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Decode Genetics Files for Chapter 11; Seeks Sale of Assets

NEW YORK (GenomeWeb News) – Decode Genetics today announced that it has filed for Chapter 11 bankruptcy protection, and concurrently it filed to sell its Iceland-based subsidiary Islensk Erfdagreining (IE), and its drug discovery and development programs to Saga Investments.

The Reykjavik, Iceland-based firm has been struggling financially for the past several quarters and has been under the threat of delisting from the Nasdaq stock exchange. In recent months, the company had been exploring alternatives for its business, including the sale of portions of Decode's operations, the sale or license of its drug discovery programs, and obtaining new equity financing.

In September, it disclosed that it would close its Woodridge, Ill., facility and eliminate around 60 positions. In addition, over the past few months, it had been borrowing money from Saga under a promissory note that had reached $4.3 million as of two weeks ago.

Saga has backing from venture capital firms Polaris Venture Partners and Arch Venture Partners and intends to buy the Icelandic subsidiary, which conducts Decode's human genetics research, manages its population genetics resources and provides its personal genome scans under the DecodeMe offering, its DNA-based risk assessment tests, and its genomics services for contract customers.

One of Polaris' Co-founders and General Partner is Terry McGuire, who resigned from Decode Genetics' board of directors on Dec. 1, 2008.

According to Decode, Saga also will provide it with interim financing to fund post-petition operating expenses, which would allow it to deliver services to the firm's customers and clients without interruption during the bankruptcy process.

The asset sale is subject to a number of contingencies, including a competitive bidding procedure and court approval in accordance with bankruptcy law.

Decode said that if the asset sales goes through, it would follow a plan of liquidation, which means "any recovery for stockholders of Decode would be highly unlikely," the firm said.

The Chapter 11 filing does not cover Decode's former US-based subsidiaries, Decode Biostructures and Emerald BioSystems, which was recently sold to an unrelated third party.

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