By Tina Peng

Law360, New York (January 13, 2010, 5:23 PM ET) -- The U.S. government has balked at bankrupt deCode Genetics Inc.'s proposed asset sale to stalking horse bidder and debtor-in-possession financier Saga Investments LLC, saying the government must protect its interests in the security-sensitive areas of research and development.

The U.S. filed an objection to deCode's proposed sale Tuesday in the U.S. Bankruptcy Court for the District of Delaware, calling the sale motion “a transparent attempt to circumvent procedural requirements designed to ensure due process.”

DeCode, a genetic testing, drug development and research company, has federal grants...