Helicos BioSciences Corp. (HLCS)

eboniecat100 (< 20) Submitted: 12/30/07 12:18 PM : Start Price: $10.48 HLCS Score: -45.64

Helicos BioSciences Corporation (HLCS)

A money-losing, high-tech start-up participating in a highly-competitive race for the $1,000 genome – what’s there to like. Actually, quite a bit.

Bullish Argument: The World’s First Single Molecule Genetic Analyzer – for everyone who isn’t a molecular biologist, this is a dramatically faster way of decoding a genome. The Human Genome Project took 7 years and about $30 million, this technology can do a human genome in 10-16 days for about $100,000; with the potential of doing a human genome in 24-hours for $1,000. Helicos states that they will be shipping their first commercial product (hand-assembled) in first quarter 2008 and that they are projecting automated production in first quarter 2009. Each machine also generates a continuing revenue stream from reagents and disposables that are used in each genome analysis. They have experienced management, starting with a CEO/Chairman who has founded two public diagnostic companies. On the technical analysis side, the stock currently seems to be in a range from about $9.50 to $11.00. It’s peak was about $, prior to announcing a delay in delivering their first commercial unit and a downgrade by UBS. It closed Friday 12/28/07 at $10.29 a share.

Bearish Argument: They delayed first commercial delivery once and cancelled a major presentation on their technology at the GME Conference in October 2007 with no explanation. Are they still resolving technical problems? Will they delay commercial delivery again? They have enough cash to continue operations for one year and they state they anticipate needing additional financing (bonds or stock) in Summer 2008.

I regard this as a highly speculative stock, but I will be trying to build a small position around $10 per share. If the tech pans out this could be a big home run, indeed once they finally deliver their first commercial product we could easily seem them retesting their all time highs. But, if they don’t deliver by March or April, it could well be time to run for the exits.

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