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Helicos Sees Declining Revenue, Customer Dissatisfaction as it Struggles to Stay Afloat

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By Monica Heger

This article was originally published April 2.

Helicos BioSciences' fourth-quarter 2011 revenues plummeted nearly five-fold to $514,000 from $2.5 million one year ago, the company reported last week in a filing with the US Securities and Exchange Commission.

Helicos also disclosed that a customer sent it a demand letter in March, alleging that its products were deficient and that the company did not provide the necessary maintenance support and customer service.

Product revenues in Q4, generated primarily by the sale of reagents, dropped to $117,000 from $960,000 a year ago and grant revenues fell to $244,000 from $1.6 million a year ago. Its DNA and RNA sequencing service revenues were up from zero a year ago to $153,000.

Late last year, the company reported that it would need significant additional capital to continue its business into 2012 (IS 11/15/2011). Then in March, it reported it only had $200,000 in cash and that its CEO Ivan Trifunovich had taken on the position of president and CEO of Fremont, Calif.-based WaferGen Biosystems, but would still remain Helicos' CEO on a part-time basis.

In this most recent filing, it said that it does "not have sufficient funds to operate our business," and that it requires "significant additional capital on a month-to-month basis."

Helicos cited an uncommitted $2 million from a $4 million bridge debt financing facility as a potential source of additional finds, and said that already $375,000 of that has been advanced on a short term basis.

Additionally, in the SEC filing Helicos disclosed that in March it received a letter from the attorney of a "major customer" alleging that Helicos is in breach of the customer's system and reagent supply agreements from the sale of multiple Helicos systems that were sold and installed prior to Dec. 31, 2009.

The letter alleges that the systems "did not conform to Helicos' specifications and were defective in material and workmanship," and that Helicos "did not provide the requisite level of customer support in connection with the system service and maintenance requirements."

The letter states that if the parties are unable to reach a settlement, the customer will "terminate the supply agreements and request that Helicos refund approximately $5 million."

As of the filing, Helicos has not yet responded to the letter and has deferred all revenue related to that arrangement.

In January, Helicos made a final payment of $1.07 million on a loan.

The company is also involved in ongoing lawsuits with Illumina, Pacific Biosciences, and Life Technologies. In March, the US Patent and Trademark Office reaffirmed its rejection of the last of four patents owned by Helicos that are subject to inter partes reexamination (IS 3/20/2012).

Pacific Biosciences had requested the reexamination of all four patents last year after Helicos sued PacBio, Life Tech, and Illumina in 2010, claiming their respective technologies infringe on the patents. That action is still ongoing.

For full-year 2011, Helicos reported $3.2 million in revenues, down 38 percent from $4.4 million in 2010. Product revenues dropped to $571,000 from $1.3 million a year ago. It recorded service revenues of $1.2 million, compared to none a year ago, but grant revenues fell to $1.5 million from $3.1 million in 2010.

The company ended 2011 with around $1 million in cash and cash equivalents.


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

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