Icelandic gene pioneer Decode files for bankruptcy

By Ben Hirschler

WASHINGTON (Reuters) - Iceland's Decode Genetics Inc, a pioneer in genetic research, has filed for bankruptcy protection, weighed down by debts after 13 years of failing to make a profit.

Shares in the group plunged around 83 percent on Tuesday as the Reykjavik-based company warned any recovery for shareholders was highly unlikely.

Decode blazed a trail in personal genomics by trawling Iceland's unique genetic heritage, which has changed little since the Vikings arrived more than 1,000 years ago, to work out the links between genes and common diseases.

Its scientists have published prolifically on genetic mutations linked to schizophrenia, cancer and other diseases. But its drug development programs stalled and the company's DNA tests for diseases have not brought in much cash.

A final blow came last year after company funds managed by Lehman Brothers were invested in U.S. auction-rate securities, the market for which seized up during the credit crisis.

Decode's fall is the second setback this year for the once high-flying Icelandic drugs sector. It follow the collapse in April of attempts to sell Iceland's Actavis, one of the world's biggest generic drugmakers, adding to the problems facing an economy already slammed by the global financial crisis.

Despite the bankruptcy filing, Decode Chief Executive Kari Stefansson -- a tall, bearded figure whose own Viking ancestry is clear -- insists the science behind his company will live on.

Commercially, though, he admits the project may have been premature.