As filed with the Securities and Exchange Commission on April 14, 2005



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, 2004
|OR                                          
|o                                            | Transition Report pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934        
|For the transition period from N/A to N/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            36,873,421

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

|Presentation of Financial and Other Information |  | 1                                                                     
|----------------------------------------------- |  | ----------------------------------------------------------------------
|Forward-Looking Statements                      |  | 1                                                                     
|Other                                           |  | 1                                                                     
|PART I                                         
|Item 1.                                         |  | Identity of Directors, Senior Management and Advisors                 
|Item 2.                                         |  | Offer Statistics and Expected Timetable                               
|Item 3.                                         |  | Key Information                                                       
|Item 4.                                         |  | Information on the Company                                            
|Item 5.                                         |  | Operating and Financial Review and Prospects                          
|Item 6.                                         |  | Directors, Senior Management and Employees                            
|Item 7.                                         |  | Major Shareholders and Related Party Transactions                     
|Item 8.                                         |  | Financial Information                                                 
|Item 9.                                         |  | The Offer and Listing                                                 
|Item 10.                                        |  | Additional Information                                                
|Item 11.                                        |  | Quantitative and Qualitative Disclosures about Market Risk            
|Item 12.                                        |  | Description of Securities Other than Equity Securities                
|PART II                                        
|Item 13.                                        |  | Defaults, Dividend Arrearages and Delinquencies                       
|Item 14.                                        |  | Material Modifications to the Rights of Security Holders              
|Item 15.                                        |  | Controls and Procedures                                               
|Item 16.                                        |  | Reserved                                                              
|Item 16A.                                       |  | Audit Committee Financial Expert                                      
|Item 16B.                                       |  | Code of Ethics                                                        
|Item 16C.                                       |  | Principal Accountant Fees and Services                                
|Item 16D.                                       |  | Exemptions from the Listing Standards for Audit Committees            
|Item 16E.                                       |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|PART III                                       
|Item 17.                                        |  | Financial Statements                                                  
|Item 18.                                        |  | Financial Statements                                                  
|Item 19.                                        |  | Exhibits                                                              

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Prior to 2000, we published our financial statements in Dutch guilders. We 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.

All
amounts set forth in this annual report, unless otherwise noted, are in thousands of euro, except share and option data.

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 certain of 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®, AdVac® and MAbstract® are trademarks of Crucell Holland B.V., a wholly owned subsidiary of Crucell N.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 Financial Data

The selected financial data presented below as at and for each of the five years in the period ended December 31, 2004 has been derived from:



We
have prepared our financial statements in accordance with accounting principles generally accepted in the United States (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 and accompanying notes that are included elsewhere
in this annual report.

3

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|                                                           |                                              | Years ended December 31, |           
|---------------------------------------------------------- | -------------------------------------------- | ------------------------ | ----------
|
|
|Consolidated Statements of Operations Data:                |                                              |                          |           
|Revenues:                                                  |                                              |                          |           
|                                                           | License                                      |                          | €         
|                                                           | Service fees                                 |                          |           
|                                                           | Government grants and other                  |                          |           
|                                                           |                                              |                          |           
|Total revenues                                             |                                              | €                        | 6,910     
|Costs and expenses:                                        |                                              |                          |           
|                                                           | Cost of service fees                         |                          |           
|                                                           | 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                                   |                                              | €                        | 135,779   
|                                                           |                                              |                          |           
|Loss from operations                                       |                                              |                          | (128,869  
|Interest income, net                                       |                                              |                          | 914       
|Foreign currency gain/(loss)                               |                                              |                          | (2,219    
|Equity in losses of unconsolidated investments             |                                              |                          | (1,443    
|Gain on sale of available for sale securities              |                                              |                          |          
|                                                           |                                              |                          |           
|Net loss                                                   |                                              | €                        | (131,617  
|                                                           |                                              |                          |           
|Net loss per share/ADSbasic and diluted                   |                                              | €                        | (5.38     
|Weighted average shares/ADSs outstandingbasic and diluted |                                              |                          | 24,485,800

|                                           |                             | 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 long term liabilities |                   
|                                           | Total shareholders' equity  |                   
|Total liabilities and shareholders' equity |                             | €                 

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4

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Exchange Rate Information

The following table sets forth, for the 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 ("Noon Buying Rates") for euros per USD 1.00.

Year ended December 31,

High

Low

Average(1)

End of
Period€

€

€

€2000

1.21

0.97

1.09

1.072001

1.20

1.05

1.12

1.122002

1.16

0.95

1.06

0.952003

0.97

0.80

0.89

0.802004

0.85

0.73

0.81

0.73


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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 2004

0.82

0.78November 2004

0.79

0.75December 2004

0.76

0.73January 2005

0.77

0.73February 2005

0.79

0.75March 2005

0.78

0.74


On
March 31, 2005, the Noon Buying Rate was USD 1.00 = EUR 0.77. 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.

Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

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Risk Factors

You should carefully consider all the information in this annual report, including these material risk factors. The risks we face are not
limited to the risks listed here. Some risks are not yet known to us and some of the risks that we currently do not believe to be material to our operations could prove to be material at a later date.
All of these risks can materially affect our business, financial condition and results of operations.

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 our incorporation. At December 31, 2004, we had an accumulated deficit of €274,524. 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 core technologiesin particular, PER.C6, AdVac and
MAbstract phage antibody-display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 involving cash consideration or the issuance of new shares. 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 American Depositary Shares
(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:



6

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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. 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 may increase our
research costs in 2005, which may 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 have 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 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 investment, including pre-clinical and clinical testing, to demonstrate their effectiveness prior to their commercial
distribution. We expect certain potential products to enter clinical trials during 2005. 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. Further, 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. We also rely heavily on research performed by third party collaborators that are not under our control in
developing certain of our potential products. As a result, we are dependent on the research and performance of such third parties to bring potential products to market. 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 may further limit our and their ability to develop commercially successful products.

We rely on license and other revenues from the licensing of our PER.C6 and other technologies. 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 and other technologies 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 technologies, we may not be able to realize the revenues and
growth we

7

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anticipate.
We also may not be able to successfully develop and derive license or other revenues from new technologies, such as the STAR technology that we acquired in 2004. 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. The dollar/euro
exchange rate may make our technology less competitive or reduce our revenues. 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 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. During 2004, existing licenses with NatImmune A/S, Pfizer, Inc., Cell Genesys, Inc., Schering AG and
Novavax, Inc., were not renewed. In the aggregate, annual payments from these license arrangements would have amounted to €536 in 2005.

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 that have similar or other technologies, or other products or forms of treatment for the diseases we are targeting. We are aware of a number of
commercial initiatives in the fields in which we operate that may result in marketable products with which we would compete. 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 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 hamper our ability to bring products to market or license and derive revenue from our technology. Such an inability to compete could have a material adverse
effect on our business, results of operations and ability to achieve profitability. For more information on our competitive position, see Item 4, "Information on the
CompanyCompetition."

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, 2004, three licensees accounted for 56% of our
revenues. For the years ended December 31, 2003, and December 31, 2002 three licensees accounted for 38% and 39% of our revenues, respectively. We currently are reliant on a limited
number of contracts for revenues and commercialization of our PER.C6 technology, and any termination or alteration to these agreements would have a substantial adverse effect on our licensing revenues
and financial results.

We
are particularly reliant on our license agreements with sanofi pasteur and DSM Biologics ("DSM"). The licenses granted under these agreements are exclusive, which means we cannot
license PER.C6 to other parties in connection with the development of the licensed influenza vaccine products or in the area of contract manufacturing for antibodies and therapeutic proteins. Such
exclusivity may cause us to forego increased revenue opportunities from other third parties regarding the licensed technology over the terms of the agreements. Further, DSM is entitled to a portion of
certain fees that are received with respect to its license, which could reduce the profitability of this technology to us. Finally, future payments to us under both agreements are dependent on
reaching development

8

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milestones,
and we rely significantly on the performance and development progress of sanofi pasteur and DSM to reach the milestones set forth in each agreement. If these milestones are not reached,
our revenues from these agreements could be substantially reduced. Though our license agreement with sanofi pasteur was initially with Aventis Pasteur (prior to the merger of Sanofi-Synthelabo and
Aventis in 2004), we have no indication that the nature of our contractual relationship will be materially altered by the merger or otherwise.

We
expect that a high level of licensee concentration will continue in the future. In the event that one or more of our 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
addition, while we have been successful in increasing our revenues from government grants and subsidies and private foundations, we cannot be assured that such grant and subsidy
revenue will continue in the future.

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 Administration, or FDA, must approve any biopharmaceutical product before it can be marketed in the United States. Comparable authorities such as the European
Medicines Agency, 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 clinical materials for clinical trials at this time, the FDA has in the past raised concerns over the history and some of the
properties of 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. Our other technologies have not yet been used in clinical trials, and may face significant hurdles in obtaining regulatory approval if and when
such trials begin.

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, such as PER.C6 technology, 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 (such as stem cells or genetically modified foods or organisms) 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 or materials
derived from human fetal tissue, which may hinder or adversely affect regulatory approval or market acceptance of our

9

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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 rely on animal testing in some of our research and development and adverse public reaction to our use of animal testing could also cause us to encounter negative publicity. Any of these
factors could generate negative publicity or other adverse consequences regarding our business or industry, and could reduce or eliminate the potential markets for our own or our licensees' potential
products.

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
our activities in 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 imperfections 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 proceedings 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
October, 2004 we commenced infringement litigation proceedings against CEVEC Pharmaceuticals in the District Court of Duesseldorf, Germany, arguing that CEVEC's cell line

10

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infringes
a recently granted European patent for our PER.C6 technology. In December 2004 CEVEC Pharmaceuticals acknowledged three out of four of our claims, but chose to defend the remaining
claim. It is possible that the court will find against us on the remaining claim, and we cannot exclude the possibility that CEVEC will also file counterclaims in separate proceedings in order to
attempt to have certain of our PER.C6 patents revoked or declared invalid.

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 or technologies, 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.

If we lose the services of 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.

We
are dependent on the principal members of our management and scientific personnel. We are particularly reliant on the members of our management board. Because of the experience our
management board members have with our scientific research and development, our financial position and our business and the industry in which we operate, the loss of the services of any of them might
adversely affect our results or the ongoing development of our technologies which is necessary to remain competitive and our ability to execute our business plan. The employment contracts of each of
our management board members contain non-compete provisions that would apply for a period of one year after the end of their employment with 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.

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 the acquisition of other companies or
entities, and such growth will continue to place a strain on our human and capital resources. The aggregate number of full-time equivalent employees increased from 183 at
December 31, 2002 to 210 at December 31, 2004. 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.

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A number of our research and product development programs depend on access to 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 biological materials, such as virus and tissue samples, which may be in limited supply. If we
lose or do not obtain access to appropriate 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 regulations could result in restricted access to, or use of, human and other biological material 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 payments. Our existing license arrangements generally entitle us
to receive royalty payments for any potential products developed using our 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 may 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. A number 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 favorable 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 technology.

We have limited experience in conducting clinical trials and manufacturing, and no infrastructure for marketing or sales of pharmaceutical products. 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.

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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 no
marketing or sales infrastructure. 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.

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 successfully sues us for an 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 as more licensees utilize our technologies or potential products, thereby lessening our control over the
manner of use of such
technologies and potential products. Our general third party product liability insurance may not be adequate to address all of our product liability exposure. We may seek to obtain additional product
liability insurance in the future, though such additional insurance may be prohibitively expensive, or may not cover all of 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. Our BioSafety Level III
(BSL-III) laboratory facilities allow us to work on-site with hazardous materials like West Nile virus that we were not permitted to work with before. Our operations also
produce hazardous waste products. Given the inherently dangerous nature of certain of the materials we may work with in our BSL-III laboratory facilities and other hazardous materials
incident to our work, 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 and significant adverse publicity 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.

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 and collaborators 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 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 and collaborators generally sign
agreements not to disclose our confidential information, it is possible that a certain portion of our valuable proprietary knowledge may become publicly known through them.

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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 the European Commission competition authorities of any of our licensing or other agreements 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. In 2004, a new regulation, the Technology Transfer Block Exemption Regulation, entered into force in the European Union, which may require us to review and possibly amend existing
license and technology transfer agreements in the future to comply with the new regulation. This review process may be costly and time consuming and may require renegotiation of certain portions of
our licenses and other agreements, but we do not expect this process to have a material adverse effect on our license portfolio or results.

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 an absolute majority of the votes cast, representing
more than one-third of our outstanding shares, can set the nominations aside. One member of our management board, one member of our supervisory board and two independent members comprise
the board of a foundation "Stichting Prioriteit Crucell", or 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, "Stichting Preferente Aandelen Crucell", or the Preferred Foundation, giving it preferred dividend rights and reducing the percentage of voting rights in the total
number of votes to be cast by the holders of the other classes of shares. The chairman of our supervisory board, Pieter Strijkert, our chief executive officer, Ronald H.P. Brus 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.

Compliance with the internal controls and evaluations and attestation requirements under the Sarbanes-Oxley Act may be expensive and
time-consuming.

Pursuant
to Section 404 of the U.S. Sarbanes-Oxley Act of 2002, we will be required, as a foreign private issuer, beginning in fiscal year 2006, to perform an evaluation of our
internal controls over financial reporting and have our auditor publicly attest to such evaluation. We have prepared an internal plan of action for compliance, which includes a timeline and scheduled
activities, although as of the date of this filing we have not yet finalized the evaluation. Compliance with these requirements is expected to be expensive and time-consuming. If we fail
to complete this evaluation in a timely manner, or if our independent auditor cannot attest to our evaluation in a timely manner, we could be subject to regulatory scrutiny and a loss of public
confidence in our internal controls, with a corresponding adverse effect on our share price.

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

Dutch
law and our articles of association govern issues regarding the legal organization, internal constitution, corporate authority and the liability of members of our management and
supervisory boards. 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 to serve process on us or these persons within
the United States. It may also be difficult 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 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 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. You may not be able to resell your ordinary shares or ADSs at or above the price you pay
for them, the ADSs may vary in value, and our 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 our ordinary shares or ADSs may not continue to develop or be sustained. The ADSs' low closing price during 2002, 2003 and 2004 has been $2.50, $3.81 and
$6.38 respectively, and the closing price as of March 31, 2005 was $13.05. The trading prices of ordinary shares of biotechnology companies in general have experienced significant volatility in
the past and are likely to continue to be volatile. Moreover, our 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 depress our ordinary share or ADS price regardless of our results of
operations. Other broad market and industry factors may affect the trading price of our ordinary shares and ADSs, regardless of our performance.

We believe that we were a passive foreign investment company in 2004 and expect to be classified as such in 2005, 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 2004, and also expect to be classified as a PFIC in respect of the
year 2005. 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 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 B.V. 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 developing vaccines and antibodies against infectious diseases. Our product programs comprise vaccines against influenza, West Nile
virus, Ebola, malaria, and tuberculosis as well as an antibody product against rabies. Our programs are in various stages of pre-clinical development. We may choose to alter or expand our
pipeline to include products that, in some instances, we may co-develop and market through collaborations or strategic alliances with third parties to share risks and costs. We also expect
to continue licensing our core technologies to companies in our industry.

We
generate revenues from the licensing of our proprietary technologies to pharmaceutical and biotechnology companies, from grants and government subsidies obtained to support the
development of our vaccines and from service fees earned under development contracts with our partners. Neither our licensees nor we currently market any products based on our technologies. We intend
to add revenues in the future from initial license fees, license maintenance fees and milestone and royalty payments from products that our licensees develop using our technologies. In addition, we
expect our
product development efforts to yield product revenues in the future. Our primary geographic markets are the United States and Europe.

The
proprietary technologies which we use in making our own products, and license to other companies, may overcome the safety, efficacy, yield, and/or scalability limitations inherent in
many currently available products, emerging products and manufacturing processes and technologies.

Our
three core technologies are as follows:



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Acquisition of ChromaGenics and STAR technology

In March 2004, we acquired the STAR technology through our purchase of ChromaGenics B.V., a privately held biotechnology company based in Amsterdam, for a
purchase price of €4,017. In connection with the purchase, we also entered into a contingent payment agreement that could result in an additional payment of €7,000 upon
our receipt of revenues generated from the STAR technology. STAR is a technology discovered by Dr. Arie Otte that may be useful for the production of proteins. It has a potentially broad
application for production of proteins on mammalian cell lines such as our PER.C6 human cell technology and the widely used Chinese hamster ovary (CHO) cell line. STAR technology contains genetic
elements that enable high-yield gene expression, thereby potentially reducing production costs. ChromaGenics was founded by UvA Holding B.V., Dr. Arie Otte, and Dr. Niek
Roosdorp as a spin-off company of the University of Amsterdam. In a joint evaluation program funded by Genentech, we and Genentech are currently investigating whether STAR technology can
increase the production yields of Genentech's proprietary systems.

Strategy

Our mission is to be a leading biotechnology company developing products to combat infectious diseases. To achieve this mission, we pursue a business strategy
aimed at developing and commercializing prophylactic vaccines and therapeutic antibodies to prevent and treat infectious diseases. We work together through strategic partnerships, collaborations,
licensing agreements or other contractual agreements with leaders in the industry to increase broad acceptance and promote further usage of our technologies. Parallel to these efforts, we are
developing our own portfolio of vaccines and antibodies. Some of these programs are partnered, like the development of new cell based influenza vaccines, while other programs are entirely developed in
house, like the development of our West Nile virus vaccine. Apart from the main strategic focus on infectious diseases, we have allocated modest resources to build skills in protein and antibody
production and to maintain our existing production technology as well as to develop the newly acquired STAR technology. The latter is currently undergoing joint evaluation by us and Genentech.

Our
business strategy is based on the following business drivers:



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Our
operating focus is on the progression of our product development programs to clinical trials, and we believe we have put in place the resources necessary to achieve this goal. We may
decide to invest in new facilities and personnel in the future to maintain the proper infrastructure and resources needed to capitalize on available product development opportunities. We also may
consider strategic acquisitions in the biotechnology industry and may enter partnerships to the extent such decisions may facilitate our strategy.

Industry/Scientific Overview



Biopharmaceutical products are therapeutics produced by means of biological production systems. Modified bacteria and yeast initially were used to produce the
first generation of human biopharmaceutical products. The first available human cell-based production systems employed human cells that spontaneously acquired the ability to divide
indefinitely. These include the MRC-5 and WI-38 cell lines, which were both divided from human lung tissue. These cell lines have been successfully used to produce a number of
human vaccines (rubella, mumps, measles, rabies and hepatitis A). More recent and better defined human cell lines were created by extracting a small and well defined part of the genome (E1) from the
adenovirus type 5 and inserting this into healthy primary human cells where it subsequently causes stable, indefinite cell growth. The immortalized cell and its progeny are called a "cell line." A
number of examples of cell lines that were made by E1 immortalization, like 293 and 911, have been described in literature and were made for research purposes. To our knowledge, the only documented
cell lines based on E1 immortalization principle that were made specifically for production of biopharmaceuticals, are PER.C6 and N52.E6.

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Vaccines are designed to protect people against potentially life-threatening diseases, including those caused by parasites, viruses and bacteria.

Scientific Progress in Vaccines.Vaccines have contributed significantly to the improvement of global
public health in the twentieth century. Smallpox was eradicated through the use of vaccines, and polio is well on its way to eradication. Significant developments include the introduction of
combination vaccines and the development of new vaccine technologies that may advance vaccine development. Today, research is underway to develop efficacious and safe vaccines against viruses such as
HIV, influenza, Ebola and West Nile virus; against parasites causing malaria; and also against inherited or acquired diseases such as cancer.

Vaccine Formats.A variety of vaccine formats are in use today and others are evolving through
ongoing research and development efforts. Some of the most common vaccine formats include live-attenuated virus vaccines, inactivated whole-killed virus vaccines, subunit vaccines, DNA
vaccines, recombinant vector-based vaccines, synthetic vaccines and peptide-based vaccines.

Vaccine Technology Development.A large variety of vaccine technologies are under development in an
attempt to improve safety and overall vaccine efficacy. The key objectives of current vaccine technology research and development are to make safer vaccines without compromising efficacy, to generate
new vaccines with stronger and broader immunogenicity, to make vaccines using more efficient manufacturing processes and to make vaccines easier to administer.



Antibodies are proteins made naturally by cells of the body's immune system. They function as one of the body's principal defense mechanisms against pathogens,
which are disease-causing agents such as parasites, viruses or bacteria. Antibodies recognize and bind to invading pathogens, ultimately eliminating them. Thus, antibodies play a crucial role in
protecting humans against disease. Because of their binding characteristics, antibodies can distinguish subtle cell differences between healthy and diseased cells. Antibodies are used to develop
therapeutic products that can trigger the death of a target cell or bind to and block a key interaction of a disease-related cell, such as a cancer cell; to develop therapeutic products that block
infectious agents; bind and neutralize toxic products; as tools in scientific research such as genomics and proteomics; and to develop diagnostic products to detect viruses or bacteria.

Scientific Progress in Antibodies.Methods for generating monoclonal antibodies have evolved
considerably over the last 25 years. The technology originally involved immunizing mice with a target molecule and isolating relevant antibody-producing cells from the mice. Because monoclonal
antibodies of rodent origin are recognized as foreign proteins and are rapidly eliminated when applied in humans, methods were developed to produce therapeutic antibodies that are of human origin.
These antibodies can be developed either using transgenic mice or by means of phage antibody-display technology. Transgenic mice are genetically engineered mice that carry human antibody genes. This
allows the immune systems of mice to generate human antibodies in response to any administered antigenic material. Phage antibody-display technology is the technology whereby human antibody genes are
cloned into bacteriophages, which are viruses that only infect bacteria. Phages displaying antibody fragments that attach to specific molecules can be selected, enabling isolation of antibodies
against targets and/or enabling the identification of target molecules. Phage antibody-display libraries are large collections of antibody-phages for use in identifying the targets and related
antibodies.

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Crucell Core Technologies: PER.C6 technology



Our PER.C6 technology provides a manufacturing system that consists of a human cell line, which can be used to produce a variety of biopharmaceutical products. We
developed the PER.C6 technology from a single source of healthy, human retina cells in a controlled, documented manner. To obtain our PER.C6 cell line, we have inserted an exactly defined fragment of
the E1 region of the genome of the adenovirus type 5 into a healthy human retina cell so that the cell can grow indefinitely. The PER.C6 cell line has been successfully adapted to grow without the
need for serum components or materials that allow cell attachment (microcarriers) and demonstrates excellent cell densities in bioreactors. These features of our cell line are important to produce
safe biopharmaceutical products in sufficient quantities.

There
are four areas in which our PER.C6 technology is currently being applied:

Vaccine production.PER.C6 technology can be used as a production system for developing and
manufacturing both classical and recombinant vaccines.

For
classical vaccine production, PER.C6 cells are infected with the virus against which the vaccine is meant to protect. The virus is subsequently multiplied on PER.C6 cells to high
virus titer, yielding a potent starting material that can be processed and purified to produce a final formulation of a whole-killed, split or subunit vaccine.

For
recombinant vaccine production, the PER.C6 technology produces delivery agents called adenoviral vectors. These vectors have been made replication incompetent and thus are only
capable of delivering into the human body a portion of DNA encoding for a protein from the pathogen against which the vaccine is meant to protect. The DNA inserted into the vector can be derived from
a virus, a parasite or even bacteria, providing a versatile vaccine vector platform.

Protein production.PER.C6 technology can be used as a production system for developing and
manufacturing both antibodies and other proteins. For both antibody and protein production DNA encoding for a particular protein of interest is inserted into PER.C6 cells. These modified PER.C6 cells
will secrete the desired antibody or protein.

Gene therapy.The primary function of PER.C6 technology in the field of gene therapy is the
production of adenoviral vectorsa gene delivery mechanism based on a common human virusthat carries therapeutic genes and facilitates the delivery of the gene into the cells.
Since the PER.C6 cell line is the only available cell line that does not allow any formation of classical replication competent adenoviruses during the production of replication deficient vectors, the
cell line may be applied across the entire adenovirus gene therapy field.

Functional Genomics.Our PER.C6 technology can be used to produce libraries of adenoviruses into
which individual human genes can be inserted to perform studies of gene functions. The adenovirus libraries carry many genes with unknown functions, which can be used to determine the function of
individual genes in a disease process. We believe that PER.C6 technology, therefore, represents a key analytical tool in the discovery of new genes and their role in biological pathways and human
disease. Galapagos Genomics, a functional genomics company in which we hold a 20.8% ownership share, executes these activities exclusively using our PER.C6 technology. Please refer to the "Galapagos
Genomics" section of Item 4 for additional information about this joint venture.

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We believe that our PER.C6 technology has the following key advantages over alternative manufacturing systems:



Crucell Core Technologies: AdVac technology



We use our AdVac technology, in combination with our PER.C6 production technology, to develop recombinant vaccines.

While
no adenovirus-based recombinant vaccines are currently licensed for human use, the scientific community is testing the ability of these vaccines to counter viruses (HIV, hepatitis
C and Ebola), parasites (malaria) and bacteria (anthrax), to name a few. Recombinant vaccines are necessary for these diseases since inactivated whole virus vaccine approaches are either ineffective
against these particular pathogens, or are too difficult or dangerous to produce. Within the field of vaccination and gene therapy, adenovirus serotype 5 (Ad5) is the most commonly used vector.

The
portion of the human population that has been exposed to Ad5 is high, and early clinical trial data demonstrates a clear correlation between the level of pre-existing
immunity against Ad5 and the frequency of non-response against Ad5-based vaccines. Moreover, immunity and resistance to Ad5 has been proven to vary from
person-to-person, creating difficulties with respect to vaccine dosing issues.

We
designed the AdVac technology to manage the problem of pre-existing immunity in humans against the recombinant adenovirus serotype 5 (rAd5) vaccine vector, without
compromising large-scale production capabilities or the immunogenic properties of rAd5. AdVac technology is based on adenovirus vectors that do not regularly occur in the human population, such as
Ad35 and Ad11. The

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technology
supports the practice of inserting DNA coding for pathogenderived proteins into a vector. AdVac technology may also be used to developex
vivovaccines and gene therapy products.



We believe our AdVac technology has the following key advantages over the commonly used vector system:



Crucell Core Technologies: MAbstract technology



Our MAbstract technology can be applied for the discovery of novel drug targets and the identification of human antibodies against those drug targets. The
MAbstract technology employs a bacteria-infecting virus called a bacteriophage, or phage, which expresses part of a human antibody on its surface. The technology employs a library of phages that carry
many different human antibodies. To identify and subsequently isolate relevant antibodies, the library is contacted with pathogens, or cells suspected of carrying the drug target, or if the target is
already known in advance, the library may be contacted with the target directly. Subsequently, phage antibodies binding to the diseased cells or the known target are separated from phage-antibodies
that do not bind at all, or bind to healthy cells added to subtract irrelevant phage-antibodies present in the library. Since irrelevant phage-antibodies for the target in question are often present
in great abundance, the subtraction step aids in enriching the phage-antibody population for potentially relevant, selectively binding phage antibodies.

Once
such phage antibodies have been isolated, they can either be used to subsequently identify the target or a specific binding place on the target (referred to as epitope), or be used
to subsequently isolate the DNA coding for the binding part of the antibody. This part may genetically be combined with other parts of the antibody that have no function in binding but have assessory
functions in the human immune system. Thus, different formats of antibodies with different modes of action or functions can be made, but with the same specificity for the target.

We
use our MAbstract technology to identify antibodies reactive with whole pathogens, or antibodies against protein elements from pathogens, or antibodies directed against targets
already known to be associated with disease. In addition MAbstract can be used to identify targets or epitopes on disease-causing agents that were previously unknown and may make suitable candidates
for antibody-based diagnosis, prevention or therapy of the associated disease.



MAbstract employs a human-based antibody-display technology. We believe that MAbstract allows for the discovery of therapeutic antibodies with several potential
advantages over current technologies using transgenic mice. These advantages include the following:



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Licensing and Collaborations

Licensees and partners.Our current licensees and partners are as follows:

VACCINES

|PARTNER/LICENSEE                                                     |  | STARTING DATE |  | TECHNOLOGY       |  | DISEASE TARGET                             |  | DEVELOPMENT STAGE             
|-------------------------------------------------------------------- |  | ------------- |  | ---------------- |  | ------------------------------------------ |  | ------------------------------
|Aeras Global TB Vaccine Foundation                                   |  | Mar. 2004     |  | PER.C6 and AdVac |  | Tuberculosis                               |  | Pre-clinical                  
|sanofi pasteur                                                       |  | Dec. 2003     |  | PER.C6           |  | Influenza                                  |  | Pre-clinical                  
|Chiron Corp.                                                         |  | Dec. 2004     |  | PER.C6           |  | Alphavirus vectors                         |  | Pre-clinical                  
|Harvard School of Medicine                                           |  | Oct. 2002     |  | PER.C6 and AdVac |  | SIV                                        |  | Pre-clinical                  
|International AIDS Vaccine Initiative (IAVI)                         |  | Sep. 2004     |  | AdVac            |  | HIV                                        |  | Pre-clinical                  
|Kimron Veterinary Institute                                          |  | Jul. 2003     |  | PER.C6           |  | West Nile virusVeterinary vaccine (avian) |  | Market authorization in Israel
|MedImmune Inc.                                                       |  | May 2002      |  | PER.C6           |  | Influenza-related                          |  | Pre-clinical                  
|Merck & Co. Inc.                                                     |  | Oct. 2000     |  | PER.C6           |  | Hepatitis C                                |  | Pre-clinical                  
|Merck & Co. Inc.                                                     |  | Oct. 2000     |  | PER.C6           |  | HIV                                        |  | Phase II                      
|Merial LLC                                                           |  | Oct. 2004     |  | PER.C6           |  | Foot and mouth disease                     |  | Pre-clinical                  
|National Institutes of Health (NIH)                                  |  | Mar. 2002     |  | PER.C6 and AdVac |  | Ebola, Lassa and Marburg                   |  | Pre-clinical                  
|National Institutes of Health (NIH)                                  |  | Mar. 2004     |  | PER.C6 and AdVac |  | Malaria                                    |  | Pre-clinical                  
|New York University                                                  |  | Aug. 2002     |  | PER.C6 and AdVac |  | Malaria                                    |  | Pre-clinical                  
|Vaxin, Inc.                                                          |  | Sep. 2004     |  | PER.C6           |  | Respiratory viruses                        |  | Pre-clinical                  
|Walter Reed Army Institute of Research & GlaxoSmithKline Biologicals |  | Mar. 2003     |  | PER.C6 and AdVac |  | Malaria                                    |  | Pre-clinical                  
|Singvax                                                              |  | Mar. 2005     |  | PER.C6           |  | Japanese Encephalitis                      |  | Pre-clinical                  

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ANTIBODIES AND THERAPEUTIC PROTEINS

|PARTNER/LICENSEE                               |  | STARTING DATE |  | TECHNOLOGY |  | DISEASE TARGET         |  | DEVELOPMENT STAGE
|---------------------------------------------- |  | ------------- |  | ---------- |  | ---------------------- |  | -----------------
|Applied Molecular Evolution, Inc. (Lilly)      |  | Oct. 2002     |  | PER.C6     |  | Portfolio antibodies   |  | Phase I          
|Biogen Idec, Inc.                              |  | Dec. 2003     |  | PER.C6     |  | Undisclosed            |  | Pre-clinical     
|Centocor Inc. (Johnson & Johnson)              |  | Dec. 2002     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|Chiron Corp.                                   |  | Jun. 2004     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|GlaxoSmithKline Ltd                            |  | Aug. 2004     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|Innogenetics                                   |  | Jan. 2002     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|JCR Pharmaceuticals Co. Ltd                    |  | Mar. 2005     |  | PER.C6     |  | Undisclosed proteins   |  | Pre-clinical     
|Merck & Co., Inc.                              |  | May 2003      |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|Merus B.V.                                     |  | Jun. 2004     |  | PER.C6     |  | Portfolio oligoclonics |  | Pre-clinical     
|Micromet AG                                    |  | Nov. 2004     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|Millipore Corp.                                |  | Mar. 2003     |  | PER.C6     |  | Undisclosed            |  | Pre-clinical     
|MorphoSys AG                                   |  | Sep. 2004     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|PanGenetics                                    |  | Jun. 2004     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|Roche                                          |  | Jan. 2005     |  | PER.C6     |  | Undisclosed proteins   |  | Pre-clinical     
|Synergenics/Synco Biopartners Investments B.V. |  | Aug. 2004     |  | PER.C6     |  | Portfolio antibodies   |  | Pre-clinical     
|Genentech                                      |  | Feb. 2004     |  | STAR       |  |                       |  | Evaluation       
|Mitsubishi Pharma Corporation                  |  | Mar. 2005     |  | PER.C6     |  | Undisclosed proteins   |  | Pre-clinical     

GENE THERAPY

|PARTNER/LICENSEE                               |  | STARTING DATE |  | TECHNOLOGY |  | DISEASE TARGET |  | DEVELOPMENT STAGE
|---------------------------------------------- |  | ------------- |  | ---------- |  | -------------- |  | -----------------
|Edwards Life Sciences Corp.                    |  | Nov. 2004     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     
|EMD Lexigen Pharmaceuticals Corp. (Merck KgaA) |  | Dec. 2001     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     
|Eurogene Ltd (Ark Therapeutics)                |  | Nov. 2000     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     
|GeneMax Pharmaceuticals Inc.                   |  | Aug. 2003     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     
|GenVec Inc.                                    |  | Jul. 2002     |  | PER.C6     |  | Cardiovascular |  | Phase II         
|GlaxoSmithKline Ltd.                           |  | Feb. 1999     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     
|Merck & Co., Inc.                              |  | Nov. 1998     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     
|ML Laboratories Ltd.                           |  | Jun. 1998     |  | PER.C6     |  | Portfolio      |  | Phase I/II       
|NeoTropix                                      |  | Mar. 2004     |  | PER.C6     |  | Oncology       |  | Pre-clinical     
|Selective Genetics Inc.                        |  | Jun. 2001     |  | PER.C6     |  | Portfolio      |  | Phase I/II       
|Transgene SA                                   |  | Apr. 2001     |  | PER.C6     |  | Portfolio      |  | Phase I/II       
|Wyeth                                          |  | Jul. 2004     |  | PER.C6     |  | Non-disclosed  |  | Pre-clinical     
|Vascular Biogenics Ltd                         |  | Mar. 2005     |  | PER.C6     |  | Portfolio      |  | Pre-clinical     

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ALLIANCES WITH CONTRACT MANUFACTURERS FOR PRODUCTION

|PARTNER/LICENSEE                     |  | STARTING DATE |  | TECHNOLOGY |  | AREA                                               
|------------------------------------ |  | ------------- |  | ---------- |  | ---------------------------------------------------
|Cambrex                              |  | Aug. 2004     |  | PER.C6     |  | Medium development                                 
|DSM Biologics                        |  | Dec. 2002     |  | PER.C6     |  | Therapeutic proteins (including antibodies)        
|Gene Medicine Japan, Inc.            |  | Oct. 2003     |  | PER.C6     |  | Recombinant vaccines & gene therapy products (Asia)
|Hyclone, Inc.                        |  | Dec. 2003     |  | PER.C6     |  | Medium development                                 
|Invitrogen Corp.                     |  | Jun. 2003     |  | PER.C6     |  | Medium development                                 
|JRH Biosciences Inc.                 |  | May 2004      |  | PER.C6     |  | Medium development                                 
|Molecular Medicine BioServices, Inc. |  | Dec. 2001     |  | PER.C6     |  | Recombinant vaccines & gene therapy products (USA) 
|Sigma-Aldrich Corp.                  |  | Dec. 2003     |  | PER.C6     |  | Medium development                                 

FUNCTIONAL GENOMICS

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

License agreement structure.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 licensees. Our research licenses granted in the areas of antibodies and gene therapy typically
cover the entire portfolio of antibodies and genes, respectively, that the customer may wish to use in the future. The general payment structure under the terms of our commercial licenses is 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 typically do not allow (late) clinical development and commercial distribution of any product using the licensed technology.

Our
commercial license agreements generally provide that the applicable commercial license will expire after the expiration of the last applicable patent or 10 to 15 years after
the first commercial sale of a product developed under the agreement with that licensee. Our research licenses generally expire two to five years after their effective date. Most of our licenses may
be terminated on 90 days' notice from the licensee. Generally, licensees may assign or sub-license their rights. Under our license agreements, because the technology that 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.

Exclusive Licenses.We have issued certain licenses to licensees on an exclusive basis. These
licenses generally state that we will not provide the licensed technology 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. For example, our agreement entered in December 2003 with Aventis Pasteur (now sanofi pasteur) for the development and commercialization of
PER.C6-based influenza vaccines includes provision for milestone payments, annual payments and research and development funding, as well as high single- up to double-digit royalties on
future PER.C6-based influenza vaccine sales. The agreement also includes financial diligence provisions designed to encourage sanofi pasteur to obtain successful regulatory approval in the
United States (FDA registration and approval) and Europe (EMEA registration and approval) for the PER.C6-based influenza vaccine as promptly as possible. In 2004, we granted an exclusive
license to the International AIDS Vaccine Initiative (IAVI) for the development of an AIDS vaccine based on our AdVac technology. Other exclusive licenses include our agreements with DSM Biologics for
the contract manufacturing of recombinant proteins and monoclonal antibodies under PER.C6 licenses and Merck & Co. for a PER.C6-produced HIV/AIDS vaccine. An extension to our
agreement with Merck relates to our PER.C6 Cell Substrate Biologics Master File (BMF), BB-MF 8453 in the U.S., and equivalents in other jurisdictions. We will work with Merck on matters
relevant to maintaining the BMF, including the provision of technical assistance and guidance from Merck as appropriate. We believe that this agreement broadens our relationship with Merck and helps
to ensure that our BMF will be upgraded in line with evolving regulatory guidelines.

Manufacturing Services

We follow good manufacturing practice level (GMP) manufacturing services for our customers. We have built a small-scale production facility in Leiden, The
Netherlands, and in 2000 we obtained the license required for the manufacture of clinical trial materials at this facility from the Dutch regulatory authorities. To date we have used the facility to
manufacture clinical grade adenoviral vectors. The production facility consists of classified clean rooms suitable for manufacturing of purified bulk drug product. 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 U.S. 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 or other materials using our PER.C6 cell line 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.

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Research and Development



Our PER.C6 technology, complemented by our AdVac and MAbstract technologies, drives the development of our current product pipeline. We continue to develop our
technologies while selecting product leads for further development based on careful product selection criteria that support our long-term business objectives. We currently have several
potential products in various stages of pre-clinical development. We may enter into collaborative and/or strategic alliance arrangements with third parties to co-develop and
market products that we may develop.

Our
primary focus is the development of a range of novel vaccine and antibody products in the area of infectious diseases. We currently have five core programs in various stages of
pre-clinical development, together with two early-stage discovery programs:

PER.C6.Our core influenza (as part of our collaboration with sanofi pasteur) and West Nile virus
vaccines are both being produced using our PER.C6 technology.

PER.C6 and AdVac.Our Ebola and malaria vaccines are recombinant vaccines based on PER.C6 that also
use AdVac technologies. In addition to these core programs, a new collaboration with the Aeras Global TB Vaccine Foundation was announced in March 2004 for the pre-clinical and
clinical development of candidate tuberculosis (TB) vaccines based on PER.C6 and AdVac.

PER.C6 and MAbstract.In 2003 our Antibody Discovery Group also turned its attention towards
infectious diseases, and in 2004 the discovery of its first two human monoclonal antibody products was announced. The first, for protection against SARS, is currently on hold, while our rabies
antibodies announced in November 2004 becomes an additional core product program.

A
short description of each of our potential products, and the diseases those products target, follows.



Each year approximately 10-20% of the world's population contracts influenza, and an estimated 250,000 to 500,000 people die annually from
influenza-associated complications. As well as these annual epidemics, a major genetic shift in the influenza virus can occasionally lead to a deadly new virus strain to which the human population
does not have immunity, resulting in a global pandemic. Concerns currently exist that a new avian influenza strain (H5N1) endemic among birds in Asia, and showing high pathogenicity for humans, could
present a genuine pandemic threat.

Influenza
vaccines are classically produced on embryonated chicken eggs. However, various challenges have led the biopharmaceutical industry and the scientific community to explore other
ways of producing influenza vaccines. Currently, cell culture systems are being developed for influenza vaccine production based on African Green Monkey Kidney (VERO) cells and Madin Darby Canine
Kidney (MDCK) cells. These cell systems often need to be grown on micro-carriers, which makes the production process expensive and difficult to scale. In contrast, PER.C6 cells grow well in suspension
and are easily scalable, potentially permitting the production of cost-efficient vaccines in large quantities. Virus yields on VERO cells have been shown to be significantly lower than the
yields grown on PER.C6 cells. PER.C6 can produce all influenza strains that we have tested, possessing the
different receptors required for the production of both human strains and the avian strains that may present a pandemic threat.

Based
on these factors, we made the decision in the second half of 2003 to go forward with our influenza vaccine product development based on an inactivated split virus vaccine concept.
In this

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regard,
influenza vaccines are well defined as a product. The safety and efficacy of such influenza virus vaccines is provenvaccine production is the main challenge.

In
December 2003, we entered into a strategic agreement with sanofi pasteur to further develop and commercialize novel influenza vaccines using our PER.C6 production technology.
Please refer to the "LicensingExclusive Licensees" section of Item 4 for more information about this agreement. Sanofi pasteur is the world leader in vaccines, and has been the largest
supplier of influenza vaccines for more than 50 years, providing more than 100 million doses worldwide during the 2003-04 season. Since the inception of the collaboration,
production processes have been under development, with the production of a GMP master cell bank already completed. Sanofi pasteur has contracted a leading CMO for an engineering concept study for
vaccine production in 20,000 liter bioreactors. We expect the collaboration to commence clinical trials in 2005.



Named for the West Nile district of Uganda where the disease was discovered in 1937, West Nile virus infection can lead to mortality in humans and animals by
causing a fatal form of encephalitis, or inflammation of the brain. It is estimated that 20% of the people who become infected with West Nile virus will develop West Nile fever. Persons over
50 years of age have the highest risk of developing a severe disease, such as meningitis, an inflammation of the membrane around the brain and the spinal cord, or encephalitis. Since 1999, West
Nile virus has caused disease in more than 16,000 U.S. citizens, leading to 650 deaths.

Continued
efforts are being made to find suitable treatments and vaccines to stop this virus. The virus may become a recurring threat in the United States. In 2003 and 2004, a number of
West Nile virus cases were reported in Europe.

In
June 2003, we announced our decision to develop a vaccine against the West Nile virus based on our PER.C6 technology. Our vaccine uses an inactivated whole virus concept, which
is different from
vaccines currently under development by our competitors. Currently there is no vaccine or antiviral therapy available to protect humans against West Nile virus.

In
a separate but related program, we entered collaboration with Kimron Veterinary Institute of Israel in June 2003, granting Kimron a license to our PER.C6 technology to develop
a West Nile veterinary vaccine for use in geese and other birds susceptible to the virus in Israel. This veterinary vaccine achieved market authorization in Israel on June 3, 2004 and we expect
that it will be produced for distribution prior to the 2005 West Nile season. Kimron intends to replace its existing West Nile veterinary vaccine, which is produced using mouse brain cells, with the
PER.C6-based vaccine. Under the terms of the agreement, Kimron has commercial rights to the PER.C6-based West Nile veterinary vaccine in Israel.

The
significance to our human vaccine program is that a PER.C6-based vaccine protects against the Israel 1998 Goose strain of West Nile virus. The fact that this strain is
closely related to the New York 1999 strain, which caused the West Nile outbreaks in the U.S., supported our decision to develop a West Nile vaccine for humans. We intend to enter clinical trials with
our human West Nile virus vaccine in the fourth quarter of 2005. An agreement with the Netherlands Vaccine Institute (NVI) was announced in November 2004 for the manufacture of the vaccine at
NVI's new BSL-3 (BioSafety Level 3) plant for use in the human clinical trials.



Ebola fever is one of the most lethal viral diseases, with a mortality ranging from 50% to 80%. Ebola outbreaks occur regularly in tropical Africa, affecting both
human and great ape populations. To date, approximately 2,000 cases have been reported since the virus was first discovered in 1976. The

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Ebola
virus belongs to the group of "hemorrhagic fever viruses," which also includes the highly pathogenic Marburg and Lassa viruses. Ebola virus causes a disease characterized by high fever and
massive internal bleeding. Because no vaccine or therapy is presently available, Ebola virus is on the Centers for Disease Control (CDC), National Institutes of Allergy and Infectious Diseases
(NIAID), and U.S. Department of Defense Category "A" list of bioterror agents. In 2003 the U.S. government announced that once available, an Ebola vaccine will be stockpiled as part of its
preparedness for bio-terror attacks under Project BioShield, a comprehensive effort to develop and make available modern, effective drugs and vaccines to protect against attack by
biological and chemical weapons. The BioShield Act was passed by Congress and signed by President Bush in July of 2004, with a total appropriation of US$5.6 billion across all programs.

Numerous
attempts to vaccinate against Ebola virus using inactivated virus or protein-based vaccine modalities have failed, and developing a live attenuated vaccine is considered too
dangerous. However, it has been shown that a single-dose immunization with a recombinant adenovirus (expressing Ebola virus proteins) vaccine protects monkeys against an otherwise lethal
challenge with wild-type Ebola virus. Based on these results, we decided to develop an Ebola vaccine. The vaccine could provide protection from the lethal virus in the event of biological
warfare.

We
have entered into a Collaborative Research and Development Agreement (CRADA) with the Vaccine Research Center (VRC) of the National Institutes of Health (NIH) in the United States to
jointly develop, test and manufacture an adenovirus-based Ebola vaccine. Under the terms of the agreement, we have an option for exclusive worldwide commercialization rights to the Ebola vaccine
resulting from this collaboration. In August 2002, the CRADA was extended to cover vaccines against Marburg and Lassa infections. The recombinant vaccine will encompass the glycoproteins and
the nucleoprotein of Ebola virus, but cannot replicate in humans. This method thus provides a very important safety advantage, while ensuring that a strong humoral and cellular immune response is
elicited against the Ebola virus. Under a separate production contract with NIH, we are manufacturing adenovirus Ebola vaccine vectors according to current good manufacturing practice (cGMP)
requirements. In March 2005 we extended the CRADA with NIH and continue to develop this vaccine and will use the Ebola vaccine results in the development of Marburg and Lassa vaccines. In
addition, we obtained an exclusive license to certain NIH patents to develop and commercialize recombinant vaccines against Ebola. The patents cover valuable vaccine components, such as Ebola antigens
and vectors. In addition, the license covers 'one-shot' emergency vaccination strategies that have proven to be effective in relevant animal models.

In
experiments conducted by the VRC together with the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) during the first half of 2004, our vaccine candidate
confirmed single-dose protection of monkeys against Ebola. What set the results of this trial apart from the earlier successful trial, which established a
proof-of-concept, was that the vaccine in this instance was produced on PER.C6. All preclinical material was produced at Crucell's FDA-compliant production
facilities in Leiden. The positive results have seen clinical trial initiation set for the fourth quarter of 2005.

In
2002 the FDA issued the so-called "two animal" or animal efficacy rule, which states that efficacy studies in man are not required to obtain a product license for special
categories of products as long as efficacy is established in two independent animal models and safety in man. Our Ebola vaccine may be a candidate for regulatory approval under this rule, and the use
of the two animal rule could potentially speed up the approval process for our Ebola vaccine.



Malaria is a life-threatening infectious disease caused by theplasmodiumparasite and transmitted
from person-to-person through the bite of a femaleAnophelesmosquito. It is one of today's top three killers among communicable
diseases. The disease currently represents one of the most prevalent

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infections
in tropical and subtropical areas causing severe illness in 300 to 500 million individuals worldwide, and causing one to three million deaths every year. Most of these deaths occur
among children and pregnant women in the developing world, especially in sub-Saharan Africa. Unfortunately, mortality associated with severe or complicated malaria still exceeds
10-30%. The widespread occurrence and elevated incidence of malaria are a consequence of discontinued malaria control programs and increasing numbers of drug-resistant
parasites and insecticide-resistant parasite vectors. Other factors include environmental and climatic changes, civil disturbances and increased mobility of populations. Although the overwhelming
majority of morbidity and mortality associated with malaria occur in the developing world, this disease also affects travelers.

Currently
there is no commercially available vaccine to protect against malaria. Our candidate malaria vaccine is based on our AdVac technology and produced using our PER.C6 technology.
In a study carried out by the Department of Medical Molecular Parasitology at New York University, the efficacy of our malaria vaccine candidate was tested in NYU's mouse malaria model. The study
showed that a single administration of a prototype AdVac vaccine, a recombinant adenovirus 35 (rAd35) vector expressing the malaria parasite-derived immunogenic circumsporozoite antigen, protects mice
upon challenge with the mouse specific parasite.

In
March 2003, we entered into collaboration with the Walter Reed Army Institute of Research (WRAIR) and GlaxoSmithKline Biologicals (GSK) under a Cooperative Research and
Development Agreement (CRADA). Pursuant to this agreement, we have been working with WRAIR and GSK to evaluate our AdVac malaria vaccine candidate directed against the human malaria parasite Plasmodium
falciparum. Our vaccine candidate is being tested as a stand-alone vaccine and in combination with GSK's RTS,S malaria vaccine candidate. The
GSK malaria vaccine candidate RTS,S has been shown to confer partial protection to human volunteers in both a laboratory challenge model conducted at WRAIR and under natural challenge conditions in a
field study conducted in the Gambia. Phase IIb pediatric trials conducted in Mozambique and reported inThe Lancetmedical journal in
October 2004 demonstrated further promising results, with the vaccine protecting some infants against infection and making the course of the disease less serious and life threatening in others.

Studies
in monkeys conducted during 2004 as part of the CRADA resulted in excellent immune responses for our AdVac-based malaria vaccine. Further, in March 2004 it was announced
that the
National Institute of Allergy and Infectious Diseases (NIAID), part of the U.S. National Institutes of Health (NIH), will support the development of our candidate malaria vaccine. The agreement has an
estimated value of up to US$3.5 million and will cover process development of the candidate AdVac-based malaria vaccine including the production of clinical trial material and Investigational
New Drug (IND) filing. The work will be done under a subcontract agreement with Science Applications International Corporation (SAIC). It is expected the vaccine will enter the clinic in the second
quarter of 2006.

A
further boost to the program was received at the end of 2004 with the December announcement of a grant up to a maximum of EUR 2 million from the Dutch Ministry of Economic
Affairs in support of our malaria research and AdVac technology development. Research carried out under this grant will aim to expand the number of antigens able to be carried by an
rAd35-vectored vaccine, such as our AdVac-based malaria candidate.

Tuberculosis

Mycobacterium tuberculosis (TB) represents one of the most prevalent infectious diseases throughout the world. It is estimated that 2 billion people are
infected with TB, representing a third of the world's population. Each year sees 8 million new cases and 2 million deaths as a result of the disease.

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TB
is spread when people who have the active form of the disease cough or sneeze and people nearby breath in these bacteria and become infected. Only 5-10 percent of
infected but otherwise healthy people develop an active TB disease. Most people who carry the bacteria suffer no obvious symptoms and cannot pass on the disease to others during this latent phase of
the infection. But if the immune system is weakened, active TB disease can occur. This occurs most in people infected with HIV/AIDS, which severely weakens the immune system.

The
increased incidence of TB is a consequence of the spread of HIV/AIDS, the emergence of multi-drug resistant strains of TB and variability in protective efficacy of the
only currently available vaccine, Bacillus Calmette-Guérin (BCG). Although the BCG vaccine offers protection against the most serious forms of TB in childhood, its efficacy wanes over a
period of 10-15 years after the vaccination. A need for an alternative vaccination approach has emerged in the last two decades.

In
March 2004 we announced a new collaboration with the Aeras Global TB Vaccine Foundation on the pre-clinical and clinical development of candidate tuberculosis (TB)
vaccines. The
Crucell-Aeras TB vaccine program will focus on improvement of BCG, using our PER.C6 and AdVac technologies. Aeras has agreed to provide us up to $2.9 million contingent upon meeting certain
development milestones, for development of TB vaccine candidates.



Rabies is a viral disease of mammals most often transmitted through the bite of a rabid animal. The virus infects the central nervous system, causing
encephalopathy and ultimately death if medical treatment is not sought before symptoms appear. Rabies is prevalent in all the continental regions of Europe, Asia, America and Africa. Greenland and
countries in Eastern Europe also have rabies in their animal populations. Globally, approximately 10 million people a year are treated after exposure to rabies. Some 40,000 to 70,000 people are
thought to die of the disease each year, mainly in China and India.

Post-exposure
treatment for Rabies is 100% effective and involves the use of a vaccine plus antibodies. Neither vaccine nor antibodies are effective independent of one
another. Current supply and quality of rabies vaccine is sufficient, but anti-rabies antibodies (Human Rabies Immune Globulin (HRIG) and Equine Rabies Immune Globulin (ERIG)) are widely
recognised as being insufficient in quality and supply, as well as posing safety concerns because they originate from human or equine serum. Market opportunities for rabies treatments are projected to
grow significantly as affected countries such as India and China grow in affluence.

We
have developed a human monoclonal antibody product in collaboration with two leaders in the rabies antibody field, the Thomas Jefferson University (TJU) based in Philadelphia and the
U.S. Centers for Disease Control and Prevention (CDC) in Atlanta, using MAbstract and PER.C6.

In
experiments conducted during 2004 in collaboration with TJU and under a Collaborative Research and Development Agreement (CRADA) with the CDC, the antibody product demonstrated
protection in the industry standard hamster model at least equivalent to HRIG.



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 the PER.C6 cell line, where we continually search for additional areas of application, MAbstract, AdVac and
STAR. In the area of vaccines, we are working to identify viruses that can be grown using the PER.C6 technology, which could then be developed into vaccines. In addition to testing for additional
applications of our existing PER.C6 technology, we are researching the creation of new cell lines from a variety of cell sources.

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Other Collaborations and Agreements



Galapagos Genomics N.V. ("Galapagos") is a privately-held discovery company focused on the rapid identification of disease-modifying drug targets
through the functional screening of human disease models, and the subsequent progression of these targets into drug discovery. Founded in Belgium in 1999 as a joint venture between IntroGene
(Crucell's predecessor) and Tibotec-Virco (acquired by Jansen Pharmaceutica, a Johnson & Johnson company), it was established to put PER.C6 technology to use in the field of functional
genomics. Research activities at Galapagos encompass internal programs in osteoporosis, rheumatoid arthritis, osteoarthritis and Alzheimer's disease, as well as numerous partnerships with
pharmaceutical, nutraceutical and biotechnology companies. A newly established services unit, Galadeno, provides reagents and functional screens to such companies for the rapid identification and
validation of novel drug targets. Partners of Galapagos include Bayer, Boehringer Ingelheim, Celgene, Johnson & Johnson, Organon, Pfizer, Procter & Gamble, Vertex and Wyeth.

Galapagos
holds an exclusive license to our PER.C6 technology for conducting activities in the field of functional genomics research. Under the license, Galapagos uses PER.C6 technology
in conjunction with Tibotec's bioinformatics technology to generate adenoviral gene libraries. Tibotec and Crucell have
agreed not to compete with the activities of Galapagos Genomics, which holds the rights to the products and technology that it develops.

Galapagos
Genomics represents a financial investment for us, and we expect that we may sell our interest at some point in the future. Our current ownership has decreased to 20.8% as a
result of private financing by Galapagos in 2002 that raised €23.4 million.

On
March 9, 2005 we announced that Galapagos is considering a Euronext stock exchange listing in 2005. The primary reason for the listing is to raise additional funds to enhance
Galapagos' drug discovery operations, which are predominantly aimed at developing breakthrough medicines for the bone and joint diseases osteoarthritis, osteoporosis and rheumatoid arthritis.



We collaborate with a number of universities worldwide in the areas of vaccines, antibodies, 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 high-level 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.

Intellectual Property and Technology Licenses from Third Parties



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

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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 retaining outside patent counsel, we also employ European and Dutch patent attorneys that file, prosecute, defend and enforce patent rights as well as manage our patent
portfolio. Our patent portfolio comprises 661 active cases (i.e.granted patents in force or pending patent applications) as of December 31,
2004. We aggressively protect our inventions and employ a proactive filing strategy with respect to patent applications. Our portfolio management involves active commercialization and enforcement
strategies combined with disposal of cases that we no longer consider commercially attractive.

The
following table reflects the total number of active cases (pending or granted) through December 31, 2004, organized according to our different fields of operation. All figures
include acquired and jointly owned patent cases, but exclude patent positions licensed-in from third parties. Patent filings classified under vaccines relate to AdVac-based and classical
vaccines. Patent filings classified under antibodies relate to antibodies and/or drug targets, excluding the enabling technologies. Patent filings classified under technology primarily relate to
cell-based production technology, adenoviral vector technology, STAR-technology and related technology, functional genomics and target and antibody discovery technology.

|             |  | Patent Filings
|------------ |  | --------------
|
|Vaccines     |  | 155           
|Antibodies   |  | 70            
|Technology   |  | 131           
|Gene Therapy |  | 53            
|             |  |               
|Total        |  | 409           
|             |  |               

The
following table summarizes the first filings for new inventions and the number of patents granted during 2004.

|             |  | First Filings and Granted Patents in 2004
|------------ |  | -----------------------------------------
|
|Vaccines     |  | 4                                        
|Antibodies   |  | 19                                       
|Technology   |  | 3                                        
|Gene Therapy |  | 1                                        
|             |  |                                          
|Total        |  | 27                                       
|             |  |                                          

Our
new filings in the vaccine field in 2004 reflect our efforts to further strengthen our patent portfolio in support of product development programs in that area. The new filings in
the area of antibodies reflect our intensified research and development in the field of infectious diseases and, to a lesser extent, the completion of development programs in the field of target and
antibody discovery in oncology. The new filings in the technology area relate to our continuing effort to protect and commercialize the PER.C6 technology and related uses of the PER.C6 cell lines.
Since we are not actively involved in gene therapy research and development, only one new filing has been made in that area during 2004.

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We
maintain a geographically diversified filing strategy, depending on our technological and business needs, as well as our view of long-term economic trends and developments
in legal systems in various parts of the world. As of December 31, 2004, we have 96 pending applications in the EU,(1) 117 pending applications in the
U.S.,(2) 31 international patent applications (so-called "PCT(3) applications") and 165 applications in the rest of the world.(4)





A significant number of our pending patent applications are filed under the Patent Cooperation Treaty (PCT), which offers a
cost-effective method to seek provisional worldwide protection in more than 100 countries and territories for the duration of 30 or 31 months from the filing date. The decision to
divide the PCT application into territories in which a granted patent is desired may be postponed until the obtainable scope of protection and the technical and commercial usefulness of the invention
becomes clearer.

We
currently own or co-own 164 granted patents in the EU territory, 29 patents in the U.S. and 59 patents in the rest of the world. During the pendency of a European
patent application, a single application may designate 30 countries but is counted as one pending application. As soon as the European patent application is granted it may be validated for each of the
designated countries by filing a translation into the official language of that designated state. Once such a translation has been filed, we count each such patent as a separate patent.

Our
patent-related activities do not 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.

In
2004, a new regulation, the Technology Transfer Block Exemption Regulation, entered into force in the European Union, which may require us to review and possibly amend existing
license and technology transfer agreements in the future to comply with the new regulation. This review process may be costly and time consuming and may require renegotiation of certain portions of
our licenses and other agreements.

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 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.

In
October 2004 we commenced infringement litigation proceedings against CEVEC Pharmaceuticals in the District Court of Duesseldorf, Germany, arguing that CEVEC's cell line
infringes a recently granted European patent for our PER.C6 technology. In December 2004 CEVEC

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Pharmaceuticals
acknowledged three out of four of our claims, but chose to defend the remaining claim. It is possible that the court will find against us on the remaining claim, and we cannot exclude
the possibility that CEVEC will also file counterclaims in separate proceedings in order to attempt to have certain of our PER.C6 patents revoked or declared invalid.

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.

When
licensing our technology to third parties we seek to obtain access to any improvement patents via so-called grant-back provisions to reduce the risk of being
exempted from using such improvements for our own benefit, or that of our licensees.



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

In
2003 we entered into a technology license agreement with Xoma in the field of bacterial expression technology. This license allows us to develop diagnostic and therapeutic antibodies
in the field of infectious disease using phage-display technology. The agreement provides us with options to expand the license to cover additional disease fields. Under the terms of the agreement, we
pay Xoma milestone payments and royalties on products as and when developed and marketed using the licensed technology.

We
also hold a license under the phage antibody display patent portfolio owned or controlled by Cambridge Antibody Technology and MRC, a cross-license with Transgene S.A. under which we
granted to Transgene a non-exclusive PER.C6 license for the manufacture and sale of certain types of vectors for use in gene therapy, and a license to phage antibody-display technology and
part human, or chimeric, binding proteins and molecules from Enzon Corporation's subsidiary, SCA Ventures, Inc.

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.

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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 toex vivoandin vivotargeting 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 2004. We do not believe there is any specific seasonal pattern to our license or government grant 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.

Obtaining
product approval is a costly and time-consuming process. All of our potential products, and those of our licensees, are either in research or development. Any
products our licensees or we 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 European Medicines Agency (EMEA) in Europe, the Food & Drug Administration (FDA) in the United States,
theCollege ter Beoordeling van Geneesmiddelen(CBG) in The Netherlands and comparable agencies in other countries to subject new biopharmaceutical
products to extensive regulation. These regulatory requirements with which our licensees and we will have to comply will evolve over time due to the novelty of the biopharmaceutical products and
therapies currently under development. Fortunately, the harmonization of these requirements is promoted at an international level (International Conferences on Harmonization (ICH)) to avoid
unnecessary repetition of studies when seeking approval in various countries. Under the current definitions, we believe that products developed using our technologies will be regulated either as
biological products or as drugs.

Before
marketing a (bio)pharmaceutical product, companies require regulatory approval from the relevant authorities. To obtain this approval, pre-clinical animal studies and
human clinical trials must be conducted to demonstrate the safety and efficacy of the product candidates. Clinical trials are the means by which experimental drugs or treatments are tested in human
volunteers. New therapies typically advance from laboratory research testing through animal pre-clinical testing and finally through several phases of clinical human testing. On successful
completion of the clinical trials and demonstration that the product can be manufactured in a safe and consistent manner, approval to market the biopharmaceutical may be requested from the EMEA in
Europe, the FDA in the United States or their counterparts in other countries.

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Clinical trials are normally done in three phases:



There is a broad range of legislation in force in member states of the EU governing the testing, manufacturing and marketing of biopharmaceutical products, both
at an individual as well as a central level (European Commission Directives). This legislation imposes specific requirements on various topics including pre-clinical and clinical testing
and the operation of laboratories and manufacturing sites. Furthermore, there are specific directives and other legislation on, among other things, pricing, distribution, labeling and advertising of
medicinal products.

At
the central level, legislation on medicinal products was first enacted in Directive 65/65/EEC: "on the approximation of provisions laid down by law, regulation or administrative
action relating to medicinal products". Subsequent Directives (75/318/EEC, 75/319/EEC and 93/39/EEC) have further amended and expanded the original provisions, resulting in a system for the regulation
of drugs, or medicinal products as they are called in the EU, based on the principle of mutual recognition. Under this mutual
recognition procedure, the applicant first submits its product for review to one or more EU member states. The first member state that decides to evaluate the product is called the reference member
state. After the reference member state has assessed the medicinal product for quality, safety, and efficacy and has granted a national marketing authorization, other member states that have received
copies of the application have 90 days for evaluation before they must grant authorization as well. In case of refusal, the application will be sent to the Committee for Human Medicinal
Products (CHMP) for arbitration.

An
alternative, centralized, approach for registration has been provided by Directive 93/41/EEC and Council Regulation No 2309/93, which lay down EU procedures for the authorization and
supervision of medicinal products for human and veterinary use and establish a European Medicines Agency (EMEA). Under this centralized procedure, which has been implemented for so-called
high technology medicinal products, particularly those derived from biotechnological processes, applicants submit their dossier for authorization to the EMEA. The EMEA coordinates the assessment
process by appointing two EU member states as a rapporteur and co-rapporteur, respectively, who will assess the application and prepare draft reports for review by the CHMP. The CHMP
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 with 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.

Since
May 1, 2004, the Clinical Trial Directive (2001/20/EC) has come into effect. The aim of this directive is to harmonize the process for authorization and conduct of clinical
trials as it is implemented in the individual EU member states. As a result of Directive 2001/20/EC, the GMP requirements for the manufacture of investigational drugs have been changed, and a specific
requirement for product release by a Qualified Person has been included in the requirements. Also,

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regulatory
inspections of manufacturing facilities for investigated drugs have been made obligatory, where in the past this was on a voluntary basis in most European countries. Manufacturers of
pharmaceutical products operating within the EU must hold a manufacturer's authorization and must comply with the requirements of good manufacturing practice (GMP) incorporated into EU legislation
(2003/94/EC). We have already obtained a GMP manufacturing license for our pilot facilities, and we also employ two Qualified Persons for production releases. 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.



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 or manufacturing and marketing of biologics or drugs may begin.

In
order to gain FDA approval to conduct clinical trials, pre-clinical studies must generally 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, in addition to information regarding the manufacture of the medicinal
product, as a part of an application for an Investigational New Drug, or IND. Furthermore, the IND application includes a detailed description of the clinical investigations.

The
clinical studies are designed to demonstrate the safety and efficacy of the new drug. 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. Recently, the FDA has issued the so-called "two animal rule." According to
this rule, extensive clinical trials in humans intended to demonstrate efficacy may not be necessary when it is unpractical or unethical to perform efficacy trials. Instead, the efficacy must be
demonstrated in relevant animal models, while safety trials in human volunteers will continue to be required.

After
all studies and trials of a new product have been completed, applicants must submit all data to the FDA for review in order to obtain marketing approval. If the product is
regulated as a biologic, applicants must submit a Biologic License Application, or BLA. If the product is classified as a new drug, a New Drug Application, or NDA is required. The NDA or BLA must
include results of product development activities, pre-clinical studies and clinical trials in addition to detailed manufacturing information.

The
FDA subjects NDAs or BLAs to a detailed and potentially time-consuming 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.

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 that the
NIH conducts or supports, including proposals to conduct clinical research involving DNA therapeutics, including our collaboration with the NIH to develop Ebola and malaria vaccines. The NIH review of

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clinical
trial proposals is a public process and usually involves review and approval by the Recombinant DNA Advisory Committee of the NIH.

Biologics Master File.The PER.C6 cell substrate Biologics Master File (BMF) is the regulatory
dossier filed with the FDA in the United States, which describes various aspects of our PER.C6 technology. We have submitted a Biologics Master File (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 product that they may produce using it. This may assist our licensees in applications they may make to the FDA for products manufactured using the PER.C6 technology. We are required
by regulators to supplement our BMF when new information arises.

During
2003, we expanded our cooperation agreement made with Merck & Co., Inc., which relates to the PER.C6 cell substrate Biologics Master File in the U.S., and equivalent
authorities in other jurisdictions. Under the terms of the agreement, we agreed to work closely with Merck on matters relevant to maintenance of the PER.C6 cell substrate BMF, including the provision
of technical assistance and guidance from Merck as appropriate.

Competition

The field of biotechnology is one of rapid change and innovation. We expect that this industry will continue to experience significant technological and other
changes in the years ahead. We operate in highly competitive markets and we may experience competition from companies that have similar or other technologies, and other products or forms of treatment
for the diseases we are targeting. We also may experience competition from companies that have acquired or may acquire technology from 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.



With respect to 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 (Madin Darby Canine Kidney cells) and VERO (monkey cells) as well as on production platforms based on 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
vaccines against infectious diseases include Wyeth, sanofi pasteur, Merck & Co., Chiron, Acambis, Baxter, GenVec, Berna Biotech, Bavarian Nordic, Baxter, Solvay, Shire, Vical and Nobilon.

In
the area of influenza, we are aware that Solvay has obtained registration in The Netherlands for a vaccine based on MDCK cells. We are aware of other biotechnology and pharmaceutical
companies that currently are developing influenza vaccines based on MDCK cells, including Shire and Chiron. In addition, we are aware that Baxter has obtained approval in Austria for its
VERO-based influenza vaccine. For other European markets Baxter appears to have stopped at Phase II in December 2004.

In
the area of West Nile virus, we are aware that Acambis is conducting a Phase I clinical safety study in humans with its West Nile ChimeriVax vaccine. This vaccine uses a genetically
engineered yellow fever 17D live virus containing the genes encoding the antigens responsible for protection

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against
West Nile virus. We also are aware that Vical is developing a DNA-based West Nile virus vaccine that uses portions of the genetic code of a pathogen to cause the host to produce
specific features of the pathogen that may induce an immune response. This method could potentially offer superior safety, ease and reliability of manufacturing, as well as storage and handling
advantages, compared with conventional vaccines that use live, weakened or dead pathogens to produce an immune response. In addition, other parties are working on human West Nile virus vaccine
research. The University of Queensland is working on a vaccine based on the relatively harmless Kunjin virus, a flavivirus found in Australia, and Hawaii Biotech received significant funding from the
NIH in December 2004 in support of the pre-clinical development of its West Nile vaccine candidate.

In
the area of Ebola, we are aware that Vical is conducting Phase I clinical efficacy studies with its DNA-based Ebola vaccine and has initiated GMP manufacturing for the NIH
with whom they are jointly developing the vaccine. We are aware that Health Canada, a federal government organization, is conducting pre-clinical studies with its Ebola vaccine that is
based on a live replication competent Vesicular Stomatitis Virus (VSV) vector. We are also aware that the U.S.
Army Medical Research Institute of Infectious Diseases (USAMRIID) is conducting pre-clinical studies with its recombinant Ebola vaccine, which is based on Ebola
virus-like-particle (VLP) technology. USAMRIID is also involved in a CRADA with AVI BioPharma in testing the latter's antisense drugs against Ebola. AVI BioPharma
received funding from the U.S. Senate Committee on Appropriations in June 2004 to support this and its work on Marburg virus.

In
the area of malaria, we are aware of two companies conducting Phase I/II clinical studies with malaria vaccine candidates based on virus-like-particle (VLP)
technology: GlaxoSmithKline Biologicals (GSK) and Apovia. We are also aware that Oxford (The Wellcome Trust Centre for Human Genetics) and GSK are jointly developing a malaria vaccine using live
vector technology, and that this vaccine is in Phase I/II a clinical studies. In addition, Oxford is conducting Phase I/II clinical studies with three additional malaria vaccine candidates based on
live vector technology, as well as pre-clinical studies with one additional vaccine candidate based on live vector technology. We are aware that the Pasteur Institute is conducting Phase
I/IIa clinical studies with its malaria vaccine candidate, which is based on Long Synthetic peptide technology (LSA-3).

For
tuberculosis, a number of companies, government bodies and academic institutes around the world are working on the development of new vaccines. The NIAID in the U.S. is involved in a
range of early-stage efforts relating to live-attenuated, subunit and naked DNA type vaccine candidates. Our partner, the Aeras Global TB Vaccine Foundation, is working on various other
programs including a live recombinant TB vaccine with the David Geffen School of Medicine at UCLA, which entered its first clinical trial in March 2004. In October Nature Medicineannounced an
Oxford University subunit vaccine, designed to work in tandem with the existing BCG vaccine, had successfully completed
safety trials with positive T-cell responses.



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., XOMA and SCA Ventures, Inc., a subsidiary of Enzon Corporation, are also working in the field of phage display
libraries and related technologies.

In
the area of infectious disease antibodies, potential competitors include serum antibody companies such as Chiron and Baxter, and monoclonal antibody companies like Neutec Pharma,
MedImmune, XTL Bio, Inhibitex and Biosynexis. For rabies specifically, Crucell's antibody product may

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offer
an alternative to the existing Rabies Immune Globulin products, both Human (HRIG) and Equine (HRIG), that are currently paired with rabies vaccine for effective post-exposure
treatment.



Other companies use cell lines derived from animals. Chinese hamster ovary (CHO) and murine myeloma (NS0) cells are widely used for the development and/or
commercial production of monoclonal antibodies and other recombinant proteins by companies including Genentech, Biogen, Centocor, Amgen, Lonza and Boehringer Ingelheim.

We
are aware of a human cell-line expression platform used for production of recombinant proteins, the 293 human cell-line, which shares some of the advantages of
the PER.C6 cell line. The 293 human cell line is utilized by Eli Lilly & Company to produce a protein for the treatment of adult severe sepsis. The FDA and the EMEA have approved this product
and it is currently available for use. We are aware that scientists have published research describing human cell culture systems that appear to have similarities to our PER.C6 cell line.



With respect to vector development, we are aware of several competing technologies, including those of GenVec and Merck & Co., which 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, Plant and Equipment

Our research activities and corporate offices are located in facilities of approximately 7,800 square meters in Leiden, The Netherlands. We sub-lease
1,000 square meters of this space to Pharming Technologies B.V. and 500 square meters to Galapagos Genomics. In addition, we lease 770 square meters of space adjacent to these corporate offices, of
which 439 square meters is subleased to a third party. Our plant and production facilities are located in a separate building in the Leiden BioScience Park, including 265 square meters of production
space, 75 square meters of quality-control laboratories and 228 square meters of office space.

The
section of the main building that we use includes 2,100 square meters of laboratories, with BioSafety Level (BSL) 1, BSL 2 and BSL 3 labs, including an animal facility. The remainder
of the main building is divided into 2,800 square meters of office space and 1,400 square meters for storage, technical areas, washrooms, waste destruction and sterilization.

Insurance

We have in place general third party public and product liability insurance. Our policy would not cover any of our activities domiciled in the United States or
Canada, has a limit of liability 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 management board, management committee and the supervisory board.

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Sales and Business Development

We currently employ seven people in our sales and business development operations. Our business development strategy has historically involved contacting
prospective licensees, assessing their interest in our technologies, and, if the prospective licensee indicates interest, negotiating a license and/or collaboration agreement pursuant to which we
deliver the applicable technology to, or collaborate with, the licensee. For some of our contracts we provide services, for which we are paid at different rates. To support our licensing activities we
at times provide our technology for free for a short term evaluation
by the licensee, or provide contract service activities prior to providing a license, such as generation of an antibody production clone or production of adenoviral vectors.

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Item 5.    Operating and Financial Review and Prospects

The following discussion 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 us 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. See "Forward-looking Statements" and Item 3, "Key InformationRisk Factors." 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 and option data.

Operating results

Overview



We are a biotechnology company that combines proprietary technologies to discover, develop and produce a variety of biological products for the prevention and
treatment of infectious diseases. Unlike
the technologies generally employed in our industry, our technologies enable the development and production of biological products that may overcome the limitations inherent in many currently
available products. We face a variety of challenges and opportunities in bringing our products to market and responding to the dynamics of the biotechnology industry, which is characterized by rapid
change and intense competition. Our strategy revolves around continued investment in research and product development, particularly related to infectious diseases, expanding the portfolio of licensees
using our proprietary technology, partnering with global industry leaders, and working to improve our operating results and financial strength. Our financial strength and ability to adapt to the
current market and economic conditions are dependent, in part, on the cost of bringing novel vaccines to market in our chosen field, the success of our licensees in developing commercial products
using our technology, and effective management of our working capital.

We
generate revenue and cash flow primarily through the licensing of our proprietary technology. In areas where we are not developing our own products, we offer our PER.C6 technology to
the biopharmaceutical industry for the development and production of diverse biopharmaceutical products. Within our chosen areas of focus, we sometimes collaborate with leading biopharmaceutical
manufacturers to develop products or processes.

In
2004, our revenues increased to €22,622 from €7,424 in 2003 and €9,575 in 2002. During this period, our total headcount increased from
183 to 210 employees on a full-time basis. At December 31, 2004, 171 of our 210 full time equivalent employees were engaged in, or directly supported, research and development
activities.

Our
total cost and expenses were €68,231 in 2002, €33,916 in 2003 and €45,348 in 2004. These amounts included non-cash charges
of: €33,593 in 2002 related to developed technology amortization, goodwill impairment and stock option compensation; and €4,026 and €4,532 related to
developed technology amortization and stock option compensation in 2003 and 2004, respectively. We incurred a loss from operations of €22,726 in 2004 as compared to an operating loss
of €26,492 in 2003. At December 31, 2004, our accumulated deficit was €274,524 and our total shareholders' equity was €78,535. 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.

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With
the discussion of our financial condition and results of operations that follows, we intend to provide information that will assist in understanding our financial statements, the
changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and
estimates affect our financial statements.



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 requires us to make 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, which impacts the valuation 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. The development and selection of our critical
accounting estimates have been discussed by management with our audit committee.



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 generally larger than the subsequent annual or semi-annual payments. Certain license agreements provide for additional
non-refundable license fees to be paid upon the achievement of contractually defined milestones.

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

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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, in certain
arrangements we collaborate with a licensee to achieve certain specified results. Under these agreements, we have significant continuing performance obligations related to research and development
subsequent to the delivery of the licensed technology. We recognize non-refundable up-front payments as revenue over the expected period of our significant continuing
involvement, the term of which is consistent with our development plans. Our two most significant collaboration agreements are with DSM Biologics and sanofi pasteur. In 2003, we recognized revenue of
€1,250 related to our arrangement with DSM and no revenue related to our arrangement with sanofi pasteur. In 2004, we recognized revenue of €5,250 related to our
arrangement with DSM and €5,792 related to our arrangement with sanofi pasteur.

Certain
of our license arrangements provide for additional non-refundable license fees to be paid upon the achievement of milestones. We recognize such additional license
fees as revenue when the amounts become due and payable.

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
part of various collaboration agreements, we receive service fees for work performed under such agreements.



We perform tests for impairment of intangible assets whenever events or circumstances suggest the value of such assets may be impaired. At December 31,
2004, our intangible assets consisted entirely of developed technology with a net carrying value of €4,047. To evaluate potential impairment of developed technology, we assess whether
the future cash flows related to the 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 still not have resulted in an impairment charge.



We account for employee stock-based compensation in accordance with the fair value method under Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" and we account for non-employee stock-based compensation in accordance with Emerging Issues Task Force No. 96-18, "Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." We value our stock options and stock warrants using the Black-Scholes
and Bloomberg pricing models 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 or stock warrant. These estimates have been prepared based upon our historical experience and our best

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estimation
of the future. Changing any of the above assumptions, particularly the expected volatility of our stock price or the expected life of our stock options, would have a significant impact on
the amount of compensation expense recognized.

Results of Operations



The following table shows our revenues for each of the years in the three-year period ended December 31, 2004, and the percentage changes
between these periods.

|                                    |  | Year ended December 31, |  |        |  |        
|----------------------------------- |  | ----------------------- |  | ------ |  | -------
|
|
|License revenues                    |  | €6,664                  |  | €4,800 |  | €12,429
|Service fees                        |  |                        |  | 404    |  | 5,712  
|Government grants and other revenue |  | 2,911                   |  | 2,220  |  | 4,481  
|                                    |  |                         |  |        |  |        
|Total revenues                      |  | €9,575                  |  | €7,424 |  | €22,622
|                                    |  |                         |  |        |  |        

Our
total revenues increased by 204.7% in 2004 compared with 2003, and decreased by 22.5% in 2003 compared with 2002. In 2004, the increase in total revenues compared to 2003 is
primarily due to an increase in license revenues from new and existing contracts of €7,629 or 158.9%, an increase in service fees for collaboration agreements of
€5,308 and an increase in government grant and other revenues of €2,261 or 101.8%. The decrease in 2003 compared to 2002 was primarily due to a decrease in license
revenues of €1,864 or 28.0%. The decrease in license revenue was principally due to a decrease in initial license fees from new license arrangements in 2003 and, to a lesser extent,
existing licensees electing not to continue their license arrangement. In 2004, we recognized revenue of €3,886 from twenty new PER.C6 license arrangements versus €587
from ten new PER.C6 license arrangements in 2003. Also, a significant initial license fee from an arrangement we entered into with sanofi pasteur in 2003 was not recognized as revenue, but is deferred
and will be recognized as revenue over three years, the period of our expected continuing involvement. During 2003, existing licenses with Cell Genesys, Inc., NatImmune A/S, Novavax,
Pfizer, Inc., and Schering AG were terminated. In the aggregate, annual payments from these license arrangements and options amount to €536.

Revenues
generated from government grants and other revenue increased 101.8% in 2004 to €4,481 after a decrease of 23.7% in 2003. The increase in 2004 is primarily a
result of additional subsidies that were granted by the Dutch government and additional revenues recognized from our services. The decrease in 2003, amounting to €691, was primarily a
result of a decreased level of production fees received in connection with our production facility, and lower reimbursable research and development expenses. Total fees recognized as revenues in
connection with our production facility in 2004 and 2003 were €1,040 and €235, respectively.

In
the past, we have experienced significant fluctuations in quarterly revenues and expects to continue to experience such fluctuations in the future.

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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, 2004, and the percentage
change between these periods.

|                                    |  | Year ended December 31, |  |           |  |          | 
|----------------------------------- |  | ----------------------- |  | --------- |  | -------- | 
|
|
|Cost of service fees                |  | €                      |  | €     399 |  | €  5,644 | 
|Research and development            |  | 24,252                  |  | 21,885    |  | 20,468   | 
|Selling, general and administrative |  | 10,386                  |  | 7,606     |  | 14,704   | 
|Developed technology amortization   |  | 1,331                   |  | 1,330     |  | 1,966    | 
|Goodwill impairment                 |  | 30,891                  |  |          |  |         | 
|Stock-based employee compensation   |  | 1,371                   |  | 2,696     |  | 2,566    | 
|                                    |  |                         |  |           |  |          | 
|Total costs and expenses            |  | €68,231                 |  | €33,916   |  | €45,348  | 
|                                    |  |                         |  |           |  |          | 

Research and Development Expenses.In 2004, research and development expense represented 45.1% of our total costs and
expenses. 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. 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 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.

Research
and development expenses decreased by 6.5% in 2004 compared with 2003 after a decrease of 9.8% in 2003 compared with 2002. The decrease in 2004 was due to an increase in the
allocation of research and development related expenses to cost of service fees. The number of research and development employees increased from 151 at the end of 2003 to 169 at the end of 2004.

The
decrease in 2003 was partially due to a decrease in our number of full-time employees engaged in research and development during 2003 from 154 at the end of 2002 to 151
at the end of 2003. During 2002 we had a maximum of 196 full-time employees, which resulted in a significant increase in laboratory expenses. In addition, fees paid for research and
development performed by third parties decreased from €2,300 in 2002 compared to €1,794 in 2003. Finally, the decrease of research and development activities in 2003
compared to 2002 was due to changes made to our overall compensation programs and severance benefits paid to employees in 2002, including a severance payment of €650 to our former
Chief Scientific Officer.

Selling, General and Administrative Expenses.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, investor relations, legal and general management, costs of professional services (such as
financial, legal, and accounting) and lease expenses.

In
2004, selling, general and administrative expenses were €14,704, an increase of 93.3% compared to €7,606 in 2003. This increase was primarily driven by
increases in non-cash expenses of €4,800. Non-cash expenses consisted of a €3,100 increase in warrant expenses as a result of share price
increases, and a €1,700 non-cash increase in compensation expense. This is related to a one-time, non-cash reduction of compensation expenses in
2003. The remaining €2,300 increase in selling, general and administrative expenses was mainly due to increases in insurance premiums, advisory costs and compensation expenses over the
year.

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Selling,
general and administrative expenses decreased by 26.8% in 2003 compared with 2002. The decrease in 2003 was primarily due to changes in our overall compensation programs and, to
a lesser extent, continued focus on operational cost control. In addition to employee salaries, our compensation program includes the issuance of options to employees as a means of attracting and
retaining talented personnel. As described in Note 6 to our financial statements, our stock option plan provides for the issuance of stock options with an exercise price that exceeds the fair
value of our ordinary shares on the date of grant. Under the terms of a cash bonus plan, if an employee maintains continuous employment with us for a period of four to five years and exercises the
option in the last month of the option term, the employee receives a cash bonus. We recognize compensation expense ratably during the employment period required under the cash bonus plan.

In
January 2003, the supervisory board approved a stock option plan whereby employees previously awarded options with an exercise price of €21.00 were be able to
exchange such options for an equal number of new options with an exercise price of €3.49. In conjunction with the replacement of these options, participating employees forfeited their
right to receive the cash bonus related to the €21.00 option award. Accordingly, the Company recorded a reduction to compensation expense of €2,300 related to the
forfeited cash bonus awards. This reduction to compensation expense is one-time, non-cash charge and is not indicative of operational changes that will benefit future periods.

In
April 2004, the supervisory board approved a new option plan whereby employees and supervisory board are granted options with an exercise price 126% greater than the average
closing stock price of the Company on the three days preceding the option grant date and have a five year life. The options are subject to profit retribution provisions. Such provisions entitle the
Company to receive a portion of the profits upon the sale of the shares, calculated as the difference between the total proceeds from the sale of shares, and the aggregate selling price. The portion
of the profits payable to the Company decreases ratably over three 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 the employee terminates employment prior to the end of the three-year period.

Developed Technology Amortization.Amortization of developed technology was €1,966 and
€1,330 in 2004 and 2003, respectively. In 2004, the amortization relates to developed technology acquired in 2004 and acquired in connection with a business combination in
June 2000. The amortization in 2003 only relates to developed technology acquired in 2000. We amortize the developed technology using the straight-line method over a
5-year period. The carrying value per December 31, 2004 is €3,381 for the developed technology acquired in 2004 and €666 for the developed technology
acquired in 2000.

Goodwill Amortization and Goodwill Impairment.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 and the amount was charged to operations.

Stock-based Employee Compensation.Stock-based employeecompensation
decreased to €2,566 in 2004 from €2,696 in 2003 after an increase compared to €1,371 in 2002. The increase in 2003 compared to 2002 was primarily due to
the issuance of 2,512,554 options during the year and changes made to the terms of all outstanding stock options to supervisory board members such that the options vest immediately and are no longer
subject to profit retribution provisions. Accordingly, we recognized compensation expense of €495 representing the total amount of deferred compensation associated with options held by
members of the supervisory board.

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The following table shows our net interest income for each of the years in the three-year period ended December 31, 2004, and the percentage
change between these periods.

|                     |  | Year ended December 31, |  |        |  |        | 
|-------------------- |  | ----------------------- |  | ------ |  | ------ | 
|
|
|Interest income, net |  | €3,547                  |  | €2,143 |  | €1,503 | 

Net
interest income decreased 29.9% in 2004 compared with 2003 and decreased 39.6% in 2003 compared with 2002. The decreases in 2004 and 2003 are primarily the result of lower average
interest yields on available cash balances and lower cash balances due to the funding of operations.

Interest
expenses relating to capital lease contracts are included in the foregoing. Those expenses amounted to €221 in 2003 and €212 in 2004.



We incurred a net loss of €507 in 2002, 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 and therefore no equity losses were recognized in 2003 and 2004.

Liquidity and Capital Resources

As of December 31, 2004, we had €76,711 in cash and cash equivalents.

To
date, we have financed our operations primarily through equity issuances (including exercises under stock-based compensation plans). Since our initial public offering in 2000, which
generated net proceeds of €128,003, proceeds from equity issuances amounted to €3,149, including €1,409 in 2004. In 2004, 2003 and 2002, we received
proceeds of €741, €1,258 and €5,349, respectively, from sale and leaseback transactions.

We
made capital investments in plant and equipment of €2,972 in 2002, €3,448 in 2003 and €2,114 in 2004. In 2003, we received proceeds of
€1,306 from the sale of available-for-sale securities, which were received in exchange for services rendered. We do not maintain any available for sale
securities as of December 31, 2004.

In
2004 we acquired the outstanding capital stock of ChromaGenics B.V., a privately held biotechnology company based in Amsterdam, the Netherlands. The acquisition has been accounted for
as an acquisition of developed technology. We paid €4,017 in cash as well as entered into a contingent payment agreement that could result in an additional payment of
€7,000 upon our receipt of revenues generated from the STAR technology. After the payments of the contingent consideration, we will pay a royalty on revenues generated from the STAR
technology through the date the STAR technology patent expires.

Our
cash flow from financing activities decreased from €5,874 in 2002 to €666 in 2003 and increased to €1,018 in 2004. The decrease in
2003 was primarily due to a decrease in proceeds from sale and leaseback transactions of €4,091 to €1,258. The increase in 2004 was primarily a result of additional
proceeds from the issuance of ordinary shares that resulted from the exercise of employee stock options. We do not expect to generate significant cash proceeds from sale and leaseback transactions in
the future. In 2003 and 2004, we made principle payments under capital lease obligations of €902 and €1,132, respectively.

We
expect to continue to make investments in plant and equipment as required by our development programs. Investments in plant and equipment will be mainly financed through capital

49

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leases,
and is not expected to impact our burn rate significantly. 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.

Certain
of our lease agreements contain provisions whereby we are required to make immediate payment of all amounts due under the lease in the event our cash and cash equivalents balance
falls below €25,000 or our stockholders' equity or our cash and cash equivalents balance falls below €75,000. At December 31, 2004, €3,880 of
amounts due under leases are subject to this provision.

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. At the end of 2004, the
Netherlands government enacted a tax rate reduction. As a result of this change in law, the Netherlands statutory tax rate will be reduced in steps to 30% through 2007.

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 law could limit our ability to realize the benefits of our tax loss carry forwards in the future. We had tax loss carry
forwards of €85,766, €68,802, and €55,289 at December 31, 2004, December 31, 2003 and December 31, 2002, respectively.

Research and Development

Our research and development spending totaled €20,468, €21,885 and €24,252 for the years 2004, 2003 and 2002,
respectively. For a description of our research and development practices and policies, see "Item 4. Information on the CompanyResearch and Development."

Trend Information

Please see "Operating Results" and "Item 4. Information on the Company" for trend information.

Off-Balance Sheet Arrangements

We have no unconsolidated special purpose financing or partnership entities or other off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that
is material to investors.

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Tabular Disclosure of Contractual Obligations and Commercial Commitments

Future minimum payments for all contractual obligations for years subsequent to December 31, 2004 are as follows:

|                                       |                                         | Total   |       | Less than
one year |   | 1-3 years |       | 3-5 years |   | More than
5 years
|-------------------------------------- | --------------------------------------- | ------- | ----- | ------------------ | - | --------- | ----- | --------- | - | -----------------
|Contractual Obligations                |                                         |         |       |                    |   |           |       |           |   |                  
|Operating leases                       |                                         | 9,285   |       | 1,838              |   | 3,692     |       | 3,654     |   | 101              
|Capital leases, short term             |                                         | 1,345   |       | 1,345              |   |          |       |          |   |                 
|Research and license                   |                                         | 5,151   |       | 1,828              |   | 3,323     |       |          |   |                 
|Other Long-Term Liabilities agreements |                                         |         |       |                    |   |           |       |           |   |                  
|                                       | Long term obligations capital leases    |         | 1,443 |                    |  |           | 1,443 |           |  |                  
|                                       | Long term obligations deferred revenues |         | 4,198 |                    |  |           | 4,198 |           |  |                  
|                                       |                                         |         |       |                    |   |           |       |           |   |                  
|Total                                  |                                         | €21,422 |       | €5,011             |   | €12,656   |       | €3,654    |   | €101             
|                                       |                                         |         |       |                    |   |           |       |           |   |                  

As
of December 31, 2004, certain lease agreements contain provisions whereby we are required to make immediate payment of all amounts due under the lease in the event our cash and
cash equivalents balance falls below € 25,000 or stockholders' equity or cash and cash equivalents balance falls below € 75,000. As of
December 31, 2004, €3,880 of amounts due under leases are subject to these provisions. As of March 2005 these covenants have been withdrawn for several contracts.
Consequently only €1,800 of amounts due under leases is subject to these provisions as of March 2005.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board ("FASB") issued a revision of FASB statement No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123 (R)"). This statement supersedes Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation
guidance. SFAS No. 123 (R) addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for either equity instruments of the
company or liabilities that are based on the fair value of the company's equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123 (R) eliminates
the ability to account for share-based compensation transactions using the intrinsic method and generally requires that such transactions be accounted for using a "fair-value"-based method
and recognized as expense in our consolidated statement of operations. SFAS No. 123 (R) is effective as of the beginning of the first interim or annual reporting period that begins after
June 15, 2005. We are currently evaluating the impact of SFAS 123(R) on our consolidated financial statements.

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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.

At
the annual general meeting of shareholders in 2004, our shareholders approved the amendment of our articles of association. Most of the amendments to the articles of association are
based on the principles and provisions of the Dutch corporate governance code. For more information on our articles of association see Item 10"Memorandum and Articles of
Association."

Supervisory 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 four years after the date of their appointment.
They may be reappointed for two consecutive terms of four years. The holder of our priority shares, Stichting Prioriteit Crucell, also referred to as the Priority Foundation, 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 an absolute majority of the votes
cast. This vote must represent more than one third 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. If the holders of our priority shares made a non binding nomination, then an appointment in deviation with the nomination is
only possible by a resolution of the general meeting of shareholders taken by an absolute majority of the votes cast, representing at least one third of our issued capital. The supervisory board
members retire according to a rotation plan that the supervisory board establishes.

Our
supervisory board appoints its own chairman and must adopt rules for its own internal governance and establish committees. The supervisory board must, in any event, establish an
audit committee, a remuneration committee and a nomination committee. Passing supervisory board decisions requires a majority of the votes cast at a meeting of our supervisory board, unless otherwise
provided for in the articles of association or the by-laws of the supervisory board. The supervisory board is assisted by a company secretary.

A
supervisory board member can be suspended or dismissed at any time by a resolution of our general meeting of shareholders passed by an absolute majority of the votes cast. This vote
must represent more than one third of our issued share capital. Within three months after a suspension, our general meeting of shareholders must either dismiss the supervisory director, terminate the
suspension or extend it. The total suspension may not exceed three months.

The
general meeting of shareholders determines the supervisory board members' compensation. In contrast to the provisions of the Dutch corporate governance code, we pay our supervisory
board

52

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members
in options on our ordinary shares as well as cash, and 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. As of March 31, 2005 our supervisory board
members held an aggregate of 269,188 of our ordinary shares. See "Share Ownership."

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

|Name              |  | Age |  | Position |  | Service period
according to
rotation scheme
|----------------- |  | --- |  | -------- |  | -------------------------------------------
|Pieter Strijkert  |  | 69  |  | Chairman |  | 2006                                       
|Jan Oosterveld    |  | 61  |  | Member   |  | 2007                                       
|Phillip Satow     |  | 63  |  | Member   |  | 2006                                       
|Claes Wilhelmsson |  | 66  |  | Member   |  | 2005                                       
|Seán Lance        |  | 57  |  | Member   |  | 2005                                       

Mr. Deleage
and Mr. Van Beneden resigned from the supervisory board on June 3, 2004 when their terms expired.

Mr. Arnold
Hoevenaars is expected to be nominated by the Priority Foundation to be appointed to the supervisory board by the annual meeting of shareholders scheduled for
June 2005. In anticipation of his nomination, Mr. Hoevenaars has attended supervisory board meetings as an observer since July 2004.

Mr. Domenico
Valerio was appointed a member of our supervisory board, effective January 1, 2005, at our annual meeting of shareholders in June 2004. In
January 2005, Mr. Valerio and we agreed that he
would not serve as a member of our supervisory board, but would continue to serve us in an advisory role with an emphasis on investor and public relations.

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

Pieter Strijkerthas served as chairman of our supervisory board since our incorporation. He also 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 currently serves on the boards of Chiron
Corporation, a position he has held since 1987, and Paratek Pharmaceuticals, Inc., a position he has held since 1998. He served as chairman of the supervisory boards of Pharming from 1995 to
2001, and for deVGen N.V. and PamGene B.V. from 2000 to 2003. From 1985 to 1995 he was a member of the managing board of Gist-Brocades N.V. Mr. Strijkert has a PhD from the
University of Utrecht.

Jan Oosterveldretired from Royal Philips Electronics N.V. on April 1, 2004, after an international career of 32 years. He
was responsible for Corporate Strategy,Corporate Alliances and the joint ventures with LGE on CRT and LCD. In the latter responsibility he was the Chairman of the Board of LG.Philips Ltd, which
went public in April 2004 and Vice-Chairman of the Board of LG.Philips Displays BV. He was also the CEO of Philips Asia Pacific. He graduated as a Mechanical Engineer from the
Technical University Eindhoven, and holds an MBA from the Instituto de Estudios Superiores de la Empresa (IESE) in Barcelona. He was appointed Professor at IESE in 2003. Mr. Oosterveld has
served as a member of our supervisory board since May 2004. He is appointed as member during the annual general meeting of shareholders on June 3, 2004. He is also a member of the Board
of Barco, Kortrijk, Belgium, Atos Origin, Paris, France, Cookson Electronics Group, London, UK and Continental, Hannover, Germany.

Phillip Satowhas served as a member of our supervisory board since our incorporation. He spent 14 years at Pfizer, Inc.
where his last position was vice president, Pfizer Europe. From 1985 to 1997, he

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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 public boards of Forest Laboratories Inc. (FRX), and Eyetech Pharmaceuticals Inc. (EYET) and is Chairman
and CEO of JDS Pharmaceuticals LLC, a privately held pharmaceutical company. Mr. Satow received a Masters in Economics from Georgetown University.

Claes Wilhelmssonhas served as a member of our supervisory board since May 2003. He was previously the Executive Director of
research and development of AstraZeneca PLC from 1999 to July 2002, where he was responsible for AstraZeneca's global R&D. He joined Astra in 1985 and held various positions
until the company merged with Zeneca in 1999. Prior to Astra, he was a lecturer and researcher at the University of Göteborg in Sweden, where he also completed his medical education and
PhD. He currently serves on the boards of a number of biotechnology and start-up companies. Dr. Wilhelmsson previously served on the board of AstraZeneca PLC.

Seán Lancehas served as a member of our supervisory board since January 2004. Mr. Lance is the past chairman
of Chiron Corporation. He joined Chiron as president and chief executive officer in 1998. From 1985 to 1998 he was employed at Glaxo Holdings where his last position was group chief operating officer
and CEO designate. He is a past president of the International Federation of Pharmaceutical Manufacturers Association. Mr. Lance is a chartered company secretary and administrator and he also
holds a post-graduate qualification in Advanced Financial Management.

Arnold Hoevenaarshas been attending our supervisory board meetings as an observer since July 2004. We expect that he will be
nominated by the Priority Foundation as an independent supervisory board member, and that shareholder approval for his appointment shall occur at our next Annual General Meeting, scheduled for
June 2005. Mr. Hoevenaars is a chartered accountant in the Netherlands, and his previous positions include, among others, Chairman of the Management Board of the Achmea Group, Chairman
of the Board of Directors and Chairman/CEO of the Executive Board of Eureko B.V. and member of the Management Board and Chief Financial Officer of Royal Boskalis Westminster N.V.



Our supervisory board has established a remuneration committee. The remuneration committee determines our policy on remuneration of all members of our management
board and management committee. See "Remuneration of the Management Board and Supervisory BoardRemuneration Policy". The members of our remuneration committee are Phillip Satow
(Chairman), Pieter Strijkert and Claes Wilhelmsson.



Our supervisory board has established an audit committee. The audit committee consists of three supervisory board members who are independent within the meaning
of the Nasdaq listing rules. This committee has responsibility for, among other things, 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 Seán Lance (Acting Chairman), Jan
Oosterveld and Pieter Strijkert. Arnold Hoevenaars has attended audit committee meetings as an observer since July 2004.



Our supervisory board has established a nomination committee, which is expected to take over the nomination responsibilities of the Priority Foundation. The
nomination committee consists of all supervisory board members. This committee (a) draws up selection criteria and appointment

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procedures
for members of the supervisory board and the management board, (b) periodically assesses the size and composition of the supervisory board and the management board and makes a
proposal for a composition profile of the supervisory board, (c) periodically assesses the functioning of individual members of the supervisory board and the management board, and reports on
this to the supervisory board and (d) supervises the policy of the management board on the selection criteria and appointment procedures for senior management. The committee also makes
proposals for appointments of management board members to the supervisory board and for appointments of supervisory board members to the holders of priority shares.



Our supervisory board has established a scientific committee. The scientific committee consists of one supervisory board member who is independent within the
meaning of the Nasdaq listing rules. This committee has responsibility for, among other things, reviewing progress in our research and development activities. The chairman and sole member of our
scientific committee is Claes Wilhelmsson.

Management Board

Our management board manages our general affairs and business, under the supervision of our supervisory board. 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.

Our
supervisory board determines the size of our management board after consultation with our chief executive officer. 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 an absolute majority of the votes cast. This vote must represent more than one third 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 an absolute majority of votes. If the supervisory
board makes a non binding nomination, then an appointment contrary to the nomination is only possible by a resolution of the general meeting of shareholders taken by an absolute majority of the votes
cast, representing at least one third of our issued capital.

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. The allocation of duties requires the approval of the supervisory board. Resolutions of our management board require a majority of
votes cast, unless provided otherwise in the by-laws of the management board. The management board

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may
appoint a company secretary who will assist the management board. The appointment and removal of the company secretary requires the prior approval of the supervisory board.

A
management board member can be suspended or dismissed and a suspension can be lifted by a resolution of an absolute majority of the votes cast at a shareholders meeting. This vote must
represent more than one third of the issued share capital. 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. The total suspension may not exceed three months.

Our
supervisory board determines the compensation and benefits of the members of our management board, on a proposal by the remuneration committee, within the scope of the remuneration
policy adopted by the general meeting of shareholders. The business address of the members 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 members of our management board are:

|Name             |  | Age |  | Position                                                               
|---------------- |  | --- |  | -----------------------------------------------------------------------
|Ronald H.P. Brus |  | 41  |  | Chairman of the management board, president and chief executive officer
|Jaap Goudsmit    |  | 53  |  | Chief scientific officer                                               
|Leonard Kruimer  |  | 46  |  | Chief financial officer                                                

On
January 26, 2004, Domenico Valerio stepped down as president, chief executive officer and chairman of our management board. Ronald H.P. Brus, formerly our chief operating
officer was appointed as Mr. Valerio's successor in these positions. In addition, Jaap Goudsmit, our chief scientific officer, was appointed as member of the management board.
Mr. Valerio was appointed a member of our supervisory board, effective January 1, 2005, at our annual meeting of shareholders in June 2004. In January 2005, we and
Mr. Valerio agreed that he would not serve the Company as a member of our supervisory board, but would continue to serve us in an advisory role with an emphasis on investor and public
relations. Leonard Kruimer, our chief financial officer, joined the management board as of January 1, 2005.

We
are currently in the process of entering into new employment contracts with each member of our management board, and we expect that these contracts will be effective by June 2005. The
fixed remuneration of our chief executive officer, Ronald H.P. Brus, is not reflected in his current employment contract, but rather has been set by resolution of our remuneration
committee. See "Remuneration of the Management Board and Supervisory Board." Our chief scientific officer, Jaap Goudsmit, voluntarily elected to receive fixed remuneration in 2004
lower than he is entitled to pursuant to the terms of his current employment contract, based on his reflection on the current biotech industry climate at the time.

The
employment contracts of Mr. Brus, Mr. Goudsmit and Mr. Kruimer contain non-compete provisions that would apply for a period of one year after the end
of their employment with us.



We have a management committee. The management board determines the number of members of the management committee. Members of the management committee are
appointed and dismissed by the management board, with the approval of our supervisory board. The management committee advises the management board in strategic, general managerial and executive
matters and assists the management board in implementing these matters. The management committee generally meets twice a month, and works closely with other members of our management team. Our
management board may

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establish
rules governing its relationship with our management committee. Our supervisory board must approve the adoption of and any changes to these rules.

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

|Name                  |  | Age |  | Position                                                           
|--------------------- |  | --- |  | -------------------------------------------------------------------
|Ronald H.P. Brus      |  | 41  |  | Chairman of management board, president and chief executive officer
|Jaap Goudsmit         |  | 53  |  | Chief scientific officer                                           
|Leonard Kruimer       |  | 46  |  | Chief financial officer                                            
|René K. Beukema(1)    |  | 41  |  | General counsel and corporate secretary                            
|Jean-Yves Guichoux(1) |  | 58  |  | Executive vice-president development                               
|Arthur Lahr(1)        |  | 36  |  | Vice-president business development                                

---

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

Ronald H.P. Brusis chairman of the management board and president and chief executive officer since January 26, 2004, and has been
a member of our management committee since our incorporation. He was executive vice president, business development at IntroGene from 1997 to 2000 and chief operating officer at Crucell from
March 2003 through to his appointment as president and chief executive officer. 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.

Jaap Goudsmitis a member of the management board since January 26, 2004. He was our Senior Vice President Vaccine Research from
September 2001 until July 2002 and member of our management committee from July 2002 as Executive Vice President Vaccine R&D. In September 2002 he was appointed Chief
Scientific Officer and head of Research and Development. He chaired at the Academic Medical Center of the University of Amsterdam the Research Institute for Infectious Diseases and the Institute for
Science Education. He was the founding chair of the Scientific Advisory Committee of the International AIDS Vaccine Initiative (IAVI) and the founding co-chair of the European Vaccine
Effort against HIV/AIDS (EuroVac). Since 1989 he has been a professor at the University of Amsterdam and the Academic Medical Center. He holds a medical degree (MD) and a PhD from the University of
Amsterdam and is a board certified medical microbiologist.

Leonard Kruimerbecame a member of the management board on January 1, 2005. He has been our chief financial officer and a member of
our management 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 Massachusetts, Amherst, and is a CPA in New York State.

René K. Beukemahas been our general counsel and corporate secretary since our incorporation. He held the same position at
IntroGene from 1999 to 2000. 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.

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Jean-Yves Guichouxhas been our executive vice president of development since December 2003. He most recently served as
vice president at Afforce Healthcare. Prior to joining Afforce, he worked at Yamanouchi Europe in The Netherlands, where he headed the clinical research department. Mr. Guichoux also spent over
10 years at the European research headquarters of Wyeth-Ayerst, where he held the position of vice president, clinical research and development. In this function, he directed the company's
Phase I through IV product development programs across multiple therapeutic areas. Previously, Mr. Guichoux spent 11 years as director of the medical department for Wyeth's French
affiliate. He also worked as medical director for Lafon and as medical advisor for Lepetit. Mr. Guichoux received his medical degree (M.D.) from the University of Rennes in France in 1971.

Arthur Lahrwas appointed vice president of business development in December 2003 and a member of the management committee in
January 2004. He joined Crucell in April 2001 as executive director, business development. From 1994 to 2001 he was a consultant at McKinsey & Co. in The Netherlands and New York.
Prior to that he worked with Unilever. He holds a Masters in Business Administration from INSEAD and a Masters in Science, Applied Physics, from the University of Delft.



The service contract with Jaap Goudsmit provides for benefits upon termination of employment in deviation with the provisions of the Dutch corporate governance
code. In addition, the supervisory board approved in May 2003 a proposal to permit severance payments to members of the management committee and certain other senior executives in case of a
change of control. In the event a change of control of the Company occurs, the following management committee members would receive severance payments equal to their salaries in the number of months
indicated: Ronald H.P. Brus (24 months), Jaap Goudsmit (21 months), Leonard Kruimer (21 months) and René Beukema (18 months).



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 members of the management committee and the management team. The management team
members are the director of finance and planning, vice president of intellectual property and licensing, director for quality affairs, executive director vaccine research, director antibody research,
director investor relations and communications, director human resources and manager facilities. 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.

Remuneration of the Management Board and Supervisory Board

Netherlands legislation requires full disclosure of individual management board and supervisory board remuneration. We have included the required disclosures
below.

58

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The remuneration committee is charged by the supervisory board to review and recommend specific compensation and benefit levels for the members of the management
board and the members of the
management committee in consultation with the management board. In addition, the remuneration committee reviews the general compensation and benefit policies for our employees.

The
remuneration committee advises on policies and reviews and determines objectives relevant to the compensation of the members of the management board and members of the management
committee. Remuneration consists of a fixed salary portion and a variable bonus portion that is linked to our overall performance and the achievement of set objectives. The remuneration committee
evaluates the performance of members of the management board and management committee in view of those objectives and advises on the fixed and variable compensation of members of the management board
and the management committee. In advising on short and long term incentive compensation for members of the management board and management 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 as another factor to benchmark the compensation levels. It is the aim of the remuneration committee to position the remuneration packages for members of the management board and
management committee at competitive levels. The bonus paid to the management board is paid in connection with achievement of certain objectives set by the supervisory board.

Our
remuneration policy is currently being reviewed by an external compensation and benefits consultancy firm, and we expect that the policy will be submitted to the general meeting of
shareholders in 2005.



The total remuneration and related costs of the members of the management board over the past three years, excluding stock options, is as follows:

|                 |  | Year ended December 31, |      
|---------------- |  | ----------------------- | -----
|
|Salaries         |  | €                       | 598  
|Bonuses          |  |                         | 494  
|Pension costs(1) |  |                         | 215  
|Severance costs  |  |                         | 454  
|                 |  |                         |      
|Totals           |  | €                       | 1,761
|                 |  |                         |      

---

59

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The
remuneration of the individual members of our management board during 2004, excluding stock options, was as follows:

|                    |  | Base salary |     | Bonus |   | Other Benefits(1) |  | Total
|------------------- |  | ----------- | --- | ----- | - | ----------------- |  | -----
|Ronald H.P. Brus    |  | €           | 289 |       | € | 296               |  | €    
|Jaap Goudsmit       |  | €           | 281 |       | € | 193               |  | €    
|Domenico Valerio(2) |  | €           | 28  |       | € | 5                 |  | €    
|                    |  |             |     |       |   |                   |  |      
|Totals              |  | €           | 598 |       | € | 494               |  | €    
|                    |  |             |     |       |   |                   |  |      

---

For
details regarding share and option ownership by our management board members, see "Share and Option Ownership."

Pension,
retirement and similar arrangements for our management board members consist of a defined contribution plan, and we do not have further pension obligations beyond the annual
premium contribution.

The
total remuneration and related costs of our management committee in 2004, excluding those of the management board members, was €1,517, excluding stock options.



During 2004, the individual members of the supervisory board received the following remuneration, excluding stock options. The remuneration was based on a fixed
amount of €5 per member, an additional payment of €5 for each chairmanship of a committee, and payments based on the actual number of supervisory board meetings
attended, as well as an additional payment of €4.9 to cover expenses for the chairman. We reimburse our supervisory board members for their travel and associated expenses incurred in
connection with supervisory board meetings. The remuneration for the members of the supervisory board is determined by the general meeting of shareholders.

|                    |  | 2004  |  | 2003 
|------------------- |  | ----- |  | -----
|Pieter Strijkert    |  | 24.9  |  | 27.5 
|Michiel de Haan     |  | N/A   |  | 25.0 
|Jan Oosterveld      |  | 22.5  |  | N/A  
|Phillip Satow       |  | 20.0  |  | 22.5 
|Claes Wilhelmsson   |  | 20.0  |  | 25.0 
|Seán Lance          |  | 22.5  |  | N/A  
|Jean Deleage        |  | 5.0   |  | 17.5 
|Patrick van Beneden |  | 5.0   |  | 22.5 
|                    |  |       |  |      
|Totals              |  | 119.9 |  | 140.0
|                    |  |       |  |      

For details regarding share and option ownership by our supervisory board members, see "Share and Option Ownership."

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Share and Option Ownership

As of December 31, 2003, December 31, 2004 and March 31, 2005, members of our management board and supervisory board held the following
options and as of March 31, 2005, the following ordinary shares. Options generally expire in December or January of the relevant year.

|Name of holder         |  | Numbers of
ordinary
shares held per
March 31, 2005 |  | % of
total
ordinary
shares |  | Options held
per
December 31,
2003       |  | Year of
expiration            |  | Exercise
price(s)               |  | Granted
2004(1)   |  | Exercised
2004 |  | Forfeited
2004 |  | Options
held per
December 31,
2004            |  | Options
held per
March 31,
2005              
|---------------------- |  | -------------------------------------------------- |  | -------------------------- |  | ---------------------------------------- |  | ----------------------------- |  | ------------------------------- |  | ----------------- |  | -------------- |  | -------------- |  | --------------------------------------------- |  | ---------------------------------------------
|Management board:      |  |                                                    |  |                            |  |                                          |  |                               |  |                                 |  |                   |  |                |  |                |  |                                               |  |                                              
|Ronald H.P. Brus       |  | 79,697                                             |  | 0.21                       |  | 56,250
75,000
225,000
90,000
125,000
   |  | 2005
2005
2011
2011
2011
2009 |  | 11.43
7.35
3.49
2.64
5.94
9.40  |  | 




250,000 |  | 




    |  | 




    |  | 56,250
75,000
225,000
90,000
125,000
250,000  |  | 
75,000
225,000
90,000
125,000
250,000      
|Jaap Goudsmit          |  |                                                   |  |                           |  | 100,000
100,000
100,000
60,000
125,000
 |  | 2005
2006
2006
2011
2011
2009 |  | 7.96
5.92
3.66
2.64
5.94
9.40   |  | 




85,000  |  | 




    |  | 




    |  | 100,000
100,000
100,000
60,000
125,000
85,000 |  | 100,000
100,000
100,000
60,000
125,000
85,000
|Leon Kruimer           |  | 12,700                                             |  | 0.03                       |  | 26,250
105,000
125,000
                 |  | 2005
2011
2011
2009           |  | 11.43
3.49
5.94
9.40            |  | 


85,000      |  | 


        |  | 


        |  | 26,250
105,000
125,000
85,000                 |  | 
105,000
125,000
85,000                     
|Domenico Valerio       |  | N/A                                                |  | N/A                        |  | 502,500
125,625                          |  | 2011
2005                     |  | 3.49
11.43                      |  | 
               |  | 
            |  | 
            |  | 502,500
125,625                               |  | N/A                                          
|                       |  |                                                    |  |                            |  |                                          |  |                               |  |                                 |  |                   |  |                |  |                |  |                                               |  |                                              
|Subtotal               |  | 92,397                                             |  | 0.24                       |  | 1,940,625                                |  |                               |  |                                 |  | 420,000           |  | 0              |  | 0              |  | 2,360,625                                     |  | 1,650,000                                    
|Supervisory board:     |  |                                                    |  |                            |  |                                          |  |                               |  |                                 |  |                   |  |                |  |                |  |                                               |  |                                              
|Pieter Strijkert       |  | 195,188                                            |  | 0.52                       |  | 79,474
4,500
8,000
24,000
10,000
       |  | 2005
2005
2005
2011
2011
2009 |  | 0.49
11.43
7.16
3.49
6.48
11.55 |  | 




10,000  |  | 




    |  | 




    |  | 79,474
4,500
8,000
24,000
10,000
10,000       |  | 

8,000
24,000
10,000
10,000               
|Jan Oosterveld         |  |                                                   |  |                           |  | 
                                      |  | 2009
2009                     |  | 8.81
11.55                      |  | 10,000
10,000     |  | 
            |  | 
            |  | 10,000
10,000                                 |  | 10,000
10,000                                
|Phillip Satow          |  | 74,000                                             |  | 0.20                       |  | 3,000
7,000
22,000
10,000
              |  | 2005
2005
2011
2011
2009      |  | 11.43
7.16
3.49
6.48
11.55      |  | 



10,000    |  | 



      |  | 



      |  | 3,000
7,000
22,000
10,000
10,000              |  | 
7,000
22,000
10,000
10,000                 
|Claes Wilhelmsson      |  |                                                   |  |                           |  | 10,000
                                 |  | 2011
2009                     |  | 6.48
11.55                      |  | 
10,000          |  | 
            |  | 
            |  | 10,000
10,000                                 |  | 10,000
10,000                                
|Seán Lance             |  |                                                   |  |                           |  | 
                                      |  | 2011
2009                     |  | 7.86
11.55                      |  | 10,000
10,000     |  | 
            |  | 
            |  | 10,000
10,000                                 |  | 10,000
10,000                                
|Patrick van Beneden(2) |  | N/A                                                |  | N/A                        |  | 7,000                                    |  | 2005                          |  | 7.16                            |  |                  |  |               |  |               |  | 7,000                                         |  | N/A                                          
|Jean Deleage(2)        |  |                                                    |  |                            |  | 3,000
7,000
10,000
22,000                |  | 2005
2005
2007
2011           |  | 11.43
7.16
6.49
3.49            |  | 


           |  | 


        |  | 


        |  | 3,000
7,000
10,000
22,000                     |  | N/A                                          
|                       |  |                                                    |  |                            |  |                                          |  |                               |  |                                 |  |                   |  |                |  |                |  |                                               |  |                                              
|Subtotal               |  | 269,188                                            |  | 0.72                       |  | 226,974                                  |  |                               |  |                                 |  | 70,000            |  | 0              |  | 0              |  | 296,974                                       |  | 161,000                                      
|                       |  |                                                    |  |                            |  |                                          |  |                               |  |                                 |  |                   |  |                |  |                |  |                                               |  |                                              
|Total                  |  | 361,585                                            |  | 0.96                       |  | 2,167,599                                |  |                               |  |                                 |  | 495,000           |  | 0              |  | 0              |  | 2,657,599                                     |  | 1,811,000                                    
|                       |  |                                                    |  |                            |  |                                          |  |                               |  |                                 |  |                   |  |                |  |                |  |                                               |  |                                              

---

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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 (SFAS 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, 2004, we had €4,958 of deferred compensation. See note 6 to
our financial statements included elsewhere in this annual report.

In
April 2004, the supervisory board approved a new option plan whereby employees and supervisory board are granted options with an exercise price 126% greater than the average
closing stock price of the Company on the three days preceding the option grant date and have a five year life. The options are subject to profit retribution provisions. Such provisions entitle us for
a period of three years from issuance to receive a portion of any profits upon the sale of the shares, calculated as the difference between the total proceeds from the sale of shares, and the
aggregate selling price. The portion of the profits payable to the Company decreases ratably over three 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 us if the employee terminates employment prior to the end of the three year period A total of 963,500 options with an exercise price of
€9.40 per share were granted under the new option
plan, resulting in deferred compensation of €3,141. Compensation expense is recognized ratably over a period of three years; €1,047 or €1.09 per option
per twelve months. As of September 2004, under Dutch law, stock options and share plans need the prior approval of the general meeting of shareholders.

As
of March 31, 2005, there were 1,273,984 options (or approximately 2% of our issued share capital) available to be granted to our employees and to our supervisory board members.

Corporate Governance Developments

We continuously monitor and assess applicable corporate governance rules, including recommendations and initiatives regarding principles of corporate governance.
These include those that have been developed in the United States both by the NASDAQ National Market ("Nasdaq") and by the SEC pursuant to the Sarbanes-Oxley Act of 2002, some of which already are
applicable and some of which will be applicable to the Company during 2006. On March 10, 2003, the Netherlands government commissioned a committee known as the Tabaksblat Committee to conduct a
review of corporate governance in the Netherlands. The Tabaksblat Committee issued its final report "The Netherlands Corporate Governance Code" (the "Code") on December 9, 2003, which came into
effect as of the financial year starting on or after January 1, 2004. On September 1, 2004, new provisions were added to Section 2:391 of the Dutch Civil Code, giving the
possibility to add by governmental decree requirements on the contents of annual reports. These requirements specifically relate to the compliance with a code of conduct designated as such by the
governmental decree. On December 23, 2004, such governmental decree was issued for Dutch listed companies, providing that the Code was designated as code of conduct and that a public company
should include in its annual report a statement about the compliance with the principles and best practice provisions of the Code that are aimed at the management board or supervisory board. The
governmental decree requires that a company states in its annual report if it did not comply with the principles or best practice provisions of the Code, or if it does not have the intention to do so
during the current or following financial year. The governmental decree applies to the annual report that relates to the financial year starting on or after January 1, 2004. A report on
compliance with the Code is required to be included in the Dutch statutory annual report for the financial year 2004. The Code contains recommendations with regard to corporate governance, including
the following topics:



62

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We
are currently implementing applicable provisions of the Code and the Sarbanes-Oxley Act of 2002, and subsequent SEC and Nasdaq rules that have been issued pursuant thereto.

Exemptions from Certain Nasdaq Corporate Governance Rules

Nasdaq rules provide that Nasdaq may provide exemptions from the Nasdaq corporate governance standards to a foreign issuer when those standards are contrary to a
law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer's country of domicile. We have received from
Nasdaq exemptions from certain Nasdaq corporate governance standards that are contrary to the laws, rules, regulations or generally accepted business practices of The Netherlands. These exemptions and
the practices followed by our company are described below:



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Limitation of Liability and Indemnification Matters

Pursuant to Dutch law, each member of our supervisory and management boards is responsible to the Company 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 or management board. Our articles of
association provide that our supervisory and management 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 the 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.

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 the
Company. A court in which an action is brought may, however, determine that indemnification is appropriate nonetheless.

Employees

As of December 31, 2004, we had 210 full-time equivalents direct and indirect employees of whom 171 were engaged in, or directly support,
research and development activities and 39 were employed in administrative and business development positions.

As
of December 31, 2003, we had 182 full-time equivalents direct and indirect employees of whom 151 were engaged in, or directly support, research and development
activities and 31 were employed in administrative and business development positions.

As
of December 31, 2002, we had 183 full-time equivalents 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.

In
2003, we established a workers council for our employees in compliance with certain Dutch legal requirements. The workers council is a representative body that consists of seven
elected employees. The management board is required to seek the non-binding advice of the workers council before making certain major decisions, such as those relating to a major
acquisition, a change of control or the appointment or dismissal of a management board member. The workers council must also be consulted in connection with any material change affecting all employees
or certain groups of employees, including with respect to any changes to our employee benefits programs. No collective bargaining agreements are applicable to our employees. We believe that our
relations with our employees are generally good.

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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 March 31, 2005 by:



Percentage
of beneficial ownership is based on an aggregate of 37,352,254 ordinary shares outstanding at March 31, 2005.

|                                                                       |  | Ordinary Shares Beneficially Owned(1) | 
|---------------------------------------------------------------------- |  | ------------------------------------- | 
|
|Aviva plc./Delta Lloyd Levensverzekeringen N.V.                        |  |                                      | 
|A. van Herk B.V                                                        |  |                                      | 
|Ordinary shares held by the members of our management board as a group |  | 92,397                                | 
|Ordinary shares held by our supervisory board members as a group       |  | 269,188                               | 

---

As
of March 31, 2005 there were 11,881,164 ADSs, each representing one ordinary share, all of which were held of record by nine registered holders in the United States (including
The Depository Trust Company). The number of ADSs at March 31, 2005 represent 31.8% 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.

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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 Financiële MarktenorAFM) immediately after the acquisition or disposal of
the triggering interest in our share capital. Upon receipt of the notification, the AFM 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 AFM of any change in our shares or options they hold or voting rights in respect
of these shares. The AFM 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.

Related Party Transactions



The following table describes all loans made to members of our management board and senior management since January 1, 2001. We have not made any loans to
any of our supervisory board members. The interest rate on all loans was 4.5% per annum in 2002, 4.4% per annum in 2003, and 3.5% per annum in 2004. 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 related options are sold or, if the employee ceases to work for us before this
time, immediately. We extended these loans prior to July 30, 2002, the date legislation was passed in the United States, prohibiting the grant of additional loans to company officers, and no
loans or our senior management have been extended since that date. The loans to the persons listed below were extended in connection with options granted to them on our ordinary shares, and related
taxes.

|Name             |  | Largest amount of loan
outstanding since
January 1, 2001 |     | Amount of loan
outstanding at
March 31, 2005 |   | Current
Interest Rate | 
|---------------- |  | -------------------------------------------------------- | --- | -------------------------------------------- | - | --------------------- | 
|Ronald H.P. Brus |  | €                                                        | 132 |                                              | € | 132                   | 
|Jaap Goudsmit    |  | €                                                        | 25  |                                              | € | 25                    | 
|René K. Beukema  |  | €                                                        | 59  |                                              | € | 54                    | 

Loans to Ronald H.P. Brus for an amount of €13 provide that he will not owe us interest with respect to the entire principal of
these 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 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.

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Item 8.    Financial Information

See Item 18, "Financial Statements."

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.

Dividends and Dividend Policy

Neither we nor our principal subsidiaries, Crucell Holland B.V., U-BiSys B.V. and ChromaGenics B.V., 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 our 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, 2004, the date of our most recent audited financial
statements.

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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 March 31, 2005, 37,352,254 ordinary shares were issued and outstanding. On the same date, there were 11,881,164 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, in U.S. dollars, for our ordinary shares on the Nasdaq National Market for the periods indicated.

ADSsHigh

LowAnnual information for the past five years2000

13.63

5.502001

12.25

4.882002

6.40

2.452003

6.16

1.542004

13.77

6.38Quarterly information for the past two years2003First Quarter

3.18

1.54Second Quarter

3.45

1.56Third Quarter

4.35

2.81Fourth Quarter

6.16

3.812004First Quarter

8.57

6.38Second Quarter

9.19

6.86Third Quarter

8.56

6.83Fourth Quarter

13.77

8.42Monthly information for the most recent six monthsOctober

10.21

8.42November

12.30

10.03December

13.77

11.91January

15.29

12.30February

14.71

13.23March

13.84

13.01


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.

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

Ordinary SharesHigh

LowAnnual information for the past five years2000

15.45

6.602001

13.30

5.402002

7.29

2.502003

4.92

1.402004

10.10

4.83Quarterly information for the past two years2003First Quarter

3.00

1.40Second Quarter

3.04

1.41Third Quarter

3.82

2.43Fourth Quarter

4.92

3.282004First Quarter

6.93

4.83Second Quarter

7.61

5.62Third Quarter

7.03

5.65Fourth Quarter

10.10

6.67Monthly information for the most recent six monthsOctober

7.97

6.67November

9.21

7.85December

10.1

8.98January

11.67

9.50February

11.27

10.18March

10.57

9.79


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Item 10.    Additional Information

Memorandum and Articles of Association

Set out below is a summary of material information concerning our shares, which are our ordinary shares together with our priority shares and preference shares,
and related material provisions of our articles of association and of Book 2 of the Dutch Civil Code (Boek 2 van het Burgerlijk Wetboek).
Our articles of association were amended on October 21, 2004, primarily to comply with various provisions of the Dutch Corporate Governance Code. This summary is not complete and is qualified
in its entirety by reference to our articles of association and to Dutch law.

General

We were incorporated as a limited liability company (naamloze vennootschap) on October 9, 2000 by deed
executed before Mr. R.J.J. Lijdsman, civil law notary. Our corporate seat is in Leiden, The Netherlands, and we have offices at Archimedesweg 4, 2333 CN Leiden, The Netherlands. We are
registered in the trade register of the Chamber of Commerce and Industry for Leiden under number 28087740. The statement of no objection of the Minister of Justice in respect of our deed of
incorporation was issued on October 9, 2000 under number N.V. 1133178. Our agent in the United States is CT Corporation, 111 Eighth Avenue, New York, New York 10011.

Corporate Purpose

Our objects include acquiring, establishing and managing companies in our field, controlling and using intellectual property, and funding our operations.

Management Board and Supervisory Board



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.

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.

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Share Capital

Our authorized share capital amounts to €40,800,002.40 divided into: 85,000,000 ordinary shares, ten priority shares and 85,000,000 preference
shares, each with a par value of €0.24.

At
December 31, 2004, there were 36,873,421 ordinary shares and ten 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.



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.



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 resolution taken by an absolute majority of the votes cast. This vote must represent more than one-third 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. The board of governors comprises Pieter Strijkert, chairman 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".



As of the date of this annual report, we have not issued any preference shares. On October 25, 2000, we established a foundation called Stichting
Preferente Aandelen Crucell, also referred to as the Preferred Foundation. The Preferred Foundation's object is to safeguard our interests and those of our affiliates through acquiring and managing
our preference shares and by exercising the rights attaching to these shares, in particular, the voting rights.

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We
have entered into an agreement with the Preferred Foundation that allows the Preferred Foundation to acquire preference shares up to 50% of the number of our outstanding shares. The
Preferred Foundation must pay at least 25% of the nominal value of the preference shares it acquires from us. 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.

Membership
of the board of governors of the Preferred Foundation terminates upon:



Other Key Provisions of our Articles of Association



Our general meeting of shareholders, or our management board if the general meeting of shareholders has delegated the power to it, has the authority to decide on
any further issuance of shares or rights to subscribe for shares and on the terms and conditions thereof. Our management board is the authorized corporate body (orgaan) for this purpose until
October 9, 2005 and this authorization may at any time be extended for periods of up to five years. Our management board's authority to issue shares is limited to our authorized share capital.

Our
management board can issue shares of any class if it has the approval of our supervisory board. Without specific authorization from our general meeting of shareholders our management
board may not issue preference shares or grant options for such shares if as a result more preference shares than other shares will or could become outstanding.

Each
holder of ordinary shares has pre-emptive rights to subscribe for any ordinary shares that we issue and has pre-emptive rights to subscribe if we make a
grant of rights to subscribe for ordinary shares. Pre-emptive rights are in proportion to the percentage of our outstanding ordinary shares that the holder owns. Pre-emptive
rights do not apply to ordinary shares issued for a non-cash contribution, to ordinary shares issued to our employees or if we issue ordinary shares to a person who exercises a
previously-acquired right to subscribe for ordinary shares. Holders of preference and priority shares do not have pre-emptive rights if we issue ordinary shares, and holders of ordinary
shares have no pre-emptive rights to purchase priority or preference shares if we issue shares of one of those classes.

If
our management board has been delegated the authority to issue shares, it can limit or exclude any pre-emptive rights as long as the general meeting of shareholders has
granted it that power and our supervisory board approves. At present, our management board is authorized to do this. This authorization is valid until October 9, 2005 and the general meeting of
shareholders may at any time extend this authorization for periods of up to five years.

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Our
shares cannot be issued below par. The priority shares and the ordinary shares must be fully paid up upon issue. Preference shares may be issued without being fully paid up, but at
least one-quarter of the nominal amount must be paid up upon subscription, and each issue of preference shares must have the same amount paid up. Our management board may determine the day
and the amount of a further call for payment on preference shares.



We may acquire our own shares if the following conditions are met:



We
may not acquire our own shares if they have not been fully paid-up. The authorization by the general meeting of shareholders may be for a term of up to 18 months.

We
and our subsidiaries may not vote shares which we or they hold. We may acquire shares to transfer them to our employees or the employees of our group companies under designated stock
option plans without authorization.



If our management board proposes, our supervisory board approves and Dutch law permits, the general meeting of shareholders can reduce our issued share capital by
cancellation of shares or reduction of the nominal value of shares.



We must hold annual general meetings of shareholders within six months of the end of our fiscal year. The annual meeting is held, among other things, to adopt our
annual accounts. We must hold extraordinary general meetings of shareholders whenever:



General
meetings of shareholders may only be held in the municipalities of Leiden, Amsterdam, Haarlemmermeer (including Schiphol Airport and Schiphol-Rijk), Utrecht,
Rotterdam and The Hague.

Each
shareholder can attend general meetings in person or by proxy, address the meeting and vote. Each share, whether ordinary, preference or priority, confers one vote on the
shareholder. The management board must be notified in writing of a registered shareholder's intention to attend the general meeting of shareholders. The holders of bearer ordinary shares can vote if a
NECIGEF

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participant
sends a written statement as to their shareholdings to our offices. Resolutions are passed by absolute majority of votes cast unless stated otherwise in Dutch law and our articles of
association.

The
general meeting of shareholders can amend our articles of association, dissolve us, merge us or demerge us only if proposed by the supervisory board.

Dutch
law and our articles of association do not impose any limitations on non-Dutch ownership or voting of our ordinary shares.



We have a calendar fiscal year. Dutch law requires that within five months after the end of our fiscal year, unless the general meeting of shareholders has
extended this period for a maximum of six months, our management board must make available to the shareholders a report with respect to that fiscal year. This report must include the financial
statements and a report of an independent accountant. The annual report is submitted to the annual general meeting of shareholders for adoption. See "ManagementLimitation of Liability and
Indemnification Matters".



Annual dividends may only be paid out of profits as shown in the adopted annual financial statements. We may not make distributions if the distribution would
reduce our shareholders' equity below certain reserves required by Dutch law or our articles of association. The profits must first be used to set up and maintain reserves required by Dutch law and
must then be set off against certain financial losses. The preference and priority shares will be paid their dividends, which will be a certain percentage of their nominal value, first. With
supervisory board approval, our management board then decides whether and how much of the remaining profit they will reserve. Any profits remaining can be paid as a dividend on the ordinary shares.
With the approval of our supervisory board and subject to Dutch law, our management board can pay an interim dividend. The payment of an interim dividend in our or another entity's shares requires the
additional approval of our general meeting of shareholders.

We
can make distributions to shareholders at the charge of one or more of our reserves. Holders of shares are entitled to the full dividend for the fiscal year 2000 and subsequent fiscal
years. Any dividends that are not claimed within five years of their declaration revert to us.



The general meeting of shareholders may only resolve to amend our articles of association or to dissolve, merge or demerge us on the proposal of our supervisory
board. The class of shareholders affected must approve a resolution to amend the articles of association to change the rights of the class. If we are dissolved and liquidated, after we pay all debts
and liquidation expenses, the holders of preference shares have first rights to payment of any dividends not fully paid to them in previous years and of the nominal value of their preference shares.
We must then pay the holders of the priority shares the nominal value of the priority shares. Finally, any remaining assets will be distributed to the holders of ordinary shares.

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

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securities
laws. In addition, it is not clear whether a Dutch court would impose civil liability on us, 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 technology 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.

On
December 31, 2003, we entered into a collaboration and license agreement with Aventis Pasteur S.A. (now sanofi pasteur) to develop and commercialize influenza vaccine products
based on our PER.C6 technology. Under the terms of the agreement, we granted sanofi pasteur an exclusive license to research, develop, manufacture and commercialize influenza vaccine products based on
our PER.C6 technology. We received an up-front payment and will receive milestone payments, annual payments, research and development funding totaling €30 million,
and high single- up to double-digit royalties on future PER.C6-based influenza vaccine sales. We retain commercialization rights for Japan, where sanofi pasteur will supply finished
vaccine products to us and we will pay a royalty on sales to sanofi pasteur.

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 U.S. holders of our securities except as otherwise set forth in Item 10, "Taxation."

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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.

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

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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 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, Dutch Individuals for whom the benefits derived from the ordinary shares or ADSs are treated
as results from other activities, and Dutch Corporate Entities.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.

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

77

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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.

Gift and Inheritance Taxes.A gift tax liability 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. An inheritance tax liability 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 the 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.

A
further condition to avoid "dividend stripping" is that the Non-Resident Shareholder qualifies 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:



78

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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 for 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 the 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.

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:



79

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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 who 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 with respect to the year 2004, and also expect to be classified as
a PFIC with respect to the year 2005. 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. 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. Subject to
certain exceptions for positions that are
hedged or held for less than 60 days, an individual U.S. holder generally will be subject to U.S. taxation at a maximum rate of 15% in respect of dividends received after 2002 and before 2009,
unless we are in the year prior to the year in which the dividend was paid, and are, in the year in which the dividend is paid, a PFIC. As described above, we believe that we were a PFIC for U.S. tax
purposes with respect to the year 2004, and also expect to be classified as a PFIC with respect to the year 2005. Dividends paid in euros 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 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

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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 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 may not be allowed in respect of 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. The net amount of long-term capital gain recognized by an individual U.S. holder
generally is subject to taxation at a maximum rate of 20%; however, net long-term capital gain recognized by an individual U.S. holder after May 5, 2003 and before January 1,
2009 generally is subject to taxation at a maximum rate of 15%.



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 the year 2004, and also expect to be classified as a PFIC in the year 2005.

If
we are classified as a PFIC in any year, then a U.S. holder who holds shares during that year and does not make a mark-to-market 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. 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

81

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recognized
upon a sale of ordinary shares or ADSs would be taxed as ordinary income in the year of sale.

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 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.

Dividends and Paying Agents

Not applicable.

Statement by Experts

Not applicable.

Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith file information with the U.S.
Securities and Exchange Commission ("SEC"). 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

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. We make our filings with the SEC by electronic means. Any filings we make electronically are available to the public over
the internet at the Commission's website athttp://www.sec.govand at our website at http://www.crucell.com.

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Item 11.    Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk related to changes in interest rates and foreign currency exchange rates between the U.S. dollar and the euro.

Interest Rate Sensitivity

We are exposed to interest rate fluctuations in connection with our cash and cash equivalents that 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.

Foreign Currency Exchange Risk

The majority of our revenue, expense and capital purchasing activities are transacted in Euros. However, since we are party to certain licenses with United States
based companies, we are exposed to changes in exchange rates between the euro and the U.S. dollar. Because we receive revenues under U.S. licenses in U.S. dollars, and such revenues are converted to
euros for purposes of our financial reporting, we can benefit from a weaker euro and can be adversely affected by a stronger euro relative to the U.S. dollar. Accordingly, changes in foreign exchange
rates, and in particular a strengthening of the euro, vis-à-vis the U.S. dollar, may adversely affect our consolidated sales and operating margins as expressed
in Euros. We currently do not hedge currency exposure. However, we may hedge currency exposure in the future if we believe it is appropriate to do so.

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

We carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial
officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2004. There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and
procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that the disclosure
controls and procedures as of December 31, 2004 were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and reported as and when required.

There
has been no change in our internal control over financial reporting during 2004 that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

Item 16.    Reserved

Item 16A.    Audit Committee Financial Expert

The members of our audit committee are all independent, non-executive members of the supervisory board. Our audit committee is in compliance with all
of the relevant rules and regulations of The Netherlands. We believe that the members of our audit committee have sufficient financial and other experience to perform their responsibilities on the
committee. Notwithstanding the committee members' financial and other experience, the audit committee does not include a "financial expert" as that term is strictly defined in the rules promulgated
under the Sarbanes-Oxley Act of 2002.

Item 16B.    Code of Ethics

During 2003, we adopted a code of business conduct and ethics that applies to all employees of the Company, including our principal executive officer and
principal financial officer. The code of business conduct and ethics has been filed as an exhibit to our Form 20-F for the fiscal year ended December 31, 2003 and can also be
accessed on our website athttp://www.crucell.com.No amendments or waivers of the code of ethics were made or granted during 2004.

Item 16C.    Principal Accountant Fees and Services

The Sarbanes-Oxley Act of 2002 requires that audit committees pre-approve all services provided by the Company's independent auditor. This process is
critical to the auditor maintaining independence. Our process requires that all services provided by the independent auditor be pre-approved by the audit committee.

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During
2003 and 2004 we paid the following amounts to our auditors Ernst & Young for audit services, audit-related services, tax services and other services:

Year ended December 31,2003

2004Audit fees

€145

€267Audit-related fees

29

66Tax fees

2

All other fees

42

Total

€218

€333


Audit-related fees

Services include accounting consultations on financial and accounting reporting standards, due diligence services and other attest services.

Tax fees

Services primarily include assistance with expatriate tax compliance.

Other

Services include assistance with grant applications.

Item 16D.    Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Neither we nor any affiliated purchaser have purchased any of our equity securities during the year ended December 31, 2004.

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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-21 of this Form 20-F, included herein.

Item 19.    Exhibits

|Exhibit
Number |  | Description                                                                                                                                                                                                                  
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            |  | Deed of Incorporation of the Company*                                                                                                                                                                                        
|1.2            |  | Amended Articles of Association                                                                                                                                                                                              
|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. 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.***                                                                                                                               
|4.6            |  | Employment Contract dated January 15, 1997 by and between Introgene B.V. (now Crucell Holland B.V.) and R.H.P. Brus                                                                                                          
|4.7            |  | Employment Contract dated October 25, 2002 by and between Crucell Holland B.V. and Prof. Dr. J. Goudsmit                                                                                                                     
|4.8            |  | Collaboration and License Agreement dated December 31, 2003 by and between Crucell Holland B.V. and Aventis Pasteur S.A. (now sanofi pasteur)****                                                                           
|8.1            |  | List of Subsidiaries of Crucell N.V.                                                                                                                                                                                         
|12.1           |  | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                               
|12.2           |  | Certification of CFO pursuant Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                  
|13.1           |  | Certification of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                       
|99.1           |  | Crucell Code of Ethics ****                                                                                                                                                                                                  

---

86

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

87

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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 14, 2005

88

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets as of December 31, 2004 and 2003

F-3Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002

F-4Consolidated Statements of Shareholders' Equity for the years ended December 31, 2004, 2003 and 2002

F-5Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002

F-6Notes to the Consolidated Financial Statements

F-7


F-1

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We
have audited the accompanying consolidated balance sheets of Crucell N.V. as of December 31, 2004 and 2003, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December 31, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement 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, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S.
generally accepted accounting principles.

/s/
Ernst & Young Accountants

Amsterdam,
The Netherlands
January 20, 2005

F-2

---





CRUCELL N.V.    CONSOLIDATED BALANCE SHEETS    (amounts in thousands)

|                                           |                                                                                                                                                                                                                      | December 31,
2004 |        | December 31,
2003 |  
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------ | ----------------- | -
|Assets                                     |                                                                                                                                                                                                                      |                   |        |                   |  
|Current assets:                            |                                                                                                                                                                                                                      |                   |        |                   |  
|                                           | Cash and cash equivalents                                                                                                                                                                                            |                   | €      | 76,711            |  
|                                           | Trade accounts receivable, net of allowance for doubtful accounts of €240 and €150 at December 31, 2004 and 2003, respectively                                                                                       |                   |        | 2,020             |  
|                                           | Prepaid expenses and other current assets                                                                                                                                                                            |                   |        | 5,424             |  
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Total current assets                       |                                                                                                                                                                                                                      | €                 | 84,155 |                   | €
|Notes receivable from employees            |                                                                                                                                                                                                                      |                   | 224    |                   |  
|Plant and equipment, net                   |                                                                                                                                                                                                                      |                   | 10,465 |                   |  
|Developed technology, net                  |                                                                                                                                                                                                                      |                   | 4,047  |                   |  
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Total assets                               |                                                                                                                                                                                                                      | €                 | 98,891 |                   | €
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Liabilities and shareholders' equity       |                                                                                                                                                                                                                      |                   |        |                   |  
|Current liabilities:                       |                                                                                                                                                                                                                      |                   |        |                   |  
|                                           | Accounts payable                                                                                                                                                                                                     |                   | €      | 2,108             |  
|                                           | Accrued compensation and related benefits                                                                                                                                                                            |                   |        | 1,050             |  
|                                           | Short term portion of deferred revenue                                                                                                                                                                               |                   |        | 6,373             |  
|                                           | Invoices to receive                                                                                                                                                                                                  |                   |        | 1,311             |  
|                                           | Short term portion lease obligations                                                                                                                                                                                 |                   |        | 1,212             |  
|                                           | Accrued vacation                                                                                                                                                                                                     |                   |        | 688               |  
|                                           | Other accrued liabilities                                                                                                                                                                                            |                   |        | 2,031             |  
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Total current liabilities                  |                                                                                                                                                                                                                      | €                 | 14,773 |                   | €
|Long term liabilities:                     |                                                                                                                                                                                                                      |                   |        |                   |  
|                                           | Long term obligation under capital lease                                                                                                                                                                             |                   |        | 1,385             |  
|                                           | Long term portion of deferred revenue                                                                                                                                                                                |                   |        | 4,198             |  
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Total long term liabilities                |                                                                                                                                                                                                                      | €                 | 5,583  |                   | €
|Shareholders' equity:                      |                                                                                                                                                                                                                      |                   |        |                   |  
|                                           | Ordinary shares, €0.24 par value; 85,000,000 shares authorized in 2004 and 89,199,990 shares authorized in 2003; 36,873,421 and 36,006,324 shares issued and outstanding at December 31, 2004 and 2003,
respectively |                   |        | 8,850             |  
|                                           | Additional paid-in capital                                                                                                                                                                                           |                   |        | 349,167           |  
|                                           | Deferred compensation                                                                                                                                                                                                |                   |        | (4,958            | )
|                                           | Accumulated deficit                                                                                                                                                                                                  |                   |        | (274,524          | )
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Total shareholders' equity                 |                                                                                                                                                                                                                      | €                 | 78,535 |                   | €
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  
|Total liabilities and shareholders' equity |                                                                                                                                                                                                                      | €                 | 98,891 |                   | €
|                                           |                                                                                                                                                                                                                      |                   |        |                   |  

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

F-3

---





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

|                                                           |                                                | Year ended December 31, |           
|---------------------------------------------------------- | ---------------------------------------------- | ----------------------- | ----------
|
|REVENUES:                                                  |                                                |                         |           
|                                                           | License                                        |                         | €         
|                                                           | Service fees                                   |                         |           
|                                                           | Government grants and other                    |                         |           
|                                                           |                                                |                         |           
|Total revenues                                             |                                                | €                       | 22,622    
|COSTS AND EXPENSES:                                        |                                                |                         |           
|                                                           | Cost of service fees                           |                         |           
|                                                           | Research and development                       |                         |           
|                                                           | Selling, general and administrative            |                         |           
|                                                           | Developed technology amortization              |                         |           
|                                                           | Goodwill impairment                            |                         |           
|                                                           | Stock-based employee compensation              |                         |           
|                                                           |                                                |                         |           
|Total costs and expenses                                   |                                                | €                       | 45,348    
|                                                           |                                                |                         |           
|LOSS FROM OPERATIONS                                       |                                                |                         | (22,726   
|                                                           | Interest income, net                           |                         |           
|                                                           | Foreign currency loss                          |                         |           
|                                                           | Gain on sale of available for sale securities  |                         |           
|                                                           | Equity in losses of unconsolidated investments |                         |           
|                                                           |                                                |                         |           
|NET LOSS BEFORE PROVISION FOR INCOME TAXES                 |                                                | €                       | (21,331   
|                                                           | Provision for income taxes                     |                         |           
|                                                           |                                                |                         |           
|NET LOSS                                                   |                                                | €                       | (21,331   
|                                                           |                                                |                         |           
|BASIC AND DILIUTED NET LOSS PER SHARE:                     |                                                |                         |           
|Net loss per share-basic and diluted                       |                                                | €                       | (0.59     
|Weighted average shares/ADSs outstanding-basic and diluted |                                                |                         | 36,382,662

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 |  |        |  |          |  |         |   |           |  
|------------------------------------------------------------------------------------------------------- |  | --------------- |  | ------ |  | -------- |  | ------- | - | --------- | -
|
|
|Balance at December 31, 2001                                                                            |  | 35,318,188      |  | €8,477 |  | €334,708 |  | €(4,334 | ) | €(174,138 | )
|Issuance of ordinary shares                                                                             |  | 331,750         |  | 79     |  | 915      |  |        |   |          |  
|Deferred compensation                                                                                   |  |                |  |       |  | 1,029    |  | (1,029  | ) |          |  
|Amortization of deferred compensation                                                                   |  |                |  |       |  |         |  | 1,371   |   |          |  
|Net loss                                                                                                |  |                |  |       |  |         |  |        |   | (55,670   | )
|                                                                                                        |  |                 |  |        |  |          |  |         |   |           |  
|Balance at December 31, 2002                                                                            |  | 35,649,938      |  | €8,556 |  | €336,652 |  | €(3,992 | ) | €(229,807 | )
|                                                                                                        |  |                 |  |        |  |          |  |         |   |           |  
|Issuance of ordinary shares                                                                             |  | 356,386         |  | 86     |  | 224      |  |        |   |          |  
|Deferred compensation                                                                                   |  |                |  |       |  | 3,186    |  | (3,186  | ) |          |  
|Amortization of deferred compensation                                                                   |  |                |  |       |  |         |  | 2,696   |   |          |  
|Issuance of warrants to acquire ordinary shares in exchange for services                                |  |                |  |       |  | 616      |  |        |   |          |  
|Net loss                                                                                                |  |                |  |       |  |         |  |        |   | (23,386   | )
|                                                                                                        |  |                 |  |        |  |          |  |         |   |           |  
|Balance at December 31, 2003                                                                            |  | 36,006,324      |  | €8,642 |  | €340,678 |  | €(4,482 | ) | €(253,193 | )
|                                                                                                        |  |                 |  |        |  |          |  |         |   |           |  
|Issuance of ordinary shares                                                                             |  | 867,097         |  | 208    |  | 1,201    |  |        |   |          |  
|Deferred compensation                                                                                   |  |                |  |       |  | 3,042    |  | (3,042  | ) |          |  
|Amortization of deferred compensation                                                                   |  |                |  |       |  |         |  | 2,566   |   |          |  
|Issuance of warrants and non-employee stock options to acquire ordinary shares in exchange for services |  |                |  |       |  | 4,246    |  |        |   |          |  
|Net loss                                                                                                |  |                |  |       |  |         |  |        |   | (21,331   | )
|                                                                                                        |  |                 |  |        |  |          |  |         |   |           |  
|Balance at December 31, 2004                                                                            |  | 36,873,421      |  | €8,850 |  | €349,167 |  | €(4,958 | ) | €(274,524 | )
|                                                                                                        |  |                 |  |        |  |          |  |         |   |           |  

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                                               |                                                                                             | €                       | (21,331
|Adjustments to reconcile net loss to net cash used in operating activities: |                                                                                             |                         |        
|                                                                            | Depreciation                                                                                |                         |        
|                                                                            | Loss on disposal of plant and equipment                                                     |                         |        
|                                                                            | Stock based employee compensation                                                           |                         |        
|                                                                            | Intangible amortization                                                                     |                         |        
|                                                                            | Goodwill impairment                                                                         |                         |        
|                                                                            | Equity in losses of unconsolidated investments                                              |                         |        
|                                                                            | Gain on sale of available for sale securities                                               |                         |        
|                                                                            | Revenue recognized in exchange for available-for-sale securities                            |                         |        
|                                                                            | Issuance of warrants and non-employee stock options to acquire ordinary shares for services |                         |        
|Change in operating assets and liabilities:                                 |                                                                                             |                         |        
|                                                                            | 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                                       |                                                                                             |                         | (5,386 
|Cash flow from investing activities                                         |                                                                                             |                         |        
|                                                                            | Purchase of developed technology                                                            |                         |        
|                                                                            | Purchase of plant and equipment                                                             |                         |        
|                                                                            | Proceeds from sale of plant and equipment                                                   |                         |        
|                                                                            | Proceeds from sale of available for sale securities                                         |                         |        
|                                                                            |                                                                                             |                         |        
|Net cash used in investing activities                                       |                                                                                             |                         | (6.131 
|Cash flow from financing activities                                         |                                                                                             |                         |        
|                                                                            | Proceeds from the issuance of ordinary shares                                               |                         |        
|                                                                            | Principal payments under capital lease obligation                                           |                         |        
|                                                                            | Proceeds from sale and lease-back of plant and equipment                                    |                         |        
|                                                                            |                                                                                             |                         |        
|Net cash provided by financing activities                                   |                                                                                             |                         | 1,018  
|                                                                            |                                                                                             |                         |        
|Net decrease in cash and cash equivalents                                   |                                                                                             |                         | (10,499
|                                                                            |                                                                                             |                         |        
|Cash and cash equivalents at beginning of period                            |                                                                                             |                         | 87,210 
|                                                                            |                                                                                             |                         |        
|Cash and cash equivalents at end of period                                  |                                                                                             | €                       | 76,711 
|                                                                            |                                                                                             |                         |        

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"), headquartered in Leiden, the Netherlands, 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
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., U-BiSys B.V. and ChromaGenics 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.

On
March 11, 2004 Crucell Holland B.V. acquired the outstanding capital stock of ChromaGenics B.V., a privately held biotechnology company based in Amsterdam, the Netherlands. The
acquisition has been accounted for as an acquisition of developed technology. The Company paid €4,017 in cash as well as entered into a contingent payment agreement that could result
in an additional payment of €7,000 upon receipt of revenues by the Company generated from the STAR technology. After the payments of the contingent consideration, the Company will pay
a royalty on revenues generated from the STAR technology through the date the STAR technology patent expires.

Note 2.    Summary of Significant Accounting Policies

Risks and Uncertainties and Use of Estimates

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

The Company generates revenues principally from the licensing of its proprietary technology and services performed together with or on behalf of licensees or
partners. 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 are recognized as revenue upon persuasive evidence of an arrangement and delivery of the associated technology, which relates to the complete
transfer of fully developed technology by the Company and represent the culmination of the earnings process. The Company's arrangements provide for continuing support 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.

In
certain arrangements, the Company collaborates with third parties to develop novel products or processes using the Company's proprietary technology. Such arrangements generally
include an initial license fee upon the delivery of the Company's proprietary technology and incremental fees for the

F-7

---



Company
providing ongoing research and development activities. The research and development activities performed by the Company are substantive and critical to the licensees' exploitation of the
delivered technology. Upon persuasive evidence of an arrangement and delivery of the associated technology, the Company recognizes initial fees from such arrangements as revenues over the period of
its continuing performance obligations and recognizes fees from research and development activities as revenues when earned. All fees received under the Company's collaboration agreements are
non-refundable.

Certain
license arrangements provide for additional non-refundable license fees to be paid upon the achievement of milestones. Such additional license fees are recognized as
revenue when the amounts become due and payable upon 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 licensee, if any, under the license agreement. Royalties are recognized as revenue when they become fixed and payable.

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.

Cost of service fees

Costs of service fees comprise direct labor, materials, and overhead costs.

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.

Stock
compensation expense for options granted to non-employees has been determined in accordance with SFAS No. 123 and Emerging Issues Task Force ("EITF")
No. 96-18, "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with

F-8

---



Selling,
Goods or Services," as the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more readily measured.

Income Taxes

The liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the tax effect of incurred
net operating losses and for tax consequences attributable to differences between the balance sheet carrying amounts of existing assets and liabilities and their respective tax bases. If it is more
likely than not that the carrying amounts of deferred tax assets will not be realized, a valuation allowance will be recorded to reduce the carrying amounts of those assets

Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

Net Loss Per Share

Basic net loss per share is computed based on the weighted-average number of ordinary shares outstanding during the period. Diluted net loss per share is computed
based on the weighted-average number of ordinary 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 outstanding stock options and warrants 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.

Long-Lived Assets Other than Goodwill

Plant and equipment is recorded at cost. Depreciation is computed using the straight-line method over the following estimated useful lives: computer
equipment, three years; furniture and laboratory equipment, five years; and leasehold improvements, the shorter of the lease term or ten years. Intangible assets other than goodwill consists of
developed technology acquired in connection with business combinations in 2000 and the purchase of certain technology in 2004. Developed technology is amortized over five years.

The
Company complies with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which requires that long-lived assets, other than
goodwill, be reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the assets might not be recoverable. 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

F-9

---



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, including intangible assets other than goodwill, during the three year period ended December 31, 2004.

Goodwill

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 of €3,140 related to a business combination in 2000, 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.

Foreign Currency

The Company's functional currency is the Euro. The Company makes payments primarily in Euro and receives payments in Euro and US dollars. Transaction gains and
losses arising from transactions denominated in US dollars and or other non-Euro currencies are included in the Consolidated Statement of Operations under "Foreign currency loss".

Financial Instruments

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

F-10

---



Concentration of Credit Risk

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

Allowance for Doubtful Accounts

The collectibility of accounts receivable is assessed based on a combination of factors. In cases where the Company is aware of circumstances that may impair a
specific customer's ability to meet its financial obligations, the Company records a specific allowance against amounts due, and thereby reduces the net recognized receivable to the amount the Company
reasonably believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on the length of time the receivables are past due, the current economic
conditions and the Company's historical experience. At December 31, 2004 and 2003, the allowance for doubtful accounts reserves was €240 and €150, respectively.

Reclassification

Certain prior year balances have been reclassified to conform to the current year's presentation.

New Accounting Pronouncements

The Company currently prepares its financial statements in accordance with US GAAP and prepares a reconciliation of stockholders' equity, net income and certain
other disclosures to Dutch GAAP. In June 2002, the Council of Ministers of the European Union ("EU") approved a new regulation proposed by the European Commission requiring all
EU-listed companies, including the Company, to apply International Financial Reporting Standards ("IFRS") in preparing their financial statements for fiscal years beginning on or after
January 1, 2005. The Company plans to prepare a reconciliation of stockholders' equity, net income and certain other disclosures from U.S. GAAP to IFRS starting January 1, 2005.

In
December 2004, the Financial Accounting Standards Board ("FASB") issued a revision of FASB statement No. 123, Accounting for Stock-Based Compensation ("SFAS
No. 123 (R)"). This statement
supersedes Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123 (R) addresses the
accounting for share-based payment transactions in which a company receives employee services in exchange for either equity instruments of the company or liabilities that are based on the fair value
of the company's equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123 (R) eliminates the ability to account for share-based compensation
transactions using the intrinsic method and generally requires that such transactions be accounted for using a "fair-value"-based method and recognized as expense in the consolidated
statement of operations. SFAS No. 123 (R) is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The Company is
currently evaluating the impact of SFAS 123(R) on the Company's consolidated financial statements.

F-11

---





Note 3.    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.

Note 4.    Goodwill and Intangible Assets

Goodwill and intangible assets originated from the merger with U-BiSys B.V. in 2000 and from the acquisition of ChromaGenics B.V.'s developed
technology in 2004.

The
movement of goodwill and intangible assets for the years 2004, 2003 and 2002 is presented below:

|                                   |  | Total |         | Developed
Technology |   | Workforce |   | Goodwill |       
|---------------------------------- |  | ----- | ------- | -------------------- | - | --------- | - | -------- | ------
|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    |  | €     | 3,326   |                      | € | 3,326     |   | €        |      
|Amortization                       |  |       | (1,330  | )                    |   | (1,330    | ) |          |      
|                                   |  |       |         |                      |   |           |   |          |       
|Balance, net, December 31, 2003(1) |  | €     | 1,996   |                      | € | 1,996     |   | €        |      
|                                   |  |       |         |                      |   |           |   |          |       
|Purchase of developed technology   |  |       | 4,017   |                      |   | 4,017     |   |          |      
|Amortization                       |  |       | (1,966  | )                    |   | (1,966    | ) |          |      
|                                   |  |       |         |                      |   |           |   |          |       
|Balance, net, December 31, 2004(2) |  | €     | 4,047   |                      | € | 4,047     |   | €        |      
|                                   |  |       |         |                      |   |           |   |          |       

---

The
purchase of developed technology in 2004 relates to the acquisition of ChromaGenics B.V. (see Note 1.). The estimated aggregate amortization expense for each of the next
respective five years is €1,469, €803, €803, €803, and €169 respectively.

F-12

---



Note 5.    Plant and Equipment



|                                              |  | December 31, |       
|--------------------------------------------- |  | ------------ | ------
|
|Leasehold improvements                        |  | €            | 4,204 
|Furniture and laboratory equipment            |  |              | 13,541
|Computer equipment                            |  |              | 1,534 
|                                              |  |              |       
|                                              |  |              | 19,279
|Less accumulated deprecation and amortization |  |              | (8,814
|                                              |  |              |       
|Plant and equipment, net                      |  | €            | 10,465
|                                              |  |              |       

At
December 31, 2004 and 2003, the Company held laboratory equipment under capital leases with a cost of €4,021 and €3,462, respectively, and a net
book value of approximately €2,266 and € 2,691, respectively. Such leases are secured by the value of the underlying assets. Interest expense on lease
obligations, which approximates cash payments for interest during the year, was €212, €221 and €146 during the year ended December 31, 2004, 2003
and 2002, respectively.

Note 6.    Shareholders' Equity

Share Capital

The Company's authorized share capital amounts to €40,800,002.40 divided into: 85,000,000 ordinary shares, ten priority shares and 85,000,000
preference shares, each with a par value of €0.24. As of December 31, 2004, there were 36,873,421 ordinary shares and ten priority shares issued and outstanding. No preference
shares are issued and outstanding as of December 31, 2004.

All
of the issued priority shares are held by Stichting Prioriteit Crucell (Priority Foundation). The board of governors comprises of the chairman of the Company's supervisory board and
two other independent members. The Priority Foundation is able to make binding nominations for the supervisory board members. The general meeting of shareholders can override these votes by an
absolute majority of the votes cast, which must represent more than one-third of the Company's issued share capital.

All
of the preference shares are held by a foundation called Stichting Preferente Aandelen Crucell (Preferred Foundation). The board of governors comprises of the Company's chairman of
the supervisory board and four other independent members. The preference shares are held by the Preferred Foundation in which the Company has entered into an agreement that allows it to acquire
preference shares up to 50% of the number of outstanding shares. The Preferred Foundation must pay at least 25% of the nominal value of the preference shares it acquires from the Company. If any
preference shares are acquired by the Company they must be cancelled.

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 3, 2005.

F-13

---



Stock Option Plan

The Company maintains a stock option plan whereby the remuneration committee of the supervisory board may grant options to employees, directors and members of the
supervisory board. All options are exercisable immediately upon grant. Upon exercise of the options, employees are subject to profit-
retribution provisions. Such provisions entitle the Company to receive a portion of the profits upon the sale of the shares, calculated as the difference between the total proceeds from the sale of
shares and the aggregate exercise price. The portion of the profits payable to the Company decreases ratably over three to four 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 the employee terminates employment prior to the end of the relevant period.

The
options expire four to eight years from the date of grant, or earlier upon termination of employment with the Company. Upon termination of employment with the Company, options must
be exercised within 90 days. Generally, options granted under the stock option plan are granted at exercise prices which exceed the fair value of the Company's ordinary shares at the date of
grant.

In
accordance with the terms of a cash bonus plan, if an employee maintains continuous employment with the Company for a period of four years, and defers exercising awarded options until
the last month of the option term, the employee receives a cash bonus. The Company recognizes compensation expense ratably during the employment period required under the cash bonus plan. In 2003, the
cash bonus plan was eliminated for certain employees resulting in a reduction to compensation expense of approximately €2,300.

In
January 2003, the supervisory board approved a new option plan whereby previously awarded options to employees and members of the supervisory board with an exercise price of
€21.00 per share could be exchanged for an equal number of new options (the "replacement options"). The replacement options have an exercise price of €3.49, which was
161% of the average closing stock price of the Company on the three days preceding the option grant date, and have an eight year life. The replacement options are exercisable immediately, but are
subject to profit retribution provisions. Such provisions entitle the Company to receive a portion of the profits upon the sale of the shares, calculated as the difference between the total proceeds
from the sale of shares, and the aggregate selling price. The portion of the profits payable to the Company decreases ratably over three 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 the employee terminates employment prior to the end of the three year period. A total of 1,295,650
options with an exercise price of €21.00 per share were replaced under the new option plan, resulting in incremental deferred compensation of €1,516 or
€1.17 per option. Compensation expense is recognized ratably over a period of three years.

Options
issued subsequent to January 2003 are subject to the terms of the new option plan. Options issued under this option plan have an eight year life and will be issued at
exercise prices equal to 161% of the average closing stock price of the Company on the three days preceding the option grant date. The options are immediately exercisable, and are subject to profit
retribution provisions which lapse over a period of three years.

In
May 2003, the supervisory board approved amendments to the terms of outstanding and future options held by members of the management board, which include the Company's chief
executive

F-14

---



officer,
chief financial officer, chief operating officer and chief scientific officer, whereby, following a change of control resulting in termination of employment, members of the management board
may exercise options over the shorter of a three year period or the remaining term of the options.

In
December 2003, the terms of all outstanding stock options to the supervisory board were modified such that options vest immediately and are no longer subject to profit
retribution provisions. The Company recognized compensation expense of €495 representing the total amount of deferred compensation associated with options held by members of the
supervisory board.

In
April 2004, the supervisory board approved a new option plan whereby employees and members of the supervisory board are granted options with an exercise price 126% greater than
the average closing stock price of the Company on the three days preceding the option grant date and have a five year life. The options are subject to profit retribution provisions. Such provisions
entitle the Company to receive a portion of the profits upon the sale of the shares, calculated as the difference between the total proceeds from the sale of shares, and the aggregate selling price.
The portion of the profits payable to the Company decreases ratably over three 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 the employee terminates employment prior to the end of the three-year period. Compensation expense is recognized ratably over a period of three
years.

Total
compensation cost recognized for all stock-based employee compensation awards was €2,566, €2,696 and €1,371 in 2004, 2003 and 2002
respectively.

A
summary of the stock option activity for the plan is as follows:

|                             |  | Number of
options |   | Weighted average
exercise price
|---------------------------- |  | ----------------- | - | -------------------------------
|Balance at December 31, 2001 |  | 4,620,264         |   | 9.43                           
|Granted                      |  | 443,500           |   | 5.48                           
|Exercised                    |  | (331,750          | ) | 3.00                           
|Forfeited                    |  | (202,850          | ) | 14.95                          
|                             |  |                   |   |                                
|Balance at December 31, 2002 |  | 4,529,164         |   | 9.27                           
|Granted                      |  | 2,512,554         |   | 4.19                           
|Exercised                    |  | (356,386          | ) | 0.87                           
|Forfeited                    |  | (2,326,574        | ) | 13.63                          
|                             |  |                   |   |                                
|Balance at December 31, 2003 |  | 4,358,758         |   | 4.70                           
|Granted                      |  | 1,333,500         |   | 9.59                           
|Exercised                    |  | (867,097          | ) | 1.62                           
|Forfeited                    |  | (6,150            | ) | 8.48                           
|                             |  |                   |   |                                
|Balance at December 31, 2004 |  | 4,819,011         |   | 6.42                           
|                             |  |                   |   |                                

Included
in the options outstanding as of December 31, 2004 are options to acquire 696,679 ordinary shares that are held by former employees. These employees have been permitted
to continue vesting in these options for services rendered.

F-15

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The
following table summarizes information about the Company's stock options outstanding at December 31, 2004:

|Exercise price |  | Outstanding
Options
at December 31,
2004 |  | Weighted average
remaining contractual
life (years) |  | Exercisable options
|-------------- |  | ---------------------------------------- |  | --------------------------------------------------- |  | -------------------
|€0.49-€3.00    |  | 243,969                                  |  | 4.06                                                |  | 243,969            
|€3.01-€5.00    |  | 1,720,600                                |  | 5.67                                                |  | 1,720,600          
|€5.01-€7.00    |  | 899,604                                  |  | 5.59                                                |  | 899,604            
|€7.01-€11.66   |  | 1,954,838                                |  | 3.18                                                |  | 1,954,838          
|               |  |                                          |  |                                                     |  |                    
|Total          |  | 4,819,011                                |  |                                                     |  | 4,819,011          
|               |  |                                          |  |                                                     |  |                    

As
of December 31, 2004, a total of 5,531,013 ordinary shares have been reserved for issuance under the option plan, of which 4,819,011 are subject to outstanding options
(including non-employee stock 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 estimated at the date of grant using the Black-Scholes option pricing model, with the following weighted average assumptions:

|                        |  | Year ended December 31, |  
|----------------------- |  | ----------------------- | -
|
|Risk-free interest rate |  | 2.9                     | %
|Expected dividend yield |  |                        |  
|Expected volatility     |  | 62.3                    | %
|Expected life (years)   |  | 4.0                     |  

The
weighted average fair value of options granted during the years ended December 31, 2004, 2003 and 2002 was €3.28, €1.41 and
€3.01, respectively.

Warrants

In 2003, the Company granted warrants to acquire 250,000 ordinary shares with an exercise price of €3.00 per share to a consultant in exchange for
services. The warrants were earned by the consultant over the service period which ended in 2004, and expire in July 2008.

F-16

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Note 7.    Commitments and Contingencies

Total minimum payments under non-cancelable operating leases and capital leases are as follows at December 31, 2004:

|                                               |                        | Capital Leases |        | Operating Leases
|---------------------------------------------- | ---------------------- | -------------- | ------ | ----------------
|2005                                           |                        | €              | 1,345  |                 
|2006                                           |                        |                | 1,036  |                 
|2007                                           |                        |                | 407    |                 
|2008                                           |                        |                |       |                 
|2009                                           |                        |                |       |                 
|Thereafter                                     |                        |                |       |                 
|                                               |                        |                |        |                 
|                                               | Total minimum payments |                |        | 2,788           
|                                               |                        |                |        |                 
|Less interest                                  |                        |                | (191   | )               
|                                               |                        |                |        |                 
|Present value of minimum lease payments        |                        |                | 2,597  |                 
|                                               |                        |                |        |                 
|Less current portion                           |                        |                | (1,212 | )               
|                                               |                        |                |        |                 
|Long term portion of capital lease obligations |                        | €              | 1,385  |                 
|                                               |                        |                |        |                 

Rental
expense was €1,174, €1,165 and €1,377 for the years ended December 31, 2004, 2003 and 2002, respectively.

The
Company has future minimum payments under non-cancelable research and licensing agreements whereby it is obligated to make payments of €1,828,
€1,804, and €1,519 in 2005, 2006, and 2007 respectively, with no required minimum payments thereafter.

Certain
lease agreements contain provisions whereby the Company is required to make immediate payment of all amounts due under the lease in the event the Company's cash and cash
equivalents balance falls below € 25,000 or stockholders' equity or cash equivalents falls below € 75,000. At December 31, 2004,
€3,880 of amounts due under leases is subject to this provision.

The
Company also has other bank guarantees that amount to €1,315 at December 31, 2004.

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

Note 8.    Collaboration Agreements

In December 2002, the Company entered into a collaboration agreement with DSM Biologics ("DSM") pursuant to which the Company granted DSM an exclusive
license to use Crucell's PER.C6 platform for the contract manufacturing of recombinant proteins and monoclonal antibodies. Under the terms of this agreement, the Company receives licensing fees over a
four year development period and is obligated to commit certain expenditures in connection with the development of the PER.C6 production platform. Under the terms of the arrangement, DSM is entitled
to a percentage of all non-service fees received by the Company from third parties licensing the Company's PER.C6 technology in certain fields, in addition to an exclusive license to the
technology that includes a right to

F-17

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sub-license.
In December 2002, the Company received an up-front non-refundable licensee fee and in June 2004 the Company received a
non-refundable milestone payment. Additional payments from DSM may be triggered upon certain dates and the attainment of certain milestones. Due to the Company's continuing performance
obligations related to the novel use of its technology during the development period, the up-front license fee was initially recognized as deferred revenue and is being recognized as
revenue ratably over four years, the estimated period of development. Milestones, related to scientific and technical achievements are recognized as revenue when the milestone is obtained.

In
December 2003, the Company entered into a collaboration and license agreement with Aventis Pasteur S.A. (as of 2004 sanofi pasteur S.A. ("Sanofi")) pursuant to which Sanofi
received an exclusive license to research, develop and manufacture influenza vaccines based on the Company's PER.C6 technology. Under the terms of the agreement the Company is obliged to provide
research and development. In addition, the Company is entitled to milestone payments, annual minimum royalty payments, research and development funding, and royalties upon the development of a
PER.C6-based influenza vaccine. The Company retains the commercialization rights in Japan, whereby the Company can request Sanofi to supply finished vaccine products to the Company, where
royalties will be due to Sanofi. Due to the Company's continuing performance obligations related to the novel use of its technology during the development period, the up-front license fee
has been deferred and will be recognized as revenue ratably over the estimated development period of three years. Minimum annual royalties during the development period, which are creditable against
future royalties, are recognized as revenue when earned. Milestones, related to scientific and technical achievements are recognized as revenue when the milestone is obtained. Service fees for work
performed under the collaboration agreement are recognized when earned.

F-18

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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 €1,032,
€761 and €525 for the years ended December 31, 2004, 2003 and 2002, respectively.

Note 10.    Revenues

The table below reflects the geographical composition of revenues for the years ending December 31, 2004, 2003 and 2002.

|              |  | Year ended December 31,
|------------- |  | -----------------------
|
|Europe        |  | 10,042                 
|North America |  | 12,535                 
|Asia          |  | 45                     
|              |  |                        
|              |  | €22,622                
|              |  |                        

The
Company had two individual customers whose respective accounts receivable balances represented 36% and 23% of the Company's total accounts receivable balance as of
December 31, 2004.

Note 11.    Income Taxes

The Company has tax loss carry forwards of €85,766, €68,802 and €55,289 at December 31, 2004, 2003 and 2002
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 carry forwards 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, 2004, 2003 and 2002.

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 the Company's ability to realize the benefits of its tax loss carry forward in the future.

F-19

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Note 12.    Significant Customers

A summary of significant customers based on a percentage of total revenues is a follows:

|           |  | 2004 |   | 2003 |   | 2002 |  
|---------- |  | ---- | - | ---- | - | ---- | -
|Customer A |  | 26   | % | (*   | ) | (*   | )
|Customer B |  | 23   | % | 17   | % | (*   | )
|Customer C |  | (*   | ) | 15   | % | 15   | %
|Customer D |  | (*   | ) | (*   | ) | 13   | %
|Customer E |  | (*   | ) | (*   | ) | 11   | %
|           |  |      |   |      |   |      |  
|           |  | 49   | % | 32   | % | 39   | %
|           |  |      |   |      |   |      |  

---

Note 13.    Quarterly Financial Data (Unaudited)

The following is a summary of the quarterly results of operations for the fiscal years ended December 31, 2004, 2003, and 2002.

|                                           |  | Fiscal year 2004 (unaudited) |       
|------------------------------------------ |  | ---------------------------- | ------
|
|Revenues                                   |  | €                            | 4,005 
|Loss from operations                       |  |                              | (7,396
|Net loss before provision for income taxes |  |                              | (7,047
|Net loss                                   |  |                              | (7,047
|Net loss per share basic and diluted       |  |                              | (0.19 

|                                           |  | Fiscal year 2003 (unaudited) |       
|------------------------------------------ |  | ---------------------------- | ------
|
|Revenues                                   |  | €                            | 2,120 
|Loss from operations                       |  |                              | (4,318
|Net loss before provision for income taxes |  |                              | (3,629
|Net loss                                   |  |                              | (3,629
|Net loss per share basic and diluted       |  |                              | (0.10 

|                                           |  | 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 

F-20

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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"). 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          |  | €                       | (21,331 
|Intangible assets                 |  |                         | 1,330   
|Stock option compensation         |  |                         | 5,320   
|Revenue recognition               |  |                         | (4,250  
|Equity in result of joint venture |  |                         | (704    
|                                  |  |                         |         
|Net loss under Dutch GAAP         |  |                         | €(19,635
|                                  |  |                         |         

|                                      |  | Year ended December 31, |        
|------------------------------------- |  | ----------------------- | -------
|
|Shareholders' equity under U.S. GAAP  |  | €                       | 78,535 
|Intangible assets                     |  |                         | (666   
|Revenue recognition                   |  |                         | 8,448  
|Equity in result of joint venture     |  |                         | 2,124  
|                                      |  |                         |        
|Shareholders' equity under Dutch GAAP |  |                         | €88,441
|                                      |  |                         |        

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

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

In case of a grant of stock options below the market value of the underlying shares the difference will be included in the profit and loss account. Stock
compensation expense for options granted is determined at the intrinsic value (difference between the market value upon date of grant and the exercise price of the option).

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.

Note 15.    Subsequent events (Unaudited)

On March 9, 2005 the Company announced that Galapagos is considering a Euronext stock exchange listing in 2005. The primary reason for the listing is to
raise additional funds to enhance Galapagos' drug discovery operations, which are predominantly aimed at developing breakthrough medicines for the bone and joint diseasesosteoarthritis,
osteoporosis and rheumatoid arthritis.

F-22

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