As filed with the Securities and Exchange Commission on April 18, 2003

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 20-F

|o                                            | Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
|-------------------------------------------- | ------------------------------------------------------------------------------------------------
|OR                                          
|ý                                            | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934            
|For the fiscal year ended: December 31, 2002
|OR                                          
|o                                            | Transition Report pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934        
|For the transition period from N/AtoN/A     

Commission file number: 0-30962

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Crucell N.V.(Exact name of Registrant as Specified in its Charter)

Crucell N.V.(Translation of Registrant's Name into English)

The Netherlands(Jurisdiction of Incorporation or Organization)

Archimedesweg 4, 2333 CN Leiden, The Netherlands(Address of Principal Executive Offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of each class

Name of each exchange on which registeredAmerican Depositary Shares,
each representing one Ordinary Share,
par value €0.24

Nasdaq National Market


Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary Shares, par value €0.24                  35,649,938

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate
by check mark which financial statement item the registrant has elected to follow.
Item 17 o Item 18 ý

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TABLE OF CONTENTS

|                                                |  |                                                            |  | Page
|----------------------------------------------- |  | ---------------------------------------------------------- |  | ----
|Presentation of Financial and Other Information |  | 1                                                         
|Forward-Looking Statements                      |  | 1                                                         
|Other                                           |  | 1                                                         
|PART I                                         
|Item 1.                                         |  | Not Applicable                                             |  | 2   
|Item 2.                                         |  | Not Applicable                                             |  | 2   
|Item 3.                                         |  | Key Information                                            |  | 3   
|Item 4.                                         |  | Information on the Company                                 |  | 17  
|Item 5.                                         |  | Operating and Financial Review and Prospects               |  | 37  
|Item 6.                                         |  | Directors, Senior Management and Employees                 |  | 47  
|Item 7.                                         |  | Major Shareholders and Related Party Transactions          |  | 58  
|Item 8.                                         |  | Financial Information                                      |  | 61  
|Item 9.                                         |  | The Offer and Listing                                      |  | 62  
|Item 10.                                        |  | Additional Information                                     |  | 64  
|Item 11.                                        |  | Quantitative and Qualitative Disclosures About Market Risk |  | 75  
|Item 12.                                        |  | Not Applicable                                             |  | 76  
|PART II                                        
|Item 13.                                        |  | Defaults, Dividend Arrearages and Delinquencies            |  | 77  
|Item 14.                                        |  | Material Modifications to the Rights of Security Holders   |  | 77  
|Item 15.                                        |  | Controls and Procedures                                    |  | 77  
|Item 16.                                        |  | Reserved                                                   |  | 77  
|PART III                                       
|Item 17.                                        |  | Financial Statements                                       |  | 78  
|Item 18.                                        |  | Financial Statements                                       |  | 78  
|Item 19.                                        |  | Exhibits                                                   |  | 78  

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

We were incorporated in October 2000 as the holding company for IntroGene, our predecessor company, following the merger of IntroGene and
U-BiSys. On October 25, 2000, IntroGene B.V. changed its name to Crucell Holland B.V.; in this annual report we refer to this company as IntroGene. Following our creation, a
reorganization took place such that each holder of IntroGene shares received one of our ordinary shares in exchange for each IntroGene share held. The reorganization effected a combination of entities
under common control and accordingly, our financial statements reflect the historical carrying amounts of the assets and liabilities and the historical results of operations of IntroGene.

On
October 25, 2000, we executed a deed of issue of shares to effect a three-for-two stock split of our shares and options. We have adjusted all share per
share and option information in this document to reflect the stock split.

Prior
to 2000, we published our financial statements in Dutch guilders. We now publish our financial statements in euro. In this document, references to (1) "€,"
"EUR" and "euro" are to the currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Economic Community as
amended by the Treaty on European Union, (2) "USD," "$" and "dollars" are to the currency of the United States and (3) "NLG" and "Dutch guilders" are to the former currency of The
Netherlands. We have converted certain amounts in this document, including our historical financial statements, into euro at the rate of EUR 1.00 to NLG 2.20371, the euro/Dutch guilder exchange rate
fixed on January 1, 1999.

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. All statements regarding our future financial condition, results of operations and business strategy,
plans and objectives are forward-looking. Statements containing the words "believes," "intends," "expects," and words of similar meaning are also forward-looking. In particular, the following are
forward-looking in nature: statements with regard to strategy and management objectives; technology and product development efforts; our ability to realize commercially valuable discoveries; our
intellectual property portfolio; our ability to develop potential products and technologies suitable for commercialization; the effects of changes or prospective changes in regulation; and trends in
results, operations and overall market trends.

These
forward-looking statements involve risks, uncertainties and other factors, some of which are beyond our control, that may cause our results, performance or achievements or
conditions in the markets in which we operate to differ from those expressed or implied in these forward-looking statements. We describe these risks and uncertainties in "Item 3Key
InformationRisk Factors". We caution you not to place undue reliance on these forward-looking statements, which reflect our management's view only as of the date of this document.

OTHER

PER.C6, MAbstract and AdVac are trademarks of Crucell Holland B.V. Other trademarks of Crucell N.V. or its wholly owned
subsidiaries used in this report include Crucell. All other trademarks, service marks, trade names and registered marks used in this report are trademarks, trade names or registered marks
of their respective owners. Crucell N.V. and its wholly owned subsidiaries own a number of additional trademarks, including registered trademarks, that are not referenced in this report.

1

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PART I

Item 1.    Identity of Directors, Senior Management and Advisors

This item is not applicable.

Item 2.    Offer Statistics and Expected Timetable

This item is not applicable.

2

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Item 3.    Key Information

Selected Historical Financial Data

The selected financial data presented below as at and for each of the five years in the period ended December 31, 2002 has been derived from:



We
have prepared our financial statements in accordance with U.S. GAAP. The selected financial data of Crucell N.V. should be read in conjunction with "Item 5. Operating and Financial
Review and Prospects" and the audited historical financial statements of Crucell included elsewhere in this annual report.

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Crucell N.V.

|                                                           |                                              | Years ended December 31, |           
|---------------------------------------------------------- | -------------------------------------------- | ------------------------ | ----------
|
|
|Consolidated Statement of Operations Data:                 |                                              |                          |           
|Revenues:                                                  |                                              |                          |           
|                                                           | License                                      |                          | €         
|                                                           | Government grants and other revenues         |                          |           
|                                                           |                                              |                          |           
|Total revenues                                             |                                              | €                        | 3,078     
|Costs and expenses:                                        |                                              |                          |           
|                                                           | Research and development                     |                          |           
|                                                           | Selling, general and administrative          |                          |           
|                                                           | Developed technology amortization            |                          |           
|                                                           | Goodwill amortization                        |                          |           
|                                                           | Goodwill impairment                          |                          |           
|                                                           | Stock option compensation                    |                          |           
|                                                           | Acquired in-process research and development |                          |           
|                                                           |                                              |                          |           
|Total costs and expenses                                   |                                              | €                        | 6,611     
|                                                           |                                              |                          |           
|Loss from operations                                       |                                              |                          | (3,533    
|Interest income                                            |                                              |                          | 356       
|Foreign currency gain/(loss)                               |                                              |                          |          
|Equity in losses of unconsolidated investments             |                                              |                          |          
|                                                           |                                              |                          |           
|Net loss                                                   |                                              | €                        | (3,177    
|                                                           |                                              |                          |           
|Net loss per share/ADSbasic and diluted                   |                                              | €                        | (0.26     
|Weighted average shares/ADSs outstandingbasic and diluted |                                              |                          | 12,092,021

|                                           |                            | As of December 31,
|------------------------------------------ | -------------------------- | ------------------
|
|
|Consolidated Balance Sheet Data:           |                            |                   
|Assets:                                    |                            |                   
|                                           | Cash and cash equivalents  |                   
|                                           | Total current assets       |                   
|                                           | Intangible assets(1)       |                   
|Total assets                               |                            | €                 
|Liabilities and shareholders' equity:      |                            |                   
|                                           | Total current liabilities  |                   
|                                           | Total shareholders' equity |                   
|Total liabilities and shareholders' equity |                            | €                 

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Exchange Rate Information

Before January 1, 1999, the Dutch guilder was a part of the European Monetary System exchange rate mechanism known as the EMS. Within the EMS, exchange
rates fluctuated within permitted margins, fixed by central bank intervention. The European Monetary Union, known as the EMU, superseded the EMS on January 1, 1999 and the euro was introduced
as the common European currency of some participating member countries of the European Monetary Union. The legal rate of conversion between Dutch guilders and the euro was established on
January 1, 1999 at NLG 2.20371 = EUR 1.00. On January 1, 2002, the Dutch guilder was replaced by the euro as the legal currency of The Netherlands.

As
a consequence of this methodology, the comparative information included in this annual report for those prior periods depicts the same trends that would have been presented if we had
continued to present financial information in our previous reporting currency, the Dutch guilder. The financial statements for periods prior to January 1, 1999 presented by us in euros will not
be comparable to the financial statements of other companies that report in euros and that have restated amounts from a currency other than Dutch guilders.

The
following table sets forth, for the periods and years indicated, the high, low, average and year-end noon buying rates in New York City for cable transfers as certified
for customs purposes by the Federal Reserve Bank of New York for Dutch guilders for 1998, and for euros for 1999 through 2002. For 1998, the high, low, average and year-end Noon Buying
Rates for Dutch guilders are shown converted into euros at the exchange rate set by the Council of the European Union for use as of January 1, 1999 of EUR 1 = NLG 2.20371 and
expressed in euros per USD 1.00. These ratios may differ from the actual ratios used in the preparation of our financial statements and other financial information appearing in this annual report.

Year ended December 31,

High

Low

Average(1)

End of
Period€

€

€

€1998

0.95

0.82

0.90

0.851999

1.00

0.84

0.94

1.002000

1.21

0.97

1.09

1.072001

1.20

1.05

1.12

1.122002

1.16

0.95

1.06

0.95


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The
following table sets forth, for the previous six months, the high and low Noon Buying Rates expressed in euros per USD 1.00.

High

Low€

€October 2002

1.03

1.01November 2002

1.01

0.99December 2002

1.01

0.95January 2003

0.97

0.92February 2003

0.93

0.92March 2003

0.95

0.90


On
April 8, 2003, the latest practicable date before the filing of this annual report, the Noon Buying Rate was USD 1.00 = EUR 0.94. These rates may differ from the actual
rates used in the preparation of our financial statements and other financial information appearing in this annual report.

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Risk Factors

You should carefully consider all the information in this annual report, including these material risk factors.

We have a history of net losses and we expect to continue to incur net losses. We may not achieve or maintain profitability.

We have incurred net losses since incorporation. At December 31, 2002, we had an accumulated deficit of €229.8 million. We expect to
have net losses and negative cash flow in the foreseeable future. The size of these net losses and negative cash flow will depend, in part, on:



We
may never generate sufficient revenues to achieve profitability. Our revenues are dependent on the success of our three core technologiesPER.C6, MAbstract phage
antibody-display and AdVacand on our success and that of our licensees in developing commercially successful products based on these technologies. We do not have control over the ability
of our licensees to develop commercially successful products based on our core technologies. We expect to continue to invest in order to enhance our core technologies and to invest in research and
development of potential products. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

We may need additional capital in the future. If we do not raise this additional capital, we may have to curtail or cease operations.

We expect that our future capital requirements will be substantial. Changes may occur that would consume available capital resources significantly sooner than we
currently expect. If our capital resources are insufficient to meet future capital requirements, we will have to raise additional funds to continue the research and development of our technologies and
potential products. We also may need to raise additional capital if we make any acquisitions using cash consideration. We may seek additional funding through public or private financing, strategic
alliances or other arrangements. We may not have access to additional financing and, if we do, it may not be on favorable terms. If we fail to raise sufficient funds, we will have to curtail or cease
operations, reduce our capital expenditures, scale back our development of new potential products, reduce our workforce and license potential products or technologies to others that we otherwise would
seek to commercialize ourselves.

We expect that our interim results of operations will fluctuate, and this fluctuation could cause the price of our ordinary shares and ADSs to decline, causing
investor losses.

Our
interim operating results have fluctuated in the past and are likely to do so in the future. These fluctuations could cause the price of our ordinary shares and ADSs to fluctuate
significantly or decline. Some of the factors that could cause our operating results to fluctuate include:



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A
large portion of our expenses is relatively fixed, including expenses for personnel, facilities and equipment. There is no direct link between the level of our expenses and our
revenues. Accordingly, if revenues decline or do not grow as anticipated, we may not be able to correspondingly reduce our
operating expenses and will suffer losses accordingly. In addition, we plan to increase our research costs in 2003, which will increase our operating expenses in the foreseeable future. Due to the
possibility of fluctuations in our revenues and expenses, we believe that period-to-period comparisons of our operating results are not a good indication of our future
performance. Our operating results in some periods may not meet the expectations of stock market analysts and investors. In that case, the price of our ordinary shares and ADSs would probably decline.

If we or our licensees do not develop potential products based on our core technologies that are approved for sale and are commercially successful, we may be
forced to cease operations.

You
must evaluate us in light of the uncertainties and complexities affecting our core technologies, none of which has yet been used to develop a product approved by the U.S. Food and
Drug Administration for commercial use. Very little data exists regarding the safety and effectiveness of the type of potential products that we and our licensees are developing. All of our potential
products, and those of our licensees, are either in research or in pre-clinical or, in select cases, clinical development. We and our licensees may not succeed in developing commercial
products that are safe and effective, meet applicable regulatory standards, are capable of being manufactured at reasonable costs, or can be marketed successfully. We have not, and many of our
licensees have not, yet begun to clinically test any of the potential products being developed using our core technologies.

Development
of products requires significant development and investment, including pre-clinical and clinical testing, to demonstrate their effectiveness prior to their
commercial distribution. We do not expect any of our potential products to enter clinical trials for at least the next year and we do not expect our licensees to commercially distribute products that
use our technologies for at least the next three years. We and our licensees must conduct a substantial amount of additional research and development before any regulatory authority will approve any
of our or their potential products. Our research and development or that of our licensees may not establish that our technologies or our or their potential products are safe and effective, in which
case regulatory authorities may not approve them. In addition, our government and university licensees and collaborators may have goals, such as academic publication or data collection, that are not
solely focused on producing marketable products. Problems frequently encountered in connection with the development and use of new and unproven technologies and the competitive environment in which we
and our licensees operate might limit our and their ability to develop commercially successful products.

We rely on license and other revenues from the licensing of our PER.C6 platform. If our licensees do not continue to use our PER.C6 technology or other of our
technologies, or if they terminate their agreements with us, we will earn less or no revenue from our license agreements with them.

License
revenues from our PER.C6 platform have accounted for a substantial portion of our revenues to date and we expect that we will continue to be reliant on these revenues for the
foreseeable future.

If
our current or prospective licensees do not develop and eventually distribute products based on our PER.C6 technology, we may not be able to realize the revenues and growth we
anticipate. Our current or prospective licensees may use or develop alternative technologies or develop competing products or potential products independently or in collaboration with others,
including our competitors. If any of our licensees become involved in a business combination or other major corporate transaction, this could cause a strategic shift in their business focus and the
technologies they use. Our agreements

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with our licensees do not require them to dedicate resources to developing and, eventually, distributing commercial products based on our technologies. Furthermore, our licensees may generally
terminate their agreements with us on short notice. If they do terminate their agreements with us, we may not be able to enter into new arrangements to replace those agreements. One such license,
granted to Centocor Inc. for the development of the anti-CD46 antibody for cancer treatment, was terminated by the licensee in December 2002 and the rights to the
anti-CD46 antibody returned to us. This license, which relied on our MAbstract phage antibody display technology, may not be replaced by a similar agreement involving the same technology.
As a result of the termination of the license with Centocor, we currently do not earn any revenue with respect to the anti-CD46 antibody that was subject to the license.

We face competition in discovering, commercializing and licensing new technologies from biotechnology firms in Europe, the United States and elsewhere. This
competition may limit our ability to derive revenues from our technologies and achieve profitability.

The
field of biotechnology is new and rapidly evolving, and we expect that it will continue to undergo significant and rapid technological change. We operate in highly competitive
markets and we may experience competition from companies which have similar or other technologies and other forms of treatment for the diseases we are targeting. We also may experience competition
from companies that have acquired or may acquire technology from companies, universities and other research institutions. As these companies develop their technologies, they may develop proprietary
positions in the areas of our core technologies or obtain regulatory approval for alternative technologies or commercial products earlier than we or our licensees do. Other companies are developing
products or potential products to address the same diseases and conditions that we and our licensees target and may have or develop products or potential products that are more effective than those
based on our technologies. We also compete with our licensees in developing new potential products. It is possible that we will not be able to effectively compete with these or other entities, and
such competition could significantly erode any market share that we may achieve and substantially curtail our ability to achieve profitability.

We
are aware of a human cell-line expression platform, the 293 human cell-line expression platform, that shares some of the advantages of our PER.C6 platform. The
293 human cell line expression platform, which is considered to be public domain, is utilized by Eli Lilly & Co. to produce a protein for the treatment of adult severe sepsis. This product has
been approved by the U.S. Food and Drug Administration (FDA) and the European Medical Examiners Association (EMEA). No product based on the PER.C6 cell line has yet been approved by the FDA or the
EMEA. The fact that a competing technology, the 293 human cell-line expression platform, has been approved could hamper our ability to license and derive revenue from our PER.C6 platform,
which could have a significant adverse effect on our financial results.

We
are aware that scientists have published research describing human cell culture systems that appear to have similarities to our PER.C6 platform. Other companies use alternative
non-human expression platform technology such as transgenic animals and cell lines derived from animals. Chinese hamster ovary, or CHO, cells are widely used for the commercial production
of antibodies and therapeutic proteins. The success of competing technologies could significantly limit our ability to license and derive revenue from our PER.C6 platform or other technologies, which
could have a significant adverse effect on our financial results.

Other
biotechnology companies, including Celltech Group plc and Protein Design Laboratories, Inc., currently generate humanized antibodies, and Medarex, Inc. and Abgenix
Corp. produce antibodies from transgenic mice. MorphoSys AG and Cambridge Antibody Technology Group plc generate fully-human antibodies using phage antibody-display libraries that are similar to ours.
Companies such as Dyax Corp. and SCA Ventures, Inc., a subsidiary of Enzon Corporation, are also

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working in the field of phage display libraries and we have licensed certain technology from them. We may be unable to compete with these companies, which would hamper our ability to license and
derive revenue from our PER.C6 platform or other technologies.

In
respect of vaccines, we are aware that other companies use alternative non-human expression platform technologies. We are aware of licensed vaccines that are produced in
cell substrates such as MDCK and VERO as well as on production platforms based on yeast or embryonated chicken eggs. There are also mouse brain-derived inactivated vaccines that are produced in
several Asian countries. We are also aware of other human expression technologies such as WI-38 and MRC-5 for licensed and marketed vaccines as well as human cell lines
supporting products in development such as HEK-293. Other biotechnology and pharmaceutical companies that are focused on developing cell-based vaccines for emerging viruses
and/or to defend against bio-terrorism include Wyeth, Aventis-Pasteur, Merck & Co., Chiron, Acambis, Baxter, PowderJect, Berna Biotech and Bavarian Nordic. We may be unable to
compete with these technologies or companies in the area of vaccines.

In
respect of vector development, we are aware of several competing technologies, including those of GenVec and Merck & Co., that may pose a threat to the commercial viability of
our AdVac technology. In particular, Merck & Co. research has established methods that may prevent problems relating to pre-existing immunity to adenovirus 5 vectors. If successful,
these methods may limit the development of a market for our AdVac technology.

We are dependent on a small number of licensees for a majority of our revenues.

We are dependent on a small number of licensees that account for the majority of our revenues. For the year ended December 31, 2002, three licensees
accounted for 39% of our revenues, for the year ended December 31, 2001, one licensee accounted for 60% of our revenues and for the year ended
December 31, 2000, one licensee accounted for 57% of our revenues. One of our significant licensees in 2002 was a significant licensee in 2001, and no licensees that were significant in 2002
and 2001 were significant in 2000. We expect that a high level of licensee concentration will continue in the future. One of our major licensees, Centocor Inc., terminated its license in
December 2002, and as a result of this termination, we will not earn any revenue with respect to the anti-CD46 antibody that was subject to the license beyond March 31, 2003.
In the event that one or more of our other major licensees were to terminate or substantially alter their licenses with us for any reason, we could experience a significant decrease in revenues and an
adverse effect on our financial results.

In 2002, we entered into a contract with DSM Biologics that is material to our operations and future revenues. Any alteration or termination of that agreement
could have a significant adverse effect on our licensing revenues and financial results.

Our
collaboration agreement with DSM, entered into in December 2002, is a significant licensing arrangement relating to our patents for the PER.C6 cell line. The objective of the
agreement is to further development and production of biopharmaceutical products such as recombinant proteins and monoclonal antibodies. Under the terms of the collaboration agreement, we will
collaborate with DSM and license our PER.C6 technology to them on an exclusive basis in the area of contract manufacturing for a sum that, over the four year term of the contract, is significantly
higher than the revenues we have earned in the past. In addition, the collaboration agreement requires us to contribute significant expenditures to the development of PER.C6 as a production platform
for antibodies over the next four years.

We
are heavily reliant on this new contract for revenues and commercialization of our PER.C6 cell line, and any termination or alteration to the collaboration agreement would have a
substantial adverse effect on our licensing revenues and financial results. The license granted to DSM under the agreement is exclusive and global, which means we cannot license PER.C6 as a production
platform for antibodies to other parties in the area of contract manufacturing. This exclusive arrangement may cause us to

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forego increased revenue opportunities from other third parties regarding the licensed technology over the four year term of the agreement. Further, DSM is entitled to a portion of all fees,
proportional to the payment of additional fees by DSM, other than service fees that are received with respect to the licensing of PER.C6, which could reduce the profitability of this technology to us.
In addition, future payments to us under the collaboration agreement are dependent on reaching three collective milestones with respect to the development of PER.C6 as a production platform. If these
milestones are not reached, our revenues from this agreement could be substantially reduced.

Obtaining regulatory approval for our potential products and technologies is a costly and time-consuming process. If the relevant regulatory
authorities do not approve products developed using our technologies, we or our licensees will not be able to commercialize them, and we may not receive any royalty or other
revenues.

The
U.S. Food and Drug Association, or FDA, must approve any biopharmaceutical product before it can be marketed in the United States. Comparable authorities such as the European Agency
for the Evaluation of Medicinal Products, or the EMEA, the European Commission and local regulatory bodies regulate biopharmaceutical products elsewhere. In the approval process, a product candidate
must undergo extensive testing, which can take many years and require substantial expenditures. The costs of pursuing and securing regulatory approval are increasing, necessitating additional
regulatory compliance expenditure on our part. Required testing and trials include a review of the underlying technologies (including the cell line on which companies produce biopharmaceuticals) and
are particularly rigorous with respect to vaccines. Product development involving new technologies is highly uncertain.

Although
the FDA allows PER.C6 cells to be used to produce vectors for clinical trials at this time, the FDA has raised concerns over the history and some of the properties of the PER.C6
cells. New regulations could be adopted that would preclude use of PER.C6 cells in the future. If we or our licensees are unable to satisfy regulatory authorities as to the history and properties of
PER.C6 or its appropriateness as a system which companies can use to produce biopharmaceuticals, PER.C6 could not be used to produce human biopharmaceuticals and our licensing and other revenues from
PER.C6 will suffer.

If ethical, legal and social issues related to the use of genetic technology, human-based materials and animal testing negatively affect regulatory approval,
patentability or market acceptance of our core technologies and of the products developed using these technologies, we would not be able to generate revenues from those products or our
technologies.

The
use of genetic technology and materials derived from human fetal tissue raises many ethical, legal and social issues that could hinder regulatory approval, patentability or market
acceptance of our technologies and products developed using them. Further, public expressions of concern and adverse events involving new biopharmaceutical technologies or products, like stem cells,
could result in greater governmental regulation of our technologies and potential regulatory delays relating to the testing or approval of our own or our licensees' potential products. Advocacy groups
have taken issue in the past and may take issue in the future with the use of genetic technology and/or materials derived from human fetal tissue, which may hinder or adversely affect regulatory
approval or market acceptance of our technologies and products developed using them. Concerns over the safety of new biopharmaceutical technologies or products could result in limited acceptance by
patients and the medical community. In addition, we use animal testing in some of our research and development and adverse public reaction to our use of animal testing could also generate negative
publicity. Any of these factors could reduce or eliminate the potential markets for our own or our licensees' potential products.

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Our efforts to protect our intellectual property rights or to defend ourselves against any claims of infringement may be costly and, if unsuccessful, we may be
barred from using or licensing our technologies.

Our
commercial success depends in part on our ability to obtain and maintain adequate protection of our intellectual property rights in our technologies and potential products in Europe,
the United States and elsewhere. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and any potential products we develop and erode our
competitive advantage and/or erode the value of our technologies.

Our
commercial success also depends on not infringing patents and proprietary rights of third parties. Our work is in areas of technology where a large number of patent rights exist. As
the biotechnology and biopharmaceutical markets expand and more patents are issued, the risk that our technologies and potential products may give rise to claims of alleged infringement increases. In
addition, we may in the future wish to undertake activities which raise patent infringement issues.

We
routinely monitor the public disclosures of other companies operating in our industry regarding their technological development efforts to ensure that we do not undertake activities
that infringe their intellectual property rights and to monitor whether those companies' activities may infringe our intellectual property rights. Due to the inherent vagaries of patent searching, we
can never be certain that our monitoring will be exhaustive, and it is possible there may be third-party intellectual property rights of which we are not yet aware. If we determine that other
companies' technological development efforts violate our intellectual property rights, we intend to take appropriate action. We are aware of a few patents which are potentially relevant to our past,
current or anticipated activities. We believe that our current activities do not infringe any valid claims of these patents. Third parties, however, may seek to enforce patents against us and a court
may find against us. Enforcing intellectual property rights against others or defending ourselves against claims of infringement can be very expensive, and any action in which we are involved could
result in substantial costs and diversion of management and technical personnel and resources.

Other
companies are and may become involved in proceedings regarding patents that cover technologies related to ours. The outcome of any intellectual property proceeding in which we or
they are involved could effectively block our ability to further use or license our technologies or enter into co-development arrangements. It could also impair our or our licensees'
ability to develop and commercialize potential products or products, and could result in the award of substantial damages against us. In the event of an unfavorable outcome in litigation, we may need
to obtain licenses or redesign our technologies or potential products to avoid infringement. In the event that we must cease using a technology, we could encounter delays in license revenue
generation, milestone or royalty payments or product introductions while we attempt to develop alternative technologies or potential products. If we do not succeed in such attempts, we may be forced
to cease operations. In addition, if litigation results in a successful challenge to one of our patents, then competitors could be free to use the subject matter covered by the patent, or we may need
to license the technology to others in settlement of such litigation.

In
December 2002 we agreed on the terms of a license with Cambridge Antibody Technology plc, or CAT, whereby we received from CAT a worldwide license with respect to all CAT's
antibody phage display technology patents. As a result of this agreement, litigation between CAT and us commenced in 2000 regarding the patents underlying the license was withdrawn. Under the
agreement, CAT will receive from us an initial license fee and milestone and royalty payments, while we will be allowed to develop and commercialize human antibody products using CAT's patented phage
display technology. Certain restrictions in this license agreement may prevent us from developing and commercializing antibodies or other products validated using phage display technology due to the
existence of exclusive arrangements between CAT and its pre-existing licensees, or pre-existing CAT internal programs.

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If we or our licensees are unable to obtain any necessary licenses from third parties for use of their intellectual property on acceptable terms, we or our
licensees may be unable to develop or market products based on our technologies.

We
may be unable to earn revenues from products based on our technologies or from our own potential products if a third party does not grant us or our licensees a necessary license or
offers a license only on unacceptable terms. Before we can market some of our potential products, we may need to obtain licenses from third parties who have patents or other intellectual property
rights. For example, in the patent context, others have filed, and in the future are likely to file, patent applications covering technologies that we may wish to use or products that are similar to
products that may be developed using our technologies. If these patent applications result in issued patents, we may need to obtain a license from the proprietors to use their patented technology.
These licenses may not be available, or may not be available on acceptable or commercially reasonable terms. Without these licenses, we may be required to alter our technologies or potential products,
or to avoid or stop certain activities. Our licensees may face similar problems.

In 2002, we lost the services of our chief scientific officer and member of our management board, which may have an adverse effect on our business. If we lose the
services of additional key personnel or are unable to attract and retain qualified personnel, we may be unable to develop our own technologies and potential products and to execute our business
plan.

On
September 9, 2002, the employment contract of our former chief scientific officer, Ton Logtenberg, was terminated and he resigned from our management board. Logtenberg was a
key member of our management, strategic and research and development teams, and we cannot be certain that his departure as chief scientific officer and member of our management board will not have an
adverse effect on our development of technologies, ability to execute our business plan and formulation of a strategic vision. In order to retain Logtenberg's continued services to the company, we
have appointed him as external advisor to the company. Neither Logtenberg's employment contract nor his consultancy agreement regarding his appointment as an external advisor contains
non-compete provisions, which permits him to compete against us, and we are aware that he intends to start a company that may compete against us in the future.

We
continue to be highly dependent on the principal members of our management and scientific personnel. We are particularly reliant on Domenico Valerio, our president and chief executive
officer, Jaap Goudsmit, our chief scientific officer as of September 9, 2002 and Ronald Brus, our chief operating officer. Because of the experience these personnel have with our scientific
research and development, our business and the industry in which we operate, the loss of the services of any of them might adversely affect our ongoing development of our technologies which is
necessary to remain competitive and our ability to execute our business plan. In addition, because our employment contract with Domenico Valerio does not contain non-compete provisions, if
we lose his services, he will be free to compete against us.

We
also may not be able to recruit and retain the qualified personnel necessary to develop our core technologies and potential products and execute our business plan. There is currently
a shortage of skilled executives, scientific personnel and intellectual property and regulatory experts in our industry, particularly in Europe. We believe this shortage is likely to continue. As a
result, competition for skilled personnel is intense, and the turnover rate can be high. Competition for experienced executives, scientists, developers and manufacturers of pharmaceutical products,
and other experts from numerous companies and academic and other research institutions may limit our ability to attract and retain qualified personnel on acceptable terms or may significantly increase
our labor costs.

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We may encounter difficulties in managing our growth. These difficulties could increase our losses.

We
have experienced rapid and substantial growth and may continue to experience such growth in the future. This growth may be organic or through acquisition and will continue to place a
strain on our human and capital resources. The aggregate number of full-time employees increased from 55 at December 31, 1998 to 183 at December 31, 2002. In addition, we
will need to continue to expend funds to manage our operations and growth effectively. We will also need to continue to expend funds to attract and retain sufficient numbers of talented employees. If
we do not have sufficient revenues to address these issues and otherwise make adequate expenditures, we may not be able to manage our growth effectively. If we are unable to manage our growth
effectively, our losses could increase.

Certain of our research and product development programs depend on access to tissue samples and other biological materials without which we would be unable to
conduct this research and development.

To
continue to develop our core technologies and potential products, we will need access to tissue samples and other biological materials, which may be in limited supply. If we lose
access or do not obtain access to tissue samples or other biological materials, or if tighter restrictions are imposed on their use or on information generated from them, we could be restricted or
prevented from conducting our research and product development. In addition, government regulation could result in restricted access to, or use of, human and other tissue samples.

We may have conflicts with our licensees that could make collecting payments due to us more difficult or that could negatively affect our relationship with our
current and potential licensees.

We
may have disagreements with our licensees over royalty payments due to us and may have difficulty in collecting these. Our existing license arrangements generally entitle us to
receive royalty payments for any potential products developed using our PER.C6 technology. We depend on our licensees to inform us when they develop products using our technology. If our licensees
fail to inform us of their progress in these developments, we will not know of payments to which we would be entitled. In addition, our licensees may have difficulties making payments to us given the
current economic climate or other factors. We may also incur significant expenses in collecting payments or, in some instances, we may not succeed in collecting these payments at all.

Our
licensees may dispute the scope of the licenses that we have granted them, which could negatively affect our relationships with them and other licensees and our ability to grant
additional licenses to other companies. Certain of our license agreements provide that if more favorable royalty terms are granted to another licensee pursuant to a license of substantially the same
scope, the initial licensee will also be entitled to the more favourable terms. A licensee may claim that other license agreements contain more favorable terms and that we should extend these terms to
it. This may lead to a licensee disputing the amounts payable to us.

We rely on third-party suppliers for our serum-free medium and any interruption in this supply would interrupt our ability to conduct research and
product development using PER.C6.

We
and some of our licensees rely on third parties for the supply of the serum-free medium in which we grow our PER.C6 cells. Such media may not be available for sale on an
industrial or bulk scale. We believe that alternative suppliers for a suitable serum-free medium could be found, but these alternative suppliers might not be able to meet our requirements
rapidly or cost effectively. If supply problems forced us to use a new medium, we would need to spend time and resources to adapt our technology and processes to that medium, and, during this period
of adaptation, our use of PER.C6 would be interrupted. Any such interruption or other failure of the serum-free medium upon which we currently rely could decrease the potential viability
and profitability of our PER.C6 cell line.

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We have limited experience in conducting clinical trials and manufacturing, and limited marketing or sales experience. Our lack of experience and need to rely on
third parties may delay our clinical trials or the marketing and sales of our potential products.

We
have limited experience in conducting the clinical trials necessary to obtain regulatory approval. Consequently, we may encounter problems in clinical trials that would cause us or
the appropriate regulatory authorities to delay, suspend or terminate these trials. These problems could include the inability to conduct clinical trials at preferred sites, enroll sufficient patients
or begin or successfully complete clinical trials in a timely fashion, if at all. We also intend to use third parties to conduct clinical trials on our behalf and any failure of these third parties to
perform under their arrangements with us in a timely manner may delay or terminate clinical trials. A delay or termination of clinical trials would result in a delay or inability to obtain the
regulatory approval necessary for commercial distribution of potential products.

In
addition, we do not have the experience or resources necessary to manufacture in large-scale quantities any products or potential products that we discover and develop, and we have
limited marketing or sales experience. If we are not able to develop, or obtain through outsourcing arrangements, the requisite manufacturing, marketing and sales capabilities, we will be unable to
commercialize our own products directly. Appropriate outsourcing arrangements are limited in scope and availability.

We may have significant product liability exposure, and our product liability insurance may be inadequate to cover product liability or other claims against
us.

Like
other organizations active in the biopharmaceutical industry, we may be exposed to product liability and other claims if third parties allege that our technologies, potential
products or future products have caused harm. If a third party sues us for any injury caused by our products, potential products or products developed using our technologies, our liability could
exceed our total assets. Suits against us arising out of clinical trials may increase the more licensees utilize our technologies or potential products, and our control over the manner of use of such
technologies and potential products is lessened. We do not currently have product liability insurance that would be adequate to address all of our product liability exposure. Although we may seek to
obtain adequate product liability insurance in the future, this insurance may be prohibitively expensive, or may not cover our potential liabilities. If we are unable to obtain sufficient insurance
coverage at an acceptable cost or if we are otherwise unable to protect ourselves against potential product liability claims, this could prevent or inhibit the commercialization of products that we or
our licensees develop.

Third parties may bring claims relating to improper handling, storage or disposal of the hazardous materials we use in our business, which may require us to spend
significant time and financial resources to defend and to pay damages.

Our
research and development processes involve the controlled use of hazardous materials, including chemicals and radioactive and biological materials. Some of these materials may be
novel, including viruses with novel properties. Our operations also produce hazardous waste products. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury
from these materials. Various applicable laws and regulations govern the use, manufacture, storage, handling and disposal of these materials. We could be subject to civil damages in the event of an
improper or unauthorized release of, or exposure of individuals to, hazardous materials. In addition, claimants may sue us for injury or contamination that results from our use or the use by third
parties of these materials, and our liability may exceed our total assets. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may make
us adopt more labor-intensive, time-consuming or complicated practices or procedures in connection with our research, development or production activities.

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Conflicts of interest with our outside scientists may arise, which could limit our access to their expertise and impede the progress of our scientific research
and development.

We
work with scientific advisors at academic and other institutions. These scientists are not our employees and may have other commitments that would limit their availability to us. If a
conflict of interest between their work for us and their work for another entity arises, we may lose their services. Because for some of our projects we rely to a significant extent on services of
these outside scientists, if this were to happen, we may find it more difficult or expensive to continue such projects. Although our scientific advisors generally sign agreements not to disclose our
confidential information, it is possible that certain of our valuable proprietary knowledge may become publicly known through them.

We cannot be certain that our licensing or other agreements are not in breach of applicable competition laws and will not be considered
void.

We
have not notified any of our licensing or other agreements to the European Commission competition authorities or sought clearance from any other competition authority. We take the
view that these agreements are unlikely to be found to infringe European Union or other applicable competition regulations. It is possible, however, that our current or future similar agreements could
be found to infringe applicable competition regulations. In this event, among other things, we may be subject to fines, claims of damages and our licensing or other agreements may be considered void
and unenforceable.

The anti-takeover provisions in our articles of association and the laws of The Netherlands may prevent a change in control that may be in the best
interests of our shareholders.

Our
articles of association and the laws of The Netherlands may have anti-takeover effects. Among other things, our articles of association provide that the holders of our
priority shares may make binding nominations for the election of our supervisory board members, and only a shareholders' resolution approved by a two-thirds majority of the votes cast,
representing more than half of our outstanding shares, can set the nominations aside. The member of our management board, two of our supervisory board members and two independent members comprise the
board of a foundation, called the Priority Foundation, that holds all of our issued and outstanding priority shares. Furthermore, we may issue preference shares to another foundation under Dutch law,
called the Preferred Foundation, giving it preferred dividend rights and voting rights. The chairman of our supervisory board, Pieter Strijkert, and four independent members comprise the board of the
Preferred Foundation. These and other provisions in our articles of association may have the effect of delaying, deterring or preventing a change in control that might otherwise be in the best
interest of our shareholders or offer them the opportunity to sell their ordinary shares or ADSs at a premium over the market price. See "Item 10Additional Information" for additional
information regarding the priority and preference shares and our articles of association.

Our shareholders may have difficulty protecting their rights as a shareholder and in enforcing civil liabilities because we are a Dutch limited liability
company.

Our
articles of association and the laws relating to limited liability companies incorporated in The Netherlands govern our affairs. Our offices and all of our assets are located outside
the United States. In addition, a majority of the members of our supervisory board, all of the members of our management board and management team are residents of, and most of their assets are
located in, jurisdictions outside the United States. As a result, it may be difficult for you to serve process on us or these persons within the United States. It may also be difficult for you to
enforce a U.S. court judgment against them in a U.S. court or in a Dutch court or to enforce a Dutch court's judgment against them in a U.S. court. This can include actions under the U.S. securities
laws. In addition, it may be difficult for you to enforce, in original actions brought in courts in jurisdictions located outside the United States, liabilities under the U.S. securities laws. For a
more complete discussion of potential

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difficulties in protecting your rights, see "Item 10Additional InformationEnforcement of Civil Liabilities".

Our ordinary shares and ADSs may have a highly volatile trading price and low trading volume. You may not be able to resell your ordinary shares or ADSs at or
above the price you pay for them, the ADSs may continue to decline in value, and our low share price may render us vulnerable to a takeover bid.

Our
ordinary shares are listed on the Official Market of the stock market of Euronext N.V. (Amsterdam), also called the Amsterdam Stock Exchange. Our ADSs are quoted on the Nasdaq
National Market. An active trading market for the ordinary shares or the ADSs may not continue to develop or be sustained, and the market price of the ordinary shares or ADSs may continue to decline.
The ADSs' low closing price during the fourth quarters of 2000, 2001 and 2002 has been $5.50, $5.05 and $2.50 respectively, and the closing price as of April 8, 2003 was $1.63. The trading
prices of ordinary shares of biotechnology companies in general have experienced extreme price fluctuations in recent months and are likely to continue to be highly volatile. Moreover, our low share
price and relatively high reserves of cash may indicate that we are vulnerable to an unsolicited takeover bid, as analysts have predicted a wave of mergers in the biotechnology industry involving
companies that some investors may consider undervalued. In addition, any negative change in the public's perception of the prospects of biotechnology companies could further depress our ordinary share
or ADS price regardless of our results of operations. Other broad market and industry factors may decrease the trading price of our ordinary shares and ADSs, regardless of our performance.

In
the past, shareholders have often instituted securities class action litigation after periods of volatility in the market price of a company's securities. If a shareholder files a
securities class action suit against us, we would incur substantial legal fees and our management's attention and resources would be diverted from operating our business in order to respond to the
litigation.

Our share price may be adversely affected by the actual or perceived availability for sale of a large number of our shares.

Historically
our shares have exhibited relatively thin daily trading volume on both the Euronext N.V. (Amsterdam) exchange and the Nasdaq National Market. Because our shares are not
heavily traded, the price of our ordinary shares may be adversely affected by sales of large numbers of shares by our original shareholders, or by the perception that such sales may occur. In
particular, we are aware that certain of our shareholders have the intention to sell their shares in our company, although no such shareholder has announced any details regarding the timing or terms
of such a sale.

We believe that we were a passive foreign investment company in 2002 and expect to be classified as such in 2003, causing certain adverse U.S. tax rules to apply
to investors.

We
believe that we were a "passive foreign investment company" or "PFIC" for U.S. tax purposes in respect of the year 2002, and also expect to be classified as a PFIC in respect of the
year 2003. Although we generally do not expect to be a PFIC in the long term, certain unfavorable U.S. tax rules apply to shareholders in companies that are PFICs in respect of even a single year. In
order to minimize exposure to these rules, U.S. investors may wish to make a mark-to-market or QEF election. See Item 10, "TaxationTaxation of U.S.
InvestorsPassive Foreign Investment Company Rules."

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Item 4.    Information on the Company

History and Development of the Company

We are a limited liability company incorporated in The Netherlands with the legal and commercial name, Crucell N.V. We were incorporated on October 9,
2000, as the holding company for Crucell Holland B.V., formerly called IntroGene B.V., following the merger of IntroGene and U-BiSys B.V. Our principal executive office is located at
Archimedesweg 4, 2333 CN Leiden, The Netherlands and our telephone number is 31-71-524-8701. Our agent in the United States is CT Corporation, 111 Eighth Avenue,
New York, New York 10011.

Business Overview

We are a biotechnology company that combines proprietary technologies to discover, develop and produce a variety of biopharmaceuticals for the prevention and
treatment of human diseases. Unlike
the technologies generally employed in our industry, our technologies, enable companies to develop and produce biopharmaceuticals that may not have the limitations inherent in many biopharmaceuticals
currently available. Our three core technologies are:



We
currently realize substantially all of our non-government grant revenues from licensing our PER.C6 technology to pharmaceutical and biotechnology companies. Neither we nor
our licensees currently market any biopharmaceuticals based on our technologies, and all of our products are potential products that we aim to commercialize and distribute in the future. We intend to
generate revenues in the future from up-front, on-going, milestone and royalty payments from biopharmaceuticals developed using our technologies. We may also selectively seek
to develop our own products which, in most instances, we expect we will co-develop and market through collaborations or strategic alliances with third parties.

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Strategy

Based on a strategic evaluation of the strengths and weaknesses of our technologies and the estimated time it may take to bring products to market, we are now
focusing our development efforts on two core activities: development and commercialization of our PER.C6 production platform, and development of our own vaccines. We have scaled back investment in
antibody research and development in the field of oncology because it has proven more time consuming than anticipated to create validated pre-clinical product candidates from the target
and antibody discoveries yielded through our MAbstract technology.

We
intend to realize value for our shareholders in the following ways:

Establish the PER.C6 Cell Line as the Industry Standard.With a view to establishing the PER.C6 cell line as the industry
standard for the production of human biopharmaceuticals, we actively seek to license it to third parties, which we believe results in increased awareness in, and acceptance by, the pharmaceutical
industry of PER.C6 as a platform for biopharmaceutical production. By increasing the number of licenses we enter into with third parties, the number of biopharmaceutical products derived from our
technology may also increase, resulting in the potential for additional royalty income. We have filed a Biologics Master File, or BMF, relating to our PER.C6 platform with the FDA, which we update
regularly and which can be used by our licensees in their regulatory filings. The BMF allows our licensees to refer to useful data that we have filed with the FDA regarding the development of the PER.
C6 platform without having to generate this data themselves. In 2002, we entered into a PER.C6 BMF cooperation agreement with Merck & Co. Inc. under which we and Merck agree to update
the BMF with new data.

Develop and Commercialize Our Own Products.We are using our PER.C6 technology to discover and develop our own products. At
present, we are focusing our efforts in the areas of Ebola and influenza vaccines. We may decide to co-develop and market our own products through collaborations or strategic alliances
with third parties such as biotechnology and pharmaceutical companies and with other public organizations, to share risks and costs.

Industry/Scientific Overview



Technological limitations previously restricted biopharmaceutical production to non-human based expression platforms. Biotechnology scientists first
used bacteria, then yeast and then mammalian systems in the production of human biopharmaceuticals. Bacteria and yeast expression platforms could not be used to produce many types of
biopharmaceuticals, in part because they could not produce complex proteins. While later generations of expression platforms could be used to produce an increasingly broad range of biopharmaceuticals,
they generally produced biopharmaceuticals with protein characteristics that differ from those in human cells. These differences can trigger an adverse immune response and shorten the
half-life or limit the therapeutic efficacy of the biopharmaceutical.

In
the area of vaccines a further limitation of the non-human platforms lies in the difficulty of production. This problem is caused by the fact that many human viruses will
not grow, or will grow very poorly, on non-human cells. Since many vaccines require the production of human viruses on a large scale, the current systems are inherently limited in their
use.

Human
cell lines are expression platforms and are based on "immortalized" cells, that is, cells that replicate indefinitely. Immortalized cells can be derived from cancerous cells, which
by their nature replicate indefinitely. An alternative is to immortalize healthy human cells by inserting a small portion of the genome extracted from an adenovirus. An adenovirus is a common human
virus that causes, for example, the common cold, to which the majority of the population has been exposed. The immortalized cell and its progeny are a "cell line." By using a human expression
platform, antibodies

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and other biopharmaceuticals can be developed without the problems associated with non-human platforms discussed above.



An important challenge for pharmaceutical companies is to select suitable targets for drug development programs from among the vast number of proteins in human
cells. In order to accomplish this goal, it is important to construct tools that help to identify proteins, establish their association with a particular disease and assist the development and
production of therapeutic substances, such as phage antibody-display technology and cell-line expression platforms. Once the function of a protein and its role in disease is understood, it
enables identification of potential drug candidates, including antibody, protein and gene therapies.



Overview.    Antibodies are part of the body's principal defense mechanism against pathogens, which are
disease-causing agents such as viruses or bacteria. Antibodies are proteins made naturally by the body's immune system. Each antibody is able to recognize a specific molecular structure on a pathogen
and bind to it. This binding triggers processes that ultimately eliminate the pathogen and protect humans against disease.

Uses for Antibodies.    Because of their binding characteristics, antibodies can distinguish subtle cell
differences, such as differences between healthy and diseased cells. Antibodies are used:



Scientific Progress in Antibodies.    Methods for generating monoclonal antibodies have evolved over the
last 25 years. This technology originally involved immunizing mice with a target molecule and isolating relevant antibody-producing cells from the mice. Because monoclonal antibodies of murine,
or mouse, origin are recognized as foreign proteins and rapidly eliminated when applied as therapeutics in humans, methods were developed to produce therapeutic antibodies that are of human origin.

Fully-human Antibodies.    Fully-human antibodies encoded by DNA sequences that are 100% human can be
developed either using transgenic mice or by means of phage antibody-display technology.

Transgenic Mice Antibodies.    In developing antibodies in transgenic mice, researchers genetically
engineered mice to carry human antibody genes. The researchers then injected the transgenic mice with disease-associated material to stimulate the production of antibodies. The immune systems of the
transgenic mice generate human antibodies in response to the injected material.

Phage Antibody-display Technology.    In phage antibody-display technology, scientists clone human
antibody genes into phagesharmless viruses that infect bacteria. Phages with antibody fragments that attach to specific molecules can be selected, enabling selection of antibodies against
targets and/or enabling the identification of target molecules. Phage antibody-display libraries are collections of large numbers of phages for use in identifying the targets and related antibodies.



Overview.    Vaccines induce immunity in people to potentially life-threatening diseases,
including those caused by viruses and bacteria.

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Scientific Progress in Vaccines.Vaccines have, next to Penicillin, contributed to world health more than any other public
health intervention of the twentieth century. Smallpox was eradicated, and Polio is on its way to eradication. Significant developments include the introduction of combination vaccines and the
development of attenuated vectors for vaccine development. Today, intense research is underway to develop efficacious vaccines against emerging and re-emerging viruses like HIV, Ebola,
West Nile Virus and even against diseases like cancer.

Vaccine Production Systems.Currently, many vaccines are produced on animal material, such as fertilized chicken eggs and
mouse brains. There are also several cell-based vaccine manufacturing systems, such as MDCK, MRC-5, Vero and PER.C6.

Vaccine Types.There are many different vaccine formats. Some of the more common ones include:



Vaccine Technology Development.A large variety of vaccine technologies have been developed in the attempt to improve overall
vaccine efficacy. The key objectives of current vaccine technology research and development are:



Adjuvants,
like alum, are used to increase the antigenic response and thus the efficacy of the vaccine. Vaccine delivery devices, like nasal delivery systems or transdermal patches, are
used to improve the ease of administration.

Core TechnologiesPER.C6, a Human Expression Platform



PER.C6 is an expression platform that consists of a human cell line that can be used to produce biopharmaceuticals. We produced our PER.C6 cell line from a single
source of healthy, human fetal cells in a controlled, documented manner. We have immortalized our PER.C6 cell line by inserting the E1 gene of a genome from an adenovirus, into a retinal cell so that
the cell can replicate itself indefinitely, unlike a "normal" human cell. This feature of our cell line is essential to produce biopharmaceutical products in sufficient quantities for commercial
distribution.

There
are four areas in which our PER.C6 platform is applied:

Vaccines.PER.C6 can be used as a platform for the development and production of both classical and recombinant vaccines.

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In
the classical approach, PER.C6 cells are infected with the viruses against which the vaccine in development is meant to protect. The virus replicates on the PER.C6 cells, providing
for potent material which is processed and inactivated to produce the vaccine.

In
the recombinant approach, PER.C6 very efficiently produces adenoviral vectors that can safely deliver a portion of a pathogen's DNA into the human body. This delivery elicits an
immune response leading to protection against the viral, parasitic or bacterial disease.

Fully-human Antibodies and Other Therapeutic Proteins.PER.C6 can be used as a platform for the production of fully-human
antibodies and other therapeutic proteins by inserting the DNA of the desired protein into PER.C6 cells. These modified PER.C6 cells will replicate further and secrete the desired antibody or
therapeutic protein, which can then be harvested for use in humans.

Gene Therapy.Gene therapy seeks to treat certain diseases through the transfer of a therapeutic gene into the cells of the
patient to replace absent or defective genes or to stimulate a target cell into producing a therapeutic protein. PER.C6 can be used to produce adenoviral vectors carrying therapeutic genes, which can
be used to treat patients by delivering the therapeutic gene into their cells. Adenoviruses can be modified for use as a vectora gene delivery mechanismby replacing naturally
existing genes in the virus with specific genes for therapeutic purposes.

Functional Genomics.Our PER.C6 technology can be used to produce libraries of adenoviruses into which genes to be studied
have been inserted. The resulting adenoviral vectors can then be put into cells and the effects of their expression analyzed to determine the function of genes in a disease process. Galapagos
Genomics, a company in which we hold a 20.8% ownership share, conducts these functional genomics activities. For additional information about this joint venture, see "Galapagos Genomics"
below.



Our proprietary PER.C6 human cell-line expression platform has the following key features and advantages over alternative expression systems:



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Core TechnologiesMAbstract Phage Antibody-display Tools



We use our phage antibody-display library and related selection and engineering technology to discover novel drug targets and generate fully-human antibodies
against those drug targets. We believe that the antibodies generated with our methods have unique specificities, and are thus more likely to target and treat diseases without harming surrounding
healthy cells or other parts of the body. The antibodies generated using our phage antibody-display library and related selection and engineering technology can then be produced using our human
expression PER.C6 platform. We believe that the fully-human antibodies produced using our PER.C6 platform will be potentially more efficacious and less toxic when introduced into the human body than
antibodies produced on non-human platforms.

We
use our phage antibody-display technology in two ways:

Discovery of Novel Drug Targets and Corresponding Antibodies.Our subtractive phage selection technology, called MAbstract,
can be used to discover drug targets by identifying differences between the cell surfaces of diseased cells, such as tumor cells, and healthy cells. In subtractive phage selection, the process selects
from the phage antibody-display library phages that bind to the surface of diseased or disease-causing cells but not to healthy cells. The antibodies displayed by these phages can be developed into
therapeutic drugs because they selectively bind to diseased or disease-causing cells. We then seek to further identify and characterize the drug target, and where possible we endeavor to apply for
patent protection for both the drug target and associated antibody.

Development of Antibodies to Known Drug Targets.The process by which we identify new drug targets and the corresponding
antibodies, can also be used to discover antibodies against known drug targets. We expose the phage library to the known drug target and recover and analyze the antibodies that bind to it. Our
engineering technology allows us to tailor antibodies to enhance their potential therapeutic efficacy. We do this by manipulating the DNA of antibody fragments to create fully-human antibodies with
specific therapeutic properties such as the ability to induce apoptosis, or cell death, which can be used to destroy diseased cells, and improved ability to bind to targets.



We believe that our phage antibody-display technology has significant advantages over technology using transgenic mice and the phage antibody-display technology
of other companies:



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Core TechnologiesAdVac



AdVac is a vector system which we use to develop adenoviral recombinant vaccines and gene therapy products. Recombinant vaccines are required for several viruses,
such as HIV and Ebola, against which inactivated vaccine approaches are not feasible due to the intrinsic dangers of these pathogens. One such strategy is to insert immunogenic material into a
"vehicle" or vector, which delivers the immunogenic material directly into the immune system.

AdVac
is intended to induce an efficacious and safe immune response which is required for a potent vaccine. In addition, AdVac in combination with our cell culture technology provides a
large scale vaccine manufacturing platform which we believe the pharmaceutical industry needs. AdVac may also be used to develop ex-vivo vaccines and gene therapy products.

AdVac
is based on adenovirus vectors that do not regularly occur in the human population, such as Ad35 and Ad11. This is in contrast to the most commonly used adenoviral vector systems
which rely on adenovirus Ad5 or Ad2, each widely present in the human population worldwide. The portion of the population that has previously been exposed to Ad5 or Ad2 is high, and a vaccine based on
Ad5 or
Ad2 increase the frequency of non-response or enhance the toxicity of treatment in individuals with a preexisting immunity for Ad5 or Ad2. Historically immunity and resistance to Ad5 or
Ad2 has been proven to vary from person to person and has created difficulties with respect to determination of appropriate dosages. Moreover, these immunities and the resulting resistance have
necessitated high doses of product to subjects. In contrast to the Ad5 and Ad2 vectors, AdVac is based on adenovirus vectors which have a low rate of occurrence in the human population. Hence, the
recombinant vaccine does not have to overcome any pre-existing immunity in the target population against the vector on which the vaccine is based.



We believe our AdVac vector system has the following key features and advantages over alternative vector systems:

Safety & Efficacy.Because we use adenovirus vectors which are not regularly occurring in the human population,
pre-existing immunity against the vector is rare. This allows for low dosing, which minimizes risk to the subject. AdVac based vaccines may not be hampered by the variable immune responses
alternative systems may have when pre existing immunity exists. In addition, AdVac vectors efficiently infect and transduce tissue and cells that play an important role in inducing the required immune
response.

Scale & Manufacturing.Our cell cultures that complement the AdVac vector system enable large scale manufacturing of
recombinant vaccines. We believe this is an essential feature required by the pharmaceutical industry in meeting the global demand of vaccine required for eradication of infectious diseases.

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Licensing

Licensees.Our current licensees are:

VACCINES

|PARTNER/LICENSEE                         |  | STARTING DATE |  | TECHNOLOGY PLATFORM |  | DISEASE TARGET           |  | DEVELOPMENT STAGE
|---------------------------------------- |  | ------------- |  | ------------------- |  | ------------------------ |  | -----------------
|Aventis Pasteur S.A.                     |  | Jan. 2003     |  | Undisclosed         |  | Undisclosed              |  | Pre-clinical     
|Genexine Co. Ltd.                        |  | June 2002     |  | PER.C6              |  | Hepatitis B              |  | Pre-clinical     
|Medimmune Inc.                           |  | May 2002      |  | PER.C6              |  | Influenza                |  |                 
|Merck & Co. Inc.                         |  | Oct. 2000     |  | PER.C6              |  | HIV                      |  | Phase I          
|Merck & Co. Inc.                         |  | Oct. 2000     |  | PER.C6              |  | 3 Undisclosed targets    |  | Pre-clinical     
|National Institutes of Health (NIH)      |  | Mar. 2002     |  | PER.C6 and AdVac    |  | Ebola, Lassa and Marburg |  | Pre-clinical     
|Rhein Biotech N.V. (Berna Biotech Group) |  | Apr. 2002     |  | PER.C6              |  | Japanese Encephalitis    |  | Pre-clinical     
|Targeted Genetics Corp.                  |  | Jan. 2003     |  | PER.C6              |  | Undisclosed              |  | Pre-clinical     
|Vaxin Inc.                               |  | June 2000     |  | PER.C6              |  | Rabies                   |  | Pre-clinical     

ANTIBODIES & THERAPEUTIC PROTEINS

|PARTNER/LICENSEE                  |  | STARTING DATE |  | TECHNOLOGY PLATFORM |  | DISEASE TARGET      |  | DEVELOPMENT STAGE
|--------------------------------- |  | ------------- |  | ------------------- |  | ------------------- |  | -----------------
|Applied Molecular Evolution, Inc. |  | Oct. 2002     |  | PER.C6              |  | Portfolio           |  | Pre-clinical     
|Centocor Inc. (Johnson & Johnson) |  | Jan. 2003     |  | PER.C6              |  | Portfolio           |  | Pre-clinical     
|Innogenetics N.V.                 |  | Jan. 2002     |  | PER.C6              |  | Portfolio           |  | Pre-clinical     
|Millipore Corp.                   |  | Mar. 2003     |  | PER.C6              |  | Undisclosed         |  |                 
|NatImmune A/S                     |  | Aug. 2002     |  | PER.C6              |  | Infectious diseases |  | Pre-clinical     

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GENE THERAPY

|PARTNER/LICENSEE                           |  | STARTING DATE |  | TECHNOLOGY PLATFORM |  | DISEASE TARGET |  | DEVELOPMENT STAGE
|------------------------------------------ |  | ------------- |  | ------------------- |  | -------------- |  | -----------------
|Ark Therapeutics                           |  | Nov. 2000     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|Aventis Pharmaceutical Products, Inc.      |  | Dec. 1999     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|Schering AG (Berlex)                       |  | Sep. 1998     |  | PER.C6              |  | Cardiovascular |  | Phase I/II       
|Cell Genesys Inc.                          |  | Jan. 2001     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|DirectGene Inc.                            |  | Sep. 2000     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|GenVec Inc.                                |  | July 2002     |  | PER.C6              |  | Cardiovascular |  | Phase II         
|GlaxoSmithKline Ltd.                       |  | Feb. 1999     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|Merck KgaA (Lexigen Pharmaceuticals Corp.) |  | Dec. 2001     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|Merck & Co. Inc.                           |  | Nov. 1998     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|ML Laboratories Ltd. (Europe)              |  | June 1998     |  | PER.C6              |  | Portfolio      |  | Phase I/II       
|Novartis (GTI Inc.)                        |  | May 1999      |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|Oxford Biomedica Ltd.                      |  | Jan. 2000     |  | PER.C6              |  | Portfolio      |  | Pre-clinical     
|Selective Genetics Inc.                    |  | June 2001     |  | PER.C6              |  | Portfolio      |  | Phase I/II       
|Transgene SA                               |  | Apr. 2001     |  | PER.C6              |  | Portfolio      |  | Phase I/II       

ALLIANCES WITH CONTRACT MANUFACTURERS FOR PRODUCTION

|PARTNER/LICENSEE       |  | STARTING DATE |  | TECHNOLOGY PLATFORM |  | AREA                                       
|---------------------- |  | ------------- |  | ------------------- |  | -------------------------------------------
|DSM Biologics          |  | Dec. 2002     |  | PER.C6              |  | Therapeutic proteins (including antibodies)
|Molecular Medicine LLC |  | Dec. 2001     |  | PER.C6              |  | Gene therapy products                      

FUNCTIONAL GENOMICS

|PARTNER/LICENSEE        |  | STARTING DATE |  | TECHNOLOGY PLATFORM |  | AREA    
|----------------------- |  | ------------- |  | ------------------- |  | --------
|Galapagos Genomics N.V. |  | June 1999     |  | PER.C6              |  | Genomics

Our
customers can elect to take either a license for commercial development or a license for research only. In addition, we have issued exclusive licenses to certain of our licensees.
Our licenses for gene therapy typically cover the entire portfolio of genes that the customer may wish to use in the future. The payment structure under the terms of our commercial licenses is
generally as follows:



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Research
licenses provide for lower issuance and license maintenance fees and do not provide for royalty payments. Generally our research licenses provide that the license may be
converted into a commercial license, and furthermore, stipulate that a commercial license must be obtained from us prior to the commercial distribution of any product using the licensed technology.

Our
license agreements provide that the applicable commercial license will expire at the later of the expiration of the last PER.C6 patent and 15 years after the first commercial
sale of a product developed under the agreement with that licensee. Our research licenses generally expire five years after their effective date. Most of our licenses may be terminated on
90 days' notice from the licensee. Generally, licensees may not assign or sub-license their rights. Some of our license agreements provide an option which entitles the applicable
commercial licensee to match or exceed more favorable terms offered to us by another party, with respect to certain technology. In addition, under our existing non-exclusive license
agreements, if we disclose additional information about our technology, for example regarding regulatory approval, safety issues or use of our technology, to any of our licensees, we would be required
to also provide this same information to our other licensees. Under our license agreements, because the technology which we transfer is fully-developed, we are not required to deliver any updated
technology to any of our licensees, though we update our know-how with respect to our technology from time to time through Biologics Master Files to which our licensees have access.

We
do not expect our licensees to distribute commercially products made using our technologies within the next three years.

Exclusive Licensees.We have issued certain licenses to licensees on an exclusive basis. These licenses generally provide
that we will not provide technology similar to the technology licensed pursuant to the exclusive license, to a party other than the exclusive licensee for use in the area covered by the exclusive
license. These licenses also generally provide for higher payments. Among the exclusive licenses we consider more important to our business is our agreement with DSM Biologics and our agreement with
Merck & Co., Inc. In 2002, an exclusive license with Centocor, Inc. was terminated.

In
December 2002, we entered into a collaboration agreement with DSM Biologics pursuant to which we have granted DSM an exclusive license to our PER.C6 platform for the contract
manufacturing of recombinant proteins and monoclonal antibodies. Under the terms of this agreement, we will be paid licensing fees over a four year period and will be obligated to commit a certain
level of expenditures in connection with the development of the PER.C6 production platform. DSM is entitled to a percentage of all non-service fees under the contract, in addition to an
exclusive license to the technology that includes the right to sublicense.

In
October 2000, we entered into an agreement with Merck & Co., Inc. pursuant to which we have granted Merck a license to our PER.C6 platform to develop vaccines for
the prevention and treatment of HIV. Merck also compensates us for providing it the option of extending exclusivity to cover three additional infectious diseases in the future. The agreement contains
standard payment and termination provisions. Merck has certain sub-licensing rights.

In
August 2001, we entered into an agreement with Centocor Inc. pursuant to which we granted a license to Centocor for the development and commercialization of
anti-CD46 antibodies against our

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proprietary CD46 variant drug target. In December 2002, these rights were returned to us by Centocor. The license was our only antibody contract outstanding and our only exclusive license
involving our MAbstract technology. Following this termination, we have decided to continue our research and development work with respect to CD46 to assess the value of CD46 as a tumor antigen. In
addition, we are assessing additional uses for our target discovery and antibody engineering capabilities.



We offer good manufacturing procedures (GMP) manufacturing services for our customers. We have built a small-scale production facility in Leiden, The Netherlands
and in 2000 we obtained from the Dutch regulatory authorities the license required for the manufacture of clinical trial materials at this facility. To date we have used the facility to manufacture
clinical grade adenoviral vectors. The production facility consists of classified clean rooms suitable for bulk manufacturing operations and product preparation. We continuously explore additional or
alternative uses for our GMP production facility. Production and testing is done under quality assurance control. Full batch documentation is generated and reviewed for product release according to EU
and US regulations.

We
have signed manufacturing service agreements with a few of our customers. Under these agreements, we have produced and may produce in the future clinical batches of adenoviral
materials using PER.C6 for the applicable licensee. We have received and may receive in the future initial fees upon signing and subsequent payments upon delivery of the batches we produce in
accordance with the specifications of the agreement.



Taking advantage of our three core technologies, we continue to develop our technologies while selecting certain product leads for further development.

We
currently have several projects in various stages of pre-clinical development. We intend to enter into collaborative or strategic alliance arrangements with third parties
to co-develop and market any products that we may develop.



In the area of vaccines, we are focusing on the development of an influenza vaccine and an adenoviral-based Ebola vaccine, both produced using our PER.C6
platform.

Influenza.We have recently increased our efforts in connection with developing PER.C-Flu, an influenza vaccine,
using the PER.C6 platform. We believe that producing influenza vaccines using our PER.C6 platform would provide significant benefits over the methods currently used. At present, companies make
influenza vaccines in embryonated chicken eggs, which presents not only logistical inefficiencies but also raises a number of significant efficacy and safety concerns. PER.C6 can be used to grow a
number of influenza strains that have not been successfully grown in eggs. The vaccine can be produced in a clean environment improving overall quality and safety. In addition, the use of a human
expression platform addresses concerns over egg-associated allergies.

Ebola.We have entered into a collaboration agreement with the National Institutes for Health (NIH) to jointly develop an
Ebola vaccine, subsequently manufacture that vaccine and test its safety in humans. The vaccine will be based upon an adenovirus vector system and produced on the PER.C6 cell line. Ebola is a disease
that is epidemic in Africa and could pose a risk to the general population in the event it were used in connection with, for example, bioterrorism. It is on the National Institute of Allergy and
Infectious Diseases (NIAID), Center For Disease Control (CDC) and U.S. Department of Defense Category "A" list of bioterrorism agents. Under the terms of the agreement, we have an option

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to exclusive worldwide commercialization rights to the Ebola vaccine potentially resulting from this collaboration.

Antibody Products and Technology

Following Centocors's decision not to advance the development of our anti-CD46 antibody for cancer treatment, we have decided to continue our work on
the CD46 target. We have decided to continue new research and development work with respect to CD46 to assess the value of CD46 as a tumor antigen. In addition, we are reassessing our target discovery
and antibody engineering capabilities. In addition to our efforts in connection with CD46, we continue to be active in research and development involving our MAbstract technology in the area of
oncology in an effort to discover novel human antigens.

AdVac Products and Technology

We are continuing to develop new vectors with a competitive advantage over vectors that are currently in pre-clinical and clinical development. Our
focus is on vectors that can be widely used as vaccines and gene therapy platforms. Adenovectors can be used for gene therapy to deliver genes to the appropriate organs, for ex vivo vaccination and as
vaccine vectors. AdVac is a platform focused on improving current vectors for each of these applications. The advantage of AdVac vectors over conventional adenovectors may lie in improved gene
delivery for gene therapy, improved entry in ex vivo cells and/or improved antibody and T-cell responses.

Galapagos Genomics

Galapagos Genomics, a Belgian company established in 1999 as a 50/50 joint venture between IntroGene and Tibotec, now a Johnson & Johnson company, conducts
functional genomics activities. Our current ownership has decreased to 20.8% as a result of a private financing by Galapagos Genomics in 2002 which raised €23.4 million. We have
granted an exclusive license of our PER.C6 platform to Galapagos Genomics for activities in the field of functional genomics research. Galapagos Genomics does not have the right to
sub-license its rights under the license. Galapagos Genomics uses our PER.C6 technology in conjunction with Tibotec's robotics technology to generate adenoviral gene libraries. We and
Tibotec have agreed not to compete with the activities of Galapagos Genomics.

We
have provided Galapagos Genomics with the adenoviral vector, cell line andin vitrocell testing technologies, and Tibotec has provided
Galapagos Genomics with robotics and bioinformatics
technology, including high throughput screening capacity, for use in its functional genomics activities. Under the terms of our joint venture agreement, Galapagos Genomics has rights to the products
and technology that it develops.

Archimedes Life Sciences

In 1999, we established a 50/50 partnership, Archimedes Life Sciences V.O.F., with Pharming Technologies B.V. to manage joint facilities in the building that
currently serves as our headquarters. In December 2001, we terminated our partnership with Pharming and agreed to acquire all of Pharming's leasehold improvements and certain laboratory
equipment for an aggregate amount of €3.1 million. In connection with the termination of our partnership, we also assumed the right to lease 100% of the office space formerly
leased by Pharming.

Research to Improve Our Core Technologies to Maintain Our Competitive Position

To maintain our competitive position, in addition to the research and development we conduct as part of our everyday operations, we continually research
improvements to and potential new versions of our core technologies. These efforts include PER.C6 and new cell lines, where we continually search

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for additional areas of application. In the area of vaccines, we are working to identify viruses that can be grown on the PER.C6 platform, which could then be developed into vaccines. In addition to
testing for additional applications of our existing PER.C6 platform, we are researching the creation of new cell lines from a variety of cell sources.

Collaborations and Other Agreements



We collaborate with a number of universities worldwide in the areas of vaccines, cell lines, gene therapy, cancer and cardiovascular disease. Some of our
collaborations provide for royalty payments to be made to the universities in the event of product sales arising out of the collaborations. Generally, these collaborations specify that we provide the
applicable university with a specific amount of funding, and in consideration of such, we receive certain intellectual property rights and access to the results of the university research.



We hire people with experience in our fields of interest to provide advice and consulting services. We generally pay consultants on a per project basis and their
term generally runs year-to-year. We require consultants, among other things, to adhere to confidentiality undertakings, and generally we have the right to all intellectual
property created during the term of the consulting agreement.



We have entered into agreements with certain providers of serum-free medium, whereby we have agreed to collaborate in order to improve the medium in
which we develop PER.C6. Pursuant to these agreements, we provide the medium producers with our technology and know-how, and they are expected to seek to develop an improved medium.

In
December 2002, we entered into a significant collaboration agreement with DSM Biologics. Under the terms of the agreement, we are partnering with DSM to commercialize the
PER.C6 cell technology and develop large scale manufacturing capabilities based on PER.C6. In addition to receiving significant licensing revenues and committing to development expenditures over the
four year term of the contract, we will perform certain research and development activities and facilitate technology transfers in collaboration with DSM.

In
addition, we entered in 2002 into an agreement with the Vaccine Research Center of the National Institute of Allergy and Infectious Diseases (NIAID), one of the institutes of the
United States National Institutes of Health (NIH), to jointly develop a vaccine against Ebola. The vaccine will be based upon an adenovirus vector system and produced on the PER.C6 cell line. Under
the terms of the agreement we obtained an option to the exclusive worldwide commercialization rights to the Ebola vaccine potentially resulting from this collaboration.

Intellectual Property and Technology Licenses



Our success and ability to compete depends in large part on our ability to protect our proprietary technology and information and to operate without infringing
the intellectual property rights of others. We rely on a combination of patent, trademark and trade secret laws, as well as confidentiality, assignment and licensing agreements, to establish and
protect our proprietary and intellectual property rights. Our policy is to actively seek patent protection of our intellectual property in the United States and Europe, as well as in other
jurisdictions as appropriate. In addition to using external advisers, we have dedicated internal resources to managing and overseeing our intellectual property rights.

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In
the course of 2002 we strengthened our patent portfolio. Patent applications have been filed for 13 new inventions in the areas of disease-associated targets and antibodies (three),
vaccines (five), human cells and vector technology (five). With these new filings, and taking into account the filings that have been abandoned, the size of our patent portfolio has yielded to a total
of 375 patent filings in various countries for a total of 73 different inventions at year end.

At
present, we have twelve issued patents and 69 applications pending in the United States and other countries that cover or seek to cover the PER.C6 cell line and derivatives and their
uses. The University of Leiden assigned to us all rights to the PER.C6 technology in November 1997. In exchange, we have agreed to pay the University of Leiden €136,134 per year
until 2005 and have granted certain licenses to the University of Leiden. We need the consent of the University of Leiden to take action if a party infringes on the patents covering the PER.C6
technology which it assigned to us.

In
the antibody field we have one issued patent in the United States and one issued patent in Europe (covering 18 countries) that cover or seek to cover our phage selection and
engineering technologies. Furthermore we have 42 patent applications pending in the United States, Europe and elsewhere.

In
the vaccine field we have currently 20 issued patents in Europe, the United States and the rest of the world. Furthermore we have more than 95 patent applications pending in the
United States, Europe and other countries. We still own a considerable number of patents and patent applications with primary use in gene therapy. In 2002 a total of eight patents issued in this
business area, among which one is in Australia, two are in New Zealand and five are in the United States of America.

We
are actively managing our portfolio and in an effort to save costs relating to patent positions no longer considered commercially attractive to us. A number of patent applications
were abandoned,
transferred, withdrawn or otherwise disposed of in 2002. The number of patent positions abandoned in the table below reflects the total number of patent applications abandoned to date.

The
following table summarizes our patent portfolio at year end. Note that after the grant of a European patent, each designated country in which the patent was validated counts as one
separate patent.

|                    |  | Pending |  | Granted |  | Abandoned,
Withdrawn, Expired
or Transferred |  | Total |  | New filings
in 2002 |  | Granted in 2002
|------------------- |  | ------- |  | ------- |  | -------------------------------------------- |  | ----- |  | ------------------- |  | ---------------
|Antibodies          |  | 42      |  | 19      |  | 16                                           |  | 77    |  | 3                   |  | 1              
|Gene Therapy        |  | 85      |  | 33      |  | 81                                           |  | 199   |  |                    |  | 8              
|Platform Technology |  | 69      |  | 12      |  | 39                                           |  | 120   |  | 5                   |  | 1              
|Vaccines            |  | 95      |  | 20      |  | 21                                           |  | 136   |  | 5                   |  | 2              
|                    |  |         |  |         |  |                                              |  |       |  |                     |  |                
|Total               |  | 291     |  | 84      |  | 157                                          |  | 532   |  | 13                  |  | 12             
|                    |  |         |  |         |  |                                              |  |       |  |                     |  |                

Our
patent-related activities do not, however, afford complete protection to our intellectual property rights. Patents in the biotechnology and biopharmaceutical fields involve complex
factual and legal questions. Patents may not be issued in respect of our pending applications or in respect of future applications that we file. In addition, a patent that is issued to us may be
narrower than our application or found to be invalid. Others may make attempts to copy, reverse engineer or design around aspects of our technology or to obtain and use information that we regard as
proprietary. Our patent filings may be subject to interferences.

We
may need to litigate or institute administrative proceedings such as oppositions to a patent to enforce or uphold our intellectual property rights or determine the validity and scope
of the proprietary rights of others. We believe that litigation can play a significant role in defining and protecting our

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intellectual property rights. We are aware, however, that legal and administrative proceedings can be costly and time-consuming, and result in a diversion of resources. As an alternative
to litigation, we may enter into licensing, including cross-licensing, arrangements as a means of clarifying the status of our intellectual property rights.

We
had two legal actions regarding patents relating to phage display technology involving patents claimed by Cambridge Antibody Technology, which was subsequently withdrawn following a
settlement with Cambridge Antibody Technology.

In
addition to protecting our intellectual property rights, our commercial success also depends on our ability to operate without infringing the intellectual property rights of others.
We monitor patent applications to the extent available, patents issued and publications of discoveries in scientific or patent literature to keep abreast of the activities of others in our field and,
with the assistance of our internal and external patent counsel and other external advisors, assess whether our activities or products infringe the patents or proprietary rights of third parties. A
number of third parties have been granted patents that cover technologies related to ours and similar patents may be granted in the future. We believe that our current activities do not infringe any
valid claims of patents or any other proprietary rights of third parties. We will consider the intellectual property rights of others as we continue to identify and develop potential products and may
have to enter into licensing or other agreements or use alternative technologies.

Research
has been conducted for many years in the fields of biotechnology and biopharmaceuticals. This has resulted in a substantial number of issued patents and an even larger number of
patent applications. The patent office maintains patent applications filed only in the United States in secrecy
until patents issue, and publication of patent applications elsewhere and of discoveries in the scientific or patent literature frequently occurs substantially later than the date of the underlying
discoveries. Moreover, patents that appear not to affect our activities may be construed broadly. As such, we or our licensees may be found to infringe the patents or violate other proprietary rights
of third parties and may be enjoined from pursuing research, development or commercialization of our or their products or be required to pay damages. In these circumstances, licensing or other
arrangements for addressing these infringements or violations may not be available, or may not be available on commercially acceptable terms.



We license technology and patents for specific use as part of our technology platforms from a number of third parties.

On
April 1, 2001, we entered into a cross-license with Transgene S.A., under which we have granted to Transgene a non-exclusive PER.C6 license for the manufacture and
sale of certain types of vectors for use in gene therapy. Also under the license, Transgene has granted us a non-exclusive license to use Transgene's intellectual property relating to cell
lines, and Transgene will receive a share of the payments we receive on any additional PER.C6 licenses that we enter into relating to adenoviral gene therapy (excluding our existing license
agreements). This cross-license is still in force.

We
have licensed technology protected by patents and/or patent applications that cover or seek to cover phage antibody-display technology and part-human, or chimeric, binding
proteins and molecules from Enzon Corporation and Dyax Corp. The licenses from both companies are non-exclusive, and we may cancel them upon six months' notice.

Under
the terms of a worldwide, non-exclusive, royalty-free license from Enzon Corporation's subsidiary, SCA Ventures, Inc., we pay to SCA
Ventures, Inc. a fixed annual maintenance fee and other fixed amounts relating to antibodies that we develop and that become the subject of agreements with third parties for further development
into products.

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Under
the terms of our world-wide, non-exclusive, licenses from Dyax Corp., we pay Dyax Corp. a fixed annual maintenance fee, milestone payments and royalties on
products as and when developed and marketed using the licensed technology.

We
also have exclusive licenses or an option for an exclusive license to a number of genes, which we may use in the development of products in the area of gene therapy. In some cases we
will be required to make royalty payments in the event of product sales based on these genes.

In
2002, in the process of resolving the patent dispute between us and Cambridge Antibody Technology/MRC and Scripps/Stratagene before the District Court of The Hague and the European
Patent Office, we obtained a license under the phage antibody display patent portfolio owned or controlled by Cambridge Antibody Technology and MRC.

In
the field of vaccines, we have concluded an agreement with the Rockefeller University in New York. According to the agreement we have the exclusive rights to use and exploit the
Rockefeller patents related to ex vivo and in vivo targeting of dendritic cells with the use of viral vectors.

Seasonality

Our revenues are related to specific license agreements and can therefore vary materially from quarter to quarter. Our revenues were highest during the second
quarter of 2002 and the fourth quarter of and 2001. We do not believe there is any specific seasonal pattern to our license revenues.

Regulation

We operate in a highly regulated industry. Our activities involve the use of hazardous materials, including chemicals and radioactive and biological materials,
and animal testing, all of which are subject to regulation. Environmental laws and regulations and laws and regulations relating to safe working conditions, laboratory conditions, and laboratory and
manufacturing practices also apply to our operations. We conduct our operations in a manner designed to comply with applicable regulations and we believe that we have all the licenses and permits
required to carry out our current activities.

Our
ability and that of our licensees to commercially distribute biopharmaceuticals depends in part on the extent to which governmental health administration authorities, health
maintenance organizations, or HMOS, and other organizations are willing to pay for the costs of these products. The willingness of governments and HMOs to pay for the costs of newly-developed health
care products is uncertain. There are efforts by governmental payers and HMOs to contain or reduce the costs of health care and we expect that there will continue to be a number of legislative
proposals to do so.

All
of our potential products, and those of our licensees, are either in research or development. Any products we or our licensees develop will require regulatory clearances prior to
clinical trials and additional regulatory clearances prior to being produced and distributed commercially. These regulatory
processes are generally stringent and time-consuming. We expect the EMEA, in Europe, the FDA in the United States, theCollege ter Beoordeling van
Geneesmiddelen(CBG) in The Netherlands and comparable agencies in other countries to subject new biopharmaceutical therapeutics to extensive regulation. The precise regulatory
requirements with which we and our licensees will have to comply are uncertain at this time due to the novelty of the biopharmaceutical products and therapies currently under development. We believe
that products developed using our technologies will be regulated either as biological products or as drugs.

In
both the United States and Europe, companies require approval prior to marketing a biopharmaceutical product. To obtain this approval, pre-clinical and clinical trials
must be conducted to demonstrate the safety, efficacy and consistent quality of the product candidates. Clinical trials are the means by which experimental drugs or treatments are tested in humans.
New therapies typically advance from laboratory research testing through animal pre-clinical testing and finally through several

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phases of clinical human testing. On successful completion of the clinical trials, approval to market the biopharmaceutical may be requested from the EMEA in Europe, the FDA in the United States and
their counterparts in other countries.

Clinical
trials are normally done in three phases:

Phase I.In Phase I, trials are conducted with a small number of patients or healthy volunteers to determine the
safety profile, the pattern of drug distribution and metabolism.

Phase II.In Phase II, trials are conducted with a larger group of patients afflicted with a target disease in order
to determine preliminary efficacy, optimal dosages and expanded evidence of safety.

Phase III.In Phase III, large-scale, multi-center, comparative trials are conducted with patients afflicted with a
target disease in order to provide enough data for the statistical proof of safety, efficacy and potency required by the appropriate regulatory authorities.

For
life-threatening diseases, initial human testing generally is done in patients rather than healthy volunteers. These studies may provide results traditionally obtained in
Phase II trials and are referred to as "Phase I/II" trials.



Obtaining EU approval is a costly and time-consuming process. There is a broad range of legislation in force in member states of the EU governing the
testing, manufacturing and marketing of biopharmaceutical products. EU legislation imposes specific requirements on pre-clinical testing where the data generated in such
pre-clinical testing is to be used for a subsequent application for a product marketing authorization in the EU. In addition, guidelines have been issued by a number of organizations,
including the Committee for Proprietary Medicinal Products, or CPMP, with respect to the conduct of pre-clinical and clinical testing and the operation of laboratories. There are also
national laws and regulations within each member state of the EU governing the conduct of research. Each European country has regulations for the conduct of clinical trials with DNA therapeutics.
Manufacturers of pharmaceutical products operating within the EU must hold a manufacturer's authorization and must comply with the requirements of Good Manufacturing Practice incorporated into EU
legislation. These requirements are intended to set minimum standards with respect to manufacturing facilities and the way of operating these facilities. Failure to comply with these requirements may
result in the suspension or revocation of the manufacturer's manufacturing authorization. There are also specific directives and other legislation on, among other things, pricing, distribution,
labeling and advertising of medicinal products.

The
"Council Directive 65/65/EEC on the approximation of provisions laid down by law, regulation or administrative action relating to medicinal products," as amended, and subsequent
related directives regulate drugs, or medicinal products as they are called in the EU. Medicinal products can only be marketed once the competent authority of an EU member state has issued a national
marketing authorization, or once a centralized authorization has been granted for the whole of the EU. Marketing authorizations are granted for five years, and are renewable for further periods of
five years.

The
centralized procedure is mandatory for medicinal products developed by certain biotechnological processes, such as recombinant DNA technology, which is used in gene therapy. It is
optional for certain innovative medicinal products, such as products developed by innovative biotechnology processes or products administered by means of innovative new delivery systems. The other
regulatory procedure for obtaining marketing authorizations in EU member states is the mutual recognition procedure. All medicinal products for which the centralized procedure is not mandatory may
follow this procedure.

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Applicants submit centralized applications for authorization to the EMEA, which coordinates the assessment process. The CPMP then assesses and issues an opinion on the product's quality,
safety and efficacy and sends its opinion to the European Commission, which drafts a decision based on that opinion. After consulting its standing committee, the European Commission may grant a
marketing authorization, subject to adequate evidence of quality, safety and efficacy. The marketing authorization granted is valid in all EU member states.

Under
the mutual recognition procedure, the applicant submits its product for review to the first EU member state, which is called the reference member state. The reference member state
then assesses the medicinal product for quality, safety and efficacy. Once the reference member state has granted national marketing authorization, a company may then make applications to other EU
member states. The other EU member states may either recognize the marketing authorization of the reference member state or issue objections. If an EU member state maintains its objection, an
arbitration process is initiated and the final decision is made by the European Commission on the basis of an opinion by the CPMP. The mutual recognition procedure may be used more than once for
subsequent applications to other member states in relation to the same medicinal product.



The Federal Food, Drug and Cosmetic Act regulates both drugs and biological products, and the Public Health Service Act also regulates biological products. The
areas that these two Acts and related regulations govern include testing, manufacturing, safety, efficacy, labeling, storage, record keeping and advertising and other promotional practices. The FDA
must approve a product or provide alternative clearances before clinical testing, manufacturing and marketing of biologics or drugs may begin.

Biologics Master File.We have submitted a BMF to the FDA. The companies to which we license our PER.C6 technology can take
advantage of the BMF that we have filed with the FDA and need not compile their own history of the PER.C6 cell line when they seek regulatory approval of any biopharmaceutical they may produce using
it. We are required by regulators to periodically supplement our BMF. This may assist our licensees in applications they may make to the FDA for products manufactured on the PER.C6 platform.

FDA Approval.Obtaining FDA approval is a costly and time-consuming process. Generally, in order to gain FDA
pre-market approval, pre-clinical studies must be conducted in the laboratory and in animal model systems to gain preliminary information on an agent's efficacy and to identify
any major safety concerns. Applicants submit the results of these studies as a part of an application for an Investigational New Drug, or IND, which the FDA must review and allow before human clinical
trials can start. The IND application includes a detailed description of the clinical investigations.

A
company must sponsor and file an IND for each proposed product and must conduct clinical studies to demonstrate the levels of safety, efficacy and potency that are necessary to obtain
FDA approval. The FDA receives reports on the progress of each phase of clinical testing, and it may require the modification, suspension, or termination of clinical trials if an unwarranted risk is
presented to patients. Human DNA therapeutics are a new category of therapeutics, and the clinical trial period may be lengthy or the number of patients may be numerous in order to establish safety,
efficacy and potency.

After
completion of clinical trials of a new product, applicants must obtain FDA marketing approval. If the product is regulated as a biologic, applicants require a Biologic License
Application, or BLA. If the product is classified as a new drug, applicants require a New Drug Application, or NDA. The NDA or BLA must include results of product development activities, preclinical
studies and clinical trials in addition to detailed manufacturing information.

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The
FDA subjects NDAs or BLAs to an unpredictable and potentially prolonged approval process. The FDA may ultimately decide that the application does not satisfy its criteria for
approval or may require additional pre-clinical or clinical studies. Even if applicants obtain FDA regulatory clearances, the FDA subjects a marketed product to continual review, and
subsequent discovery of previously unknown problems or failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or mandated withdrawal of
the product from the market as well as possible civil or criminal sanctions. Before marketing clearance is secured, the manufacturing facility will be inspected for compliance with current Good
Manufacturing Practices requirements by FDA inspectors and will be inspected periodically for continuing compliance by FDA inspectors.

The
FDA also regulates animal testing. Safety studies in laboratory animals that are intended to be submitted to the FDA in support of marketing authorization applications generally must
comply with principles of Good Laboratory Practice and are subject to inspection and verification by FDA or foreign government agencies with which the FDA maintains mutual recognition agreements.

In
addition to the FDA requirements, the NIH, has established guidelines for research involving recombinant DNA molecules. These guidelines apply to all recombinant DNA research which
the NIH conducts or supports, including proposals to conduct clinical research involving DNA therapeutics and including our collaboration with the NIH to develop an Ebola vaccine. The NIH review of
clinical trial
proposals is a public process and usually involves review and approval by the Recombinant DNA Advisory Committee of the NIH.

Competition

The field of biotechnology is new and rapidly evolving, and we expect that it will continue to undergo significant and rapid technological change. We operate in
highly competitive markets and we may experience competition from companies which have similar or other technologies and other forms of treatment for the diseases we are targeting. We also may
experience competition from companies that have acquired or may acquire technology from companies, universities and other research institutions. As these companies develop their technologies, they may
develop proprietary positions in the areas of our core technologies or obtain regulatory approval for alternative technologies or commercial products earlier than we or our licensees do. Other
companies are developing products to address the same diseases and conditions that we and our licensees target and may have or develop products that are more effective than those based on our
technologies. We also compete with our licensees in developing new products.

We
are aware of only one human cell-line expression platform, the 293 human cell-line expression platform, that shares some of the advantages of PER.C6. The 293
human cell line expression platform, which is considered to be public domain, is utilized by Eli Lilly & Co. to produce a protein for the treatment of adult severe sepsis. This product has been
approved by the FDA and the EMEA. No product based on the PER.C6 cell line has yet been approved by the FDA or the EMEA.

We
are aware that scientists have published research describing human cell culture systems that appear to have similarities to our PER.C6 platform. Other companies use alternative
non-human expression platform technology such as transgenic animals and cell lines derived from animals. Chinese hamster ovary, or CHO, cells are widely used for the commercial production
of antibodies and therapeutic proteins.

Other
biotechnology companies, including Celltech Group plc and Protein Design Laboratories, Inc., currently generate humanized antibodies, and Medarex, Inc. and Abgenix
Corp. produce fully-human antibodies from transgenic mice. MorphoSys AG and Cambridge Antibody Technology Group plc generate fully-human antibodies using phage antibody-display libraries that are
similar to ours. Companies such as Dyax Corp. and SCA Ventures, Inc., a subsidiary of Enzon

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Corporation, are also working in the field of phage display libraries and we have licensed certain technology from them.

In
respect of vaccines, other companies use alternative non-human expression platform technologies. We are aware of licensed vaccines that are produced in cell substrates
such as MDCK and VERO as well
as on production platforms based on yeast or embryonated chicken eggs. There are also mouse brain-derived inactivated vaccines that are produced in several Asian countries. We are also aware of other
human expression technologies such as WI-38 and MRC-5 for licensed and marketed vaccines as well as human cell lines supporting products in development such as
(HEK)-293. Other biotechnology and pharmaceutical companies that are focused on developing cell-based vaccines for emerging viruses and/or to defend against
bio-terrorism include Wyeth, Aventis-Pasteur, Merck & Co., Chiron, Acambis, Baxter, PowderJect, Berna Biotech and Bavarian Nordic.

In
respect of vector development, we are aware of several competing technologies, including those of GenVec and Merck & Co., that may pose a threat to the commercial viability of
our AdVac technology. In particular, Merck & Co. research has established methods that may prevent problems relating to pre-existing immunity to adenovirus 5 vectors. If successful,
these methods may limit the development of a market for our AdVac technology.

Property, Plants and Equipment

Our research activities and corporate offices are located in facilities of 7,240 square meters in Leiden, The Netherlands. We sub-lease 1,188 square
meters of this space to Pharming Technology B.V., and 420 square meters to Galapagos Genomics. In addition, we lease 770 square meters of office space adjacent to these corporate offices. Our plant
and production facilities of 360 square meters is located in a separate building in the Leiden Bioscience Park, which also houses 65 square meters of office space.

Insurance

In January 2003, we obtained general third party public and product liability insurance. This insurance policy will be in place until January 1,
2004, does not cover any of our activities domiciled in the United States or Canada, has a limit of liability of €25 million, and has certain additional conditions to coverage
and deductibles. We do not insure our phage antibody-display library or PER.C6 master cell bank, though identical copies of the same cell bank are stored in multiple locations in Europe. We carry
insurance relating to theft, fire and damage to the moveable assets within our facilities and other customary insurance coverage for most of our activities, including liability insurance coverage for
the board of management and the supervisory board.

Sales and Marketing

We currently employ eight people in our sales and marketing operations. Our sales strategy has historically involved contacting prospective licensees, assessing
their interest in our technologies, and, if the prospective licensee indicates interest, negotiating a material transfer agreement pursuant to which we deliver the applicable technology to the
prospective licensee for their assessment. We contact prospective licensees and offer to internally develop their products of interest using our technologies.
Pursuant to this method, the prospective licensee sends us their base ingredients, for example a particular antibody gene, we produce the product in our own laboratories using our technology, and then
we deliver them the end-product for their evaluation. This strategy allows us to avoid sending prospective licensees our technology until they have signed a license agreement with us.

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Item 5.    Operating and Financial Review and Prospects

The following discussion regarding operating and financial review and prospects contains forward-looking statements based upon current expectations that involve
risks and uncertainties. When used in this annual report, the words "intend," "anticipate," "believe," "estimate," "plan," and "expect" and similar expressions as they relate to Crucell are included
to identify forward-looking statements. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain
factors, including those set forth below and elsewhere in this annual report. You should read the following discussion in conjunction with our consolidated financial statements and the notes thereto,
which we have included elsewhere in this annual report.

All
amounts in this Item 5 are in thousands of euro, except share data.

Operating results

Overview



We are a biotechnology company that primarily combines proprietary technologies to discover, develop and produce a variety of biopharmaceuticals for the
prevention and treatment of human diseases. Unlike the technologies generally employed in our industry, our technologies enable companies to develop and produce biopharmaceuticals that may not have
the limitations inherent in many
biopharmaceuticals currently available. Our revenues have increased from €6,910 in 2000 to €9,575 in 2002. Over this period, our total headcount increased from 110 to
183 employees on a full-time basis. At December 31, 2002, 154 of our 183 employees were engaged in research and development activities.

Our
costs and expenses have increased as our business activities have grown. Our total cost and expenses were €135,779 in 2000, €37,311 in 2001, and
€68,231 in 2002. These amounts included non-cash charges of: €120,372 in 2000 related to developed technology amortization, goodwill amortization, stock
option compensation and acquired in-process research and development; €11,044 in 2001 related to developed technology amortization, goodwill amortization and stock option
compensation; and €33,593 in 2002 related to developed technology amortization, goodwill impairment and stock option compensation. We incurred a loss from operations of
€58,656 in 2002 as compared to an operating loss of €28,130 in 2001. At December 31, 2002, our accumulated deficit was €229,807 and our total
shareholders' equity was €111,409. Although, we do not expect to significantly expand our research and development activities or corporate infrastructure levels in the near future we
expect to continue to incur operating and net losses over at least the next several years.



The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our financial
statements. The U.S. Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of our financial condition and results,
and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most
critical policies include revenue recognition; the assessment of recoverability of our intangible assets, including goodwill and developed technology, which impacts the write-offs of
intangible assets; and the determination of the fair value of stock-based compensation, which impacts compensation expense. Below we discuss these policies further, as well as the estimates and
judgments involved.

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Licensing our PER.C6 technology to third parties is a key element of our strategy to establish PER.C6 as the cell-line of choice in the
biopharmaceutical industry. Our license agreements generally provide for a non-refundable payment upon signing, a non-refundable fixed annual or fixed semi-annual
payment (which is generally creditable against future royalty payments) payable in arrears and royalty payments
calculated as a percentage of the net sales of the licensee using our technology. The payment upon signing under these license agreements is larger than the subsequent annual or
semi-annual payments. Certain license agreements provide for additional non-refundable license fees to be paid upon the licensee's achievement of milestones in connection with
the licensee's exploitation of our technology. In such agreements, we have no substantive involvement in, and bear no risk related to, the licensees' development of products exploiting our technology.
In certain other license agreements, we collaborate with the licensee and have significant continuing involvement in the development of the potential products exploiting our technology.

We
also aim to generate revenues in the future from the commercial distribution of biopharmaceutical products developed using our core technologies. We intend to market our own products
through collaborations or strategic alliances with third parties, particularly pharmaceutical and biopharmaceutical companies. The timing and nature of these arrangements will depend on a number of
factors, including the product's likelihood of clinical success, its stage of development, its commercial potential and the resources and abilities of our prospective partner.

We
earn revenues from government grants received from the Dutch government and the European Union. We expect to continue to generate revenues from such government grants in the future.
We have also filed grant proposals and expect to generate additional revenues from grants from non-governmental, semi-governmental and governmental bodies in the United States.
Grants generally take the form of reimbursements for specific expenses incurred in connection with approved scientific research activities. We intend to continue to apply for available public grants
and non-governmental organization support in the future, though the timing and amount of any grant revenues are uncertain. We recognize revenues from grants when we incur the related
expenses and collectibility of the grant is probable.

We
recognize initial fees related to the licensing of our technology as revenues over the period of our significant continuing performance obligations, if any, and upon persuasive
evidence of an arrangement and delivery of the associated technology. Under certain arrangements, we have no continuing performance obligations after delivery of the associated technology under the
license agreement or any other arrangement with the licensee. In such arrangements, the initial license fees recognized as revenue relate to the complete transfer of our fully developed technology to
the licensee and represent the culmination of the earnings process.

While
for the majority of our license agreements, we have no significant continuing performance obligations subsequent to the delivery of the associated technology, we have in the past,
and may in the future, enter into agreements whereby we collaborate with a licensee to achieve certain specified results. Under these agreements, we may have significant continuing performance
obligations subsequent to the delivery of the licensed technology. We recognize non-refundable up-front payments, if any, as revenue over the period of our significant
continuing involvement, the term of which is consistent with our development plans.

Certain
of our license arrangements provide for additional non-refundable license fees to be paid upon the licensee's achievement of milestones in connection with the
licensee's exploitation of our
technology. In such arrangements, we have no substantive involvement in, and bear no risk related to, the licensees' development of products exploiting our technology. We recognize such additional
license fees as revenue when the amounts become due and payable upon the licensee's achievement of the milestone.

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In
addition to the initial fee, our arrangements generally provide that the licensees make semi-annual or annual payments ("license maintenance fees") to maintain the license
for a subsequent term. Generally, licensees may terminate the license and related maintenance fees upon 30 days' to 90 days' notice. We recognize annual and semi-annual non
refundable license maintenance fees as revenues when the amounts become fixed and payable. The aggregate of annual or semi-annual license maintenance fees paid generally will reduce any
royalty payments which may be due based on future product sales of the licensee, if any, under the license agreement. Although we have not received royalty payments from our licensees to date, we will
recognize royalties as revenue when they become fixed and payable, to the extent we receive such royalties in the future.



As discussed in Note 2 to our consolidated financial statements, we adopted Statement of Financial Accounting Standard No. 142, "Goodwill and Other
Intangible Assets," on January 1, 2002. This standard requires that goodwill no longer be amortized, but instead be tested for impairment at least annually.

In
testing for a potential impairment of goodwill, SFAS 142 requires us to estimate the fair value of our business and, if the estimated fair value is less than the carrying
value, we are required to estimate the fair value of all identifiable assets and liabilities of the business, in a manner similar to a purchase price allocation for an acquired business. Accordingly,
the process of evaluating the impairment of goodwill is subjective and requires significant judgment at many points during the analysis. In estimating the fair value of our business, we considered our
market capitalization on January 1, 2002, the date of our transitional impairment test and November 1, 2002, the date of our annual impairment tests. No impairment was noted at the date
of our transitional impairment test.

Based
on the results of our annual impairment test, we concluded that the entire balance of our recorded goodwill of €30,891 was impaired in the fourth quarter and have
recorded the entire amount of goodwill as a charge to operations.



We perform tests for impairment of intangible assets other than goodwill whenever events or circumstances suggest the value of such assets may be impaired. At
December 31, 2002, our intangible assets other than goodwill consisted entirely of developed technology related to our merger with U-BiSys, with a net carrying value of
€3,326. To evaluate potential impairment, we assess whether the future cash flows related to the applicable asset will be greater than its current carrying value. Accordingly, while
our cash flow assumptions are consistent with the plans and estimates we are using to manage the underlying business, there is significant judgment in determining the cash flows attributable to our
developed technology over its estimated useful life. However, a reduction of the projected annual cash flows attributable to our developed technology of up to 50%, would not have resulted in an
impairment charge.



We account for stock-based compensation in accordance with Statement of Financial Accounting Standard No. 123, Accounting for Stock-Based Compensation. We
value our stock options using the Black-Scholes option pricing model which requires us to make several key judgments including: the expected life of issued stock options, the expected volatility of
our stock price, and the expected dividend yield to be realized over the life of the stock option. These estimates have been prepared based upon our historical experience and our best estimation of
the future. Changing any of the above assumptions, particularly the expected volatility of our stock price, would have a significant impact on the amount of compensation expense recognized.

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We expect that our expenses will continue to consist principally of research and development expenses, primarily to support development of our technology
platforms and research on potential products based on these platforms, and the salaries of our research scientists. Research and development expenses
constituted €24,252 in 2002 compared to €17,392 in 2001. Our research and development expenses increased primarily driven by increases in headcount and related
laboratory expenses.

Research
and development expenses consist primarily of salaries and other personnel-related expenses for research and development personnel, laboratory expenses, technology purchases,
patent related fees, technology license fees, depreciation and amortization of tangible and intangible assets related to research and development, and lease expenses. Research and development expenses
also include fees we pay to third parties who conduct research on our behalf. We incurred approximately €2,300 for these services in 2002.



Selling, general and administrative expenses consist primarily of salaries and other personnel-related expenses for personnel in the area of finance, human
resources, business development, legal and general management, costs of professional services (such as financial, legal, and accounting), general expenses, and lease expenses. Selling, general and
administrative expenses constituted €10,386 in 2002 compared to €8,875 in 2001.



In connection with our acquisition of U-BiSys in June 2000, we acquired intangible assets consisting of developed technology, assembled
workforce and goodwill. Upon the adoption of SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets," on January 1, 2002, the remaining
unamortized balance of the assembled workforce intangible was subsumed into goodwill, and goodwill was no longer amortized, but subject to impairment tests at least annually. In the fourth quarter, we
performed our annual goodwill impairment test and concluded the entire amount of our recorded goodwill of €30,891 was impaired and have recorded the amount as a charge to operations.
Our developed technology intangible asset continues to be amortized over its estimated useful live.



We account for stock-based compensation under the fair value method in accordance with the provisions of Financial Accounting Standards Board Statement
No. 123, "Accounting for Stock-Based Compensation". Under SFAS 123, the fair market value of a stock option is determined at the time of grant and recorded on our balance sheet as
deferred compensation, which we then amortize over the
vesting period. At December 31, 2002, we had €3,992 of deferred compensation. See note 7 to our financial statements included elsewhere in this annual report.

In
January 2003, our supervisory board approved a new option plan whereby employees holding previously issued options with an exercise price of €21.00 were be able
to exchange their options for an equal number of new options. The new options have an exercise price of 161% of the average closing price on the three days preceding the grant on January 30,
2003. The life of these options is 8 years, with a profit retribution scheme covering three years. In total, 97% of all outstanding existing options with an exercise price of
€21.00 were exchanged. We have also decided to grant new options to all permanent personnel per January 30, 2003. These options have the same terms and conditions as the

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exchanged options granted on the same date. Members of our management board and executive committee have not participated in this new option grant. Members of the supervisory board received options
in the new option round for their activities in 2002 as part of their normal remuneration.



On June 30, 2000, we acquired all of the outstanding shares of U-BiSys B.V., a development stage biotechnology company based in the
Netherlands, for aggregate consideration of €136,450. The acquisition was accounted for using the purchase method of accounting and, as such, our results of operations include the
results of the acquired business from the date of acquisition. On the acquisition date, we recorded, based upon an independent valuation, its allocation of the purchase price in excess of the fair
value of the net tangible assets acquired, to intangible assets and in-process research and development totaling €50,782 and €84,141, respectively. On the
acquisition date, intangible assets consisted principally of developed technology valued at €6,652, workforce valued at €4,487 and goodwill valued at
€39,643. In connection with the adoption of SFAS No. 141, the remaining unamortized balance of the assembled workforce intangible was subsumed into goodwill.

Acquired
in-process research and development has no alternative future use as defined by Statement of Financial Accounting Standards No. 2, "Accounting for Research
and Development Costs." We determined that the acquired in-process research and development had no alternative future use because in the event of failure to achieve regulatory approval,
should the identical technology be proposed for an alternate indication, it would be subjected to the risk of another series of clinical trials. The amount of the purchase price allocated to
in-process research and development was determined using the income method by estimating the stage of development of the research and development projects at the date of acquisition,
estimating cash flows resulting from the expected revenues generated from such projects, providing a risk adjustment factor of 80% to 90% based upon the probability of success as measured by the stage
of completion, and discounting the net cash flows back to their present value using a discount rate of 13%. These projections are based on management's best estimates of market size and growth. To
determine the estimated net cash flows of each acquired
research and development project, we estimated the costs to complete each project as the acquisition date.

Based
on a strategic evaluation of the strengths and weaknesses of our technologies and the estimated time it may take to bring products to market, we are focused on the development and
commercialization of our PER.C6 production platform and development of our own vaccines. We have scaled back investment in antibody research and development in the field of oncology.

Currently,
we do not anticipate developing the acquired development projects arising from the merger of U-BiSys B.V. through approved and marketed products. Current research
efforts on Endothelial, Lipid Tails, CD-46, CD-38 and CD-22 are limited and are anticipated to remain limited. Instead we are focusing on licensing the technologies
to third parties who will further develop these technologies and bring products to market.



In June 1999, we established a 50/50 joint venture, Galapagos Genomics N.V., with Tibotec Group N.V. We account for Galapagos Genomics using the equity
method. In 2002, our proportional share of Galapagos' net loss, which is included in our consolidated balance sheet under the caption "Investment in joint venture," reduced the carrying amount of our
investment to zero, and we therefore no longer record our portion of Galapagos Genomics' losses. In 2002, Galapagos Genomics raised €23,400 in private financing. As a result our
ownership in Galapagos Genomics has decreased to 20.8%.

In
1999, we established a 50/50 partnership, Archimedes Life Sciences V.O.F. with Pharming Technologies B.V. to manage joint facilities in a new building that currently serves as our
headquarters.

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In December 2001, we terminated our partnership with Pharming and agreed to acquire 100% of Pharming's leasehold improvements and certain laboratory equipment for an aggregate consideration of
€3,148, which primarily included €2,950 in cash and forgiveness of amounts due from Pharming of €175. We also assumed the right to lease 100% of the
office space formerly leased by Pharming. At December 31, 2001, both the assets we purchased from Pharming and the carrying value of our investment in Archimedes of €3,926
immediately prior to the dissolution of the joint venture, are recorded in plant and equipment.



The following table shows our revenues for each of the years in the three-year period ended December 31, 2002, and the percentage changes
between these periods.

|                                    |  | Year ended December 31, |       |  |   |       | 
|----------------------------------- |  | ----------------------- | ----- |  | - | ----- | 
|
|
|License revenues                    |  | €                       | 6,045 |  | € | 7,972 | 
|Government grants and other revenue |  |                         | 865   |  |   | 1,209 | 
|                                    |  |                         |       |  |   |       | 
|Total revenues                      |  | €                       | 6,910 |  | € | 9,181 | 
|                                    |  |                         |       |  |   |       | 

Our
total revenues increased by 4.3% in 2002 compared with 2001, and by 32.9% in 2001 compared with 2000. The increase in license revenues in 2001 was primarily due to increases in
license revenues from seven new PER.C6 licenses, generating additional revenue from initial fees of €1,061. The collaboration agreement reached with DSM Biologics was deferred. In
2001, we also recognized revenue of €1,645 related to a licensee's achievement of a milestone in connection with their exploitation of our technology.

License
revenues decreased 16.4% from 2001 to 2002, primarily due to a decrease in revenues recognized from upfront and milestone payments. In 2002, we entered into a license agreement
for which we received an up-front fee which will be recognized as revenue over the anticipated period of our significant continuing involvement.

Revenues
generated from government grants and other revenue increased 140.8% in 2002 to €2,911 and increased 39.8% in 2001. The increase in 2002 is primarily a result of
an increased level of reimbursable research and development expenses, and €780 in revenues from production fees received in connection with our production facility. The increase in
2001 was primarily a result of an increased level of reimbursable research and development expenses. We did not have any contract research revenues in 2000, 2001 or 2002.

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The following table shows our costs and expenses for each of the years in the three-year period ended December 31, 2002, and the percentage
change between these periods.

|                                             |  | Year ended December 31, |         |  |   |        | 
|-------------------------------------------- |  | ----------------------- | ------- |  | - | ------ | 
|
|
|Research and development expenses            |  | €                       | 7,189   |  | € | 17,392 | 
|Selling, general and administrative expenses |  |                         | 8,218   |  |   | 8,875  | 
|Developed technology amortization            |  |                         | 665     |  |   | 1,330  | 
|Goodwill amortization                        |  |                         | 4,413   |  |   | 8,826  | 
|Goodwill impairment                          |  |                         |        |  |   |       | 
|Stock option compensation                    |  |                         | 31,153  |  |   | 888    | 
|Acquired in-process research and development |  |                         | 84,141  |  |   |       | 
|                                             |  |                         |         |  |   |        | 
|Total costs and expenses                     |  | €                       | 135,779 |  | € | 37,311 | 
|                                             |  |                         |         |  |   |        | 

Research and Development Expenses.Research and development expenses increased by 39.4% in 2002 compared with 2001 and by
141.9% in 2001 compared with 2000. The increase in 2002 was partially
due to an increase in our number of full-time employees engaged in research and development during 2002 from 136 at the end of 2001 to 168 at the end of 2002. During 2002 we had a maximum
of 196 full-time employees, which resulted in a significant increase in laboratory expenses and external research expenses. The increase was also due to an increase in our outsourcing
research and development activities to third parties, an increase in depreciation expenses and significant restructuring costs associated with former employees. The increase in 2001 was principally
due to an increase in patent related fees for both applications and maintenance and an increase in our number of employees from 92 at the end of 2000 to 136 at the end of 2001.

Selling, General and Administrative Expenses.Selling, general and administrative expenses increased by 17.0% in 2002
compared with 2001 and by 8.0% in 2001 compared with 2000. The increase in 2002 was primarily due to the full-year impact of employees hired in 2001 and an increase in
non-research and development employees from 32 at the end of 2001 to 35 at the end of 2002. The increase in 2001 was primarily due to an increase in non-research and
development employees from 25 at the end of 2000 to 32 at the end of 2001.

Developed Technology Amortization.Amortization of developed technology was €1,331 in 2002 and 2001. The
amortization relates to €6,652 of developed technology in connection with the merger with U-BiSys B.V. in June 2000. We are amortizing the developed technology using
the straight-line method over a 5-year period.

Goodwill Amortization and Goodwill Impairment.Goodwill impairment was €30,891 in 2002, and goodwill
amortization was €8,826 and €4,413 in 2001 and 2000, respectively. Beginning January 1, 2002, upon the adoption of SFAS No. 142, we ceased amortizing
goodwill on a straight-line basis and began subjecting goodwill to annual impairment tests. We performed the first annual impairment test at the end of 2002 and determined the full amount
of our goodwill of €30,891 was impaired.

Stock Option Compensation.Stock option compensation increased from €888 in 2001 to €1,371 in
2002. Stock option compensation was €31,153 in 2000. The increase in stock option compensation in 2002 compared to 2001 is primarily due to an increased number of stock options
outstanding. The decrease in stock option compensation in 2001 is primarily due to the immediate recognition of compensation expense of all issued and outstanding stock options in 2000 due to
amendments made to the terms of our stock option plan on September 26, 2000, such that all stock options became immediately exercisable with no vesting provisions. On January 2, 2001, we
made amendments to our

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stock option plan such that all options granted under the plan subsequent to January 2, 2001 are subject to time based vesting provisions. As a result of such time based vesting provisions, we
recognize the stock option compensation over the period in which the options vest. During 2002 we issued 443,500 stock options.

Acquired In-process Research and Development.Acquired in-process research and development in 2000
was €84,141 and related to the merger with U-BiSys B.V. Acquired in-process research and development has no alternative future use as defined by Statement of
Financial Accounting Standards No. 2, "Accounting for Research and Development Costs". We determined that the acquired in-process research and development had no alternative future
use because in the event of failure to achieve regulatory approval, should the identical technology be proposed for an alternate indication, it would be subjected to the risk of another series of
clinical trials. We did not have any acquired in-process research and development expense in 2002 or 2001.



The following table shows our net interest income for each of the years in the three-year period ended December 31, 2002, and the percentage
change between these periods.

|                |  | Year ended December 31, |     |  |   |       | 
|--------------- |  | ----------------------- | --- |  | - | ----- | 
|
|
|Interest income |  | €                       | 914 |  | € | 6,205 | 

Interest
income decreased 57.2% in 2002 compared with 2001 and increased 578.9% in 2001 compared with 2000. The decrease in 2002 compared to 2001 is primarily a result of lower average
interest yields on available cash balances and somewhat lower average cash balances, which were €110,645 and €120,243 at December 31, 2002 and
December 31, 2001, respectively. The increase in 2001 compared to 2000 was a result of higher average cash balances in 2001 compared to 2000. The cash balances were €120,243 and
€136,056 at December 31, 2001 and December 31, 2000, respectively. The cash balances reflect our initial public offering in October 2000 which provided us with
€128,003. In 2002, we raised a total of €6,343 which included €994 from issuances of ordinary shares and €5,349 from proceeds received
from the sale and lease-back of property and equipment. In 2001, we raised a total of
€1,420 which included €436 from issuances of ordinary shares and €984 from proceeds from sale and lease-back of property. Interest income
will depend primarily on fluctuations in interest rates in 2003 and the level of our cash balances going forward.



We incurred a net loss of €507, €2,524 and €1,443 in 2002, 2001 and 2000, respectively, representing our share of
the net losses of Galapagos Genomics. During 2002 our proportional share of the losses of Galapagos Genomics reduced the carrying amount of our investment to zero. The increase 2001 compared to 2000
in the net losses of Galapagos Genomics resulted from increased expenses associated with increased growth in the absence of a corresponding increase in revenues.

Liquidity and Capital Resources

As of December 31, 2002, we had €110,645 in cash and cash equivalents. We currently have no bank financing facilities in place and no
indebtedness for borrowed money.

To
date, we have financed our operations primarily through equity issuances. Equity issuances provided us with €128,003 in 2000, €436 in 2001 and
€994 in 2002, excluding the ordinary shares issued to acquire U-BiSys in June 2000. For additional information about our equity issuances, see our financial
statements. In 2002 and 2001, we also financed €5,349 and €984 through the proceeds from sale and lease-back of property, respectively.

44

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Our operating activities used cash of €6,190 in 2000, €12,022 in 2001 and €12,500 in 2002. In 2002, we primarily used cash in operating
activities to fund day-to-day operations. In 2001, we primarily used cash in operating activities to fund working capital.

We
made capital investments in plant and equipment of €3,379 in 2000, €4,366 in 2001 and €2,972 in 2002. In addition, we made investments
of €4,012 in 2000 and €145 in 2001 relating to Archimedes. Archimedes was dissolved in 2001. These investments were primarily for certain leasehold improvements to our
new facility and laboratory equipment.

We
also made a capital investment in Galapagos Genomics of €2,556 in 2000, including €2,000 in the form of a convertible loan and €700 in
2001. We made no investments in Galapagos genomics in 2002.

Our
cash flow from financing activities increased from €1,420 in 2001 to €5,874 in 2002, primarily due to select non-recurring sale and
lease-back transactions, in the aggregate amount of €5,349. We do not expect to generate significant inflows of cash from this type of financing activity going forward.

We
expect to continue to make investments in plant and equipment from time to time consistent with the level of investments in 2002. We may use a portion of our cash to acquire or invest
in complementary businesses, products or technologies, or to license-in the right to use such complementary technologies. We believe our current cash balances and operating revenues will
be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 24 months. However, it is possible that we will seek additional financing
within this timeframe. We may raise additional funds through public or private financing, strategic alliances or other arrangements. We may not be able to raise additional funding. Further, any
additional equity financing will be dilutive to shareholders, and debt financing, if available, may involve restrictive covenants. Our failure to raise capital when needed will harm our business and
operating results.

We
expect 2003 cash flow from operations and available cash will be sufficient to cover next year operations.

Taxation

We have to date incurred net losses and, accordingly, have not paid corporate income taxes. The current corporate income tax rate in The Netherlands is 34.5%. A
special 29% rate applies on the first €23 of taxable profits. We have recorded a valuation allowance equal to 100% of the value of our tax loss carry forwards.

Tax
losses can be carried forward indefinitely and set off against future taxable profits. On January 1, 2001, a bill was enacted that may limit the ability to set off tax losses
against future profits when the beneficial ownership of a company changes. This new law could limit our ability to realize the benefits of our tax loss carry forwards in future. We have tax loss carry
forwards of €59,749, €38,179 and €19,870 at December 31 2002, 2001 and 2000, respectively.

Contractual Obligations and Commercial Commitments

Future minimum payments for all contractual obligations for years subsequent to December 31, 2001 are as follows:

|                                |  | Total |        | 2003 |   | 2004-2005 |  | 2006-2007 |       | after 2007
|------------------------------- |  | ----- | ------ | ---- | - | --------- |  | --------- | ----- | ----------
|Contractual Obligations         |  |       |        |      |   |           |  |           |       |           
|Operating leases                |  | €     | 13,747 |      | € | 2,287     |  | €         | 4,025 |           
|Capital leases                  |  |       | 2,983  |      |   | 823       |  |           | 1,646 |           
|Research and license agreements |  |       | 3,800  |      |   | 2,295     |  |           | 1,449 |           

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Recent Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities."
This statement defines the accounting and reporting for costs associated with exit or disposal activities and is effective for exit or disposal activities that are initiated after December 31,
2002. This statement requires a liability to be recorded only at the moment when the actual liability as a result of the exit or disposal activity occurs. The standard also requires that the basis for
measurement for such a liability should be fair value. SFAS 146 supersedes EITF issue 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity." We will adopt SFAS 146 as of January 1, 2003 and do not expect the adoption of the statement to have a significant impact on our financial position and results of
operations.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123."
SFAS 148 amends the disclosure requirements of SFAS 123 to require disclosure in the significant accounting policy footnote of both annual and interim financial statements of the method
of accounting for stock-based compensation and the related pro-forma disclosures when the intrinsic value method continues to be used. We adopted SFAS No. 148 on January 1,
2003. As we currently apply the fair value method of accounting for stock options, adoption of the statement will not impact our financial position and results of operations.

In
November 2002, the Emerging Issues Task Force ("EITF") reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." EITF Issue
No. 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of
EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We are currently evaluating the effect that the adoption
of EITF Issue No. 00-21 will have on its results of operations and financial condition.

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Item 6.    Directors, Senior Management and Employees

Directors, Senior Management and Board Practices

We have a two-tier board structure consisting of a management board (raad van bestuur), which manages
our business, and a supervisory board (raad van commissarissen), which supervises and advises our management board.



Our supervisory board must approve certain resolutions of our management board, which are specified in our articles of association. In addition, our supervisory
board may give our management board written notice of other corporate actions that it wishes to approve. In fulfilling their duties, all members of our supervisory board must serve our best interests.

Our
articles of association provide that at least three supervisory board members must serve on our supervisory board. We must fill any vacancies on the supervisory board as soon as
possible, but until they are filled the remaining members of our supervisory board constitute a competent board. Under Dutch law, supervisory board members cannot serve as members of our management
board.

The
members of our supervisory board are appointed for terms ending on the date of the first annual meeting of shareholders that is held two years after the date of their appointment.
The holder of our priority shares, the foundation Stichting Prioriteit Crucell, nominates the supervisory board members. There must be at least two nominees for each vacancy on the supervisory board.
The general meeting can override these binding nominations by a vote of two-thirds of the votes cast. This vote must represent more than one-half of our issued share capital.
If the holders of our priority shares do not make any nominations within three months after the vacancy has occurred, our general meeting of shareholders can fill supervisory board vacancies. The
supervisory board members retire according to a rotation plan that the supervisory board establishes, and they may be reappointed.

Our
supervisory board appoints its own chairman and may adopt rules for its own internal governance and establish committees. Our supervisory board has established an audit committee and
a remuneration committee. Passing supervisory board decisions requires a majority of the votes cast at a meeting of our supervisory board. The chairman of our supervisory board, two of its members and
our management board may request a meeting of our supervisory board.

A
supervisory board member must retire at the annual general meeting of shareholders in the year in which he turns 72. A supervisory board member can be suspended or dismissed at any
time by a resolution of our general meeting of shareholders passed by two-thirds of the votes cast. This vote must represent more than one-half of our issued share capital. A
simple majority of votes can suspend or dismiss a supervisory board member if the supervisory board proposes the measure. Within three months after a suspension, our general meeting of shareholders
must either dismiss the supervisory director, terminate the suspension or extend it for up to another three months.

The
general meeting of shareholders determines the supervisory board members' compensation. We will pay our supervisory board members in options on our ordinary shares and cash and will
reimburse them for their expenses. See "Remuneration of the management board and supervisory board."

The
business address of each supervisory board member is the address of our principal executive office in Leiden, The Netherlands. Our supervisory board members currently hold an
aggregate of 300,524 of our ordinary shares. See "Share Ownership."

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The
following table sets forth the name, age and position of each of the members of our supervisory board:

|Name                |  | Age |  | Position                 |  | Expiry of Term
|------------------- |  | --- |  | ------------------------ |  | --------------
|Pieter J. Strijkert |  | 67  |  | Chairman                 |  | 2003          
|Michiel A. de Haan  |  | 55  |  | Vice-Chairman            |  | 2003          
|Jean Deleage        |  | 62  |  | Supervisory board member |  | 2003          
|Phillip M. Satow    |  | 61  |  | Supervisory board member |  | 2003          
|Patrick van Beneden |  | 40  |  | Supervisory board member |  | 2003          

The
following paragraphs contain brief biographies of each of our supervisory board members:

Pieter J. Strijkerthas served as chairman of our supervisory board since our incorporation and served as chairman of the supervisory
board of IntroGene from 1994 to October 2000 and as chairman of the supervisory board of U-BiSys from 1998 to October 2000. He also serves as chairman of the supervisory
boards of PamGene B.V. and has held that position since 2000. He has served on the board of Chiron Corporation since 1987 and also currently serves on the board of Paratek Pharmaceuticals, Inc. From
1985 to 1995 he was a member of the managing board of Gist-Brocades N.V. Mr. Strijkert has a Ph.D from the University of Utrecht.

Michiel A. de Haanhas served as vice chairman and a member of our supervisory board since our incorporation and served as a supervisory
board member of IntroGene from 1994 to October 2000. He is a founder of Atlas Venture and served there as a managing partner from 1980 to 2000. He serves on the supervisory board of Atlas
Investerings Groep N.V. and the board of the European Life Science Partnering Foundation. Mr. De Haan has also served on the supervisory boards of Advanced European Technologies N.V., European
Technologies Holding N.V., N.P.B.I. B.V. and Pharming Group N.V. and on the boards of Cardima Inc., Develogen AG and Genpharm International Inc. Until June 2000, Mr. De
Haan also served on the supervisory board of MorphoSys AG.

Jean Deleagehas served as a member of our supervisory board since our incorporation and served as a supervisory board member of IntroGene
from 1997 to October 2000. He is a founder and managing director of Alta Partners, a venture capital firm investing in information technologies and life science companies. Alta Partners was
founded in 1996. In 1979, he founded and is a managing partner of Burr, Egan, Deleage & Co., a venture capital firm in San Francisco and Boston. He was a member of Sofinnova's initial team, a
venture capital organization in Paris, and in 1976 formed Sofinnova, Inc. (the U.S. subsidiary of Sofinnova). Mr. Deleage serves on the boards of Kosan Biosciences, Inc., Rigel
Pharmaceuticals, Inc. and several private companies. He holds a Master's Degree in Electrical Engineering from Ecole Superieure d'Electricite and a Ph.D. in Economics from the Sorbonne. In
1984, he was awarded the Ordre National du Mérite, and in 1993, he was awarded the Legion of Honor from the French government in recognition of his career accomplishments.

Phillip M. Satowhas been a member of our supervisory board since our incorporation. He spent 14 years at Pfizer, Inc. where
his last position was Vice President, Pharmaceutical Development, Pfizer Europe. From 1985 to 1997, he was executive vice president of marketing at Forest Laboratories, Inc. From 1998 to 1999
he was president of Forest Pharmaceuticals, executive vice president of Forest
Laboratories Inc. and a member of its board of directors. Mr. Satow currently serves on the boards of Forest Laboratories Inc., Vela Pharmaceuticals Inc. and the American
Foundation of Suicide Prevention and is a founder of the Jed Foundation. He was president of the Columbia College Alumni Association from 1998 to June 2000. Mr. Satow received a Masters
in Economics from Georgetown University.

Patrick van Benedenhas served as a member of our supervisory board since our incorporation and served as a member of the supervisory
board of IntroGene from 1997 to October 2000. He is vice

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president of GIMV N.V. and since 1985 has held several positions with this company, including as financial analyst, investment manager, senior investment manager and executive senior investment
manager, and investment director. He currently serves on the supervisory boards of DevGen N.V., Avalon Pharmaceuticals Inc., Xantos Biomedicine AG and Crop Design N.V., and on the boards of
Ablynx N.V., Astex, Pamgene, Psychiatric Genomics, I&I Gent and the Biotech Fund Flanders.

Jason S. FishermanandMartijn Kleijwegtresigned from our supervisory board in
May 2002.



Our supervisory board has established a remuneration committee. The remuneration committee determines our policy on remuneration of all members of our management
board and executive committee. The members of our remuneration committee are Phillip Satow (Chairman), Pieter Strijkert and Patrick van Beneden.



Our supervisory board has established an audit committee. The audit committee consists of two supervisory board members who are independent within the meaning of
the Nasdaq listing rules. This committee has responsibility for, among other things, planning and reviewing our annual and interim reports and accounts and monitoring our auditors' involvement in that
process. The ultimate responsibility for reviewing our annual and interim accounts lies with our supervisory board. The members of our audit committee are Michiel de Haan (Chairman) and Patrick van
Beneden.



Our articles of association provide for the possibility of establishing a scientific advisory committee. We have elected not to establish such a committee, and
have instead organized expert panels and focus groups targeting certain areas relevant to our scientific research and development. We believe that targeted expert panels and focus groups currently
provide a more flexible and useful approach to scientific advisory issues than the establishment of a formal committee.



In March 2003, we established a disclosure committee designed to help senior management, particularly the chief executive officer and chief financial
officer, in the maintenance and evaluation of our disclosure controls and procedures. The disclosure committee gathers all relevant financial and non-financial information and assesses
materiality, timeliness and necessity for disclosure of such information. The disclosure committee is comprised of the chief operating officer, chief scientific officer, corporate controller, general
counsel, vice president intellectual property and licensing, director for quality affairs and vice president development and regulatory affairs. Members of the disclosure committee have direct access
to our external legal counsel and our external auditor. The disclosure committee reports to the chief executive officer and chief financial officer. The chief executive officer and chief financial
officer have also re-emphasized the importance of internal controls at our company in an effort to facilitate continuous improvement of internal control procedures and reporting.

We
believe that the establishment of the disclosure committee and additional actions taken for further improvement of disclosure and internal controls comply with the requirements of the
Sarbanes-Oxley Act of 2002 and recent regulations promulgated by the Securities and Exchange Commission under that Act.

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Our management board manages our general affairs and business, under the supervision of our supervisory board. The management board consists of one person who is
authorized to represent us. Under our articles of association, the management board requires prior approval of the supervisory board for resolutions to:



Under
Dutch law, in certain circumstances, management board actions may require the approval of the general meeting of shareholders. See "Description of Shares".

Our
management board may have one or more members. Our supervisory board determines the size of our management board. Our general meeting of shareholders appoints the members of our
management board from binding nominations made by our supervisory board. There must be at least two nominees for each vacancy on our management board. The general meeting of shareholders can override
these binding nominations by a vote of two-thirds of the votes cast. This vote must represent more than one-half of our issued share capital. If our supervisory board does not
nominate anyone for a specific position within three months after the vacancy has occurred, our general meeting of shareholders can appoint a replacement by a simple majority of votes.

Our
management board may establish rules governing its internal organization. Our supervisory board must approve the adoption of and any changes to these rules. Our management board may
charge each member of the management board with particular duties. Our supervisory board may appoint a management board member as chief executive officer. Resolutions of our management board require a
majority of votes cast.

A
management board member can be suspended, or dismissed and a suspension can be lifted by a resolution of two-thirds of the votes cast at a shareholders meeting. This vote
must represent more than one-half of the issued share capital. A simple majority of votes can suspend, dismiss or lift a suspension of a management board member if the supervisory board
proposes the measure. Our supervisory board may also suspend (but not dismiss) a member of our management board. We must hold a general meeting of shareholders within three months after a suspension
to either terminate or extend it for up to another three months.

Our
supervisory board determines the compensation and benefits of the members of our management board. The business address of the member of our management board is the same as the
address of our principal executive office in Leiden, The Netherlands.

The
name, age and position of the member of our management board is:

|Name             |  | Age |  | Position                             
|---------------- |  | --- |  | -------------------------------------
|Domenico Valerio |  | 46  |  | president and chief executive officer

In
addition to his role as president, chief executive officer and management board member, Domenico Valerio has a contract to spend one day a week as professor in a chair at the
University of Leiden overseeing research. We sponsor the chair. We believe that there are benefits to Domenico

50

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Valerio maintaining an ongoing relationship with this university, as it provides him with a continued association with the academic biotechnology community. Domenico Valerio does not have a
non-compete provision in his employment contract.

Ton
Logtenberg's employment contract was terminated and he resigned from our management board on September 9, 2002.



Our management board may establish rules governing its relationship with our executive committee. Our supervisory board must approve the adoption of and any
changes to these rules. Our management board may charge each member of the executive committee with particular duties. The executive
committee is responsible for setting and executing our strategy and general management. The executive committee meets weekly, and works closely with other members of our management team.

The
following table sets forth the name, age and position of each of the members of our executive committee:

|Name              |  | Age |  | Position                            
|----------------- |  | --- |  | ------------------------------------
|Leonard Kruimer   |  | 44  |  | chief financial officer             
|Ronald H. P. Brus |  | 39  |  | chief operating officer             
|Jaap Goudsmit     |  | 51  |  | chief scientific officer            
|René K. Beukema*  |  | 39  |  | general counsel, corporate secretary

---

The
following paragraphs contain brief biographies of the member of our management board and members of our executive committee:

Domenico Valeriois our president and chief executive officer. He has been a member of our management board and a member of our executive
committee since our incorporation. Dr. Valerio is also a part-time professor of gene therapy at the University of Leiden, a position he has held since 1992. He was one of the
founders of IntroGene in 1993 and has been the president and chief executive officer of the company since its inception. For five years prior to founding IntroGene, he held positions at TNO, including
head of the Gene Therapy Department. He was a post-doctoral fellow at the Salk
Institute and a visiting scientific specialist at Genentech Inc. Dr. Valerio has a Ph.D. from the University of Leiden.

Leonard Kruimerhas been our chief financial officer and a member of our executive committee since our incorporation. He held the same
position at IntroGene from 1998 to 2000. From 1996 to 1998 he was an independent consultant with companies such as Pepsico and Royal Boskalis Westminster N.V. From 1988 to 1995, he held senior
executive positions at Continental Can Europe, GE Capital/TIP Europe and Kwik-Fit Europe B.V. He was a consultant at McKinsey & Co. and has worked with Price Waterhouse. He holds a
Masters in Business Administration from Harvard Graduate School of Business Administration, a degree from the University of Massachussets, Amherst, and is a CPA in New York State.

Ronald H.P. Bruswas appointed chief operating officer in March 2003 and has been a member of our executive committee since our
incorporation. He was executive vice president, business development at IntroGene since 1997. From 1994 to 1996, he was Product Planning Physician at Forest Laboratories (New York) and from 1990 to
1994 he was Medical Director for Zambon B.V. He holds a medical degree (M.D.) from the University of Groningen.

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Jaap Goudsmithas been our senior vice president for vaccine research since September 2001 and chief scientific officer
since
September 2002. He has chaired various national and international committees and is a fellow of the National Institutes of Health and of New York University. He co-founded both the
International AIDS Vaccine Initiative (IAVI) and EuroVac, the European Union AIDS vaccine program. Since 1989 he has been a professor at the University of Amsterdam and the Amsterdam Medical Center.
He holds a medical degree (M.D.) and a PhD from the University of Amsterdam.

René K. Beukemahas been our general counsel and corporate secretary since our incorporation. He held the same position at
IntroGene since 1999. From 1994 to 1999 Mr. Beukema was Senior Legal Counsel for GE Capital/TIP Europe. From 1991 to 1994, he was legal counsel for TNT Express Worldwide N.V. He has a Masters
in Law from the University of Amsterdam.



The service contracts with Domenico Valerio and Jaap Goudsmit provide for benefits upon termination of employment beyond statutory Dutch law requirements. In case
of termination of employment due to a change of control of us, Domenico Valerio is entitled to severance pay equal to three years salary, and Jaap Goudsmit is entitled to severance pay equal to one
year salary. The other members of our executive committee have no service contracts that provide for benefits upon termination of employment.

Remuneration of the management board and supervisory board

In 2002, Netherlands legislation was adopted that requires full disclosure of individual management board and supervisory board remuneration. The legislation
became effective for financial years starting on or after September 1, 2002. We have included the required disclosures below.



Executive remuneration consists of a fixed portion and a variable portion that is linked to our overall performance and the achievement of certain objectives. The
general principles of the policy on remuneration for member of the management board are discussed by the remuneration committee, and subsequently approved by the supervisory board.

The
remuneration committee is charged by the supervisory board to review and recommend specific compensation and benefit levels for the member of the management board and the member of
the executive committee in consultation with the management board. In addition, the remuneration committee reviews the general compensation and benefit policies for our employees. Members of the
remuneration committee are Phillip Satow (chairman), Pieter Strijkert and Patrick van Beneden.

The
remuneration committee advises on policies and reviews and determines objectives relevant to the compensation of the member of the management board and member of the executive
committee. The remuneration committee evaluates the performance of the management board and members of the executive committee in view of those goals and objectives and advises on the fixed and
variable compensation of member of the management board and the executive committee. In advising on short and long term incentive compensation for the management board and members of the executive
committee, the remuneration committee considers among other factors our financial and commercial performance, scientific performance and progress, and the accrual of value of the company. External
compensation survey data available for the biotechnology industry are also used is another factor to benchmark the compensation levels. It is the aim of the remuneration committee to position the
remuneration packages for the management board and members of the executive committee at competitive levels.

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The
bonus paid to the management board is paid in connection with achievement of certain objectives set by the supervisory board.



The total remuneration and related costs of the members of the management board over the past three years has been as follows:

|                |  | Year ended December 31,
|--------------- |  | -----------------------
|
|Salaries        |  | €                      
|Bonuses         |  |                        
|Pension costs   |  |                        
|Severance costs |  |                        
|                |  |                        
|Total           |  | €                      
|                |  |                        

The
2002 remuneration of the individual members of the management board was as follows:

|                 |  | 2002
|---------------- |  | ----
|
|D. Valerio       |  | €   
|T. Logtenberg(1) |  |     

---

In
March 2003, the management board passed a resolution requesting that the remuneration committee ratify and confirm a proposal to voluntarily adjust the fixed compensation level
for its sole member, Domenico Valerio, as the result of his reflection on the current biotech industry climate and our consequent market capitalization. The proposal is that Domenico Valerio's annual
gross salary, effective as of April 1, 2003, shall be €340,000, a decrease of €45,000 per year.

Our
management board members held the following options per December 31, 2002:

|Name of holder    |  | Options held per
December 31, 2001 |  | Year of expiration  |  | Exercise
price(s)     |  | Granted
2002 |  | Exercised
2002 |  | Forfeited
2002 |  | Options held per
December 31, 2002
|----------------- |  | ---------------------------------- |  | ------------------- |  | --------------------- |  | ------------ |  | -------------- |  | -------------- |  | ----------------------------------
|Domenico Valerio  |  | 120,000
187,500
502,500
125,625    |  | 2003
2003
2004
2005 |  | 2.27
4.23
21.00
11.43 |  | 


      |  | 


        |  | 


        |  | 120,000
187,500
502,500
25,625    
|Ton Logtenberg(1) |  | 445,695
195,000                    |  | 2005
2004           |  | 0.49
21.00            |  | 
          |  | 
            |  | 
            |  | 445,695
195,000                   
|                  |  |                                    |  |                     |  |                       |  |              |  |                |  |                |  |                                   
|Total             |  | 1,625,070                          |  |                     |  |                       |  |             |  |               |  |               |  | 1,625,070                         
|                  |  |                                    |  |                     |  |                       |  |              |  |                |  |                |  |                                   

---

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Since
the pension arrangements for the management board is a defined contribution plan, we do not have further pension obligations beyond the annual premium contribution.



During 2002, the individual members of the supervisory board received the following fixed remuneration:

|                  |  | 2002 |       | 2001
|----------------- |  | ---- | ----- | ----
|P. Strijkert      |  | €    | 7,270 |     
|M.A. de Haan      |  |      | 7,270 |     
|J. Deleage        |  |      | 4,715 |     
|J.S. Fisherman(1) |  |      | 4,715 |     
|M. Kleijwegt(1)   |  |      | 4,715 |     
|P.M. Satow        |  |      | 7,270 |     
|P. van Beneden    |  |      | 4,715 |     

---

Our
supervisory board members held the following options per December 31, 2002:

|Name of holder        |  | Options held
per
December 31, 2001      |  | Year of
expiration            |  | Exercise
price(s)               |  | granted
2002 |  | exercised
2002 |  | forfeited
2002 |  | Options held
per
December 31, 2002     
|--------------------- |  | --------------------------------------- |  | ----------------------------- |  | ------------------------------- |  | ------------ |  | -------------- |  | -------------- |  | ---------------------------------------
|Pieter Strijkert      |  | 45,000
15,000
79,474
12,000
4,500
8,000 |  | 2003
2003
2005
2004
2005
2005 |  | 2.27
4.23
0.49
21.00
11.43
7.16 |  | 




  |  | 




    |  | 




    |  | 45,000
15,000
79,474
12,000
4,500
8,000
|Michiel de Haan       |  | 11,250
12,000
3,000
7,000               |  | 2003
2004
2005
2005           |  | 4.23
21.00
11.43
7.16           |  | 


      |  | 


        |  | 


        |  | 11,250
12,000
3,000
7,000              
|Jason S. Fisherman(1) |  |                                        |  |                              |  |                                |  |             |  |               |  |               |  |                                       
|Martijn Kleijwegt(1)  |  |                                        |  |                              |  |                                |  |             |  |               |  |               |  |                                       
|Phillip Satow         |  | 12,000
3,000
7,000                      |  | 2004
2005
2005                |  | 21.00
11.43
7.16                |  | 

        |  | 

          |  | 

          |  | 12,000
3,000
7,000                     
|Patrick van Beneden   |  | 11,250
7,000                            |  | 2003
2005                     |  | 4.23
7.16                       |  | 
          |  | 
            |  | 
            |  | 11,250
7,000                           
|                      |  |                                         |  |                               |  |                                 |  |              |  |                |  |                |  |                                        
|Total                 |  | 237,474                                 |  |                               |  |                                 |  |             |  |               |  |               |  | 237,474                                
|                      |  |                                         |  |                               |  |                                 |  |              |  |                |  |                |  |                                        

---

In
2002, we paid our management board members an aggregate of €1,508,920 and our supervisory board members an aggregate of €40,670 in each case excluding
stock options. We have reimbursed our supervisory board members for their travel and associated expenses.

54

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We
account for stock-based compensation under the fair value method in accordance with the provisions of Financial Accounting Standards Board Statement No. 123, Accounting for
Stock-Based Compensation. Under SFAS 123, the fair market value of a stock option is determined at the time of grant and recorded on our balance sheet as deferred compensation, which we then
amortize over the vesting period. At December 31, 2002, we had €3,992 of deferred compensation. See note 7 to our financial statements included elsewhere in this annual
report.

In
January 2003, our supervisory board approved a new option plan whereby employees and supervisory board members holding previously issued options with an exercise price of
€21.00 were be able to exchange their options for an equal number of new options. The new options have an exercise price of 161% of the average closing price on the three days
preceding the grant on January 30, 2003. The life of these options is eight years, with a profit retribution scheme covering three years. In total, 97% of all outstanding existing options with
an exercise price of €21.00 were exchanged. We have also decided to grant new options to all permanent personnel per January 30, 2003. These options have the same terms and
conditions as the exchanged options granted on the same date. Members of our management board and executive committee have not participated in this new option grant. Members of the Supervisory Board
received options in the new option round for their activities in 2002 as part of their normal remuneration. We feel that these option initiatives will foster long-term commitments from our
employees.

The
remuneration for the members of the supervisory board is determined by the general meeting of shareholders.

As
of April 8, 2003, there were 877,252 options (or approximately 2.5% of our issued share capital) available to be granted to our employees. Approximately 1.5 million
options were granted to certain employees at the time of our initial public offering in October 2000 at an exercise price at or above the initial public offering price, including 502,500
options which were granted to Domenico Valerio at an exercise price above the initial public offering price.

We
intend to pay approximately 20% of Domenico Valerio's salary to a foundation that will fund an academic chair in his name at the University of Leiden. The foundation intends to pay
the funds received from us to Domenico Valerio.

Limitation of Liability and Indemnification Matters

Pursuant to Dutch law, each member of our supervisory and management boards is responsible to us for the proper performance of his or her assigned duties. They
are also responsible for taking measures to prevent the consequences of any improper performance of duties by another member of our supervisory board or our management board. Our articles of
association provide that our managing board members and our supervisory board members are discharged from liability for their actions as board members, if our general meeting of shareholders adopts a
resolution to that effect. This
discharge extends only to actions or omissions disclosed in or apparent from the adopted annual accounts or otherwise communicated to our general meeting of shareholders.

This
discharge of liability may be limited by mandatory provisions of Dutch law, such as in the case of bankruptcy. Under Dutch law, our supervisory board members and members of our
management board generally cannot be held personally liable for decisions made exercising their reasonable business judgment.

Our
articles of association provide that we shall generally indemnify any person who is or was a member of our supervisory board or our management board or one of our employees, officers
or agents, and suffers any loss as a result of any action in connection with their service to us, provided they acted in good faith in carrying out their duties.

55

---

This
indemnification generally will not be available if the person seeking indemnification acted with gross negligence or willful misconduct in the performance of their duties to us. A
court in which an action is brought may, however, determine that indemnification is appropriate nonetheless.

Employees

As of December 31, 2002, we had 183 full-time direct and indirect employees of whom 154 were engaged in, or directly support, research and
development activities and 29 were employed in administrative and business development positions.

As
of December 31, 2001, we had 159 full-time direct and indirect employees of whom 136 were engaged in, or directly support, research and development activities and
23 were employed in administrative and business development positions.

As
of December 31, 2000, we had 110 full-time direct and indirect employees, 36 of whom hold Ph.D. or M.D. degrees. Of these employees, 85 were engaged in, or directly
support, research and development activities, and 25 were in administrative and business development positions.

The
increase in number of employees from 2001 to 2002 was due primarily to increased investment in research and development activities. No collective bargaining agreements are applicable
to our employees. We believe that our relations with our employees are generally good.

56

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Share Ownership

As of April 8, 2003 our management board, our supervisory board and our executive committee hold the following options and ordinary shares. Options
generally expire in October or January.

|Name of Holder                            |  | Number of
ordinary
shares held |     | Percentage
of total
ordinary
shares |  | Options
held                     |  | Expiration
date(s)       |  | Exercise
price(s)         |  | Total
options
held
|----------------------------------------- |  | ------------------------------ | --- | ----------------------------------- |  | -------------------------------- |  | ------------------------ |  | ------------------------- |  | ------------------
|
|Supervisory Board:                        |  |                                |     |                                     |  |                                  |  |                          |  |                           |  |                   
|Pieter Strijkert                          |  | 115,714                        |     | 0.3                                 |  | 15,000
79,474
24,000
4,500
8,000 |  | 2003
2005
2008
2005
2005 |  | 4.23
0.49
3.49
11.43
7.16 |  | 130,074           
|Michiel de Haan                           |  | 69,810                         |     | 0.2                                 |  | 11,250
22,000
3,000
7,000        |  | 2003
2008
2005
2005      |  | 4.23
3.49
11.43
7.16      |  | 43,250            
|Jason Fisherman(1)                        |  |                               |     |                                    |  |                                 |  |                         |  |                          |  |                  
|Martijn Kleijwegt(1)                      |  | 19,000                         |     | 0.05                                |  |                                 |  |                         |  |                          |  |                  
|Phillip Satow                             |  | 102,000                        |     | 0.3                                 |  | 22,000
3,000
7,000               |  | 2008
2005
2005           |  | 3.49
11.43
7.16           |  | 32,000            
|Patrick van Beneden                       |  |                               |     |                                     |  | 11,250
7,000                     |  | 2003
2005                |  | 4.23
7.16                 |  | 18,250            
|                                          |  |                                |     |                                     |  |                                  |  |                          |  |                           |  |                   
|Subtotal                                  |  | 306,524                        |     | 0.9                                 |  | 224,474                          |  |                          |  |                           |  |                   
|Management Board and Executive Committee: |  |                                |     |                                     |  |                                  |  |                          |  |                           |  |                   
|Domenico Valerio                          |  | 681,549                        | (2) | 1.9                                 |  | 187,500
502,500
125,625          |  | 2003
2008
2005           |  | 4.23
3.49
11.43           |  | 815,625           
|Ton Logtenberg(3)                         |  | 468,317                        |     | 1.3                                 |  | 445,695
195,000
48,750           |  | 2005
2004
2005           |  | 0.49
21.00
11.43          |  | 689,445           
|Ronald Brus                               |  | 79,697                         |     | 0.2                                 |  | 150,000
225,000
56,250
75,000    |  | 2003
2008
2005
2005      |  | 4.23
3.49
11.43
7.35      |  | 506,251           
|Jaap Goudsmit                             |  |                               |     |                                    |  | 100,000
100,000
100,000          |  | 2005
2006
2006           |  | 7.96
5.92
3.66            |  |                   
|Leonard Kruimer                           |  | 12,700                         |     | 0.04                                |  | 75,000
112,500
105,000
26,250    |  | 2003
2003
2008
2005      |  | 2.27
4.23
3.49
11.43      |  | 318,750           
|Rene Beukema                              |  | 10,856                         |     |                                     |  | 26,250
115,000
26,250
25,000     |  | 2003
2008
2005
2006      |  | 4.23
3.49
11.43
6.82      |  | 182,500           
|Subtotal                                  |  | 1,253,119                      |     | 3.5                                 |  | 2,512,570                        |  |                          |  |                           |  |                   
|                                          |  |                                |     |                                     |  |                                  |  |                          |  |                           |  |                   
|Total                                     |  | 1,559,643                      |     | 4.4                                 |  | 3,015,044                        |  |                          |  |                           |  |                   
|                                          |  |                                |     |                                     |  |                                  |  |                          |  |                           |  |                   

---

In January 2003, 45,000, 120,000 and 30,000 options with an exercise price of €2.27 were forfeited by Pieter Strijkert,
Domenico Valerio and Ronald Brus, respectively. For further details regarding our stock options, see note 8 to our financial statements.

57

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Item 7.    Major Shareholders and Related Party Transactions

Major Shareholders

The following table sets forth certain information concerning the beneficial ownership of our ordinary shares as of April 8, 2003 by:



Percentage
of beneficial ownership is based on an aggregate of 35,681,938 ordinary shares outstanding at April 8, 2003. The totals underlying these percentages comprise, for each
individual shareholder, both the total number of ordinary shares outstanding and the number of ordinary shares underlying options held by the individual shareholder.

|                                                                 |  | Ordinary Shares Beneficially Owned(1) |    
|---------------------------------------------------------------- |  | ------------------------------------- | ---
|
|Atlas Venture                                                    |  | 3,129,582                             | (2)
|Biotechnologie Fonds Vlaanderen N.V                              |  |                                      | (3)
|SHV Holdings N.V. (for NPM Capital N.V.).                        |  |                                      | (4)
|3i Investments PLC                                               |  | 1,822,000                             | (5)
|Ordinary shares held by our management board                     |  | 681,549                               | (6)
|Ordinary shares held by our supervisory board members as a group |  | 306,524                               |    
|Ordinary shares held by our executive committee as a group(7)    |  | 103,253                               |    

---

58

---

To
the best of our knowledge, there have been no significant changes in percentage ownership of our major shareholders over the past three years.

As
of April 8, 2003 there were 2,494,756 ADSs, each representing one ordinary share, all of which were held of record by eight registered holders in the United States (including
The Depository Trust Company). The number of ADSs at April 8, 2003 represents 7.0% of our ordinary shares that were issued and outstanding on that date.

To
the best of our knowledge, we are not directly or indirectly controlled by any other corporation, foreign government or other entity.

Obligations of Shareholders to Disclose Holdings under Netherlands Law

The Netherlands' Act on Disclosure of Holdings in Listed Companies (the "Major Holdings Act") applies to any person or entity that, directly or indirectly,
acquires or disposes of an interest in the voting rights and/or the capital of a public limited company incorporated under the laws of the Netherlands that is officially listed on a stock exchange
within the European Union (the "EU").
Disclosure is required when, as a result of an acquisition or disposal, the percentage of voting rights or capital interest acquired or disposed of by a person or an entity reaches, exceeds or falls
below 5, 10, 25, 50 or 662/3 percent. With respect to us, the Major Holdings Act would require any person or entity whose interest in our voting rights and/or capital reached, exceeded
or fell below those percentage interests to notify in writing both us and the Netherlands Authority for the Financial Markets (Autoriteit Financiele
Markten) immediately after the acquisition or disposal of the triggering interest in our share capital. Upon receipt of the notification, the Netherlands Authority for the
Financial Markets will disclose the information, as notified, to the public by means of an advertisement in a newspaper distributed throughout the Netherlands.

In
addition, the members of our management and supervisory boards are required to immediately notify the Netherlands Authority for the Financial Markets of any change in our shares or
options they hold or voting rights in respect of these shares. The Netherlands Authority for the Financial Markets will disclose this information in a public register won its website. Noncompliance
with the obligations of the Major Holdings Act can lead to criminal prosecution. In addition, a civil court can issue orders against any person who fails to notify or incorrectly notifies in
accordance with the Major Holdings Act, including suspension of the voting rights in respect of such person's ordinary shares.



The following table describes all loans made to members of our management board and senior management since January 1, 1998. We have not made any loans to
any of our supervisory board members. The interest rate on all loans was 4% per annum prior to December 31, 2000, 5.5% per annum in 2000, 4.5% per annum in 2001 and 4.4% per annum in 2002. We
set these interest rates in relation to Dutch income tax law which changes on an annual basis. These loans become payable at the time shares received on exercise of the related options are sold or, if
the employee ceases to work for us before this time, immediately. We fund payments due under the loans prior to July 30, 2002, the date legislation was passed in the United States which
prohibited the granting of additional loans to

59

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company officers. We made loans to the persons listed below in connection with options granted to them on our ordinary shares.

|Name               |  | Largest amount of loan
outstanding since
January 1, 1998 |         | Amount of loan
outstanding at
April 8, 2003 |   | Current
Interest Rate |    
|------------------ |  | -------------------------------------------------------- | ------- | ------------------------------------------- | - | --------------------- | ---
|Domenico Valerio   |  | €                                                        | 691,992 | (1)                                         | € | 691,992               | (1)
|Ronald Brus        |  | €                                                        | 131,592 | (2)                                         | € | 131,592               | (2)
|Jaap Goudsmit      |  | €                                                        | 24,688  |                                             | € | 24,688                |    
|Leonard Kruimer(3) |  | €                                                        | 71,846  | (2)                                         |   |                      |    
|René Beukema       |  | €                                                        | 53,726  | (2)                                         | € | 53,726                | (2)

---

The
loans to Domenico Valerio and Ronald Brus for the amounts of €136,799 and €13,160, respectively, provide that the applicable individual will not owe
us interest with respect to the entire principal of such person's loans. In each case, we cancel a certain portion of the interest owed to us and the associated income tax, and attribute such
cancelled amounts to salary for income tax purposes.

Neither
we nor any of our subsidiaries was a party to any material transactions, or proposed transactions, in which any director, any other executive officer, any spouse or relative of
any of the foregoing, or any relative of any such spouse had or was to have a direct or indirect material interest.

60

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Item 8.    Financial Information

See Item 18, "Financial Statements" and pages F-1 through F-22.

Legal Proceedings

In the ordinary course of business, we have been involved in certain disputes. Neither we, nor any of our subsidiaries, has been party to any legal or arbitration
proceedings that may have, or have had during the 12 months preceding the date of this document, a significant effect on our financial position or any of our subsidiaries nor, as far as we are
aware, are any such legal proceedings pending or threatened.

On
December 20, 2002 we agreed on terms whereby pending litigation involving Cambridge Antibody Technology plc, or CAT, regarding two actions we filed in the District Court of The
Hague, The Netherlands concerning the Winter patent and the McCafferty patents was withdrawn. Under the terms of our agreement with CAT, we received a worldwide license with respect to all CAT's
antibody phage display technology patents, both pending and granted. In addition to an initial license fee, CAT obtains an option to develop certain antibodies in an arrangement intended to open the
way for further collaboration between us and CAT. CAT will also receive milestone and royalty payments for any antibody products that we or our partners develop that are derived from our MAbstract
technology or other technology involving phage display. We will be free under the settlement to develop and commercialize human antibody products against targets using our MAbstract and other phage
display technology.

The
Winter and McCafferty patents were also the subject of proceedings between CAT and third parties in Europe and the United States. A patent similar to the McCafferty patent had been
issued in the United States to the Medical Research Council and CAT jointly. In the United States, CAT was also involved in litigation regarding the McCafferty patent in the United States and an
additional patent, referred to as the Griffiths patent, that covers technologies related to phage display. We believe these disputes have all been settled by CAT, the Medical Research Council and the
relevant third
parties. We were not a party to these disputes and no claim has been filed against us in relation to these patents.

Dividends and Dividend Policy

Neither we nor our two principal subsidiaries, IntroGene and U-BiSys, have ever declared or paid dividends. We do not intend to pay dividends on our
ordinary shares for the foreseeable future. Any payment of future dividends and the amounts thereof will depend upon earnings, statutory and financial requirements and other factors deemed relevant by
our management board, and will be subject to withholding tax in The Netherlands. In the event that we pay dividends in the future, holders of the ADSs will be entitled to receive payments in U.S.
dollars in respect of dividends on the underlying ordinary shares in accordance with a deposit agreement dated October 26, 2000, between The Bank of New York and us.

Significant Changes

Other than as disclosed in this annual report, no significant change has occurred since December 31, 2002, the date of our most recent audited financial
statements.

61

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Item 9.    The Offer and Listing

Our ordinary shares are traded in the United States solely in the form of ADSs, each ADS representing one ordinary share. Each ADS is evidenced by an American
Depositary Receipt issued by The Bank of New York acting as Depositary in respect thereof.

As
of April 8, 2003, 35,681,938 ordinary shares were issued and outstanding. At the same date, there were 2,494,756 ADSs, each representing one ordinary share.

Our
ordinary shares have been listed on the Official Market of Euronext Amsterdam N.V. (formerly Amsterdam Exchanges N.V.) since October 25, 2000 and the ADSs have been quoted on
the Nasdaq National Market since October 27, 2000, both under the symbol "CRXL".

The
following table sets forth the range of high and low closing prices for our ordinary shares on the Nasdaq National Market for the periods indicated.

ADSsHigh

Low2000Fourth Quarter (beginning October 27)

$
12,750

$
5,5002001First Quarter


13.625


4.875Second Quarter


7.02


5.00Third Quarter


7.26


5.102Fourth Quarter


6.86


5.052002First Quarter


6.20


5.36Second Quarter


5.22


4.26Third Quarter


4.56


2.67Fourth Quarter


3.55


2.502003First Quarter


3.18


1.542002October


3.00


2.50November


3.55


2.85December


3.42


2.972003January


3.18


2.21February


2.33


1.81March


1.80


1.54


Our
ordinary shares trade on the Official Market of Euronext Amsterdam N.V. through the book-entry facilities of NEGICEF, Euroclear and Clearstream Luxembourg. For the
ordinary shares the International Securities Identification Number (ISIN) code is NL0000358562, the Amsterdam Security Number is 35856 and the Common Code is 11907164.

62

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The
following table sets forth the range of high and low closing prices for our ordinary shares in The Netherlands for the periods indicated.

Ordinary SharesHigh

Low2000Fourth Quarter (beginning October 27)

€15.45

€6.602001First Quarter

13.30

5.50Second Quarter

8.40

5.40Third Quarter

8.45

5.70Fourth Quarter (beginning October 27)

7.50

5.502002First Quarter

7.29

5.76Second Quarter

6.10

4.43Third Quarter

4.75

2.50Fourth Quarter

3.55

2.752003First Quarter

3.00

1.402002October

3.24

2.75November

3.55

2.89December

3.21

2.902003January

3.00

2.01February

2.15

1.62March

1.65

1.40


63

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Item 10.    Additional Information

Share Capital

Our authorized share capital amounts to €32,112,000 divided into: 89,199,990 ordinary shares, 10 priority shares and 44,600,000 preference
shares, each with a par value of €0.24.

As
of April 8, 2003, there were 35,681,938 ordinary shares and 10 priority shares issued and outstanding. No preference shares are currently issued and outstanding. The ordinary
shares can be issued in bearer or registered form. The priority and preference shares can only be issued in registered form. No share certificates will be issued for shares in registered form.



Our ordinary shares may be in registered or bearer form and will be in bearer form unless the shareholder indicates otherwise in writing. Only bearer ordinary
shares can trade on the Amsterdam Stock Exchange.

Bearer Ordinary Shares.All of our bearer ordinary shares will be embodied in a single global share certificate which will
not be exchanged for single or multiple physical securities and which we will deposit with NECIGEF for safekeeping on behalf of the parties entitled to the ordinary shares in bearer form.

The
ordinary shares represented by the single global share certificate may only be transferred through the book-entry system maintained by NECIGEF. A participant in the
collective deposit (verzameldepot)
of a securities institution admitted to NECIGEF may, at his own expense, require conversion of one or more of his bearer ordinary shares into ordinary shares in registered form.

Registered Ordinary Shares.We enter holders of registered ordinary shares in the register of shareholders. We do not issue
share certificates. However, the shareholder may request an extract from the shareholders' register regarding the ordinary shares registered in his name. We are required to provide this free of
charge. Dutch law requires that transfers of registered ordinary shares be recorded in a written instrument to which we are a party or which is served on us, or that the transaction be acknowledged by
us.



All of the issued priority shares are held by Stichting Prioriteit Crucell, also referred to as the Priority Foundation. This foundation was founded in Leiden,
The Netherlands on October 25, 2000. The priority shares confer a right to make binding nominations for our supervisory board members. The general meeting can override these binding nominations
by a vote of two-thirds of the votes cast. This vote must represent more than one-half of our issued share capital. Except for the transfer of priority shares to us, priority
shares can only be transferred with the approval of our management board and our supervisory board. A board of governors of at least five persons governs the Priority Foundation. The board of
governors initially comprises Domenico Valerio, the member of our management board, Pieter Strijkert and Michiel de Haan, members of our supervisory board and Martin van Olffen and Joost van
Heijningen Nanninga, who are independent members. The board of governors appoints and dismisses its own members. See "Item 6Directors, Senior Management and Employees". Ton Logtenberg and
Gerlach Cerfontaine resigned from the board of governors as of September 9 and November 29, 2002, respectively.

We
have made a donation to the Priority Foundation in the amount of €128,000 to enable the Priority Foundation to finance its day to day operations.

64

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As of the date of this annual report, we have not issued any preference shares. On October 25, 2000, we established a
not-for-profit foundation called Stichting Preferente Aandelen Crucell, also referred to as the Preferred Foundation.

We
have entered into an agreement with the Preferred Foundation that grants the Preferred Foundation the option to acquire that number of preference shares, up to 50% of the number of
our outstanding shares, necessary to match the total number of statutory votes on all of our ordinary shares outstanding at the time of purchase. The purchase price would be at the nominal value of
the preferred shares, but the Preferred Foundation would only be required to pay 25% of the purchase price at the time of issue. If we acquire any preference shares, they may be cancelled.

A
board of governors of up to five persons directs the Preferred Foundation. Pieter Strijkert, in his capacity as chairman of our supervisory board, and Pieter Bouw, Mick W. den Boogert,
Sweder van Wijnbergen and Gerard P. Krans, have been appointed to the board of governors. A majority of these members may not be members or former members of our management or supervisory board, or an
employee of any of our advisers, any of our banks or us. These independent members are appointed by the board of governors. The non-independent members are appointed by our supervisory
board after consultation with our management board.

The
Preferred Foundation has obtained a credit facility from a Dutch bank to secure adequate funds to acquire the preferred shares if and when the board of governors of the Preferred
Foundation decides to do so. We have made a donation to the Preferred Foundation in the amount of €180,000 to enable the Preferred Foundation to finance its day to day operations.

The
special voting rights of the Priority Foundation and the option held by the Preferred Foundation to acquire the preference shares, are intended to secure the continuity and identity
of our company. Such arrangements may delay or prevent the acquisition or change of control of us.



Under Dutch law and the articles of association, we may, subject to certain Dutch statutory provisions, repurchase up to one-tenth of our issued and
outstanding share capital. Any such purchase is subject to approval of the supervisory board and the authorization by the general meeting of shareholders, which authorization may not continue for more
than eighteen months. By resolution of the general meeting of shareholders adopted on May 31, 2002, the management board was authorized for eighteen months to repurchase up to 10% of the
outstanding share capital. This authorization expires on December 1, 2003.

Memorandum and Articles of Association

The information with respect to our memorandum and articles of association required pursuant to Item 10B of the Form 20-F is incorporated by
reference to our 2000 Form 20-F, filed with the Securities and Exchange Commission on June 28, 2001.

Enforcement of Civil Liabilities

We are incorporated under the laws of The Netherlands, and the majority of the members of our supervisory board, all of the members of our management board and
management team and all of the experts named in this document are residents of, and most of our and their assets are in, jurisdictions outside the United States. As a result, it may not be possible
for you to effect service of process within the United States upon us or these persons, or to enforce against us or these persons in courts in the United States, judgments of these courts predicated
upon the civil liability provisions of United States securities laws. In addition, it is not clear whether a Dutch court would impose civil liability on us,

65

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members of our management board or supervisory board or management team or any of the experts named in this document in an original action based solely upon the federal securities laws of the United
States brought in a court of competent jurisdiction in The Netherlands. Dutch law, furthermore, does not recognize a shareholder's right to bring a derivative action on behalf of a corporation.

Our
legal counsel in The Netherlands, Allen & Overy, has advised us that because there is no treaty on the reciprocal recognition and enforcement of judgments in civil and
commercial matters between the United States and The Netherlands, courts in The Netherlands will not automatically enforce a final judgment rendered by a United States court. In order to obtain a
judgment enforceable in The Netherlands, claimants must litigate the relevant claim again before a Dutch court of competent jurisdiction. Under current practice, however, a Dutch court will recognize
a final and conclusive judgment rendered by a United States court if the Dutch court finds that:



If
the Dutch court recognizes the final judgment, that court generally will grant the same judgment without litigating again on the merits.

Material Contracts

On December 18, 2002 we entered into a collaboration agreement with DSM Biologics Holding, Inc., DSM Biologics Company, Inc. and DSM
Biologics Company, B.V. Under the terms of the agreement, we grant to DSM an exclusive license to our PER.C6 platform for the contract manufacturing of recombinant proteins and monoclonal antibodies.
We will receive licensing fees over a four year period, depending on the achievement of certain cumulative milestones, and are obligated to commit to certain expenditures in connection with the
development of the PER.C6 production platform. DSM is entitled to a percentage of all non-service fees under the contract, in addition to an exclusive license to the technology that
includes the right to sublicense. As of April 8, 2003 we had no other material contracts.

Exchange Controls

There are currently no Dutch laws, decrees or regulations that restrict the export or import of capital, including, but not limited to, foreign exchange controls,
or that affect the remittance of dividends or other payments to non-Dutch residents or to US holders of Crucell's securities except as otherwise set forth in "Item
10Taxation".

Taxation

The following is a summary of the material Dutch and U.S. tax consequences of an investment in ordinary shares or ADSs. This summary does not discuss every aspect
of taxation that may be relevant to a particular investor who is subject to special treatment under any applicable law, and is not intended to be applicable in all respects to all categories of
investors. This summary also assumes that our business will be conducted in the manner outlined in this document. Changes in our organizational structure or the manner in which we conduct our business
may invalidate this summary. The laws upon which this summary is based are subject to change, perhaps with retroactive effect. A change to these laws may invalidate the contents of this summary, which
will not be updated to reflect changes in the laws. Prospective investors should consult their professional tax advisors regarding their particular personal tax consequences of acquiring, owning and
disposing of our ordinary shares or ADSs.

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Certain Dutch Tax Consequences for Holders of Ordinary Shares or ADSs

This summary describes the principal tax consequences that will generally apply in the case of an investment in the ordinary shares or ADSs under Dutch tax laws
in force and in effect as of the date hereof, and is subject to changes in Dutch law, including changes that could have retroactive effect. Not
every potential tax consequence of such investment under the laws of The Netherlands will be addressed.



The summary of certain Dutch taxes set out in this section "Dutch Taxation of Resident Shareholders" is only intended for the following investors:





Generally,
a holder of ordinary shares or ADSs will not have a substantial interest if he, his spouse, certain other relatives (including foster children) or certain persons sharing his
household, do not hold,
alone or together, whether directly or indirectly, the ownership of, or certain other rights over, ordinary shares representing 5% or more of our total issued and outstanding capital (or the issued
and outstanding capital of any class of shares), or rights to acquire ordinary shares, whether or not already issued, that represent at any time 5% or more of our total issued and outstanding capital
(or the issued and outstanding capital of any class of shares) or the ownership of certain profit participating certificates that relate to 5% or more of our annual profit and/or to 5% or more of our
liquidation proceeds. A deemed substantial interest is present if (part of) a substantial interest has been disposed of, or is deemed to have been disposed of, on a non-recognition basis,
unless, in the case of an actual disposal, the consideration received forms part of a substantial interest.

Individual and Corporate Income Tax.Dutch Individuals not engaged or deemed to be engaged in an enterprise and Dutch
Individuals for whom the benefits derived from the ordinary shares or ADSs are not treated as "results from other activities".Under current legislation, the taxable benefit
from a Dutch (private) Individual's "savings and investments" (sparen en beleggen) is set annually at 4% of the average of the so-called
"yield basis" (rendementsgrondslag) at the beginning and at the end of a year, insofar as the average exceeds the "exempt net asset amount"
(heffingvrij vermogen). Such taxable benefit is reduced by such portion of the personal allowance as has not been taken into account in respect of
certain other types of income. This benefit shall be taxed at the rate of 30%. For Dutch

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Individuals who invest in the ordinary shares or ADSs, the ordinary shares or ADSs will form part of the yield basis. The ordinary shares or ADSs will be taken into account in the yield basis at
their fair market value. If the actual benefits from the ordinary shares or ADSs exceed 4% of the yield basis, these benefits (capital gains and income) are not taxable.

Dutch Individuals engaged or deemed to be engaged in an enterprise and Dutch Corporate Entities and Dutch Individuals for whom the benefits derived from the
ordinary shares or ADSs are treated as results from other activities.Any benefits derived or deemed to be derived from the ordinary shares or ADSs (including any capital gains
realised on the disposal thereof) that are attributable to an enterprise carried on by a Dutch Individual or to an enterprise in which he has an interest, are generally subject to income tax charged
at progressive rates in his hands. The same applies to a Dutch Individual for whom the benefits derived from the ordinary shares or ADSs are treated as results from other
activities.Any benefits derived or deemed to be derived from the ordinary shares or ADSs (including any capital gains realised on the disposal thereof)
that are held by a Dutch Corporate Entity are generally subject to corporate income tax in its hands.

Net Wealth Tax.The net wealth tax for Dutch Individuals was abolished as of the end of 2000.

Withholding Tax.Dividends we distribute generally are subject to a withholding tax imposed by The
Netherlands at a rate of 25%. The concept "dividends we distribute" used in this section includes, but is not limited to:



Dutch
Individuals and Dutch Corporate Entities generally can credit the dividend withholding tax against their income tax or corporate income tax liability and will be entitled to a
refund of dividend withholding tax insofar as such tax, together with any other creditable domestic and/or foreign taxes, exceeds their aggregate income tax or corporate income tax liability. A
condition to avoid "dividend stripping" is that the recipient of proceeds from the ordinary shares or ADSs qualify as the beneficial owner thereof. A recipient of proceeds from the ordinary shares or
ADSs is not considered to be the beneficial owner thereof if the amount of dividend, following a set of transactions, is ultimately wholly or partly received by another person, if this other person
also maintains, directly or indirectly, an interest in the ordinary shares or ADSs.

We
can refrain from withholding dividend tax on the part of the proceeds from the ordinary shares or ADSs in respect of which the temporary special distribution surtax (as discussed
below) is applicable except to the extent that the recipient of proceeds from the ordinary shares or ADSs is not resident in

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The Netherlands, The Netherlands Antilles or Aruba, a member state of the European Union or a country that has a double taxation convention in effect with The Netherlands.

Distribution Surtax.We are subject to a temporary special distribution surtax at a rate of 20% to the extent that any
"excessive" proceeds (such as dividends) are distributed on the ordinary shares or ADSs in the period up to and including December 31, 2005. For purposes of this distribution tax, proceeds are
considered to be "excessive" when during a particular calendar year, the total proceeds distributed exceed the highest of the following three amounts:



The
temporary special distribution surtax is not levied to the extent that the aggregate profit distributions during the period January 1, 2001 up to and including
December 31, 2005 are in excess of the balance of the assets, liabilities and provisions, calculated on the basis of fair market value, reduced by the paid-in capital at the end of
the book year that ended prior to January 1, 2001.

The
distribution surtax due is reduced pro rata to the extent that our ordinary shares were held, at the time of the distribution of the "excessive proceeds," during an uninterrupted
period of three years, by individuals or entities (other than investment institutions (beleggingsinstellingen) as defined in the Dutch Corporate Income
Tax Act 1969) holding at least 5% of our nominal paid-in capital. As the distribution tax is payable by us, this reduction will not inure to the shareholders in question, but to us and
thus, indirectly, to all shareholders.

Gift and Inheritance Taxes.A liability to gift tax will arise in The Netherlands with respect to an acquisition of the
ordinary shares or ADSs by way of a gift made by a Dutch Individual or a Dutch Corporate Entity. A liability to inheritance tax will arise in The Netherlands with respect to an acquisition or deemed
acquisition of the ordinary shares or ADSs on the death of a Dutch Individual.

For
purposes of Dutch gift and inheritance taxes, an individual who holds Dutch nationality will be deemed to be resident in The Netherlands if he has been resident in The Netherlands at
any time during the ten years preceding the date of the gift or his death. For purposes of Dutch gift tax, an individual not holding Dutch nationality will be deemed to be resident in The Netherlands
if he has been resident in The Netherlands at any time during the twelve months preceding the date of the gift.



This section "Dutch Taxation of Non-resident Shareholders" describes certain Dutch tax consequences for a holder of the ordinary shares or ADSs who is
neither resident, nor deemed to be resident, and who has not opted to be treated as a resident in The Netherlands for purposes of Dutch taxation (a "Non-Resident Shareholder").

Withholding Tax.Dividends we distribute generally are subject to a withholding tax imposed by The Netherlands at a rate of
25%. Reference is made to the section "Dutch Taxation of Resident ShareholdersWithholding Tax" for a description of the concept "dividends distributed by us".

If
a double taxation convention is in effect between The Netherlands and the country of residence of a Non-Resident Shareholder, such Non-Resident Shareholder
may, depending on the terms of that double taxation convention, be eligible for a full or partial exemption from, or refund of, Dutch dividend withholding tax. See the section "Taxation of U.S.
InvestorsTaxation of Dividends" for a discussion of the partial exemption available under the convention with the United States.

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A
further condition to avoid "dividend stripping" is that the Non-Resident Shareholder qualify as the beneficial owner of the dividend. A Non-Resident Shareholder
is not considered to be the beneficial owner of the dividend, if the amount of this dividend, following a set of transactions, is ultimately wholly or partly received by another person and this other
person also maintains, directly or indirectly, an interest in the ordinary shares or ADSs.

Taxes on Income and Capital Gains.A Non-Resident Shareholder will not be subject to any Dutch taxes on income or
capital gains in respect of dividends we distribute (other than the withholding tax described above) or in respect of any gain realised on the disposal of the ordinary shares or ADSs, provided that:



Reference
is made to the section "Dutch Taxation of Resident Shareholders" for a description of the concepts "substantial interest" and "deemed substantial interest". A
Non-Resident Shareholder will furthermore not be subject to any Dutch taxes on income or capital gains in respect of any benefits derived from the ordinary shares or ADSs, if such holder
does have an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in The Netherlands and the ordinary
shares or ADSs are attributable to such enterprise or part of an enterprise, as the case may be, provided that such benefits are exempt under the participation exemption (as laid down in the Dutch
Corporate Income Tax Act 1969).

Gift and Inheritance Taxes.No liability to gift or inheritance taxes will arise in The Netherlands with respect to an
acquisition of the ordinary shares or ADSs by way of a gift made by, or on the death of, a Non-Resident Shareholder, unless:



For
purposes of Dutch gift and inheritance tax, an individual who holds Dutch nationality will be deemed to be resident in The Netherlands if he has been resident in The Netherlands at
any time during the ten years preceding the date of the gift or his death. For purposes of Dutch gift tax, an individual not holding Dutch nationality will be deemed to be resident in The Netherlands
if he has been resident in The Netherlands at any time during the twelve months preceding the date of the gift.

Capital Tax.Dutch capital tax will be payable by us at a rate of 0.55% on any contribution made to us in respect of the
ordinary shares or ADSs, unless an exemption is available.

Other Taxes and Duties.No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty will
be payable in The Netherlands in respect of or in connection with the subscription, issue, placement, allotment or delivery of the ordinary shares or ADSs.

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Taxation of U.S. Investors

The following is a summary of the material U.S. federal income tax considerations regarding the purchase, ownership and disposition of ordinary shares or ADSs if
you are an eligible U.S. holder. You are an eligible U.S. holder if you are a resident of the United States for purposes of the tax treaty between The Netherlands and the United States and are fully
eligible for benefits under the tax treaty. You generally will be entitled to the benefits of the tax treaty if you are:



You
generally will not be eligible for the benefits of the tax treaty, and therefore will not be an eligible U.S. holder, if you hold ordinary shares or ADSs in connection with the
conduct of business through a permanent establishment, or the performance of services through a fixed base, in The Netherlands, or you are not resident in the United States for U.S. tax purposes.

The
summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to your decision to purchase ordinary shares or ADSs. In particular,
the summary does not address considerations that may be applicable to you if you will not hold ordinary shares or ADSs as capital assets, or if you are a taxpayer subject to special tax rules, such as
a bank, tax-exempt entity, insurance company, a regulated investment company, a pension fund, a real estate investment trust, a dealer in securities or currencies, a person that holds
ordinary shares or ADSs as part of an integrated investment (including a "straddle") comprised of ordinary shares or ADSs and one or more other positions, and a person that owns or is deemed to own
10% or more of any class of our stock. The summary is based on laws, treaties and regulatory interpretations in effect on the date of this document, all of which are subject to change. You should
consult your own advisers regarding the tax consequences of an investment in the ordinary shares or ADSs in light of your particular circumstances, including the effect of any state, local or other
national laws.

We believe that we were a "passive foreign investment company" or "PFIC" for U.S. tax purposes in respect of the year 2002, and also expect to be classified as a
PFIC in respect of the year 2003. In order to minimize exposure to unfavorable U.S. tax rules applicable to PFICs, U.S. holders may wish to make a mark-to-market or QEF
election. See "Passive Foreign Investment Company Rules".

For
U.S. federal income tax purposes and for purposes of the tax treaty between The Netherlands and the United States, beneficial owners of ADSs will be treated as the owners of the
underlying ordinary shares represented by those ADSs.



Subject to the discussion below under "Passive Foreign Investment Company Rules", the gross amount of dividends distributed by us (including amounts
withheld in respect of Dutch withholding tax) generally will be subject to U.S. federal income taxation as foreign source dividend income, and will not be eligible for the dividends received
deduction. Dividends paid in euro will be included in income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt by you (or by the depositary in the
case of ADSs). If such dividends are converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend
income. If you receive a refund of Dutch withholding tax under the tax treaty

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between The Netherlands and the United States, you may be required to recognize foreign currency gain or loss to the extent the amount of the tax treaty refund (in dollars) received by you differs
from the U.S. dollar equivalent of the refund amount on the date the dividends were received.

You
may claim the benefit of the reduced withholding rate of 15 percent that is available under the Tax treaty between The Netherlands and the United States by submitting a duly
completed Form IB 92 USA that has been certified by a financial institution (typically the entity that holds the ordinary shares or ADSs as custodian for the holder). If we receive the required
documentation prior to the relevant dividend payment date, we may apply the reduced withholding rate at source. If you fail to satisfy these requirements prior to the payment of a dividend, you may
claim a refund of the excess of the amount withheld over the tax treaty rate by filing Form IB 92 USA together with a supplemental statement with the Dutch tax authorities. Pension funds and
tax-exempt organizations qualifying for a complete exemption from tax are not entitled to claim tax treaty benefits at source, and instead must file claims for refund by filing Form IB 95
USA.

Subject
to generally applicable limitations and to the special considerations discussed below, Dutch withholding tax at the 15% tax treaty rate will be treated as a foreign income tax
that is eligible for credit against your U.S. federal income tax liability or, at your election, may be deducted in computing taxable income. Foreign tax credits will not be allowed for withholding
taxes imposed in respect of
certain short-term or hedged positions and arrangements in which your expected economic profit, after non-U.S. taxes, is insubstantial. You should consult your own advisers
concerning the implications of these rules in light of your particular circumstances.



Subject to the discussion below under "Passive Foreign Investment Company Rules", gain or loss realized by you on the sale or other disposition of
ordinary shares or ADSs will be capital gain or loss in an amount equal to the difference between your basis in the ordinary shares or ADSs and the amount realized on the disposition (or its dollar
equivalent, determined at the spot rate on the date of disposition, if the amount realized is denominated in a foreign currency). The gain or loss will be long-term gain or loss if the
ordinary shares or ADSs were held for more than one year. If you are an individual, the net amount of long-term capital gain realized by you generally is subject to taxation at a maximum
rate of 20%.



Unfavorable U.S. tax rules apply to companies that are considered passive foreign investment companies ("PFICs"). We will be classified as a PFIC in a particular
taxable year if either:



We believe that we were a PFIC in respect of the year 2002, and also expect to be classified as a PFIC in respect of the year 2003.

If
we are a PFIC in respect of any year, then a U.S. holder who holds shares during that year and does not make a mark-to-market or "qualified electing fund"
("QEF") election will be subject to a special tax at ordinary income tax rates on certain dividends that we pay and on gains realized on the sale of ordinary shares or ADSs ("excess distributions") in
all subsequent years, without regard to whether we were a PFIC in the year the excess distribution was received. The amount of this tax will be increased by an interest charge to compensate for tax
deferral, calculated as if the excess distributions had been earned ratably over the period the U.S. holder held its ordinary shares or ADSs.

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Classification as a PFIC may also have other adverse tax consequences, including the denial of a step-up in the basis of ordinary shares and ADSs at death.

You
can avoid the unfavorable rules described above by electing to mark your ordinary shares or ADSs to market. For any year in which we are a PFIC, a U.S. holder who makes a
mark-to-market election would include as ordinary income the excess of the fair market value of the ordinary shares or ADSs at year-end over the holder's basis in
those ordinary shares or ADSs. In addition, any gain recognized upon a sale of ordinary shares or ADSs would be taxed as ordinary income in the year of sale.

Alternatively,
if we are a PFIC, you can avoid the PFIC taxation regime described above by making an election to treat us as a "qualified electing fund" (a "QEF"). The effect of a QEF
election is that you will be taxable currently on your pro rata share of our earnings and net capital gains (at ordinary income and capital gains rates, respectively) for each taxable year in which we
are classified as a PFIC, even if you do not receive any dividend distributions from us that year. However, if you elect to treat us as a QEF for every year that you hold ordinary shares or ADSs and
during which we are classified as a PFIC, then, in the absence of an actual distribution, you will not be required to include any amounts in income in respect of the ordinary shares or ADSs
(i) for any year in which we do not have earnings and profits (as determined under U.S. federal income tax principles) or (ii) for any year in which we are not a PFIC. Because of our
significant research and development expenditures and selling and administrative expenses, we do not expect to have earnings and profits during our developmental phase (although there can be no
assurance that this will be the case). We intend to provide you with the information necessary for you to make a QEF election if you request it.

You should consult your own tax advisors regarding the U.S. federal income tax considerations discussed above and the desirability of making a
mark-to-market or QEF election.



Payments in respect of the ordinary shares or ADSs that are made in the United States or by a U.S.-related financial intermediary will be subject to information
reporting and may be subject to backup withholding unless you:



If
you are not a U.S. person, you generally are not subject to these rules, but may be required to provide certification of non-U.S. status in order to establish that you are
exempt.

Experts

Our consolidated financial statements as of December 31, 2000, 2001 and 2002 and for each of the years then ended, included in this annual report have been
audited by Ernst & Young Accountants, independent auditors, as stated in their report appearing herein.

Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934 and files information with the Commission. You may read and copy this
information at the following location:

Public
Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549

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Please
call the SEC at 1-800-SEC-0330 for further information on the public reference room. Copies of these materials can also be obtained by mail at
prescribed rates from the Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Our ADSs are quoted on the Nasdaq
National Market, and consequently, the periodic reports and other information filed by us with the Commission can be inspected at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, D.C. 20006. The primary market for our ordinary shares is Euronext Amsterdam. As a foreign private issuer, we are is not required to, and do not currently make certain filings with the
Commission by electronic means, although we may do so. Any filings we make electronically in the future will be available to the public over the internet at the Commission's web site at http://www.sec.gov.

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Item 11.    Quantitative and Qualitative Disclosures about Market Risk

Our only exposure to market risk lies in our cash and cash equivalents which have maturities of less than three months. Substantially all of our cash and cash
equivalents consist of bank deposits. We also hold a limited amount of commercial paper issued by European institutions that are at least AA-rated and that have a maturity of less than
three months. The securities in our investment portfolio are not leveraged, are classified as available-for-sale and are, due to their very short-term nature,
subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities of our investments, we do not believe that an increase in
market rates would have any negative impact on the realized value of our investment portfolio. In addition, we do not hedge currency exposure. Our income and expenses are primarily denominated in euro
and we do not have long-term commitments or receivables other than those denominated in a currency within the European Economic and Monetary Union. However, we may hedge currency exposure
in the future if we believe it is appropriate to do so.

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Item 12.    Description of Securities Other than Equity Securities

This item is not applicable.

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PART II

Item 13.    Defaults, Dividend Arrearages and Delinquencies

None.

Item 14.    Material Modifications to the Rights of Security Holders

None.

Item 15.    Controls and Procedures



Our chief executive officer, chief financial officer and disclosure committee have evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) as of a date within 90 days prior to the filing date of this annual report (the "Evaluation
Date"). Based on such evaluation, the officers and the committee have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in alerting them on a timely basis
to material information relating to us (including our consolidated subsidiaries) that is required to be included in our periodic filings under the Exchange Act.

There
were no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date. No significant
deficiencies and material weaknesses were identified that required corrective actions.

Item 16.    Reserved

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PART III

Item 17.    Financial Statements

The registrant has responded to Item 18 in lieu of responding to this item.

Item 18.    Financial Statements

See pages F-1 through F-22 of this Form 20-F, included herein.

Item 19.    Exhibits

Documents filed as exhibits to this annual report:

Confidential
treatment has been requested with respect to portions of the exhibit indicated by a dagger (). The omitted portions have been filed separately with the
Securities and Exchange Commission.

|Exhibit
Number |  | Description                                                                                                                                                                                                                  
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            |  | Deed of Incorporation of the Company*                                                                                                                                                                                        
|4.1            |  | Summary and Lease Agreement dated November 18, 1998, between Introgene B.V. and Amboz B.V.**                                                                                                                                 
|4.2            |  | Summary and Lease Agreement dated November 27, 1997, between Introgene B.V. N.V. and CAM Implants B.V.**                                                                                                                     
|4.3            |  | Lease Agreement dated July 1, 2002 between Crucell Holland B.V. and Oppenheim Property Services B.V. (English translation)***                                                                                                
|4.4            |  | Collaboration Agreement dated December 18, 2002 by and between Crucell N.V. and Crucell Holland B.V., and DSM Biologics Holding, Inc., DSM Biologics Company, Inc., and DSM Biologics Company, B.V. (English translation)***
|4.5            |  | Employment Contract dated October 21, 2001 by and between Domenico Valerio and Crucell N.V.***                                                                                                                               
|8.1            |  | List of Subsidiaries of Crucell N.V. as of April 8, 2003***                                                                                                                                                                  
|99.1           |  | Certification of CEO Pursuant to 17 C.F.R. 240.13a-14 or 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***                                                                                      
|99.2           |  | Certification of CFO Pursuant to 17 C.F.R. 240.13a-14 or 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***                                                                                      
|99.3           |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***                                                                                      

---

78

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SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | CRUCELL N.V.
| |  | ------------
| |  | By:         
| |  |             
| |  |             

Date:
April 18, 2003

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INDEX TO FINANCIAL STATEMENTS

|Report of Independent Auditors                                                                       |  | F-2
|---------------------------------------------------------------------------------------------------- |  | ---
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                         |  | F-3
|Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000           |  | F-4
|Consolidated Statements of Shareholders' Equity for the years ended December 31, 2002, 2001 and 2000 |  | F-5
|Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000           |  | F-6
|Notes to the Consolidated Financial Statements                                                       |  | F-7

F-1

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REPORT OF INDEPENDENT AUDITORS

The
Board of Supervisory Directors and Shareholders
Crucell N.V.

We
have audited the accompanying consolidated balance sheets of Crucell N.V. as of December 31, 2002 and 2001, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Crucell N.V. at
December 31, 2002 and 2001, and the consolidated results of its operations and cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.

As
discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets," effective January 1, 2002.

Ernst &
Young Accountants
Amsterdam, The Netherlands
January 16, 2003

F-2

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CRUCELL N.V.        CONSOLIDATED BALANCE SHEETS        (amounts in thousands of euro, except share data)

|                                           |                                                                                                                                                                     | December 31,
2002 |         | December 31,
2001 |  
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------- | ----------------- | -
|Assets                                     |                                                                                                                                                                     |                   |         |                   |  
|Current assets:                            |                                                                                                                                                                     |                   |         |                   |  
|                                           | Cash and cash equivalents                                                                                                                                           |                   | €       | 110,645           |  
|                                           | Trade accounts receivable, net of allowance for doubtful accounts of €100 and €50 at December 31, 2002 and 2001, respectively                                       |                   |         | 1,009             |  
|                                           | Receivable from related parties and employees                                                                                                                       |                   |         |                  |  
|                                           | Prepaid expenses and other current assets                                                                                                                           |                   |         | 2,823             |  
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Total current assets                       |                                                                                                                                                                     |                   | 114,477 |                   |  
|Notes receivable from employees            |                                                                                                                                                                     |                   | 901     |                   |  
|Investment in joint venture                |                                                                                                                                                                     |                   |        |                   |  
|Plant and equipment, net                   |                                                                                                                                                                     |                   | 11,153  |                   |  
|Developed technology, net                  |                                                                                                                                                                     |                   | 3,326   |                   |  
|Goodwill, net                              |                                                                                                                                                                     |                   |        |                   |  
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Total assets                               |                                                                                                                                                                     | €                 | 129,857 |                   | €
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Liabilities and shareholders' equity       |                                                                                                                                                                     |                   |         |                   |  
|Current liabilities:                       |                                                                                                                                                                     |                   |         |                   |  
|                                           | Accounts payable                                                                                                                                                    |                   | €       | 2,407             |  
|                                           | Accrued compensation and related benefits                                                                                                                           |                   |         | 3,033             |  
|                                           | Short term portion of deferred revenue                                                                                                                              |                   |         | 2,334             |  
|                                           | Accrued liabilities                                                                                                                                                 |                   |         | 5,025             |  
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Total current liabilities                  |                                                                                                                                                                     |                   | 12,799  |                   |  
|Long term liabilities:                     |                                                                                                                                                                     |                   |         |                   |  
|                                           | Long term obligation under capital lease                                                                                                                            |                   |         | 1,951             |  
|                                           | Long term portion of deferred revenue                                                                                                                               |                   |         | 3,698             |  
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Total long term liabilities                |                                                                                                                                                                     |                   | 5,649   |                   |  
|Shareholders' equity:                      |                                                                                                                                                                     |                   |         |                   |  
|                                           | Ordinary shares, €0.24 par value; 89,199,990 shares authorized; 35,649,938 and 35,318,188 shares issued and outstanding at December 31, 2002 and 2001, respectively |                   |         | 8,556             |  
|                                           | Additional paid-in capital                                                                                                                                          |                   |         | 336,652           |  
|                                           | Deferred compensation                                                                                                                                               |                   |         | (3,992            | )
|                                           | Accumulated deficit                                                                                                                                                 |                   |         | (229,807          | )
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Total shareholders' equity                 |                                                                                                                                                                     |                   | 111,409 |                   |  
|                                           |                                                                                                                                                                     |                   |         |                   |  
|Total liabilities and shareholders' equity |                                                                                                                                                                     | €                 | 129,857 |                   | €
|                                           |                                                                                                                                                                     |                   |         |                   |  

The
accompanying notes are an integral part of these financial statements.

F-3

---

CRUCELL N.V.        CONSOLIDATED STATEMENTS OF OPERATIONS        (amounts in thousands of euro, except share data)

|                                                      |                                                | Year ended December 31, |           
|----------------------------------------------------- | ---------------------------------------------- | ----------------------- | ----------
|
|REVENUES:                                             |                                                |                         |           
|                                                      | License                                        |                         | €         
|                                                      | Government grants and other revenues           |                         |           
|                                                      |                                                |                         |           
|Total revenues                                        |                                                |                         | 9,575     
|COSTS AND EXPENSES:                                   |                                                |                         |           
|                                                      | Research and development                       |                         |           
|                                                      | Selling, general and administrative            |                         |           
|                                                      | Developed technology amortization              |                         |           
|                                                      | Goodwill amortization                          |                         |           
|                                                      | Goodwill impairment                            |                         |           
|                                                      | Stock option compensation                      |                         |           
|                                                      | Acquired in-process research and development   |                         |           
|                                                      |                                                |                         |           
|Total costs and expenses                              |                                                |                         | 68,231    
|                                                      |                                                |                         |           
|LOSS FROM OPERATIONS                                  |                                                |                         | (58,656   
|                                                      | Interest income                                |                         |           
|                                                      | Foreign currency gain/(loss)                   |                         |           
|                                                      | Equity in losses of unconsolidated investments |                         |           
|                                                      |                                                |                         |           
|NET LOSS BEFORE PROVISION FOR INCOME TAXES            |                                                |                         | (55,670   
|                                                      | Provision for income taxes                     |                         |           
|                                                      |                                                |                         |           
|NET LOSS                                              |                                                | €                       | (55,670   
|                                                      |                                                |                         |           
|BASIC AND DILIUTED NET LOSS PER SHARE:                |                                                |                         |           
|Net loss per sharebasic and diluted                  |                                                |                         | (1.57     
|Weighted average shares outstandingbasic and diluted |                                                |                         | 35,547,635

The
accompanying notes are an integral part of these financial statements.

F-4

---



CRUCELL N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(amounts in thousands of euro, except share data)

|                                                                               |  | Ordinary shares |  | Preference shares |       |  |            |   |   |      |   |   |        
|------------------------------------------------------------------------------ |  | --------------- |  | ----------------- | ----- |  | ---------- | - | - | ---- | - | - | -------
|
|
|Balance at January 1, 2000                                                     |  | 15,885,420      |  | €                 | 865   |  | 3,230,799  |   | € | 176  |   | € | 43,452 
|Issuance of ordinary shares                                                    |  | 15,911,159      |  |                   | 866   |  |           |   |   |     |   |   | 261,232
|Conversion of preference shares to ordinary shares                             |  | 3,230,799       |  |                   | 176   |  | (3,230,799 | ) |   | (176 | ) |   |       
|Deferred compensation related to issuance of options with business combination |  |                |  |                   |      |  |           |   |   |     |   |   | 15,527 
|Amortization of deferred compensation                                          |  |                |  |                   |      |  |           |   |   |     |   |   |       
|Compensation related to the issuance of stock options                          |  |                |  |                   |      |  |           |   |   |     |   |   | 15,409 
|Change in nominal value of ordinary shares from €0.05445 to €0.24              |  |                |  |                   | 6,500 |  |           |   |   |     |   |   | (6,500 
|Net loss                                                                       |  |                |  |                   |      |  |           |   |   |     |   |   |       
|                                                                               |  |                 |  |                   |       |  |            |   |   |      |   |   |        
|Balance at December 31, 2000                                                   |  | 35,027,378      |  | €                 | 8,407 |  |           |   | € |     |   | € | 329,120
|                                                                               |  |                 |  |                   |       |  |            |   |   |      |   |   |        
|Issuance of ordinary shares                                                    |  | 290,810         |  | €                 | 70    |  |           |   |   |     |   |   | 366    
|Deferred compensation                                                          |  |                |  |                   |      |  |           |   |   |     |   |   | 5,222  
|Amortization of deferred compensation                                          |  |                |  |                   |      |  |           |   |   |     |   |   |       
|Net loss                                                                       |  |                |  |                   |      |  |           |   |   |     |   |   |       
|                                                                               |  |                 |  |                   |       |  |            |   |   |      |   |   |        
|Balance at December 31, 2001                                                   |  | 35,318,188      |  | €                 | 8,477 |  |           |   | € |     |   | € | 334,708
|                                                                               |  |                 |  |                   |       |  |            |   |   |      |   |   |        
|Issuance of ordinary shares                                                    |  | 331,750         |  | €                 | 79    |  |           |   |   |     |   |   | 915    
|Deferred compensation                                                          |  |                |  |                   |      |  |           |   |   |     |   |   | 1,029  
|Amortization of deferred compensation                                          |  |                |  |                   |      |  |           |   |   |     |   |   |       
|Net loss                                                                       |  |                |  |                   |      |  |           |   |   |     |   |   |       
|                                                                               |  |                 |  |                   |       |  |            |   |   |      |   |   |        
|Balance at December 31, 2002                                                   |  | 35,649,938      |  | €                 | 8,556 |  |           |   |   | €   |   | € | 336,652
|                                                                               |  |                 |  |                   |       |  |            |   |   |      |   |   |        

The accompanying notes are an integral part of these financial statements.

F-5

---

CRUCELL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands of euro)

|                                                                                      |                                                               | Year ended December 31, |         
|------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ----------------------- | --------
|
|Operating activities                                                                  |                                                               |                         |         
|Net loss                                                                              |                                                               | €                       | (55,670 
|Adjustments to reconcile net loss to net cash used in operating activities:           |                                                               |                         |         
|                                                                                      | Depreciation                                                  |                         |         
|                                                                                      | Loss on disposal of plant and equipment                       |                         |         
|                                                                                      | Amortization of deferred compensation                         |                         |         
|                                                                                      | Compensation expense related to the issuance of stock options |                         |         
|                                                                                      | Intangible amortization                                       |                         |         
|                                                                                      | Goodwill impairment                                           |                         |         
|                                                                                      | In-process research & development                             |                         |         
|                                                                                      | Equity in losses of unconsolidated investments                |                         |         
|                                                                                      | Issuance of ordinary shares for services                      |                         |         
|Change in operating assets and liabilities, net of the effects of acquisitions:       |                                                               |                         |         
|                                                                                      | Trade accounts receivable                                     |                         |         
|                                                                                      | Receivable from related parties and employees                 |                         |         
|                                                                                      | Prepaid expenses and other current assets                     |                         |         
|                                                                                      | Accounts payable                                              |                         |         
|                                                                                      | Accrued compensation and related benefits                     |                         |         
|                                                                                      | Deferred revenues                                             |                         |         
|                                                                                      | Accrued liabilities                                           |                         |         
|                                                                                      |                                                               |                         |         
|Net cash used in operating activities                                                 |                                                               |                         | (12,500 
|Cash flow from investing activities                                                   |                                                               |                         |         
|                                                                                      | Investment in joint venture                                   |                         |         
|                                                                                      | Investment in partnership                                     |                         |         
|                                                                                      | Merger costs                                                  |                         |         
|                                                                                      | Cash acquired in business combination                         |                         |         
|                                                                                      | Purchase of plant and equipment                               |                         |         
|                                                                                      |                                                               |                         |         
|Net cash used in investing activities                                                 |                                                               |                         | (2,972  
|Cash flow from financing activities                                                   |                                                               |                         |         
|                                                                                      | Proceeds from the issuance of ordinary and preferred shares   |                         |         
|                                                                                      | Proceeds from sale and lease-back of property and equipment   |                         |         
|                                                                                      | Repayment of notes payable and capital lease obligations      |                         |         
|                                                                                      |                                                               |                         |         
|Net cash provided by financing activities                                             |                                                               |                         | €5,874  
|                                                                                      |                                                               |                         |         
|Net (decrease)/increase in cash and cash equivalents                                  |                                                               |                         | (9,598  
|                                                                                      |                                                               |                         |         
|Cash and cash equivalents at beginning of period                                      |                                                               |                         | 120,243 
|                                                                                      |                                                               |                         |         
|Cash and cash equivalents at end of period                                            |                                                               |                         | €110,645
|                                                                                      |                                                               |                         |         
|Supplemental disclosure of non-cash investing and financing activities                |                                                               |                         |         
|Issuance of ordinary shares and stock options in connection with business combination |                                                               |                         |        

The accompanying notes are an integral part of these financial statements.

F-6

---



CRUCELL N.V.        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        (amounts in thousands of euro, except share data)

Note 1.    Business Activities and Basis of Presentation

Crucell N.V. (the "Company") combines three innovative technological platforms to provide powerful and effective means to discover, develop and produce a variety
of biopharmaceuticals for the treatment of human diseases. The Company operates in one business segment. The Company was incorporated in 1993 and emerged from the development stage in 2001.

The
consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and include the accounts of the
Company and its wholly-owned subsidiaries, Crucell Holland B.V., IntroGene Belgium N.V. and U-BiSys B.V. Investments in 20% to 50% owned affiliates in which the Company has the ability to
exercise significant influence over the investee, but less than a controlling voting interest, are accounted for under the equity method of accounting. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Note 2.    Summary of Significant Accounting Policies

Risks and Uncertainties

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Initial fees related to the licensing of the Company's technology are recognized as revenues over the period of the Company's significant continuing performance
obligations, if any, upon persuasive evidence of an arrangement and delivery of the associated technology. Under certain arrangements, the Company has no continuing performance obligations after
delivery of the associated technology under the license agreement or any other arrangement with the licensee. In such arrangements, initial license fees recognized as revenue relate to the complete
transfer of fully developed technology by the Company and represent the culmination of the earnings process. In arrangements where there are continuing performance obligations, initial license fees
are deferred and recognized over the term of the license arrangement.

Certain
license arrangements provide for additional non-refundable license fees to be paid upon the licensee's achievement of milestones in connection with the licensee's
exploitation of the Company's technology. The Company has no substantive involvement in, and bears no risk related to, the licensees' development of products exploiting the Company's technology. Such
additional license fees are recognized as revenue when the amounts become due and payable upon the licensee's achievement of the milestone.

In
addition to the initial fee, the Company's arrangements generally provide that the licensee make semi-annual or annual payments ("license maintenance fees") to maintain
the license for a subsequent term. Generally, licensees may terminate the license and related maintenance fees upon 30 days' to 90 days' notice. Annual and semi-annual
license maintenance fees are recognized as revenues when the amounts become fixed and payable. The aggregate of annual or semi-annual license maintenance fees paid will generally reduce
any royalty payments which may be due based on future product sales of the

F-7

---

licensee, if any, under the license agreement. Royalties are recognized as revenue when they become fixed and payable. The Company's arrangements provide for continuing support, principally in the
form of technical knowledge-sharing, of its technology at standard consulting rates. Revenues derived from consulting services, which are not essential to licensee's ability to use the Company's
technology are recognized as earned.

The
Company receives certain government grants that support the Company's research effort in defined research projects. These grants generally provide for reimbursement of approved costs
incurred as defined in various grants. Revenues associated with these grants are recognized when costs under each grant are incurred in accordance with the terms and conditions of the grant and the
collectibility of the receivable is deemed probable.

Research and Development Expenses

Research and development costs are expensed as incurred.

Stock-Based Compensation

The Company accounts for stock-based compensation under the fair value method in accordance with Statement of Financial Accounting Standards (SFAS)
No. 123. "Accounting for Stock-Based Compensation." The Company values stock options issued based upon the Black-Scholes option pricing model and recognizes this value as an expense over the
period in which the options vest.

Income Taxes

Deferred tax assets and liabilities are established for temporary differences between the financial and tax bases of assets and liabilities using currently
enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established for deferred tax assets for which realization is not likely.

Net Loss Per Share

Basic net loss per share is computed based on the weighted-average number of ordinary and preference shares outstanding during the period. Diluted net loss per
share is computed based on the weighted-average number of ordinary and preference shares outstanding, including the dilutive effect of stock options, if any. Basic and diluted net loss per share are
the same for all periods presented because the impact of stock options outstanding is anti-dilutive.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less, which are convertible to a known amount of cash and bear an
insignificant risk of change in value, to be cash equivalents.

F-8

---

Long-Lived Assets Other than Goodwill

Plant and equipment is recorded at cost. Depreciation is computed principally using the straight-line method over the following estimated useful
lives: computer equipment, three years; furniture and laboratory equipment, five years; and leasehold improvements, ten years. Intangible assets other than goodwill consists of developed technology
acquired in connection with the business combination described in Note 3. Developed technology is amortized over five years.

The
Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets," on January 1, 2002. Long-lived assets, other
than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does not perform a periodic
assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include an impairment of goodwill of the associated
assets, a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate
that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount
is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. There was no impairment of
long-lived assets or intangible assets, other than goodwill, during the three years ended December 31, 2002.

Goodwill

Goodwill relates to the business combination described in Note 3. Effective January 1, 2002, the Company adopted the provisions of SFAS
No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting and broadens the criteria for recording intangible assets apart from goodwill. The Company evaluated its goodwill and intangible assets acquired
prior to June 30, 2001 using the criteria of SFAS No. 141, which resulted in the remaining unamortized balance of the workforce intangible asset described in Note 3 being subsumed
into goodwill on January 1, 2002. SFAS No. 142 requires that purchased goodwill no longer be
amortized, but instead be tested for impairment at least annually. Prior to the adoption of SFAS No. 142, goodwill and the workforce intangible asset were being amortized over five years. The
Company performed a transitional impairment test on January 1, 2002, which did not result in the impairment of goodwill.

SFAS 142
prescribes a two-phase process for impairment testing of goodwill. The first phase screens for impairment; while the second phase, if necessary, measures the
amount of impairment. The Company completed the first phase of its annual impairment test during the fourth quarter of 2002 and found the carrying value of goodwill to be impaired. During the second
phase, the Company determined the full amount of its recorded goodwill of €30,891 was impaired based upon the excess of the Company's net book value over its market capitalization on
the date of testing.

F-9

---

The
non-amortization provisions of SFAS 142 have been applied prospectively beginning January 1, 2002. Supplemental comparative disclosure, as if the
non-amortization provisions of SFAS 142 had been retroactively applied, is as follows:

|                                              |                             | For the years ended December 31, |        
|--------------------------------------------- | --------------------------- | -------------------------------- | -------
|
|Net loss:                                     |                             |                                  |        
|                                              | Reported net loss           |                                  | €      
|                                              | Goodwill amortization(1)    |                                  |        
|                                              |                             |                                  |        
|Adjusted net loss                             |                             | €                                | (55,670
|                                              |                             |                                  |        
|Basic and diluted net loss per share:         |                             |                                  |        
|                                              | Reported net loss per share |                                  | €      
|                                              | Goodwill amortization(1)    |                                  |        
|                                              |                             |                                  |        
|Adjusted basic and diluted net loss per share |                             | €                                | (1.57  
|                                              |                             |                                  |        

---

Financial Instruments

The Company's financial instruments include primarily cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable,
accrued liabilities and other current liabilities and notes payable. Due to the short-term nature of the financial instruments, the carrying amounts of these assets and liabilities
approximate their fair value.

Concentration of Credit Risk

The Company extends credit based on an evaluation of the customer's financial condition, without requiring collateral. The Company monitors it exposure related to
credit losses and maintains allowances for anticipated losses.

Reclassification

Certain prior year balances have been reclassified to conform with current year presentation.

New Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS
No. 146 provides guidance related to accounting for costs associated with disposal activities covered by SFAS No. 144 or with exit or restructuring activities
previously covered by Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity." SFAS
No. 146 supercedes EITF Issue No. 94-3 in its entirety. SFAS No. 146 requires that costs related

F-10

---

to exiting an activity or to a restructuring not be recognized until the liability is incurred. SFAS No. 146 will be applied prospectively to exit or disposal activities that are initiated
after December 31, 2002. Management does not expect the adoption of SFAS No. 146 to have an impact on the Company's operations and financial condition.

In
December 2002, the FASB issued SFAS No.148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123."
SFAS 148 amends the disclosure requirements of SFAS 123 to require disclosure in the significant accounting policy footnote of both annual and interim financial statements of the method
of accounting for stock-based compensation and the related pro-forma disclosures when the intrinsic value method continues to be used. The Company will adopt SFAS No. 148 on
January 1, 2003. As the Company currently applies the fair value method of accounting for stock options, adoption of the statement will not impact the Company's financial position and results
of operations.

In
November 2002, the EITF reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21
provides guidance on how to account for arrangement that involve the delivery or performance of multiple products, services and/or the rights to use assets. The provisions of EITF Issue
No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company is currently evaluating the effect that the adoption of
EITF Issue No. 00-21 will have on its results of operations and financial condition.

Note 3.    Business Combination

On June 30, 2000, the Company acquired all of the outstanding shares of U-BiSys B.V., a development stage biotechnology company based in the
Netherlands, for aggregate consideration of €136,450, which included the issuance of 7,651,536 shares of the Company, valued at €132,627, merger costs of
€2,412, and the issuance of options to acquire 1,005,716 ordinary shares of the Company, of which options to acquire 83,809 ordinary shares were vested and valued at
€1,412. The options issued in connection with the business combination replaced existing options of U-BiSys B.V. The acquisition was accounted for using the purchase method
of accounting and, as such, the Company's results of operations include the results of the acquired business from the date of acquisition.

The
Company has recorded, based upon an independent valuation, its allocation of the purchase price in excess of the fair value of the net tangible assets acquired to intangible assets
and in-process research and development totaling €50,782 and €84,141, respectively. At the date of acquisition, intangible assets consisted principally of
developed technology valued at €6,652, workforce valued at €4,487 and goodwill valued at
€39,643. The Company adopted the provisions of SFAS No. 142 on January 1, 2002. Upon adoption, the workforce intangible asset, was subsumed into goodwill and the Company
ceased amortization of the new goodwill balance. Prior to January 1, 2002, all intangible assets were amortized over a period of 5 years on a straight-line basis.

Acquired
in-process research and development has no alternative future use as defined by SFAS No. 2, "Accounting for Research and Development Costs." The Company
determined that the acquired in-process research and development had no alternative future use because in the event of failure to achieve regulatory approval, should the identical
technology be proposed for an alternate indication, it would be subjected to the risk of another series of clinical trials. The amount of the purchase price

F-11

---

allocated to in-process research and development was determined using the income method by estimating the stage of development of the research and development projects at the date of
acquisition, estimating cash flows resulting from the expected revenues generated from such projects, providing a risk adjustment factor of 80% to 90% based upon the probability of success as measured
by the stage of completion, and discounting the net cash flows back to their present value using a discount rate of 13%. These projections are based on management's best estimates of market size and
growth. To determine the estimated net cash flows of each acquired research and development project, the Company estimated the costs to complete each project as the acquisition date. Subsequent
revisions to those estimates, arising from decisions made based on facts and circumstances arising after the acquisition date, have no effect on the original purchase price allocation.

Pro Forma Financial Information

The following unaudited pro forma financial information has been prepared assuming that the acquisition of U-BiSys B.V. had taken place at the
beginning of the respective periods presented. The amount of the aggregate purchase price allocated to in-process research and development has been excluded from the pro forma information,
as it is a non-recurring item. The unaudited pro forma financial information is not necessarily indicative of the combined results of operations that would have occurred had the
acquisition taken place at the beginning of each period, nor is it necessarily indicative of results that may occur in the future.

|                                     |  | Pro forma
Year ended
December 31, 2000
(unaudited) |        
|------------------------------------ |  | -------------------------------------------------- | -------
|Total revenues                       |  | €                                                  | 7,100  
|Loss from operations                 |  |                                                    | (52,552
|Net loss                             |  |                                                    | (55,291
|Net loss per sharebasic and diluted |  |                                                    | (1.95  

Note 4.    Equity Investments

Galapagos Genomics N.V.

In June 1999, the Company together with Tibotec Group N.V., an unrelated party, established a 50/50 joint venture, Galapagos Genomics N.V.
("Galapagos"), registered in Mechelen, Belgium to carry out certain functional genomics research activities. In 2002, the company's ownership interest decreased to 20.8%. This investment is accounted
for using the equity method, and thus the Company's proportional share of Galapagos' net loss is included in the consolidated statement of operations. The joint venture is engaged in research and
development activities, and does not have significant revenues, assets or liabilities. In 2002, the Company's proportional share of Galapagos net loss reduced the carrying amount of the investment to
zero.

Archimedes Life Sciences V.O.F.

In 1999, the Company established a 50/50 partnership, Archimedes Life Sciences V.O.F., with Pharming Technologies B.V. ("Pharming") to manage the joint facilities
in the building which both the

F-12

---

Company and Pharming occupy. The investment was accounted for using the equity method, and thus the Company's proportional share of Archimedes' net loss is included in the consolidated statement of
operations.

In
December 2001, the Company and Pharming terminated their partnership. Based on the terms of the dissolution agreement, the Company acquired 100% of Pharming's leasehold
improvements in the building and certain laboratory equipment for an aggregate consideration of €3,148 which included €2,950 in cash and forgiveness of amounts due from
Pharming of €175. The Company also assumed the right to lease 100% of the office and laboratory space formerly leased by Pharming.

Note 5.    Goodwill and Intangible Assets

Goodwill and intangible assets originate from the merger with U-BiSys B.V. on June 30, 2000 as described in Note 3.

The
movement of goodwill and intangible assets for the years 2002 and 2001 is presented below:

|                                   |  | Total |         | Developed
Technology |   | Workforce |   | Goodwill |       
|---------------------------------- |  | ----- | ------- | -------------------- | - | --------- | - | -------- | ------
|Balance, net, January 1, 2001      |  | €     | 45,704  |                      | € | 5,987     |   | €        | 4,038 
|Amortization                       |  |       | (10,156 | )                    |   | (1,330    | ) |          | (898  
|                                   |  |       |         |                      |   |           |   |          |       
|Balance, net, December 31, 2001    |  | €     | 35,548  |                      | € | 4,657     |   | €        | 3,140 
|Transfer(1)                        |  |       |        |                      |   |          |   |          | (3,140
|Impairment                         |  |       | (30,891 | )                    |   |          |   |          |      
|Amortization                       |  |       | (1,331  | )                    |   | (1,331    | ) |          |      
|                                   |  |       |         |                      |   |           |   |          |       
|Balance, net, December 31, 2002(2) |  | €     | 3,326   |                      | € | 3,326     |   | €        |      
|                                   |  |       |         |                      |   |           |   |          |       

---

F-13

---



Note 6.    Plant and Equipment

Plant and equipment consist of the following:

|                                              |  | December 31, |       
|--------------------------------------------- |  | ------------ | ------
|
|Leasehold improvements                        |  | €            | 4,132 
|Furniture and laboratory equipment            |  |              | 10,136
|Computer equipment                            |  |              | 1,719 
|                                              |  |              |       
|                                              |  |              | 15,987
|Less accumulated deprecation and amortization |  |              | (4,834
|                                              |  |              |       
|Plant and equipment, net                      |  | €            | 11,153
|                                              |  |              |       

At
December 31, 2002, the Company held laboratory equipment under capital leases with a cost of €3,105 and a net book value of approximately
€2,687. Such leases are secured by the value of the underlying assets. Cash paid for interest expense on lease obligations was €146 during the year ended
December 31, 2002, 2001, and 2000, respectively. The Company did not have any laboratory equipment under capital leases at December 31, 2001 or 2000.

Note 7.    Shareholders' Equity

Initial public offering

In October 2000, the Company completed its initial public offering of its ordinary shares. The initial public offering generated net proceeds of
€127,470.

Preference shares

Preference shares are convertible into an equal number of ordinary shares at any time at the sole option of the holder. Approval of at least 60% of the holders of
preference shares is required to implement certain changes to the Company's articles of incorporation. The preference shares have no liquidation or dividend preferences. In May 2000, all
outstanding preference shares were converted to ordinary shares.

Reorganization

On October 10, 2000, the Company effected a reorganization pursuant to which IntroGene B.V. became a wholly-owned subsidiary of Crucell N.V. Pursuant to
the reorganization, shareholders of IntroGene B.V. received one share of Crucell N.V. for each share of IntroGene B.V. held. The reorganization, which effected a combination of entities under common
control, has been accounted for in a manner similar to a pooling of interest. Accordingly, the financial statements of the Company reflect the historical carrying amounts of the assets and liabilities
and the historical results of operations.

In
conjunction with the reorganization, the nominal value of both ordinary and preferred shares was changed from €0.05445 to €0.24.

F-14

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Stock Split

On October 25, 2000, the Company executed a deed to effect a three-for-two stock split of its shares and stock options. All shares
and options in the accompanying financial statements have been retroactively adjusted to reflect the stock split.

Repurchase of shares

Pursuant to a resolution of the shareholders, the Company may repurchase up to 10 percent of its outstanding share capital through December 1, 2003.

Stock Option Plan

In 1997, the Company adopted a stock option plan whereby the remuneration committee of the supervisory board may grant stock options to employees, consultants and
directors. Time-based vesting provisions for stock options granted under the stock option plan are typically four to five years and permit employees to exercise options to the extent
vested. Unvested options are forfeited upon employee termination. Upon exercise of options, employees may elect not to be subject to time-based vesting provisions. If employees elect not
to be subject to time-based vesting provisions, the employees may exercise all options granted and become subject to profit-retribution provisions. Such provisions entitle the Company to
receive a portion of the profits upon the sale of the shares to a third party, calculated as the difference between the total proceeds from the sale of shares, and the aggregate exercise price. If
employees elect not to be subject to time-based vesting provisions, the portion of the profits payable to the Company decreases ratably over four to five years. The relevant portion of any
profits derived by the employee from the sale of shares received on exercise of options must be remitted to the Company, if an employee terminates employment prior to the end of the relevant four to
five year period. No employees to date have elected not to be subject to time-based vesting provisions.

In
connection with the acquisition of U-BiSys BV on June 30, 2000, the Company issued options to acquire 1,005,716 ordinary shares in the Company at an exercise price
of €0.49. These options expire five years from the date of grant and vest through February 2005. Options are exercisable immediately upon grant. However, in the event of
voluntary or involuntary termination of employment with the Company for any reason, unvested options may be exercised by the employee at an exercise price equal to the fair market value of the
Company's stock on the date of termination.
Based upon the terms of the employee stock option awards, in the event of employee termination and the exercise of unvested options by the employee, the Company is required to reduce the proceeds from
the employee from the exercise of options to the extent of employee taxes that result from the exercise of such options.

The
Company recognized deferred compensation of €15,527 related to the issuance of unvested options to acquire 921,907 ordinary shares of the Company, representing
principally the difference between the exercise price and fair value of the Company's stock.

On
September 26, 2000 the members of the Supervisory Board and shareholders approved amendments to the terms of all outstanding stock options, such that all options became
immediately exercisable with no vesting requirements and not subject to any profit retribution provisions.

F-15

---

Accordingly, the Company recognized compensation expense of €15,700 representing the total amount of deferred compensation.

On
September 26, 2000, the members of the Supervisory Board and shareholders approved a stock option plan, which replaced the existing plan, whereby a total of 15% of the total
issued and outstanding shares were available for issuance under the plan. To the extent additional ordinary shares are issued, under the terms of the stock option plan 15% of the additional ordinary
shares issued will become available for issuance under the plan. Under the terms of the stock option plan, options must be granted at an exercise price not less than the average market value of an
ordinary share over the three days immediately preceding the grant date.

On
January 2, 2001, the members of the Supervisory Board and shareholders approved amendments to the terms of the plan whereby stock options granted under the plan subsequent to
January 2, 2001 are subject to time based vesting provisions of four to five years and permit employees to exercise options to the extent vested. Upon exercise of options, employees may elect
to not be subject to time-based vesting provisions. If employees elect not to be subject to time-based vesting provisions, the employees may exercise all options granted and
become subject to profit-retribution provisions. Such provisions entitle the Company to receive a portion of the profits upon the sale of the shares to a third party, calculated as the difference
between the total proceeds from the sale of shares, and the aggregate exercise price. If employees elect not to be subject to time-based vesting provisions, the portion of the profits
payable to the Company decreases ratably over four to five years. The relevant portion of any profits derived by the employee from the sale of shares received on exercise of options must be remitted
to the Company, if an employee terminates employment prior to the end of the relevant four to five year period.

Total
compensation cost recognized for all stock-based employee compensation awards was €1,371, €888 and €31,153 in 2002, 2001 and 2000
respectively.

The
options expire four to five years from the date of grant, or earlier upon termination of employment with the Company. Generally, options granted under the stock option plan are
granted at exercise prices at least equal to the fair value at the date of grant.

F-16

---

A
summary of the stock option activity for the plan, including 1,005,716 stock options issued in connection with the acquisition of U-BiSys B.V., is as follows:

|                             |  | Number of
options |   | Weighted average
exercise price
|---------------------------- |  | ----------------- | - | -------------------------------
|Balance at December 31, 1999 |  | 1,990,461         |   | €                              
|Granted                      |  | 2,427,216         |   |                                
|Exercised                    |  | (250,323          | ) |                                
|Forfeited                    |  | (167,119          | ) |                                
|                             |  |                   |   |                                
|Balance at December 31, 2000 |  | 4,000,235         |   |                                
|Granted                      |  | 1,006,813         |   |                                
|Exercised                    |  | (290,810          | ) |                                
|Forfeited                    |  | (95,974           | ) |                                
|                             |  |                   |   |                                
|Balance at December 31, 2001 |  | 4,620,264         |   |                                
|Granted                      |  | 443,500           |   |                                
|Exercised                    |  | (331,750          | ) |                                
|Forfeited                    |  | (202,850          | ) |                                
|                             |  |                   |   |                                
|Balance at December 31, 2002 |  | 4,533,440         |   |                                
|                             |  |                   |   |                                

The
following table summarizes information about the Company's stock options outstanding at December 31, 2002:

|Exercise price |  | Outstanding
Options
at December 31,
2002 |  | Weighted average
remaining contractual
life (years) |  | Exercisable options
|-------------- |  | ---------------------------------------- |  | --------------------------------------------------- |  | -------------------
|€0.49          |  | 989,803                                  |  | 2.08                                                |  | 989,803            
|€2.27          |  | 307,500                                  |  | 0.19                                                |  | 307,500            
|€4.23          |  | 643,875                                  |  | 0.49                                                |  | 643,875            
|€3.16-€9.30    |  | 872,000                                  |  | 3.01                                                |  | 872,000            
|€11.43         |  | 388,763                                  |  | 2.05                                                |  | 388,763            
|€21.00         |  | 1,331,500                                |  | 1.80                                                |  | 1,331,500          
|               |  |                                          |  |                                                     |  |                    
|Total          |  | 4,533,440                                |  |                                                     |  | 4,533,440          
|               |  |                                          |  |                                                     |  |                    

As
of December 31, 2002, a total of 814,051 ordinary shares have been reserved for the grant of future options.

The
Company accounts for its employee stock options under the fair value method in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation". The fair value of
options was

F-17

---

estimated at the date of grant using the the Black-Scholes option pricing model, with the following weighted average assumptions:

|                        |  | Year ended December 31, |  
|----------------------- |  | ----------------------- | -
|
|Risk-free interest rate |  | 4.5                     | %
|Expected dividend yield |  |                        |  
|Expected volatility     |  | 93.0                    | %
|Expected life (years)   |  | 4.0                     |  

The
weighted average fair value of options noted above which were granted during the years ended December 31, 2002, 2001 and 2000 was €3.01, €5.19
and €10.84, respectively.

Note 8.    Commitments and Contingencies

Total minimum payments under non-cancelable operating leases and capital leases are as follows at December 31, 2002:

|                                               |                        | Capital Leases |       | Operating Leases
|---------------------------------------------- | ---------------------- | -------------- | ----- | ----------------
|2003                                           |                        | €              | 823   |                 
|2004                                           |                        |                | 823   |                 
|2005                                           |                        |                | 823   |                 
|2006                                           |                        |                | 514   |                 
|2007                                           |                        |                |      |                 
|Thereafter                                     |                        |                |      |                 
|                                               |                        |                |       |                 
|                                               | Total minimum payments |                |       | 2,983           
|                                               |                        |                |       |                 
|Less interest                                  |                        |                | (346  | )               
|                                               |                        |                |       |                 
|Present value of minimum lease payments        |                        |                | 2,637 |                 
|Less current portion                           |                        |                | (686  | )               
|                                               |                        |                |       |                 
|Long term portion of capital lease obligations |                        |                | 1,951 |                 
|                                               |                        |                |       |                 

Building
rental expense was €1,377, €798 and €645 for the years ended December 31, 2002, 2001 and 2000, respectively.

The
Company has future minimum payments under non-cancelable research and licensing agreements whereby it is obligated to make payments of €2,295,
€1,118, €331 and €56 in 2003, 2004, 2005, and 2006, respectively.

The
Company is party to routine claims and litigation incidental to the business. The Company believes the ultimate resolution of these routine matters will not have a material adverse
effect on its financial position, results of operations, or cash flows.

F-18

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Note 9.    Defined Contribution Plan

The Company maintains a defined contribution plan in The Netherlands whereby participants may contribute up to 12% of their pre-tax base salaries,
subject to certain limitations. The Company makes a matching contribution equal to 100% of an employee's pre-tax contributions. The contributions to the plan were €525,
€290 and €262 for the years ended December 31, 2002, 2001 and 2000, respectively.

Note 10.    Revenues

The table below reflects the geographical composition of revenues for the years ending December 31, 2002, 2001 and 2000.

|              |  | Year ended December 31,
|------------- |  | -----------------------
|
|Europe        |  | €                      
|North America |  | €                      
|Asia          |  | €                      
|              |  |                        
|              |  | €                      
|              |  |                        

Note 11.    Income Taxes

The Company has tax loss carry forwards of €59,749, €38,179 and €19,870 at December 31, 2002, 2001 and
2000, respectively. The Company has evaluated evidence impacting the realizability of its deferred tax assets, which consist principally of tax loss carry forwards. Management has considered the
Company's history of net losses and concluded that it is more likely than not that the full benefits of these tax loss carryforwards will not be realized in the near term. Accordingly, the Company
recorded a valuation allowance equal to 100% of the net deferred tax asset balance at December 31, 2002, 2001 and 2000.

Tax
losses may be carried forward indefinitely and offset against future taxable profits. On January 1, 2001, a bill was enacted that may limit the ability to offset losses
against future profits when the beneficial ownership of a company changes. This new law could limit our ability to realize the benefits of our tax loss carryforward in the future.

Note 12.    Significant Customers

For the year ended December 31, 2002, three customers accounted for 15%, 13% and 11% of revenues. For the year ended December 31, 2001, one customer
accounted for 60% of revenues. For the year ended December 31, 2000, one customer accounted for 57% of revenues. One of the Company's
significant customers in 2002 was a significant customer in 2001. No customers, except for one, which were significant in 2002 and 2001 were significant in 2000.

F-19

---

Note 13.    Quarterly Financial Data (Unaudited)

The following is a summary of the quarterly results of operations for the fiscal years ended December 31, 2002 and 2001.

|                                           |  | Fiscal year 2002 (unaudited) |       
|------------------------------------------ |  | ---------------------------- | ------
|
|Revenues                                   |  | €                            | 2,161 
|Loss from operations                       |  |                              | (5,861
|Net loss before provision for income taxes |  |                              | (5,292
|Net loss                                   |  |                              | (5,292
|Net loss per sharebasic and diluted       |  |                              | (0.15 

|                                           |  | Fiscal year 2001 (unaudited) |       
|------------------------------------------ |  | ---------------------------- | ------
|
|Revenues                                   |  | €                            | 920   
|Loss from operations                       |  |                              | (7,217
|Net loss before provision for income taxes |  |                              | (5,636
|Net loss                                   |  |                              | (5,636
|Net loss per sharebasic and diluted       |  |                              | (0.16 

Note 14.    Net Loss and Shareholders' Equity under Accounting Principles Generally Accepted in The Netherlands

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S.
GAAP"), which differ in significant respects from generally accepted accounting principles in The Netherlands ("Dutch GAAP").

F-20

---

The
tables below reconcile the net loss and shareholders' equity of the Company under U.S. GAAP to the net loss and shareholders' equity under Dutch GAAP:

|                                             |  | Year ended December 31, |         
|-------------------------------------------- |  | ----------------------- | --------
|
|Net loss under U.S. GAAP                     |  | €                       | (55,670 
|Acquired in-process research and development |  |                         |        
|Intangible assets                            |  |                         | 32,222  
|Stock option compensation                    |  |                         | 1,371   
|Revenue recognition                          |  |                         | 4,948   
|Equity in result of joint venture            |  |                         | 1,481   
|                                             |  |                         |         
|Net loss under Dutch GAAP                    |  |                         | €(15,648
|                                             |  |                         |         

|                                      |  | Year ended December 31, |        
|------------------------------------- |  | ----------------------- | -------
|
|Shareholders' equity under U.S. GAAP  |  | €                       | 111,409
|Intangible assets                     |  |                         | (3,326 
|Revenue recognition                   |  |                         | 4,948  
|Equity in result of joint venture     |  |                         | 1,481  
|                                      |  |                         |        
|Shareholders' equity under Dutch GAAP |  | €                       | 114,512
|                                      |  |                         |        

The
following accounting principles were previously followed by the Company pursuant to Dutch GAAP:

Acquired in-process research and development

Acquired in-process research and development is capitalized as goodwill.

Intangible assets

Intangible assets consist of the capitalization of start-up expenses, certain research and development activities and goodwill. Such intangible assets
are amortized over their estimated useful life.

Stock option compensation

No compensation expense is recognized for equity awards.

Revenue recognition

Revenue is recognized upon persuasive evidence of an arrangement.

F-21

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Equity in result of joint venture

The result is recognized based upon the ownership interest in the equity value at year-end of the joint venture.

F-22

---

Confidential treatment has been requested with respect to portions of the exhibit indicated by a dagger (). The omitted portions have been filed separately with the
Securities and Exchange Commission.

EXHIBIT INDEX

|Exhibit
Number |  | Description                                                                                                                                                                                                                  
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            |  | Deed of Incorporation of the Company*                                                                                                                                                                                        
|4.1            |  | Summary and Lease Agreement dated November 18, 1998, between Introgene B.V. and Amboz B.V.**                                                                                                                                 
|4.2            |  | Summary and Lease Agreement dated November 27, 1997, between Introgene B.V. N.V. and CAM Implants B.V.**                                                                                                                     
|4.3            |  | Lease Agreement dated July 1, 2002 between Crucell Holland B.V. and Oppenheim Property Services B.V. (English translation)***                                                                                                
|4.4            |  | Collaboration Agreement dated December 18, 2002 by and between Crucell N.V. and Crucell Holland B.V., and DSM Biologics Holding, Inc., DSM Biologics Company, Inc., and DSM Biologics Company, B.V. (English translation)***
|4.5            |  | Employment Contract dated October 21, 2001 by and between Domenico Valerio and Crucell N.V.***                                                                                                                               
|8.1            |  | List of Subsidiaries of Crucell N.V. as of April 8, 2003***                                                                                                                                                                  
|99.1           |  | Certification of CEO Pursuant to 17 C.F.R. 240.13a-14 or 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***                                                                                      
|99.2           |  | Certification of CFO Pursuant to 17 C.F.R. 240.13a-14 or 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***                                                                                      
|99.3           |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***                                                                                      

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