<PAGE>   1
     As filed with the Securities and Exchange Commission on March 14, 2001

                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                                    FORM S-8
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              deCODE genetics, Inc.

             (Exact name of registrant as specified in its charter)


                DELAWARE                                     04-3326704
      (State or other jurisdiction                        (I.R.S. Employer
    of incorporation or organization)                    Identification No.)


                                   LYNGHALS 1
                               REYKJAVIK, ICELAND
                                 + 354-570-1900
               (Address, including ZIP code, and telephone number,
        including area code, of registrant's principal executive offices)

                     1996 EQUITY INCENTIVE PLAN, AS AMENDED
                            (Full title of the plans)

             KARI STEFANSSON, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                              deCODE genetics, INC.
                                   LYNGHALS 1
                               REYKJAVIK, ICELAND
                                 + 354-570-1900

    (Name, address, including ZIP code, and telephone number, including area
                          code, of agent for service)

                                   COPIES TO:

                           EDWARD P. BROMLEY III, ESQ.
                                 REED SMITH LLP
                           136 MAIN STREET - SUITE 250
                           PRINCETON, NEW JERSEY 08540


                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
                                      Amount            Proposed Maximum           Proposed
  Title of Each Class of              to be              Offering Price        Maximum Aggregate        Amount of
to be Registered Securities        Registered(1)          Per Share(2)          Offering Price       Registration Fee
----------------------------------------------------------------------------------------------------------------------
<S>                                <C>                  <C>                    <C>                   <C>
Common stock, $.001 par value        3,192,974                $8.22               $26,246,246           $6,561.56

======================================================================================================================
</TABLE>

(1)      Together with an indeterminate number of additional shares which may be
issued pursuant to the 1996 Equity Incentive Plan, as amended as a result of
stock splits, stock dividends or similar transactions in accordance with Rule
416.

(2)      Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on March 12, 2001.
<PAGE>   2
                                     PART I

                                EXPLANATORY NOTE

         This registration statement registers 1,321,974 shares of common stock,
par value $.001 per share, of deCODE genetics, Inc. that were issued and sold
and 1,871,000 shares of common stock that may be issued and sold under deCODE's
1996 Equity Incentive Plan, as amended (the "Plan").

         This registration statement contains two parts. The first part contains
a resale prospectus prepared in accordance with Instruction C of the General
Instructions to Form S-8 which covers the reoffer and resales of shares of the
common stock issued pursuant to the Plan. The second part contains information
required to be included in Part II of a Registration Statement on Form S-8. In
accord with the Note to Part I of the Form S-8, information regarding the Plan,
as specified by Part I of Form S-8, will be delivered to each participant in the
Plan and does not need to be filed with the Securities and Exchange Commission.
<PAGE>   3
                               REOFFER PROSPECTUS

                        1,321,974 Shares of Common Stock

                              deCODE genetics, Inc.

                              ---------------------


         The shares of common stock, $0.001 par value per share (the "shares"),
of deCODE genetics, Inc. covered by this reoffer prospectus, may be offered and
sold to the public by certain stockholders of deCODE (collectively, the "Selling
Securityholders"). The Selling Securityholders have acquired the shares through
their exercise of stock options granted to them under deCODE's 1996 Equity
Incentive Plan, as amended ("the Plan").

         Our common stock is quoted on the Nasdaq National Market under the
symbol "DCGN." On March 1, 2001, the closing price of a share of our common
stock on the Nasdaq National Market was $8.00 per share. The Selling
Securityholders may sell their shares directly or indirectly in one or more
transactions on the Nasdaq National Market or on any stock exchange on which the
shares may be listed at the time of sale, in privately negotiated transactions,
or through a combination of such methods. These sales may be at fixed prices
(which may be changed), at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.

         The shares are "restricted securities" under the Securities Act of
1933, as amended (the "Securities Act") before their sale under this prospectus.
This reoffer prospectus has been prepared for the purpose of registering the
shares under the Securities Act to allow for future sales by the Selling
Securityholders to the public without restriction. The Selling Securityholders
may sell shares through one or more agents, brokers or dealers or directly to
purchasers. Such brokers or dealers may receive compensation in the form of
commissions, discounts or concessions from the Selling Securityholders and/or
purchasers of the shares, or both (which compensation as to a particular broker
or dealer may be in excess of customary commissions). In connection with such
sales, the Selling Securityholders and any participating broker or dealer may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions they receive and the proceeds of any sale of shares may be deemed to
be underwriting discounts and commissions under the Securities Act. deCODE will
not receive any proceeds from the sale of the shares by the Selling
Securityholders.

                              --------------------

         INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.

                              --------------------

         The Securities and Exchange Commission and state securities commission
have not approved or disapproved these securities, or determined if this reoffer
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                              --------------------

              The date of this reoffer prospectus is March 13, 2001.


                                       1
<PAGE>   4
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
Where You Can Find More Information.......................................    2
Incorporation of Certain Documents by Reference...........................    3
The Company...............................................................    4
Risk Factors..............................................................    5
Use of Proceeds...........................................................   17
Selling Securityholders...................................................   17
Plan of Distribution......................................................   26
Legal Matters.............................................................   26
Experts...................................................................   26
</TABLE>

                                 --------------


         You should rely only on the information contained in this reoffer
prospectus or any supplement. We have not authorized anyone to provide you with
information different from that which is contained in or incorporated by
reference to this reoffer prospectus. We are offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this reoffer
prospectus is accurate only as of the date of this reoffer prospectus,
regardless of the time of delivery of this reoffer prospectus or of any sale of
the common stock.

                       WHERE YOU CAN FIND MORE INFORMATION

          We have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-8 under the Securities Act with
respect to the shares of common stock offered hereby. This reoffer prospectus
does not contain all of the information set forth in the registration statement
and the exhibits thereto. For further information with respect to us and the
common stock offered hereby, reference is made to the registration statement and
the exhibits thereto. Statements contained in this reoffer prospectus regarding
the contents of any contract or any other document to which reference is made
are not necessarily complete, and, in each instance where a copy of such
contract or other document has been filed as an exhibit to the registration
statement, reference is made to the copy so filed, each such statement being
qualified in all respects by such reference.

         We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, file reports and other information with the Commission. The
Registration Statement, including exhibits, and the reports and other
information filed by deCODE can be inspected without charge at the public
reference facilities maintained by the Commission at the Commission's principal
office at 450 Fifth Street, N.W., Room 1024, Washington, D.C., 20549, and at the
Regional Offices of the Commission located at Seven World Trade Center, l3th
Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can be obtained
from such offices at fees prescribed by the Commission. The public may obtain
information on the operation of the Public Reference room by calling the
Commission at 1-800-SEC-0330. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of this site is http://www.sec.gov. deCODE shares are quoted on the Nasdaq
National Market under the symbol "DCGN."


                                       2
<PAGE>   5
                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The following documents, which have been filed by us with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration statement as
of their respective dates:

         (a)      The final prospectus filed on July 18, 2000 pursuant to Rule
                  424(b) of the Securities Act;

         (b)      The Quarterly Reports on Form 10-Q for the quarters ended June
                  30 and September 30, 2000;

         (c)      All other reports filed pursuant to Section 13 or 15(d) of the
                  Exchange Act since July 18, 2000;

         (d)      The Form 8-A filed on June 26, 2000 pursuant to Section 12(g)
                  of the Exchange Act; and

         (e)      The description of our common stock contained in the
                  Registrant's final prospectus filed on July 18, 2000 pursuant
                  to Rule 424(b) of the Securities Act.

         All documents filed by us pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this reoffer prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement.

         deCODE will provide without charge to any person to whom this reoffer
prospectus is delivered, upon written or oral request of such person, a copy of
each document incorporated by reference in the registration statement (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into this reoffer prospectus). Requests should be
directed to Edward Farmer at deCODE, Lynghals 1, Reykjavik, Iceland. deCODE's
telephone number is + 354-570-1900 and its Web site is located at
www.decode.com. Information on the Web site is not incorporated by reference
into this reoffer prospectus.


                                       3
<PAGE>   6
                                   THE COMPANY

         deCODE was incorporated in August 1996. We are a genomics and health
informatics company which develops products and services for the healthcare
industry. Our approach to the discovery of healthcare knowledge brings together
three key types of non-personally identifiable population data derived from the
Icelandic nation: information from the healthcare system, information about
relationships among individuals covered by this system and associated molecular
genetics data. We have three avenues of commercialization which are: Discovery
Services, with a focus on gene and drug target discovery; Database Services,
with a focus on the construction and commercialization of the Icelandic Health
Sector Database, which contains non-personally identifiable data from Icelandic
healthcare records, and the deCODE Combined Data Processing system, to
cross-reference data from the Icelandic Health Sector Database with genealogical
and genotypic data; and Healthcare Informatics, which is computerized analysis
of healthcare data, with a focus on bioinformatics, which is the computerized
analysis of biological information, decision-support tools and privacy products.

         In February 1998, we entered into a research collaboration and
cross-license agreement with F.Hoffmann-La Roche, or Roche, regarding research
into the genetic causes of twelve diseases. Under the terms of the agreement,
Roche has made equity investments and has funded our gene discovery programs in
twelve diseases. Under the agreement, we may receive a total of more than $200
million in research funding and milestone payments and we will receive royalty
payments on the sale of diagnostic and therapeutic products resulting from the
collaboration. The term of the agreement will continue until February 1, 2003
provided that Roche elects to extend the agreement for the one-year period
commencing on the fourth anniversary of the agreement. Revenues recognized by us
have consisted primarily of revenues generated under the research collaboration
and cross-license agreement with Roche.

         In May 2000, we entered into a strategic alliance agreement and
crosswalk development agreement with Partners Healthcare System, Inc., The
General Hospital Corporation, d.b.a. Massachusetts General Hospital and The
Brigham and Women's Hospital, Inc., (collectively "Partners") pursuant to which
(a) we will fund research by investigators of Partners pursuant to sponsored
research agreements and/or clinical trial agreements to be entered into from
time to time, (b) we will collaborate with Partners on, and provide funding for,
development of an information technology bridge, called the crosswalk, to
facilitate studies with the deCODE Combined Data Processing system and Partners'
Research Patient Data Registry and (c) we will develop and market, in
consultation with Partners, new information technology products and services
relating to the use of the crosswalk for future pharmaceutical and biotechnology
applications.

         We have a number of collaborative agreements with local medical
institutions and doctors regarding particular disease research. These agreements
generally extend for a period of five years. Under the agreements, these
institutions and/or physicians contribute data or other clinical information and
we contribute equipment, research supplies and our molecular genetics and
experimental design expertise. The agreements also require us to reimburse all
project-related expenses. If we sell project results, the agreements require us
to make specified payments and pay a portion of performance-based milestone
payments that we receive. In addition, we have a settlement agreement with a
non-Icelandic medical institution whereby we are committed to pay royalties and
milestone payments if we are successful in developing and commercializing
products which result from a particular technology jointly owned by us and the
medical institution.


                                       4
<PAGE>   7
                                  RISK FACTORS

WE MAY NOT SUCCESSFULLY DEVELOP OR DERIVE REVENUES FROM ANY PRODUCTS OR SERVICES

         DISCOVERY SERVICES

         Our gene discovery programs are still in the early stages of
development and may not result in marketable products. We direct our technology
and development focus primarily toward identifying genes or gene fragments which
are responsible for, or indicate the presence of, certain diseases. Our
technologies and approach to gene discovery may not enable us to identify
successfully the specific genes that cause or predispose individuals to the
complex diseases that are the targets of our gene discovery program, even where
we have identified candidate genes. In addition, the diseases we are targeting
are generally believed to be caused by a number of genetic and environmental
factors. It may not be possible to address such diseases through gene-based
therapeutic or diagnostic products. Accordingly, even if we are successful in
identifying specific genes, our discoveries may not lead to the development of
commercial products.

         Even if we, or our collaborators, are able to develop pharmaceutical
products, those products will fail to produce revenues unless they:

         -        are safe and effective;

         -        meet regulatory standards in a timely manner;

         -        successfully compete with other technologies and products;

         -        avoid infringing on the proprietary rights of others;

         -        can be manufactured in sufficient quantities at reasonable
                  costs; and

         -        can be marketed successfully.

         We are not certain that we will be able to achieve these conditions for
product revenues. We expect that it will be a number of years, if ever, before
we will recognize revenue from therapeutic or diagnostic product sales or
royalties on such sales.

         Our initiatives in pharmacogenomics and the study of the function of
genes, a field known as functional genomics, are not certain to provide any
revenues. There may be no market for these services because of competition, lack
of market acceptance or our inability to develop these services successfully. We
may not be able to develop our functional genomics capabilities to a state that
is adequate for realizing revenues.

         DATABASE SERVICES

         We, through our wholly-owned subsidiary Islensk erfdagreining ehf.,
received a license permitting us to develop and operate the Icelandic Health
Sector Database in January 2000, and accordingly, are at the early stages of its
development. The collection of genotypic data, which is another integral part of
the deCODE Combined Data Processing system, is also in the early stages of
development. We expect that it will take several years before we have fully
developed the deCODE Combined Data Processing system. We are presently devoting
substantial resources to the development of the deCODE Combined Data Processing
system and its components. We plan to continue to devote substantial resources
to this development for the foreseeable future. We cannot be sure that the
deCODE Combined Data Processing system will result in marketable products or
services. Our intended method for cross-referencing genealogical, genotypic and
healthcare data is central to the development of the deCODE Combined Data
Processing system and is unproven. The success of our database services is
contingent upon:

         -        the development of the Icelandic Health Sector Database and
                  collection of genotypic data;


                                       5
<PAGE>   8
         -        the creation of database and cross-reference software that is
                  free from design defects or errors;

         -        compliance with governmental requirements regarding the
                  Icelandic Health Sector Database;

         -        the security and reliability of encryption technology;

         -        the cooperation of the Icelandic healthcare system;

         -        the ability to obtain blood samples from consenting Icelanders
                  and consents to the use of their genotypic data by
                  cross-referencing through the deCODE Combined Data Processing
                  system;

         -        the usefulness of information derived through the deCODE
                  Combined Data Processing system in disease management,
                  analysis of drug response, gene discovery and drug target
                  validation; and

         -        the development of marketing and pricing methods that the
                  intended users of the deCODE Combined Data Processing system
                  will accept. If we fail to successfully commercialize our
                  database services, we will not realize revenues from this part
                  of our business.

HEALTHCARE INFORMATICS

         Our bioinformatics and privacy protection products have, to date, been
tested only in connection with our own use of them and they may not meet the
needs of potential customers. We are at a very early stage of development of our
medical decision-support systems for healthcare providers, and we have generated
no revenues from sales or licenses of bioinformatics, decision-support, or
privacy protection products. To date we have not produced any decision-support
tools and there can be no assurance that we can successfully develop or
commercialize medical decision-support systems or that there will be a market
for our bioinformatics, decision-support or privacy protection products for
healthcare delivery.

IF OUR ASSUMPTION ABOUT THE ROLE OF GENES IN DISEASE IS WRONG, WE MAY NOT BE
ABLE TO DEVELOP USEFUL PRODUCTS

         The products we hope to develop involve new and unproven approaches.
They are based on the assumption that information about genes may help
scientists better understand complex disease processes. Scientists generally
have a limited understanding of the role of genes in diseases, and few products
based on gene discoveries have been developed. Of the products that exist, all
are diagnostic products. To date, we know of no therapeutic products based on
disease gene discoveries. If our assumption about the role of genes in the
disease process is wrong, our gene discovery programs may not result in
products, the genetic data included in our database and informatics products may
not be useful to our customers and those products may lose any competitive
advantage.

IF WE CONTINUE TO INCUR OPERATING LOSSES FOR A PERIOD LONGER THAN ANTICIPATED,
OR IN AN AMOUNT GREATER THAN ANTICIPATED, WE MAY BE UNABLE TO CONTINUE OUR
OPERATIONS

    We incurred net losses of $24,864,953 for the nine months ended September
30, 2000, and $23,788,447 for the year ended December 31, 1999. As of September
30, 2000, we had an accumulated deficit of $102,277,926. To date, we have never
generated a profit and we have not generated any significant revenues except for
payments received in connection with our research collaboration with Roche and
interest revenues. The development of our technologies will require substantial
increases in expenditures over the next several years. In addition, we expect to
spend more in connection with our internal research programs and the preparation
of the Icelandic Health Sector Database, the deCODE Combined Data Processing
system and informatics. As a result, we expect to incur operating losses for
several years. If the time required to generate product revenues and achieve
profitability is longer than we currently anticipate or the level of operating
losses is greater than we currently anticipate, we may not be able to continue
our operations.


                                       6
<PAGE>   9
IF WE ARE NOT ABLE TO OBTAIN SUFFICIENT ADDITIONAL FUNDING TO MEET OUR EXPANDING
CAPITAL REQUIREMENTS, WE MAY BE FORCED TO REDUCE OR TERMINATE OUR RESEARCH
PROGRAMS AND PRODUCT DEVELOPMENT

         We have used substantial amounts of cash to fund our research and
development activities. We expect our capital and operating expenditures to
increase over the next several years as we expand our research and development
activities, construct the Icelandic Health Sector Database and the deCODE
Combined Data Processing system, collect the genotype data and develop
healthcare informatics products. Many factors will influence our future capital
needs, including:

         -        the progress of our discovery and research programs;

         -        the number and breadth of these programs;

         -        our ability to attract collaborators for, subscribers to or
                  customers for our products and services;

         -        our achievement of milestones under our research collaboration
                  agreement with Roche;

         -        our ability to establish and maintain additional
                  collaborations;

         -        our collaborators' progress in commercializing our gene
                  discoveries;

         -        the level of our activities relating to commercialization
                  rights we retain in our collaborations;

         -        competing technological and market developments;

         -        the costs involved in enforcing patent claims and other
                  intellectual property rights; and

         -        the costs and timing of regulatory approvals.

         We intend to rely on Roche and future collaborators for significant
funding in support of our research efforts. In addition, we may seek additional
funding through public or private equity offerings and debt financings.
Additional financing may not be available when needed. If available, such
financing may not be on terms favorable to us or our stockholders. Stockholders'
ownership will be diluted if we raise additional capital by issuing equity
securities. If we raise additional funds through collaborations and licensing
arrangements, we may have to relinquish rights to certain of our technologies or
product candidates, or grant licenses on unfavorable terms. If adequate funds
are not available, we would have to scale back or terminate our discovery and
research programs and product development. We believe that the net proceeds from
our initial public offering, other cash and investment securities and
anticipated cash flow from Roche will be sufficient to support our current
operating plan for several years. We have based this belief on assumptions that
may prove wrong.

IF WE DO NOT MAINTAIN THE GOODWILL AND RECEIVE THE COOPERATION OF THE ICELANDIC
POPULATION, WE MAY BE UNABLE TO PURSUE OUR GENE IDENTIFICATION PROGRAMS,
PHARMACOGENOMICS OR FUNCTIONAL GENOMICS EFFORTS, COLLECT GENOTYPE DATA OR
DEVELOP THE ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA
PROCESSING SYSTEM

         Our approach to gene identification and the development and maintenance
of genotype data, the Icelandic Health Sector Database and the deCODE Combined
Data Processing system depend on the goodwill and cooperation of the Icelandic
population, including the Icelandic government and the healthcare system. Our
development of the Icelandic Health Sector Database will be impaired if
individual Icelanders refuse to allow information from their medical records to
be included in the Icelandic Health Sector Database or healthcare providers
attempt to prevent us from having access to medical records of their patients.
Individuals may opt-out of having their records included in the Icelandic Health
Sector Database. As of December 31, 2000 approximately 7% of the population has
exercised this right. Some doctors practicing in Iceland have expressed
opposition to the Icelandic Health Sector Database and may attempt to withhold
their patients' data from inclusion in such database or encourage their patients
to exercise their opt-out rights. Our development of genotype data and our
cross-referencing through the deCODE Combined Data Processing system


                                       7
<PAGE>   10
of that data with information about the manifestations of disease, which are
known as phenotypes, in the Icelandic Health Sector Database require that a
substantial portion of the Icelandic population provide us with blood samples
for genotyping and consent to the use of their DNA to cross-reference molecular
genetics data with the Icelandic Health Sector Database. To date, between eighty
and ninety percent of individuals that we have asked to participate in our
research projects have done so. Because only a small portion of the Icelandic
population may carry certain mutations, the unwillingness of even a small
portion of the population to participate in our programs could diminish our
ability to develop and market information based on the use of genotypic data.

OUR RELIANCE ON THE ICELANDIC POPULATION IN OUR GENE DISCOVERY PROGRAMS AND
DATABASE SERVICES MAY LIMIT THE APPLICABILITY OF OUR DISCOVERIES TO CERTAIN
POPULATIONS

         In general, the genetic make-up and prevalence of disease vary across
populations around the world. Common complex diseases generally occur with a
similar frequency in Iceland as in other western countries. We are already
studying some of these diseases in our gene discovery programs. However, the
populations of other western nations may be genetically predisposed to certain
diseases because of mutations not present in the Icelandic population. As a
result, we and our partners may take more time or may be unable to develop
diagnostic products that are effective on all, or a portion, of those people
with such diseases. Similarly, any difference between the Icelandic population
and the populations of other countries may have an effect on the usefulness of
the Icelandic Health Sector Database and deCODE Combined Data Processing system
in studying disease in populations of countries other than Iceland. We do not
anticipate developing any products solely for the Icelandic market. For our
business to succeed, we must apply discoveries that we make on the basis of the
Icelandic population to other markets.

OUR CREATION AND OPERATION OF THE ICELANDIC HEALTH SECTOR DATABASE IS BASED UPON
A LICENSE FROM THE ICELANDIC MINISTRY OF HEALTH AND SOCIAL SECURITY AND IS
SUBJECT TO GOVERNMENT SUPERVISION AND REGULATION, WHICH MAY MAKE OUR DEVELOPMENT
OF DATABASE PRODUCTS MORE EXPENSIVE AND TIME-CONSUMING THAN WE ANTICIPATED

We may construct the Icelandic Health Sector Database and cross-reference it
with our genealogical and genetic data, through the deCODE Combined Data
Processing system, only in accordance with the stipulations of the Icelandic
Health Sector Database license (the "License") which the Ministry of Health and
Social Security, or the Ministry, granted us pursuant to the Act on a Health
Sector Database no. 139/1998, or the Act. The License permits the processing of
healthcare data from healthcare records and other relevant data into the
Icelandic Health Sector Database. The Monitoring Committee, the Data Protection
Authority of Iceland and an Interdisciplinary Ethics Committee will supervise
our construction and operation of the Icelandic Health Sector Database. These
committees report to the Ministry. In addition, the Icelandic Bioethics
Committee will review our operation of the Icelandic Health Sector Database. The
Ministry may withdraw our License in the event that we violate the terms and
conditions of the License, the Act or its rules. In addition, the Icelandic
parliament could amend the Act in ways which would adversely affect our ability
to develop or market the Icelandic Health Sector Database and, consequently, the
deCODE Combined Data Processing system. Because the Icelandic parliament and
government recently adopted the Act and its rules, there is no precedent
interpreting the Act or the rules.

         In preparing the Icelandic Health Sector Database, we must comply with
the Data Protection Authority's technical requirements. These technical
requirements cover areas such as data encryption and privacy protection. The
Data Protection Authority may review these requirements from time to time and
may require greater technical capabilities than we currently have. Compliance
with these requirements can be expensive and time-consuming and may delay the
development of the Icelandic Health Sector Database and the deCODE Combined Data
Processing system or make such development more expensive than we anticipated.
In addition, the agencies imposing these requirements will evaluate our
compliance efforts. We cannot control the time required for this evaluation, and
accordingly, the evaluation process may lead to delay in the development of the
Icelandic Health Sector Database and the deCODE Combined Data Processing system.


                                       8
<PAGE>   11
         The Interdisciplinary Ethics Committee has the power to withdraw
permission for any type of research program in the Icelandic Health Sector
Database not conducted in accordance with international rules of bioethics.

         At the expiration of the License, we are required to ensure that the
Ministry or its designee will receive, without payment of consideration,
intellectual property rights necessary for the creation and operation of the
database for public health purposes and for scientific research.

         We are subject to a very extensive indemnity clause in our agreement
with the Ministry, pursuant to which:

         -        we have agreed not to make any claim against the government if
                  the Act or the License are amended as a result of the Act or
                  rules relating to the Icelandic Health Sector Database being
                  found to be inconsistent with the rules of the European
                  Economic Area, or EEA, or other international rules and
                  agreements to which Iceland is or becomes a party;

         -        we have agreed that if the Icelandic State, by a final
                  judgment, is found to be liable or subject to payment to any
                  third party as a result of the passage of legislation on the
                  Icelandic Health Sector Database and/or issuance of the
                  Icelandic Health Sector Database license, we will indemnify it
                  against all damages and costs in connection with the
                  litigation; and

         -        we have agreed to compensate any third parties with whom the
                  Icelandic government negotiates a settlement of liability
                  claims arising from the legislation on the Icelandic Health
                  Sector Database and/or the issuance of the License, provided
                  that the Icelandic government demonstrates that it was
                  justified in agreeing to make payments pursuant to the
                  settlement.

IF WE ARE NOT ABLE TO ENTER INTO AGREEMENTS WITH MORE ICELANDIC HEALTH
INSTITUTIONS, AS THE ICELANDIC HEALTH SECTOR DATABASE LICENSE REQUIRES, IN ORDER
TO COLLECT DATA FROM THE INSTITUTIONS, WE WILL NOT BE ABLE TO CONSTRUCT AND
OPERATE THE ICELANDIC HEALTH SECTOR DATABASE

         The License requires us to enter into agreements with Icelandic health
institutions and self-employed health service professionals regarding access to
and the processing of information from medical records. To date we have only
entered into such agreements with 9 Icelandic health institutions. We cannot be
certain that we will be able to enter into such agreements with a sufficient
number of health institutions as the operations of the Icelandic Health Sector
Database will require. Neither can we be certain that such agreements will be
on terms favorable to us. Some doctors practicing in Iceland have expressed
opposition to the Icelandic Health Sector Database and it is possible that
those who have private practices and as such have authority to enter into
agreements with us may refuse to do so or those who are employed by health
institutions may encourage the institutions to refuse to do so. We cannot be
certain that individuals within health institutions will adhere to the
requirements of such agreements. The Icelandic Medical Association is currently
publicly opposing some aspects of the way in which the Icelandic Health Sector
Database will be created. Our inability to enter into additional such
agreements on favorable terms or in a timely manner, or to obtain others'
compliance with the terms of such agreements, could have a material adverse
effect on our ability to construct and operate the Icelandic Health Sector
Database.

IF WE CANNOT OBTAIN AN EXTENSION OF THE TERM OF THE ICELANDIC HEALTH SECTOR
DATABASE LICENSE BEYOND ITS EXPIRATION DATE IN JANUARY 2012, WE WILL NOT BE ABLE
TO OPERATE OR DERIVE RESOURCES FROM THE ICELANDIC HEALTH SECTOR DATABASE OR THE
deCODE COMBINED DATA PROCESSING SYSTEM AFTER THAT DATE

Even if we are successful in creating and marketing the Icelandic Health Sector
Database and the deCODE Combined Data Processing system, the License will expire
in January 2012 unless we are able to obtain an extension. There is no assurance
that we will obtain further access rights on favorable terms, if at all. Our
negotiations with healthcare institutions, the process of genotyping and the
development of database infrastructure, among other factors, will determine when
we can begin marketing the deCODE Combined Data Processing system. We expect
that the Icelandic Health Sector Database and the deCODE Combined Data
Processing system will not be fully operational for up to four years. The
License will be subject


                                       9
<PAGE>   12
to a review in 2008, and at that time, in accordance with an agreement we
entered into with the Ministry simultaneously with the granting of the License,
we and the Ministry will enter into discussions on renewal of the License at the
end of the term. The Ministry might not renew the License in 2012 and we cannot
guarantee any renewal.

WE MAY NOT BE ABLE TO FORM AND MAINTAIN THE COLLABORATIVE RELATIONSHIPS THAT OUR
BUSINESS STRATEGY REQUIRES

         Our strategy for deriving revenues from the discovery of genes and the
development of products based upon our discoveries depends upon the formation of
research collaborations and licensing arrangements with several partners at the
same time. We currently have only two substantial collaborative relationships.
To succeed, we will have to maintain these relationships and establish
additional collaborations. We cannot be sure that we will be able to establish
the additional research collaborations or licensing arrangements necessary to
develop and commercialize products using our technology, that any future
collaborations or licensing arrangements will be on terms favorable to us, or
that current or future collaborations or licensing arrangements ultimately will
be successful. If we are not able to manage multiple collaborations
successfully, our programs will suffer.

         We also expect to rely on collaborations in other parts of our business
such as the construction of the deCODE Combined Data Processing system. During
the development of the deCODE Combined Data Processing system, we intend to
pursue collaborations to assist us in the development of certain of its
components. Such collaborations may involve the use of particular technologies
or collaborative development and marketing activities. If we are unable to enter
into such collaborations on favorable terms, our ability to commercialize the
deCODE Combined Data Processing system will be adversely affected.

         To develop our healthcare informatics products, we also plan to rely on
collaborative relationships. To date we have not established any such
collaborative relationships. If we are unable to form or maintain such
collaborative arrangements, our healthcare informatics operations will be
adversely affected.

OUR DEPENDENCE ON COLLABORATIVE RELATIONSHIPS MAY LEAD TO DELAYS IN PRODUCT
DEVELOPMENT AND DISPUTES OVER RIGHTS TO TECHNOLOGY

         Currently we do not expect to develop or market pharmaceutical products
on our own. As a result, we will be dependent on collaborators for the
pre-clinical study and clinical development of therapeutic and diagnostic
products and for regulatory approval, manufacturing and marketing of any
products that result from our technology. Our agreements with pharmaceutical
collaborators or collaborators for gene research projects will typically allow
them significant discretion in electing whether to pursue such activities. We
cannot control the amount and timing of resources collaborators will devote to
our programs or potential products. Our collaborations may have the effect of
limiting the areas of research that we may pursue either alone or with others.

         In addition, we expect to develop our database products, in part, with
various collaborators, and we may develop healthcare informatics tools which are
designed to work in conjunction with or to enhance the healthcare informatics
tools of other developers. These arrangements may place responsibility for key
aspects of product development and marketing on our collaborative partners.
Accordingly, the performance of these key aspects is uncertain and beyond our
direct control. If our collaborators fail to perform their obligations, our
database products could contain erroneous data, design defects, viruses or
software defects that are difficult to detect and correct and may adversely
affect our revenues and the market acceptance of our products.

         If any pharmaceutical, healthcare informatics or database collaborator
were to breach or terminate its agreement with us, or otherwise fail to conduct
collaborative activities successfully and in a timely manner, the development or
commercialization of products, services, technologies or research programs may
be delayed or terminated.

         Competing products that our collaborators develop or to which our
collaborators have rights may result in their withdrawal of support for our
products and services.


                                       10
<PAGE>   13
         Disputes may arise in the future over the ownership of rights to any
technology developed with collaborators. These and other possible disagreements
between us and our collaborators could lead to delays in the collaborative
research, development or commercialization of products. Such disagreements could
also result in litigation or require arbitration to resolve.

ETHICAL AND PRIVACY CONCERNS MAY LIMIT OUR ABILITY TO DEVELOP AND USE THE
ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA PROCESSING SYSTEM
AND MAY LEAD TO LITIGATION AGAINST US OR THE ICELANDIC GOVERNMENT

         The Icelandic parliament's passage of the Act and the Ministry's
granting of the License have raised ethical and privacy concerns in Iceland and
internationally among healthcare professionals and others including the
Icelandic Medical Association and the World Medical Association. Ethical and
privacy concerns about the development and use of the Icelandic Health Sector
Database and the deCODE Combined Data Processing system may lead to litigation
in U.S., Icelandic or other national courts, or in international courts such as
the European Court of Human Rights in Strasbourg (e.g., on the basis of an
alleged breach of the patient-doctor confidential relationship, constitutional
privacy issues, international conventions dealing with protection of privacy
issues or human rights conventions). The results of such litigation could have
a material adverse affect on our ability to construct and operate the
Icelandic Health Sector Database and the deCODE Combined Data Processing system.

CERTAIN PARTIES HAVE ANNOUNCED AN INTENTION TO INSTITUTE LITIGATION TESTING THE
CONSTITUTIONALITY OF THE ACT, WHICH COULD DELAY OR PREVENT US FROM DEVELOPING
AND OPERATING THE ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA
PROCESSING SYSTEM

         In February 2000, an organization known as The Association of
Icelanders for Ethics in Science and Medicine, or Mannvernd, and a group of
physicians and other citizens issued a press release announcing their intention
to file lawsuits against the State of Iceland and any other relevant parties,
including deCODE, to test the constitutionality of the Act. According to the
press release, the intended lawsuit will allege that the Act and the License
involve human rights violations and will challenge the validity of provisions of
the Act which allow the use of presumed consent for the processing of health
data into the Icelandic Health Sector Database and the grant of a license to
operate a single database. To date no such suit has been brought against deCODE
or the State of Iceland to that effect by Mannvernd or any other party. deCODE
believes that any such litigation would be without merit and intends to defend
vigorously any such action in which we become a party. However, in the event
that the Icelandic State by a final judgment is found to be liable or subject to
payment to any third party as a result of the passage of legislation on the
Icelandic Health Sector Database and/or the issuance of the License, our
agreement with the Ministry requires us to indemnify the Icelandic State against
all damages and costs incurred in connection with such litigation. In addition,
the pendency of such litigation could lead to delay in the development of the
Icelandic Health Sector Database and the deCODE Combined Data Processing System,
and an unfavorable outcome would prevent us from developing and operating the
Icelandic Health Sector Database and the deCODE Combined Data Processing system.

IF WE FAIL TO PROTECT CONFIDENTIAL DATA ADEQUATELY, WE COULD INCUR LIABILITY OR
LOSE OUR LICENSE

         The Act and the License require us to encrypt all patient data and to
take other actions to ensure confidentiality of data included in the Icelandic
Health Sector Database and restrict access to it. We are developing the
Icelandic Health Sector Database according to the Data Protection Authority's
technology, security and organizational terms. The Data Protection Authority may
periodically review and amend such terms in light of new technology or change of
circumstances. We must comply with any such revised data protection terms within
a deadline which the Data Protection Authority may establish when it revises the
terms. Although, to date, one expert in this field has criticized the security
terms, we believe that they are, and will continue to be, in line with
international best industry-practice standards. In addition, the customers for
other products we may develop may impose confidentiality requirements.
Accidental disclosures of confidential data may result from technical failures
in encryption technology or from human error by our employees or those of our
customers or collaborators. Any failure to comply fully with all confidentiality
requirements could lead to liability for damages incurred by individuals whose
privacy is violated, the loss of the License, the loss of our customers and
reputation and the loss of the goodwill and cooperation of the Icelandic
population including healthcare professionals.


                                       11
<PAGE>   14
ETHICAL AND PRIVACY CONCERNS MAY LIMIT THE USE OF GENETIC TESTING AND THEREFORE
THE COMMERCIAL LIABILITY OF ANY PRODUCTS WE DEVELOP

         Other companies have developed genetic predisposition tests that have
raised ethical concerns. It is possible that employers or others could
discriminate against people who have a genetic predisposition to certain
diseases. Concern regarding possible discrimination may result in governmental
authorities enacting restrictions or bans on the use of all, or certain types
of, genetic testing. Similarly, such concerns may lead individuals to refuse to
use genetics tests even if permissible. These factors may limit the market for,
and therefore the commercial viability of, products that we and our
collaborators develop.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH BIOTECHNOLOGY COMPANIES AND
ESTABLISHED PHARMACEUTICAL COMPANIES IN THE DEVELOPMENT AND MARKETING OF
PRODUCTS BASED UPON THE IDENTIFICATION OF DISEASE-CAUSING GENES

         A number of companies are attempting to rapidly identify and patent
genes that cause diseases or an increased susceptibility to diseases.
Competition in this field is intense and is expected to increase. We have
numerous competitors, including major pharmaceutical and diagnostic companies,
specialized biotechnology firms, universities and other research institutions,
the United States-funded Human Genome Project and other government-sponsored
entities. Many of our competitors have considerably greater capital resources,
research and development staffs and facilities, and technical and other
resources than we do, which may allow them to discover important genes before we
do. We believe that a number of our competitors are developing competing
products and services that may be commercially successful and that are further
advanced in development than our potential products and services. To succeed,
we, together with our collaborators, must discover disease-predisposing genes,
characterize their functions, develop genetic tests or therapeutic products and
related information services based on such discoveries, obtain regulatory and
other approvals, and launch such services or products before competitors. Even
if our collaborators or we are successful in developing effective products or
services, our products and services may not successfully compete with those of
our competitors. Our competitors may succeed in developing and marketing
products and services that are more effective than ours or that are marketed
before ours.

         Our collaboration with Roche does not prevent it from initiating its
own gene research or developing products based upon its, or any other party's,
gene research. Such products may compete with any products that we develop
through our gene discovery programs. We expect that future collaborations may
allow our future partners to undertake research and develop products on their
own or with third parties.

         Competitors have established, and in the future may establish, patent
positions with respect to gene sequences related to our research projects. Such
patent positions or the public availability of gene sequences comprising
substantial portions of the human genome could decrease the potential value of
our research projects and make it more difficult for us to compete. We may also
face competition from other entities in gaining access to DNA samples used for
research and development purposes.

         We expect competition to intensify as technical advances are made and
become more widely known. Our future success will depend in large part on
maintaining a competitive position in the genomics field. Others' or our rapid
technological development may result in products or technologies becoming
obsolete before we recover the expenses we incur in developing them. Less
expensive or more effective technologies could make future products obsolete. We
cannot be certain that we will be able to make the necessary enhancements to any
products we develop to compete successfully with newly emerging technologies.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH ESTABLISHED COMPANIES AND
GOVERNMENT AGENCIES IN THE FIELD OF DATABASE SERVICES

         Others are currently developing or marketing a number of databases to
assist participants in the healthcare industry and academic researchers in the
management and analysis of their own genomic data and data available in the
public domain. Although we believe that our existing genealogy database and our
license to construct and operate the Icelandic Health Sector Database provide us
with a unique opportunity to cross-reference databases that include genetic


                                       12
<PAGE>   15
makeup, genealogy, medical history, disease symptoms, resource use and treatment
outcomes, we cannot be sure that any of the databases that we create will
achieve greater market acceptance than those of our competitors. We plan to
grant limited Internet access to our genealogy data to the Icelandic public for
non-business use. Although our genealogy data will be restricted both by
technical and legal means, it is possible that this Internet access will in some
way facilitate the construction of similar databases intended for commercial
purposes.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER COMPANIES IN THE FIELD OF
HEALTHCARE INFORMATICS

         The healthcare informatics field is highly competitive. Many companies
compete with us to develop healthcare informatics similar to our expected
products, including products relating to medical record maintenance, medical
decision-support systems and systems design. We expect that competition will
continue to intensify. Many of our competitors have significantly greater
financial resources and market presence than we have. We cannot be sure that any
products that we develop in the field of healthcare informatics, including
medical decision-support systems, will compete effectively with those of our
competitors.

REGULATORY AUTHORITIES MAY DETERMINE THAT OUR LICENSE TO DEVELOP THE ICELANDIC
HEALTH SECTOR DATABASE INFRINGES UPON COMPETITION RULES IN THE EUROPEAN ECONOMIC
AREA, OR EEA, WHICH COULD NEGATIVELY AFFECT OUR ABILITY TO DERIVE REVENUES FROM
THE ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA PROCESSING
SYSTEM

         Iceland is a member of the European Free Trade Association, or EFTA,
together with Norway, Switzerland and Liechtenstein. Through this membership,
Iceland has become a part of the EEA which was created by the EEA agreement
between EFTA and the European Union, or EU. The EEA agreement extends the EU
internal market and its regulations to EFTA countries that adopt certain EU
legislation. Accordingly, Iceland is subject to both EFTA and EU competition and
public procurement rules. A determination that the Act or our License is in
breach of such rules could result in a revocation or dilution of the License for
the Icelandic Health Sector Database and could have a negative impact on the
profitability and marketing potential of the deCODE Combined Data Processing
system.

OTHERS MAY CLAIM INTELLECTUAL PROPERTY RIGHTS TO OUR GENEALOGY DATABASE, WHICH
COULD PREVENT US FROM USING SOME OR ALL OF OUR DATABASE AND IMPAIR OUR ABILITY
TO DERIVE REVENUES FROM OUR DATABASE AND GENE DISCOVERY SERVICES

         We are aware that there are other firms and individuals who have
prepared, or are currently preparing, genealogy databases similar to the one we
have developed. If any parties should successfully claim that the creation or
use of any of our databases infringes upon their intellectual property rights,
it could have a material adverse effect on our business. Two parties alleging to
hold copyrights to approximately 100 Icelandic genealogy books have filed a
copyright infringement suit against us in Iceland claiming that we have used
data from these books in the creation of our genealogy database, in violation of
their rights. The claimants seek a declaratory judgment to prevent our use of
the database and monetary damages in the amount of approximately $9,000,000. We
believe that this suit is without merit and intend to defend it vigorously, but
if it were successful it could have a material adverse effect on our database
and gene discovery services.

WE MAY NOT BE ABLE TO PROTECT THE PROPRIETARY RIGHTS THAT ARE CRITICAL TO OUR
SUCCESS

         Our success will depend on our ability to protect our genealogy
database and genotypic data and any other proprietary databases that we develop,
proprietary software and other proprietary methods and technologies. Despite our
efforts to protect our proprietary rights, unauthorized parties may be able to
obtain and use information that we regard as proprietary.

         Our commercial success will depend in part on obtaining patent
protection. The patent positions of pharmaceutical, biopharmaceutical and
biotechnology companies, including ours, are generally uncertain and involve
complex legal and factual considerations. We cannot be sure that any of our
pending patent applications will result in issued patents, that we will develop
additional proprietary technologies that are patentable, that any patents issued
to us or our partners will provide a basis for commercially viable products,
will provide us with any competitive advantages or will not be challenged by
third parties, or that the patents of others will not have an adverse effect on
our ability to do business.


                                       13
<PAGE>   16
         In addition, patent law relating to the scope of claims in the area of
genetics and gene discovery is still evolving. There is substantial uncertainty
regarding the patentability of genes or gene fragments without known functions.
The laws of some European countries provide that genes and gene fragments may
not be patented. The Commission of the EU has passed a directive which prevents
the patenting of genes in their natural state. The U.S. Patent and Trademark
Office initially rejected a patent application by the National Institutes of
Health on partial genes. Accordingly, the degree of future protection for our
proprietary rights is uncertain and, we cannot predict the breadth of claims
allowed in any patents issued to us or to others. We could also incur
substantial costs in litigation if we are required to defend ourselves in patent
suits brought by third parties or if we initiate such suits.

         Others may have filed and in the future are likely to file patent
applications covering genes or gene products that are similar or identical to
our products. We cannot be certain that our patent applications will have
priority over any patent applications of others. The mere issuance of a patent
does not guarantee that it is valid or enforceable; thus even if we are granted
patents we cannot be sure that they would be valid and enforceable against third
parties. Further, a patent does not provide the patent holder with freedom to
operate in a way that infringes the patent rights of others. Any legal action
against us or our partners claiming damages and seeking to enjoin commercial
activities relating to the affected products and processes could, in addition to
subjecting us to potential liability for damages, require us or our partners to
obtain a license in order to continue to manufacture or market the affected
products and processes. There can be no assurance that we or our partners would
prevail in any action or that any license required under any patent would be
made available on commercially acceptable terms, if at all. If licenses are not
available, we or our partners may be required to cease marketing our products or
practicing our methods.

         If expressed sequence tags, single nucleotide polymorphisms, or SNPs,
or other sequence information become publicly available before we apply for
patent protection on a corresponding full-length or partial gene, our ability to
obtain patent protection for those genes or gene sequences could be adversely
affected. In addition, other parties are attempting to rapidly identify and
characterize genes through the use of gene expression analysis and other
technologies. If any patents are issued to other parties on these partial or
full-length genes or gene products or uses for such genes or gene products, the
risk increases that the sale of our or our collaborators' potential products or
processes may give rise to claims of patent infringement. The amount of
supportive data required for issuance of patents for human therapeutics is
highly uncertain. If more data than we have available is required, our ability
to obtain patent protection could be delayed or otherwise adversely affected.
Even with supportive data, the ability to obtain patents is uncertain in view of
evolving examination guidelines, such as the utility and written description
guidelines that the U.S. Patent and Trademark Office has adopted.

         While we require employees, academic collaborators and consultants to
enter into confidentiality agreements, there can be no assurance that
proprietary information will not be disclosed, that others will not
independently develop substantially equivalent proprietary information and
techniques, otherwise gain access to our trade secrets or disclose such
technology, or that we can meaningfully protect our trade secrets.

         If the information processed by the deCODE Combined Data Processing
system is disclosed without our authorization, demand for our products and
services may be adversely affected.

IF WE OR OUR COLLABORATORS ARE UNABLE TO OBTAIN REGULATORY APPROVALS FOR
PRODUCTS RESULTING FROM OUR GENE DISCOVERY PROGRAMS, WE WILL NOT BE ABLE TO
DERIVE REVENUES FROM THESE PRODUCTS

         Government agencies must approve new drugs and diagnostic products in
the countries in which they are to be marketed. We cannot be certain that
regulatory approval for any drugs or diagnostic products resulting from our gene
discovery programs will be obtained. The regulatory process can take many years
and require substantial resources. Because some of the products likely to result
from our disease research programs involve the application of new technologies
and may be based upon a new therapeutic approach, various government regulatory
authorities may subject such products to substantial additional review. As a
result, these authorities may grant regulatory approvals for these products more
slowly than for products using more conventional technologies. Furthermore,
regulatory approval may impose limitations on the use of a drug or diagnostic
product.


                                       14
<PAGE>   17
         After initial regulatory approval, a marketed product and its
manufacturer must undergo continuing review. Discovery of previously unknown
problems with a product may have adverse effects on our business, financial
condition and results of operations, including withdrawal of the product from
the market.

OUR DEPENDENCE UPON A SINGLE THIRD PARTY FOR SEQUENCING MACHINES MAY IMPAIR OUR
RESEARCH PROGRAMS

         We currently use a single manufacturer to supply the gene sequencing
machines that we use in our gene discovery programs. While other types of gene
sequencing machines are available from other manufacturers, we do not believe
that the other machines are as efficient as the machines we currently use. We
cannot be sure that the gene sequencing machines will remain available in
sufficient quantities at acceptable costs. If we cannot obtain additional gene
sequencing machines at commercially reasonable rates, or if we are required to
change to a new supplier of gene sequencing machines, our gene discovery
programs would be adversely affected.

WE MAY NOT BE ABLE TO OBTAIN NECESSARY TECHNOLOGY

         We have acquired or licensed certain components of our technologies
from third parties. Changes in or termination of these third party agreements
could materially adversely affect our discovery or research programs. We cannot
be certain that we will be able to acquire any new technologies which we need.

WE WILL HAVE TO RELY ON OTHERS FOR CLINICAL TRIALS, MANUFACTURING, MARKETING,
REGULATORY COMPLIANCE AND SALES CAPABILITIES, WHICH MAY IMPAIR OUR ABILITY TO
DELIVER PRODUCTS

         In our research collaborations, we will seek to retain rights to
develop and market certain therapeutic and diagnostic products or services. If
we are able to retain these rights and successfully develop products, we expect
to contract with others for conducting clinical trials, manufacturing, marketing
and sales.

         We are not certain that we will be able to enter into such arrangements
on favorable terms, if at all. Our dependence upon third parties for the conduct
of clinical trials, the obtaining of governmental approvals or the manufacture,
marketing or sales of products may adversely affect our ability to develop and
deliver products on a timely and competitive basis. Our current facilities and
staff are inadequate for commercial production and distribution of products. If
we choose in the future to engage directly in the development, manufacturing and
marketing of certain products, we will require substantial additional funds,
personnel and production facilities.

EFFORTS TO REDUCE HEALTHCARE COSTS MAY REDUCE MARKET ACCEPTANCE OF OUR PRODUCTS

         Our success will depend in part on the extent to which government and
health administration authorities, private health insurers and other third party
payors will pay for our products. Reimbursement for newly approved healthcare
products is uncertain. Third party payors, including Medicare in the U.S., are
increasingly challenging the prices charged for medical products and services.
Government and other third party payors are increasingly attempting to contain
healthcare costs by limiting both coverage and the level of reimbursement for
new therapeutic products. We cannot be certain that any third party insurance
coverage will be available to patients for any products we discover or develop.
If government or other third party payors do not provide adequate coverage and
reimbursement levels for our products, the market acceptance of these products
may be materially reduced.

OUR OPERATIONS MAY BE IMPAIRED UNLESS WE CAN SUCCESSFULLY MANAGE OUR GROWTH

         We have recently experienced significant growth in the number of our
employees and the scope of our operations. We intend to hire additional
personnel to construct the Icelandic Health Sector Database and the deCODE
Combined Data Processing system, and to develop our healthcare informatics
products. Our management and operations are, and may continue to be, under
significant strain due to this growth. To manage such growth, we must strengthen
our management team and attract and retain skilled employees. Our success will
also depend on our ability to improve our management information, research
information and operational control systems and to expand, train and manage our
workforce.

CHANGES IN OUTSOURCING TRENDS IN THE PHARMACEUTICAL AND BIOTECHNOLOGY
INDUSTRIES COULD ADVERSELY AFFECT OUR GROWTH

         Economic factors and industry trends that affect our primary customers,
pharmaceutical and biotechnology companies, also affect our business. For
example, the practice of many companies in these industries has been to
outsource from organizations like ours to conduct genetic research, clinical
research and sales and marketing projects. Some industry commentators believe
that the rate of growth of outsourcing will trend downward. If these industries
reduce their present tendency to outsource those projects, our operations,
financial condition and growth rate could be materially and adversely affected.
Recently, we also believe we have been negatively impacted by pending mergers
and other factors in the pharmaceutical industry, which appear to have slowed
decision making by our customers and delayed certain trials. A continuation of
these trends would have an ongoing adverse effect on our business. In addition,
numerous governments have undertaken efforts to control growing healthcare costs
through legislation, regulation and voluntary agreements with medical care
providers and pharmaceutical companies. If further regulatory cost containment
efforts limit the profits which can be derived on new drugs, our customers may
reduce their research and development spending which could reduce the business
they outsource to us. We cannot predict the likelihood of any of these events or
the effects they would have on our business, results of operations or financial
condition.

ENCODE'S PRODUCT DEVELOPMENT SERVICES CREATE A RISK OF LIABILITY FROM CLINICAL
TRIAL PARTICIPANTS AND THE PARTIES WITH WHOM WE CONTRACT

         Encode, our subsidiary, contracts with drug companies to perform a wide
range of services to assist them in bringing new drugs to market. Its services
include supervising clinical trials, data and laboratory analysis, patient
recruitment and other services. The process of bringing a new drug to market is
time-consuming and expensive. If we do not perform our services to contractual
or regulatory standards, the clinical trial process could be adversely affected.
Additionally, if clinical trial services such as monitoring clinical trials,
adherence to good clinical practice and laboratory analysis do not conform to
contractual or regulatory standards, trial participants could be affected. In
such case these events would create a risk of liability to us from the drug
companies with whom we contract or the study participants.

         We also contract with physicians to serve as investigators in
conducting clinical trials. Such testing creates risk of liability for personal
injury to or death of patients or volunteers, particularly to patients with
life-threatening illnesses, resulting from adverse reactions to the test drugs.
It is possible third parties could claim that we should be held liable for
losses arising from any deficiencies in professional conduct of the
investigators with whom we contract or in the event of personal injury to or
death of persons participating in clinical trials. We do not believe we are
legally accountable for the medical care rendered by third party investigators,
and we would vigorously defend any such claims. Nonetheless, it is possible we
could be found liable for such losses.

         In addition to supervising tests or performing laboratory analysis,
Encode will also engage in Phase I clinical trials. Phase I clinical trials
involve testing a new drug on a limited number of healthy individuals, typically
20 to 80 persons, to determine the drug's basic safety. We also could be liable
for the general risks associated with the conducting of such trials. These risks
include, but are not limited to, adverse events resulting from the
administration of drugs to clinical trial participants or the unprofessional
practice of Phase I medical care providers.

         We also could be held liable for errors or omissions in connection with
our services. For example, we could be held liable for errors or omissions or
breach of contract if one of our laboratories inaccurately reports or fails to
report lab results or if our informatics products violate rights of third
parties. We maintain insurance to cover ordinary risks but any insurance might
not be adequate, and it would not cover the risk of a customer deciding not to
do business with us as a result of poor performance.

                                       15
<PAGE>   18
USE OF THERAPEUTIC OR DIAGNOSTIC PRODUCTS DEVELOPED AS A RESULT OF OUR PROGRAMS
MAY RESULT IN LIABILITY CLAIMS FOR WHICH WE HAVE INADEQUATE INSURANCE

         The users of any therapeutic or diagnostic products developed as a
result of our discovery or research programs or the use of our database or
medical decision-support products may bring product liability claims against us.
We currently do not carry liability insurance to cover such claims. We are not
certain that we or our collaborators will be able to obtain such insurance or,
if obtained, that sufficient coverage can be acquired at a reasonable cost. If
we cannot protect against potential liability claims, we or our collaborators
may find it difficult or impossible to commercialize products.

WE MAY BE UNABLE TO HIRE AND RETAIN THE KEY PERSONNEL UPON WHOM OUR SUCCESS
DEPENDS

         We depend on the principal members of our management and scientific
staff, including Dr. Kari Stefansson, Chairman, President and Chief Executive
Officer, Hannes Smarason, Executive Vice President and Senior Business and
Finance Officer, Dr. Jeffrey Gulcher, Vice President, Research and Development
and Dr. C. Augustine Kong, Vice President of Statistics. We have not entered
into agreements with any of these persons that bind them to a specific period of
employment. If any of these people leaves us, our ability to conduct our
operations may be negatively affected. Our future success also will depend in
part on our ability to attract, hire and retain additional personnel. There is
intense competition for such qualified personnel and we cannot be certain that
we will be able to continue to attract and retain such personnel. Failure to
attract and retain key personnel could have a material adverse effect on us.

OUR OPERATIONS INVOLVE A RISK OF INJURY FROM HAZARDOUS MATERIALS, WHICH COULD BE
VERY EXPENSIVE TO US

         Our research and manufacturing activities involve the generation, use
and disposal of hazardous materials and wastes, including various chemicals and
radioactive compounds. We are subject to laws and regulations governing the use,
storage, handling and disposal of these materials, including standards
prescribed by Iceland and applicable EU standards. Although we believe that our
safety procedures comply with such laws and regulations, we cannot eliminate the
risk of environmental contamination or injury. In the event of such an
occurrence, we could be held liable for any damages that result, which could
exceed our resources. Although we believe that we comply in all material aspects
with applicable environmental laws and regulations and do not expect to make
additional material capital expenditures in this area, we cannot predict whether
new regulatory restrictions on the production, handling and marketing of
biotechnology products will be imposed. Any such new regulatory restrictions
could require us to incur significant costs to comply.

CURRENCY FLUCTUATIONS MAY NEGATIVELY AFFECT OUR FINANCIAL CONDITION

         Our revenues and cash reserves are denominated in U.S. dollars, but a
portion of our operating costs are denominated in Icelandic kronas. A
strengthening of the Icelandic krona against the U.S. dollar may, therefore,
have a negative impact on our financial condition.


                                       16
<PAGE>   19
                                USE OF PROCEEDS

         deCODE will not receive any proceeds from the sale of shares which may
be sold pursuant to this reoffer prospectus for the respective accounts of the
Selling Securityholders. All such proceeds, net of brokerage commissions, if
any, will be received by the Selling Securityholders. See "Selling
Securityholders" and "Plan of Distribution."

                            SELLING SECURITYHOLDERS

         This reoffer prospectus relates to shares of common stock which have
been acquired by the Selling Securityholders through their exercise of stock
options granted to them under the Plan. The inclusion in the table of the
individuals named therein shall not be deemed to be an admission that any such
individuals are "affiliates" of deCODE.

         The following is a list, as of February 15, 2001, of the Selling
Securityholders and the number of shares held by each Selling Securityholder.

<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      ----------------------------------------------        ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Aoalbjorg Jonasdottir               Laboratory Project Leader                                 5,729         5,000         729
Anna Einarsdottir                   Laboratory Research Associate                             5,000         5,000          0
Anne  Fasquel                       Laboratory  Research Associate                            5,000         5,000          0
Aslaug Jonasdottir                  Laboratory Research Scientist                             5,000         5,000          0
Berglind Olafsdottir                Laboratory Project Leader                                 5,000         5,000          0
Birgir Palsson                      Informatics, Product Development Specialist               5,000         5,000          0
Birgitta Birgisdottir               Laboratory  Research Associate                            5,000         5,000          0
Bjorgvin Richardsson                Laboratory, Head of Genotyping                            5,000         5,000          0
Droplaug Magnusdottir               Laboratory Research Associate                             5,000         5,000          0
Ebba Palsdottir                     Laboratory Research Associate                             5,000         5,000          0
Frosti Palsson                      Informatics, Software Engineer                            5,000         5,000          0
Gretar Arnason                      Informatics, Bioinformatics Specialist                    5,000         5,000          0
Guomundur Guomundsson               Laboratory, Project Leader                               20,000        20,000          0
Guomundur B. Guomundsson            Laboratory, Research Scientist                            5,000         5,000          0
Helga Siguroardottir                Laboratory, Research Assistant                            5,000         5,000          0
Helga Eiriksdottir                  Laboratory, Head of Sequencing                            5,000         5,000          0
Helgi H. Hannessson                 Informatics, Bioinformatics Specialist                    5,000         5,000          0
Helgi B. Magnusson                  Informatics, Bioinformatics Specialist                    5,000         5,000          0
Hildur A. Bjornsdottir              Head of DNA Isolation                                     5,000         5,000          0
Hjalti Andrason                     Laboratory, Research Associate                            5,000         5,000          0
Hrafnhildur H. Antonsdottir         Laboratory, Group Leader-Genotyping                       5,000         5,000          0
</TABLE>


                                       17
<PAGE>   20
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Hrefna Johannsdottir                Laboratory,  Research Associate                           5,000         5,000                0
Hreinn Stefansson                   Laboratory, Head of Division                             30,000        30,000                0
Inga Reynisdottir                   Laboratory, Head of Division                             20,000        20,000                0
Katrin H. Guojonsdottir             Laboratory,  Research Associate                           5,000         5,000                0
Katrin Helgadottir                  Laboratory,  Research Associate                           5,000         5,000                0
Maria Siguroardottir                Laboratory,  Research Assistant                           5,000         5,000                0
Marino Njalsson                     Formerly employed as a Security Manager                   8,333         8,333                0
                                    from July 1997 to October 2000
Peter Donnelly                      Consultant                                               60,000        60,000                0
Ragnar Valdimarsson                 Informatics, Project Manager                              5,000         5,000                0
Ragnheiour Fossdal                  Laboratory, Research Scientist                            5,000         5,000                0
Sigrun Sturludottir                 Laboratory, Head of Sample Management                     5,000         5,000                0
Sigurour Sveinsson                  Formerly employed as a Laboratory                         1,250         1,250                0
                                    Research Assistant from 1998 to 1999
Sigurour Baldursson                 Laboratory, Research Scientist                            5,000         5,000                0
Sigurlaug Sigvaldadottir            Finance, Secretary                                        5,000         5,000                0
Sigrun Siguroardottir               Laboratory, Research Scientist                            5,000         5,000                0
Soffia Hrafnkelsdottir              Laboratory, Research Scientist                            5,000         5,000                0
Steinunn Gunnarsdottir              Laboratory, Research Scientist                            5,000         5,000                0
Steinunn Snorradottir               Laboratory, Research Associate                            5,000         5,000                0
Steinunn Sigurjonsdottir            Laboratory, Research Associate                            5,000         5,000                0
Stein(th)ora (th)orisdottir         Laboratory, Research Associate                            5,000         5,000                0
Stella Maria Siguroardottir         Finance, Secretary                                        5,000         5,000                0
(th)orour Kristjansson              Informatics, Software Engineer                            5,000         5,000                0
(th)orgeir (th)orgeirsson           Laboratory, Associate Director                           20,000        20,000                0
(th)orgerour Bjornsdottir           Purchasing Manager                                        5,000         5,000                0
(th)orlakur Jonsson                 Laboratory, Director                                     20,000        20,000                0
Unnur Styrkarsdottir                Laboratory, Project Leader                               10,000        10,000                0
Valgerour Backman                   Laboratory, Research Scientist                           10,000        10,000                0
Viktoria Loftsdottir                Finance, Assistant                                        5,000         5,000                0
Timothy Hemesath                    Laboratory, Director                                    100,000       100,000                0
Albert Smith                        Laboratory, Project Leader                               10,000        10,000                0
Anna Helgadottir                    Laboratory, Project Leader                               20,000        20,000                0
Burkni Palson                       Informatics Software Engineer                             5,000         5,000                0
Guobjorg Orlygsdottir               Laboratory, Research Scientist                            5,000         5,000                0
Guolaug Kristjansdottir             Laboratory, Research Associate                            5,000         5,000                0
Guorun Hafsteinsdottir              Laboratory, Research Assistant                            5,000         5,000                0
</TABLE>


                                       18
<PAGE>   21
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Jesus Sainz                         Laboratory, Head of Physical Mapping                     20,000        20,000                0
Jonina Valsdottir                   Laboratory, Research Scientist                            5,000         5,000                0
Juergen Laufs                       Laboratory, Project Leader                               12,034        12,034                0
Kristinn Finnbogason                Administrative Assistant                                  5,000         5,000                0
Lara Erlingsdottir                  Informatics, Software Engineer                            5,300         5,000              300
Margret Jakobsdottir                Laboratory, Group Leader                                  5,000         5,000                0
Olafur Einarsson                    Laboratory, Research Associate                            5,000         5,000                0
Ragnheiour Stefansdottir            Laboratory, Research Associate                            5,000         5,000                0
Sigriour (th)orsteinsdottir         Laboratory, Research Associate                            5,000         5,000                0
Sigurour Grimsson                   IT Specialist                                            10,000        10,000                0
Skeggi (th)ormar                    Database Project Manager                                 25,000        25,000                0
Solveig Gretarsdottir               Laboratory, Head of Division                             10,000        10,000                0
Anna Halldorsdottir                 Formerly employed as a Genealogy Associate                1,167         1,167                0
                                    from May 1998 to September 2000
Arnar Hrolfsson                     Finance\Purchasing Assistant                              2,000         2,000                0
Berglind Freymoosdottir             Formerly employed as a Nurse from                         5,000         5,000                0
                                    April 1998 to September 1998
Bjorn Arnarson                      Informatics, Genealogy Associate                          2,000         2,000                0
Daniel Guobjartsson                 Statistics Research Scientist                             5,000         5,000                0
Elin Gretarsdottir                  Informatics, Genealogy Associate                          2,000         2,000                0
Elinbjorg H. Runarsdottir           Laboratory, Research Associate                            5,000         5,000                0
Erla Olafsdottir                    Laboratory, Research Associate                            5,000         5,000                0
Frosti Jonsson                      Laboratory, Research Associate                            5,000         5,000                0
Guobjorg Olafsdottir                Laboratory, Research Associate                            5,000         5,000                0
Guofinna Sveinbjornsdottir          Formerly employed as a Nurse from                         4,500         4,500                0
                                    April 1998 to September 1998
Guorun Haroardottir                 Formerly employed in finance from                         2,813         2,813                0
                                    March 1998 to June 2000
Guorun Ingadottir                   Formerly employed as a Nurse from                         4,000         4,000                0
                                    April 1998 to September 1998
Guorun Johannsdottir                Human Resources, HR representative                        2,000         2,000                0
Guorun Guolaugsdottir               Formerly employed as a Nurse from                         5,000         5,000                0
                                    April 1998 to September 1998
Guorun Bjornsdottir                 Formerly employed as a Nurse from                         4,000         4,000                0
                                    April 1998 to September 1998
Halldora Grondal                    Formerly employed as a Nurse from                         4,000         4,000                0
                                    April 1998 to September 1998
Heioa Liljudottir                   Informatics, Genealogy Associate                          2,000         2,000                0
</TABLE>


                                       19
<PAGE>   22
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Helga Sigurgeirsdottir              Laboratory, Research Assistant                            2,000         2,000                0
Helgi Hallbeck                      Laboratory, Research Associate                            5,000         5,000                0
Hjordis Palsdottir                  Formerly employed as a Nurse from                         4,000         4,000                0
                                    August 1998 to September 1998
Ingolfur Agustsson                  Informatics, Senior Software Engineer                     5,000         5,000                0
Johanna Stefansdottir               Laboratory, Research Assistant                            2,000         2,000                0
Jon Gunnar (th)orsteinsson          Formerly employed as a Genealogy                          1,250         1,250                0
                                    Associate from March 1998 to
                                    September 2000
Katirin Stefansdottir               Laboratory, Research Assistant                            2,000         2,000                0
Kjartan Benediktsson                Informatics, Software Engineer                            5,000         5,000                0
Kolbeinn Proppe                     Formerly employed as a Genealogy                          1,125         1,125                0
                                    Associate from June 1998 to August 2000
Omar Gustafsson                     Laboratory, Research Associate                            5,000         5,000                0
Petur Larusson                      Informatics, Genealogy Associate                          2,000         2,000                0
Rakel (th)orhallsdottir             Laboratory, Research Assistant                            2,000         2,000                0
Selma Haflioadottir                 Formerly employed as a Laboratory                           625           625                0
                                    Assistant from June 1998 to September 1999
Sesselja Jonsdottir                 Formerly employed as a Genealogy                          1,125         1,125                0
                                    Associate from June 1998 to January 2001
Siv Oscarsson                       Formerly employed as a Nurse from                         5,000         5,000                0
                                    April 1998 to September 1998
Stefan Palsson                      Laboratory, Research Associate                            5,000         5,000                0
Svana Steinsdottir                  Laboratory, Research Associate                            5,000         5,000                0
Svava  Siguroardottir               Informatics, Genealogy Associate                          2,000         2,000                0
Svanhvit Antonsdottir               Laboratory, Research Assistant                            2,000         2,000                0
(th)orarinn Blondal                 Laboratory, Research Associate                            5,000         5,000                0
(th)orey Arnadottir                 Finance, Secretary                                        2,000         2,000                0
Vala Guonadottir                    Laboratory, Research Associate                            5,000         5,000                0
Heioar Guonason                     Informatics, Director                                     2,000         2,000                0
Malfriour Siguroardottir            Laboratory, Research Associate                            2,000         2,000                0
Anton Yuryev                        Formerly employed as a Laboratory Research
                                    Scientist from September 1998 to September 1999           2,167         2,167                0
Dana Sholkny                        Laboratory, Research Scientist                            3,000         3,000                0
Andrew Hicks                        Laboratory, Project Leader                                5,000         5,000                0
Sigurbjorg Guonadottir              Research Associate, Statistics                            5,000         5,000                0
Arna Antonsdottir                   Laboratory, Research Associate                            5,000         5,000                0
Auour (th)orsteinsdottir            Finance, Secretary                                        1,000         1,000                0
</TABLE>


                                       20
<PAGE>   23
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Asgeir Bjornsson                    Laboratory, Research Scientist                            5,000         5,000                0
Asgeir Sigurosson                   Laboratory Research Scientist                             1,000         1,000                0
Asdis Aoalsteinsdottir              Laboratory, Research Associate                            1,000         1,000                0
Baldur Bragason                     Informatics, Bioinformatics Specialist                    5,000         5,000                0
Berg(th)ora Skuladottir             Laboratory, Research Associate                            2,000         2,000                0
Bjarni Gislason                     Finance, Assistant, Internal Operations                   1,000         1,000                0
Einar Gislason                      Laboratory, Electronics Technician                        5,000         5,000                0
Emilia Soebeck                      Laboratory, Research Associate                            5,000         5,000                0
Eva Halapi                          Laboratory, Research Scientist                            5,000         5,000                0
Gisli (th)orisson                   Formerly employed as a Laboratory, Medical                1,250         1,250                0
                                    Doctor from June 1998 to July 1999
Guomundur Georgsson                 Informatics, LIMS Senior Software Engineer                5,000         5,000                0
Havarour Hjaltason                  Informatics, IT Service Technician                        5,000         5,000                0
Helga Einarsdottir                  Laboratory, Research Associate                            3,000         3,000                0
Herdis Guojonsdottir                Laboratory, Research Associate                            5,000         5,000                0
Hjordis Bjarnason                   Laboratory, Research Associate                            3,000         3,000                0
Hjortur Jonsson                     Statistics, Group leader, Statistics                      5,000         5,000                0
Hjorvar Petursson                   Statistics, Research Associate, Statistics                1,000         1,000                0
Hlynur Magnusson                    Laboratory, Research Assistant                            1,000         1,000                0
Ingibjorg Bjorgvinsdottir           Formerly employed as a Laboratory Research                  292           292                0
                                    Associate from May 1998 to July 1999
Jakob Sigurosson                    Informatics Software Engineer                             3,000         3,000                0
Ingigerour Ingudottir               Formerly employed as a Laboratory Research                  500           500                0
                                    Assistant from September 1998 to September 2000
Jona Saemundsdottir                 Laboratory, Research Associate                            5,000         5,000                0
Jonina Palmadottir                  Finance, Assistant                                        1,000         1,000                0
Jon Sveinsson                       Finance, Librarian                                        1,718         1,000              718
Julius Guomundsson                  Laboratory, Research Scientist                            5,000         5,000                0
Katrin Ingjaldsdottir               Laboratory, Research Assistant                            1,000         1,000                0
Kristbjorg Jonsdottir               Laboratory, Research Associate                            5,000         5,000                0
Kristjan Jonasson                   Statistics, Group Leader                                 10,000        10,000                0
Margret Andresdottir                Laboratory, Research Associate                            1,000         1,000                0
Margret Sveinsdottir                Formerly employed as a Research Assistant                   313           313                0
                                    in the lab from June 1998 to September 1999
</TABLE>


                                       21
<PAGE>   24
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Oddur Jonas Jonasson                Formerly employed as an Assistant in Internal               396           396                0
                                    Operations from to September 1998 to March 2000
Olga Geirsdottir                    Formerly employed as an Assistant in Internal               375           375                0
                                    Operations from October 1998 to April 2000
Olof Guomundsdottir                 Laboratory, Research Scientist                            5,000         5,000                0
Omar Traustason                     Laboratory, Research Assistant                            1,000         1,000                0
Ragnar Runarsson                    Laboratory, Research Associate                            1,000         1,000                0
Rakel Magnusdottir                  Formerly employed as a Research Assistant                   500           500                0
                                    in the lab from August 1998 to August 2000
Robert Skraban                      Laboratory, Research Scientist                            1,000         1,000                0
Shyamali Ghosh                      Laboratory, Research Scientist                            5,000         5,000                0
Sigrun Reynisdottir                 Laboratory, Research Scientist                            1,000         1,000                0
Sigurbjorg Jakobsdottir             Laboratory, Research Assistant                            1,000         1,000                0
Sigurour Ingason                    Laboratory, Research Associate                            5,000         5,000                0
Sigurjon Guojonsson                 Laboratory, Research Scientist                            5,000         5,000                0
Sonja Siguroardottir                Laboratory, Research Associate                            1,000         1,000                0
Soley Bjornsdottir                  Laboratory, Research Scientist                            5,000         5,000                0
Steinunn Matthiasdottir             Laboratory, Research Associate                            1,359         1,000              359
Sunna Bragadottir                   Formerly employed as a Laboratory Research                  500           500                0
                                    Assistant from September 1998 to September 2000
Valgerour Stein(th)orsdottir        Laboratory, Project Leader                                5,000         5,000                0
Valgerour Gunnarsdottir             Medical Informatics Specialist                            5,000         5,000                0
(th)orbjorg Jonsdottir              Laboratory, Research Associate                            1,000         1,000                0
(th)oranna Bjornsdottir             Finance\Purchasing, Purchasing Assistant                  1,000         1,000                0
(th)orunn Guomundsdottir            Laboratory, Research Associate                            1,359         1,000              359
(th)rainn Arsaelsson                Internal Operations, Chef                                 1,000         1,000                0
Alexander Diehl                     Laboratory, Research Scientist                            5,000         5,000                0
Alfreo Hauksson                     Informatics, Software Engineer                            3,000         3,000                0
Andrei Manolescu                    Statistics, Research Scientist                            4,000         4,000                0
Anthony Gunnel                      Laboratory, Research Scientist                            3,000         3,000                0
Arnaldur Gylfason                   Informatics, Bioinformatics Specialist                    1,000         1,000                0
Arnar Sigmundsson                   Laboratory, Research Associate                            1,000         1,000                0
Arndis Bjornsdottir                 Laboratory, Research Associate                            1,000         1,000                0
Arni Sigurosson                     Informatics, IT Service                                   1,000         1,000                0
</TABLE>


                                       22
<PAGE>   25
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Berit Nielsen                       Laboratory, Research Associate                            1,168         1,000              168
Bjorg Olafsdottir                   Laboratory, Research Associate                            1,000         1,000                0
Brynhildur Einarsdottir             Laboratory, Research Assistant                            1,000         1,000                0
Dagny Hreinsdottir                  Laboratory, Research Associate                            1,000         1,000                0
Eduardo Hernandez                   Laboratory, Research Scientist                            5,000         5,000                0
Egill Juliusson                     Formerly employed as a Research Assistant                   296           250               46
                                    in laboratory from September 1999 to
                                    September 2000
Ella Geirsdottir                    Laboratory, Research Associate                            1,000         1,000                0
Erna Magnusdottir                   Laboratory, Research Associate                            1,000         1,000                0
Freyr (th)orarinsson                Informatics, Project Manager, Data Mining                 7,500         7,500                0
Guolaug Runarsdottir                Laboratory, Research Assistant                            1,000         1,000                0
Guolaugur Egilsson                  Informatics Bioinformatics Specialist                     3,386         3,000              386
Guomar (th)orleifsson               Statistics, Group Leader                                  3,000         3,000                0
Guomundur (th)orisson               Informatics, Bioinformatics Specialist                    1,000         1,000                0
Guorun Jonsdottir                   Statistics, Research Associate                            1,000         1,000                0
Guorun AEgisdottir                  Laboratory, Genotyping                                    1,000         1,000                0
Gunnar Sigurosson                   Informatics, Bioinformatics Specialist                    1,000         1,000                0
Halldor Erlendsson                  Laboratory, Electronics Technician                        3,000         3,000                0
Halldor Fjalldal                    Formerly employed as a Research Scientist                   250           250                0
                                    from August 1999 to September 2000
Haraldur Hallgrimsson               Informatics Assistant                                     1,000         1,000                0
Harpa Runarsdottir                  Statistics                                                1,000         1,000                0
Haukur Arason                       Statistics, Research Scientist                            3,000         3,000                0
Hakon Aoalsteinsson                 Laboratory, Research Assistant                            1,000         1,000                0
Helena Marteinsdottir               Laboratory                                                1,000         1,000                0
Helga Erlingsdottir                 Laboratory, Research Associate                            1,000         1,000                0
Helga Knudsen                       Laboratory, Research Associate                            1,000         1,000                0
Helga Stefansdottir                 Informatics Office Manager                                1,000         1,000                0
Hermann Ingjaldsson                 Formerly employed as a Laboratory Research                  250           250                0
                                    Assistant from August 1999 to August 2000
Hjalti Sigurosson                   Informatics IT Service Technician                         1,000         1,000                0
Hjordis Siguroardottir              Informatics Software Engineer                             1,000         1,000                0
</TABLE>


                                       23
<PAGE>   26
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Hulda (th)rainsdottir               Formerly employed as a Bioinformatics                       250           250                0
                                    Associate from May 1999 to May 2000
Ileana Manolescu                    Statistics, Research Associate                            1,000         1,000                0
Jo Ronneberg                        Laboratory, Research Associate                            1,000         1,000                0
Johann Fjalldal                     Informatics, Project Manager                              1,000         1,000                0
Johann Einarsson                    Informatics, Project Manager Database, Software          15,660        15,000              660
Jonas Hauksson                      Laboratory, Research Associate                            1,000         1,000                0
Jonheiour Isleifsdottir             Laboratory, Research Assistant                            1,000         1,000                0
Katherine Mylonas                   Laboratory, Research Associate                            1,000         1,000                0
Kristjana Johannesdottir            Laboratory, Research Assistant                            1,000         1,000                0
Kristjon Guojonsson                 Laboratory, Research Assistant                            1,000         1,000                0
Lisa Libungan                       Formerly employed as an Informatics                         396           396                0
                                    Assistant from June 1999 to December 2000
Luovik Guojonsson                   Informatics, Bioinformatics Specialist                    1,000         1,000                0
Luovik Tomasson                     Finance\Financial Reporting                              50,000        50,000                0
Magnus Jokulsson                    Formerly employed as a Research Assistant                   292           292                0
                                    in laboratory from June 1999 to August 2000
Nanna Vioarsdottir                  Laboratory, Research Associate                            1,000         1,000                0
Natasha Desnica                     Laboratory, Research Associate                            1,000         1,000                0
Ragnheiour Gestsdottir              Formerly employed as a Genealogy Associate                  250           250                0
                                    from September 1999 to September 2000
Rakel Tryggvadottir                 Formerly employed as a Research Assistant                   312           312                0
                                    in the lab from May 1999 to December 2000
Raywatee Sahodeo                    Finance, IR Assistant                                     1,000         1,000                0
Remi Spillaert                      Laboratory, Research Scientist,                           3,112         3,000              112
Robert (th)orvaldsson               Finance, Internal Operations, Assistant                   1,000         1,000                0
Sif Jonsdottir                      Laboratory, Research Scientist                            2,000         2,000                0
Sigfus Sigfusson                    Formerly employed as a Genealogy Associate                  375           375                0
                                    from May 1999 to December 2000
</TABLE>


                                       24
<PAGE>   27
<TABLE>
<CAPTION>
                                                                                                       Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
<S>                                 <C>                                                   <C>          <C>           <C>
Sigriour Gunnarsdottir              Laboratory, Research Assistant                            1,000         1,000                0
Sigriour Reynisdottir               Laboratory, Research Associate                            1,000         1,000                0
Sigrun Bjarnadottir                 Laboratory, Research Associate                            1,200         1,000              200
Sigrun Bjornsdottir                 Formerly employed in the Communications                   1,771         1,771                0
                                    Department from March 1999 to August 2000
Sigrun Halldorsdottir               Laboratory, Research Assistant                            1,000         1,000                0
Sigurborg Matthiasdottir            Laboratory, Research Associate                            1,000         1,000                0
Sigurour Arnason                    Database                                                 10,000        10,000                0
Sigurour Kristjansson               Informatics, Genealogy Associate                          1,000         1,000                0
Silja Arnarsdottir                  Laboratory, Research Assistant                            1,000         1,000                0
Stefan Jonsson                      Formerly employed as a Laboratory Research                  313           313                0
                                    Associate from June 1999 to September 2000
Steinunn Jonsdottir                 Laboratory, Research Associate                            1,000         1,000                0
Sunil Godithi                       Corporate Development,Software Engineer                   3,000         3,000                0
Sveinn Joelsson                     Informatics,                                              1,000         1,000                0
Theodora Thorlacius                 Laboratory, Research Associate                            1,000         1,000                0
(th)orsteinn Njalsson               Medical Doctor                                           15,000        15,000                0
(th)orunn Guomundsdottir            Informatics                                               1,000         1,000                0
(th)orunn Juliusdottir              Formerly employed as a Laboratory Research                  250           250                0
                                    Assistant from August 1999 to August 2000
Vaka Agustsdottir                   Laboratory, Research Assistant                            1,000         1,000                0
Vala Johannsdottir                  Laboratory, Research Associate                            1,000         1,000                0
Valdimar Hauksson                   Laboratory, Research Associate                            1,000         1,000                0
Valgeir Hallbergsson                Informatics, IT service                                   1,000         1,000                0
Orn Asgeirsson                      Informatics, IT service                                   1,000         1,000                0
Unnur Jokulsdottir                  Formerly Director of Communications                     160,000       100,000           60,000
Karl Tryggvason                     Consultant                                               60,000        60,000                0
Vigfus Sveinbjornsson               Finance\Purchasing, Purchasing Specialist                10,000        10,000                0
</TABLE>


*        All Selling Securityholders listed herein will own less than one
         percent of the outstanding shares after the offering.

(1)      Represents shares beneficially owned by the named individual, including
         shares that such person has the right to acquire within 60 days of the
         date of this Reoffer Prospectus. Unless otherwise noted, all persons


                                       25
<PAGE>   28
         referred to above have sole voting and sole investment power.

(2)      Does not include outstanding options to purchase Shares of Common Stock
         granted to the named individuals under the Plan, whether or not vested
         or exercisable within 60 days of the date of this Reoffer Prospectus.
         Includes all Shares issued to such named individuals upon the exercise
         of options granted under the Plan. All of such Shares are being
         registered under the registration statement of which this Resale
         Prospectus is a part.

(3)      Does not constitute a commitment to sell any or all of the stated
         number of Shares of Common Stock. The number of Shares offered shall be
         determined from time to time by each Selling Stockholder at his or her
         sole discretion.


                              PLAN OF DISTRIBUTION

         Shares offered hereby may be sold from time to time directly by or on
behalf of the Selling Securityholders in one or more transactions on the Nasdaq
National Market or on any stock exchange on which the common stock may be listed
at the time of sale, in privately negotiated transactions, or through a
combination of such methods, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at fixed prices (which may be
changed) or at negotiated prices. The Selling Securityholders may sell shares
through one or more agents, brokers or dealers or directly to purchasers. Such
brokers or dealers may receive compensation in the form of commissions,
discounts or concessions from the Selling Securityholders and/or purchasers of
the shares or both (which compensation as to a particular broker or dealer may
be in excess of customary commissions).

         In connection with such sales, the Selling Securityholders and any
participating broker or dealer may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions they receive and the proceeds
of any sale of shares may be deemed to be underwriting discounts and commissions
under the Securities Act.

         In order to comply with certain state securities laws, if applicable,
the shares may be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the shares may not be sold unless the
shares have been registered or qualified for sale in such state or an exemption
from regulation or qualification is available and is complied with. Sales of
shares must also be made by the Selling Securityholders in compliance with all
other applicable state securities laws and regulations.

         In addition to any shares sold hereunder, Selling Securityholders may,
at the same time, sell any shares of common stock, including the shares, owned
by them in compliance with all of the requirements of Rule 144, regardless of
whether such shares are covered by this reoffer prospectus. There can be no
assurance that any of the Selling Securityholders will sell any or all of the
shares offered by them hereby.

         deCODE will pay all expenses of the registration of the shares. deCODE
has notified certain Selling Securityholders of the need to deliver a copy of
this reoffer prospectus in connection with any sale of the shares.

                                  LEGAL MATTERS

         The validity of the shares being offered hereby has been passed upon
for deCODE by Reed Smith LLP.

                                     EXPERTS

         The financial statements as of December 31, 1998 and 1999 and for each
of the three years in the period ended December 31, 1999, which are incorporated
by reference in this reoffer prospectus, have been so incorporated in reliance
on the report of PricewaterhouseCoopers ehf., independent accountants, given on
the authority of said firm as experts in auditing and accounting.


                                       26
<PAGE>   29
                                     PART II
               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The following documents, which have been filed by deCODE genetics, Inc.
(the "Registrant") with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration statement as
of their respective dates:

         (a)      The Registrant's final prospectus filed on July 18, 2000
                  pursuant to Rule 424(b) of the Securities Act of 1933, as
                  amended (the "Securities Act");

         (b)      The Registrant's Quarterly Reports on Form 10-Q for the
                  quarters ended June 30 and September 30, 2000;

         (c)      All other reports filed pursuant to Section 13 or 15(d) of the
                  Exchange Act since July 18, 2000;

         (d)      The Registrant's Form 8-A filed on June 26, 2000 pursuant to
                  Section 12(g) of the Exchange Act; and

         (e)      The description of the Registrant's common stock contained in
                  the Registrant's final prospectus filed on July 18, 2000
                  pursuant to Rule 424(b) of the Securities Act.

         All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of this registration
statement and prior to the filing of a post-effective amendment which indicates
that all securities described herein have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents with the Commission. Any statement in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this registration
statement.


ITEM 4.  DESCRIPTION OF SECURITIES.

Not applicable.


ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Section 102(b)(7) of the Delaware General Corporation Law ("DGCL")
enables a corporation in its certificate of incorporation to limit the personal
liability of its directors for violations of their fiduciary duty of care.
Accordingly, Section 4.7 of our certificate of incorporation states that a
director will not be personally liable to us or to our stockholders for monetary
damages resulting from any breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to us or to our
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. If the DGCL is amended, then the liability of a
director will be eliminated or limited to the fullest extent permitted by the
amended DGCL.


                                      II-1
<PAGE>   30
         Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

         Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of that action or
suit if he acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the corporation. No indemnification
will be made, however, in respect to any claim, issue or matter as to which that
person is adjudged to be liable to the corporation, unless and only to the
extent that the Court of Chancery or the court in which that action or suit was
brought will determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, that person is
fairly and reasonably entitled to indemnity for the expenses which the Court of
Chancery or such other court deems proper.

         Section 145 further provides that to the extent a present or former
director or officer of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in defense of any claim, issue or matter therein, that person will be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him; that the indemnification provided by Section 145 will not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the scope of indemnification extends to directors, officers,
employees, or agents of a constituent corporation absorbed in a consolidation or
merger and persons serving in that capacity at the request of the constituent
corporation for another. The determination of whether indemnification is proper
under the circumstances, unless made by a court, is determined by (a) a majority
of the disinterested members of the Board of Directors or board committee; (b)
independent legal counsel (if a quorum of the disinterested members of the Board
of Directors or board committee is not available or if the disinterested members
of the Board of Directors or a board committee so direct); or (c) the
stockholders.

         Section 145 also empowers us to purchase and maintain insurance on
behalf of our directors or officers against any liability asserted against them
or incurred by them in any such capacity or arising out of their status as our
directors or officers whether or not we would have the power to indemnify them
against the liabilities under Section 145. We currently carry liability
insurance for the benefit of our past, present and future directors and officers
that provides coverage for any damages (including punitive or exemplary damages,
where insurable under applicable law), settlements, judgments and reasonable and
necessary legal fees and expenses incurred by any of the officers or directors
resulting from any judicial or administrative proceeding (including arbitration
or alternative dispute resolution proceeding) or any written demand or notice
describing circumstances likely to give rise to a judicial or administrative
proceeding initiated during the policy period against any of the officers or
directors in which they may be subjected to a binding adjudication of liability
for damages or other relief, including any appeal therefrom, for any actual or
alleged error, omission, misstatement, misleading statement, breach of duty,
violation of securities laws or regulations by any officer or director,
(including libel, slander or defamation in connection solely with an employment
practices wrongful act), or in connection with the purchase or sale, or offer to
purchase or sell, securities issued by the company, while acting in his capacity
as or by reason of his status as a director or officer of the company (or any
subsidiary of the company) or in his capacity as a director or officer of a
company exempt from taxation under 501(c)(3) of the Internal Revenue Code (or
any subsidiary of such company) during such time


                                      II-2
<PAGE>   31
that such service is part of the regularly assigned duties of the officer or
director with the company. Our liability insurance further provides for any
reasonable investigative costs, including fees of attorneys and experts,
incurred by the company or its board of directors in the investigation or
evaluation of any shareholder derivative demand to bring a civil proceeding
against an officer or director. Among other exclusions, our current policy
specifically excludes coverage for any claim: brought about or contributed to in
fact by any intentional dishonest or fraudulent act or omission or any willful
violation of any statute, rule or law by any officer or director; based upon
actual or alleged exposure to pollution or contamination; for actual or alleged
violations of the Employee Retirement Income Security Act of 1974; by, on behalf
of, or at the direction of, the company or other officers or directors; brought
about or contributed to in fact by the gaining by any officer or director of any
profit, remuneration or advantage to which such officer or director is not
legally entitled; by any willful violation of any statute, rule or law; seeking
relief or redress in any form other than money damages; for actual or alleged
bodily injury, sickness, disease, death, mental anguish, emotional distress,
damage to or destruction of tangible property, nuclear reaction, nuclear
radiation, radioactive contamination or radioactive substance.

         Section 42 of our bylaws requires that we indemnify each director and
executive officer to the fullest extent allowable under the DGCL, and empowers
us to indemnify our other officers, employees and other agents. Section 42
further provides, however, that we may limit the extent of our indemnification
by individual contracts with our directors and executive officers, and further,
that we will not be required to indemnify any director or executive officer in
connection with any proceeding (or part of a proceeding) initiated by that
person or any proceeding by that person against us or our directors, officers,
employees or other agents unless (a) indemnification is expressly required to be
made by law, (b) the proceeding was authorized by our Board of Directors or
(c)indemnification is provided by us, in our sole discretion, pursuant to the
powers vested in us under the DGCL. This provision is a contract with each
director and executive officer who serves in that capacity at any time while the
provision and the relevant provisions of the DGCL are in effect.

         Any repeal or modification of Section 42 of our bylaws will only be
prospective, and will not affect any rights in effect at the time of the alleged
occurrence of any action or omission to act that is the cause of any proceeding
against any of our agents. Further, the rights conferred on any person by
Section 42 will continue as to a person who has ceased to be a director,
officer, employee or other agent and will inure to the benefit of the heirs,
executors and administrators of such person.

         We have, in addition, entered into an indemnity agreement with one of
our directors, Sir John Vane. The agreement requires us, subject to certain
exceptions, to hold harmless and indemnify Sir John to the fullest extent
authorized or permitted by the provisions of the bylaws and the DGCL, as each
may be amended from time to time (but, only to the extent that an amendment
permits us to provide broader indemnification rights than the bylaws or the DGCL
permitted prior to adoption of that amendment). Subject to certain exclusions,
we further agreed to hold harmless and indemnify Sir John against any and all
expenses (including attorneys' fees), witness fees, damages, judgments, fines
and amounts paid in settlement and any other amounts that he becomes legally
obligated to pay because of any claim or claims made against or by him in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, arbitrational, administrative or investigative
(including an action by or in the right of us) to which he is, was, or at any
time becomes, a party, or is threatened to be made a party, by reason of the
fact that he is, was, or at any time becomes, our director, officer, employee or
other agent, or is or was serving, or at any time serves, at our request, as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and otherwise
to the fullest extent as may be provided to him by us under our bylaws and the
DGCL.

         Our agreement with, and obligations to, Sir John under his indemnity
agreement will continue during the period that he serves as our director,
officer, employee or other agent (or is or was serving at our request as a
director, officer, employee or other agent of another company, partnership,
joint venture, trust, employee benefit plan or other enterprise) and will
continue thereafter so long as he will be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that the director was serving in the capacity referred to herein.


                                      II-3
<PAGE>   32
ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         The shares to be sold under the reoffer prospectus were initially
issued by the Registrant and were deemed exempt from registration under the
Securities Act in reliance on: (1) Rule 701 promulgated under the Securities Act
as offers and sales of securities pursuant to certain compensatory benefit plans
relating to compensation in compliance with Rule 701, (2) Regulation S as offers
and sales that occurred outside the United States, or (3) Section 4(2) of the
Securities Act, and/or Regulation D thereunder, as transactions by an issuer not
involving any public offering.


ITEM 8.  EXHIBITS

Exhibit No.       Description of Exhibit

3.1               Amended and Restated Certificate of Incorporation, as further
                  amended (Incorporated by reference to Exhibit 3.1 and Exhibit
                  3.3 to the Registrant's Registration Statement on Form S-1
                  (Registration No. 333-31984) which became effective on July
                  17, 2000.)

3.2               Bylaws, as amended (Incorporated by reference to Exhibit 3.2
                  to the Registrant's Registration Statement on Form S-1
                  (Registration No. 333-31984) which became effective on July
                  17, 2000.)

4.1               Specimen Common Stock Certificate (Incorporated by reference
                  to Exhibit 4.1 to the Registrant's Registration Statement on
                  Form S-1 (Registration No. 333-31984) which became effective
                  on July 17, 2000.)

5.1               Opinion of Reed Smith LLP

10.1              1996 Equity Incentive Plan, as amended

10.2              Form of Non-Statutory Stock Option Agreement, including Early
                  Exercise Stock Purchase Agreement and all exhibits thereto, as
                  executed by employees and officers of deCODE genetics, Inc.
                  who received and exercised non-statutory stock options
                  (Incorporated by reference to Exhibit 10.3 to the Registrant's
                  Registration Statement on Form S-1 (Registration No.
                  333-31984) which became effective on July 17, 2000.)

23.1              Consent of PricewaterhouseCoopers ehf., independent public
                  accountants

23.2              Consent of Reed Smith LLP (contained in the opinion filed as
                  Exhibit 5.1 hereto).

24.1              Power of Attorney (included on the Signature Page)


ITEM 9. UNDERTAKINGS.

     (a) The undersigned Registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made,
         a post-effective amendment to this registration statement:

                  (i) To include any prospectus required by Section 10(a)(3) of
         the Securities Act;


                                      II-4
<PAGE>   33
                  (ii) To reflect in the prospectus any facts or events arising
         after the effective date of the registration statement (or the most
         recent post-effective amendment thereof) which, individually or in the
         aggregate, represent a fundamental change in the information set forth
         in the registration statement. Notwithstanding the foregoing, any
         increase or decrease in volume of securities offered (if the total
         dollar value of securities offered would not exceed that which was
         registered) and any deviation from the low or high and of the estimated
         maximum offering range may be reflected in the form of prospectus filed
         with the Commission pursuant to Rule 424(b) if, in the aggregate, the
         changes in volume and price represent no more than 20 percent change in
         the maximum aggregate offering price set forth in the "Calculation of
         Registration Fee" table in the effective registration statement; and

                  (iii) To include any material information with respect to the
         plan of distribution not previously disclosed in this registration
         statement or any material change to such information in this
         registration statement;

         provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
         apply if the information required to be included in a post-effective
         amendment by those paragraphs is contained in periodic reports filed
         with or furnished to the Commission by the Registrant pursuant to
         Section 13 or Section 15(d) of the Exchange Act that are incorporated
         by reference in the registration statement.

         (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.


                                      II-5
<PAGE>   34
                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it meets all of the requirements for filing on Form
S-8 and has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the city of Reykjavik,
Iceland, on this 28th day of February, 2001.

                                             deCODE genetics, Inc.

                                             By:  /s/ Kari Stefansson
                                                 ______________________________
                                                 Dr. Kari Stefansson, President
                                                 and Chief Executive Officer


                               POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dr. Kari Stefansson, Hannes Smarason and
Axel Nielsen, and each or any one of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
Signature                                              Title                                        Date
---------                                              -----                                        ----
<S>                                  <C>                                                     <C>

/s/ Kari Stefansson
____________________________         Chairman, President, Chief Executive Officer            February 28, 2001
Dr. Kari Stefansson                  (principal executive officer) and Director

/s/ Axel Nielsen
____________________________         Vice President, Finance and Treasurer                    February 28, 2001
Axel Nielsen                         (principal financial officer and
                                     principal accounting officer)

/s/ Jean-Francois Formela
____________________________         Director                                                 February 28, 2001
Jean-Francois Formela

/s/ Andre Lamotte
____________________________         Director                                                 February 28, 2001
Andre Lamotte

/s/ Terrance McGuire
____________________________         Director                                                 February 28, 2001
Terrance McGuire

 /s/ John Vane
____________________________         Director                                                 February 28, 2001
Sir John Vane
</TABLE>
[{"type": "S-8", "sequence": "1", "filename": "w46328s-8.txt", "description": "FORM S-8 FOR DECODE GENETICS FILED MARCH 2001", "secsgml_size_bytes": 150134}]
{"company-data": {"conformed-name": "DECODE GENETICS INC", "cik": "0001022974", "assigned-sic": "8731", "irs-number": "043326704", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-56996", "film-number": "1567797"}, "business-address": {"street1": "LYNGHALSI 1", "city": "REYJKAVIK", "state": "K6", "zip": "94306-2155", "phone": "0113545701900"}, "mail-address": {"street1": "LYNGHALSI 1", "street2": "REYKJAVIK", "city": "ICELAND"}}
1
     As filed with the Securities and Exchange Commission on March 14, 2001

                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION

                                    FORM S-8
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              deCODE genetics, Inc.

             (Exact name of registrant as specified in its charter)

                DELAWARE                                     04-3326704
      (State or other jurisdiction                        (I.R.S. Employer
    of incorporation or organization)                    Identification No.)

                                   LYNGHALS 1
                               REYKJAVIK, ICELAND
                                 + 354-570-1900
               (Address, including ZIP code, and telephone number,
        including area code, of registrant's principal executive offices)

                     1996 EQUITY INCENTIVE PLAN, AS AMENDED
                            (Full title of the plans)

             KARI STEFANSSON, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                              deCODE genetics, INC.
                                   LYNGHALS 1
                               REYKJAVIK, ICELAND
                                 + 354-570-1900

    (Name, address, including ZIP code, and telephone number, including area
                          code, of agent for service)

                                   COPIES TO:

                           EDWARD P. BROMLEY III, ESQ.
                                 REED SMITH LLP
                           136 MAIN STREET - SUITE 250
                           PRINCETON, NEW JERSEY 08540

                         CALCULATION OF REGISTRATION FEE
======================================================================================================================
                                      Amount            Proposed Maximum           Proposed
  Title of Each Class of              to be              Offering Price        Maximum Aggregate        Amount of
to be Registered Securities        Registered(1)          Per Share(2)          Offering Price       Registration Fee
----------------------------------------------------------------------------------------------------------------------
Common stock, $.001 par value        3,192,974                $8.22               $26,246,246           $6,561.56

======================================================================================================================
(1)      Together with an indeterminate number of additional shares which may be
issued pursuant to the 1996 Equity Incentive Plan, as amended as a result of
stock splits, stock dividends or similar transactions in accordance with Rule
416.

(2)      Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on March 12, 2001.
2
                                     PART I

                                EXPLANATORY NOTE

         This registration statement registers 1,321,974 shares of common stock,
par value $.001 per share, of deCODE genetics, Inc. that were issued and sold
and 1,871,000 shares of common stock that may be issued and sold under deCODE's
1996 Equity Incentive Plan, as amended (the "Plan").

         This registration statement contains two parts. The first part contains
a resale prospectus prepared in accordance with Instruction C of the General
Instructions to Form S-8 which covers the reoffer and resales of shares of the
common stock issued pursuant to the Plan. The second part contains information
required to be included in Part II of a Registration Statement on Form S-8. In
accord with the Note to Part I of the Form S-8, information regarding the Plan,
as specified by Part I of Form S-8, will be delivered to each participant in the
Plan and does not need to be filed with the Securities and Exchange Commission.
3
                               REOFFER PROSPECTUS

                        1,321,974 Shares of Common Stock

                              deCODE genetics, Inc.

                              ---------------------

         The shares of common stock, $0.001 par value per share (the "shares"),
of deCODE genetics, Inc. covered by this reoffer prospectus, may be offered and
sold to the public by certain stockholders of deCODE (collectively, the "Selling
Securityholders"). The Selling Securityholders have acquired the shares through
their exercise of stock options granted to them under deCODE's 1996 Equity
Incentive Plan, as amended ("the Plan").

         Our common stock is quoted on the Nasdaq National Market under the
symbol "DCGN." On March 1, 2001, the closing price of a share of our common
stock on the Nasdaq National Market was $8.00 per share. The Selling
Securityholders may sell their shares directly or indirectly in one or more
transactions on the Nasdaq National Market or on any stock exchange on which the
shares may be listed at the time of sale, in privately negotiated transactions,
or through a combination of such methods. These sales may be at fixed prices
(which may be changed), at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.

         The shares are "restricted securities" under the Securities Act of
1933, as amended (the "Securities Act") before their sale under this prospectus.
This reoffer prospectus has been prepared for the purpose of registering the
shares under the Securities Act to allow for future sales by the Selling
Securityholders to the public without restriction. The Selling Securityholders
may sell shares through one or more agents, brokers or dealers or directly to
purchasers. Such brokers or dealers may receive compensation in the form of
commissions, discounts or concessions from the Selling Securityholders and/or
purchasers of the shares, or both (which compensation as to a particular broker
or dealer may be in excess of customary commissions). In connection with such
sales, the Selling Securityholders and any participating broker or dealer may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions they receive and the proceeds of any sale of shares may be deemed to
be underwriting discounts and commissions under the Securities Act. deCODE will
not receive any proceeds from the sale of the shares by the Selling
Securityholders.

                              --------------------

         INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.

                              --------------------

         The Securities and Exchange Commission and state securities commission
have not approved or disapproved these securities, or determined if this reoffer
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                              --------------------

              The date of this reoffer prospectus is March 13, 2001.

                                       1
4
                               TABLE OF CONTENTS
Page
Where You Can Find More Information.......................................    2
Incorporation of Certain Documents by Reference...........................    3
The Company...............................................................    4
Risk Factors..............................................................    5
Use of Proceeds...........................................................   17
Selling Securityholders...................................................   17
Plan of Distribution......................................................   26
Legal Matters.............................................................   26
Experts...................................................................   26
--------------

         You should rely only on the information contained in this reoffer
prospectus or any supplement. We have not authorized anyone to provide you with
information different from that which is contained in or incorporated by
reference to this reoffer prospectus. We are offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this reoffer
prospectus is accurate only as of the date of this reoffer prospectus,
regardless of the time of delivery of this reoffer prospectus or of any sale of
the common stock.

                       WHERE YOU CAN FIND MORE INFORMATION

          We have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-8 under the Securities Act with
respect to the shares of common stock offered hereby. This reoffer prospectus
does not contain all of the information set forth in the registration statement
and the exhibits thereto. For further information with respect to us and the
common stock offered hereby, reference is made to the registration statement and
the exhibits thereto. Statements contained in this reoffer prospectus regarding
the contents of any contract or any other document to which reference is made
are not necessarily complete, and, in each instance where a copy of such
contract or other document has been filed as an exhibit to the registration
statement, reference is made to the copy so filed, each such statement being
qualified in all respects by such reference.

         We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, file reports and other information with the Commission. The
Registration Statement, including exhibits, and the reports and other
information filed by deCODE can be inspected without charge at the public
reference facilities maintained by the Commission at the Commission's principal
office at 450 Fifth Street, N.W., Room 1024, Washington, D.C., 20549, and at the
Regional Offices of the Commission located at Seven World Trade Center, l3th
Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can be obtained
from such offices at fees prescribed by the Commission. The public may obtain
information on the operation of the Public Reference room by calling the
Commission at 1-800-SEC-0330. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of this site is http://www.sec.gov. deCODE shares are quoted on the Nasdaq
National Market under the symbol "DCGN."

                                       2
5
                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The following documents, which have been filed by us with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration statement as
of their respective dates:

         (a)      The final prospectus filed on July 18, 2000 pursuant to Rule
                  424(b) of the Securities Act;

         (b)      The Quarterly Reports on Form 10-Q for the quarters ended June
                  30 and September 30, 2000;

         (c)      All other reports filed pursuant to Section 13 or 15(d) of the
                  Exchange Act since July 18, 2000;

         (d)      The Form 8-A filed on June 26, 2000 pursuant to Section 12(g)
                  of the Exchange Act; and

         (e)      The description of our common stock contained in the
                  Registrant's final prospectus filed on July 18, 2000 pursuant
                  to Rule 424(b) of the Securities Act.

         All documents filed by us pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this reoffer prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement.

         deCODE will provide without charge to any person to whom this reoffer
prospectus is delivered, upon written or oral request of such person, a copy of
each document incorporated by reference in the registration statement (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into this reoffer prospectus). Requests should be
directed to Edward Farmer at deCODE, Lynghals 1, Reykjavik, Iceland. deCODE's
telephone number is + 354-570-1900 and its Web site is located at
www.decode.com. Information on the Web site is not incorporated by reference
into this reoffer prospectus.

                                       3
6
                                   THE COMPANY

         deCODE was incorporated in August 1996. We are a genomics and health
informatics company which develops products and services for the healthcare
industry. Our approach to the discovery of healthcare knowledge brings together
three key types of non-personally identifiable population data derived from the
Icelandic nation: information from the healthcare system, information about
relationships among individuals covered by this system and associated molecular
genetics data. We have three avenues of commercialization which are: Discovery
Services, with a focus on gene and drug target discovery; Database Services,
with a focus on the construction and commercialization of the Icelandic Health
Sector Database, which contains non-personally identifiable data from Icelandic
healthcare records, and the deCODE Combined Data Processing system, to
cross-reference data from the Icelandic Health Sector Database with genealogical
and genotypic data; and Healthcare Informatics, which is computerized analysis
of healthcare data, with a focus on bioinformatics, which is the computerized
analysis of biological information, decision-support tools and privacy products.

         In February 1998, we entered into a research collaboration and
cross-license agreement with F.Hoffmann-La Roche, or Roche, regarding research
into the genetic causes of twelve diseases. Under the terms of the agreement,
Roche has made equity investments and has funded our gene discovery programs in
twelve diseases. Under the agreement, we may receive a total of more than $200
million in research funding and milestone payments and we will receive royalty
payments on the sale of diagnostic and therapeutic products resulting from the
collaboration. The term of the agreement will continue until February 1, 2003
provided that Roche elects to extend the agreement for the one-year period
commencing on the fourth anniversary of the agreement. Revenues recognized by us
have consisted primarily of revenues generated under the research collaboration
and cross-license agreement with Roche.

         In May 2000, we entered into a strategic alliance agreement and
crosswalk development agreement with Partners Healthcare System, Inc., The
General Hospital Corporation, d.b.a. Massachusetts General Hospital and The
Brigham and Women's Hospital, Inc., (collectively "Partners") pursuant to which
(a) we will fund research by investigators of Partners pursuant to sponsored
research agreements and/or clinical trial agreements to be entered into from
time to time, (b) we will collaborate with Partners on, and provide funding for,
development of an information technology bridge, called the crosswalk, to
facilitate studies with the deCODE Combined Data Processing system and Partners'
Research Patient Data Registry and (c) we will develop and market, in
consultation with Partners, new information technology products and services
relating to the use of the crosswalk for future pharmaceutical and biotechnology
applications.

         We have a number of collaborative agreements with local medical
institutions and doctors regarding particular disease research. These agreements
generally extend for a period of five years. Under the agreements, these
institutions and/or physicians contribute data or other clinical information and
we contribute equipment, research supplies and our molecular genetics and
experimental design expertise. The agreements also require us to reimburse all
project-related expenses. If we sell project results, the agreements require us
to make specified payments and pay a portion of performance-based milestone
payments that we receive. In addition, we have a settlement agreement with a
non-Icelandic medical institution whereby we are committed to pay royalties and
milestone payments if we are successful in developing and commercializing
products which result from a particular technology jointly owned by us and the
medical institution.

                                       4
7
                                  RISK FACTORS

WE MAY NOT SUCCESSFULLY DEVELOP OR DERIVE REVENUES FROM ANY PRODUCTS OR SERVICES

         DISCOVERY SERVICES

         Our gene discovery programs are still in the early stages of
development and may not result in marketable products. We direct our technology
and development focus primarily toward identifying genes or gene fragments which
are responsible for, or indicate the presence of, certain diseases. Our
technologies and approach to gene discovery may not enable us to identify
successfully the specific genes that cause or predispose individuals to the
complex diseases that are the targets of our gene discovery program, even where
we have identified candidate genes. In addition, the diseases we are targeting
are generally believed to be caused by a number of genetic and environmental
factors. It may not be possible to address such diseases through gene-based
therapeutic or diagnostic products. Accordingly, even if we are successful in
identifying specific genes, our discoveries may not lead to the development of
commercial products.

         Even if we, or our collaborators, are able to develop pharmaceutical
products, those products will fail to produce revenues unless they:

         -        are safe and effective;

         -        meet regulatory standards in a timely manner;

         -        successfully compete with other technologies and products;

         -        avoid infringing on the proprietary rights of others;

         -        can be manufactured in sufficient quantities at reasonable
                  costs; and

         -        can be marketed successfully.

         We are not certain that we will be able to achieve these conditions for
product revenues. We expect that it will be a number of years, if ever, before
we will recognize revenue from therapeutic or diagnostic product sales or
royalties on such sales.

         Our initiatives in pharmacogenomics and the study of the function of
genes, a field known as functional genomics, are not certain to provide any
revenues. There may be no market for these services because of competition, lack
of market acceptance or our inability to develop these services successfully. We
may not be able to develop our functional genomics capabilities to a state that
is adequate for realizing revenues.

         DATABASE SERVICES

         We, through our wholly-owned subsidiary Islensk erfdagreining ehf.,
received a license permitting us to develop and operate the Icelandic Health
Sector Database in January 2000, and accordingly, are at the early stages of its
development. The collection of genotypic data, which is another integral part of
the deCODE Combined Data Processing system, is also in the early stages of
development. We expect that it will take several years before we have fully
developed the deCODE Combined Data Processing system. We are presently devoting
substantial resources to the development of the deCODE Combined Data Processing
system and its components. We plan to continue to devote substantial resources
to this development for the foreseeable future. We cannot be sure that the
deCODE Combined Data Processing system will result in marketable products or
services. Our intended method for cross-referencing genealogical, genotypic and
healthcare data is central to the development of the deCODE Combined Data
Processing system and is unproven. The success of our database services is
contingent upon:

         -        the development of the Icelandic Health Sector Database and
                  collection of genotypic data;

                                       5
8
         -        the creation of database and cross-reference software that is
                  free from design defects or errors;

         -        compliance with governmental requirements regarding the
                  Icelandic Health Sector Database;

         -        the security and reliability of encryption technology;

         -        the cooperation of the Icelandic healthcare system;

         -        the ability to obtain blood samples from consenting Icelanders
                  and consents to the use of their genotypic data by
                  cross-referencing through the deCODE Combined Data Processing
                  system;

         -        the usefulness of information derived through the deCODE
                  Combined Data Processing system in disease management,
                  analysis of drug response, gene discovery and drug target
                  validation; and

         -        the development of marketing and pricing methods that the
                  intended users of the deCODE Combined Data Processing system
                  will accept. If we fail to successfully commercialize our
                  database services, we will not realize revenues from this part
                  of our business.

HEALTHCARE INFORMATICS

         Our bioinformatics and privacy protection products have, to date, been
tested only in connection with our own use of them and they may not meet the
needs of potential customers. We are at a very early stage of development of our
medical decision-support systems for healthcare providers, and we have generated
no revenues from sales or licenses of bioinformatics, decision-support, or
privacy protection products. To date we have not produced any decision-support
tools and there can be no assurance that we can successfully develop or
commercialize medical decision-support systems or that there will be a market
for our bioinformatics, decision-support or privacy protection products for
healthcare delivery.

IF OUR ASSUMPTION ABOUT THE ROLE OF GENES IN DISEASE IS WRONG, WE MAY NOT BE
ABLE TO DEVELOP USEFUL PRODUCTS

         The products we hope to develop involve new and unproven approaches.
They are based on the assumption that information about genes may help
scientists better understand complex disease processes. Scientists generally
have a limited understanding of the role of genes in diseases, and few products
based on gene discoveries have been developed. Of the products that exist, all
are diagnostic products. To date, we know of no therapeutic products based on
disease gene discoveries. If our assumption about the role of genes in the
disease process is wrong, our gene discovery programs may not result in
products, the genetic data included in our database and informatics products may
not be useful to our customers and those products may lose any competitive
advantage.

IF WE CONTINUE TO INCUR OPERATING LOSSES FOR A PERIOD LONGER THAN ANTICIPATED,
OR IN AN AMOUNT GREATER THAN ANTICIPATED, WE MAY BE UNABLE TO CONTINUE OUR
OPERATIONS

    We incurred net losses of $24,864,953 for the nine months ended September
30, 2000, and $23,788,447 for the year ended December 31, 1999. As of September
30, 2000, we had an accumulated deficit of $102,277,926. To date, we have never
generated a profit and we have not generated any significant revenues except for
payments received in connection with our research collaboration with Roche and
interest revenues. The development of our technologies will require substantial
increases in expenditures over the next several years. In addition, we expect to
spend more in connection with our internal research programs and the preparation
of the Icelandic Health Sector Database, the deCODE Combined Data Processing
system and informatics. As a result, we expect to incur operating losses for
several years. If the time required to generate product revenues and achieve
profitability is longer than we currently anticipate or the level of operating
losses is greater than we currently anticipate, we may not be able to continue
our operations.

                                       6
9
IF WE ARE NOT ABLE TO OBTAIN SUFFICIENT ADDITIONAL FUNDING TO MEET OUR EXPANDING
CAPITAL REQUIREMENTS, WE MAY BE FORCED TO REDUCE OR TERMINATE OUR RESEARCH
PROGRAMS AND PRODUCT DEVELOPMENT

         We have used substantial amounts of cash to fund our research and
development activities. We expect our capital and operating expenditures to
increase over the next several years as we expand our research and development
activities, construct the Icelandic Health Sector Database and the deCODE
Combined Data Processing system, collect the genotype data and develop
healthcare informatics products. Many factors will influence our future capital
needs, including:

         -        the progress of our discovery and research programs;

         -        the number and breadth of these programs;

         -        our ability to attract collaborators for, subscribers to or
                  customers for our products and services;

         -        our achievement of milestones under our research collaboration
                  agreement with Roche;

         -        our ability to establish and maintain additional
                  collaborations;

         -        our collaborators' progress in commercializing our gene
                  discoveries;

         -        the level of our activities relating to commercialization
                  rights we retain in our collaborations;

         -        competing technological and market developments;

         -        the costs involved in enforcing patent claims and other
                  intellectual property rights; and

         -        the costs and timing of regulatory approvals.

         We intend to rely on Roche and future collaborators for significant
funding in support of our research efforts. In addition, we may seek additional
funding through public or private equity offerings and debt financings.
Additional financing may not be available when needed. If available, such
financing may not be on terms favorable to us or our stockholders. Stockholders'
ownership will be diluted if we raise additional capital by issuing equity
securities. If we raise additional funds through collaborations and licensing
arrangements, we may have to relinquish rights to certain of our technologies or
product candidates, or grant licenses on unfavorable terms. If adequate funds
are not available, we would have to scale back or terminate our discovery and
research programs and product development. We believe that the net proceeds from
our initial public offering, other cash and investment securities and
anticipated cash flow from Roche will be sufficient to support our current
operating plan for several years. We have based this belief on assumptions that
may prove wrong.

IF WE DO NOT MAINTAIN THE GOODWILL AND RECEIVE THE COOPERATION OF THE ICELANDIC
POPULATION, WE MAY BE UNABLE TO PURSUE OUR GENE IDENTIFICATION PROGRAMS,
PHARMACOGENOMICS OR FUNCTIONAL GENOMICS EFFORTS, COLLECT GENOTYPE DATA OR
DEVELOP THE ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA
PROCESSING SYSTEM

         Our approach to gene identification and the development and maintenance
of genotype data, the Icelandic Health Sector Database and the deCODE Combined
Data Processing system depend on the goodwill and cooperation of the Icelandic
population, including the Icelandic government and the healthcare system. Our
development of the Icelandic Health Sector Database will be impaired if
individual Icelanders refuse to allow information from their medical records to
be included in the Icelandic Health Sector Database or healthcare providers
attempt to prevent us from having access to medical records of their patients.
Individuals may opt-out of having their records included in the Icelandic Health
Sector Database. As of December 31, 2000 approximately 7% of the population has
exercised this right. Some doctors practicing in Iceland have expressed
opposition to the Icelandic Health Sector Database and may attempt to withhold
their patients' data from inclusion in such database or encourage their patients
to exercise their opt-out rights. Our development of genotype data and our
cross-referencing through the deCODE Combined Data Processing system

                                       7
10
of that data with information about the manifestations of disease, which are
known as phenotypes, in the Icelandic Health Sector Database require that a
substantial portion of the Icelandic population provide us with blood samples
for genotyping and consent to the use of their DNA to cross-reference molecular
genetics data with the Icelandic Health Sector Database. To date, between eighty
and ninety percent of individuals that we have asked to participate in our
research projects have done so. Because only a small portion of the Icelandic
population may carry certain mutations, the unwillingness of even a small
portion of the population to participate in our programs could diminish our
ability to develop and market information based on the use of genotypic data.

OUR RELIANCE ON THE ICELANDIC POPULATION IN OUR GENE DISCOVERY PROGRAMS AND
DATABASE SERVICES MAY LIMIT THE APPLICABILITY OF OUR DISCOVERIES TO CERTAIN
POPULATIONS

         In general, the genetic make-up and prevalence of disease vary across
populations around the world. Common complex diseases generally occur with a
similar frequency in Iceland as in other western countries. We are already
studying some of these diseases in our gene discovery programs. However, the
populations of other western nations may be genetically predisposed to certain
diseases because of mutations not present in the Icelandic population. As a
result, we and our partners may take more time or may be unable to develop
diagnostic products that are effective on all, or a portion, of those people
with such diseases. Similarly, any difference between the Icelandic population
and the populations of other countries may have an effect on the usefulness of
the Icelandic Health Sector Database and deCODE Combined Data Processing system
in studying disease in populations of countries other than Iceland. We do not
anticipate developing any products solely for the Icelandic market. For our
business to succeed, we must apply discoveries that we make on the basis of the
Icelandic population to other markets.

OUR CREATION AND OPERATION OF THE ICELANDIC HEALTH SECTOR DATABASE IS BASED UPON
A LICENSE FROM THE ICELANDIC MINISTRY OF HEALTH AND SOCIAL SECURITY AND IS
SUBJECT TO GOVERNMENT SUPERVISION AND REGULATION, WHICH MAY MAKE OUR DEVELOPMENT
OF DATABASE PRODUCTS MORE EXPENSIVE AND TIME-CONSUMING THAN WE ANTICIPATED

We may construct the Icelandic Health Sector Database and cross-reference it
with our genealogical and genetic data, through the deCODE Combined Data
Processing system, only in accordance with the stipulations of the Icelandic
Health Sector Database license (the "License") which the Ministry of Health and
Social Security, or the Ministry, granted us pursuant to the Act on a Health
Sector Database no. 139/1998, or the Act. The License permits the processing of
healthcare data from healthcare records and other relevant data into the
Icelandic Health Sector Database. The Monitoring Committee, the Data Protection
Authority of Iceland and an Interdisciplinary Ethics Committee will supervise
our construction and operation of the Icelandic Health Sector Database. These
committees report to the Ministry. In addition, the Icelandic Bioethics
Committee will review our operation of the Icelandic Health Sector Database. The
Ministry may withdraw our License in the event that we violate the terms and
conditions of the License, the Act or its rules. In addition, the Icelandic
parliament could amend the Act in ways which would adversely affect our ability
to develop or market the Icelandic Health Sector Database and, consequently, the
deCODE Combined Data Processing system. Because the Icelandic parliament and
government recently adopted the Act and its rules, there is no precedent
interpreting the Act or the rules.

         In preparing the Icelandic Health Sector Database, we must comply with
the Data Protection Authority's technical requirements. These technical
requirements cover areas such as data encryption and privacy protection. The
Data Protection Authority may review these requirements from time to time and
may require greater technical capabilities than we currently have. Compliance
with these requirements can be expensive and time-consuming and may delay the
development of the Icelandic Health Sector Database and the deCODE Combined Data
Processing system or make such development more expensive than we anticipated.
In addition, the agencies imposing these requirements will evaluate our
compliance efforts. We cannot control the time required for this evaluation, and
accordingly, the evaluation process may lead to delay in the development of the
Icelandic Health Sector Database and the deCODE Combined Data Processing system.

                                       8
11
         The Interdisciplinary Ethics Committee has the power to withdraw
permission for any type of research program in the Icelandic Health Sector
Database not conducted in accordance with international rules of bioethics.

         At the expiration of the License, we are required to ensure that the
Ministry or its designee will receive, without payment of consideration,
intellectual property rights necessary for the creation and operation of the
database for public health purposes and for scientific research.

         We are subject to a very extensive indemnity clause in our agreement
with the Ministry, pursuant to which:

         -        we have agreed not to make any claim against the government if
                  the Act or the License are amended as a result of the Act or
                  rules relating to the Icelandic Health Sector Database being
                  found to be inconsistent with the rules of the European
                  Economic Area, or EEA, or other international rules and
                  agreements to which Iceland is or becomes a party;

         -        we have agreed that if the Icelandic State, by a final
                  judgment, is found to be liable or subject to payment to any
                  third party as a result of the passage of legislation on the
                  Icelandic Health Sector Database and/or issuance of the
                  Icelandic Health Sector Database license, we will indemnify it
                  against all damages and costs in connection with the
                  litigation; and

         -        we have agreed to compensate any third parties with whom the
                  Icelandic government negotiates a settlement of liability
                  claims arising from the legislation on the Icelandic Health
                  Sector Database and/or the issuance of the License, provided
                  that the Icelandic government demonstrates that it was
                  justified in agreeing to make payments pursuant to the
                  settlement.

IF WE ARE NOT ABLE TO ENTER INTO AGREEMENTS WITH MORE ICELANDIC HEALTH
INSTITUTIONS, AS THE ICELANDIC HEALTH SECTOR DATABASE LICENSE REQUIRES, IN ORDER
TO COLLECT DATA FROM THE INSTITUTIONS, WE WILL NOT BE ABLE TO CONSTRUCT AND
OPERATE THE ICELANDIC HEALTH SECTOR DATABASE

         The License requires us to enter into agreements with Icelandic health
institutions and self-employed health service professionals regarding access to
and the processing of information from medical records. To date we have only
entered into such agreements with 9 Icelandic health institutions. We cannot be
certain that we will be able to enter into such agreements with a sufficient
number of health institutions as the operations of the Icelandic Health Sector
Database will require. Neither can we be certain that such agreements will be
on terms favorable to us. Some doctors practicing in Iceland have expressed
opposition to the Icelandic Health Sector Database and it is possible that
those who have private practices and as such have authority to enter into
agreements with us may refuse to do so or those who are employed by health
institutions may encourage the institutions to refuse to do so. We cannot be
certain that individuals within health institutions will adhere to the
requirements of such agreements. The Icelandic Medical Association is currently
publicly opposing some aspects of the way in which the Icelandic Health Sector
Database will be created. Our inability to enter into additional such
agreements on favorable terms or in a timely manner, or to obtain others'
compliance with the terms of such agreements, could have a material adverse
effect on our ability to construct and operate the Icelandic Health Sector
Database.

IF WE CANNOT OBTAIN AN EXTENSION OF THE TERM OF THE ICELANDIC HEALTH SECTOR
DATABASE LICENSE BEYOND ITS EXPIRATION DATE IN JANUARY 2012, WE WILL NOT BE ABLE
TO OPERATE OR DERIVE RESOURCES FROM THE ICELANDIC HEALTH SECTOR DATABASE OR THE
deCODE COMBINED DATA PROCESSING SYSTEM AFTER THAT DATE

Even if we are successful in creating and marketing the Icelandic Health Sector
Database and the deCODE Combined Data Processing system, the License will expire
in January 2012 unless we are able to obtain an extension. There is no assurance
that we will obtain further access rights on favorable terms, if at all. Our
negotiations with healthcare institutions, the process of genotyping and the
development of database infrastructure, among other factors, will determine when
we can begin marketing the deCODE Combined Data Processing system. We expect
that the Icelandic Health Sector Database and the deCODE Combined Data
Processing system will not be fully operational for up to four years. The
License will be subject

                                       9
12
to a review in 2008, and at that time, in accordance with an agreement we
entered into with the Ministry simultaneously with the granting of the License,
we and the Ministry will enter into discussions on renewal of the License at the
end of the term. The Ministry might not renew the License in 2012 and we cannot
guarantee any renewal.

WE MAY NOT BE ABLE TO FORM AND MAINTAIN THE COLLABORATIVE RELATIONSHIPS THAT OUR
BUSINESS STRATEGY REQUIRES

         Our strategy for deriving revenues from the discovery of genes and the
development of products based upon our discoveries depends upon the formation of
research collaborations and licensing arrangements with several partners at the
same time. We currently have only two substantial collaborative relationships.
To succeed, we will have to maintain these relationships and establish
additional collaborations. We cannot be sure that we will be able to establish
the additional research collaborations or licensing arrangements necessary to
develop and commercialize products using our technology, that any future
collaborations or licensing arrangements will be on terms favorable to us, or
that current or future collaborations or licensing arrangements ultimately will
be successful. If we are not able to manage multiple collaborations
successfully, our programs will suffer.

         We also expect to rely on collaborations in other parts of our business
such as the construction of the deCODE Combined Data Processing system. During
the development of the deCODE Combined Data Processing system, we intend to
pursue collaborations to assist us in the development of certain of its
components. Such collaborations may involve the use of particular technologies
or collaborative development and marketing activities. If we are unable to enter
into such collaborations on favorable terms, our ability to commercialize the
deCODE Combined Data Processing system will be adversely affected.

         To develop our healthcare informatics products, we also plan to rely on
collaborative relationships. To date we have not established any such
collaborative relationships. If we are unable to form or maintain such
collaborative arrangements, our healthcare informatics operations will be
adversely affected.

OUR DEPENDENCE ON COLLABORATIVE RELATIONSHIPS MAY LEAD TO DELAYS IN PRODUCT
DEVELOPMENT AND DISPUTES OVER RIGHTS TO TECHNOLOGY

         Currently we do not expect to develop or market pharmaceutical products
on our own. As a result, we will be dependent on collaborators for the
pre-clinical study and clinical development of therapeutic and diagnostic
products and for regulatory approval, manufacturing and marketing of any
products that result from our technology. Our agreements with pharmaceutical
collaborators or collaborators for gene research projects will typically allow
them significant discretion in electing whether to pursue such activities. We
cannot control the amount and timing of resources collaborators will devote to
our programs or potential products. Our collaborations may have the effect of
limiting the areas of research that we may pursue either alone or with others.

         In addition, we expect to develop our database products, in part, with
various collaborators, and we may develop healthcare informatics tools which are
designed to work in conjunction with or to enhance the healthcare informatics
tools of other developers. These arrangements may place responsibility for key
aspects of product development and marketing on our collaborative partners.
Accordingly, the performance of these key aspects is uncertain and beyond our
direct control. If our collaborators fail to perform their obligations, our
database products could contain erroneous data, design defects, viruses or
software defects that are difficult to detect and correct and may adversely
affect our revenues and the market acceptance of our products.

         If any pharmaceutical, healthcare informatics or database collaborator
were to breach or terminate its agreement with us, or otherwise fail to conduct
collaborative activities successfully and in a timely manner, the development or
commercialization of products, services, technologies or research programs may
be delayed or terminated.

         Competing products that our collaborators develop or to which our
collaborators have rights may result in their withdrawal of support for our
products and services.

                                       10
13
         Disputes may arise in the future over the ownership of rights to any
technology developed with collaborators. These and other possible disagreements
between us and our collaborators could lead to delays in the collaborative
research, development or commercialization of products. Such disagreements could
also result in litigation or require arbitration to resolve.

ETHICAL AND PRIVACY CONCERNS MAY LIMIT OUR ABILITY TO DEVELOP AND USE THE
ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA PROCESSING SYSTEM
AND MAY LEAD TO LITIGATION AGAINST US OR THE ICELANDIC GOVERNMENT

         The Icelandic parliament's passage of the Act and the Ministry's
granting of the License have raised ethical and privacy concerns in Iceland and
internationally among healthcare professionals and others including the
Icelandic Medical Association and the World Medical Association. Ethical and
privacy concerns about the development and use of the Icelandic Health Sector
Database and the deCODE Combined Data Processing system may lead to litigation
in U.S., Icelandic or other national courts, or in international courts such as
the European Court of Human Rights in Strasbourg (e.g., on the basis of an
alleged breach of the patient-doctor confidential relationship, constitutional
privacy issues, international conventions dealing with protection of privacy
issues or human rights conventions). The results of such litigation could have
a material adverse affect on our ability to construct and operate the
Icelandic Health Sector Database and the deCODE Combined Data Processing system.

CERTAIN PARTIES HAVE ANNOUNCED AN INTENTION TO INSTITUTE LITIGATION TESTING THE
CONSTITUTIONALITY OF THE ACT, WHICH COULD DELAY OR PREVENT US FROM DEVELOPING
AND OPERATING THE ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA
PROCESSING SYSTEM

         In February 2000, an organization known as The Association of
Icelanders for Ethics in Science and Medicine, or Mannvernd, and a group of
physicians and other citizens issued a press release announcing their intention
to file lawsuits against the State of Iceland and any other relevant parties,
including deCODE, to test the constitutionality of the Act. According to the
press release, the intended lawsuit will allege that the Act and the License
involve human rights violations and will challenge the validity of provisions of
the Act which allow the use of presumed consent for the processing of health
data into the Icelandic Health Sector Database and the grant of a license to
operate a single database. To date no such suit has been brought against deCODE
or the State of Iceland to that effect by Mannvernd or any other party. deCODE
believes that any such litigation would be without merit and intends to defend
vigorously any such action in which we become a party. However, in the event
that the Icelandic State by a final judgment is found to be liable or subject to
payment to any third party as a result of the passage of legislation on the
Icelandic Health Sector Database and/or the issuance of the License, our
agreement with the Ministry requires us to indemnify the Icelandic State against
all damages and costs incurred in connection with such litigation. In addition,
the pendency of such litigation could lead to delay in the development of the
Icelandic Health Sector Database and the deCODE Combined Data Processing System,
and an unfavorable outcome would prevent us from developing and operating the
Icelandic Health Sector Database and the deCODE Combined Data Processing system.

IF WE FAIL TO PROTECT CONFIDENTIAL DATA ADEQUATELY, WE COULD INCUR LIABILITY OR
LOSE OUR LICENSE

         The Act and the License require us to encrypt all patient data and to
take other actions to ensure confidentiality of data included in the Icelandic
Health Sector Database and restrict access to it. We are developing the
Icelandic Health Sector Database according to the Data Protection Authority's
technology, security and organizational terms. The Data Protection Authority may
periodically review and amend such terms in light of new technology or change of
circumstances. We must comply with any such revised data protection terms within
a deadline which the Data Protection Authority may establish when it revises the
terms. Although, to date, one expert in this field has criticized the security
terms, we believe that they are, and will continue to be, in line with
international best industry-practice standards. In addition, the customers for
other products we may develop may impose confidentiality requirements.
Accidental disclosures of confidential data may result from technical failures
in encryption technology or from human error by our employees or those of our
customers or collaborators. Any failure to comply fully with all confidentiality
requirements could lead to liability for damages incurred by individuals whose
privacy is violated, the loss of the License, the loss of our customers and
reputation and the loss of the goodwill and cooperation of the Icelandic
population including healthcare professionals.

                                       11
14
ETHICAL AND PRIVACY CONCERNS MAY LIMIT THE USE OF GENETIC TESTING AND THEREFORE
THE COMMERCIAL LIABILITY OF ANY PRODUCTS WE DEVELOP

         Other companies have developed genetic predisposition tests that have
raised ethical concerns. It is possible that employers or others could
discriminate against people who have a genetic predisposition to certain
diseases. Concern regarding possible discrimination may result in governmental
authorities enacting restrictions or bans on the use of all, or certain types
of, genetic testing. Similarly, such concerns may lead individuals to refuse to
use genetics tests even if permissible. These factors may limit the market for,
and therefore the commercial viability of, products that we and our
collaborators develop.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH BIOTECHNOLOGY COMPANIES AND
ESTABLISHED PHARMACEUTICAL COMPANIES IN THE DEVELOPMENT AND MARKETING OF
PRODUCTS BASED UPON THE IDENTIFICATION OF DISEASE-CAUSING GENES

         A number of companies are attempting to rapidly identify and patent
genes that cause diseases or an increased susceptibility to diseases.
Competition in this field is intense and is expected to increase. We have
numerous competitors, including major pharmaceutical and diagnostic companies,
specialized biotechnology firms, universities and other research institutions,
the United States-funded Human Genome Project and other government-sponsored
entities. Many of our competitors have considerably greater capital resources,
research and development staffs and facilities, and technical and other
resources than we do, which may allow them to discover important genes before we
do. We believe that a number of our competitors are developing competing
products and services that may be commercially successful and that are further
advanced in development than our potential products and services. To succeed,
we, together with our collaborators, must discover disease-predisposing genes,
characterize their functions, develop genetic tests or therapeutic products and
related information services based on such discoveries, obtain regulatory and
other approvals, and launch such services or products before competitors. Even
if our collaborators or we are successful in developing effective products or
services, our products and services may not successfully compete with those of
our competitors. Our competitors may succeed in developing and marketing
products and services that are more effective than ours or that are marketed
before ours.

         Our collaboration with Roche does not prevent it from initiating its
own gene research or developing products based upon its, or any other party's,
gene research. Such products may compete with any products that we develop
through our gene discovery programs. We expect that future collaborations may
allow our future partners to undertake research and develop products on their
own or with third parties.

         Competitors have established, and in the future may establish, patent
positions with respect to gene sequences related to our research projects. Such
patent positions or the public availability of gene sequences comprising
substantial portions of the human genome could decrease the potential value of
our research projects and make it more difficult for us to compete. We may also
face competition from other entities in gaining access to DNA samples used for
research and development purposes.

         We expect competition to intensify as technical advances are made and
become more widely known. Our future success will depend in large part on
maintaining a competitive position in the genomics field. Others' or our rapid
technological development may result in products or technologies becoming
obsolete before we recover the expenses we incur in developing them. Less
expensive or more effective technologies could make future products obsolete. We
cannot be certain that we will be able to make the necessary enhancements to any
products we develop to compete successfully with newly emerging technologies.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH ESTABLISHED COMPANIES AND
GOVERNMENT AGENCIES IN THE FIELD OF DATABASE SERVICES

         Others are currently developing or marketing a number of databases to
assist participants in the healthcare industry and academic researchers in the
management and analysis of their own genomic data and data available in the
public domain. Although we believe that our existing genealogy database and our
license to construct and operate the Icelandic Health Sector Database provide us
with a unique opportunity to cross-reference databases that include genetic

                                       12
15
makeup, genealogy, medical history, disease symptoms, resource use and treatment
outcomes, we cannot be sure that any of the databases that we create will
achieve greater market acceptance than those of our competitors. We plan to
grant limited Internet access to our genealogy data to the Icelandic public for
non-business use. Although our genealogy data will be restricted both by
technical and legal means, it is possible that this Internet access will in some
way facilitate the construction of similar databases intended for commercial
purposes.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OTHER COMPANIES IN THE FIELD OF
HEALTHCARE INFORMATICS

         The healthcare informatics field is highly competitive. Many companies
compete with us to develop healthcare informatics similar to our expected
products, including products relating to medical record maintenance, medical
decision-support systems and systems design. We expect that competition will
continue to intensify. Many of our competitors have significantly greater
financial resources and market presence than we have. We cannot be sure that any
products that we develop in the field of healthcare informatics, including
medical decision-support systems, will compete effectively with those of our
competitors.

REGULATORY AUTHORITIES MAY DETERMINE THAT OUR LICENSE TO DEVELOP THE ICELANDIC
HEALTH SECTOR DATABASE INFRINGES UPON COMPETITION RULES IN THE EUROPEAN ECONOMIC
AREA, OR EEA, WHICH COULD NEGATIVELY AFFECT OUR ABILITY TO DERIVE REVENUES FROM
THE ICELANDIC HEALTH SECTOR DATABASE AND THE deCODE COMBINED DATA PROCESSING
SYSTEM

         Iceland is a member of the European Free Trade Association, or EFTA,
together with Norway, Switzerland and Liechtenstein. Through this membership,
Iceland has become a part of the EEA which was created by the EEA agreement
between EFTA and the European Union, or EU. The EEA agreement extends the EU
internal market and its regulations to EFTA countries that adopt certain EU
legislation. Accordingly, Iceland is subject to both EFTA and EU competition and
public procurement rules. A determination that the Act or our License is in
breach of such rules could result in a revocation or dilution of the License for
the Icelandic Health Sector Database and could have a negative impact on the
profitability and marketing potential of the deCODE Combined Data Processing
system.

OTHERS MAY CLAIM INTELLECTUAL PROPERTY RIGHTS TO OUR GENEALOGY DATABASE, WHICH
COULD PREVENT US FROM USING SOME OR ALL OF OUR DATABASE AND IMPAIR OUR ABILITY
TO DERIVE REVENUES FROM OUR DATABASE AND GENE DISCOVERY SERVICES

         We are aware that there are other firms and individuals who have
prepared, or are currently preparing, genealogy databases similar to the one we
have developed. If any parties should successfully claim that the creation or
use of any of our databases infringes upon their intellectual property rights,
it could have a material adverse effect on our business. Two parties alleging to
hold copyrights to approximately 100 Icelandic genealogy books have filed a
copyright infringement suit against us in Iceland claiming that we have used
data from these books in the creation of our genealogy database, in violation of
their rights. The claimants seek a declaratory judgment to prevent our use of
the database and monetary damages in the amount of approximately $9,000,000. We
believe that this suit is without merit and intend to defend it vigorously, but
if it were successful it could have a material adverse effect on our database
and gene discovery services.

WE MAY NOT BE ABLE TO PROTECT THE PROPRIETARY RIGHTS THAT ARE CRITICAL TO OUR
SUCCESS

         Our success will depend on our ability to protect our genealogy
database and genotypic data and any other proprietary databases that we develop,
proprietary software and other proprietary methods and technologies. Despite our
efforts to protect our proprietary rights, unauthorized parties may be able to
obtain and use information that we regard as proprietary.

         Our commercial success will depend in part on obtaining patent
protection. The patent positions of pharmaceutical, biopharmaceutical and
biotechnology companies, including ours, are generally uncertain and involve
complex legal and factual considerations. We cannot be sure that any of our
pending patent applications will result in issued patents, that we will develop
additional proprietary technologies that are patentable, that any patents issued
to us or our partners will provide a basis for commercially viable products,
will provide us with any competitive advantages or will not be challenged by
third parties, or that the patents of others will not have an adverse effect on
our ability to do business.

                                       13
16
         In addition, patent law relating to the scope of claims in the area of
genetics and gene discovery is still evolving. There is substantial uncertainty
regarding the patentability of genes or gene fragments without known functions.
The laws of some European countries provide that genes and gene fragments may
not be patented. The Commission of the EU has passed a directive which prevents
the patenting of genes in their natural state. The U.S. Patent and Trademark
Office initially rejected a patent application by the National Institutes of
Health on partial genes. Accordingly, the degree of future protection for our
proprietary rights is uncertain and, we cannot predict the breadth of claims
allowed in any patents issued to us or to others. We could also incur
substantial costs in litigation if we are required to defend ourselves in patent
suits brought by third parties or if we initiate such suits.

         Others may have filed and in the future are likely to file patent
applications covering genes or gene products that are similar or identical to
our products. We cannot be certain that our patent applications will have
priority over any patent applications of others. The mere issuance of a patent
does not guarantee that it is valid or enforceable; thus even if we are granted
patents we cannot be sure that they would be valid and enforceable against third
parties. Further, a patent does not provide the patent holder with freedom to
operate in a way that infringes the patent rights of others. Any legal action
against us or our partners claiming damages and seeking to enjoin commercial
activities relating to the affected products and processes could, in addition to
subjecting us to potential liability for damages, require us or our partners to
obtain a license in order to continue to manufacture or market the affected
products and processes. There can be no assurance that we or our partners would
prevail in any action or that any license required under any patent would be
made available on commercially acceptable terms, if at all. If licenses are not
available, we or our partners may be required to cease marketing our products or
practicing our methods.

         If expressed sequence tags, single nucleotide polymorphisms, or SNPs,
or other sequence information become publicly available before we apply for
patent protection on a corresponding full-length or partial gene, our ability to
obtain patent protection for those genes or gene sequences could be adversely
affected. In addition, other parties are attempting to rapidly identify and
characterize genes through the use of gene expression analysis and other
technologies. If any patents are issued to other parties on these partial or
full-length genes or gene products or uses for such genes or gene products, the
risk increases that the sale of our or our collaborators' potential products or
processes may give rise to claims of patent infringement. The amount of
supportive data required for issuance of patents for human therapeutics is
highly uncertain. If more data than we have available is required, our ability
to obtain patent protection could be delayed or otherwise adversely affected.
Even with supportive data, the ability to obtain patents is uncertain in view of
evolving examination guidelines, such as the utility and written description
guidelines that the U.S. Patent and Trademark Office has adopted.

         While we require employees, academic collaborators and consultants to
enter into confidentiality agreements, there can be no assurance that
proprietary information will not be disclosed, that others will not
independently develop substantially equivalent proprietary information and
techniques, otherwise gain access to our trade secrets or disclose such
technology, or that we can meaningfully protect our trade secrets.

         If the information processed by the deCODE Combined Data Processing
system is disclosed without our authorization, demand for our products and
services may be adversely affected.

IF WE OR OUR COLLABORATORS ARE UNABLE TO OBTAIN REGULATORY APPROVALS FOR
PRODUCTS RESULTING FROM OUR GENE DISCOVERY PROGRAMS, WE WILL NOT BE ABLE TO
DERIVE REVENUES FROM THESE PRODUCTS

         Government agencies must approve new drugs and diagnostic products in
the countries in which they are to be marketed. We cannot be certain that
regulatory approval for any drugs or diagnostic products resulting from our gene
discovery programs will be obtained. The regulatory process can take many years
and require substantial resources. Because some of the products likely to result
from our disease research programs involve the application of new technologies
and may be based upon a new therapeutic approach, various government regulatory
authorities may subject such products to substantial additional review. As a
result, these authorities may grant regulatory approvals for these products more
slowly than for products using more conventional technologies. Furthermore,
regulatory approval may impose limitations on the use of a drug or diagnostic
product.

                                       14
17
         After initial regulatory approval, a marketed product and its
manufacturer must undergo continuing review. Discovery of previously unknown
problems with a product may have adverse effects on our business, financial
condition and results of operations, including withdrawal of the product from
the market.

OUR DEPENDENCE UPON A SINGLE THIRD PARTY FOR SEQUENCING MACHINES MAY IMPAIR OUR
RESEARCH PROGRAMS

         We currently use a single manufacturer to supply the gene sequencing
machines that we use in our gene discovery programs. While other types of gene
sequencing machines are available from other manufacturers, we do not believe
that the other machines are as efficient as the machines we currently use. We
cannot be sure that the gene sequencing machines will remain available in
sufficient quantities at acceptable costs. If we cannot obtain additional gene
sequencing machines at commercially reasonable rates, or if we are required to
change to a new supplier of gene sequencing machines, our gene discovery
programs would be adversely affected.

WE MAY NOT BE ABLE TO OBTAIN NECESSARY TECHNOLOGY

         We have acquired or licensed certain components of our technologies
from third parties. Changes in or termination of these third party agreements
could materially adversely affect our discovery or research programs. We cannot
be certain that we will be able to acquire any new technologies which we need.

WE WILL HAVE TO RELY ON OTHERS FOR CLINICAL TRIALS, MANUFACTURING, MARKETING,
REGULATORY COMPLIANCE AND SALES CAPABILITIES, WHICH MAY IMPAIR OUR ABILITY TO
DELIVER PRODUCTS

         In our research collaborations, we will seek to retain rights to
develop and market certain therapeutic and diagnostic products or services. If
we are able to retain these rights and successfully develop products, we expect
to contract with others for conducting clinical trials, manufacturing, marketing
and sales.

         We are not certain that we will be able to enter into such arrangements
on favorable terms, if at all. Our dependence upon third parties for the conduct
of clinical trials, the obtaining of governmental approvals or the manufacture,
marketing or sales of products may adversely affect our ability to develop and
deliver products on a timely and competitive basis. Our current facilities and
staff are inadequate for commercial production and distribution of products. If
we choose in the future to engage directly in the development, manufacturing and
marketing of certain products, we will require substantial additional funds,
personnel and production facilities.

EFFORTS TO REDUCE HEALTHCARE COSTS MAY REDUCE MARKET ACCEPTANCE OF OUR PRODUCTS

         Our success will depend in part on the extent to which government and
health administration authorities, private health insurers and other third party
payors will pay for our products. Reimbursement for newly approved healthcare
products is uncertain. Third party payors, including Medicare in the U.S., are
increasingly challenging the prices charged for medical products and services.
Government and other third party payors are increasingly attempting to contain
healthcare costs by limiting both coverage and the level of reimbursement for
new therapeutic products. We cannot be certain that any third party insurance
coverage will be available to patients for any products we discover or develop.
If government or other third party payors do not provide adequate coverage and
reimbursement levels for our products, the market acceptance of these products
may be materially reduced.

OUR OPERATIONS MAY BE IMPAIRED UNLESS WE CAN SUCCESSFULLY MANAGE OUR GROWTH

         We have recently experienced significant growth in the number of our
employees and the scope of our operations. We intend to hire additional
personnel to construct the Icelandic Health Sector Database and the deCODE
Combined Data Processing system, and to develop our healthcare informatics
products. Our management and operations are, and may continue to be, under
significant strain due to this growth. To manage such growth, we must strengthen
our management team and attract and retain skilled employees. Our success will
also depend on our ability to improve our management information, research
information and operational control systems and to expand, train and manage our
workforce.

CHANGES IN OUTSOURCING TRENDS IN THE PHARMACEUTICAL AND BIOTECHNOLOGY
INDUSTRIES COULD ADVERSELY AFFECT OUR GROWTH

         Economic factors and industry trends that affect our primary customers,
pharmaceutical and biotechnology companies, also affect our business. For
example, the practice of many companies in these industries has been to
outsource from organizations like ours to conduct genetic research, clinical
research and sales and marketing projects. Some industry commentators believe
that the rate of growth of outsourcing will trend downward. If these industries
reduce their present tendency to outsource those projects, our operations,
financial condition and growth rate could be materially and adversely affected.
Recently, we also believe we have been negatively impacted by pending mergers
and other factors in the pharmaceutical industry, which appear to have slowed
decision making by our customers and delayed certain trials. A continuation of
these trends would have an ongoing adverse effect on our business. In addition,
numerous governments have undertaken efforts to control growing healthcare costs
through legislation, regulation and voluntary agreements with medical care
providers and pharmaceutical companies. If further regulatory cost containment
efforts limit the profits which can be derived on new drugs, our customers may
reduce their research and development spending which could reduce the business
they outsource to us. We cannot predict the likelihood of any of these events or
the effects they would have on our business, results of operations or financial
condition.

ENCODE'S PRODUCT DEVELOPMENT SERVICES CREATE A RISK OF LIABILITY FROM CLINICAL
TRIAL PARTICIPANTS AND THE PARTIES WITH WHOM WE CONTRACT

         Encode, our subsidiary, contracts with drug companies to perform a wide
range of services to assist them in bringing new drugs to market. Its services
include supervising clinical trials, data and laboratory analysis, patient
recruitment and other services. The process of bringing a new drug to market is
time-consuming and expensive. If we do not perform our services to contractual
or regulatory standards, the clinical trial process could be adversely affected.
Additionally, if clinical trial services such as monitoring clinical trials,
adherence to good clinical practice and laboratory analysis do not conform to
contractual or regulatory standards, trial participants could be affected. In
such case these events would create a risk of liability to us from the drug
companies with whom we contract or the study participants.

         We also contract with physicians to serve as investigators in
conducting clinical trials. Such testing creates risk of liability for personal
injury to or death of patients or volunteers, particularly to patients with
life-threatening illnesses, resulting from adverse reactions to the test drugs.
It is possible third parties could claim that we should be held liable for
losses arising from any deficiencies in professional conduct of the
investigators with whom we contract or in the event of personal injury to or
death of persons participating in clinical trials. We do not believe we are
legally accountable for the medical care rendered by third party investigators,
and we would vigorously defend any such claims. Nonetheless, it is possible we
could be found liable for such losses.

         In addition to supervising tests or performing laboratory analysis,
Encode will also engage in Phase I clinical trials. Phase I clinical trials
involve testing a new drug on a limited number of healthy individuals, typically
20 to 80 persons, to determine the drug's basic safety. We also could be liable
for the general risks associated with the conducting of such trials. These risks
include, but are not limited to, adverse events resulting from the
administration of drugs to clinical trial participants or the unprofessional
practice of Phase I medical care providers.

         We also could be held liable for errors or omissions in connection with
our services. For example, we could be held liable for errors or omissions or
breach of contract if one of our laboratories inaccurately reports or fails to
report lab results or if our informatics products violate rights of third
parties. We maintain insurance to cover ordinary risks but any insurance might
not be adequate, and it would not cover the risk of a customer deciding not to
do business with us as a result of poor performance.

                                       15
18
USE OF THERAPEUTIC OR DIAGNOSTIC PRODUCTS DEVELOPED AS A RESULT OF OUR PROGRAMS
MAY RESULT IN LIABILITY CLAIMS FOR WHICH WE HAVE INADEQUATE INSURANCE

         The users of any therapeutic or diagnostic products developed as a
result of our discovery or research programs or the use of our database or
medical decision-support products may bring product liability claims against us.
We currently do not carry liability insurance to cover such claims. We are not
certain that we or our collaborators will be able to obtain such insurance or,
if obtained, that sufficient coverage can be acquired at a reasonable cost. If
we cannot protect against potential liability claims, we or our collaborators
may find it difficult or impossible to commercialize products.

WE MAY BE UNABLE TO HIRE AND RETAIN THE KEY PERSONNEL UPON WHOM OUR SUCCESS
DEPENDS

         We depend on the principal members of our management and scientific
staff, including Dr. Kari Stefansson, Chairman, President and Chief Executive
Officer, Hannes Smarason, Executive Vice President and Senior Business and
Finance Officer, Dr. Jeffrey Gulcher, Vice President, Research and Development
and Dr. C. Augustine Kong, Vice President of Statistics. We have not entered
into agreements with any of these persons that bind them to a specific period of
employment. If any of these people leaves us, our ability to conduct our
operations may be negatively affected. Our future success also will depend in
part on our ability to attract, hire and retain additional personnel. There is
intense competition for such qualified personnel and we cannot be certain that
we will be able to continue to attract and retain such personnel. Failure to
attract and retain key personnel could have a material adverse effect on us.

OUR OPERATIONS INVOLVE A RISK OF INJURY FROM HAZARDOUS MATERIALS, WHICH COULD BE
VERY EXPENSIVE TO US

         Our research and manufacturing activities involve the generation, use
and disposal of hazardous materials and wastes, including various chemicals and
radioactive compounds. We are subject to laws and regulations governing the use,
storage, handling and disposal of these materials, including standards
prescribed by Iceland and applicable EU standards. Although we believe that our
safety procedures comply with such laws and regulations, we cannot eliminate the
risk of environmental contamination or injury. In the event of such an
occurrence, we could be held liable for any damages that result, which could
exceed our resources. Although we believe that we comply in all material aspects
with applicable environmental laws and regulations and do not expect to make
additional material capital expenditures in this area, we cannot predict whether
new regulatory restrictions on the production, handling and marketing of
biotechnology products will be imposed. Any such new regulatory restrictions
could require us to incur significant costs to comply.

CURRENCY FLUCTUATIONS MAY NEGATIVELY AFFECT OUR FINANCIAL CONDITION

         Our revenues and cash reserves are denominated in U.S. dollars, but a
portion of our operating costs are denominated in Icelandic kronas. A
strengthening of the Icelandic krona against the U.S. dollar may, therefore,
have a negative impact on our financial condition.

                                       16
19
                                USE OF PROCEEDS

         deCODE will not receive any proceeds from the sale of shares which may
be sold pursuant to this reoffer prospectus for the respective accounts of the
Selling Securityholders. All such proceeds, net of brokerage commissions, if
any, will be received by the Selling Securityholders. See "Selling
Securityholders" and "Plan of Distribution."

                            SELLING SECURITYHOLDERS

         This reoffer prospectus relates to shares of common stock which have
been acquired by the Selling Securityholders through their exercise of stock
options granted to them under the Plan. The inclusion in the table of the
individuals named therein shall not be deemed to be an admission that any such
individuals are "affiliates" of deCODE.

         The following is a list, as of February 15, 2001, of the Selling
Securityholders and the number of shares held by each Selling Securityholder.
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      ----------------------------------------------        ---------    ----------    -------------
Aoalbjorg Jonasdottir               Laboratory Project Leader                                 5,729         5,000         729
Anna Einarsdottir                   Laboratory Research Associate                             5,000         5,000          0
Anne  Fasquel                       Laboratory  Research Associate                            5,000         5,000          0
Aslaug Jonasdottir                  Laboratory Research Scientist                             5,000         5,000          0
Berglind Olafsdottir                Laboratory Project Leader                                 5,000         5,000          0
Birgir Palsson                      Informatics, Product Development Specialist               5,000         5,000          0
Birgitta Birgisdottir               Laboratory  Research Associate                            5,000         5,000          0
Bjorgvin Richardsson                Laboratory, Head of Genotyping                            5,000         5,000          0
Droplaug Magnusdottir               Laboratory Research Associate                             5,000         5,000          0
Ebba Palsdottir                     Laboratory Research Associate                             5,000         5,000          0
Frosti Palsson                      Informatics, Software Engineer                            5,000         5,000          0
Gretar Arnason                      Informatics, Bioinformatics Specialist                    5,000         5,000          0
Guomundur Guomundsson               Laboratory, Project Leader                               20,000        20,000          0
Guomundur B. Guomundsson            Laboratory, Research Scientist                            5,000         5,000          0
Helga Siguroardottir                Laboratory, Research Assistant                            5,000         5,000          0
Helga Eiriksdottir                  Laboratory, Head of Sequencing                            5,000         5,000          0
Helgi H. Hannessson                 Informatics, Bioinformatics Specialist                    5,000         5,000          0
Helgi B. Magnusson                  Informatics, Bioinformatics Specialist                    5,000         5,000          0
Hildur A. Bjornsdottir              Head of DNA Isolation                                     5,000         5,000          0
Hjalti Andrason                     Laboratory, Research Associate                            5,000         5,000          0
Hrafnhildur H. Antonsdottir         Laboratory, Group Leader-Genotyping                       5,000         5,000          0
17
20
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Hrefna Johannsdottir                Laboratory,  Research Associate                           5,000         5,000                0
Hreinn Stefansson                   Laboratory, Head of Division                             30,000        30,000                0
Inga Reynisdottir                   Laboratory, Head of Division                             20,000        20,000                0
Katrin H. Guojonsdottir             Laboratory,  Research Associate                           5,000         5,000                0
Katrin Helgadottir                  Laboratory,  Research Associate                           5,000         5,000                0
Maria Siguroardottir                Laboratory,  Research Assistant                           5,000         5,000                0
Marino Njalsson                     Formerly employed as a Security Manager                   8,333         8,333                0
                                    from July 1997 to October 2000
Peter Donnelly                      Consultant                                               60,000        60,000                0
Ragnar Valdimarsson                 Informatics, Project Manager                              5,000         5,000                0
Ragnheiour Fossdal                  Laboratory, Research Scientist                            5,000         5,000                0
Sigrun Sturludottir                 Laboratory, Head of Sample Management                     5,000         5,000                0
Sigurour Sveinsson                  Formerly employed as a Laboratory                         1,250         1,250                0
                                    Research Assistant from 1998 to 1999
Sigurour Baldursson                 Laboratory, Research Scientist                            5,000         5,000                0
Sigurlaug Sigvaldadottir            Finance, Secretary                                        5,000         5,000                0
Sigrun Siguroardottir               Laboratory, Research Scientist                            5,000         5,000                0
Soffia Hrafnkelsdottir              Laboratory, Research Scientist                            5,000         5,000                0
Steinunn Gunnarsdottir              Laboratory, Research Scientist                            5,000         5,000                0
Steinunn Snorradottir               Laboratory, Research Associate                            5,000         5,000                0
Steinunn Sigurjonsdottir            Laboratory, Research Associate                            5,000         5,000                0
Stein(th)ora (th)orisdottir         Laboratory, Research Associate                            5,000         5,000                0
Stella Maria Siguroardottir         Finance, Secretary                                        5,000         5,000                0
(th)orour Kristjansson              Informatics, Software Engineer                            5,000         5,000                0
(th)orgeir (th)orgeirsson           Laboratory, Associate Director                           20,000        20,000                0
(th)orgerour Bjornsdottir           Purchasing Manager                                        5,000         5,000                0
(th)orlakur Jonsson                 Laboratory, Director                                     20,000        20,000                0
Unnur Styrkarsdottir                Laboratory, Project Leader                               10,000        10,000                0
Valgerour Backman                   Laboratory, Research Scientist                           10,000        10,000                0
Viktoria Loftsdottir                Finance, Assistant                                        5,000         5,000                0
Timothy Hemesath                    Laboratory, Director                                    100,000       100,000                0
Albert Smith                        Laboratory, Project Leader                               10,000        10,000                0
Anna Helgadottir                    Laboratory, Project Leader                               20,000        20,000                0
Burkni Palson                       Informatics Software Engineer                             5,000         5,000                0
Guobjorg Orlygsdottir               Laboratory, Research Scientist                            5,000         5,000                0
Guolaug Kristjansdottir             Laboratory, Research Associate                            5,000         5,000                0
Guorun Hafsteinsdottir              Laboratory, Research Assistant                            5,000         5,000                0
18
21
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Jesus Sainz                         Laboratory, Head of Physical Mapping                     20,000        20,000                0
Jonina Valsdottir                   Laboratory, Research Scientist                            5,000         5,000                0
Juergen Laufs                       Laboratory, Project Leader                               12,034        12,034                0
Kristinn Finnbogason                Administrative Assistant                                  5,000         5,000                0
Lara Erlingsdottir                  Informatics, Software Engineer                            5,300         5,000              300
Margret Jakobsdottir                Laboratory, Group Leader                                  5,000         5,000                0
Olafur Einarsson                    Laboratory, Research Associate                            5,000         5,000                0
Ragnheiour Stefansdottir            Laboratory, Research Associate                            5,000         5,000                0
Sigriour (th)orsteinsdottir         Laboratory, Research Associate                            5,000         5,000                0
Sigurour Grimsson                   IT Specialist                                            10,000        10,000                0
Skeggi (th)ormar                    Database Project Manager                                 25,000        25,000                0
Solveig Gretarsdottir               Laboratory, Head of Division                             10,000        10,000                0
Anna Halldorsdottir                 Formerly employed as a Genealogy Associate                1,167         1,167                0
                                    from May 1998 to September 2000
Arnar Hrolfsson                     Finance\Purchasing Assistant                              2,000         2,000                0
Berglind Freymoosdottir             Formerly employed as a Nurse from                         5,000         5,000                0
                                    April 1998 to September 1998
Bjorn Arnarson                      Informatics, Genealogy Associate                          2,000         2,000                0
Daniel Guobjartsson                 Statistics Research Scientist                             5,000         5,000                0
Elin Gretarsdottir                  Informatics, Genealogy Associate                          2,000         2,000                0
Elinbjorg H. Runarsdottir           Laboratory, Research Associate                            5,000         5,000                0
Erla Olafsdottir                    Laboratory, Research Associate                            5,000         5,000                0
Frosti Jonsson                      Laboratory, Research Associate                            5,000         5,000                0
Guobjorg Olafsdottir                Laboratory, Research Associate                            5,000         5,000                0
Guofinna Sveinbjornsdottir          Formerly employed as a Nurse from                         4,500         4,500                0
                                    April 1998 to September 1998
Guorun Haroardottir                 Formerly employed in finance from                         2,813         2,813                0
                                    March 1998 to June 2000
Guorun Ingadottir                   Formerly employed as a Nurse from                         4,000         4,000                0
                                    April 1998 to September 1998
Guorun Johannsdottir                Human Resources, HR representative                        2,000         2,000                0
Guorun Guolaugsdottir               Formerly employed as a Nurse from                         5,000         5,000                0
                                    April 1998 to September 1998
Guorun Bjornsdottir                 Formerly employed as a Nurse from                         4,000         4,000                0
                                    April 1998 to September 1998
Halldora Grondal                    Formerly employed as a Nurse from                         4,000         4,000                0
                                    April 1998 to September 1998
Heioa Liljudottir                   Informatics, Genealogy Associate                          2,000         2,000                0
19
22
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Helga Sigurgeirsdottir              Laboratory, Research Assistant                            2,000         2,000                0
Helgi Hallbeck                      Laboratory, Research Associate                            5,000         5,000                0
Hjordis Palsdottir                  Formerly employed as a Nurse from                         4,000         4,000                0
                                    August 1998 to September 1998
Ingolfur Agustsson                  Informatics, Senior Software Engineer                     5,000         5,000                0
Johanna Stefansdottir               Laboratory, Research Assistant                            2,000         2,000                0
Jon Gunnar (th)orsteinsson          Formerly employed as a Genealogy                          1,250         1,250                0
                                    Associate from March 1998 to
                                    September 2000
Katirin Stefansdottir               Laboratory, Research Assistant                            2,000         2,000                0
Kjartan Benediktsson                Informatics, Software Engineer                            5,000         5,000                0
Kolbeinn Proppe                     Formerly employed as a Genealogy                          1,125         1,125                0
                                    Associate from June 1998 to August 2000
Omar Gustafsson                     Laboratory, Research Associate                            5,000         5,000                0
Petur Larusson                      Informatics, Genealogy Associate                          2,000         2,000                0
Rakel (th)orhallsdottir             Laboratory, Research Assistant                            2,000         2,000                0
Selma Haflioadottir                 Formerly employed as a Laboratory                           625           625                0
                                    Assistant from June 1998 to September 1999
Sesselja Jonsdottir                 Formerly employed as a Genealogy                          1,125         1,125                0
                                    Associate from June 1998 to January 2001
Siv Oscarsson                       Formerly employed as a Nurse from                         5,000         5,000                0
                                    April 1998 to September 1998
Stefan Palsson                      Laboratory, Research Associate                            5,000         5,000                0
Svana Steinsdottir                  Laboratory, Research Associate                            5,000         5,000                0
Svava  Siguroardottir               Informatics, Genealogy Associate                          2,000         2,000                0
Svanhvit Antonsdottir               Laboratory, Research Assistant                            2,000         2,000                0
(th)orarinn Blondal                 Laboratory, Research Associate                            5,000         5,000                0
(th)orey Arnadottir                 Finance, Secretary                                        2,000         2,000                0
Vala Guonadottir                    Laboratory, Research Associate                            5,000         5,000                0
Heioar Guonason                     Informatics, Director                                     2,000         2,000                0
Malfriour Siguroardottir            Laboratory, Research Associate                            2,000         2,000                0
Anton Yuryev                        Formerly employed as a Laboratory Research
                                    Scientist from September 1998 to September 1999           2,167         2,167                0
Dana Sholkny                        Laboratory, Research Scientist                            3,000         3,000                0
Andrew Hicks                        Laboratory, Project Leader                                5,000         5,000                0
Sigurbjorg Guonadottir              Research Associate, Statistics                            5,000         5,000                0
Arna Antonsdottir                   Laboratory, Research Associate                            5,000         5,000                0
Auour (th)orsteinsdottir            Finance, Secretary                                        1,000         1,000                0
20
23
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Asgeir Bjornsson                    Laboratory, Research Scientist                            5,000         5,000                0
Asgeir Sigurosson                   Laboratory Research Scientist                             1,000         1,000                0
Asdis Aoalsteinsdottir              Laboratory, Research Associate                            1,000         1,000                0
Baldur Bragason                     Informatics, Bioinformatics Specialist                    5,000         5,000                0
Berg(th)ora Skuladottir             Laboratory, Research Associate                            2,000         2,000                0
Bjarni Gislason                     Finance, Assistant, Internal Operations                   1,000         1,000                0
Einar Gislason                      Laboratory, Electronics Technician                        5,000         5,000                0
Emilia Soebeck                      Laboratory, Research Associate                            5,000         5,000                0
Eva Halapi                          Laboratory, Research Scientist                            5,000         5,000                0
Gisli (th)orisson                   Formerly employed as a Laboratory, Medical                1,250         1,250                0
                                    Doctor from June 1998 to July 1999
Guomundur Georgsson                 Informatics, LIMS Senior Software Engineer                5,000         5,000                0
Havarour Hjaltason                  Informatics, IT Service Technician                        5,000         5,000                0
Helga Einarsdottir                  Laboratory, Research Associate                            3,000         3,000                0
Herdis Guojonsdottir                Laboratory, Research Associate                            5,000         5,000                0
Hjordis Bjarnason                   Laboratory, Research Associate                            3,000         3,000                0
Hjortur Jonsson                     Statistics, Group leader, Statistics                      5,000         5,000                0
Hjorvar Petursson                   Statistics, Research Associate, Statistics                1,000         1,000                0
Hlynur Magnusson                    Laboratory, Research Assistant                            1,000         1,000                0
Ingibjorg Bjorgvinsdottir           Formerly employed as a Laboratory Research                  292           292                0
                                    Associate from May 1998 to July 1999
Jakob Sigurosson                    Informatics Software Engineer                             3,000         3,000                0
Ingigerour Ingudottir               Formerly employed as a Laboratory Research                  500           500                0
                                    Assistant from September 1998 to September 2000
Jona Saemundsdottir                 Laboratory, Research Associate                            5,000         5,000                0
Jonina Palmadottir                  Finance, Assistant                                        1,000         1,000                0
Jon Sveinsson                       Finance, Librarian                                        1,718         1,000              718
Julius Guomundsson                  Laboratory, Research Scientist                            5,000         5,000                0
Katrin Ingjaldsdottir               Laboratory, Research Assistant                            1,000         1,000                0
Kristbjorg Jonsdottir               Laboratory, Research Associate                            5,000         5,000                0
Kristjan Jonasson                   Statistics, Group Leader                                 10,000        10,000                0
Margret Andresdottir                Laboratory, Research Associate                            1,000         1,000                0
Margret Sveinsdottir                Formerly employed as a Research Assistant                   313           313                0
                                    in the lab from June 1998 to September 1999
21
24
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Oddur Jonas Jonasson                Formerly employed as an Assistant in Internal               396           396                0
                                    Operations from to September 1998 to March 2000
Olga Geirsdottir                    Formerly employed as an Assistant in Internal               375           375                0
                                    Operations from October 1998 to April 2000
Olof Guomundsdottir                 Laboratory, Research Scientist                            5,000         5,000                0
Omar Traustason                     Laboratory, Research Assistant                            1,000         1,000                0
Ragnar Runarsson                    Laboratory, Research Associate                            1,000         1,000                0
Rakel Magnusdottir                  Formerly employed as a Research Assistant                   500           500                0
                                    in the lab from August 1998 to August 2000
Robert Skraban                      Laboratory, Research Scientist                            1,000         1,000                0
Shyamali Ghosh                      Laboratory, Research Scientist                            5,000         5,000                0
Sigrun Reynisdottir                 Laboratory, Research Scientist                            1,000         1,000                0
Sigurbjorg Jakobsdottir             Laboratory, Research Assistant                            1,000         1,000                0
Sigurour Ingason                    Laboratory, Research Associate                            5,000         5,000                0
Sigurjon Guojonsson                 Laboratory, Research Scientist                            5,000         5,000                0
Sonja Siguroardottir                Laboratory, Research Associate                            1,000         1,000                0
Soley Bjornsdottir                  Laboratory, Research Scientist                            5,000         5,000                0
Steinunn Matthiasdottir             Laboratory, Research Associate                            1,359         1,000              359
Sunna Bragadottir                   Formerly employed as a Laboratory Research                  500           500                0
                                    Assistant from September 1998 to September 2000
Valgerour Stein(th)orsdottir        Laboratory, Project Leader                                5,000         5,000                0
Valgerour Gunnarsdottir             Medical Informatics Specialist                            5,000         5,000                0
(th)orbjorg Jonsdottir              Laboratory, Research Associate                            1,000         1,000                0
(th)oranna Bjornsdottir             Finance\Purchasing, Purchasing Assistant                  1,000         1,000                0
(th)orunn Guomundsdottir            Laboratory, Research Associate                            1,359         1,000              359
(th)rainn Arsaelsson                Internal Operations, Chef                                 1,000         1,000                0
Alexander Diehl                     Laboratory, Research Scientist                            5,000         5,000                0
Alfreo Hauksson                     Informatics, Software Engineer                            3,000         3,000                0
Andrei Manolescu                    Statistics, Research Scientist                            4,000         4,000                0
Anthony Gunnel                      Laboratory, Research Scientist                            3,000         3,000                0
Arnaldur Gylfason                   Informatics, Bioinformatics Specialist                    1,000         1,000                0
Arnar Sigmundsson                   Laboratory, Research Associate                            1,000         1,000                0
Arndis Bjornsdottir                 Laboratory, Research Associate                            1,000         1,000                0
Arni Sigurosson                     Informatics, IT Service                                   1,000         1,000                0
22
25
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Berit Nielsen                       Laboratory, Research Associate                            1,168         1,000              168
Bjorg Olafsdottir                   Laboratory, Research Associate                            1,000         1,000                0
Brynhildur Einarsdottir             Laboratory, Research Assistant                            1,000         1,000                0
Dagny Hreinsdottir                  Laboratory, Research Associate                            1,000         1,000                0
Eduardo Hernandez                   Laboratory, Research Scientist                            5,000         5,000                0
Egill Juliusson                     Formerly employed as a Research Assistant                   296           250               46
                                    in laboratory from September 1999 to
                                    September 2000
Ella Geirsdottir                    Laboratory, Research Associate                            1,000         1,000                0
Erna Magnusdottir                   Laboratory, Research Associate                            1,000         1,000                0
Freyr (th)orarinsson                Informatics, Project Manager, Data Mining                 7,500         7,500                0
Guolaug Runarsdottir                Laboratory, Research Assistant                            1,000         1,000                0
Guolaugur Egilsson                  Informatics Bioinformatics Specialist                     3,386         3,000              386
Guomar (th)orleifsson               Statistics, Group Leader                                  3,000         3,000                0
Guomundur (th)orisson               Informatics, Bioinformatics Specialist                    1,000         1,000                0
Guorun Jonsdottir                   Statistics, Research Associate                            1,000         1,000                0
Guorun AEgisdottir                  Laboratory, Genotyping                                    1,000         1,000                0
Gunnar Sigurosson                   Informatics, Bioinformatics Specialist                    1,000         1,000                0
Halldor Erlendsson                  Laboratory, Electronics Technician                        3,000         3,000                0
Halldor Fjalldal                    Formerly employed as a Research Scientist                   250           250                0
                                    from August 1999 to September 2000
Haraldur Hallgrimsson               Informatics Assistant                                     1,000         1,000                0
Harpa Runarsdottir                  Statistics                                                1,000         1,000                0
Haukur Arason                       Statistics, Research Scientist                            3,000         3,000                0
Hakon Aoalsteinsson                 Laboratory, Research Assistant                            1,000         1,000                0
Helena Marteinsdottir               Laboratory                                                1,000         1,000                0
Helga Erlingsdottir                 Laboratory, Research Associate                            1,000         1,000                0
Helga Knudsen                       Laboratory, Research Associate                            1,000         1,000                0
Helga Stefansdottir                 Informatics Office Manager                                1,000         1,000                0
Hermann Ingjaldsson                 Formerly employed as a Laboratory Research                  250           250                0
                                    Assistant from August 1999 to August 2000
Hjalti Sigurosson                   Informatics IT Service Technician                         1,000         1,000                0
Hjordis Siguroardottir              Informatics Software Engineer                             1,000         1,000                0
23
26
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Hulda (th)rainsdottir               Formerly employed as a Bioinformatics                       250           250                0
                                    Associate from May 1999 to May 2000
Ileana Manolescu                    Statistics, Research Associate                            1,000         1,000                0
Jo Ronneberg                        Laboratory, Research Associate                            1,000         1,000                0
Johann Fjalldal                     Informatics, Project Manager                              1,000         1,000                0
Johann Einarsson                    Informatics, Project Manager Database, Software          15,660        15,000              660
Jonas Hauksson                      Laboratory, Research Associate                            1,000         1,000                0
Jonheiour Isleifsdottir             Laboratory, Research Assistant                            1,000         1,000                0
Katherine Mylonas                   Laboratory, Research Associate                            1,000         1,000                0
Kristjana Johannesdottir            Laboratory, Research Assistant                            1,000         1,000                0
Kristjon Guojonsson                 Laboratory, Research Assistant                            1,000         1,000                0
Lisa Libungan                       Formerly employed as an Informatics                         396           396                0
                                    Assistant from June 1999 to December 2000
Luovik Guojonsson                   Informatics, Bioinformatics Specialist                    1,000         1,000                0
Luovik Tomasson                     Finance\Financial Reporting                              50,000        50,000                0
Magnus Jokulsson                    Formerly employed as a Research Assistant                   292           292                0
                                    in laboratory from June 1999 to August 2000
Nanna Vioarsdottir                  Laboratory, Research Associate                            1,000         1,000                0
Natasha Desnica                     Laboratory, Research Associate                            1,000         1,000                0
Ragnheiour Gestsdottir              Formerly employed as a Genealogy Associate                  250           250                0
                                    from September 1999 to September 2000
Rakel Tryggvadottir                 Formerly employed as a Research Assistant                   312           312                0
                                    in the lab from May 1999 to December 2000
Raywatee Sahodeo                    Finance, IR Assistant                                     1,000         1,000                0
Remi Spillaert                      Laboratory, Research Scientist,                           3,112         3,000              112
Robert (th)orvaldsson               Finance, Internal Operations, Assistant                   1,000         1,000                0
Sif Jonsdottir                      Laboratory, Research Scientist                            2,000         2,000                0
Sigfus Sigfusson                    Formerly employed as a Genealogy Associate                  375           375                0
                                    from May 1999 to December 2000
24
27
Number of      Number of
                                                                                          Number of    Shares to     Shares to be
                                                                                           Shares          be         Owned After
Name:                               Position in the Company:                              Owned (1)    Offered(2)    Offering (3)*
------------------------------      -----------------------------------------------       ---------    ----------    -------------
Sigriour Gunnarsdottir              Laboratory, Research Assistant                            1,000         1,000                0
Sigriour Reynisdottir               Laboratory, Research Associate                            1,000         1,000                0
Sigrun Bjarnadottir                 Laboratory, Research Associate                            1,200         1,000              200
Sigrun Bjornsdottir                 Formerly employed in the Communications                   1,771         1,771                0
                                    Department from March 1999 to August 2000
Sigrun Halldorsdottir               Laboratory, Research Assistant                            1,000         1,000                0
Sigurborg Matthiasdottir            Laboratory, Research Associate                            1,000         1,000                0
Sigurour Arnason                    Database                                                 10,000        10,000                0
Sigurour Kristjansson               Informatics, Genealogy Associate                          1,000         1,000                0
Silja Arnarsdottir                  Laboratory, Research Assistant                            1,000         1,000                0
Stefan Jonsson                      Formerly employed as a Laboratory Research                  313           313                0
                                    Associate from June 1999 to September 2000
Steinunn Jonsdottir                 Laboratory, Research Associate                            1,000         1,000                0
Sunil Godithi                       Corporate Development,Software Engineer                   3,000         3,000                0
Sveinn Joelsson                     Informatics,                                              1,000         1,000                0
Theodora Thorlacius                 Laboratory, Research Associate                            1,000         1,000                0
(th)orsteinn Njalsson               Medical Doctor                                           15,000        15,000                0
(th)orunn Guomundsdottir            Informatics                                               1,000         1,000                0
(th)orunn Juliusdottir              Formerly employed as a Laboratory Research                  250           250                0
                                    Assistant from August 1999 to August 2000
Vaka Agustsdottir                   Laboratory, Research Assistant                            1,000         1,000                0
Vala Johannsdottir                  Laboratory, Research Associate                            1,000         1,000                0
Valdimar Hauksson                   Laboratory, Research Associate                            1,000         1,000                0
Valgeir Hallbergsson                Informatics, IT service                                   1,000         1,000                0
Orn Asgeirsson                      Informatics, IT service                                   1,000         1,000                0
Unnur Jokulsdottir                  Formerly Director of Communications                     160,000       100,000           60,000
Karl Tryggvason                     Consultant                                               60,000        60,000                0
Vigfus Sveinbjornsson               Finance\Purchasing, Purchasing Specialist                10,000        10,000                0
*        All Selling Securityholders listed herein will own less than one
         percent of the outstanding shares after the offering.

(1)      Represents shares beneficially owned by the named individual, including
         shares that such person has the right to acquire within 60 days of the
         date of this Reoffer Prospectus. Unless otherwise noted, all persons

                                       25
28
         referred to above have sole voting and sole investment power.

(2)      Does not include outstanding options to purchase Shares of Common Stock
         granted to the named individuals under the Plan, whether or not vested
         or exercisable within 60 days of the date of this Reoffer Prospectus.
         Includes all Shares issued to such named individuals upon the exercise
         of options granted under the Plan. All of such Shares are being
         registered under the registration statement of which this Resale
         Prospectus is a part.

(3)      Does not constitute a commitment to sell any or all of the stated
         number of Shares of Common Stock. The number of Shares offered shall be
         determined from time to time by each Selling Stockholder at his or her
         sole discretion.

                              PLAN OF DISTRIBUTION

         Shares offered hereby may be sold from time to time directly by or on
behalf of the Selling Securityholders in one or more transactions on the Nasdaq
National Market or on any stock exchange on which the common stock may be listed
at the time of sale, in privately negotiated transactions, or through a
combination of such methods, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at fixed prices (which may be
changed) or at negotiated prices. The Selling Securityholders may sell shares
through one or more agents, brokers or dealers or directly to purchasers. Such
brokers or dealers may receive compensation in the form of commissions,
discounts or concessions from the Selling Securityholders and/or purchasers of
the shares or both (which compensation as to a particular broker or dealer may
be in excess of customary commissions).

         In connection with such sales, the Selling Securityholders and any
participating broker or dealer may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions they receive and the proceeds
of any sale of shares may be deemed to be underwriting discounts and commissions
under the Securities Act.

         In order to comply with certain state securities laws, if applicable,
the shares may be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the shares may not be sold unless the
shares have been registered or qualified for sale in such state or an exemption
from regulation or qualification is available and is complied with. Sales of
shares must also be made by the Selling Securityholders in compliance with all
other applicable state securities laws and regulations.

         In addition to any shares sold hereunder, Selling Securityholders may,
at the same time, sell any shares of common stock, including the shares, owned
by them in compliance with all of the requirements of Rule 144, regardless of
whether such shares are covered by this reoffer prospectus. There can be no
assurance that any of the Selling Securityholders will sell any or all of the
shares offered by them hereby.

         deCODE will pay all expenses of the registration of the shares. deCODE
has notified certain Selling Securityholders of the need to deliver a copy of
this reoffer prospectus in connection with any sale of the shares.

                                  LEGAL MATTERS

         The validity of the shares being offered hereby has been passed upon
for deCODE by Reed Smith LLP.

                                     EXPERTS

         The financial statements as of December 31, 1998 and 1999 and for each
of the three years in the period ended December 31, 1999, which are incorporated
by reference in this reoffer prospectus, have been so incorporated in reliance
on the report of PricewaterhouseCoopers ehf., independent accountants, given on
the authority of said firm as experts in auditing and accounting.

                                       26
29
                                     PART II
               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The following documents, which have been filed by deCODE genetics, Inc.
(the "Registrant") with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration statement as
of their respective dates:

         (a)      The Registrant's final prospectus filed on July 18, 2000
                  pursuant to Rule 424(b) of the Securities Act of 1933, as
                  amended (the "Securities Act");

         (b)      The Registrant's Quarterly Reports on Form 10-Q for the
                  quarters ended June 30 and September 30, 2000;

         (c)      All other reports filed pursuant to Section 13 or 15(d) of the
                  Exchange Act since July 18, 2000;

         (d)      The Registrant's Form 8-A filed on June 26, 2000 pursuant to
                  Section 12(g) of the Exchange Act; and

         (e)      The description of the Registrant's common stock contained in
                  the Registrant's final prospectus filed on July 18, 2000
                  pursuant to Rule 424(b) of the Securities Act.

         All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of this registration
statement and prior to the filing of a post-effective amendment which indicates
that all securities described herein have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents with the Commission. Any statement in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this registration
statement.

ITEM 4.  DESCRIPTION OF SECURITIES.

Not applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Section 102(b)(7) of the Delaware General Corporation Law ("DGCL")
enables a corporation in its certificate of incorporation to limit the personal
liability of its directors for violations of their fiduciary duty of care.
Accordingly, Section 4.7 of our certificate of incorporation states that a
director will not be personally liable to us or to our stockholders for monetary
damages resulting from any breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to us or to our
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. If the DGCL is amended, then the liability of a
director will be eliminated or limited to the fullest extent permitted by the
amended DGCL.

                                      II-1
30
         Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

         Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of that action or
suit if he acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the corporation. No indemnification
will be made, however, in respect to any claim, issue or matter as to which that
person is adjudged to be liable to the corporation, unless and only to the
extent that the Court of Chancery or the court in which that action or suit was
brought will determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, that person is
fairly and reasonably entitled to indemnity for the expenses which the Court of
Chancery or such other court deems proper.

         Section 145 further provides that to the extent a present or former
director or officer of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in defense of any claim, issue or matter therein, that person will be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him; that the indemnification provided by Section 145 will not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the scope of indemnification extends to directors, officers,
employees, or agents of a constituent corporation absorbed in a consolidation or
merger and persons serving in that capacity at the request of the constituent
corporation for another. The determination of whether indemnification is proper
under the circumstances, unless made by a court, is determined by (a) a majority
of the disinterested members of the Board of Directors or board committee; (b)
independent legal counsel (if a quorum of the disinterested members of the Board
of Directors or board committee is not available or if the disinterested members
of the Board of Directors or a board committee so direct); or (c) the
stockholders.

         Section 145 also empowers us to purchase and maintain insurance on
behalf of our directors or officers against any liability asserted against them
or incurred by them in any such capacity or arising out of their status as our
directors or officers whether or not we would have the power to indemnify them
against the liabilities under Section 145. We currently carry liability
insurance for the benefit of our past, present and future directors and officers
that provides coverage for any damages (including punitive or exemplary damages,
where insurable under applicable law), settlements, judgments and reasonable and
necessary legal fees and expenses incurred by any of the officers or directors
resulting from any judicial or administrative proceeding (including arbitration
or alternative dispute resolution proceeding) or any written demand or notice
describing circumstances likely to give rise to a judicial or administrative
proceeding initiated during the policy period against any of the officers or
directors in which they may be subjected to a binding adjudication of liability
for damages or other relief, including any appeal therefrom, for any actual or
alleged error, omission, misstatement, misleading statement, breach of duty,
violation of securities laws or regulations by any officer or director,
(including libel, slander or defamation in connection solely with an employment
practices wrongful act), or in connection with the purchase or sale, or offer to
purchase or sell, securities issued by the company, while acting in his capacity
as or by reason of his status as a director or officer of the company (or any
subsidiary of the company) or in his capacity as a director or officer of a
company exempt from taxation under 501(c)(3) of the Internal Revenue Code (or
any subsidiary of such company) during such time

                                      II-2
31
that such service is part of the regularly assigned duties of the officer or
director with the company. Our liability insurance further provides for any
reasonable investigative costs, including fees of attorneys and experts,
incurred by the company or its board of directors in the investigation or
evaluation of any shareholder derivative demand to bring a civil proceeding
against an officer or director. Among other exclusions, our current policy
specifically excludes coverage for any claim: brought about or contributed to in
fact by any intentional dishonest or fraudulent act or omission or any willful
violation of any statute, rule or law by any officer or director; based upon
actual or alleged exposure to pollution or contamination; for actual or alleged
violations of the Employee Retirement Income Security Act of 1974; by, on behalf
of, or at the direction of, the company or other officers or directors; brought
about or contributed to in fact by the gaining by any officer or director of any
profit, remuneration or advantage to which such officer or director is not
legally entitled; by any willful violation of any statute, rule or law; seeking
relief or redress in any form other than money damages; for actual or alleged
bodily injury, sickness, disease, death, mental anguish, emotional distress,
damage to or destruction of tangible property, nuclear reaction, nuclear
radiation, radioactive contamination or radioactive substance.

         Section 42 of our bylaws requires that we indemnify each director and
executive officer to the fullest extent allowable under the DGCL, and empowers
us to indemnify our other officers, employees and other agents. Section 42
further provides, however, that we may limit the extent of our indemnification
by individual contracts with our directors and executive officers, and further,
that we will not be required to indemnify any director or executive officer in
connection with any proceeding (or part of a proceeding) initiated by that
person or any proceeding by that person against us or our directors, officers,
employees or other agents unless (a) indemnification is expressly required to be
made by law, (b) the proceeding was authorized by our Board of Directors or
(c)indemnification is provided by us, in our sole discretion, pursuant to the
powers vested in us under the DGCL. This provision is a contract with each
director and executive officer who serves in that capacity at any time while the
provision and the relevant provisions of the DGCL are in effect.

         Any repeal or modification of Section 42 of our bylaws will only be
prospective, and will not affect any rights in effect at the time of the alleged
occurrence of any action or omission to act that is the cause of any proceeding
against any of our agents. Further, the rights conferred on any person by
Section 42 will continue as to a person who has ceased to be a director,
officer, employee or other agent and will inure to the benefit of the heirs,
executors and administrators of such person.

         We have, in addition, entered into an indemnity agreement with one of
our directors, Sir John Vane. The agreement requires us, subject to certain
exceptions, to hold harmless and indemnify Sir John to the fullest extent
authorized or permitted by the provisions of the bylaws and the DGCL, as each
may be amended from time to time (but, only to the extent that an amendment
permits us to provide broader indemnification rights than the bylaws or the DGCL
permitted prior to adoption of that amendment). Subject to certain exclusions,
we further agreed to hold harmless and indemnify Sir John against any and all
expenses (including attorneys' fees), witness fees, damages, judgments, fines
and amounts paid in settlement and any other amounts that he becomes legally
obligated to pay because of any claim or claims made against or by him in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, arbitrational, administrative or investigative
(including an action by or in the right of us) to which he is, was, or at any
time becomes, a party, or is threatened to be made a party, by reason of the
fact that he is, was, or at any time becomes, our director, officer, employee or
other agent, or is or was serving, or at any time serves, at our request, as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and otherwise
to the fullest extent as may be provided to him by us under our bylaws and the
DGCL.

         Our agreement with, and obligations to, Sir John under his indemnity
agreement will continue during the period that he serves as our director,
officer, employee or other agent (or is or was serving at our request as a
director, officer, employee or other agent of another company, partnership,
joint venture, trust, employee benefit plan or other enterprise) and will
continue thereafter so long as he will be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that the director was serving in the capacity referred to herein.

                                      II-3
32
ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         The shares to be sold under the reoffer prospectus were initially
issued by the Registrant and were deemed exempt from registration under the
Securities Act in reliance on: (1) Rule 701 promulgated under the Securities Act
as offers and sales of securities pursuant to certain compensatory benefit plans
relating to compensation in compliance with Rule 701, (2) Regulation S as offers
and sales that occurred outside the United States, or (3) Section 4(2) of the
Securities Act, and/or Regulation D thereunder, as transactions by an issuer not
involving any public offering.

ITEM 8.  EXHIBITS

Exhibit No.       Description of Exhibit

3.1               Amended and Restated Certificate of Incorporation, as further
                  amended (Incorporated by reference to Exhibit 3.1 and Exhibit
                  3.3 to the Registrant's Registration Statement on Form S-1
                  (Registration No. 333-31984) which became effective on July
                  17, 2000.)

3.2               Bylaws, as amended (Incorporated by reference to Exhibit 3.2
                  to the Registrant's Registration Statement on Form S-1
                  (Registration No. 333-31984) which became effective on July
                  17, 2000.)

4.1               Specimen Common Stock Certificate (Incorporated by reference
                  to Exhibit 4.1 to the Registrant's Registration Statement on
                  Form S-1 (Registration No. 333-31984) which became effective
                  on July 17, 2000.)

5.1               Opinion of Reed Smith LLP

10.1              1996 Equity Incentive Plan, as amended

10.2              Form of Non-Statutory Stock Option Agreement, including Early
                  Exercise Stock Purchase Agreement and all exhibits thereto, as
                  executed by employees and officers of deCODE genetics, Inc.
                  who received and exercised non-statutory stock options
                  (Incorporated by reference to Exhibit 10.3 to the Registrant's
                  Registration Statement on Form S-1 (Registration No.
                  333-31984) which became effective on July 17, 2000.)

23.1              Consent of PricewaterhouseCoopers ehf., independent public
                  accountants

23.2              Consent of Reed Smith LLP (contained in the opinion filed as
                  Exhibit 5.1 hereto).

24.1              Power of Attorney (included on the Signature Page)

ITEM 9. UNDERTAKINGS.

     (a) The undersigned Registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made,
         a post-effective amendment to this registration statement:

                  (i) To include any prospectus required by Section 10(a)(3) of
         the Securities Act;

                                      II-4
33
                  (ii) To reflect in the prospectus any facts or events arising
         after the effective date of the registration statement (or the most
         recent post-effective amendment thereof) which, individually or in the
         aggregate, represent a fundamental change in the information set forth
         in the registration statement. Notwithstanding the foregoing, any
         increase or decrease in volume of securities offered (if the total
         dollar value of securities offered would not exceed that which was
         registered) and any deviation from the low or high and of the estimated
         maximum offering range may be reflected in the form of prospectus filed
         with the Commission pursuant to Rule 424(b) if, in the aggregate, the
         changes in volume and price represent no more than 20 percent change in
         the maximum aggregate offering price set forth in the "Calculation of
         Registration Fee" table in the effective registration statement; and

                  (iii) To include any material information with respect to the
         plan of distribution not previously disclosed in this registration
         statement or any material change to such information in this
         registration statement;

         provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
         apply if the information required to be included in a post-effective
         amendment by those paragraphs is contained in periodic reports filed
         with or furnished to the Commission by the Registrant pursuant to
         Section 13 or Section 15(d) of the Exchange Act that are incorporated
         by reference in the registration statement.

         (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

                                      II-5
34
                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it meets all of the requirements for filing on Form
S-8 and has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the city of Reykjavik,
Iceland, on this 28th day of February, 2001.

                                             deCODE genetics, Inc.

                                             By:  /s/ Kari Stefansson
                                                 ______________________________
                                                 Dr. Kari Stefansson, President
                                                 and Chief Executive Officer

                               POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dr. Kari Stefansson, Hannes Smarason and
Axel Nielsen, and each or any one of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
Signature                                              Title                                        Date
---------                                              -----                                        ----
/s/ Kari Stefansson
____________________________         Chairman, President, Chief Executive Officer            February 28, 2001
Dr. Kari Stefansson                  (principal executive officer) and Director

/s/ Axel Nielsen
____________________________         Vice President, Finance and Treasurer                    February 28, 2001
Axel Nielsen                         (principal financial officer and
                                     principal accounting officer)

/s/ Jean-Francois Formela
____________________________         Director                                                 February 28, 2001
Jean-Francois Formela

/s/ Andre Lamotte
____________________________         Director                                                 February 28, 2001
Andre Lamotte

/s/ Terrance McGuire
____________________________         Director                                                 February 28, 2001
Terrance McGuire

 /s/ John Vane
____________________________         Director                                                 February 28, 2001
Sir John Vane