By Julia Karow
Helicos BioSciences installed two sequencing systems and recorded $371,000 in revenue during the second quarter, according to documents filed with the Securities and Exchange Commission last week.
The company also disclosed last week that it had $5 million in cash and equivalents on hand as of Aug. 14. This cash -- along with expected revenue and additional cost-cutting measures -- will be sufficient to fund its operations into the first quarter of 2010, but it will need to find new financing sources to continue beyond that time, according to the SEC document.
During the second quarter, Helicos booked $371,000 in revenue, consisting of $158,000 in product revenue -- mostly from sales of proprietary reagents -- and $213,000 from a National Human Genome Research Institute grant, compared with no product revenue and $251,000 in grant revenue during the second quarter of 2008.
As of the end of the second quarter, which ended June 30, five Helicos Genetic Analysis systems were installed at customer sites, according to the SEC filing. Last year, Helicos shipped a system to Stanford University and one to Expression Analysis, which later returned its instrument. Earlier this year, an instrument went to the Broad Institute at no cost, and another one to the Dana-Farber Cancer Institute for evaluation purposes.
Paul Morrison, director of the Molecular Biology Core Facilities at Dana-Farber, told In Sequence this week that following the six-month evaluation period, the institute has decided to keep the instrument, which has a list price of $999,000, but is still exploring funding options. "We are very excited how the project is going as we are pushing a high volume of ChIP-seq and RNA-seq samples and the interest is very high as researchers are starting to get the feel for how deep the data are," he said by e-mail.
Two more instruments were installed during the second quarter, one placed by Helicos in Daniel Haber's lab at the Massachusetts General Hospital Cancer Center (see other article in this issue), another one sold to an undisclosed biotechnology company in the Northeast.
Helicos President Steve Lombardi told In Sequence this week that there are now a total of seven instruments installed outside of the firm, among them four "placements" by Helicos and three systems ordered by customers.
In recent weeks, the company has also seen further scientific validation of its sequencing technology through several peer-reviewed publications, including one on digital gene expression analysis (see In Sequence 7/7/2009) and one, by its co-founder Steve Quake at Stanford, on human genome sequencing (see other article in this issue).
The company's research and development costs declined by almost half during the quarter, to $3.5 million, compared to $7.1 million during the same period last year. Selling, general, and administrative expenses also declined significantly, to $2.7 million, from $4.8 million a year ago.
Research expenses primarily decreased because of $2.3 million in savings from labor and overhead costs associated with the under-utilization of the company's manufacturing facility, according to the filing. Another $768,000 in R&D savings resulted from a 30-percent workforce reduction that the company implemented at the end of 2008 (see In Sequence 12/9/2008); and $592,000 in savings came from a decrease in product development costs.
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SG&A expenses declined for several reasons, including $874,000 in savings from salary and benefit expenses related to the workforce reduction, $674,000 in savings from lower public company activities, a $212,000 reduction in marketing programs, and a $285,000 drop in outside legal expenses.
The company's net loss for the quarter decreased almost 50 percent, to $6.3 million, compared to $11.9 million during the year-ago period.
As of June 30, Helicos had $8.4 million in cash and cash equivalents, and as of Aug. 14, $5 million of that remained, according to the filing. Combined with expected revenues from product sales and cost cutting measures, the company believes that this funding will be sufficient to support its operations into the first quarter of 2010.
Helicos said it expects to record additional instrument revenue later this year. So far, it has recognized revenue from a single system, installed at Stanford University last year. Helicos reiterated that there is a delay between installations and revenue recognition as shipments are "subject to various customer evaluation periods with acceptance criteria" and as customer evaluation periods generally extend beyond the fiscal quarter in which a unit is shipped.
To stretch its cash into 2010, Helicos plans to implement "significant additional expense reduction initiatives." According to Lombardi, the company has not yet decided on specifics. "We are trying to figure out if we need to do something and what it is, but we haven't decided on anything," he said.
At the same time, the company is seeking new funding opportunities. Helicos said in the filing that it is "actively engaged in discussions with potential strategic partners regarding various financing alternatives" as well as pursing a variety of potential funding sources, such as equity or debt financing, collaborations, licensing arrangements, joint ventures, or partnerships.
Helicos acknowledged that fundraising has been difficult, citing the turmoil of the worldwide financial markets that has "impacted the availability of financing to a wide variety of companies, particularly early-stage companies such as Helicos."