The Icelandic company deCODE Genetics is racing to secure an infusion of cash as its reserves rapidly dwindle. In a conference call with investors this morning, deCODE executives said they had money to last until the end of the year; they intend to merge with another company and sell off assets in order to survive. The company, hit hard by the financial crisis, has pioneered genetic tests for six common diseases, most recently a test for breast cancer, released last month (Science, 17 October, p. 357). DeCODE is also developing drugs that emerged from its efforts to mine genetic and health databases of Icelandic residents.
"We are definitely in a hard place," acknowledged Kári Stefánsson, deCODE's CEO. Stefánsson blames the situation on the collapse of Lehman Brothers, which was managing deCODE's money. He says Lehman placed deCODE's dollars into auction-rate securities, whose interest rate is regularly reset with auctions. The auction market froze up earlier this year, and many auction-rate securities are now not accessible to investors. At the end of September, deCODE had just $11.8 million readily available, compared with double that 3 months earlier. It was also fighting to remain listed on the NASDAQ stock market, after the company's value fell below the minimum $50 million required.
DeCODE has brought new genetic tests to market since last year, but its revenues were up only slightly. The company brought in $12 million between July and September, compared with $10.9 million in the same stretch last year. In addition to a test for breast cancer, deCODE sells tests for type 2 diabetes, atrial fibrillation and stroke, heart attack, prostate cancer, and glaucoma. The tests all target common forms of these diseases by looking for certain common genetic variants. But because no single variant raises risk substantially, those who carry them generally are only slightly more likely than other people to develop the disease. DeCODE is also focused on developing drugs and last month sought permission from the U.S. Food and Drug Administration to begin testing a treatment for Alzheimer's disease and other memory disorders.
"We must obtain further financial resources," said Chief Financial Officer Lance Thibault in the call. But he and Stefánsson declined to name any companies interested in merging with deCODE, though Stefánsson said they're out there and he is optimistic that the company will survive.