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Helicos Reports $1.1M in Q3 Revenue; Rules Out Company Sale for Now as Prospects Improve

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Helicos BioSciences said this week that, for now, it no longer considers a sale of the company as its business prospects and market valuation have been improving.

The company, which made the announcement along with its third-quarter earnings release, also indicated that it is weighing price reductions for its instrument and plans to introduce new reagent kits.

The announcement comes two months after Helicos said it had hired investment firm Thomas Weisel Partners to help it evaluate "strategic alternatives" as its cash was running low (see In Sequence 9/8/2009).

It has been able to buoy its cash position since then by raising $9.4 million in a private placement of shares of common stock and warrants to new and existing investors.

This and other "improving standalone prospects,” including instrument sales, have enabled Helicos’ board of directors "to disengage from discussions involving a potential sale of the company at the current time," according to the earnings report, which was filed with the Securities and Exchange Commission this week.

Helicos will continue to keep Thomas Weisel as a financial advisor "in connection with its long-term financing strategy," the company said.

During the third quarter, Helicos reported approximately $1.11 million in revenue, almost all of it product revenue, up from $200,000 during last year's third quarter. The firm said $1 million of the revenue resulted from the sale of an instrument that it shipped during the second quarter.

Helicos shipped two instruments in Q2: one to a lab at the Massachusetts General Hospital Cancer Center, and another to an undisclosed biotechnology company in the Northeast (see In Sequence 8/18/2009).

In total, it has received sales orders for seven systems and has recognized revenue for two of these. In addition, it has three systems installed at academic institutions for scientific and commercial evaluation, and one at the Broad Institute at no cost to the institute.

The company incurred $3.5 million in research and development costs during the third quarter, down from $5.6 million in the year-ago quarter. Almost $1 million of this decrease resulted from lower product-development costs.

Helicos' net loss for the quarter totaled $6.9 million, down from $11.5 million during the third quarter of 2008.

As of Nov. 9, the company had $8.4 million in cash and cash equivalents, according to the filing. As stated two weeks ago, Helicos expects to receive approximately $5 million in cash from customers during the fourth quarter of this year and the first quarter of next year (see In Sequence 10/27/2009). Combined, these funds will allow the company to operate through the first quarter of 2010, according to its estimate.

Also contributing to the company’s reversal of fortune has been "very positive feedback from our initial customers" and "an increased interest in clinical applications for which the Helicos system is uniquely suited," CEO Ron Lowy said in a statement this week.

He added that Helicos has established "a first-mover advantage in diagnostics and biomarker discovery using single-molecule sequencing technology."

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Helicos also hinted in its statement at future price reductions for its sequencing system, which currently has a list price of $999,000. According to Lowy, the company expects to reduce the cost of goods for its Helicos Analysis System "through a series of meaningful cost reductions targeted at key system components" both in the near-term and over the next 12 months, allowing it to "have the flexibility to address the initial cost of the platform for our customers."

Starting during the first half of 2010, the company also plans to introduce new reagent kits that will allow customers to run fewer samples, and that will reduce the instrument runtime by up to 70 percent. These kits will require no changes to the system hardware.

Lowy predicted that, as a result, the cost of sequencing a human genome using its instrument will decrease by more than half. He did not state what the current level is, but a recent publication by Helicos co-founder Steve Quake put the reagent cost at $48,000 (see In Sequence 8/18/2009).

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