd like to see covered in In Sequence? Contact the editor at jkarow [at] genomeweb [.] com.