Use these links to rapidly review the documentTABLE OF CONTENTS



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-Q

|(Mark One)                                    |                                                                                         
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended March 31, 2008
|OR                                           
|o                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-33484

HELICOS BIOSCIENCES CORPORATION(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                                                                                                                    |  | 05-0587367(I.R.S. Employer
Identification No.)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|One Kendall Square, Building 700, Cambridge, MA 02139
(617) 264-1800(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes: ý    No: o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting
company. See the definitions of "large accelerated filer, large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer o |  | Accelerated filer o |  | Non-accelerated filer o (Do not check if a smaller reporting company) |  | Smaller reporting company ý
|------------------------- |  | ------------------- |  | --------------------------------------------------------------------- |  | ---------------------------

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act) Yes: o    No: ý

The number of shares of the registrant's Common Stock, $.001 par value, outstanding as of April 30, 2008, was 20,935,691 shares.



---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

Table of Contents



|                             |  |                                                                                                                                                                     |  | Page
|---------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Part IFinancial Information |  |                                                                                                                                                                    
|Item 1.                      |  | Consolidated Financial Statements                                                                                                                                   |  | 3   
|                             |  | Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007                                                                                              |  | 3   
|                             |  | Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007 and the period from May 9, 2003 (date of inception) through March 31, 2008 |  | 4   
|                             |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007 and the period from May 9, 2003 (date of inception) through March 31, 2008 |  | 5   
|                             |  | Notes to Consolidated Financial Statements                                                                                                                          |  | 6   
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                               |  | 14  
|Item 3.                      |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                          |  | 21  
|Item 4.                      |  | Controls and Procedures                                                                                                                                             |  | 21  
|Part IIOther Information    |  |                                                                                                                                                                    
|Item 1.                      |  | Legal Proceedings                                                                                                                                                   |  | 21  
|Item 1A.                     |  | Risk Factors                                                                                                                                                        |  | 21  
|Item 2.                      |  | Unregistered Sale of Equity Securities and Use of Proceeds                                                                                                          |  | 22  
|Item 3.                      |  | Defaults upon Senior Securities                                                                                                                                     |  | 22  
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                                                                                 |  | 22  
|Item 5.                      |  | Other Information                                                                                                                                                   |  | 23  
|Item 6.                      |  | Exhibits                                                                                                                                                            |  | 23  
|SIGNATURES                   |  | 24                                                                                                                                                                 

2

---





Part IFinancial Information

Item 1.    Consolidated Financial Statements

HELICOS BIOSCIENCES CORPORATION (a development stage company)        CONSOLIDATED BALANCE SHEETS  (unaudited)        (in thousands, except share and per share data)

|                                       |                                                                                                                                                                                                                            | December 31,
2007 |                                            | March 31,
2008 |  
|-------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------------------------------------------ | -------------- | -
|ASSETS                                 |                                                                                                                                                                                                                            |                   |                                            |                |  
|Current assets                         |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       | Cash                                                                                                                                                                                                                       |                   | $                                          | 52,683         |  
|                                       | Unbilled government grant receivable                                                                                                                                                                                       |                   |                                            | 117            |  
|                                       | Inventory                                                                                                                                                                                                                  |                   |                                            | 1,612          |  
|                                       | Prepaid expenses and other current assets                                                                                                                                                                                  |                   |                                            | 706            |  
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       |                                                                                                                                                                                                                            |                   | Total current assets                       |                |  
|Property and equipment, net            |                                                                                                                                                                                                                            |                   | 3,400                                      |                |  
|Other assets                           |                                                                                                                                                                                                                            |                   | 691                                        |                |  
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       |                                                                                                                                                                                                                            |                   | Total assets                               |                | $
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|LIABILITIES AND STOCKHOLDERS' EQUITY   |                                                                                                                                                                                                                            |                   |                                            |                |  
|Current liabilities                    |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       | Accounts payable                                                                                                                                                                                                           |                   | $                                          | 1,691          |  
|                                       | Accrued expenses and other current liabilities                                                                                                                                                                             |                   |                                            | 1,993          |  
|                                       | Current portion of long-term debt                                                                                                                                                                                          |                   |                                            | 988            |  
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       |                                                                                                                                                                                                                            |                   | Total current liabilities                  |                |  
|Long-term debt, net of current portion |                                                                                                                                                                                                                            |                   | 10,786                                     |                |  
|Other long-term liabilities            |                                                                                                                                                                                                                            |                   | 312                                        |                |  
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       |                                                                                                                                                                                                                            |                   | Total liabilities                          |                |  
|Commitments and contingencies (Note 6) |                                                                                                                                                                                                                            |                   |                                            |                |  
|Stockholders' equity                   |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       | Preferred stock: par value $0.001 per share; 5,000,000 shares authorized at December 31, 2007 and March 31, 2008; no shares issued and outstanding at December 31, 2007 and March 31, 2008                                 |                   |                                            |               |  
|                                       | Common stock: par value $0.001 per share; 120,000,000 shares at December 31, 2007 and March 31, 2008; 20,983,638 shares and 20,935,018 shares issued and outstanding at December 31, 2007 and March 31,
2008, respectively |                   |                                            | 21             |  
|                                       | Additional paid-in capital                                                                                                                                                                                                 |                   |                                            | 137,472        |  
|                                       | Deficit accumulated during the development stage                                                                                                                                                                           |                   |                                            | (94,054        | )
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       |                                                                                                                                                                                                                            |                   | Total stockholders' equity                 |                |  
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  
|                                       |                                                                                                                                                                                                                            |                   | Total liabilities and stockholders' equity |                | $
|                                       |                                                                                                                                                                                                                            |                   |                                            |                |  

The
accompanying notes are an integral part of the interim consolidated financial statements.

3

---





HELICOS BIOSCIENCES CORPORATION (a development stage company)        CONSOLIDATED STATEMENTS OF OPERATIONS  (unaudited)        (in thousands, except share and per share data)

|                                                                                         |                                     | Three Months Ended March 31, |           | Period from
May 9, 2003
(date of inception)
through March 31, 2008 |       
|---------------------------------------------------------------------------------------- | ----------------------------------- | ---------------------------- | --------- | ------------------------------------------------------------------ | ------
|
|Grant revenue                                                                            |                                     | $                            | 92        |                                                                    | $     
|Operating expenses                                                                       |                                     |                              |           |                                                                    |       
|                                                                                         | Research and development            |                              |           | 5,385                                                              |       
|                                                                                         | Selling, general and administrative |                              |           | 3,251                                                              |       
|                                                                                         |                                     |                              |           |                                                                    |       
|                                                                                         | Total operating expenses            |                              |           | 8,636                                                              |       
|                                                                                         |                                     |                              |           |                                                                    |       
|                                                                                         |                                     | Operating loss               |           |                                                                    | (8,544
|                                                                                         | Interest income                     |                              |           | 267                                                                |       
|                                                                                         | Interest expense                    |                              |           | (73                                                                | )     
|                                                                                         |                                     |                              |           |                                                                    |       
|                                                                                         |                                     | Net loss                     |           |                                                                    | (8,350
|Beneficial conversion feature related to Series B redeemable convertible preferred stock |                                     |                              | (18,140   | )                                                                  |       
|                                                                                         |                                     |                              |           |                                                                    |       
|Net loss attributable to common stockholders                                             |                                     | $                            | (26,490   | )                                                                  | $     
|                                                                                         |                                     |                              |           |                                                                    |       
|Net loss attributable to common stockholders per sharebasic and diluted                 |                                     | $                            | (17.90    | )                                                                  | $     
|                                                                                         |                                     |                              |           |                                                                    |       
|Weighted average number of common shares used in computationbasic and diluted           |                                     |                              | 1,480,130 |                                                                    |       
|                                                                                         |                                     |                              |           |                                                                    |       

The
accompanying notes are an integral part of the interim consolidated financial statements.

4

---





HELICOS BIOSCIENCES CORPORATION (a development stage company)        CONSOLIDATED STATEMENTS OF CASH FLOWS  (unaudited)        (in thousands)

|                                                                                        |                                                       | Three Months Ended
March 31,          |        |        |       
|--------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------- | ------ | ------ | ------
|
|
|Cash flows from operating activities:                                                   |                                                       |                                       |        |        |       
|Net loss                                                                                |                                                       | $                                     | (8,350 | )      | $     
|Adjustments to reconcile net loss to cash used in operating activities:                 |                                                       |                                       |        |        |       
|                                                                                        | Depreciation and amortization                         |                                       |        | 364    |       
|                                                                                        | Amortization of lease incentive                       |                                       |        | (33    | )     
|                                                                                        | Common stock issued for licenses                      |                                       |        |       |       
|                                                                                        | Stock-based compensation expense                      |                                       |        | 715    |       
|                                                                                        | Noncash interest expense related to debt and warrants |                                       |        | 12     |       
|Changes in operating assets and liabilities:                                            |                                                       |                                       |        |        |       
|                                                                                        | Unbilled government grant receivable                  |                                       |        | 67     |       
|                                                                                        | Inventory                                             |                                       |        |       |       
|                                                                                        | Prepaid expenses and other current assets             |                                       |        | (25    | )     
|                                                                                        | Accounts payable                                      |                                       |        | (349   | )     
|                                                                                        | Accrued expenses and other current liabilities        |                                       |        | (16    | )     
|                                                                                        | Other long-term liabilities                           |                                       |        | 31     |       
|                                                                                        |                                                       |                                       |        |        |       
|                                                                                        |                                                       | Net cash used in operating activities |        |        | (7,584
|                                                                                        |                                                       |                                       |        |        |       
|Cash flows from investing activities:                                                   |                                                       |                                       |        |        |       
|Purchases of property and equipment                                                     |                                                       |                                       | (450   | )      |       
|Increase in restricted cash                                                             |                                                       |                                       |       |        |       
|Purchases of short-term investments                                                     |                                                       |                                       |       |        |       
|Maturities of short-term investments                                                    |                                                       |                                       | 795    |        |       
|                                                                                        |                                                       |                                       |        |        |       
|Net cash provided by (used in) investing activities                                     |                                                       |                                       | 345    |        |       
|                                                                                        |                                                       |                                       |        |        |       
|Cash flows from financing activities:                                                   |                                                       |                                       |        |        |       
|Proceeds from debt issuances                                                            |                                                       |                                       |       |        |       
|Payments on debt                                                                        |                                                       |                                       | (91    | )      |       
|Payments of debt issuance costs                                                         |                                                       |                                       |       |        |       
|Proceeds from initial public offering                                                   |                                                       |                                       |       |        |       
|Deferred initial public offering costs                                                  |                                                       |                                       | (453   | )      |       
|Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs |                                                       |                                       | 19,994 |        |       
|Proceeds from bridge loan                                                               |                                                       |                                       |       |        |       
|Proceeds from issuance of common stock                                                  |                                                       |                                       |       |        |       
|Proceeds from issuance of restricted common stock                                       |                                                       |                                       | 4      |        |       
|Payments to employees for cancelled restricted common stock                             |                                                       |                                       | (47    | )      |       
|Proceeds from exercise of stock options                                                 |                                                       |                                       | 3      |        |       
|                                                                                        |                                                       |                                       |        |        |       
|Net cash provided by (used in) financing activities                                     |                                                       |                                       | 19,410 |        |       
|                                                                                        |                                                       |                                       |        |        |       
|Net increase (decrease) in cash and cash equivalents                                    |                                                       |                                       | 12,171 |        |       
|Cash and cash equivalents, beginning of period                                          |                                                       |                                       | 10,589 |        |       
|                                                                                        |                                                       |                                       |        |        |       
|Cash and cash equivalents, end of period                                                |                                                       | $                                     | 22,760 |        | $     
|                                                                                        |                                                       |                                       |        |        |       
|Supplemental disclosure of cash flow information                                        |                                                       |                                       |        |        |       
|Cash paid during the year for:                                                          |                                                       |                                       |        |        |       
|Interest                                                                                |                                                       | $                                     | 72     |        | $     
|Noncash financing activities:                                                           |                                                       |                                       |        |        |       
|Issuance of redeemable convertible preferred stock warrants                             |                                                       | $                                     |       |        | $     
|Conversion of bridge loan to equity                                                     |                                                       | $                                     |       |        | $     
|Beneficial conversion feature related to Series B redeemable                            |                                                       |                                       |        |        |       
|                                                                                        | convertible preferred stock                           |                                       | $      | 18,140 |       
|Conversion of preferred stock to common stock                                           |                                                       | $                                     |       |        | $     
|Reclassification of preferred stock warrants to common stock warrants                   |                                                       | $                                     |       |        | $     

The accompanying notes are an integral part of the interim consolidated financial statements.

5

---





HELICOS BIOSCIENCES CORPORATION (a development stage company)        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (unaudited)

1. Nature of the Business and Basis of Presentation

Helicos BioSciences Corporation ("Helicos" or the "Company") is a life sciences company focused on innovative genetic analysis technologies for the research, drug
discovery and clinical diagnostics markets. Helicos has developed a proprietary technology to enable the rapid analysis of large volumes of genetic material by directly sequencing single molecules of
DNA or single DNA copies of RNA. Helicos is a Delaware corporation and was incorporated on May 9, 2003.

Although
the Company shipped its first product in March 2008, it has had limited operations to date and its activities have consisted primarily of conducting research and development,
early-stage manufacturing, initial sales related activities, recruiting personnel and raising capital. Accordingly, the Company is considered to be in the development stage at March 31, 2008,
as defined by the Financial Accounting Standards Board ("FASB") in Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." The
Company's fiscal year ends on December 31. The Company operates as one reportable segment.

Since
inception, the Company has incurred losses and has not generated positive cash flows from operations. The Company expects such losses to continue for at least two years as it
continues to develop and commercialize its products. The Company will seek to raise additional funds through public or private equity or debt financings, collaborative or other arrangements with
corporate sources, or through other sources of financing. However, additional financing may not be available on a timely basis on terms acceptable to the Company, or at all. The Company's failure to
raise capital as and when needed would have a negative impact on its financial condition and its ability to pursue its business strategies. If adequate funds are not available, the Company would have
to delay, reduce or eliminate development and commercialization efforts, and may have to obtain funds through arrangements with collaborators or others on terms unfavorable to the Company or pursue
merger or acquisition strategies.

The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting principles ("GAAP") in the United States of America. The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated.

The
preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent liabilities at the dates of the financial statements. Actual amounts may differ from these estimates, different assumptions or conditions.

It
is management's opinion that the accompanying interim consolidated financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair
statement of the results for the interim periods. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended
December 31, 2007 included in the Company's Form 10-K.

Certain
amounts reported in previous periods have been reclassified to conform to the current presentation.

6

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

2. Initial Public Offering

On May 24, 2007, the Company completed its initial public offering ("IPO") of 5,400,000 shares of common stock at an initial public offering price of $9.00
per share. Net proceeds were approximately $43.9 million after deducting underwriting discounts and commissions and offering expenses paid by the Company. Total fees and expenses paid by the
Company, excluding underwriting discounts and commissions were approximately $1.8 million which includes legal, accounting and printing costs and various other fees associated with registration
and listing of the Company's common stock.

On
May 24, 2007, upon completion of the Company's IPO, all of the Company's 59,189,998 shares of redeemable convertible preferred stock outstanding on that date were automatically
converted into 13,153,293 shares of common stock. In addition, the outstanding warrants to purchase 81,184 shares of Series B redeemable convertible preferred stock were converted into warrants
to purchase 18,040 shares of common stock. During the period January 1, 2007 through the date of the Company's IPO, the estimated fair value of the warrants to purchase 81,184 shares of
Series B redeemable convertible
preferred stock decreased by $42,000 to $162,000. Upon conversion on the date of the Company's IPO, the warrants to purchase 18,040 shares of the Company's common stock were reclassified to additional
paid-in capital.

On
June 27, 2007, the underwriters exercised their over-allotment option and purchased an additional 397,000 shares of the Company's common stock, and the net proceeds
after deducting underwriters' discounts and commissions related to the offering were approximately $3.3 million.

3. Summary of Significant Accounting Policies

In the Company's Form 10-K for the fiscal year ended December 31, 2007, our significant accounting policies were identified. Effective
January 1, 2008, the Company made a prospective change to its useful life policy for property and equipment. However, the change did not have a material impact on the Company's financial
position, results of operations or cash flows.

Property and equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are
capitalized. Depreciation is provided using the straight-line method over the following estimated useful lives: Machinery and equipmentthree to five years, office furniture
and equipmentthree to seven years, leasehold improvementsthe shorter of three years or the life of lease. Upon retirement or sale, the cost of the assets disposed of and the
related accumulated depreciation are eliminated from the consolidated balance sheets and related gains or losses are reflected in the consolidated statements of operations. There have been no material
retirements or sale of assets since May 9, 2003 (date of inception).

Other comprehensive income (loss)

Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income," establishes standards for reporting and displaying
comprehensive income and its components in a full set of general-purpose financial statements. For each of the three months ended March 31, 2007 and 2008, and the period from May 9, 2003
(date of inception) to March 31, 2008, there was no material difference between the net loss and comprehensive loss.

7

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

3. Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits an entity to choose to measure many financial instruments
and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. The
Company did not elect to re-measure any of its existing financial assets or liabilities under the provisions of SFAS No. 159.

In
November 2007, the Emerging Issues Task Force ("EITF") issued EITF Issue 07-01 "Accounting for Collaborative Arrangements" ("EITF No. 07-01"). EITF
No. 07-01 requires collaborators to present the results of activities for which they act as the principal on a gross basis and report any payments received from (made to) other
collaborators based on other applicable GAAP or, in the absence of other applicable GAAP, based on analogy to authoritative accounting literature or a reasonable, rational, and consistently applied
accounting policy election. Further, EITF No. 07-01 clarified that the determination of whether transactions within a collaborative arrangement are part of a vendor-customer (or
analogous) relationship subject to Issue 01-9, "Accounting for Consideration Given by a Vendor to a Customer". EITF No. 07-01 is effective for fiscal years beginning
after December 15, 2008, and interim periods within those years. The Company is currently evaluating the impact, if any, that the adoption of EITF No. 07-01 will have
on its financial position, results of operations or cash flows.

Effective
January 1, 2008, the Company implemented SFAS No. 157, "Fair Value Measurement" ("SFAS No. 157") for its financial assets and liabilities that are
re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least
annually. In accordance with the
provisions of FSP No. FAS 157-2, "Effective Date of FASB Statement No. 157", the Company has elected to defer implementation of SFAS No. 157 as it relates to
the Company's non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis until
January 1, 2009. The Company is currently evaluating the impact, if any, that FSP No. FAS 157-2 will have on its non-financial assets and liabilities.

The
adoption of SFAS No. 157 to the Company's financial assets and liabilities and non-financial assets and liabilities that are re-measured and
reported at fair value at least annually did not have an impact on the Company's financial results in any period.

4. Inventory

Inventories are stated at the lower of cost or market with cost determined under the first-in, first-out, or FIFO, method. The components
of inventory are as follows (in thousands):

December 31,
2007

March 31,
2008Raw materials

$
799

$
1,482Work in process


813


3,760Finished goods





424Inventory

$
1,612

$
5,666


8

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

5. Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The Company's potential
dilutive shares, which include outstanding common stock options, unvested restricted stock, redeemable convertible preferred stock and warrants have not been included in the computation of diluted net
loss per share for both periods as the result would be antidilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. Because the Company reported a
net loss for the three months ended March 31, 2007 and 2008, all potential common shares have been excluded from the computation of the dilutive net loss per share for all periods presented
because the effect would have been antidilutive. Such potential common shares consist of the following:

Three months ended
March 31,2007

2008Stock options

1,219,870

2,340,633Unvested restricted stock

461,551

214,906Warrants

18,040

Redeemable convertible preferred stock

13,153,293




6. Commitments and Contingencies

License agreements and patents

In November 2003, the Company entered into a license agreement with California Institute of Technology (the "Caltech License Agreement") that granted the Company
a worldwide, exclusive, royalty-bearing license, with the right to grant sublicenses, under specified patents and patent applications, and a worldwide, non-exclusive royalty bearing
license, with the right to grant sublicenses, under specified technology outside the scope of the licensed patents. In connection with the Caltech License Agreement, the Company issued 46,514 shares
of common stock, and recorded a charge of $20,000. In addition, the Company pays an annual license fee of $10,000 per year. The license fee payments are creditable against royalties based upon sales
of products covered by patents licensed under the agreement. Royalties are calculated based on a percentage of defined net sales. The Company is also obligated to pay California Institute of
Technology a portion of specified license and sublicense income, proceeds from sales of specified intellectual property and specified service revenue amounts that it receives based on licenses and
sublicenses that the Company grants, sales of intellectual property and services that are provided to third parties. The royalty obligation with respect to any licensed product extends until the later
of the expiration of the last-to-expire of the licensed patents covering the licensed product and three years after the first commercial sale of the licensed product in any
country for non-patented technology covered under the agreement. Through March 31, 2008, no royalty payments have been made. In March 2007, the Company amended the Caltech License
Agreement to provide rights under an additional patent application under the terms of the existing license in exchange for a one-time payment of $50,000 to the California Institute of
Technology. All amounts paid to date and the value of the common stock issued have been expensed to research and development expense as technological feasibility had not been established and the
technology had no alternative future use.

9

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

6. Commitments and Contingencies (Continued)

In
June 2004, the Company entered into a license agreement with Roche Diagnostics (the "Roche License Agreement") that granted the Company a worldwide, semi-exclusive
royalty-bearing license, with the right to grant sublicenses under a patent relating to sequencing methods. In connection with the Roche License Agreement, the Company paid an upfront fee of
175,000 Euros and committed to pay an annual license fee ranging from 10,000 to 40,000 Euros. The Company has an option to convert the license to non-exclusive beginning in
2008, in which case the annual license fees would be reduced to 10,000 Euros beginning in 2008. The Company has the right to terminate the Roche License Agreement at any time for convenience
upon 90 days prior written notice to Roche Diagnostics. Both the Company and Roche Diagnostics have the right to terminate the Roche License Agreement upon breach by the other party, subject to
notice and an opportunity to cure. The Roche License Agreement also terminates upon the occurrence of specified bankruptcy events. As part of the Roche License Agreement, the Company agrees to pay
royalties based on a percentage of defined net sales. The Company also agrees to pay a portion of specified sublicense income amounts that are received based on sublicenses that the Company grants to
third parties. The Company's royalty obligation, if any, extends until the expiration of the last-to-expire of the licensed patents. Through March 31, 2008, no royalty
payments have been made. All amounts paid to date have been expensed to research and development expense as technological feasibility had not established and the technology had no alternative future
use.

In
March 2005, the Company entered into a license agreement with Arizona Technology Enterprises (the "AZTE License Agreement") that granted the Company a worldwide, exclusive,
irrevocable, royalty-bearing license, with the right to grant sublicenses, under specified patents and patent applications exclusively licensed by AZTE from Arizona State University and the University
of Alberta. In connection with the AZTE License Agreement, the Company paid an upfront fee of $350,000, committed to an annual license fee of $50,000, which will increase to $100,000 upon the
successful issuance of a U.S. patent, committed to pay a three-year maintenance fee of $50,000, payable in equal annual installments beginning in March 2006, and issued 88,888 shares of
restricted common stock, which vest in two equal installments upon the achievement of separate milestones. The Company is obligated to use reasonable commercial efforts to develop, manufacture and
commercialize licensed products. In addition, if the Company fails to meet specified development and commercialization deadlines, the AZTE License Agreement converts from exclusive to
non-exclusive. The AZTE License Agreement will remain in force until terminated. The Company has the right to terminate the AZTE License agreement at any time for convenience upon
60 days prior written notice to Arizona Technology Enterprises. Both the Company and Arizona Technology Enterprises have the right to terminate the agreement upon breach by the other party,
subject to notice and an opportunity to cure. The AZTE License Agreement also terminates upon the occurrence of specified bankruptcy events.

As
part of the AZTE License Agreement, the Company agrees to pay royalties based on a percentage of defined net sales. The Company also agrees to pay a portion of specified sublicense
income amounts that are received based on sublicenses granted to third parties. The Company's royalty obligation, if any, extends until the expiration of the last-to-expire of
the licensed patents. Through March 31, 2008, no royalty payments have been made. All amounts paid to date have been expensed to research and development expense as technological feasibility
had not been established and the technology had no alternative future use. In May 2006, in accordance with the license agreement, due to the successful issuance of a U.S. patent, the committed annual
license fee increased from $50,000 to

10

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

6. Commitments and Contingencies (Continued)

$100,000
and 44,444 shares of the restricted common stock vested. The vesting of 44,444 shares of restricted common stock resulted in a charge to research and development expense of $127,000 based on
the fair value of the Company's common stock at the time the milestone was achieved. The remaining 44,444 shares of restricted common stock will vest immediately upon the successful issuance of a
second U.S. patent.

In
June 2006, the Company entered into an agreement to acquire certain U.S. and foreign patents and patent applications. In connection with the agreement, the Company paid an upfront fee
of $350,000, committed to a one-time payment of $250,000 once technological feasibility has been established, and committed to a one-time payment of $400,000 upon the first
commercial sale of product. As part of the agreement, the Company agrees to pay royalties based on a percentage of defined net sales. Through March 31, 2008, no royalty payments have been made.
All amounts paid to date have been expensed to research and development expense as technological feasibility had not established and the technology had no alternative future use.

In
April 2007, the Company entered into an agreement with PerkinElmer LAS, Inc. ("PerkinElmer"), in which PerkinElmer granted the Company a worldwide, non-exclusive,
non-transferable, non-sublicensable, royalty bearing license under specified patents. The license from PerkinElmer grants the Company rights under certain patents to produce
and commercialize certain of the reagents used in some applications on the HeliScope system, which contain chemicals purchased from PerkinElmer. In exchange for rights licensed from PerkinElmer, the
Company is obligated to pay PerkinElmer a portion of the Company's net revenue from the sale of reagents that contain chemicals covered by the patents licensed under the PerkinElmer agreement. The
Company has the right to terminate the agreement at any time upon 90 days written notice to PerkinElmer. Each party has the right to terminate the agreement upon breach by the other party
subject to notice and an opportunity to cure. The agreement also terminates upon the occurrence of specified bankruptcy events. PerkinElmer has the sole right under the agreement to enforce the
licensed patents.

7. Preferred Stock

As of December 31, 2006, the Company had 59,314,030 authorized shares of preferred stock, of which 28,182,246 were designated as Series A redeemable
convertible preferred stock and 31,131,784 were designated as Series B redeemable convertible preferred stock. As of March 31, 2008, the Company had 5,000,000 authorized shares of
preferred stock with no shares issued or outstanding.

As
of December 31, 2006, redeemable convertible preferred stock consisted of:

Number of
shares
authorized

Number of
shares issued
and outstanding

Carrying value
(in thousands)

Liquidation
preference
per shareSeries A

28,182,246

28,182,246

$
26,869

$
0.9555Series B

31,131,784

15,503,876


19,892

$
1.2959,314,030

43,686,122

$
46,761


11

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

7. Preferred Stock (Continued)

In
March 2006, the Company sold 15,503,876 shares of Series B redeemable convertible preferred stock, at a price of $1.29 per share, resulting in net proceeds of approximately
$19.9 million, net of $108,000 of issuance costs.

In
January 2007, the Company sold an additional 15,503,876 shares of Series B redeemable convertible preferred stock, at a price of $1.29 per share, resulting in proceeds of
approximately $20.0 million. This issuance of Series B redeemable convertible preferred stock contained a beneficial conversion feature as the estimated fair value of the Company's
common stock on the date of issuance was in excess of the $1.29 per share conversion price. As the shares of Series B redeemable convertible preferred stock can be immediately converted into
shares of common stock at the option of the holder, the beneficial conversion feature of $18.1 million is recorded as a deemed dividend to additional paid-in capital.

As
discussed in Note 2, on May 24, 2007, upon completion of the Company's IPO, 59,189,998 shares of redeemable convertible preferred stock were automatically converted into
13,153,293 shares of common stock.

8. Stock-Based Compensation

The Company recognized stock-based compensation expense on all employee and non-employee awards as follows:

Three months ended
March 31,2007

2008($ in thousands)Research and development

$
284

$
312Selling, general and administrative


431


921Total stock-based compensation expense

$
715

$
1,233


During
the three months ended March 31, 2008, the Company granted 148,333 stock options at an exercise price of $12.36 per share and 50,600 stock options at
an exercise price of $6.15 per share.

For
the three months ended March 31, 2007 and 2008, the fair value of stock options was estimated on the date of grant using the Black-Scholes option valuation model with the
following assumptions:

Three months ended
March 31,2007

2008Expected volatility

80.0
%
65.7
%Expected option life

7 years

6 yearsWeighted average risk-free interest rate

4.9
%
2.7
%Expected annual dividend yield

none

none


12

---



HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

9. Subsequent Event

On May 1, 2008, the Company announced the addition of Stephen P. Hall as Senior Vice President and Chief Financial Officer. Most recently, Mr. Hall
served as Senior Vice President and Chief Financial Officer of TriPath Imaging, Inc., a publicly traded cancer diagnostics company acquired by Becton Dickinson in December of 2006.
Mr. Hall and the TriPath Imaging team achieved profitability and drove annualized revenues to over $100 million at the time of the Becton Dickinson acquisition.

13

---





Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In particular, statements contained in this Form 10-Q, including but not limited to,
statements regarding our future results of operations and financial position, business strategy and plan prospects, projected revenue or costs and objectives of management for future research,
development or operations, are forward-looking statements. These statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as "may," "will,"
"should," "expects," "plans," "anticipates," "intends," "targets," "projects," "contemplates," "believes," "seeks," "goals," "estimates," "predicts," "potential" and "continue" or similar words.
Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified
below, under "Part II, Item 1A. Risk Factors" and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.
We undertake no obligation to revise or update any forward-looking statements for any reason.

Business Overview

We are a life sciences company focused on innovative genetic analysis technologies for the research, drug discovery and clinical diagnostics markets. We have
developed our True Single Molecule Sequencing (tSMS) technology to enable the rapid analysis of large quantities of genetic material by directly sequencing single molecules of DNA or
single DNA copies of RNA. By enabling direct sequencing of single DNA molecules, we believe our technology represents a fundamental breakthrough in genetic analysis.

Our
Helicos Genetic Analysis System is comprised of an instrument, its associated reagents and disposable supplies. We shipped our first Helicos System on March 5,
2008 following assembly and completion of our verification and validation process. As a result, we believe that we have incurred the substantial majority of the costs related to the development of the
initial version of our Helicos System. In anticipation of future orders and shipments, we are assembling and are testing multiple production units of our Helicos System, and are purchasing the
subassemblies and components for future systems. In addition, we are taking other steps to scale the commercial manufacturing process of the system, including improvements to our manufacturing
documentation and quality assurance and quality control procedures. We also are manufacturing the proprietary reagents and disposable supplies that are part of the system.

Because
of the dynamic nature of the market for genetic analysis instruments, we expect to expend significant amounts of research and development expense on an ongoing basis to improve
the performance of our HeliScope Sequencer and tSMS technology. The goals of these performance improvements are to increase the throughput of the HeliScope Sequencer and to achieve a
further approximate 100-fold reduction in the cost per base of sequencing. We also plan to explore other markets for the Helicos System in the longer term, such as diagnostics.

Although
we shipped our first Helicos System on March 5, 2008 and plan to ship additional Helicos Systems during fiscal 2008, the initial shipments of this product will be subject
to various customer evaluation periods with acceptance criteria, and we expect the customer evaluation period to extend beyond the fiscal quarters in which commercial units are shipped. We do not
expect to recognize any revenue from product shipments until the second half of 2008 or later, and future revenues from sales of proprietary reagents and disposable supplies will depend on the timing
of system placements, customers' use of the system and our ability to maintain our proprietary position on the reagents and disposable supplies. Because we have limited experience in the
commercialization of our

14

---



Helicos
System, we cannot predict the percentage of our revenues that we will derive from sales of proprietary reagents and disposable supplies. However, over time we would expect the sales of the
reagents and disposable supplies to increase as our installed base of instruments grows and usage of these instruments increases.

We
were incorporated in May 2003, and our activities to date have consisted primarily of conducting research and development. Accordingly, we are considered to be in the development
stage at March 31, 2008, as defined by the Financial Accounting Standards Board ("FASB") in Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by
Development Stage Enterprises." Our fiscal year ends on December 31, and we operate as one reportable segment.

We
expect to continue to incur operating losses for at least the next two years, and will need additional financing to support our activities. If required, we will seek to fund our
operations through public or private equity or debt financings or other sources, such as collaborations. Adequate additional funding
may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue business
strategies. If adequate funds are not available to us, we may be required to delay, reduce or eliminate research and development programs, reduce or eliminate commercialization efforts, obtain funds
through arrangements with collaborators or others on terms unfavorable to us or pursue merger or acquisition strategies.

In
May 2007, we completed an initial public offering ("IPO") of our common stock in which we sold and issued 5.4 million shares of our common stock at an issue price of $9.00 per
share. We raised a total of $48.6 million in gross proceeds from the IPO, or $43.9 million in net proceeds after deducting underwriting discounts and commissions of $2.9 million
and other offering costs of $1.8 million. In June 2007, we sold an additional 397,000 shares of our common stock at $9.00 per share resulting in net proceeds of $3.3 million after
deducting underwriting discounts and commissions of $250,000, pursuant to the over-allotment option granted by us to the underwriters of our IPO. Upon the closing of our IPO, all
outstanding shares of our preferred stock were converted into common stock.

Financial Overview

Grant revenue

In September 2006, we were awarded a grant from the National Human Genome Research Institute, a branch of the National Institutes of Health, pursuant to which we
are eligible to receive reimbursement of our research expenses of up to $2.0 million through August 2009. We recognized revenue during the three months ended March 31, 2007 and 2008 of
$92,000 and $113,000, respectively, in connection with this award. We will continue to recognize revenue under this grant as the related expenses are incurred.

Research and development expenses

Research and development expenses consist of costs associated with scientific research activities, and engineering development efforts. Such costs primarily
include salaries, benefits and stock-based compensation; lab and engineering supplies; investment in equipment; consulting fees; and facility related costs, including rent and depreciation.

During
2007, we were focused on preparing for the launch of the initial version of the Helicos Genetic Analysis System. Substantially all research and development expenses
since our inception have been in connection with this project and we believe that we have incurred the substantial majority of the development costs associated with the commercial launch of the first
generation of the Helicos System prior to our first shipment on March 5, 2008. However, substantial additional costs will be

15

---



incurred
to both maintain and enhance the initial version of the Helicos System in addition to development of new and different genetic analysis assays which will extend the capability of the initial
version.

Research
and development expenses for the three months ended March 31, 2007 and 2008 were $5.4 million and $5.7 million, respectively. From 2007 to 2008, expenses
increased as our research progressed and we built infrastructure and hired additional employees with the requisite expertise to execute the next steps in the development process.

In
2007, in addition to our ongoing research and development efforts, we incurred start-up manufacturing costs related to the assembly, testing and performance validation of
the Helicos System. These costs were accounted for as research and development expenses in our pre-commercialization phase as we prepared to ship the first Helicos System which occurred on
March 5, 2008. We reached technological feasibility of the Helicos System in December 2007 and, as a result, we began to record the cost of the Helicos System in inventory.

We
believe that the Helicos System can potentially access a wide range of genetic analysis tests useful to the basic, pharmaceutical, and biomedical research and diagnostic markets. In
addition, we have envisioned a series of performance enhancements to the chemistries and consumables used on the initial Helicos System which potentially serve to greatly enhance the sequencing
throughput. Each of these research and development projects is dependent upon achieving technical objectives, which are inherently uncertain. As a result of these uncertainties, we are unable to
predict to what extent we will receive additional cash inflows from the commercialization and sale of these future tests or from the future enhanced throughput. Our inability to complete these new
research and development projects in a timely manner would significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek
additional, external sources of financing from time to time in order to continue with our strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would
jeopardize the future success of our business.

Selling, general and administrative expenses

Selling, general and administrative expenses consist principally of salaries, benefits and stock-based compensation, consulting and professional fees, including
patent related costs, general corporate costs and facility costs not otherwise included in research and development expenses.

Selling,
general and administrative expenses for the three months ended March 31, 2007 and 2008 were $3.3 million and $6.2 million, respectively. We expect that
these expenses will continue to increase significantly throughout 2008 and beyond as we hire our specialized sales, marketing and service personnel and increase our finance and administrative staff.
We also anticipate that we will incur increased expenses for the costs associated with Sarbanes-Oxley compliance, continued ERP system enhancements, directors' and officers' insurance and investor
relations programs.

Overview of Results of Operations

Three months ended March 31, 2007 compared to three months ended March 31, 2008

Grant revenue.We recognized $92,000 and $113,000 of grant revenue during the three months ended March 31, 2007 and
2008, respectively. Grant revenue recognized during the three months ended March 31, 2007 and 2008 related to the reimbursement of expenses in connection with our government research grant.

16

---



Research and development expenses.Research and development expenses during the three months ended March 31, 2007 and
2008 were as follows:

Three Months Ended
March 31,2007

2008

Change($ in thousands)Research and development

$
5,385

$
5,705

$
320

6
%


Research
and development expenses increased by $320,000 from the three months ended March 31, 2007 to the three months ended March 31, 2008. The increase was primarily due
to the hiring of additional personnel to support production activity, which led to a $792,000 increase in our salary and benefit expenses and stock based compensation expense. Increased headcount and
research and development activity lead to additional space requirements which raised our occupancy costs by $281,000. These increases were offset by a $1,158,000 decrease in product development costs,
which included lab expenses, materials, supplies, temporary help and prototype expenses. Our product development costs decreased as we moved toward manufacturing and production activities. We expect
our research and development expenses to continue to increase to support our start-up manufacturing efforts this year and as we continue to invest in future versions of our system.

Selling, general and administrative expenses.Selling, general and administrative expenses during the three months ended
March 31, 2007 and 2008 were as follows:

Three Months Ended
March 31,2007

2008

Change($ in thousands)Selling, general and administrative

$
3,251

$
6,184

$
2,933

90
%


The
increase in selling, general and administrative expenses of $2.9 million from the three months ended March 31, 2007 to the three months March 31, 2008 was
primarily due to an increase in our salary and benefit expenses of $1.1 million and an increase in our stock-based compensation expense of $490,000. These increases were primarily due to the
hiring of additional personnel. The increase also included an additional $482,000 spent in patent expenses. In addition, we spent an additional $291,000 related to public company activities, including
investor relations expenses, business insurance and consulting fees. We expect our selling, general and administrative expenses to increase as we expand our sales and marketing functions, and incur
additional administrative costs associated with Sarbanes-Oxley compliance.

Interest income.Interest income for the three months ended March 31, 2007 and 2008 was as follows:

Three Months Ended
March 31,2007

2008

Change($ in thousands)Interest income

$
267

$
338

$
71

27
%


The
increase in interest income from the three months ended March 31, 2007 compared to the three months ended March 31, 2008 was due primarily to higher cash balances
during the three months ended March 31, 2008 in connection with the receipt of proceeds from the IPO partially offset by lower yields on our cash balances due to declining
short-term interest rates.

17

---



Interest expense.Interest expense for the three months ended March 31, 2007 and 2008 was as follows:

Three Months Ended
March 31,2007

2008

Change($ in thousands)Interest expense

$
73

$
360

$
287

393
%


The
increase in interest expense from the three months ended March 31, 2007 compared to the three months ended March 31, 2008 is attributable to the $10 million term
loan entered into on December 31, 2007.

Liquidity and Capital Resources

We have incurred losses since our inception in May 2003 and, as of March 31, 2008 we had an accumulated deficit of $105.9 million. We have financed
our operations to date principally through the sale of preferred stock and common stock, including our IPO, and to a lesser extent debt financing and interest earned on investments. Through
March 31, 2008, we have received net proceeds of $66.8 million from the issuance of preferred stock, $47.5 million through the issuance of common stock, including our IPO,
$9.9 million in debt financing for working capital and $2.5 million in debt financing to finance equipment purchases. Working capital as of December 31, 2007 was
$50.4 million, consisting of $55.1 million in current assets and $4.7 million in current liabilities. Working capital as of March 31, 2008 was $37.8 million,
consisting of $44.4 million in current assets and $6.6 million in current liabilities. Our
cash is held in interest-bearing bank accounts. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily to achieve liquidity and capital preservation.

The
following table summarizes our net increase (decrease) in cash and cash equivalents for the three months ended March 31, 2007 and 2008:

Three Months Ended
March 31,2007

2008($ in thousands)Net cash provided by (used in):Operating activities

$
(7,584
)
$
(13,011
)Investing activities


345


(1,489
)Financing activities


19,410


(268
)Net increase (decrease) in cash and cash equivalents

$
12,171

$
(14,768
)


Net
cash used in operating activities was $7.6 million for the three months ended March 31, 2007 compared to $13.0 million for the three months ended
March 31, 2008. The $5.4 million increase was primarily due to a $4.1 million increase in the change in inventory and a $3.4 million increase in the net loss, partially
offset by an increase in the change in accrued expenses and other current liabilities of $835,000, an increase in the change in accounts payable of $681,000, and an increase in non-cash
stock-based compensation expense of $518,000.

Net
cash provided by investing activities was $345,000 for the three months ended March 31, 2007 compared to net cash used in investing activities of $1.5 million for the
three months ended March 31, 2008. The $1.8 million decrease was primarily due to a $1.0 million increase in the cash used for purchases of property and equipment, as well as a
$795,000 decrease in cash provided by maturities of short-term investments.

18

---





Net cash provided by financing activities was $19.4 million for the three months ended March 31, 2007 compared to net cash used in financing activities of $268,000 for the
three months ended March 31, 2008. The $19.7 million decrease was primarily due to the receipt of $20.0 million of cash proceeds from the issuance of redeemable convertible
preferred stock, net of issuance costs during the three months ended March 31, 2007.

Operating capital and capital expenditure requirements

To date, we have shipped one HeliScope system and have not achieved profitability. We anticipate that we will continue to incur substantial net losses for at
least two years as we continue our efforts in commercializing the HeliScope system and develop the corporate infrastructure required to manufacture and sell our products.

We
do not expect to generate product revenue until the second half of 2008 or later. We believe that our existing cash and interest income we earn on these balances will be sufficient
into the first quarter of 2009. It is difficult to predict the actual rate of product sales as a result of the complex nature of the HeliScope system and its expected long sales cycle. We will seek to
sell additional equity or debt securities or enter into another credit facility. The sale of additional equity and debt securities may result in dilution to our stockholders. If we raise additional
funds through the issuance of debt securities, these securities would have rights senior to those of our common stock and could contain covenants that would restrict our operations. We may require
additional capital beyond our currently anticipated amounts. Any such required additional capital may not be available on reasonable terms, if at all. If adequate funds are not available, the Company
would have to delay, reduce or eliminate development and commercialization efforts, curtail its future spending, and may have to obtain funds through arrangements with collaborators or others on terms
unfavorable to the Company or pursue merger or acquisition strategies.

Our
forecast of the period of time through which our financial resources will be adequate to support our operations, the costs to complete development of products and the cost to
commercialize our future products are forward-looking statements and involve risks and uncertainties, and actual results could vary materially and negatively as a result of a number of factors,
including the factors discussed in the "Risk Factors" section of this report. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital
resources sooner than we currently expect.

Because
of the numerous risks and uncertainties associated with the development of our product, we are unable to estimate the exact amounts of capital outlays and operating expenditures
necessary to complete the development of our future products and successfully deliver any such products to the market. Our future capital requirements will depend on many factors, including, but not
limited to, the following:



19

---





Working
capital as of December 31, 2007 was $50.4 million, consisting of $55.1 million in current assets and $4.7 million in current liabilities. Working
capital as of March 31, 2008 was $37.8 million, consisting of $44.4 million in current assets and $6.6 million in current liabilities.

Contractual obligations

A summary of our contractual obligations is included in our Form 10-K for the fiscal year ended December 31, 2007.

License agreements and patents

We have fixed annual costs associated with license agreements into which we have entered. In addition, we may have to make contingent payments in the future upon
realization of certain milestones or royalties payable under these agreements.

Line of credit facility and security agreement

In June 2006, we entered into a line of credit facility and security agreement with General Electric Capital Corporation ("GE Capital"). The credit facility
provides that we may borrow up to $8.0 million at an interest rate based on the Federal Reserve's three year Treasury Constant Maturities Rate. The end of the advance period was
December 31, 2007. The proceeds of the credit facility may be used for the purchase of equipment and are collateralized by specific equipment assets. Payments are required to be made on a
monthly basis. For the first six months interest-only payments are required. Thereafter, for the following 30 months, payments of principal and interest will be due for each
advance. The outstanding balance is collateralized by the equipment purchased with the proceeds from each equipment advance. As of March 31, 2008, advances on the credit facility were
$2.5 million at a weighted-average interest rate of 10.1%.

Loan and security agreement

In December 2007, we entered into a loan and security agreement with GE Capital. The loan agreement provides that we may borrow up to $20.0 million at an
interest rate equal to the sum of (i) the greater of (A) an interest rate based on the Federal Reserve's three year Treasury Constant Maturities Rate or (B) 3.84% plus
(ii) 6.11%. The initial term loan was made on the closing date in an aggregate principal amount equal to $10.0 million. We may request one additional term loan in an amount equal to
$10.0 million no later than June 30, 2008. The credit facility contains both conditions precedent that must be satisfied prior to any borrowing and affirmative and negative covenants to
which we and our subsidiaries must adhere. The proceeds of the loan agreement may be used for working capital, capital expenditures and general corporate purposes and are collateralized by essentially
all of our assets. Payments are required to be made on a monthly basis. For the initial term loan, interest-only payments are required for the first twelve months. Thereafter, for the
following 24 months, payments of principal and interest will be due. For any subsequent term loan, interest-only payments will be required for the first nine months. Thereafter, for
the following 27 months, payments of principal and interest will be due. As of March 31, 2008, advances on the loan agreement were $10.0 million at an interest rate of 9.95%.

Off-balance sheet arrangements

During the three months ended March 31, 2007 and 2008, we did not engage in any off-balance sheet arrangements.

20

---



Critical Accounting Policies and Estimates

In our Form 10-K for the fiscal year ended December 31, 2007, our most critical accounting policies and estimates upon which our
financial status depends were identified as those relating to stock-based compensation; revenue recognition; inventory; allowance for doubtful accounts; net operating losses and tax credit
carryforwards; and impairment of long-lived assets. We reviewed our policies and determined that those policies remain our most critical accounting policies for the three months ended
March 31, 2008. We did not make any changes in those policies during the three months ended March 31, 2008.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risk is limited to our cash. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and fiduciary
control of cash. We also seek to maximize income from our investments without assuming significant risk. To achieve our goals, we maintain our cash in interest-bearing bank accounts. As all of our
investments are cash deposits in a global bank, it is subject to minimal interest rate risk.

Item 4.    Controls and Procedures

Our management, with the participation of our chief executive officer, chief financial officer, and chief accounting officer has evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this report. Based on such evaluation, our principal executive officer, principal financial officer, and principal accounting officer have concluded that, as of the end of
such period, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by Helicos in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, on a timely basis, and is accumulated and communicated to our management, including our principal executive officer, principal financial officer, and
principal accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

No
change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the period covered by
this quarterly report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part IIOther Information

Item 1.    Legal Proceedings

Not applicable.

Item 1A.    Risk Factors

The Company cautions investors that its future performance and results and, therefore, any forward-looking statements are subject to risks and uncertainties.
Various factors may cause the Company's future results to differ materially from those projected in any forward-looking statements. These factors were disclosed, but are not limited to, the items in
the Company's most recent Annual Report on Form 10-K, Part I, Item 1A. There have been no material changes to the risk factors previously disclosed in Item 1A of the
Company's Annual Report on Form 10-K for the year ended December 31, 2007.

21

---





Item 2.    Unregistered Sale of Equity Securities and Use of Proceeds

Use of Proceeds from Public Offering of Common Stock

On
May 24, 2007, we completed our initial public offering of 5,400,000 shares of our common stock at a price to the public of $9.00 per share for an aggregate offering price of
$48.6 million. We received aggregate net proceeds of approximately $43.9 million, after deducting underwriting discounts and commissions of $2.9 million, and $1.8 million
of additional expenses, including legal, accounting and printing costs and various other fees associated with the registration and listing of our common stock. None of the underwriting discounts and
commissions or offering expenses were incurred or paid, directly or indirectly, to directors or officers of ours or their associates or to persons owning 10% or more of our common stock or to any
affiliates of ours. The offer and sale of all of the shares in the initial public offering were registered under the Securities Act of 1933, as amended, pursuant to a registration statement on
Form S-1 (File No. 333-140973), which was declared effective by the Securities and Exchange Commission on May 24, 2007. UBS Investment Bank, JP Morgan,
Leerink Swann & Company, and Pacific Growth Equities, LLC were the underwriters of the initial public offering. The offering commenced on May 24, 2007 and did not terminate until
after the sale of all of the securities registered in the registration statement.

On
June 27, 2007, we sold an additional 397,000 shares of our common stock at $9.00 per share pursuant to the over-allotment option granted to the underwriters of our
initial public offering. The net proceeds after deducting underwriters' discounts and commission related to the offering were $3.3 million. UBS Securities, J.P. Morgan Securities, Inc.,
Leerink Swann & Co., Inc. and Pacific Growth Equities, LLC acted as representatives of the underwriters.

Of
the $52.2 million of gross proceeds we received in our initial public offering, including the exercise of the over-allotment options, through March 31, 2008,
we have spent approximately $3.2 million on underwriting discounts and commissions and approximately $1.8 million for payment of expenses related to our initial public offering.
Additionally, we have spent $8.0 million on pre-production research and development expenses and $5.7 million on inventory. None of these expenses were incurred or paid,
directly or indirectly, to directors or officers of ours or their associates or to persons owning 10% or more of our common stock or to any affiliates of ours.

The
proceeds remaining after paying the costs noted above are invested in interest bearing bank accounts.

We
expect to use the remaining proceeds from our initial public offering for general corporate purposes which include ongoing research and development activities, funding the additional
recruitment of our specialized sales, marketing and services force and marketing initiatives and funding manufacturing expenses associated with the commercial version of our HeliScope system. Our
management has broad discretion as to the use of the net proceeds. We may use a portion of the net proceeds for the acquisition of, or investment in, technologies or products that complement our
business. As required by the Securities Commission regulations, we will provide further detail on our use of the net proceeds from our initial public offering in future periodic reports.

Item 3.    Defaults upon Senior Securities

Not applicable.

Item 4.    Submission of Matters to a Vote of Security Holders

Not applicable.

22

---



Item 5.    Other Information

None.

Item 6.    Exhibits

The exhibits listed in the Exhibit Index immediately preceding such exhibits are filed as part of this report and such Exhibit Index is incorporated herein by
reference.

23

---





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|Dated: May 13, 2008 | /s/STANLEY N. LAPIDUSStanley N. Lapidus Chairman and Chief Executive
Officer
(Principal Executive Officer)           
|------------------- | ---------------------------------------------------------------------------------------------------------------------
|Dated: May 13, 2008 | /s/STEPHEN J. LOMBARDIStephen J. Lombardi President and Chief Operating Officer
(Interim Principal Financial Officer)
|Dated: May 13, 2008 | /s/KEVIN G. LAFONDKevin G. Lafond Controller
(Interim Principal Accounting Officer)                                  

24

---





EXHIBIT INDEX

|31.1 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- |  | -----------------------------------------------------------------------
|31.2 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|31.3 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|32.1 |  | Certifications pursuant to 18 U.S.C. Section 1350                      

25

---