The World’s Most Successful Failure

During the late 1990s, it was an article of faith that the decade ahead would be the Age of Biotech, an era when science would unravel the mysteries of DNA to determine the causes—and potentially the cures s—of the world's most common ailments: heart disease, cancer, mental illness. But even in an industry accustomed to hype, one company stood out: a small Icelandic startup called deCODE. In 1999 The New Yorker ran a glowing 10-page profile with a portrait of Kári Stefánsson, the company's charismatic founder, climbing the DNA double helix like a ladder. DeCODE, it said, had "a scientific instrument of unparalleled power." Over the next 10 years, deCODE discovered so many genes linked to diseases that its only competitors were top U.S. labs lavishly funded by the National Institutes of Health. What it didn't find, however, was a business model that made sense—a common problem in the speculative, science-driven world of biotech. That, plus the global financial crisis, caused it to burn through $676 million, and last November it went bankrupt.

DeCODE's story is dramatic, but these days...