deCODE genetics, Inc. (DCGN) is a biopharmaceutical company that uses genetics to develop drugs, diagnostics, and pharmacogenetics for the healthcare industry.

3Q08 revenue of $12 million was less than our estimate of $16 million. As of September 30, 2008, the company had $17.7 million in deferred revenue that will be recognized over future reporting periods. The period-on-period increase in revenue for the third quarter was driven principally by growth in the company's genomic services business, which includes the company's diagnostics, deCODEme(TM) personal genome analysis, and contract genotyping businesses.

Operating loss for the third quarter 2008 was $11.3 million, compared to $22.2 million for the third quarter 2007. Net loss for the quarter ending September 30, 2008 was $17.9 million, compared to $24.2 million for the third quarter 2007. In addition to operating loss, net loss figures for the periods presented include interest expense and, in the 2008 periods, unrealized loss resulting from the revaluation of the company's auction rate securities investments.

We maintain our Hold rating on the shares with a target price of $0.50. We believe that the risk/reward profile is balanced for deCODE at the current level. We are optimistic that clinical results will demonstrate the viability of DG-031 for reducing cardiovascular events, but we would like to see more large-scale data before we become bullish on the shares.