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Helicos Ships First HeliScope, Plans To Improve System Later This Year

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Helicos BioSciences said last week that it has shipped its first HeliScope system to Expression Analysis, a provider of gene-expression,genotyping, and other services.
 
Helicos this week also reported $117,000 in fourth quarter 2007 revenues and recorded a $10.4 million net loss for the period (see Short Reads, in this issue). The company said it plans to add applications, increase the throughput, and decrease the running costs for its instrument during 2008.
 
The Expression Analysis shipment comes about a month after Helicos said it had received its first order (see In Sequence 2/12/2008). This is the first time Expression Analysis will offer sequencing-based services. The company expects to have the instrument up and running within the next two or three weeks, and to start offering limited services in the third quarter, Expression Analysis CEO Steve McPhail told In Sequence last week.
 
This year, Expression Analysis plans to offer three types of services on the instrument: digital gene expression, candidate gene sequencing, and genomic signature sequencing — counting the expression of gene subsets in thousands of samples. In the future, “we certainly have interest in de novo sequencing,” said McPhail.
 
The company, based in Durham, NC, currently offers a variety of genomic services, including gene-expression profiling, genotyping, related bioinformatics services, and nucleic-acid purification from blood and other tissues. It uses a number of platforms, including microarrays from Affymetrix and Illumina, as well as real-time PCR TaqMan assays from Applied Biosystems.
 
McPhail said the HeliScope is “a great complement” to these services.
 
According to Expression Analysis’ website, the company’s customers include Wyeth Research, GlaxoSmithKline, the Environmental Protection Agency, the Immune Tolerance Network, and Duke and Emory Universities.
 
McPhail said the company considered other next-generation sequencing platforms initially but “decided that for our laboratory, and our specific situation, the Helicos [instrument] represented the best fit.” He declined to compare specific metrics of Helicos’ instrument with those of competing platforms.
 
He listed as reasons the company chose to purchase a HeliScope its simple sample preparation, the simple and robust instrument operation, its high throughput and ability to multiplex, and the “great potential” for future performance characteristics.
 
In a Helicos press release last week, McPhail said that “what immediately attracted us to Helicos was the accuracy of its single molecule sequencing offerings.” He did not elaborate on the instrument’s accuracy.
 
“I think that Helicos has done a lot of things for a research-grade instrument that you typically see in clinical instruments, in terms of sample preparation and maintaining chain of custody, in terms of reagent configurations, et cetera,” McPhail told In Sequence, adding that “we expect to see a significant improvement in performance over the next six to 12 months.”
 
Helicos says its instrument can currently yield 25 megabases per hour for dual-pass high-accuracy sequencing applications, and 90 megabases per hour for single-pass lower-accuracy gene-expression applications. Helicos this year plans to increase the instrument’s sequencing throughput and decrease the running cost.
 
At last month’s Advances in Genome Biology and Technology meeting in Marco Island, Fla., Helicos’ senior vice president of R&D, Bill Efcavitch, said that for sequencing applications, the instrument currently generates 7.5 gigabases of data per 14-day run at a reagent cost of $18,000. Running 50 samples in parallel, the system generates 150 megabases of sequence data per sample, at a cost of $360 each.
 
McPhail said he believes the throughput of the system will eventually make up for the high acquisition cost. The list price of the HeliScope system, $1.35 million, is more than twice that of competing systems. It was not immediately clear how much Expression Analysis paid for its unit.
 
Expression Analysis believes there will be significant demand for its next-gen sequencing services among its pharmaceutical customers.
 

“What’s critical for us is getting placements across the target market in 2008, getting these customers up and running, and making them as successful as possible.”

“We had lengthy discussions with our pharmaceutical partners prior to making this decision [and] very few were interested in actually acquiring next-generation sequencers,” McPhail said. “Most were looking for a reliable outsourcing partner.”
 
He added that “we have relationships with top-tier pharmaceutical companies that we think we can turn into service partnerships.”
 
Asked about the potential challenges of being the first customer of a new technology platform, McPhail said these will not come to Expression Analysis as a surprise. “We expect to skin our knees and learn a lot as we go,” he said, but “the partnership that we have established we believe will bode well for all concerned.”
 
In preparation for the platform, Expression Analysis upgraded its storage and data analysis capacities, he said, but did not provide specifics.
 
A company spokesperson also told In Sequence’s sister publication GenomeWeb Daily News last week that Expression Analysis needs to perform structural work on its facility in order to support the weight of the instrument. McPhail declined to provide further details.
 
He did not say whether Expression Analysis will consider acquiring other next-gen sequencing platforms but said that “we are platform-agnostic” and “will provide any platform that best fits our client application requirements.”
 
Expression Analysis was founded in 2001 “to fill the market need for a high quality supplier of microarray services and solutions,” according to the company’s website. It now bills itself as “the market leader in microarray outsourcing for gene expression, genotyping and resequencing analysis.”
 
Planned Improvements
 
During the fourth-quarter 2007 earnings call, Helicos President and COO Steve Lombardi said company researchers have improved the overall accuracy of the machine and that this will eventually enable single-pass sequencing applications. He did not specify the error rate, but said it is “good enough to be able to detect SNPs,” and that substitution errors are a “very small part” of the overall errors.
 
Initial tests have shown that “there is strong utility for our single-pass, 90-megabase-per-hour [true single molecule sequencing] assay in candidate region sequencing applications,” he said.
 
The company is now setting up collaborations to further test this application and to include it into its commercial offering. Lombardi did not give a timeline for when this application will be commercially available because it is unclear how long the testing will take.
 
In the second half of the year, Helicos plans to expand its offering in gene-expression analysis to discovery applications “using our amplification-free digital gene expression assay,” Lombardi said. 
 
Also later this year, Helicos wants to offer a new process for multiplexing sample prep for candidate region resequencing.
 
Regarding cDNA sequencing, company researchers have developed an assay that has “shown exquisite results in both quantification and sequencing accuracy” in a yeast model system, Lombardi said. Because this application involves no amplification, it could deliver “very accurate quantification” of transcripts, he said.
 
The next step will be to apply this assay to a human transcriptome, he said, and to validate it in outside collaborations.
 
The company’s R&D team is also currently working on a paired-end read protocol, he said, and has shown that the technology can “effectively sequence the ends of templates up to two kilobases in length.”
 
Commercial Goals
 
Discussing sales goals, Lombardi said the company this year will “focus our sales efforts to the 30 to 40 early adopters that form the beachhead of our commercial strategy.” He added later that the company is confident it will obtain more orders in the second quarter of this year.
 
Following the AGBT meeting in February, several potential customers have visited the company, he said, adding that these are “very interested in our trajectory to get to higher throughput,” as well as in paired-end reads.
 
Overall, the company’s target market consists of about 300 institutions, according to Lombardi, including pharmaceutical and biotechnology companies, large academic health centers, and private research institutes and genome centers.
 
Lombardi said it is premature to estimate how many instruments Helicos will ship this year, since this will depend on market dynamics and instrument improvements. However, the company plans to provide updates on numbers of instrument shipments throughout the year during its quarterly earnings calls.
 
“What’s critical for us is getting placements across the target market in 2008, getting these customers up and running, and making them as successful as possible,” he said.
 
To generate more data from research projects, Helicos plans to ramp up collaborations between company researchers, led by CSO Patrice Milos, and external scientists.
 
“As we are able to get Patrice more and more access to an instrument, and be able to really start cranking that collaborative effort up, I think we will have an ability to not only leverage what will be our customer base but what we can do internally with real samples,” Lombardi said.
 
However, Helicos does not plan to offer sequencing services to prospective customers to demonstrate the technology. “We don’t want to get into a demo situation,” Lombardi said. “That can be very frustrating, because it can stall you.”
 
After doubling its headcount in 2007, Helicos plans to make more hires this year, both in the areas of operations and sales, and in R&D. The company is currently searching for a new chief financial officer, to replace Louise Mawhinney, who resigned last week (see Paired Ends, in this issue).

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