Genetics blogger Daniel MacArthur points out that personal genetics pioneer deCODEme is in serious financial straits. The company is going to run out of money within the next quarter or two unless it can complete some sort of strategic alliance, investment, or sale of assets that will keep it afloat. Even if kept afloat, the company still must overcome the significant hurdle of turning a business around that has lost a whopping $176.4 million during the last two years.
From the company earnings release:
At December 31, 2008, the company had liquid funds available for operating activities, comprised of cash and cash equivalents together with current investments, of $3.7 million, compared to $64.2 million at December 31, 2007. In early 2009 the company sold its auction rate securities (ARS) for $11.0 million in cash which the company has been using to finance its operating activities. The company believes it has sufficient resources to sustain operations only into the second quarter of this year.
DeCODE, along with its more successful and savvy competitor 23andme, have been at the forefront of a burgeoning industry that is bringing personal genetics to the masses. These two companies will analyze thousands of portions of your DNA (from a swab of your mouth for example), revealing your genetic predisposition to disease, your ancestry, and the basis for many of your physical traits.
DeCODE’s failure is a sad setback for a field that offers so much hope and promise for more personalized and effective medical treatment. deCODE’s imminent collapse is also a powerful reminder that ideas and breakthroughs that seem so promising in the lab can often be harder to bring to the masses than we would like. deCODE has some of the best technology in its field, demand is enormous for its products, and competition is minimal. Yet despite what seems to be a slam dunk opportunity to deliver a great product and make lots of money, deCODE has failed.
Decode can still survive in some form through bankruptcy proceedings, acquisition by a larger company, and so forth, but sadly no matter how you cut it this company is in for some serious pain. We will know more about the outcome in the coming months.