A reader pointed me to this press release on the dire financial state of Icelandic biotech deCODE Genetics.
The slow financial train-wreck that is deCODE has been sliding off the rails for years (see stock price chart below), but things look set to reach their final resolution one way or another within the next few months: the company currently has $3.8 million in cash reserves, but is bleeding out $12 million per quarter, and "believes it has sufficient resources to fund operations only into the latter half of the third quarter".
Where to from here? In the press release, deCODE CEO Kari Stefansson makes it sound as though the major focus will be on deCODE's consumer genomics arm, deCODEme, and other ventures into genome-based diagnostics and risk prediction:
As the focus of our healthcare system shifts toward prevention, measuring and controlling individual risk of disease will become a central part of everyday medicine. DNA-based risk assessment tests and personal genome scans such as those we have developed offer a novel and personalized means of more accurately gauging risk. The goal of our strategic review is to recast deCODE as a diagnostics company positioned to lead in this growing new market. Over the past quarter we have made our gene discovery engine more efficient, and shown that it continues to be second to none in delivering the content required to create effective genetic risk tests for common diseases.
It's hard to believe that the still-embryonic personal genomics market will be able to provide the cash-flow required to turn this company around, especially given that the consumer genome scan field is now effectively dominated by 23andMe.
Realistically, deCODE needs a buyer; but in the current economic climate that's hard for anyone, and if you add on top of that the regulatory complexity of purchasing a company that owns the health and genetic data of a sizeable fraction of the population of Iceland, you've got real problems.
Still, I hope a solution can be found, and quickly - as I've said before, the loss of deCODE would be a genuine and substantial blow to the field of complex trait genetics.
Below, the share price for DCGN since its launch in 2000. The company has never made a quarterly profit since its launch, and has haemorrhaged away more than $600 million over that period; on the plus side, it's generated an insanely large number of Nature Genetics publications.
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This will maybe show the stupidity (open to debate) to mix great science and the need to be financially sustainable. Decode has proved to be one of the great realisation of human genetics of the last ten years. Why not selling/closing all the business sections (that were probably bad business ideas since the beginning) and just recovering this amazing research department thanks to European research funds? Is such 'easy solution' technically impossible? Thanks for enlightening me.
Although I agree that the loss of deCODE "would be a genuine and substantial blow to the field of complex trait genetics," I think there's an argument to be made that it would actually be good for the DTC genomics industry. Winnowing the field would provide remaining companies (23andMe, Navigenics, Pathway, Knome, Illumina, etc.) with a greater shot at profitability which is, ultimately, what needs to be demonstrated to continue to entice further investment and development in the field.
Hi GS,
I think having deCODE's research arm purchased by European funding organisations (yes, I'm looking at you, Wellcome Trust) would be a fantastic outcome - but I'm still unsure how the Icelanders would feel about the prospect of selling their sensitive genetic and health data to outsiders. The implications in terms of international law are also completely obscure to me, but I've just received an email from someone who may be able to clear that up for us - more details to come soon, hopefully. :-)
I like the idea of the European funding, but there may be one little problem, is Iceland in Europe? I believe its not, now that their economy has crashed they are considering it, as always when things are good you stay on your own, when things are bad join the eu...). Nevertheless, I think their publication record is very impressive; it would be a shame to loose all this knowledge.
DeCODE should die. Any mourning of it is misguided. DeCODE generated no money - so it is no more a reasonable business than factory making typewriters. Of course, lots of endeavors are generally worthy of funding and using up money without generating outright profit for a narrow group of investors. This is collectively known as doing science. The question is then, does DeCODE do better/cheaper science? I counted 122 papers over the listed 11 years. True, there are many Nature Genetics ones but majority are pretty mundane. So as a scientific outlet DeCODE needs to be compared to labs receiving comparable funding. You quote an average ~$60M/year. By academic standards, that insane. There are hundreds and possibly approaching a thousand of labs around the world living off budgets well below $6M/year with total publication output ~10/year and comparable or higher citation impact!
Conclusion: as a knowledge gaining enterprise, DeCODE does not make sense either. It's a waste every way you look at it.
Hey Alex,
Iceland isn't in the EU, but it's nonetheless in Europe's best interests to maintain the research resources that deCODE has collated. And as you say, it's likely that Iceland will join the EU now that its economy is down the toilet.
DK,
Well argued - but deCODE is valuable not simply for the research it has generated to date, but for the resources and infrastructure it has developed and the research cohorts it has unique access to.
Averaging publications per year over the company's lifetime seems a bit harsh, given that the company wasn't initially focused on publication and it obviously takes a long time to get an institute of this scale and regulatory complexity up and running.
I don't disagree that deCODE could have churned out more bang for its buck - but to throw the resources it has accumulated away because it failed as a business would be a tremendous waste. The company's current management clearly needs to go, but the company itself (or a private research institute based on it, as GS suggests) should survive.
The company's current management clearly needs to go, but the company itself (or a private research institute based on it, as GS suggests) should survive.
I completely agree. Turn it into a research institute and let it beg for money like everyone else. Of course, even under these circumstances DeCODE will still have a much better deal than most: Iceland is special and DeCODE is special in Iceland.