deCODE This

Hate company names that defy all common spelling parameters? Try these two: Icelandic "population genetics" company deCODE genetics (Nasdaq: DCGN) announced the resignation of its independent accountants PricewaterhouseCoopers (PwC). Those are two ugly spellings!

Wall Street saw ugly news and subtracted 19% from deCODE's stock price in early trading.

deCODE's press release says there were no disagreements that would have affected financial reporting. In the SEC filing, a change in the method of recognizing milestone revenue and period-end financial closing procedures were the only areas noted that might be of concern. Still, it's impossible to decode why PwC withdrew.

deCODE took care of its biggest financial need in April when it sold $150 million in convertible notes. If PwC was worried about the company's near-term viability, or the interest the company could muster for a placement, those thoughts should have been waylaid when the offering was oversubscribed.

deCODE has approximately half of the adult population of Iceland (an isolated genetic population with excellent genealogical records) participating in one or more of its research projects. The company, so far, has isolated 15 specific disease genes, including those for asthma, myocardial infarction (heart attack), stroke, prostate cancer, and osteoporosis.

While these discoveries have in many cases received mass media attention, there are no drugs yet in phase 3 trials. Having partners such as IBM (NYSE: IBM) for technology and Merck (NYSE: MRK) for obesity are just window dressing when any drug payoff is literally years away.

By targeting the major causes of disease, deCODE's competitors include Pfizer (NYSE: PFE), Eli Lilly (NYSE: LLY), GlaxoSmithKline (NYSE: GSK), and Johnson & Johnson (NYSE: JNJ) -- to name a few.

Let's decode what can be said about deCODE's news. There will be another independent auditor. With its financing in place, audit concerns are certainly minimized.

deCODE is a story stock. Does it have superior technology for isolating disease genes, and can that be used to find significant drugs?

Those who purchased the IPO four years ago are nursing a big loss. If you speculate in story stocks, now is the time to review this company. The phase 2 heart drug trial ends this month, and results are expected before the end of the year.

Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.