Headquartered in Reykjavik, Iceland, the company was founded in August 1996 by Dr. Kari Stefansson. After the human genome sequence was completed in 2003, deCODE attempted to capitalize on Iceland’s excellent medical records and genealogical information available on its close-knit, rather isolated population, to determine the genetic factors that cause several major diseases. Media releases on the discoveries and developments of deCODE products painted a picture of a very promising and strong player in the biomedical industry, and a sure bet for those choosing biotech stocks. However, these releases may have been deceptive, since, on November 17, 2009, the company filed for Chapter 11 bankruptcy protection. A sign of promise, company stock had risen in value to over $30 by June 2000, only to drop to below $2 by 2008.
According to The New York Times’ Nicholas Wade, the demise of the company was not necessarily based on poor business management as much as it was a case of over simplifying the causes of disease. Experts now believe that the genetic causes of disease are more complex than deCODE’s founders realized and "the mutations that deCODE and others detected in each disease turned out to account for a small fraction of the overall incidence…responsible for too few cases to support the development of widely used diagnostic tests or blockbuster drugs".
On January 5, 2010, the company received notice from Nasdaq that it’s common stock was suspended and will be delisted. The bankruptcy affects the parent company based in the United States, which will likely be liquidated, according to deCODE’s website. It is expected that the Icelandic subsidiary, Islensk Erfdagreining (IE) will be sold and will continue to investigate genetic causes of diseases, hopefully with better success and a better understanding of how polymorphisms can play a role in disease.
Source: Wade, N. A genetics company fails, it's research too complex. The New York Times, November 17, 2009 (online).