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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 1934For the quarterly period ended March 31, 2010ORo

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 has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files). Yes: o    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, 2010, was 79,923,677 shares.



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HELICOS BIOSCIENCES CORPORATION (a development stage company)        Table of Contents



PagePart IFinancial InformationItem 1.

Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets as of December 31, 2009 and March 31, 2010

3Consolidated Statements of Operations for the three months ended March 31, 2009 and 2010 and the period
from May 9, 2003 (date of inception) through March 31, 2010

4Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2010 and the period
from May 9, 2003 (date of inception) through March 31, 2010

5Notes to Consolidated Financial Statements

6Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

16Item 3.

Quantitative and Qualitative Disclosures about Market Risk

28Item 4.

Controls and Procedures

28Part IIOther InformationItem 1.

Legal Proceedings

29Item 1A.

Risk Factors

29Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

29Item 3.

Defaults upon Senior Securities

32Item 4.

Removed and Reserved

32Item 5.

Other Information

32Item 6.

Exhibits

32SIGNATURES

33


2

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Table of Contents

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,
2009

March 31,
2010ASSETSCurrent assetsCash and cash equivalents

$
15,930

$
11,305Accounts receivable


848


151Unbilled receivables


496


527Inventory


6,827


7,867Prepaid expenses and other current assets


424


363Total current assets


24,525


20,213Property and equipment, net


1,706


1,338Restricted cash


225


225Other assets


79


76Total assets

$
26,535

$
21,852LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable

$
1,005

$
2,405Accrued expenses and other current liabilities


3,632


2,962Deferred revenue


5,705


6,324Current portion of long-term debt


2,773


4,276Total current liabilities


13,115


15,967Long-term debt, net of current portion


2,081


Warrants


5,253


3,660Other long-term liabilities


400


400Total liabilities


20,849


20,027Commitments and contingenciesStockholders' equityPreferred stock: par value $0.001 per share; 5,000,000 shares authorized at December 31, 2009 and March 31, 2010, respectively; no shares issued and
outstanding December 31, 2009 and March 31, 2010





Common stock: par value $0.001 per share; 120,000,000 shares authorized at December 31, 2009 and March 31, 2010, respectively; 79,370,610 and 79,669,712
shares issued and outstanding at December 31, 2009 and March 31, 2010, respectively


79


80Additional paid-in capital


173,272


175,750Deficit accumulated during the development stage


(167,665
)

(174,005
)Total stockholders' equity


5,686


1,825Total liabilities and stockholders' equity

$
26,535

$
21,852


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

3

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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, 20102009

2010Product revenue

$
963

$
42

$
2,403Grant revenue


239


527


2,741Total revenue


1,202


569


5,144Costs and expensesCost of product revenue


521


72


1,321Research and development


4,093


4,046


98,662Selling, general and administrative


2,851


4,072


64,508Total costs and expenses


7,465


8,190


164,491Operating loss


(6,263
)

(7,621
)

(159,347
)Interest income


40


12


4,146Interest expense


(305
)

(183
)

(4,075
)Change in fair value of warrant liability





1,452


3,411Net loss


(6,528
)

(6,340
)

(155,865
)Beneficial conversion feature related to Series B redeemable convertible preferred stock








(18,140
)Net loss attributable to common stockholders

$
(6,528
)
$
(6,340
)
$
(174,005
)Net loss attributable to common stockholders per sharebasic and diluted

$
(0.10
)
$
(0.08
)Weighted average number of common shares used in computationbasic and diluted


63,498,663


79,259,874


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

4

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

Three Months Ended
March 31,

Period from
May 9, 2003
(date of inception)
through
March 31, 20102009

2010Cash flows from operating activities:Net loss

$
(6,528
)
$
(6,340
)
$
(155,865
)Adjustments to reconcile net loss to cash used in operating activities:Depreciation and amortization


687


385


8,424Amortization of lease incentive


(37
)

(4
)

(474
)Common stock issued for licenses








147Stock-based compensation expense


1,062


2,015


16,725Noncash interest expense related to debt and warrants


89


82


959Noncash expense related to change in fair value of warrant liability





(1,452
)

(3,411
)Provisions on inventory








3,276Loss on disposal of property and equipment





10


36Changes in operating assets and liabilities:Accounts receivable


192


697


(151
)Unbilled receivable


(34
)

(31
)

(277
)Inventory


132


(1,040
)

(11,398
)Prepaid expenses and other current assets


(103
)

61


(688
)Deferred revenue


(492
)

619


6,324Accounts payable


(184
)

1,400


2,405Accrued expenses and other current liabilities


230


(413
)

3,526Other long-term liabilities


(25
)




557Net cash used in operating activities


(5,011
)

(4,011
)

(129,885
)Cash flows from investing activities:Purchases of property and equipment


(8
)

(25
)

(9,539
)Decrease (increase) in restricted cash








(225
)Purchases of short-term investments








(34,709
)Maturities of short-term investments








34,709Net cash used in investing activities


(8
)

(25
)

(9,764
)Cash flows from financing activities:Proceeds from debt issuances








22,256Payments on debt


(817
)

(659
)

(18,251
)Payments of debt issuance costs








(194
)Proceeds from initial public offering








49,011Deferred initial public offering costs








(1,838
)Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs








66,405Proceeds from bridge loan








350Proceeds from issuance of common stock and common stock warrants





69


32,876Proceeds from issuance of restricted common stock


1


1


339Payments to employees for cancelled restricted common stock








(104
)Proceeds from exercise of stock options


2





104Net cash (used in) provided by financing activities


(814
)

(589
)

150,954Net (decrease) increase in cash and cash equivalents


(5,833
)

(4,625
)

11,305Cash and cash equivalents, beginning of period


19,713


15,930


Cash and cash equivalents, end of period

$
13,880

$
11,305

$
11,305


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

5

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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 RNA. Helicos is
a Delaware corporation and was incorporated on May 9, 2003.

The
Company has had limited operations to date and its activities have consisted primarily of raising capital, conducting research and development and recruiting personnel. Accordingly,
the Company is considered to be in the development stage at March 31, 2010, as defined by the Financial Accounting Standards Board ("FASB"). The Company's fiscal year ends on December 31. The Company
operates as one reportable segment.

In
the first quarter of 2010, the Company began a process of considering alternatives to the Company's existing long-term strategic focus, including a repositioning of the Company in the
genetic analysis markets. The Company believes that an adjustment to its existing strategy would better position the
Company to take advantage of the unique capabilities of its proprietary platform and to address the growing competition in the genetic research marketplace. Although the Company made progress during
2009 in the genetic research market as demonstrated by its growing installed base and the number of peer reviewed publications referencing its single molecule sequencing technology, the Company
believes that it must consider a number of alternatives to improving shareholder value and, as a result, have embarked upon this process with a view toward repositioning Helicos' highly differentiated
single molecule sequencing solution. In this regard, the Company has continued its relationship with Thomas Weisel Partners LLC (TWP), a nationally recognized investment bank, to assist the Company
with its evaluation and execution of strategic alternatives and long term financing strategy. The Company has also engaged a variety of consultants in the genomic research, services and diagnostics
industries to evaluate available alternatives.

In
particular, the Company believes that Helicos' technology is uniquely suited for applications in molecular diagnostics. The Company believes that diagnostics applications may benefit
from the specific features for which the Helicos System is uniquely suited, including the platform's quantitative accuracy, the use of small sample quantities in simple preparation methods, and high
throughput, as well as lack of biases typically seen with sample amplification.

The
Company anticipates the repositioning evaluation process will take at least several months. There can be no assurance, however, that the Company will be successful in re-focusing its
long-term strategy or that any transaction it undertakes to implement a change in strategy will ultimately be completed or, if one is undertaken, there can be no assurance regarding its terms, timing
or sources of funding. During this time, Helicos will focus its limited resources on satisfying current customer needs and stabilizing system performance, which has varied at some customer and
placement sites. In addition, new initiatives will be prioritized to those that reduce operational risk and conserve resources while the company considers its strategic alternatives and direction.

In
connection with its repositioning strategy, on May 11, 2010, the Board of Directors of the Company approved a reduction in headcount and restructuring plan (the "Restructuring
Plan") which involves the consolidation and reorganization of its operations in order to reduce operating costs. The Restructuring Plan has resulted in the elimination of approximately 40 positions
during the second

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

1. Nature of the Business and Basis of Presentation (Continued)

fiscal
quarter of 2010. Employees directly affected by the Restructuring Plan were notified on May 13, 2010, and have been provided with severance arrangements including outplacement
assistance.

Since
inception, the Company has incurred losses and has not generated positive cash flows from operations. The Company expects its losses to continue for a considerable period of time
as the Company reevaluates its long-term strategic focus and consider various alternatives to reposition the business, including by exploring various opportunities in the genetic analysis markets.
These losses, among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders' equity. As of March 31, 2010 and May 14, 2010, the
Company had $11.3 million and $8.7 million, respectively, in cash and cash equivalents. The Company will, before the end of the
third quarter of 2010, require significant additional capital to fund its operations. Because the Company's present capital resources are not sufficient to fund its planned operations for a twelve
month period as of the date of the Annual Report on Form 10-K, for the year ended December 31, 2009, the Company's current financial resources raise substantial doubt about its ability to continue as
a going concern.

The
Company may seek to raise the funds it requires to continue its operations through public or private sales of equity, from borrowings or from strategic partners. The Company's future
capital requirements will depend on many factors, including the precise nature of our strategic repositioning. The Company may require additional capital beyond its currently anticipated amounts. Any
such required additional capital may not be available on reasonable terms, if at all, given the current economic turmoil and restricted access to capital markets. The continued depletion of our
resources may make future funding more difficult or expensive to attain. Additional equity financing may be dilutive to the Company's stockholders; debt financing, if available, may involve
significant cash payment obligations and covenants that restrict its ability to operate as a business; and strategic partnerships may result in royalties or other terms which reduce its economic
potential from any adjustments to its existing long-term strategy. If the Company is unable to execute its operations according to its plans or to obtain additional financing, the Company may be
forced to cease operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amount of reclassification of
liabilities, or any adjustment that might be necessary should the Company be unable to continue as a going concern.

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

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

1. Nature of the Business and Basis of Presentation (Continued)

with
the consolidated financial statements for the year ended December 31, 2009 included in the Company's Form 10-K.

2. Summary of Significant Accounting Policies

Our significant accounting policies were identified in the Company's Form 10-K for the fiscal year ended December 31, 2009.

Revenue recognition

Government research grants that provide for payments to the Company for work performed are recognized as revenue when the related
expenses are incurred.

The
Company recognizes revenue in accordance with FASB accounting guidance on revenue recognition in financial statements and accounting for multiple element revenue arrangements. This
guidance requires that persuasive evidence of a sales arrangement exists; delivery of goods occurs through transfer of title and risk and rewards of ownership, the selling price is fixed or
determinable and collectability is reasonably assured. The Company also follows FASB guidance on how to account for arrangements that involve the delivery or performance of multiple products, services
and/or rights to use assets.

In
instances where the Company sells instruments with a related installation obligation, the Company will allocate the revenue between the instrument and the installation based on
relative fair value at the time of the sale. The instrument revenue will be recognized when title and risk of loss passes. The installation revenue will be recognized when the installation is
performed. If fair value is not available for any undelivered element, revenue for all elements is deferred until delivery and installation are complete.

When
the Company sells an instrument with specified acceptance criteria, the Company will defer revenue recognition until such acceptance has been obtained.

The
customer may also purchase a service contract. Revenue from service contracts will be recognized ratably over the service period.

Recent Accounting Pronouncements

In October 2009, the FASB issued an amendment to the accounting guidance for revenue arrangements with multiple deliverables. This
guidance provides principles for allocation of consideration among its multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. The
guidance introduces an estimated selling price method for valuing the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available,
and significantly expands related disclosure requirements. This guidance is effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on
or after June 15, 2010. Alternatively, adoption may be on a retrospective basis, and early application is permitted. Although the Company is still evaluating the impact of this standard, its adoption
is not expected to have a material impact on the financial position or results of operations.

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

2. Summary of Significant Accounting Policies (Continued)

In
October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing
accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product's essential functionality, shall be excluded from
the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition accounting standards or may now be
within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the
impact, will become effective for the Company on January 1, 2011.

3. 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,
2009

March 31,
2010Raw materials

$
372

$
105Work in process


2,462


2,193Finished goods


3,993


5,569Total inventory

$
6,827

$
7,867


4. 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 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, 2009 and 2010, 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:

March 31,2009

2010Stock options


3,916,068


4,462,083Unvested restricted stock


961,836


964,686Warrants


25,762,333


28,231,37630,640,237


33,658,145


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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

5. Stock-Based Compensation

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

Three months ended
March 31,2009

2010Selling, general and administrative

$
681

$
1,469Research and development


381


546Total

$
1,062

$
2,015


During
the three months ended March 31, 2009, the Company granted 1,409,521 stock options at an exercise price of $1.04 per share and 82,260 stock options at an exercise price of $0.78
per share. During the three months ended March 31, 2009, the Company granted 745,895 shares of restricted stock. During the three months ended March 31, 2010, the Company granted 8,750 stock options
at an exercise price of $1.00 per share. During the three months ended March 31, 2010, the Company granted 374,866 shares of restricted stock.

For
the three months ended March 31, 2009 and 2010, 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 31,2009

2010Expected volatility


63.0
%

91.0
%Expected life in years


6.0


6.0Weighted average risk-free interest rate


1.7
%

2.6
%Expected dividends


0.0
%

0.0
%


6. Fair Value Measurement

The Company considers all highly liquid investments with original maturities of generally three months or less at the time of acquisition to be cash equivalents. Cash equivalents are
stated at cost, which approximates fair market value. The Company classifies marketable securities as available-for-sale. These securities are carried at fair market value with unrealized gains and,
to the extent deemed temporary, unrealized losses, reported as a component of other comprehensive gain or loss in stockholders' equity. Realized gains or losses on securities sold are based on the
specific identification method.

Marketable
securities are considered to be impaired when a decline in fair value below cost basis is determined to be other-than-temporary. The Company evaluates whether a decline in
fair value below cost basis is other-than-temporary using available evidence regarding its investments. In the event that the cost basis of a security significantly exceeds its fair value, the Company
evaluates, among other factors, the duration of the period that, and extent to which, the fair value is less than cost basis, the financial health of and business outlook for the issuer, including
industry and sector performance, and

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

6. Fair Value Measurement (Continued)

operational
and financing cash flow factors, overall market conditions and trends, the Company's intent to sell the investment and if it is more likely than not that the Company would be required to
sell the investment before its anticipated recovery. Once a decline in fair value is determined to be other-than-temporary, a write-down is recorded in the consolidated statements of operations and a
new cost basis in the security is established. In April 2009, the Company adopted new accounting guidance which provides additional guidance in assessing the credit and noncredit component of an
other-than-temporary impairment event for debt securities and modifies the presentation and disclosures when an other-than-temporary impairment event for debt securities has occurred. The adoption of
this new accounting guidance did not have a significant impact on the Company's financial statements.

The
Company's assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2009 and March 31, 2009 are measured in accordance with FASB
standards. Fair values determined by Level 1 inputs utilize observable data such as quoted prices in active markets. Fair values determined by Level 2 inputs utilize data points other than quoted
prices in active markets that are observable either directly or indirectly. Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which
require the reporting entity to develop its own assumptions.

The
following table represents the Company's assets and liabilities measured at fair value on a recurring basis at December 31, 2009:

Quoted Prices
in Active
Markets
(Level 1)

Other
Observable
Inputs
(Level 2)

Unobservable
Inputs
(Level 3)

Total($ in thousands)Money market funds

$


$
3,053

$


$
3,053Warrant liability








5,253


5,253$


$
3,053

$
5,253

$
8,306


The
Company's warrant liability was valued at December 31, 2009 using a Black-Scholes model and is therefore classified as Level 3.

The
following tables roll forward the fair value of our warrant liability, whose fair value is determined by Level 3 inputs for the 2009 periods presented:

Balance at December 31, 2008

$
Issuance of new warrants


7,212Change in fair value


(1,959
)Balance at December 31, 2009

$
5,253


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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

6. Fair Value Measurement (Continued)

The
following table represents the Company's assets and liabilities measured at fair value on a recurring basis at March 31, 2010:

Quoted Prices
in Active
Markets
(Level 1)

Other
Observable
Inputs
(Level 2)

Unobservable
Inputs
(Level 3)

Total($ in thousands)Money market funds

$


$
3,053

$


$
3,053Warrant liability








3,660


3,660$


$
3,053

$
3,660

$
6,713


The
Company's cash equivalents were valued at March 31, 2010 using calculated net asset values and are therefore classified as Level 2. The Company's warrant liability was valued at
March 31, 2010 using a Black-Scholes model and is therefore classified as Level 3.

The
following tables roll forward the fair value of our warrant liability, whose fair value is determined by Level 3 inputs for the 2010 period presented:

Balance at December 31, 2009

$
5,253Exercise warrants


(141
)Change in fair value


(1,452
)Balance at March 31, 2010

$
3,660


The
valuation of the warrant liability is discussed further in Note 7.

The
carrying amount of the Company's debt approximates its fair value at December 31, 2009 and March 31, 2010.

7. Common Stock and Warrant Liability

September 2009 Financing

In September 2009, the Company entered into a securities purchase agreement with certain investors pursuant to which it (i) sold to
certain existing investors a total of 1,030,028 units, each unit consisting of (a) one share of common stock (collectively, the "Shares") and (b) one warrant (collectively, the "Warrants") to purchase
0.662 shares of common stock at an exercise price equal to $2.61 per share (105% of the closing bid price of the common stock on September 15, 2009), at a purchase price equal to $2.57 per unit, and
(ii) sold to certain new investors a total of 3,281,252 units, each unit consisting of (a) one share of common stock and (b) one warrant to purchase 0.50 shares of common stock at an exercise price
equal to $2.61 per share, at a purchase price equal to $2.24 per unit (together, the "September 2009 Offering"). The closing of the transaction occurred on September 18, 2009. In connection with the
September 2009 Offering, the Company raised approximately $10.0 million in gross proceeds. After paying $646,000 in placement agent fees and offering expenses, the net proceeds were $9.4 million.

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

7. Common Stock and Warrant Liability (Continued)

In
connection with the September 2009 Offering, the Company issued warrants to purchase an aggregate of 2,322,509 shares of common stock which become exercisable on or after the six
month anniversary following the closing of the transaction. The warrants have an exercise price of $2.61 per share and have a five and a half year term. The fair value of the warrants was estimated at
$4.5 million using a Black-Scholes model with the following assumptions: expected volatility of 100%, risk free interest rate of 2.49%, expected life of five and a half years and no dividends.
Expected volatility was based on the volatility contractually specified in the warrant agreements. Due to a price adjustment clause included in the warrant agreements, the warrants were deemed to be a
liability and, therefore, the fair value of the warrants was recorded in the liability section of the balance sheet. As such, the warrants will be revalued each reporting period, with the resulting
gains and losses recorded as the change in fair value of warrant liability on the statement of operations. In connection with the December 2009 Offering, the exercise price for the warrants issued in
this transaction was subsequently reduced to $0.31 per share in accordance with the terms of the warrant. For the three month period ending March 31, 2010 the Company recorded a gain in the amount of
$0.6 million for the change in the fair value of the warrant liability. During the three months ended March 31, 2010, 223,213 warrant shares from the September 2009 Offering were exercised into common
stock at a exercise price of $0.31.

In
connection with the September 2009 Offering, the Company entered into a registration rights agreement (the "September 2009 Registration Rights Agreement") with each of the investors.
The Registration Rights Agreement provides that the Company will file a "resale" registration statement covering all of the shares of common stock and the shares of common stock issuable upon exercise
of the warrants, up to the maximum number of shares able to be registered pursuant to applicable SEC regulations, within 15 days of the closing of the September 2009 Offering. The Company currently
maintains an effective registration statement relating to these shares (File No. 333-162240). Under the
terms of the September 2009 Registration Rights Agreement, the Company is obligated to maintain the effectiveness of the "resale" registration statement until all securities therein are sold or are
otherwise can be sold pursuant to Rule 144, without any restrictions. A cash penalty at the rate of 2% per month will be triggered for any filing or effectiveness failures or 1% in the event of
suspensions of prospectus delivery or if, at any time after six months following the closing of the September 2009 Offering, the Company ceases to be current in its periodic reports with the SEC. The
aggregate penalty accrued with respect to each investor may not exceed 12% of the original purchase price paid by that investor. The Company has not recorded an amount associated with the contingent
obligation regarding the cash penalties as of March 31, 2010 as the Company believes that the contingent obligation to make future payments is not probable.

December 2009 Financing

In December 2009, the Company entered into an Underwriting Agreement (the "Underwriting Agreement") with Thomas Weisel Partners LLC
(the "Underwriter"), pursuant to which it sold to the Underwriter 6,400,000 shares of common stock and warrants to purchase up to 4,160,000 shares of common stock sold in units, at a price of $1.00
per unit ("December 2009 Offering"). Each unit consists of one share of common stock and a warrant to buy 0.65 of a share of common stock. The warrants will be exercisable for a period of five years,
beginning six months after issuance, at an exercise price of $1.4385 per share. The closing of the transaction occurred on December 15, 2009. The

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

7. Common Stock and Warrant Liability (Continued)

Company
received approximately $6.4 million in gross proceeds from the December 2009 Offering. After paying $718,000 in underwriting discounts, commissions and offering expenses, the net proceeds were
$5.6 million.

In
connection with the December 2009 Offering, the Company issued warrants to purchase an aggregate of 4,160,000 shares of common stock. The warrants have an exercise price of $1.44 per
share and have a five and a half year term. The fair value of the warrants was estimated at $2.7 million using a Black-Scholes model with the following assumptions: expected volatility of 100%, risk
free interest rate of 2.43%, expected life of five and a half years and no dividends. Expected volatility was based on the volatility contractually specified in the warrant agreements. Due to a price
adjustment clause included in the warrant agreements, the warrants were deemed to be a liability and, therefore, the fair value of the warrants was recorded in the liability section of the balance
sheet. As such, the warrants will be revalued each reporting period, with the resulting gains and losses recorded as the change in fair value of warrant liability on the income statement. The Company
recorded a gain in the amount of $0.9 million for the change in the fair value of the warrant liability for the three month period ending March 31, 2010.

8. Debt

As of December 31, 2009 and March 31, 2010, the outstanding balance on a loan and security agreement was $4.9 million and $4.3 million, respectively.

As
of March 31, 2010, loan payable payments are due as follows (in thousands):

2010

$
2,3642011


2,439Thereafter


Total future minimum payments


4,803Less: amount representing interest


(923
)Less: debt discount


(587
)Add: amortization of debt discount


983Carrying value of debt

$
4,276


As
of March 31, 2010, the loan and security agreement did not require the Company to comply with any financial covenants.

The
loan and security agreement contains a subjective material adverse clause, which allows the debt holders to call the loans upon a material adverse event. Based on an updated
assessment of the terms of the loan and security agreement, the entire balance due is classified in the current liabilities section in the accompanying balance sheet at March 31, 2010.

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

9. Subsequent Event

On May 11, 2010, the Board of Directors of Helicos Corporation approved a reduction in headcount and restructuring plan (the "Restructuring Plan") which involves the consolidation and
reorganization of its operations in order to reduce operating costs. The Restructuring Plan has resulted in the elimination of approximately 40 positions during the second fiscal quarter of 2010.
Employees directly affected by the Restructuring Plan were notified on May 13, 2010, and have been provided with severance arrangements including outplacement assistance. These actions were
approved as part of the Company's previously announced efforts to consider alternatives to its existing long-term strategic focus, including a repositioning of the Company in the genetic analysis
markets. The Company estimates that the total restructuring expenses to be incurred in connection with the Restructuring Plan will be in the range of $550,000 to $650,000. Of this total, the Company
estimates $550,000 relates to employee severance benefits. The Company expects that these restructuring payments will be reflected in its financial results beginning in the second fiscal quarter 2010
and continuing through the first fiscal quarter 2011. Cash outlays incurred in connection with these restructuring activities are estimated to be in the range of $550,000 to $650,000.

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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

Helicos BioSciences Corporation is a life sciences company which has developed proprietary technology focused on the research, drug
discovery and clinical diagnostics markets. Our proprietary True Single Molecule Sequencing (tSMS) technology enables rapid analysis of large quantities of genetic material by directly
sequencing single molecules of DNA or single DNA copies of RNA (cDNA) and our newest approach of direct sequencing of RNA. Our tSMS approach differs from current methods of sequencing DNA or RNA
because it analyzes individual molecules of DNA directly instead of analyzing a large number of copies of the molecule produced through complex sample preparation techniques. Our tSMS technology
eliminates the need for costly, labor-intensive and time-consuming sample preparation techniques, such as amplification or cloning, which are required by other methods to produce a sufficient quantity
of genetic material for analysis.

Our
Helicos® Genetic Analysis Platform is designed to obtain sequencing information by repetitively performing a cycle of biochemical reactions on individual DNA or RNA
molecules and imaging the results after each cycle. The platform consists of an instrument called the HeliScope Single Molecule Sequencer, an image analysis computer tower called the
HeliScope Analysis Engine, associated reagents, which are chemicals used in the sequencing process, and disposable supplies. The information generated from using our tSMS products may
lead to improved drug therapies, personalized medical treatments and more accurate diagnostics for cancer and other diseases.

In
the first quarter of 2010, we began a process of considering alternatives to our existing long-term strategic focus, including a repositioning of the Company in the genetic analysis
markets. We believe that an adjustment to our existing strategy would better position us to take advantage of the unique capabilities of our proprietary platform and to address the growing competition
in the genetic research marketplace. Although we made progress during 2009 in the genetic research market as demonstrated by our growing installed base and the number of peer reviewed publications
referencing our single molecule sequencing technology, we believe that we must consider a number of alternatives to improving shareholder value and, as a result, have embarked upon this process with a
view toward repositioning our highly differentiated single molecule sequencing solution. In this regard, we have continued our relationship with Thomas Weisel Partners LLC (TWP), a nationally
recognized investment bank, to assist us with our evaluation and execution of strategic alternatives and long term financing strategy. We have also engaged a variety of consultants in the genomic
research, services and diagnostics industries to evaluate available alternatives.

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In
particular, we believe that our technology is uniquely suited for applications in molecular diagnostics. We believe that diagnostics applications may benefit from the specific
features for which the Helicos System is uniquely suited, including the platform's quantitative accuracy, the use of small sample quantities in simple preparation methods, and high throughput, as well
as lack of biases typically seen with sample amplification.

We
anticipate the repositioning evaluation process will take at least several months. There can be no assurance, however, that we will be successful in re-focusing our long-term strategy
or that any transaction we undertake to implement a change in strategy will ultimately be completed or, if one is undertaken, there can be no assurance regarding its terms, timing or sources of
funding. During this time, we will focus our limited resources on satisfying current customer needs and stabilizing system performance, which has varied at some customer and placement sites. In
addition, new initiatives will be prioritized to those that reduce operational risk and conserve resources while the company considers its strategic alternatives and direction.

In
connection with its repositioning strategy, on May 11, 2010, the Board of Directors of the Company approved a reduction in headcount and restructuring plan (the "Restructuring Plan")
which involves the consolidation and reorganization of its operations in order to reduce operating costs. The Restructuring Plan has resulted in the elimination of approximately 40 positions during
the second fiscal quarter of 2010. Employees directly affected by the Restructuring Plan were notified on May 13, 2010, and have been provided with severance arrangements including outplacement
assistance. The annual savings are estimated to be approximately $6.8 million as a result of the Restructuring Plan.

Through
March 31, 2010, we have received cumulative sales orders for ten Helicos Systems. In addition, we have one system installed at The Broad Institute, Inc. on a no cost basis, and
have three systems at leading academic institutions for scientific and commercial evaluation. During 2009, we recognized revenue on two of the ten sales orders. We have not recognized revenue on
system sales during the three month period ended March 31, 2010. We have shipped seven units that have not met our revenue recognition requirements.

We
believe that we have incurred the substantial majority of the costs related to the development of the initial version of our Helicos System. Any future shipments, as well as shipments
that have occurred but have not yet generated revenue, of the Helicos Systems 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. Future revenues from sales of our instruments, proprietary reagents and disposable supplies will depend on individual
customer agreements, timing of the installation and turnover to customer, 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 Helicos System and are reevaluating our
long-term strategic focus, we cannot predict the percentage of our revenues that we will derive from sales of proprietary reagents and disposable supplies.

In
September 2009, we raised approximately $9.4 million, after deducting placement agent fees and offering expenses, through the issuance of 4,311,280 shares of common stock and warrants
to acquire up to 2,322,509 shares of common stock for an exercise price of $2.61 per share. In December 2009, we raised approximately $5.7 million, after deducting placement agent fees and offering
expenses, through the issuance of 6,400,000 shares of common stock and warrants to acquire up to 4,160,000 shares of common stock for an exercise price of $1.44 per share.

Since
inception, we have incurred losses and have not generated positive cash flows from operations. We expect our losses to continue for a considerable period of time as we reevaluate
our long-term strategic focus and consider various alternatives to reposition our business, by exploring various opportunities including the use of our technology for diagnostic applications in the
genetic analysis market. These losses, among other things, have had and will continue to have an adverse effect

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on
our working capital, total assets and stockholders' equity. As of March 31, 2010 and May 14, 2010, we had $11.3 million and $8.7 million, respectively, in cash and cash equivalents.
We will, before the end of the third quarter of 2010, require significant additional capital to fund our operations. Because our present capital resources are not sufficient to fund our planned
operations for a twelve month period as of the date of our Annual Report on Form 10-K for the year ended December 31, 2009, our current financial resources raise substantial doubt about our ability to
continue as a going concern. A result of our failure to raise capital as and when needed would have a material negative impact on our financial condition and would have a material adverse impact on
the viability of our company to continue as a going concern.

We
were incorporated in Delaware in May 2003 under the name RareEvent Medical Corporation, renamed Newco LS6, Inc. in September 2003 and ultimately renamed Helicos BioSciences
Corporation in November 2003. Our activities to date have consisted primarily of conducting research and development. Accordingly, we are considered to be in the development stage at December 31,
2009, as defined by the Financial Accounting Standards Board ("FASB"). Our fiscal year ends on December 31, and we operate as one reportable segment. Our corporate offices are located at One Kendall
Square, Building 700, Cambridge, Massachusetts 02139.

Financial Overview

Product revenue

Product revenue for the three months ended March 31, 2009 consists of $829,000 in revenue from the sale of systems and an additional
$134,000 of revenue recognized from the sale of proprietary reagents to customers. Product revenue for the three months ended March 31, 2010 primarily consists of $42,000 of revenue recognized from
the sale of proprietary reagents to customers.

Grant revenue

In September 2006, we were awarded a grant from the National Human Genome Research Institute ("NHGRI"), a branch of the National
Institutes of Health ("NIH"), pursuant to which were eligible to receive reimbursement of our research expenses of up to $2.0 million through August 2009. In connection with this award we recognized
$239,000 in revenue during the three months ended March 31, 2009. We have fully expended all available funds under this grant as of December 31, 2009.

In
September 2009, we were awarded another grant from the NHGRI, pursuant to which we are eligible to receive reimbursement of our research expenses of up to $2.9 million through August
2011. The two year grant is part of the Sequencing Technology Development Program representing one of NHGRI's signature projects for the American Recovery and Reinvestment Act's effort to jumpstart
the economy and create or save millions of jobs. This project, a part of NIH's "Grand Opportunities" program, is designed to support large-scale, high impact research projects that are expected to
accelerate critical scientific breakthroughs and enable growth and investment in biomedical research and development. In connection with this award we recognized $490,000 in revenue for the three
months ended March 31, 2010.

In
April 2010, we were awarded another grant from the NHGRI, pursuant to which we are eligible to receive reimbursement of our research expenses of up to $1.6 million through February
2013. The three year grant is part of the True Direct Single Molecule RNA Sequencing Program representing one of NHGRI's signature projects for the American Recovery and Reinvestment Act's effort to
jumpstart the
economy and create or save millions of jobs. This project, a part of NIH's "Grand Opportunities" program, is designed to support large-scale, high impact research projects that are expected to
accelerate critical scientific breakthroughs and enable growth and investment in biomedical research and development. In connection with this award we recognized $37,000 in revenue for the three
months ended March 31, 2010.

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Cost of product revenue

Cost of product revenue for the three months ended March 31, 2010 consists of costs associated with the sale of proprietary reagents.

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 the three months ended March 31, 2010 and 2009, research and development expenses also included labor and overhead costs associated with the under-utilization of the manufacturing
facility.

Substantially
all research and development expenses since our inception have been in connection with the launch of the initial version of the Helicos® Genetic Analysis System
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 through December 2007.
However, additional costs were incurred during 2008, 2009 and the first quarter of 2010 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, 2009 and 2010 were $4.1 million and $4.0 million, respectively. In addition to our ongoing research and development
efforts, we have 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 cash inflows from the sale of 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 would adversely impact our liquidity.

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 or cost of product revenue.

Selling,
general and administrative expenses for the three months ended March 31, 2009 and 2010 were $2.9 million and $4.1 million, respectively.

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Overview of Results of Operations

Three months ended March 31, 2009 compared to three months ended March 31, 2010

Product revenue.We recognized $963,000 and $42,000 of product revenue during the three months ended March 31, 2009 and 2010,
respectively. Product
revenue recognized during the three months ended March 31, 2009 consists of $829,000 of revenue from the sale of an instrument that was shipped in 2008, as well as $134,000 of revenue from the sale of
proprietary reagents to customers. Product revenue recognized during the three months ended March 31, 2010 consists of $42,000 of revenue from the sale of proprietary reagents to customers.

Grant revenue.We recognized $239,000 and $527,000 of grant revenue during the three months ended March 31, 2009 and 2010,
respectively. Grant
revenue recognized during the three months ended March 31, 2009 and 2010 related to the reimbursement of expenses in connection with our government research grants.

Cost of product revenue.We recorded $521,000 and $72,000 as cost of product revenue during the three months ended March 31, 2009 and
2010,
respectively. Cost of product revenue consists of costs associated with the sale and placement of instruments and sale of proprietary reagents.

Research and development expenses.Research and development expenses during the three months ended March 31, 2009 and 2010 were as
follows:

Three months ended
March 31,2009

2010

Change($ in thousands)Research and development

$
4,093

$
4,046

$
(47
)

-1
%


Research
and development expenses decreased by $47,000 from the three months ended March 31, 2009 to the three months ended March 31, 2010. The majority of the decrease was due to a $0.2
million decrease in occupancy cost, offset by an increase of $0.2 million in stock based compensation expense.

Selling, general and administrative expenses.Selling, general and administrative expenses during the three months ended March 31, 2009
and 2010 were
as follows:

Three months ended
March 31,2009

2010

Change($ in thousands)Selling, general and administrative

$
2,851

$
4,072

$
1,221


43
%


Selling,
general and administrative expenses increased by $1.2 million from the three months ended March 31, 2009 to the three months ended March 31, 2010. The largest contributors to
this increase was a $0.3 million increase in our salary and benefit expenses and a $0.8 million increase in stock compensation expense. These increases are due to the issuance of restricted stock and
the associated employment tax expense in the three month period ending March 31, 2010.

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Interest income.Interest income for the three months ended March 31, 2009 and 2010 was as follows:

Three months ended
March 31,2009

2010

Change($ in thousands)Interest income

$
40

$
12

$
(28
)

-70
%


The
decrease in interest income from the three months ended March 31, 2009 compared to the three months ended March 31, 2010 was due primarily to decreased cash balances during the three
months ended March 31, 2010 compared to the three months ended March 31, 2009.

Interest expense.Interest expense for the three months ended March 31, 2009 and 2010 was as follows:

Three months ended
March 31,2009

2010

Change($ in thousands)Interest expense

$
305

$
183

$
(122
)

-40
%


The
decrease in interest expense from the three months ended March 31, 2009 compared to the three months ended March 31, 2010 is attributable to the year over year decrease in our
long-term debt obligations.

Change in fair value of warrant liability.Change in fair value of warrant liability for the three months ended March 31, 2009 and 2010
was as
follows:

Three months ended
March 31,2009

2010

Change($ in thousands)Change in fair value of warrant liability

$


$
1,452

$
1,452


100
%


In
connection with the September and December 2009 equity offerings, we issued warrants to purchase an aggregate of 6,482,509 shares of common stock. The fair value of the warrants is
recorded in the liability section of the balance sheet and at March 31, 2010 was estimated at $3.7 million. The fair value of the warrant liability will be determined at the end of each reporting
period with the resulting gains and losses recorded as the change in fair value of warrant liability on the income statement. For the three month period ended March 31, 2010, we realized a gain of
$1.5 million due to the change in the fair value of the warrant liability. This gain is principally a result of the decrease of our stock price between December 31, 2009 and March 31, 2010. Future
changes in the fair value of the warrant liability will be due primarily to fluctuations in the value of our common stock. During the three months ended March 31, 2010, 223,213 warrant shares from the
September 2009 equity offering were exercised into common stock at a exercise price of $0.31.

Liquidity and Capital Resources

We have incurred losses since our inception in May 2003 and, as of March 31, 2010 we have an accumulated deficit of $174.1 million. We
have financed our operations to date principally through the sale of common stock and preferred stock, including our IPO, two private placements of common stock and warrants, an underwritten offering
of common stock and warrants, debt financing and interest earned on investments. Through March 31, 2010, we have received net proceeds of $80.3 million

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through
the issuance of common stock, including our IPO, private placements and an underwritten offering of common stock and warrants, $66.8 million from the issuance of preferred stock, $2.5 million
in debt financing from a lender to finance equipment purchases, and $19.6 million in debt financing from a lender for working capital, capital expenditures and general corporate purposes. Working
capital as of December 31, 2009 was $11.4 million, consisting of $24.5 million in current assets and $13.1 million in current liabilities. Working capital as of March 31, 2010 was $4.2 million,
consisting of $20.2 million in current assets and $16.0 million in current liabilities. Our cash and cash equivalents are held in interest-bearing cash 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 decrease in cash and cash equivalents for the three months ended March 31, 2009 and 2010:

Three months ended
March 31,2009

2010($ in thousands)Net cash used in:Operating activities

$
(5,011
)
$
(4,011
)Investing activities


(8
)

(25
)Financing activities


(814
)

(589
)Net decrease in cash and cash equivalents

$
(5,833
)
$
(4,625
)


Net
cash used in operating activities was $5.0 million for the three months ended March 31, 2009 compared to $4.0 million for the three months ended March 31, 2010. The $1.0 million
decrease was primarily due to a decrease in the net loss of $0.2 million, an increase in the change of accounts receivables of $0.5 million, an increase in prepaid and other current assets of $0.2
million, an increase in deferred revenue of $1.1 million, an increase in the change in accounts payable of $1.6 million, and a increase in non-cash stock-based compensation expense of $1.0 million,
offset by an increase in inventory of $1.2 million, a decrease in the change in accrued expenses and other current liabilities of $0.6 million, and a decrease in non-cash expenses related to the fair
value of the warrant liability of $1.5 million and a decrease in depreciation and amortization expense of $0.3 million.

Net
cash used in investing activities was $8,000 for the three months ended March 31, 2009 compared to $25,000 for the three months ended March 31, 2010.

Net
cash used in financing activities was $814,000 for the three months ended March 31, 2009 compared to $589,000 for the three months ended March 31, 2010. The $225,000 decrease was
primarily due to a $158,000 decrease in debt payments and $69,000 in proceeds from the conversion of warrant shares into common stock.

Operating capital and capital expenditure requirements

As of March 31, 2010 and May 14, 2010, we had $11.3 million and $8.7 million, respectively, in cash and cash equivalents.
We will, before the end of the third quarter of 2010, require significant additional capital to fund our operations. Since our present capital resources are not sufficient to fund our planned
operations for a twelve month period as of the date of our Annual Report on Form 10-K, our current financial resources raise substantial doubt about our ability to continue as a going concern. We may
raise the funds we require to continue our operations through public or private sales of equity, from borrowings or from strategic partners. Our future capital requirements will depend on many
factors, including the precise nature of our strategic repositioning. Failure to satisfy our capital requirements or any such delay would have a negative impact on our ability to continue as a going
concern.

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We shipped our first two Helicos Systems in 2008, the first of which was ultimately returned. This initial shipment to our first customer, Expression Analysis,
Inc. ("EA"), was made on March 5, 2008. This system was an early version and did not consistently achieve our commercial specification levels at EA and, as a result, on January 27, 2009, we agreed to
have EA return the Helicos System that was installed at EA. Following EA's return of this system, our commercial relationship with EA was suspended. EA did not make any payments for this Helicos
System that was ultimately returned.

Through
March 31, 2010, we have received cumulative sales orders for ten Helicos Systems. In addition, we have one system installed at The Broad Institute, Inc. on a no cost basis, and
have three systems at leading academic institutions for scientific and commercial evaluation. During 2009, we have recognized revenue on two of the ten sales orders. For the three month period ended
March 31, 2010, no revenue on system sales was recognized.

In
the first quarter of 2010, we began a process of considering alternatives to our existing long-term strategic focus, including a repositioning of the company in the genetic analysis
markets. We believe that an adjustment to our existing strategy would better position us to take advantage of the unique capabilities of our proprietary platform and to address the growing competition
in the genetic research marketplace. Although we made progress during 2009 in the genetic research market as demonstrated by our growing installed base and the number of peer reviewed publications
referencing our single molecule sequencing technology, we believe that Helicos must consider a number of alternatives to improving shareholder value and, as a result, have embarked upon this process
with a view toward repositioning Helicos' highly differentiated single molecule sequencing solution. In this regard, we have
continued our relationship with Thomas Weisel Partners LLC (TWP), a nationally recognized investment bank, to assist us with its evaluation and execution of strategic alternatives and long term
financing strategy. We have also engaged a variety of consultants in the genomic research, services and diagnostics industries to evaluate available alternatives.

To
date, we have not achieved profitability. We expect our losses to continue for a considerable period of time as we reevaluate our long-term strategic focus and consider various
alternatives to reposition our business, including by exploring various opportunities including the use of our technology for diagnostic applications in the genetic analysis market. These losses,
among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders' equity. Future revenues if any, from sales of our instruments,
proprietary reagents and disposable supplies will depend on individual customer agreements, timing of the installation and turnover to customer, 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 Helicos System and are reevaluating our long-term
strategic focus, we cannot predict the percentage of our revenues that we will derive from sales of proprietary reagents and disposable supplies. We have shipped seven units that have not met our
revenue recognition criteria.

The
continued depletion of our resources may make future funding more difficult or expensive to attain. Additional equity financing may be dilutive to our stockholders; debt financing,
if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business; and strategic partnerships may result in royalties or other terms which
reduce our economic potential from any adjustments to our existing long-term strategy. Because our present capital resources are not sufficient to fund our planned operations for a twelve month period
as of the date of this Form 10-Q, substantial doubt about our ability to continue as a going concern exists without successfully raising funds as described above. If we are unable to execute our
operations according to our plans or to obtain additional financing, we may be forced to cease operations.

Our
forecast of the period of time through which our financial resources will be adequate to support our operations, and the costs associated with our repositioning strategy as we
reevaluate our long-term strategic focus are forward-looking statements and involve risks and uncertainties, and actual

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results
could vary materially and negatively as a result of a number of factors, including the factors discussed in the "Risk Factors" section of our annual report on Form 10-K for the year ended
December 31, 2009. 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 our long-term strategic focus, we are unable to estimate the exact amounts of capital outlays and operating expenditures
necessary to reposition our business, 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:



Working
capital as of December 31, 2009 was $11.4 million, consisting of $24.5 million in current assets and $13.1 million in current liabilities. Working capital as of March 31, 2010
was $4.2 million, consisting of $20.2 million in current assets and $16.0 million in current liabilities.

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.

Contractual obligations

A summary of our contractual obligations is included in our Form 10-K for the fiscal year ended December 31, 2009. There have been no
material changes to our contractual obligations previously disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2009.

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 provided 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 advance period ended
on 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

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made
on a monthly basis. For the first six months interest-only payments were 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. Borrowings on the credit facility in aggregate were $2.5 million at a weighted-average
interest rate of 10.1% through March 31, 2010. As of December 31, 2009 and March 31, 2010, there was no outstanding balance on the credit facility.

Loan and security agreement

In December 2007, we entered into a loan and security agreement with two lenders including GE Capital Corporation, which is serving as
agent. The loan agreement provided 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 and (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.

In
June 2008, we entered into an amendment to the loan and security agreement with two lenders including GE Capital Corporation. A subsequent term loan was made upon execution of the
amendment in an aggregate principal amount equal to $10.0 million. The loan amendment provided that the interest rate for the subsequent term loan is 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 and (B) 3.17% plus (ii) 8.33%. The loan agreement, as amended, contained affirmative and negative
covenants to which we and our subsidiaries were required to adhere. Pursuant to the amendment, we were required to maintain, at all times, unrestricted cash in our bank account equal to at least
$10.0 million. The borrowings under the loan agreement were 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 were required for the first five months. Thereafter, for the following 31 months, payments of principal and interest will be due. For the subsequent term loan, principal and
interest payments are required for the 36 month term of the loan.

In
connection with the execution of the June 2008 amendment to the loan and security agreement with two lenders including GE Capital Corporation, we issued warrants to the two lenders to
purchase an aggregate of 110,000 shares of common stock. The warrants have an exercise price of $4.80 per share and expire in June 2014. The fair value of the warrants was estimated at $337,000 using
a Black-Scholes model with the following assumptions: expected volatility of 65.4%, risk free interest rate of 3.4%, expected life of six years and no dividends. Expected volatility was based on the
volatility of similar entities in the life sciences industry of comparable size of market capitalization and financial position that completed initial public offerings within the last ten years. The
fair value of the warrants was recorded as equity and a debt discount and will be amortized to interest expense over the term of the loan.

In
December 2008, we entered into an additional amendment to the loan and security agreement with certain lenders including GE Capital Corporation. The amendment amended the prepayment
provisions of the loan and security agreement to allow us to make a prepayment of $10.0 million (the "Pay Down Amount") without incurring any prepayment penalties. Pursuant to the amendment, we made a
prepayment, equal to the Pay Down Amount, before December 31, 2008. In connection with such prepayment, and in lieu of the 4% final payment fee with respect to the Pay Down Amount, the amendment
provides that we will pay a fee equal to 2% of the initial $10.0 million term loan, payable on the earlier of (a) January 31, 2011 and (b) the maturity date for the subsequent term loan.

The
amendment further provides that our obligations under the loan agreement, as amended, are no longer secured by a cash amount of $10.0 million. As such, this amount in no longer
classified as restricted cash as of December 31, 2008. Such obligations continue to be secured under various collateral documents by interests in substantially all of our personal property, including
the pledge of

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the
stock of our wholly-owned subsidiary, and proceeds of any intellectual property, but not by our intellectual property.

The
loan and security agreement contains a subjective material adverse clause, which allows the debt holders to call the loans upon a material adverse event. Based on an updated
assessment of the terms of the loan and security agreement, the entire balance due is classified in the current liabilities section in the accompanying balance sheet at March 31, 2010.

As
of December 31, 2009 and March 31, 2010, the outstanding balance on the loan agreement was $4.9 million and $4.3 million, respectively.

Private Placement in Public Equity Offering (December 2008)

In December 2008, we entered into a securities purchase agreement with certain investors pursuant to which we sold a total of
42,753,869 units (the "Units"), each Unit consisting of (i) one share of common stock and (ii) one warrant to purchase 0.6 shares of common stock at an exercise price of $0.45 per share, for a
purchase price of $0.435 per unit (representing the closing bid price plus an additional amount for the warrants) (the "December 2008 Offering"). The closing of the transaction occurred on December
23, 2008. In connection with the December 2008 Offering, we raised approximately $18.6 million in gross proceeds. We paid $813,000 in placement agent fees and offering expenses and expect to use the
remaining net proceeds of $17.8 million for general corporate purposes.

In
connection with the December 2008 Offering, we issued warrants to purchase an aggregate of 25,652,333 shares of common stock which are exercisable immediately. The warrants have an
exercise price of $0.45 per share and have a five year term. The relative fair value of the warrants was estimated at $4.4 million using a Black-Scholes model with the following assumptions: expected
volatility of 66.15%, risk free interest rate of 1.53%, expected life of five years and no dividends. Expected volatility was based on the volatility of similar entities in the life sciences industry
of comparable size of market capitalization and financial position that completed initial public offerings within the last ten years. The relative fair value of the warrants was recorded in the equity
section of the balance sheet.

In
connection with the December 2008 Offering, we entered into a registration rights agreement (the "2008 Registration Rights Agreement") with each of the investors. The 2008
Registration Rights Agreement provides that we file a "resale" registration statement covering all of the shares of common stock and the shares of common stock issuable upon exercise of the warrants,
up to the maximum number of shares able to be registered pursuant to applicable SEC regulations, within 30 days of the closing of the December 2008 Offering. We currently maintain an effective
registration statement relating to a portion of these shares (File No. 333-156885). Under the terms of the 2008 Registration Rights Agreement, we are obligated to maintain the effectiveness of the
"resale" registration statement until all securities therein are sold or are otherwise can be sold pursuant to Rule 144, without any restrictions. A cash penalty at the rate of 2% per month will be
triggered for any filing or effectiveness failures or suspensions of prospectus delivery or if, at any time after six months following the closing of the December 2008 Offering, we cease to be current
in our periodic reports with the SEC. The aggregate penalty accrued with respect to each investor may not exceed 12% of the original purchase price paid by that investor.

Private Placement in Public Equity Offering (September 2009)

In September 2009, we entered into a securities purchase agreement with certain investors pursuant to which we (i) sold to certain
existing investors a total of 1,030,028 units, each unit consisting of (a) one share of common stock and (b) one warrant to purchase 0.662 shares of common stock at an exercise price equal to
$2.61 per share (105% of the closing bid price of the common stock on September 15, 2009), at a purchase price equal to $2.57 per unit, and (ii) sold to certain new investors

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a
total of 3,281,252 units, each unit consisting of (a) one share of common stock and (b) one warrant to purchase 0.50 shares of common stock at an exercise price equal to $2.61 per share, at a
purchase price equal to $2.24 per unit (together, the "September 2009 Offering"). The closing of the transaction occurred on September 18, 2009. In connection with the September 2009 Offering, we
raised approximately $10.0 million in gross proceeds. We paid $646,000 in placement agent fees and offering expenses and expect to use the remaining net proceeds of $9.4 million for general corporate
purposes.

In
connection with the September 2009 Offering, we issued warrants to purchase an aggregate of 2,322,509 shares of common stock which become exercisable on or after the six month
anniversary following the closing of the transaction. The warrants have an exercise price of $2.61 per share and have a five and a half year term. The fair value of the warrants was estimated at $4.5
million using a Black-Scholes model with the following assumptions: expected volatility of 100%, risk free interest rate of 2.49%, expected life of five and a half years and no dividends. Expected
volatility was based on the volatility contractually specified in the warrant agreements. Due to a price adjustment clause included in the warrant agreements, the warrants were deemed to be a
liability and, therefore, the fair value of the warrants was recorded in the liability section of the balance sheet. As such, the warrants will be revalued each reporting period, with the resulting
gains and losses recorded as the change in fair value of warrant liability on the income statement. In connection with the December 2009 Offering, the exercise price for the warrants issued in this
transaction was subsequently reduced to $0.31 per share in accordance with the terms of the warrant. For the three month period ending March 31, 2010 we recorded a gain in the amount of $0.6 million
for the change in the fair value of the warrant liability. During the three months ended March 31, 2010, 223,213 warrant shares from the September 2009 Offering were exercised into common stock at a
exercise price of $0.31.

In
connection with the September 2009 Offering, we entered into a registration rights agreement (the "September 2009 Registration Rights Agreement") with each of the investors. The
September 2009 Registration Rights Agreement provides that we will file a "resale" registration statement covering all of the shares of common stock and the shares of common stock issuable upon
exercise of the warrants, up to the maximum number of shares able to be registered pursuant to applicable SEC regulations, within 15 days of the closing of the September 2009 Offering. We currently
maintain an effective registration statement relating to these shares (File No. 333-162240). Under the terms of the September 2009 Registration Rights Agreement, we are obligated to maintain the
effectiveness of the "resale" registration statement until all securities therein are sold or are otherwise can be sold pursuant
to Rule 144, without any restrictions. A cash penalty at the rate of 2% per month will be triggered for any filing or effectiveness failures or 1% in the event of suspensions of prospectus delivery or
if, at any time after six months following the closing of the September 2009 Offering, we cease to be current in our periodic reports with the SEC. The aggregate penalty accrued with respect to each
investor may not exceed 12% of the original purchase price paid by that investor.

Underwritten Offering (December 2009)

In December 2009, we entered into an Underwriting Agreement (the "Underwriting Agreement") with Thomas Weisel Partners LLC (TWP) (the
"Underwriter"), pursuant to which we agreed to sell to the Underwriter 6,400,000 shares of common stock and warrants to purchase up to 4,160,000 shares of common stock sold in units, at a price of
$1.00 per unit ("December 2009 Offering"). Each unit consists of one share of common stock and a warrant to buy 0.65 of a share of common stock. The Warrants will be exercisable for a period of five
years, beginning six months after issuance, at an exercise price of $1.4385 per share. We received approximately $6.4 million in gross proceeds from the December 2009 Offering. We paid $718,000 in
underwriting discounts, commissions and offering expenses and expect to use the remaining net proceeds of $5.6 million for general corporate purposes, which include ongoing research and development
activities, funding marketing initiatives and funding

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manufacturing
expenses associated with the commercial version of our Helicos System. The closing of the transaction occurred on December 21, 2009.

In
connection with the December 2009 Offering, we issued warrants to purchase an aggregate of 4,160,000 shares of common stock. The warrants have an exercise price of $1.44 per share and
have a five and a half year term. The fair value of the warrants was estimated at $2.7 million using a Black-Scholes model with the following assumptions: expected volatility of 100%, risk free
interest rate of 2.43%, expected life of five and a half years and no dividends. Expected volatility was based on the volatility contractually specified in the warrant agreements. Due to a price
adjustment clause included in the warrant agreements, the warrants were deemed to be a liability and, therefore, the fair value of the warrants was recorded in the liability section of the balance
sheet. As such, the warrants will be revalued each reporting period, with the resulting gains and losses recorded as the change in fair value of warrant liability on the income statement. We recorded
a gain in the amount of $0.9 million for the change in the fair value of the warrant liability for the three month period ending March 31, 2010.

Off-balance sheet arrangements

During the three months ended March 31, 2009 and 2010, we did not engage in any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

In our Form 10-K for the fiscal year ended December 31, 2009, our critical accounting policies and estimates upon which our financial
status depends were identified as those relating to inventory; revenue recognition; impairment of long-lived assets; allowance for doubtful accounts; stock-based compensation; and fair value of
financial instruments. We reviewed our policies and determined that those policies remain our critical accounting policies for the three months ended March 31, 2010. We did not make any changes in
those policies during the three months ended March 31, 2010.

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 and investments. 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 principal executive officer (PEO) and principal financial officer (PFO), has evaluated
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of
March 31, 2010. Based on that
evaluation, our PEO and PFO have concluded that our disclosure controls and procedures were effective at the reasonable level of assurance.

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.

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Part IIOther Information

Item 1.    Legal Proceedings

We are not party to any material pending or threatened litigation.

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. Other than the additional risk factor set forth below, 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, 2009.

Following our reduction in force in May 2010 which resulted in the elimination of approximately one-half of the Company's headcount, we may not be able to retain our
remaining employees while we explore various alternatives to the Company's long-term strategic focus. As a result, we may be unable to achieve our goals, in which case, our business, financial
conditions, results of operations and prospects will be materially adversely affected and we may have to cease operations.

In connection with our efforts to consider alternatives to our long-term strategic focus, in May 2010, we committed to a reduction in
headcount and restructuring plan (the "Restructuring Plan") which involved the consolidation and reorganization of our operations in order to reduce operating costs. The Restructuring Plan involved a
reduction in headcount of approximately 40 employees or one-half of the organization. As a result, while we reevaluate our long-term strategic focus and consider various alternatives to reposition our
business, we will rely heavily on our ability to retain our remaining employees. The loss of the service of any number of our remaining employees may significantly delay or prevent our ability to
implement a long-term strategy and other business objectives. For example, because of the complex and technical nature of our Helicos System, any failure to retain a sufficient number of our
remaining, qualified employees could materially harm our ability to maintain our existing know-how and proprietary technology which would severely limit any ability to purse our long-term strategic
direction.

Given
the magnitude of our May 2010 reduction in force and the potential uncertainty about our strategic focus and long-term roles within our organization, the morale of our remaining
employees may be lowered, key employees may be distracted and our business may experience a loss of continuity while we continue to evaluate and implement our long-term strategic plan. Each of our
remaining employees could terminate his or her relationship with us at any time. These persons' expertise would be difficult to replace and the failure to do so could have a material adverse effect on
our ability to achieve our business goals. There can be no assurance that we will have the financial resources or otherwise be successful in retaining our remaining personnel and our failure to do so
could have a material adverse effect on our business, financial condition and results of operations. Our inability to retain existing personnel during this period of uncertainty or our inability to
attract new personnel that fit within a new strategic focus once it is identified, would prevent our exploiting fully any new business alternative and thereby cause a material adverse effect on our
business, financial condition, results of operations and prospects.

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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 December 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 $16.6
million on pre-production research and development expenses and $10.9 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. During early 2009, we used 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 Helicos System. Our management has broad discretion as to the use of the net proceeds. As
required by applicable Securities and Exchange Commission ("SEC") regulations, we will provide further detail on our use of the net proceeds from our initial public offering in future periodic
reports.

Recent Sales of Unregistered Securities

In September 2009, we entered into a securities purchase agreement with certain investors pursuant to which we (i) sold to certain
existing investors a total of 1,030,028 units, each unit consisting of (a) one share of common stock and (b) one warrant to purchase 0.662 shares of common stock at an exercise price equal to $2.61
per share (105% of the closing bid price of the common stock on September 15, 2009), at a purchase price equal to $2.57 per unit, and (ii) sold to certain new investors a total of 3,281,252 units,
each unit consisting of (a) one share of common stock and (b) one warrant to purchase 0.50 shares of common stock at an exercise price equal to $2.61 per share, at a purchase price equal to $2.24 per
unit (together, the "September 2009 Offering") for gross proceeds of $10.0 million. We paid $646,000 in placement agent fees and offering expenses and expect to use the remaining net proceeds of $9.4
million for general corporate purposes, which include ongoing research

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and
development activities, funding marketing initiatives and funding manufacturing expenses associated with the commercial version of our Helicos System. The warrants have a five and a half year
term and become exercisable on or after the six month anniversary following the closing of the transaction. The closing of the transaction occurred on September 18, 2009. The September 2009 Offering
was consummated in reliance on the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act").

Under
NASDAQ Marketplace Rule 4350(i)(1)(B), stockholder approval is required for issuances of securities that will result in a change of control of the issuer. In order to comply with
Rule 4350(i)(1)(B), until the September 2009 Offering has been approved by the stockholders, the warrants prohibit holders from exercising the warrants for any number of shares which would cause that
holder to hold more than 19.9% of our common stock following the exercise. We expect to seek approval of the September 2009 Offering at our next annual meeting of stockholders.

In
connection with the September 2009 Offering, we entered into a registration rights agreement (the "September 2009 Registration Rights Agreement") with each of the investors. The
September 2009 Registration Rights Agreement provides that we will file a "resale" registration statement covering all of the shares of common stock and the shares of common stock issuable upon
exercise of the warrants, up to the maximum number of shares able to be registered pursuant to applicable SEC regulations, within 15 days of the closing of the September 2009 Offering. We currently
maintain an effective registration statement relating to these shares (File No. 333- 162240). Under the terms of the September 2009 Registration Rights Agreement, we are obligated to maintain the
effectiveness of the "resale" registration statement until all securities therein are sold or are otherwise can be sold pursuant to Rule 144, without any restrictions. A cash penalty at the rate of 2%
per month will be triggered for any filing or effectiveness failures or 1% in the event of suspensions of prospectus delivery or if, at any time after six months following the closing of the September
2009 Offering, we cease to be current in our periodic reports with the SEC. The aggregate penalty accrued with respect to each investor may not exceed 12% of the original purchase price paid by that
investor.

In
December 2009, we entered into an Underwriting Agreement (the "Underwriting Agreement") with Thomas Weisel Partners LLC (the "Underwriter"), pursuant to which we agreed to sell to the
Underwriter 6,400,000 shares of common stock and warrants to purchase up to 4,160,000 shares of Common Stock sold in units, at a price of $1.00 per unit. Each unit consists of one share of common
stock and a warrant (each a "Warrant") to buy 0.65 of a share of common stock. The Warrants will be exercisable for a period of five years, beginning six months after issuance, at an exercise price of
$1.4385 per share. We received approximately $6.4 million in gross proceeds from the offering ("December 2009 Offering"). We paid $0.7 million in underwriting discounts, commissions and offering
expenses and expect to use the remaining net proceeds of $5.7 million for general corporate purposes, which include ongoing research and development activities, funding marketing initiatives and
funding manufacturing expenses associated with the commercial version of our Helicos System. The closing of the transaction occurred on December 21, 2009.

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Issuer Purchases of Equity Securities

During the first quarter of 2010, we purchased 269,046 restricted shares from employees to cover withholding taxes due from the
employees at the time the shares vested. The following table provides information about these purchases of restricted shares for the three months ended March 31, 2010:

Period

Total Number of
Shares Purchased

Average Price
Paid Per Share
($)January 1 to 31, 2010


128,340

$
1.05February 1 to 28, 2010


7,452


1.02March 1 to 31, 2010


133,254


0.79Total


269,046


Upon
the termination of employees during the quarter ended March 31, 2010, 29,931 unvested restricted shares were forfeited. The following table provides information about our forfeited
restricted shares for the three months ended March 31, 2010:

Period

Total Number of
Shares Forfeited

Average Price
Per Share
($)January 1 to 31, 2010


25,070

$
1.10February 1 to 28, 2010


4,861


1.02March 1 to 31, 2010





Total


29,931


Item 3.    Defaults upon Senior Securities

None.

Item 4.    (Removed and Reserved)

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.

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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.

HELICOS BIOSCIENCES CORPORATIONDated: May 17, 2010

By:

/s/ RONALD A. LOWYName:

Ronald A. LowyTitle:

President and Chief Executive Officer
(Principal Executive Officer)Dated: May 17, 2010

By:

/s/ JEFFREY R. MOOREName:

Jeffrey R. MooreTitle:

Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


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EXHIBIT INDEX

Exhibit No.

Description10.1
*
Letter Agreement, dated February 11, 2010, by and between Stephen J. Lombardi and Helicos BioSciences Corporation (Incorporated by reference herein to Exhibit 10.1 to the Company's Form 8-K, filed with the Securities and
Exchange Commission on February 12, 2010).31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certifications pursuant to 18 U.S.C. Section 1350


*Previously
filed.


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