By Julia Karow
This article was originally published Aug. 15.
Helicos BioSciences plans to reduce its headcount to 10 from 16 by the end of the third quarter while focusing its remaining resources on grant-funded R&D and on monetizing its intellectual property, the company said in a filing with the US Securities and Exchange Commission last week.
As of June 30, the company had $1.6 million in cash and cash equivalents, down from $2.9 million at the end of March.
In order to conserve cash, the firm has begun to reduce R&D efforts in targeted areas that were "designed to achieve tangible proof-of-concept goals connected with potential partnership opportunities" with companies interested in next-gen sequencing, or "to pursue other funding and strategic alternatives."
Though Helicos believes that its sequencing system "has unique ability across a broad array of molecular … tests," — owing to its quantitative accuracy, high throughput, lack of amplification and associated biases, inexpensive sample prep, and ability to work with small samples – it has "further delayed" its plans to commercialize these tests through a partnership with a CLIA lab because of its lack of finances and uncertain financial outlook.
Last month, Helicos published a proof-of-principle study of its capture sequencing approach for analyzing the BRCA1 gene but said that it needs additional funding for validation studies and to demonstrate equivalency to the standard of care (CSN 8/9/2011).
As of last week, Helicos "does not have adequate resources," according to the filing, and needs to raise cash "from various sources," including contract sequencing and government grants.
To conserve cash, the company decided during the second quarter to cut six business and research positions, which will be phased out during the third quarter and will leave Helicos with a staff of 10. In addition, Helicos is downsizing its headquarters and lab in Cambridge, Mass.
The firm has also "significantly" scaled back service support and reagent supplies to current customers and reduced its collaborations.
Despite these measures, it will need "significant additional capital" in the fourth quarter to continue operations, beyond a committed $2 million from a bridge debt financing from two existing venture capital investors that Helicos secured last November. As of last week, $1.33 million of that debt financing remained available.
Helicos said that additional funding may come from the remaining $2 million uncommitted portion of the bridge debt financing, as well as "from other sources that have not yet been identified."
In the absence of such funding, the company will no longer be able to make payments to trade vendors and unsecured creditors, which "increases the likelihood that the lenders could declare a default under the senior debt in the near term, including with regard to solvency."
Helicos also plans to continue to license and enforce its intellectual property. Last year, the company sued Pacific Biosciences, Illumina, and Life Technologies for infringing several of its patents. This spring, in response to a request for reexamination of the patents by PacBio, the US Patent Office rejected all their claims in a non-final office action, though the outcome of the reexamination is still pending (IS 5/10/2011).
PacBio and Life Tech recently asked the court to halt the litigation until the reexamination is over, and Life Tech asked the court to drop Helicos' claims. Last month, a magistrate judge ordered a mediation conference between Helicos and the three defendants for late August (IS 7/26/2011), and a trial date is currently set for Sept. 10, 2012.
Helicos said that if its litigation is successful, the proceeds "could be substantial." In addition, the company continues to license out its IP for single-molecule sequencing and sequencing-by-synthesis.
For the quarter ended June 30, Helicos booked $809,000 in revenue, up from $661,000 during the year-ago period.
Revenues consisted of $427,000 from government grants, $273,000 from a sequencing services business that Helicos started in the fourth quarter; and $109,000 from products, primarily reagent sales.
Second-quarter R&D expenses fell to $982,000, from $4.2 million last year, mainly due to the decrease in personnel and R&D support costs.
SG&A costs during the quarter decreased to $1.4 million, from $2.7 million last year, again mostly related to reduced personnel and related support costs.
The company's net loss for the second quarter narrowed to $1.8 million, from $4.7 million during the year-ago period.
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