deCODE Genetics Inc. (NASDAQ: DCGN)

deCODE Genetics Inc. (DCGN) engages in the research and commercialization of DNA-based tests and genome scans to reveal genetic risk factors of disease, including cardiovascular, cancer and diabetes. The Company licenses its tests and intellectual rights to big pharmaceuticals and research institutions, globally. On November 16, 2009, the Company filed Chapter 11 in the District of Columbia.

Founded in 1996, the Company is headquartered in Reykjavik, Iceland.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com, SEC Filings.

Analyst Consensus

No analyst polled by Thomson Reuters rates shares of DCGN.

Investment Highlights

The Company’s target market includes many various diseases, with cardiovascular and oncologic as important sectors to the Company.

According to the Cancer Market Outlook report published by Business Insights, the market for cancer therapeutic drugs is expected to reach $40.9 billion by 2012, while advisory firm Decision Resources expects new product launches will drive an increase in the coronary artery disease market by approximately $4.6 billion through 2017. Moreover, a new report released by Pharmacor entitled ‘Coronary Heart Disease’ states that sales of coronary therapies to the United States and other developed nations of Europe, UK and Japan will increase to $19.4 billion in 2017.

The pharmaceutical industry is undergoing substantial headwinds this year, with many expecting the slump in pharma sales to continue into 2010. Several leading companies face patent challenges, a weak dollar (affecting U.S.-based companies), and a declining revenue stream due to the global economic slowdown. Many companies struggle with earnings growth, with much of the growth this year due to mergers, share buyback programs, and cost-cutting measures.

The industry’s overall valuations, however, have dropped substantially, with six or seven large capitalized companies once trading below 10 times 2009 estimated earnings, far cheaper on an earnings valuation basis when compared with the S&P. In addition, many pharmaceuticals pay dividends, which further reduces downside risk in this industry.

The Company has delivered six DNA-based laboratory tests to identify hereditary risks of several widespread diseases. The Company also performs personal genome analysis services, deCODEme.

The Company has added new genetic markers to its deCODEme cancer scan, including the risk of a abdominal aortic aneurysm, intracranial aneurysm, heart attack and stroke. These additions have been added to the Company’s scans for bladder cancer, skin cancer and thyroid cancer, and for lung cancer and nicotine dependence. Other genetic markers offered by the Company’s deCODEme scan include bone mineral density and osteoporosis, obesity, schizophrenia, essential tremor and asthma.

The Company is presently developing genetic markers to identify melanoma, basal cell cancer, bladder cancer and lung cancer.

Latest News

On December 16, the Company announced that its team of scientists discovered mutations in five genes related to diseases identified as inherited by a particular parent. For example, the team found that genes associated with diabetes protects against the disease if inherited by the mother, but increases the risk for the disease if inherited from the father.

The team said that the risk for breast cancer is increased if inherited from the father, but was neutral to slightly protective if inherited by the mother, while the risk for basal-cell carcinoma is alarmingly much higher if inherited from the father.

Shares of the Company soared on the announcement.

Technical Analysis

DCGN trades above its 13-day moving average. This bullish sign is significant because the 13-day moving average is upwardly sloped.

The MACD for DCGN currently indicates a bullish signal. The MACD is above the signal line, a 9-day moving average of the MACD. The MACD is, however, below the critical level of 0, which implies the past price action had been negative. Overall, the chart is bullish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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