Table of Contents



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

FORM 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             to


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, 2009, was 64,655,624 shares.



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Table of Contents

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, 2008 and March 31, 2009

3Consolidated Statements of Operations for the three months ended March 31, 2008 and 2009 and the
period from May 9, 2003 (date of inception) through March 31, 2009

4Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2009 and the
period from May 9, 2003 (date of inception) through March 31, 2009

5Notes to Consolidated Financial Statements

6Item 2.

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

11Item 3.

Quantitative and Qualitative Disclosures about Market Risk

20Item 4.

Controls and Procedures

21Part IIOther InformationItem 1.

Legal Proceedings

22Item 1A.

Risk Factors

22Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

22Item 3.

Defaults upon Senior Securities

24Item 4.

Submission of Matters to a Vote of Security Holders

24Item 5.

Other Information

24Item 6.

Exhibits

24SIGNATURES

25


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, 2008

March 31, 2009ASSETSCurrent assetsCash

$
19,713

$
13,880Accounts receivable


223


31Unbilled government grant receivable


205


239Inventory


6,830


6,698Prepaid expenses and other current assets


235


338Total current assets


27,206


21,186Property and equipment, net


4,016


3,337Restricted cash


225


225Other assets


13


11Total assets

$
31,460

$
24,759LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable

$
789

$
605Accrued expenses and other current liabilities


1,652


1,843Deferred revenue


623


131Current portion of long-term debt


3,323


3,169Total current liabilities


6,387


5,748Long-term debt, net of current portion


4,535


3,959Other long-term liabilities


35


6Total liabilities


10,957


9,713Commitments and contingenciesStockholders' equityPreferred stock: par value $0.001 per share; 5,000,000 shares authorized
at December 31, 2008 and March 31, 2009 respectively; no shares issued
and outstanding at December 31, 2008 and March 31, 2009





Common stock: par value $0.001 per share; 120,000,000 shares authorized
at December 31, 2008 and March 31, 2009; 63,808,282 and 64,553,002
shares issued and outstanding at December 31, 2008 and March 31, 2009, respectively


64


65Additional paid-in capital


160,144


161,214Deficit accumulated during the development stage


(139,705
)

(146,233
)Total stockholders' equity


20,503


15,046Total liabilities and stockholders' equity

$
31,460

$
24,759


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, 20092008

2009Product revenue

$


$
963

$
999Grant revenue


113


239


1,752Total revenue


113


1,202


2,751Costs and expensesCost of product revenue





521


531Research and development


5,705


4,093


80,453Selling, general and administrative


6,184


2,851


50,806Total costs and expenses


11,889


7,465


131,790Operating loss


(11,776
)

(6,263
)

(129,039
)Interest income


338


40


4,099Interest expense


(360
)

(305
)

(3,153
)Net loss


(11,798
)

(6,528
)

(128,093
)Beneficial conversion feature related to Series B redeemable convertible preferred stock








(18,140
)Net loss attributable to common stockholders

$
(11,798
)
$
(6,528
)
$
(146,233
)Net loss attributable to common stockholders per sharebasic and diluted

$
(0.57
)
$
(0.10
)Weighted average number of common shares used in computationbasic and diluted


20,688,578


63,498,663


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

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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, 20092008

2009Cash flows from operating activities:Net loss

$
(11,798
)
$
(6,528
)
$
(128,093
)Adjustments to reconcile net loss to cash used in operating activities:Depreciation and amortization


528


687


6,418Amortization of lease incentive


(37
)

(37
)

(402
)Common stock issued for licenses








147Stock-based compensation expense


1,233


1,062


10,491Noncash interest expense related to debt and warrants


66


89


641Provisions on inventory








1,577Changes in operating assets and liabilities:Accounts receivable





192


(31
)Unbilled government grant receivable


4


(34
)

(239
)Inventory


(4,054
)

132


(8,530
)Prepaid expenses and other current assets


(21
)

(103
)

(338
)Deferred revenue





(492
)

131Accounts payable


332


(184
)

605Accrued expenses and other current liabilities


819


230


2,059Other long-term liabilities


(83
)

(25
)

167Net cash used in operating activities


(13,011
)

(5,011
)

(115,397
)Cash flows from investing activities:Purchases of property and equipment


(1,489
)

(8
)

(9,500
)(Increase) decrease in restricted cash








(225
)Purchases of short-term investments








(34,709
)Maturities of short-term investments








34,709Net cash used in investing activities


(1,489
)

(8
)

(9,725
)Cash flows from financing activities:Proceeds from debt issuances








22,256Payments on debt


(237
)

(817
)

(15,087
)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








17,811Proceeds from issuance of restricted common stock





1


340Payments to employees for cancelled restricted common stock


(41
)




(104
)Proceeds from exercise of stock options


10


2


52Net cash (used in) provided by financing activities


(268
)

(814
)

139,002Net (decrease) increase in cash and cash equivalents


(14,768
)

(5,833
)

13,880Cash and cash equivalents, beginning of period


52,683


19,713


Cash and cash equivalents, end of period

$
37,915

$
13,880

$
13,880Supplemental disclosure of cash flow informationCash paid during the year for interest

$
212

$
294

$
2,075Transfers from inventory to property and equipment

$


$


$
255Noncash financing activities:Issuance of redeemable convertible preferred stock warrants

$


$


$
95Issuance of common stock warrants

$


$


$
6,021Conversion of bridge loan to equity

$


$


$
350Beneficial conversion feature related to Series B redeemable convertible preferred stock

$


$


$
18,140Conversion of preferred stock to common stock

$


$


$
66,755Reclassification of preferred stock warrants to common stock warrants

$


$


$
162


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

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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, 2009, as defined by the Financial Accounting Standards Board ("FASB") in Statement of Financial Accounting Standards
("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." The Company's fiscal year ends on December 31. The Company operates as one reportable segment.

Since
inception, the Company has incurred losses and has not generated positive cash flows from operations. The Company expects such losses to continue for at least two years as it
continues to develop and commercialize its products. As of March 31, 2009, the Company had $13.9 million in cash. The Company believes that its existing cash, receipts from customers on
sales of products, and interest income it expects to earn on invested cash balances will be sufficient to fund its operations into the first quarter of 2010. At some point prior to the end of the
first quarter of 2010, the Company will need additional financing to support its activities. The Company will seek to fund its operations through public or private equity or debt financings or other
sources, such as collaborations and licensing arrangements or partnerships. The worldwide financial markets are continuing to experience turmoil through the first quarter of 2009. These events have
materially and adversely impacted the availability of financing to a wide variety of companies, particularly early-stage companies such as Helicos. Adequate additional funding may not be available to
the Company on acceptable terms, or at all. The Company's failure to raise capital as and when needed would have a negative impact on its financial condition and its ability to pursue its business
strategies. In December 2008, the Company implemented a 30% reduction in its workforce and took other measures to reduce its future operating costs. If the Company's current operating plan including
forecasted sales for the remainder of 2009 does not materialize or if adequate additional funds are not available when required, the Company will be required to further delay, reduce or eliminate
research and development programs, reduce or eliminate commercialization efforts, obtain funds through arrangements with collaborators or others on terms unfavorable to the Company, or pursue merger
or divestiture strategies.

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

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

6

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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)

It
is management's opinion that the accompanying interim consolidated financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair
statement of the results for the interim periods. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended
December 31, 2008 included in the Company's Form 10-K.

2. Summary of Significant Accounting Policies

In the Company's Form 10-K for the fiscal year ended December 31, 2008, our significant accounting policies were identified.

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 Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements," or SAB No. 104 and Emerging Issues Task
Force No. 00-21, "Accounting for Multiple Element Revenue Arrangements." SAB No. 104 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 collectibility is reasonably assured. EITF No. 00-21 provides 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.

In
instances where 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.

During
the quarter ended March 31, 2009, the Company obtained customer acceptance on an instrument system that was previously shipped to a customer in 2008 and, accordingly,
recognized revenue of $829,000 in the quarter ended March 31, 2009. In addition, product revenue includes $134,000 of revenue recognized from the sale of proprietary reagents to customers in
the quarter ended March 31, 2009.

Recent Accounting Pronouncements

In November 2007, the EITF issued EITF Issue 07-01 "Accounting for Collaborative Arrangements" ("EITF
No. 07-01"). EITF No. 07-01 requires collaborators to present the results of activities for which they act as the principal on a gross basis and report any
payments received from

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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)

(made
to) other collaborators based on other applicable GAAP or, in the absence of other applicable GAAP, based on analogy to authoritative accounting literature or a reasonable, rational, and
consistently applied accounting policy election. Further, EITF No. 07-01 clarified that the determination of whether transactions within a collaborative arrangement are part of a
vendor-customer (or analogous) relationship subject to Issue 01-9, "Accounting for
Consideration Given by a Vendor to a Customer". EITF No. 07-01 is effective for fiscal years beginning after December 15, 2008, and interim periods within those years. The
adoption of EITF No. 07-01 did not have a material impact on the Company's financial position, results of operations or cash flows.

In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51". This statement
establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years
beginning on or after December 15, 2008. Adoption of this statement did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.
However, this statement may affect the accounting for non-controlling (or minority) interests in the future.

In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" ("SFAS 141(R)"). This statement requires an acquiring company to measure all assets acquired and
liabilities assumed, including contingent considerations and all contractual contingencies, at fair value as of the acquisition date. In addition, an acquiring company is required to capitalize
in-process research and development and either amortize it over the life of the product, or write it off if the project is abandoned or impaired. The statement is effective for
transactions occurring on or after January 1, 2009. The adoption of SFAS 141(R) did not have a material impact on the Company's consolidated financial statements during the three months
ended March 31, 2009. However, this statement may affect the accounting for any acquisition in the future.

Effective
January 1, 2008, the Company implemented Statement of Financial Accounting Standards No. 157, "Fair Value Measurement" ("SFAS No. 157") for its financial
assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and
reported at fair value at least annually. In accordance with the provisions of FSP No. FAS 157-2, "Effective Date of FASB Statement No. 157", the Company has elected to defer
implementation of SFAS No. 157 as it relates to the Company's non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the
financial statements on a nonrecurring basis until January 1, 2009. The adoption of SFAS No. 157 to the Company's financial and non-financial assets and liabilities and
non-financial assets and liabilities that are re-measured and reported at fair value at least annually did not have an impact on the Company's financial results in any period.

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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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, 2008

March 31, 2009Raw materials

$
1,277

$
1,698Work in process


3,238


1,812Finished goods


2,315


3,188Total inventory

$
6,830

$
6,698


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,
2008 and 2009, 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 31,2008

2009Stock options


2,340,633


3,916,068Unvested restricted stock


214,906


961,836Warrants





25,762,3332,555,539


30,640,237


5. Stock-Based Compensation

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

Three months ended
March 31,2008

2009($ in thousands)Selling, general and administrative

$
921

$
681Research and development


312


381Total stock-based compensation expense

$
1,233

$
1,062


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HELICOS BIOSCIENCES CORPORATION (a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

5. Stock-Based Compensation (Continued)

During
the three months ended March 31, 2008, the Company granted 148,333 stock options at an exercise price of $12.36 per share and 50,600 stock options at an exercise price of
$6.15 per share. In connection with the Company's 2008 Corporate Retention Program, in the first quarter of 2009, the Company granted stock options and restricted stock to all employees. 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.

For
the three months ended March 31, 2008 and 2009, 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 31,2008

2009Expected volatility

65.7%

63.0%Expected option life

6 years

6 yearsWeighted average risk-free interest rate

2.7%

1.7%Expected annual dividend yield

none

none


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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

We are a life sciences company focused on innovative genetic analysis technologies for the research, drug discovery and clinical
diagnostics markets. Our products are based on our proprietary True Single Molecule Sequencing (tSMS) technology which enables rapid analysis of large quantities of genetic material by
directly sequencing single molecules of DNA or single DNA copies of RNA. This approach differs from current methods of sequencing DNA 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.

We
believe that our tSMS technology will represent the first comprehensive and universal solution for single molecule genetic analysis and that its adoption can expand the market for
genetic analysis while substantially lowering the cost of individual analyses. Our goal is to enable production-level genetic analysis on an unprecedented scale by providing scientists and clinicians
with the ability to compare genes and genomes from thousands of individuals. If our tSMS-based products are successful, the information generated from using these products may lead to
improved drug therapies, personalized medical treatments and more accurate diagnostics for cancer and other diseases.

Our
Helicos Genetic Analysis Platform is designed to obtain sequencing information by repetitively performing a cycle of biochemical reactions on individual DNA 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
imaging capability of the HeliScope Sequencer is designed to accommodate performance beyond what is needed to meet the platform's initial goals, providing the flexibility to
introduce substantial throughput and cost improvements in the future without major changes to or replacement of the instrument. We believe that the Helicos Genetic Analysis Platform will ultimately
enable the
automated, parallel sequencing of billions of individual DNA molecules at orders of magnitude of greater speed and lower cost than other sequencing systems.

We
shipped our first two Helicos Systems in 2008, one of which was ultimately returned. During the first quarter of 2009, we placed a third Helicos System at the Broad Institute of MIT
and Harvard,

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at
no cost. Also in the first quarter of 2009, we installed a fourth Helicos System at an institution for scientific and commercial evaluation. We believe that we have incurred the substantial
majority of the costs related to the development of the initial version of our Helicos System. In anticipation of future orders, shipments and placements, we are assembling and are testing multiple
production units of our Helicos System. These future shipments 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. We continue to secure orders for the Helicos System and recognized revenue from one of our initial 2008
instrument shipments during the three months ended March 31, 2009. 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, we cannot predict the percentage of our revenues that we will derive from sales of proprietary reagents and disposable supplies.
However, over time we would expect the sales of the reagents and disposable supplies to increase as our installed base of instruments grows and usage of these instruments increases.

In
December 2008, we raised approximately $17.8 million, after deducting placement agent fees and estimated offering expenses, through the issuance of 42,753,869 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.
Our cash burn during the first quarter of 2009 was $5.8 million. As of March 31, 2009, we had $13.9 million in cash. We believe that our existing cash, receipts from customers on
sales of products, and interest income we expect to earn on invested cash balances will be sufficient to fund our operations into the first quarter of 2010. We expect to continue to incur operating
losses for at least the next two years, and will need additional financing to support our activities. We will seek to fund our operations through public or private equity or debt financings or other
sources, such as collaborations and licensing arrangements or partnerships. The worldwide financial markets are continuing to experience turmoil through the first quarter of 2009. These events have
materially and adversely impacted the availability of financing to a wide variety of companies, particularly early-stage companies such as Helicos. We do not know whether the additional capital which
we will require will be available when and as needed, on favorable terms if at all, or that our actual cash requirements will not be greater than anticipated. In addition, if we raise additional funds
through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights,
preferences or privileges senior to those of existing stockholders. If we obtain additional debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of
principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on our operations. If we raise additional funds through collaborations
and licensing arrangements, we might be required to relinquish significant rights to our technologies or products, or grant licenses on terms that are not favorable to us. Our failure to raise capital
as and when needed
would have a negative impact on our financial condition and our ability to pursue business strategies. In December 2008, we implemented a 30% reduction in our workforce and took other measures to
reduce our future operating costs. If our current operating plan including forecasted sales for the remainder of 2009 does not materialize or if adequate additional funds are not available to us when
required, we will be required to further delay, reduce or eliminate research and development programs, reduce or eliminate commercialization efforts, obtain funds through arrangements with
collaborators or others on terms unfavorable to us, or pursue merger or divestiture strategies.

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 March 31,
2009, as

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defined
by the Financial Accounting Standards Board ("FASB") in Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." Our
fiscal year ends on December 31, and we operate as one reportable segment. Our corporate offices are located at One Kendall Square, Building 700, Cambridge, Massachusetts 02139.

Financial Overview

Grant revenue

In September 2006, we were awarded a grant from the National Human Genome Research Institute, a branch of the National Institutes of
Health, pursuant to which we are eligible to receive reimbursement of our research expenses of up to $2.0 million through August 2009. We recognized revenue during the three months ended
March 31, 2008 and 2009 of $113,000 and $239,000, respectively, in connection with this award. We will continue to recognize revenue under this grant as the related expenses are incurred.

Product revenue

Product revenue for the three months ended March 31, 2009 consists of $829,000 of revenue recognized from the sale of an
instrument that was shipped in 2008, as well as $134,000 of revenue recognized from the sale of proprietary reagents to customers.

Cost of product revenue

Cost of product revenue for the three months ended March 31, 2009 consists of costs associated with the sale of instruments and
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, 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 and the first quarter of 2009 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, 2008 and 2009 were $5.7 million and $4.1 million, respectively. From 2008 to 2009, expenses
decreased as we focused more of our efforts on manufacturing activities and spent less time on research and development activities.

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.

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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, 2008 and 2009 were $6.2 million and $2.9 million, respectively. The decrease is due
to the reduction in force implemented in December 2008, as well as a significant reduction in costs associated with ERP system enhancements, public company expenses, investor relations programs, and
outside consultant costs related to Sarbanes-Oxley compliance.

Restructuring

In December 2008, we implemented a work force reduction plan that resulted in the reduction of approximately 30% of our workforce (the
"Reduction in Force Plan"). The Reduction in Force Plan was designed to reduce our operating costs and direct our resources to continue advancing towards our near term goals. Employees directly
affected by the Reduction in Force Plan were provided with severance payments and outplacement assistance.

We
incurred restructuring charges relating to one-time termination benefits of approximately $433,000 in the fourth quarter of 2008. These charges represent employee
severance and termination costs which were paid out during the fourth quarter of 2008 and the first quarter of 2009.

We
estimate that this restructuring will result in annual cost savings of approximately $3.8 million, including salaries and benefits.

A
summary of restructuring activity at March 31, 2009 is as follows:

Balance
December 31,
2008

Payments/
Settlements

Balance
March 31,
2009($ in thousands)Employee severance, benefits and related costs:Research and development

$
69

$
(69
)
$
Selling, general and administrative


64


(64
)

Total

$
133

$
(133
)
$



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Overview of Results of Operations

Three months ended March 31, 2008 compared to three months ended March 31, 2009

Grant revenue.We recognized $113,000 and $239,000 of grant revenue during the three months ended March 31, 2008 and 2009,
respectively. Grant
revenue recognized during the three months ended March 31, 2008 and 2009 related to the reimbursement of expenses in connection with our government research grant.

Product revenue.We recognized $0 and $963,000 of product revenue during the three months ended March 31, 2008 and 2009,
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.

Cost of product revenue.We recorded $0 and $521,000 as cost of product revenue during the three months ended March 31, 2008 and
2009,
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, 2008 and 2009 were as
follows:

Three months ended
March 31,2008

2009

Change($ in thousands)Research and development

$
5,705

$
4,093

$
(1,612
)

-28
%


Research
and development expenses decreased by $1.6 million from the three months ended March 31, 2008 to the three months ended March 31, 2009. The majority of the
decrease was due to a $1.2 million decrease in our salary and benefit expenses. This was a result of cost savings that were realized from the Reduction in Force Plan implemented in December
2008. In addition, there was an $819,000 decrease in product development costs, which included lab expenses, materials, supplies, temporary help and prototype expenses. In addition to our overall
reduction in operating costs, our product development costs decreased as we moved toward manufacturing and production activities. The overall decrease was offset by a $530,000 charge for labor and
overhead costs associated with the under-utilization of the manufacturing facility. We expect our research and development expenses to stay consistent throughout the remainder of 2009. However, as we
gain commercial traction we will need to invest in future versions of our system.

Selling, general and administrative expenses.Selling, general and administrative expenses during the three months ended March 31,
2008 and
2009 were as follows:

Three months ended
March 31,2008

2009

Change($ in thousands)Selling, general and administrative

$
6,184

$
2,851

$
(3,333
)

-54
%


Selling,
general and administrative expenses decreased by $3.3 million from the three months ended March 31, 2008 to the three months ended March 31, 2009. The
largest contributor to the decrease is a $1.1 million decrease in our salary and benefit expenses and a $256,000 decrease in stock compensation expense. This was a result of cost savings that
were realized from the Reduction in Force Plan implemented in December 2008. In addition, our expenses related to public company activities decreased by $650,000. Such activities include investor
relations programs, business insurance, and outside consulting fees associated with Sarbanes-Oxley compliance. We also spent $307,000 less on

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marketing
programs and $372,000 less on costs associated with our outside legal expenses. We expect our selling, general and administrative expenses to stay consistent throughout the remainder of
2009. However, as we gain commercial traction we will need to expand our sales, marketing, and administrative functions.

Interest income.Interest income for the three months ended March 31, 2008 and 2009 was as follows:

Three months ended
March 31,2008

2009

Change($ in thousands)Interest income

$
338

$
40

$
(298
)

-88
%


The
decrease in interest income from the three months ended March 31, 2008 compared to the three months ended March 31, 2009 was due primarily to decreased interest rates
during the three months ended March 31, 2009 compared to the three months ended March 31, 2008. In addition, interest income from the three months ended March 31, 2009 was lower
than interest income from the same period in the prior year as a result of higher cash balances during the three months ended March 31, 2008, in connection with the remaining proceeds from the
initial public offering ("IPO") effected in May 2007.

Interest expense.Interest expense for the three months ended March 31, 2008 and 2009 was as follows:

Three months ended
March 31,2008

2009

Change($ in thousands)Interest expense

$
360

$
305

$
(55
)

-15
%


The
decrease in interest expense from the three months ended March 31, 2008 compared to the three months ended March 31, 2009 is attributable to the year over year decrease
in our long-term debt obligations.

Liquidity and Capital Resources

We have incurred losses since our inception in May 2003 and, as of March 31, 2009 we had an accumulated deficit of
$146.2 million. We have financed our operations to date principally through the sale of preferred stock and common stock, including our IPO and a private placement of common stock and warrants,
debt financing and interest earned on investments. Through March 31, 2009, we have received net proceeds of $66.8 million from the issuance of preferred stock, $65.3 million
through the issuance of common stock, including our IPO and a private placement of common stock and warrants, $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, 2008 was $20.8 million,
consisting of $27.2 million in current assets and $6.4 million in current liabilities. Working capital as of March 31, 2009 was $15.4 million, consisting of
$21.2 million in current assets and $5.7 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.

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The following table summarizes our net decrease in cash and cash equivalents for the three months ended March 31, 2008 and 2009:

Three months ended
March 31,2008

2009($ in thousands)Net cash used in:Operating activities

$
(13,011
)
$
(5,011
)Investing activities


(1,489
)

(8
)Financing activities


(268
)

(814
)Net decrease in cash and cash equivalents

$
(14,768
)
$
(5,833
)


Net
cash used in operating activities was $13.0 million for the three months ended March 31, 2008 compared to $5.0 million for the three months ended
March 31, 2009. The $8.0 million decrease was primarily due to a decrease in the net loss of $5.3 million and a decrease in inventory purchases of $4.2 million, partially
offset by a decrease in the change in accrued expenses and other current liabilities of $589,000, a decrease in the change in accounts payable of $516,000, and a decrease in non-cash
stock-based compensation expense of $171,000.

Net
cash used in investing activities was $1.5 million for the three months ended March 31, 2008 compared to $8,000 for the three months ended March 31, 2009. The
$1.5 million decrease was due to a $1.5 million decrease in the cash used for purchases of property and equipment.

Net
cash used in financing activities was $268,000 for the three months ended March 31, 2008 compared to $814,000 for the three months ended March 31, 2009. The $546,000
increase was primarily due to a $580,000 increase in debt payments, partially offset by a decrease in payments to employees for cancelled restricted stock of $41,000.

Operating capital and capital expenditure requirements

We shipped our first two Helicos Genetic Analysis Systems in 2008, one of which was ultimately returned. During the first
quarter of 2009, we placed a third Helicos System at the Broad Institute of MIT and Harvard, at no cost. Also in the first quarter of 2009, we installed a fourth Helicos System at an institution for
scientific and commercial evaluation. To date, we have not achieved profitability. We anticipate that we will continue to incur substantial net losses for at least two years as we continue our efforts
in commercializing the Helicos System and develop the corporate infrastructure required to manufacture and sell our products. We continue to secure orders for the Helicos System, and we expect to
generate additional instrument revenue during 2009.

As
of March 31, 2009, we had $13.9 million in cash. We believe that our existing cash, receipts from customers on sales of products, and interest income we expect to earn
on invested cash balances will be sufficient to fund our operations into the first quarter of 2010. At some point prior to the end of the first quarter of 2010, we will need additional financing to
support our activities. We will seek to fund our operations through public or private equity or debt financings or other sources, such as collaborations and licensing arrangements or partnerships. If
we raise additional funds through the issuance of preferred or debt securities, these securities would have rights senior to those of our common stock and could contain covenants that would restrict
our operations. We may require additional capital beyond our currently anticipated amounts. Any such required additional capital may not be available on reasonable terms, if at all, given the current
economic turmoil and restricted access to capital markets. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue business
strategies. In December 2008, we implemented a 30% reduction in our workforce and took other measures to reduce our future

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operating
costs. If our current operating plan including forecasted sales for the remainder of 2009 does not materialize or if adequate additional funds are not available to us when required, we will
be required to further delay, reduce or eliminate research and development programs, reduce or eliminate commercialization efforts, obtain funds through arrangements with collaborators or others on
terms unfavorable to us, or pursue merger or divestiture strategies.

Our
forecast of the period of time through which our financial resources will be adequate to support our operations, the costs to complete development of products and the cost to
commercialize our future products are forward-looking statements and involve risks and uncertainties, and actual results could vary materially and negatively as a result of a number of factors,
including the factors discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2008. We have based these estimates
on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

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



Working
capital as of December 31, 2008 was $20.8 million, consisting of $27.2 million in current assets and $6.4 million in current liabilities. Working
capital as of March 31, 2009 was $15.4 million, consisting of $21.2 million in current assets and $5.7 million in current liabilities.

Contractual obligations

A summary of our contractual obligations is included in our Form 10-K for the fiscal year ended December 31,
2008.

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.

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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 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. As of March 31, 2009, advances on the credit facility were
$2.5 million at a weighted-average interest rate of 10.1%.

Loan and security agreement

In December 2007, we entered into a loan and security agreement with two lenders including GE Capital, 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. 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 personal property, including the pledge of the stock of our wholly-owned subsidiary,
and proceeds of any intellectual property, but not by our intellectual property. 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, 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. 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

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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 is no
longer classified as restricted cash. Such obligations continue to be secured under various collateral documents by interests in substantially all of our personal property, including the pledge of the
stock of our wholly-owned subsidiary, and proceeds of any intellectual property, but not by our intellectual property.

As
of December 31, 2008 and March 31, 2009, the outstanding balance on the loan agreement was $7.1 million and $6.4 million, respectively.

Private Placement in Public Equity Offering

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 (collectively, the "Shares") and (ii) one warrant (collectively, the "Warrants") 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
"Offering"). The Warrants have a five year term and became exercisable immediately following the closing of the transaction. The closing of the transaction occurred on December 23, 2008. In
connection with the 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 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 $4,449,397 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.

Off-balance sheet arrangements

During the three months ended March 31, 2008 and 2009, 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, 2008, 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 net operating losses and tax credit carryforwards. We reviewed our policies and determined that those policies remain our critical accounting policies for the three months ended
March 31, 2009. We did not make any changes in those policies during the three months ended March 31, 2009.

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

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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, 2009. 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

Not applicable.

Item 1A.    Risk Factors

The Company cautions investors that its future performance and results and, therefore, any forward-looking statements are subject to
risks and uncertainties. Various factors may cause the Company's future results to differ materially from those projected in any forward-looking statements. These factors were disclosed, but are not
limited to, the items in the Company's most recent Annual Report on Form 10-K, Part I, Item 1A. There have been no material changes to the risk factors previously
disclosed in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

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

Use of Proceeds from Public Offering of Common Stock

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

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

Of
the $52.2 million of gross proceeds we received in our initial public offering, including the exercise of the over-allotment options, through March 31, 2009,
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 $17.7 million on pre-production research and development expenses and $11.3 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 were invested in interest bearing bank accounts. Through the first quarter of 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 HeliScope system. Our management had broad discretion as to the use of the net
proceeds.

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Use of Proceeds from Private Placement in Public Equity Offering

On December 19, 2008, we announced that we had entered into a securities purchase agreement with certain investors pursuant to
which it has agreed to sell a total of 42,753,869 units (the "Units"), each Unit consisting of (i) one share of common stock (collectively, the "Shares") and (ii) one warrant
(collectively, the "Warrants") 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 "Offering") for gross proceeds of $18.6 million. We paid $0.8 million in placement agent fees and offering expenses and expect to use the
remaining net proceeds of $17.8 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 Shares and Warrants were immediately separable and were issued separately. The Warrants have a five year term and became
exercisable immediately following the closing of the transaction. The closing of the transaction occurred on December 23, 2008.

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 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 Offering at our next annual meeting of stockholders.

In
connection with the Offering, we have entered into a registration rights agreement (the "Registration Rights Agreement") with each of the investors. The Registration Rights Agreement
provides that we file a "resale" registration statement (the "Registration Statement") covering all of the Shares and the shares issuable upon exercise of the Warrants (the "Warrant Shares"),
up to the maximum number of shares able to be registered pursuant to applicable Securities and Exchange Commission ("SEC") regulations, within 30 days of the closing of the Offering. We filed
the Registration Statement with the SEC on January 22, 2009 (File No. 333-156885), which was declared effective by the SEC on April 28, 2009. Under the terms of the
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 if, at any time after six months following the
closing of the Offering, we cease to be current in 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.

Issuer Purchases of Equity Securities

During the first quarter of 2009, we purchased 480 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, 2009:

Period

Total Number of
Shares Purchased

Average Price
Paid Per Share
($)January 1 to 31, 2009


480

$
0.60February 1 to 28, 2009





March 1 to 31, 2009





Total


480


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Upon
the termination of employees during the quarter ended March 31, 2009, 6,250 unvested restricted shares were forfeited. The following table provides information about our
forfeited restricted shares for the three months ended March 31, 2009:

Period

Total Number of
Shares Forfeited

Average Price
Per Share
($)January 1 to 31, 2009





February 1 to 28, 2009


6,250


0.58March 1 to 31, 2009





Total


6,250


Item 3.    Defaults upon Senior Securities

Not applicable.

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

Not applicable.

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.

Dated: May 14, 2009

/s/ RONALD A. LOWY Ronald A. Lowy Chief Executive Officer
(Principal Executive Officer)Dated: May 14, 2009

/s/ STEPHEN P. HALL Stephen P. Hall Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)


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EXHIBIT INDEX

10.1
+
Form of Unrestricted Stock Award Agreement under the 2007 Stock Option and Incentive Plan31.1

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


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