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Helicos Reiterates Dx Strategy as Product Revenues, Cash Dry Up

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By Bernadette Toner

This story was originally published on August 16.

Helicos last week reported $661,000 in total revenues for the second quarter as an increase in grant revenue was slightly offset by a decline in product sales.

In a filing with the US Securities and Exchange Commission, the company disclosed that it held $3.7 million in cash and cash equivalents as of Aug. 11 — down from $6.2 million as of June 30. As a result, Helicos said that it will need to raise "significant additional capital" before the end of the third quarter in order to continue operations.

"In this regard, we are actively pursuing various financing strategies and plan to seek to raise funds to continue our operations and finance our new strategic plan through public or private sales of equity, from borrowings or from strategic partners," Helicos said.

Helicos, which underwent a restructuring during the quarter in which it laid off 40 employees, or approximately half of its staff (IS 5/18/2010), reiterated its plans to refocus its business on diagnostics but did not provide an update on its strategy. Its first test, which will identify gene mutations associated with a woman's risk of developing hereditary breast or ovarian cancer, is still being targeted for launch in the second quarter of 2011.

The company said that it has also begun to develop its own genetic testing laboratory for which it plans to seek certification under the Clinical Laboratory Improvement Amendments.

For the three months ended June 30, Helicos reported an increase in total revenue to $661,000 from $371,000 in the second quarter of 2009.

Grant revenue increased to $576,000 from $213,000 in the year-ago period. For the second quarter of 2010, the company recognized revenue from three awards from the National Human Genome Research Institute: a two-year, $2.9 million grant awarded in September 2009; a three-year, $1.6 million grant awarded in April; and a one-year $146,000 grant awarded in June. The company also recognized $200,000 in revenue during the quarter from a collaborative study in Ewing's sarcoma sponsored by the Children's Oncology Group.

Product revenue, which consisted primarily of reagent sales, declined to $85,000 from $158,000 in the second quarter of 2009. The company has not received any new instrument orders in 2010.

Second-quarter research and development spending increased 17 percent, to $4.2 million from $3.5 million in the year-ago period. The company attributed the increase to a restructuring charge of $543,000, an increase in stock-based compensation of $36,000, and a net increase of $98,000 in other expenses.

Selling, general and administrative spending was flat at $2.7 million. A $356,000 decrease in salaries and benefits and $490,000 decrease in occupancy costs was offset by an increase in stock-based compensation expenses of $400,000, an increase of patent expenses of $224,000, and an increase of $165,000 in public company expenses.

The company expects that payments associated with its restructuring will continue through the second quarter of 2011. The restructuring is expected to result in an annual cost savings of approximately $6.8 million.

Helicos narrowed its net loss to $4.7 million, from $6.3 million in the second quarter of 2009, but said it anticipates its losses will "continue for a considerable period of time as we focus our efforts on entering the diagnostic markets."

Since its inception in 2003, the company has accumulated a total deficit of $178.7 million.

During the second quarter, Helicos also terminated its agreement with investment bank Thomas Weisel, which it hired in late 2009 to assist with the evaluation of its long-term strategy (IS 9/3/2009).

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