<PAGE>   1
                                                                     EXHIBIT 4.2


                                                                   NO. PAW-____


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.


                     WARRANT TO PURCHASE ___________ SHARES
                         OF SERIES A PREFERRED STOCK OF
                              DECODE GENETICS, INC.
                            (VOID AFTER ___________)


         This certifies that _________________________ or its assigns (the
"Holder"), for value received, is entitled to purchase from deCODE genetics,
Inc., a Delaware corporation (the "Company"), a maximum of __________ fully paid
and nonassessable shares of the Company's Series A Preferred Stock ("Preferred
Stock") for cash at a price of $_________ per share (the "Stock Purchase Price")
at any time or from time to time up to and including 5:00 p.m. (Pacific time) on
____________________ (the "Expiration Date"), upon surrender to the Company at
its principal office (or at such other location as the Company may advise the
Holder in writing) of this Warrant properly endorsed with the Form of
Subscription attached hereto duly filled in and signed and, if applicable, upon
payment in cash or by check of the aggregate Stock Purchase Price for the number
of shares for which this Warrant is being exercised determined in accordance
with the provisions hereof. The Company shall deliver notice of the Initial
Public Offering to the Holder at least 30 days prior to the closing thereof. The
Stock Purchase Price and the number of shares purchasable hereunder are subject
to adjustment as provided in Section 3 of this Warrant.

         This Warrant is subject to the following terms and conditions:

         1.       EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.

                  1.1 GENERAL. This Warrant is exercisable at the option of the
holder of record hereof, at any time or from time to time, up to the Expiration
Date for all or any part of the shares of Preferred Stock (but not for a
fraction of a share) which may be purchased hereunder. The Company agrees that
the shares of Preferred Stock purchased under this Warrant shall be and are
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered, properly endorsed, the completed, executed Form of Subscription
delivered and payment made for such shares. Certificates for the shares of
Preferred Stock so purchased, together with any other securities or property to
which the Holder hereof is entitled upon such exercise. shall be delivered to
the Holder hereof by the Company at the Company's expense within a reasonable
time after the rights represented by this Warrant have been so exercised. In
case of a purchase of less than all the shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time. Each stock certificate so delivered shall be in such
denominations of Preferred Stock as may be requested by the Holder hereof and
shall be registered in the name of such Holder.



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                  1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein
to the contrary, if the fair market value of one share of the Company's
Preferred Stock is greater than the Stock Purchase Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant for cash,
the Holder may elect to receive shares equal to the value (as determined below)
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Form of Subscription and notice of such election in which event the
Company shall issue to the Holder a number of shares of Preferred Stock computed
using the following formula:

                           X = Y (A-B)
                           -----------
                                A

         Where      X =      the number of shares of Preferred Stock to be
                             issued to the Holder

                    Y =      the number of shares of Preferred Stock
                             purchasable under the Warrant or, if only a
                             portion of the Warrant is being exercised,
                             the portion of the Warrant being canceled
                             (at the date of such calculation)

                    A =      the fair market value of one share of the Company's
                             Preferred Stock (at the date of such calculation)

                    B =      Stock Purchase Price (as adjusted to the date of
                             such calculation)

For purposes of the above calculation, fair market value of one share of
Preferred Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that in the event the Company makes an initial public
offering of its Common Stock the fair market value at such time per share shall
be the product of (i) the per share offering price to the public of the
Company's initial public offering, and (ii) the number of shares of Common Stock
into which each share of Preferred Stock is convertible at the time of such
exercise.

         2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Preferred Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Preferred Stock, or other securities and property, when and as required
to provide for the exercise of the rights represented by this Warrant. The
Company will take all such action as may be necessary to assure that such shares
of Preferred Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which the Preferred Stock may be listed; provided, however, that
the Company shall not be required to effect a registration under Federal or
State securities laws with respect to such exercise. The Company will not take
any action which would result in any adjustment of the Stock Purchase Price (as
set forth in Section 3 hereof) (i) if the total number of shares of Preferred
Stock issuable after such action upon exercise of all outstanding warrants,
together with all shares of Preferred Stock then outstanding and all shares of
Preferred Stock then issuable upon exercise of all options and upon the
conversion of all convertible securities then outstanding, would exceed the
total number of shares of Preferred Stock then authorized by the Company's
Restated Certificate of Incorporation, or (ii) if the total number of shares of
Common Stock issuable after such action upon the conversion of all such shares
of Preferred Stock, together





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with all shares of Common Stock then issuable upon exercise of all options and
upon the conversion of all such shares of Preferred Stock, together with all
shares of Common Stock then outstanding and all shares of Common Stock then
issuable upon exercise of all options and upon the conversion of all convertible
securities then outstanding would exceed the total number of shares of Common
Stock then authorized by the Company's Amended and Restated Articles of
Incorporation.

         3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.

                  3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide its outstanding shares of Preferred Stock into a
greater number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Preferred Stock of the Company shall be combined into
a smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.

                  3.2 DIVIDENDS IN PREFERRED STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the Holders of Preferred
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,

                      (A)      Preferred Stock or any shares of stock or other
                               securities which are at any time directly or
                               indirectly convertible into or exchangeable for
                               Preferred Stock, or any rights or options to
                               subscribe for, purchase or otherwise acquire any
                               of the foregoing by way of dividend or other
                               distribution,

                      (B)      any cash paid or payable otherwise than as a cash
                               dividend, or

                      (C)      Preferred Stock or additional stock or other
                               securities or property (including cash) by way of
                               spinoff, split-up, reclassification, combination
                               of shares or similar corporate rearrangement,
                               (other than shares of Preferred Stock issued as a
                               stock split or adjustments in respect of which
                               shall be covered by the terms of Section 3.1
                               above), then and in each such case, the Holder
                               hereof shall, upon the exercise of this Warrant,
                               be entitled to receive, in addition to the number
                               of shares of Preferred Stock receivable
                               thereupon. and without payment of any additional
                               consideration therefor, the amount of stock and
                               other securities and property (including cash in
                               the cases referred to in clause (b) above and
                               this clause (c)) which such Holder would hold on
                               the date of such exercise had he been the holder
                               of record of such Preferred Stock as of the date
                               on which holders of Preferred Stock received or
                               became entitled to receive such shares or all
                               other additional stock and other securities and
                               property.

                  3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any recapitalization, reclassification or reorganization of the capital
stock of the Company (including any automatic conversion of outstanding shares
of the Preferred Stock), or any consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets or
other transaction shall be effected in such a way that holders of Preferred
Stock shall be entitled to receive stock, securities, or other assets or
property (an "Organic Change"), then, as a condition of such Organic Change,
lawful and adequate


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provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Preferred Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby) such shares of
stock, securities or other assets or property as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Preferred
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby;
provided, however, that in the event the value of the stock, securities or other
assets or property (determined in good faith by the Board of Directors of the
Company) issuable or payable with respect to one share of the Preferred Stock of
the Company immediately theretofore purchasable and receivable upon the exercise
of the rights represented hereby is in excess of the Stock Purchase Price hereof
effective at the time of a merger and securities received in such
reorganization, if any, are publicly traded, then this Warrant shall expire
unless exercised prior to such Organic Change. In the event of any Organic
Change, appropriate provision shall be made by the Company with respect to the
rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Stock Purchase Price and of the number of shares purchasable and receivable
upon the exercise of this Warrant) shall thereafter be applicable, in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof. The Company will not effect any such consolidation, merger or
sale unless, prior to the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or the corporation
purchasing such assets shall assume by written instrument reasonably
satisfactory in form and substance to the Holders of a majority of the warrants
to purchase Series A Preferred Stock then outstanding, executed and mailed or
delivered to the registered Holder hereof at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase.

                  3.4 CERTAIN EVENTS. If any change in the outstanding Preferred
Stock of the Company or any other event occurs as to which the other provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under the
Warrant, the Stock Purchase Price or the application of such provisions, so as
to protect such purchase rights as aforesaid. The adjustment shall be such as
will give the Holder of the Warrant upon exercise for the same aggregate Stock
Purchase Price the total number, class and kind of shares as he would have owned
had the Warrant been exercised prior to the event and had he continued to hold
such shares until after the event requiring adjustment.

                  3.5      NOTICES OF CHANGE.

                           (A)      Immediately upon any adjustment in the
number or class or shares subject to this Warrant and of the Stock Purchase
Price, the Company shall give written notice thereof to the Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.

                           (B)      The Company shall give written notice to the
Holder at least 10 business days prior to the date on which the Company closes
its books or takes a record for determining rights to receive any dividends or
distributions.

                           (C)      The Company shall also give written notice
to the Holder at least 30 business days prior to the date on which an Organic
Change shall take place.




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         4. ISSUE TAX. The issuance of certificates for shares of Preferred
Stock upon the exercise of the Warrant shall be made without charge to the
Holder of the Warrant for any issue tax (other than any applicable income taxes)
in respect thereof, provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.

         5. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Preferred Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.

         6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
holder to purchase shares of Preferred Stock, and no mere enumeration herein of
the rights or privileges of the holder hereof, shall give rise to any liability
of such Holder for the Stock Purchase Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.

         7. WARRANTS TRANSFERABLE. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof (except
for transfer taxes), upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable,
and that the holder hereof, when this Warrant shall have been so endorsed, may
be treated by the Company, at the Company's option, and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this Warrant, or to
the transfer hereof on the books of the Company any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.

         8. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Preferred Stock issued upon exercise of this Warrant, referred to in
Section 7 shall survive the exercise of this Warrant.

         9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of the same is sought.

         10. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered or shall be sent by certified mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefore in the first paragraph of this Warrant or such
other address as either may from time to time provide to the other.

         11. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Preferred Stock issuable upon the exercise of




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this Warrant shall survive the exercise and termination of this Warrant. All of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.

         12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.

         13. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.

         14. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.




                      [THIS SPACE INTENTIONALLY LEFT BLANK]


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         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officer, thereunto duly authorized this ____ day of __________,



                                              DECODE GENETICS, INC.
                                              a Delaware corporation



                                              By:
                                                   Kari Stefansson
                                                   President and Secretary



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                                    EXHIBIT A

                                SUBSCRIPTION FORM


                                                              Date:

deCODE genetics, Inc.



Attn:  President



Ladies and Gentlemen:

:        The undersigned hereby elects to exercise the warrant issued to it by
         deCODE genetics, Inc. (the "Company") and dated ______________, Warrant
         No. PAW-9, (the "Warrant") and to purchase thereunder ___________
         shares of the Series A Preferred Stock of the Company (the "Shares") at
         a purchase price of ______________ per Share or an aggregate purchase
         price of $________________ (the "Purchase Price").

:        The undersigned hereby elects to convert percent ( %) of the value of
         the Warrant pursuant to the provisions of Section 1.2 of the Warrant.

         Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
The undersigned also makes the representations set forth on the attached Exhibit
B of the Warrant.

                                                     Very truly yours,





                                                     By:

                                                     Title:





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                                    EXHIBIT B

                            INVESTMENT REPRESENTATION


THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO DECODE GENETICS, INC.
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE PREFERRED STOCK ISSUABLE UPON
EXERCISE OF THE WARRANT DATED _______________, WILL BE ISSUED.

                                                    Date:


deCODE genetics, Inc.



Attn:  President


Ladies and Gentlemen:

         The undersigned, __________________________ ("Purchaser"), intends to
acquire up to shares of the Series A Preferred Stock (the "Preferred Stock") of
deCODE genetics, Inc. (the "Company") from the Company pursuant to the exercise
or conversion of certain Warrants to purchase Preferred Stock held by Purchaser.
The Preferred Stock will be issued to Purchaser in a transaction not involving a
public offering and pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. In connection with such purchase and in order to comply with
the exemptions from registration relied upon by the Company, Purchaser
represents, warrants and agrees as follows:

         Purchaser is acquiring the Preferred Stock for its own account, to hold
for investment, and Purchaser shall not make any sale, transfer or other
disposition of the Preferred Stock in violation of the 1933 Act or the General
Rules and Regulations promulgated thereunder by the Securities and Exchange
Commission (the "SEC") or in violation of any applicable state securities law.

         Purchaser has been advised that the Preferred Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter.

         Purchaser has been informed that under the 1933 Act, the Preferred
Stock must be held indefinitely unless it is subsequently registered under the
1933 Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Preferred Stock. Purchaser further agrees that the Company may refuse to
permit Purchaser to sell, transfer or dispose of the Preferred Stock (except as
permitted under Rule 144) unless there is in effect a registration statement
under the 1933 Act and any applicable state securities laws covering such
transfer, or unless Purchaser furnishes an opinion of counsel reasonably
satisfactory to counsel for the Company, to the effect that such registration is
not required.

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<PAGE>   10


         Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Preferred Stock, or any substitutions therefor, a legend
stating in substance:

         "The shares represented by this certificate have not been registered
         under the Securities Act of 1933, as amended (the "Securities Act"), or
         any state securities laws. These shares have been acquired for
         investment and may not be sold or otherwise transferred in the absence
         of an effective registration statement for these shares under the
         Securities Act and applicable state securities laws, or an opinion of
         counsel satisfactory to the Company that registration is not required
         and that an applicable exemption is available."

         Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Preferred Stock with Purchaser's counsel.

                                                     Very truly yours,





                                                     By:

                                                     Title: