Can deCODE Genetics Escape Icelandic Woes? (DCGN)

If you think things are bad here in the U.S., Iceland is experiencing something far worse.  The country is on the verge of teetering, it is nationalizing its banks, and it is on the verge of hyper inflation.  It is nearly impossible for U.S. investors to invest in anything liquid in the country via closed end funds or by ADR shares.  But there is one stock: deCODE genetics Inc. (NASDAQ: DCGN).

deCODE is based in Reykjavik and the company is a genetics and genomicscompany.  The company mapped the human genome there and Iceland offereda stable pool as the population is small and there has been littleoutside changes in its demographics in the last few hundred years.

It is in pre-clinical studies for many diseases and has a Phase IIstudy for heart attacks and another Phase II for asthma.  It also haspartnerships with Illumina, Hoffmann-La Roche, Merck & Co, andBayer HealthCare AG.

deCODE stock is actually well under $1.00 as its shares closed at $0.48yesterday.  Shares briefly traded through $0.20 on Monday and its52-week high is $4.41.  At the start of 2006 this was a $10.00 stockand is shares were north of $20.00 when it came public earlier thisdecade.

Its market cap based on yesterday’s close is a mere $29.7 million.  Asof its June 30 balance sheet the company also has some $238.1 millionin long-term debt and its total cash, cash equivalents, and long-terminvestments are listed as being just under $45 million.

Unfortunately, this one is still in the very speculative stage and the markets aren’t rewarding such companies right now.

Jon C. Ogg
October 9, 2008