We are dependent on a small number of products for a majority of our revenues and expect this dependence to continue for the foreseeable future.

We are dependent on a small number of products that account for the majority of our revenues. By the end of 2006 year our core product portfolio contains of six vaccines, namely Quinvaxem, Hepavax-Gene (Paediatric vaccines), Inflexal (Influenza), Dukoral, Epaxal and Vivotif (Travel vaccines). The aggregated revenues for our core product portfolio amount to € 91,664 in 2006 and represent 88.2% of our total product sales. In particular, we will be dependent on sales of Quinvaxem and Inflexal.

If these products were to become subject to any problem such as loss of patent protection, unexpected side effects, regulatory proceedings, publicity affecting doctor or patient confidence or pressure from competitive products, or if new, more effective treatments should be introduced, we could experience a significant decrease in revenues and an adverse effect on our financial results.

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. In addition, a recent U.S. Supreme Court decision has established that a party need not break or terminate a license agreement before seeking a court judgment that the patents underlying the license agreement are not valid, not enforceable or not infringed. Some commentators in the intellectual property field have expressed the opinion that, due to this decision, patent challenges by licensees in general will increase. If, in the future, we become subject to additional patent challenges, it would cause us to have to expend greater resources defending such challenges. Challenges decided adversely to us could cause us to forego royalty payments which could have a material adverse effect on our business, financial condition and results of operations.

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.

An inability to attract and retain qualified personnel could adversely impact our business.

We 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 the markets in which we operate. We believe this shortage is likely to continue. As a result, competition for skilled personnel is intense. 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. The inability to attract and retain highly skilled

personnel on acceptable terms could have a material adverse effect on our business, financial condition, results of operations and prospects.

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 was 282 at December 31, 2005. Mainly due to the acquisition of Berna Biotech AG and SBL Vaccin Holding AB in 2006 our total head count increased to 1,073 employees at December 31, 2006. 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.

A number of our research and product development programs depend on access to biological materials without which we would be unable to conduct certain 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 certain research and product development. In addition, government regulations could result in restricted access to, or use of, human and other biological material samples.

We require a reliable supply of crucial materials for the production of our products and for our serum-free medium. Some of these supplies are provided by a limited number of third-party suppliers and some of these supplies we produce or are planning to produce ourselves. Any interruption in certain supplies would interrupt our production and ability to conduct research and product development.

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. We cannot guarantee this medium will be available in the future on an industrial or bulk scale. If supply problems force 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.

In addition, we rely at least in part on third-party suppliers including CSL and Novartis for the supply of crucial materials for the production of some of our marketed products or those under development, including starting materials as well as antigens present in the final product. This includes, but is not limited to, the supply of A-Singapore flu antigen for the production of the currently marketed hepatitis A vaccine Epaxal, flu antigen for the production of the currently marketed flu vaccine Inflexal and DiTeWPHiB antigen for the currently marketed pentavalent vaccine Quinvaxem. Any interruption or termination of these supply relationships may have adverse effects on our ability to produce and supply these products as well as on our ability to launch new products in development and thus on our overall results.

For example, we currently source our supplies of A-Singapore flu antigen used in the production of our Hepatitis A vaccine Epaxal from Novartis. Concurrently, we are planning to produce this antigen at our production facility in Berne, Switzerland, beginning in early 2008. A significant shortfall of the supply of the antigen before December 31, 2007, when our agreement with Novartis for the supply of this antigen terminates, may have a material adverse effect on our ability to produce Epaxal. Likewise, if a delay in

commencement of our own planned production of the antigen were to occur after our agreement with Novartis expires, and we were not able to find an alternative source for the antigen, this may have a material adverse effect on our ability to produce Epaxal.

In addition, our agreement with CSL for the supply of flu antigen for the production of our flu vaccine Inflexal will terminate as of December 31, 2009. Due to the shortage of antigen production capacity worldwide, we anticipate that it may be difficult to establish a new contract for the supply of flu antigen on the terms and conditions we currently have. If we are unable to establish a new supply agreement, or are only able to establish a new agreement on less favorable terms and conditions, it could increase our costs, and there is no guarantee that we would be able to pass on these increased costs to our customers.

The manufacture and distribution of our products is technically complex. Supply interruptions, product recalls or inventory losses caused by unforeseen events, cold chain interruption and testing difficulties may reduce sales, delay the launch of new products and adversely affect our operating results and financial condition.

Our products are manufactured and distributed using technically complex processes requiring specialized facilities, highly specific raw materials and other production constraints. The complexity of these processes as well as strict company and government standards for the manufacture of our products subject us to production risks. For example, during the manufacturing process, defects in equipment or infrastructure may generate production delays. In addition, process deviations or unanticipated effects of approved process changes may result in these intermediate products not complying with stability requirements or specifications. Our vaccine products in particular are subject to the risk of manufacturing stoppages or the risk of loss of inventory because of the difficulties inherent to the aseptic processing of biological materials at this stage. Vaccine components cannot be sterilized nor can conservative agents be added to the manufactured vaccine. If our products were to be contaminated by micro-organisms, it could result in the rejection of entire batches of finished vaccine, which would result in lost sales and possibly product recall, if contaminated vaccines have been shipped to customers.

Most of our products must be stored and transported at temperatures within a certain range, which is known as “strict cold chain” storage and transportation. If these environmental conditions deviate, our products’ remaining shelf-lives could be impaired or their efficacy and safety could even become so impaired that they are no longer suitable for use. Further, most of our products are subject to additional testing upon receipt, both by our customers and by governmental agencies that regulate drugs in the markets in which we sell our products. Due to significant lab-to-lab variability of certain type of tests, in particular tests on biological products such as ours, batches of products may not be cleared by customers or these agencies, despite our having successfully tested them at the end of the manufacturing process. Failed tests may of course lead to customers rejecting delivery of the product or government agencies not releasing the product for marketing.

The occurrence or suspected occurrence of production, distribution and testing difficulties can lead to lost inventories, and in some case product recalls, with consequential reputational damage and the risk of product liability. See “—We may have significant product liability exposure, and our product liability insurance may be inadequate to cover product liability or other claims against us”. The investigation and remediation of any identified problems can cause production delays, substantial expense, lost sales and the delay of new product launches.

We rely on our manufacturing facilities in Korea to produce all of our supplies of Quinvaxem, and any events or disputes concerning that facility that interrupt, reduce or terminate production there may harm our business.

Our manufacturing facility in Korea is our sole source of our supplies of our Quinvaxem vaccine. As such, we are vulnerable to any event there that interrupts, reduces or slows our production of Quinvaxem. For example, we could experience natural disasters such as floods or storms or work slow-downs or work stoppages by our employees. In addition, we lease the property on which our factory is build from our

landlord, Green Cross Holdings Corp under a lease that expires in 2010, and which can be extended for an additional five years at our election. We are the only party entitled to terminate the lease. Our landlord also provides our utilities, such as access to water and electricity, at the site.

We have been notified that our landlord will have to surrender a portion of the land on which our Korean facility sits to the local and regional authorities due to construction of a light railway, a subway line extension and a transfer station between those two transit lines. Our landlord plans to vacate the property by the end of 2008 and has advised us they will stop providing utilities to us at that time. We are currently engaged in negotiations with the local and regional authorities to determine the exact impact of the construction projects on our facilities as well as the exact nature of the compensation we are to receive. While we may be entitled to at least partial compensation for any of our leasehold which the authorities condemn, our predecessor signed certain waivers in relation to the right to receive such compensation, as a condition to receiving permission to build the facilities. At the time the facilities were constructed, the authorities had made these construction projects part of their longer-term plan for the local area’s infrastructure. We may not be able to successfully challenge these waivers in court and, in turn, may not be legally entitled to full compensation for any condemnation by the authorities.

Currently, we plan to modify our facilities in order to allow enough land to be surrendered to the authorities in order to allow for the construction projects to take place. We also plan to apply for permits that will permit us access to utilities in our own right. We cannot guarantee that we will be granted these permits, nor can we assure you that any compensation we receive from the authorities will be sufficient to cover all of our expense that arise due to this construction.

If our lease were terminated or we were otherwise forced to leave the land, we would have to manufacture Quinvaxem at another of our facilities, build another facility to manufacture Quinvaxem or find a third party to manufacture the vaccine. We would incur substantial costs if we were to have to either move production to a different facility or build a new facility without necessarily being compensated for those expenses. Further, there is no guarantee that we could find a suitable third party to manufacture our vaccine or that if we did find one, we could enter into an agreement with them on favorable terms or at all. If we were to suffer any interruption, including a permanent one at our Korean facility, this would reduce our sales of Quinvaxem, may increase our expenses and, in turn, have a material adverse effect on our business, financial condition and results of operations.

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

In the past, 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. Under the 2004 Technology Transfer Block Exemption Regulation, or the Regulation, in the European Union we may be required to review and possibly amend existing license and technology transfer agreements in the future. For example, if certain market share thresholds will or have been reached in the relevant markets by those third parties that use our technologies to produce their products, the Regulation may require us to revise our agreements with those parties to ensure the agreements are in compliance with European competition law. 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 of operations.

Potential patent disputes with GlaxoSmithKline, if decided adversely to us, could cause us to lose a significant share of our future revenues.

Berna Biotech’s subsidiary Green Cross Vaccine Corporation, currently operating under the name Berna Biotech Korea Corp., and our partner Novartis, lodged oppositions against a patent of GlaxoSmithKline (GSK) in Korea. The patent is concerned with multivalent vaccine formulations, such as our pentavalent vaccine Quinvaxem which is registered in Korea. In response to the opposition, the patent was revoked by the Korean Intellectual Property Office in December 2004 on the grounds that the subject-matter claimed in the patent lacks novelty. GSK appealed that decision before the Korean Patent Court. After a hearing which took place in April 2006, the Korean Patent Court dismissed the appeal in June 2006. GSK has appealed this decision. If the Korean Supreme Court were to reverse the decision of the Patent Court and if GSK were to decide to enforce its patent, Berna Biotech Korea Corp. could be found to have infringed or be infringing the patent. If we are found to be infringing, we may be forced to suspend, or even cancel, our commercial activities with this vaccine. As a consequence we would lose revenues and our business would be adversely affected.

In addition, production of our Quinvaxem requires a particular vaccine component that may become the subject of a patent dispute between either GSK and us or GSK and our supplier of that component. The patent on that particular component, held by GSK, is currently under opposition before the European patent office and a definitive outcome on the validity of the patent is expected to take a number of years. A negative outcome of this opposition proceeding could lead to infringement proceedings between GSK and us or GSK and our supplier, although we believe that neither we nor our supplier would be held to have infringed or be infringing that patent. The outcome of legal disputes is invariably difficult to predict with accuracy, but in the event GSK were to prevail in infringement proceedings against us, this would adversely affect our business.

Risks related to our Industry

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 development programs.

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 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 manufacturers 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. This risk may be more pronounced in the case of the prophylactic vaccines, which constitute our marketed products, than with respect to other pharmaceutical and medicinal products generally. 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. We maintain product liability insurance in respect of all marketed products. 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. We are currently involved in a small number of product liability cases related to products that our subsidiary Berna Biotech marketed in the past. While we cannot predict the outcome of these cases, we do not believe that, if decided against us, any of these matters would have a material adverse effect on our business, financial condition or results of operations.

If ethical, legal and social issues related to the use of genetic technology, human-based materials and pre-clinical and clinical 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 its 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 its existing technologies and potential regulatory delays relating to the testing or approval of Crucell’s own or its licensees’ potential products. Any of these factors could generate negative publicity or other adverse consequences regarding its business or industry, and could reduce or eliminate the potential markets for for its own or its licensees’ potential products.

We cannot be certain that we will be successful in public tenders to provide national governments and supranational organizations with our vaccine products.

For the sale of our paediatric vaccines, we rely to a considerable extent on the public markets, which typically operate via a tender system. In a tender system, national governments or supranational organizations request proposals for the terms under which a vaccine manufacturer will provide a large quantity of one or more vaccines. The award of the tender is typically based on a number of factors, including price and other non-financial attributes such as supply reliability and quality. The tender is often for a period of one or more years, meaning that only the chosen manufacturer will be permitted to supply the subject vaccine for that length of time. Failure to win a tender therefore, may cause us to be ineligible to supply the relevant national government or supranational organization for one or more years, and in turn, have a material adverse effect on our business, results of operations and financial condition.

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. 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 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.

We may be unable to obtain regulatory approval to manufacture and market our new products and may have regulatory approval of the manufacture and marketing of our existing products revoked.

Regulatory bodies such as the U.S. Food and Drug Administration (FDA) and comparable authorities elsewhere, such as the European Medicines Agency (EMEA) and the European Commission, regulate the market introduction of biopharmaceutical products. 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. In addition, different regulatory authorities may impose different conditions upon the marketing of a given product or may refuse to grant, or require additional data before granting, an approval to market a product even though the product may have been approved by another regulatory authority. There can be no assurance that regulatory approvals will ultimately be obtained to manufacture and market any such product candidates in which we are, or may in the future be, interested.

Although the FDA allows PER.C6 cells to be used to produce clinical materials that are being used in 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. 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 from which companies can produce biopharmaceuticals, new regulations could be adopted that would preclude use of PER.C6 cells in the future. If this were to occur, 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.

Once a product is approved, the manufacture and marketing of the product remains subject to periodic review. Changes in applicable regulations, breaches of regulatory requirements or the discovery of problems related to the manufacture, safety, quality or efficacy of a product may result in the imposition of fines or restrictions upon the manufacture and sale of such product, including in the worst case withdrawal of the product from the market and/or the revocation of the relevant regulatory approvals. If the relevant regulatory authorities do not approve products developed using our technologies, or revokes approval of

our existing products, we may not receive any licensing or royalty revenues, which may have a material adverse impact on our business, financial condition, results of operations and prospects.

Any potential health risks associated with our products may lead to significant adverse regulatory and market consequences.

The possibility of product failure or adverse side effects poses a variety of risks for manufacturers of pharmaceutical and medical products. These risks may be more pronounced in the case of the prophylactic vaccines that constitute our core products than with respect to other pharmaceutical and medical products generally. Because such vaccines are administered to healthy subjects, any adverse health consequences associated with such administration may be perceived as less tolerable than side effects associated with the treatment of disease. Accordingly, there can be no assurance that even relatively minor potential health risks associated with our products will not give rise to adverse regulatory action, and/or negative market perception of us and our products, resulting in a material adverse effect on our business, financial condition, results of operations and prospects.

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, including patents, in our technologies and potential products in Europe, the United States and elsewhere. However, the patent positions of technology-based enterprises like us are subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope and priority of a particular patent. There can be no assurance that we will develop products that are patentable, that patents will be granted under pending or future applications or that patents granted to us or our collaborators will be of sufficient breadth to provide adequate protection against competitors with similar technologies or products or will not be successfully challenged. 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 in part 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 held by third parties 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.

Oppositions are relatively straightforward proceedings where any third party can seek to have a patent revoked. The proceedings typically have a stage where the patent’s opponents and proprietor may each file observations in writing, followed by oral proceedings. The decision, which may be a dismissal of the opposition, a revocation of the patent or a maintenance of the patent in more limited form, usually takes between two to three years from the start of the proceedings. In most jurisdictions the decision is subject to appeal by the adversely affected party or parties. If the oppositions against our PER.C6 and AdVac patents are successful we may lose some or all patent protection in Europe.

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.

Before we can market some of our products or technologies, we may need to obtain licenses from third parties who have patents or other intellectual property rights. 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. 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.

Risks related to the securities markets and ownership of our shares or ADSs

The protective measures included in our articles of association may prevent unfriendly action that might otherwise be in the best interests of our shareholders.

Our articles of association have, in accordance with the laws of The Netherlands, protective effects. Among other things, our articles of association provide that our Supervisory Board may make binding nominations for the election of its 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. Furthermore under Dutch law, we may issue preference shares to a foundation, Stichting Preferente Aandelen Crucell, or the Preferred Foundation, giving it preferred dividend rights and diluting the voting rights held by the holders of the other classes of shares. The Preferred Foundation has an option to acquire a number of preference shares equal to the number of our outstanding shares. The chairman of our Supervisory Board, Jan Oosterveld, 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 unfriendly action 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 preference shares and our articles of association.

U.S. and other non-Dutch holders of our ordinary shares may not be able to exercise pre-emption rights.

In the event of an increase in our share capital, holders of our ordinary shares are generally entitled to certain pre-emption rights unless these rights are excluded by a resolution of the general meeting of shareholders or of our board of directors, if so designated by the general meeting of shareholders or pursuant to our articles of association. However, U.S. holders of our ordinary shares may not be able to exercise pre-emption rights unless a registration statement under the Securities Act is declared effective with respect to the shares issuable upon exercise of such rights or an exemption from the registration requirements is available. No assurance can be given that any registration statement will be filed or, that if filed, will be declared effective, or that any exemption from registration would be available to enable the exercise of a U.S. holder’s pre-emption rights.

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 Board and Supervisory Board. Most of our offices and 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 Euronext Amsterdam’s Eurolist by Euronext, 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 2004, 2005 and 2006 has been $ 6.38, $ 12.30 and $ 17.27 respectively, and the closing price as of June 1, 2007 was $ 22.90. 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. 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.

If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our ordinary shares or ADSs adversely, our share or ADS price and trading volume could decline.

The trading market for our ordinary shares and ADSs will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who

cover us or our industry downgrade our ordinary shares or our ADSs, the market price of the shares or ADSs would likely decline. If one or more of these analysts ceases coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the market price of our shares or ADSs or trading volume to decline.

We believe that we were or may have been a passive foreign investment company before 2005, causing certain adverse U.S. tax rules to apply to U.S. holders that held our ordinary shares or ADSs before 2005.

Although we believe that we were not a “passive foreign investment company” or “PFIC” for U.S. tax purposes with respect to the year 2006 and also do not anticipate becoming a PFIC with respect to the year 2007 or thereafter, we believe that we were or may have been a PFIC with respect to the years before 2005. If we were a PFIC in the past, U.S. holders that held our ordinary shares or ADSs at any time during the years when we were treated as a PFIC and did not make a mark-to-market election or a qualified electing fund (“QEF”) election will generally continue to be subject to certain adverse U.S. federal tax rules (the “PFIC rules”), even though we later ceased to qualify as a PFIC. In order to avoid being subject to these rules in the future, affected U.S. investors may wish to make a deemed sale election with respect to our ordinary shares or ADSs. The PFIC rules are extremely complex, and U.S. investors are urged to consult their own tax advisers regarding the potential consequences to them of making the deemed sale election. See Item 10, “Taxation—Taxation of U.S. Investors—Passive Foreign Investment Company Rules.”

Item 4. Information on the Company

History and Development of Crucell

We are a limited liability company incorporated in The Netherlands with the legal and commercial name Crucell N.V., registered under number 28087740. We were incorporated on October 9, 2000, as the holding company for Crucell Holland B.V., formerly called IntroGene B.V., following the combination of IntroGene B.V. and U-BiSys B.V. Our principal executive office is located at Archimedesweg 4-6, 2333 CN Leiden, The Netherlands and our telephone number is +31 (0)71 519 9100. Our agent in the United States is CT Corporation, 111 Eigth Avenue, New York, New York 10011.

We concluded a share exchange offer on February 22, 2006 and at March 31, 2006 we owned 98.4% of Berna Biotech A.G. (“Berna Biotech” or “Berna”) a stock corporation (Aktiengesellschaft) under Swiss law. In September 2006, we completed the squeeze-out of the remaining shares and since then hold all outstanding Berna shares. The SWX Swiss Exchange approved Berna’s delisting, which was effected on September 18, 2006. Berna was founded in 1898 when many disease causing bacteria were being identified for the first time. Then calling itself the Swiss Serum and Vaccine Institute, the company focused on methods to harness the human immune system against these pathogens. Berna changed its name to “Berna Biotech AG” in 2001. Its registered office is at Rehhagstrasse 79, 3018 Bern, Switzerland. Its reference number is CH- 35.3.000.374-7.

In the second quarter of 2006 we sold the veterinary division of the Berna Biotech Group, which included the companies Dr. E. Gräub AG, Switzerland and Berna Veterinary AG, Switzerland to the German Vetinvest GmbH for an amount of € 5,390 in cash. In the same quarter the biopharmaceutical and vaccine manufacturer Rhein Biotech GmbH was sold to Dynavax Technologies Corporation, a U.S. based biotech company, for an amount of € 6,383 in cash. Both divestments were steps towards aligning our portfolio of activities with our strategic priorities.

Prior to its sale, Rhein Biotech GmbH was a subsidiary of Rhein Biotech N.V., which was listed on the Frankfurt Stock Exchange. Berna owned 92.7% of Rhein Biotech N.V. while external shareholders held the remaining 7.3% of shares. On December 28, 2006, Crucell squeezed-out the remaining 7.3% minority shareholders of Rhein Biotech N.V. Upon approval by the its shareholders, Rhein Biotech N.V. legally merged into Berna Rhein BV, a fully owned subsidiary of the Crucell group in exchange for 0.3 million

Crucell shares with a fair value of € 18.51 per share, resulting in a transaction value of € 6.4 million. As a result, Rhein Biotech N.V. ceased to exist and its shares were delisted at the Frankfurt Stock Exchange. With this transaction, Crucell completed the integration of the Berna Biotech.

In October 2006 we purchased, via Crucell Vaccines Inc., the assets and liabilities of Florida-based Berna Products Corp. (“BPC”) from Acambis plc for € 13.8 million, excluding transaction costs. BPC was originally established in 1990 by Berna and was formed to market Vivotif, Berna’s oral typhoid fever vaccine, in the United States and Canada. The company was acquired by Acambis in 2003. In November 2006 we acquired Stockholm-based SBL Vaccin Holding AB (“SBL”), a fully integrated independent biotechnology company, from the private equity firm 3i and the financial group SEB, for € 39.3 million in cash, excluding transaction costs. Both acquisitions provide a powerful platform for accelerated growth as an integrated biopharmaceuticals company, strengthening our travel vaccine franchise and sales capabilities.

In November 2006 we and our technology partner DSM Biologics opened the PERCIVIA PER.C6 Development Center in Cambridge, Massachusetts. Our joint licensing business with DSM Biologics, a business unit of DSM Pharmaceutical Products, is based on a collaboration agreement, signed in 2002 and amended in January 2006. PERCIVIA was conceived and designed to further develop the PER.C6 cell line and provide turnkey solutions for the production of pharmaceutical proteins to licensees utilizing the PER.C6 human cell line in the biotech industry.

Our common shares are listed on Euronext (Amsterdam), quoted on NASDAQ (New York) in the form of American Depositary Shares (“ADS”) under the symbol CRXL and also listed on the SWX Swiss Exchange in Zürich, under the symbol CRX.

Crucell N.V. is the parent for a group of subsidiary companies, which together constitute the Crucell Group (the “Group” or the “Company”). The following companies were the most significant subsidiaries part of the Group as of December 31, 2006:

Subsidiaries (fully consolidated)

			2006			2005
Name	Legal Seat	Country	Ownership %			Ownership %
Crucell Holland B.V.	Leiden	the Netherlands		100	%		100	%
U-BiSys B.V.	Utrecht	the Netherlands		100	%		100	%
ChromaGenics B.V.	Amsterdam	the Netherlands		100	%		100	%
Berna Biotech AG	Bern	Switzerland		100	%		0	%
Berna Biotech España SA	Madrid	Spain		100	%		0	%
Berna Biotech Italia Srl	Milano	Italy		100	%		0	%
Etna Biotech Srl	Catania	Italy		100	%		0	%
Berna Rhein B.V.	Leiden	the Netherlands		100	%		0	%
Rhein Vaccines B.V.	Maastricht	the Netherlands		100	%		0	%
Berna Biotech Korea corp.	Seoul	Korea		100	%		0	%
Crucell Holding Inc.	Wilmington, DE	United States		100	%		0	%
Crucell Vaccines Inc.	Wilmington, DE	United States		100	%		0	%
Crucell Biologics Inc.	Wilmington, DE	United States		100	%		0	%
SBL Vaccin Holding AB	Stockholm	Sweden		100	%		0	%
SBL Vaccin AB	Stockholm	Sweden		100	%		0	%
Vitec AB	Stockholm	Sweden		100	%		0	%

The Group has a stake in the following joint ventures and associated companies, which are not consolidated.

2006

2005

Name

Legal Seat

Country

Ownership
%

Pevion Biotech AG

Joint venture

Bern

Switzerland

Kenta Biotech AG

Associated company

Bern

Switzerland

Percivia LLC

Joint venture

Cambridge, MA

United States

Business overview

Profile

We are a fully integrated biopharmaceutical company, focused on developing, producing and marketing vaccines and antibodies against infectious diseases for private and public markets worldwide, and leveraging our novel, proprietary technologies to develop monoclonal antibodies and therapeutic protein products. Our core portfolio includes Quinvaxem, a fully-liquid vaccine against five important childhood diseases, Hepavax-Gene, a vaccine against hepatitis B, and Inflexal, a virosome-adjuvanted vaccine against influenza. We also market travel vaccines, such as Vivotif, the only oral anti-typhoid vaccine, Dukoral, an oral cholera vaccine and Epaxal, the only aluminum-free hepatitis A vaccine on the market. Besides this portfolio of well known vaccines we have a broad pipeline of new potential vaccines, antibodies and a blood clotting protein.

We have developed various proprietary technologies such as the PER.C6, AdVac, MAbstract, STAR and our virosomal technology as well as our Hansenula polymorpha expression system. We believe our proprietary PER.C6 human cell line technology is well suited for the development and large-scale manufacturing of a wide range of biopharmaceuticals including vaccines, antibodies, therapeutic proteins and gene therapy products. AdVac is used to develop novel adenoviral-based products. MAbstract can be used to develop human antibodies. Our novel STAR technology is useful for increasing production output of recombinant antibodies and therapeutic proteins on mammalian cell lines.

Our research and development facilities are located in the Netherlands, Switzerland, Korea , Italy and Sweden. We also have manufacturing facilities in Switzerland, Korea, Spain and Sweden, and a sales and marketing infrastructure in our core markets of the Netherlands, Switzerland, United States, Italy, Spain, Korea and the Nordic region. At December 31, 2006 we had 1,073 employees. As of January 1, 2007 our research and development (“R&D”) facilities employed approximately 310 employees of which one third are outside the Netherlands, primarily in Switzerland. Our R&D activities are concentrated in our headquarters in The Netherlands. Clinical development is concentrated in our Swiss operations in Bern.

Strategy

We aim to increase revenue growth by developing, manufacturing and marketing vaccines and antibodies that address currently unmet medical needs and to leverage our proprietary technologies to develop monoclonal antibodies and therapeutic protein products to combat infectious and other diseases. We do this by discovering, researching and developing technologies, vaccines, antibodies and proteins, using our own fully integrated infrastructure for in-house development, production and marketing, and, where useful or necessary, by forging partnerships with other companies and organizations. We may alter or expand our product 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 will continue licensing our core technologies to other companies in biotech industry.

Business drivers

Our business strategy is based on the following business drivers:

· Leveraging presence of our marketed vaccines in public and private markets. We produce and sell established hepatitis B, paediatric, respiratory and travel vaccines. We intend to enhance our position in these markets by highlighting the unique features of these products and by providing outstanding customer service in terms of delivery, reliability and quality and by leveraging our worldwide presence in both public and private markets.

· Product pipeline with competitive advantage. We believe that each of our selected products either targets unmet medical needs, improves current medications, or is perceived as a marketable product due to predictive study models and/or perceived favorable regulatory conditions. We currently have nine programs in clinical trials including one vaccine in Phase III / registration stage, as well as several programs in various stages of pre-clinical development. These products are based on our PER.C6 production technology. In addition, we have various discovery programs to find new vaccine antibody and therapeutic protein leads.

· Ongoing technology licensing program. We have a broad base of excellent technologies with applicability for vaccines, antibodies, other recombinant proteins and gene therapy. Our licensing program provides a source of revenue as well as the potential for future, additional revenue in the form of royalties from products developed by our licensees. In areas where we are not developing our own products, we offer our technologies to the biopharmaceutical industry for the development and production of diverse biopharmaceutical products. The ongoing and extensive PER.C6 technology licensing program and as of yet more limited licensing programs for our other technologies support and accelerate our in-house product development. In the coming years, we expect a contribution from the licensing of our novel STAR technology to the biopharmaceutical industry. We believe that our licensing program results in increased awareness in, and acceptance by, the biopharmaceutical industry and the regulatory authorities of our technology as a production technology for biopharmaceutical products.

Our Core Products

Our core product portfolio currently consists of six marketed vaccines: Quinvaxem, Hepavax-Gene, Inflexal, Epaxal, Vivotif and Dukoral.

Quinvaxem

On March 27, 2006 the Korea Food and Drug Administration (KFDA) awarded a licence to Quinvaxem, a fully liquid pentavalent (five-component) vaccine we produce in Korea. Following WHO prequalification in September 2006, Quinvaxem was made available to supranational purchasing organizations. Supranational organizations are major customers for combination vaccines, which are used in large vaccination programs in developing countries. Quinvaxem combines antigens for protection against five important childhood diseases: diphtheria, tetanus, pertussis (whooping cough), hepatitis B and Haemophilus influenzae type b, one of the leading causes of bacterial meningitis in children. It is the first internationally available fully liquid vaccine containing all five of the above antigens to reach the market, offering a clear advantage in terms of convenience of use. Quinvaxem was co-developed with Novartis (then Chiron), which provides four of the five components as bulk.

In December 2006 we were awarded contracts totaling over US$ 230 million for our Quinvaxem and Hepavax-Gene paediatric vaccines by supranational organizations. The contracts provide for the supply of these vaccines until 2009, with the awarded amount growing over those three years. In addition to these contracts a Latin American supranational organization has awarded us a contract totaling over US$ 20 million for our Quinvaxem pediatric vaccine. This contract relates to sales of the vaccine in 2007.

Hepavax-Gene

Hepavax-Gene is a Hansenula polymorpha-based recombinant hepatitis B vaccine. Since its launch in 1996, more than 350 million doses of Hepavax-Gene have been commercially distributed in more than 90 countries, making it the third most used hepatitis B vaccine in the world. A key competitive advantage for Hepavax-Gene is that its immunogenic component, HBsAg, is produced in modified yeast using our proprietary Hansenula polymorpha expression system, which allows for stable and efficient production. We launched a thiomersal-free formulation in 2004 in Korea. In addition, Hepavax-Gene forms the foundation of two combination paediatric vaccines, one of which has already received its marketing authorization from the Korean FDA.

Inflexal

Inflexal is a virosome-adjuvanted influenza vaccine administered by injection. It is the first vaccine in our portfolio to use our patented virosome technology. Due to the absence of aluminium, which in consequence reduces adverse effects on patients compared to alternative influenza vaccines, the vaccine has a high tolerability. In addition, it has a good immunogenicity profile, making it particularly effective with high-risk patients, such as the elderly, in whom the immune response is generally weaker. Inflexal was originally introduced in 1997 and was successfully registered through the Mutual Recognition procedure in most European markets in October 2001. The vaccine is currently registered in 43 countries.

Epaxal

Epaxal is the first virosome-adjuvanted vaccine for hepatitis A. The vaccine has a high tolerability due to the absence of aluminum and thiomersal and is highly effective, offering protective immunity within a few days following the first dose and, following the second (booster) dose, providing immunity for up to 20 years. The product is currently licensed in more than 40 countries world-wide under the brand names Epaxal and HAVpur and in most of these countries is licensed for adults and children over the age of one year.

The pediatric dose of Epaxal has been shown in a Phase III study to be effective in combination with other children’s vaccines, providing immediate and long lasting protection. The product’s registration dossier has been filed with the Swiss Health Authorities and has been approved. Submission of the files for approval to Health Authorities in various European and other countries is planned in the course of 2007.

Vivotif

Vivotif is a live attenuated typhoid fever vaccine administered orally. It is the only live oral vaccine indicated for use against Salmonella typhi, the most prevalent of the typhoid fever-causing bacteria. Vivotif consists of a live strain of Salmonella typhi that has been altered so that it stimulates an immune response, but not the disease. The bacteria are enclosed in coated capsules that dissolve in the intestines, releasing the live organism. Vivotif exhibits high tolerability and efficacy. Vivotif has an established track-record for safety, having been on the market for over twenty years. The vaccine is indicated for adults and children over the age of five. Vivotif is currently licensed in 44 countries, including the United States.

Dukoral

Dukoral is an oral vaccine which offers protection against cholera and is registered in more than 50 countries excluding the United States. Dukoral is also registered many of those 50 countries (excluding the European Union and Australia) to protect against ETEC (travelers’ diarrhea). The vaccine is indicated for immunisation against disease caused by Vibrio cholerae (serogroup O1) in adults and children from 2 years of age who will be visiting endemic/epidemic areas. Dukoral acts by inducing antibodies against both the bacterial components and cholera toxin (CTB).

Complementary vaccines

Our core vaccines business also includes a range of paediatric and booster vaccines and vaccines for special indications which we offer in our key markets and, through regional sales partners, world-wide. We currently offer, through our partnership with Novartis (then Chiron), Di Te Anatoxal for diphtheria and tetanus, Encepur for tick-borne encephalitis, Menjugate for meningitis C, Te Anatoxal for tetanus and MoRuviraten for measles/rubella.

Seasonality

Our sales of respiratory vaccines are exposed to seasonal variations. The sales are primarily made in the second half of the financial year. In other respects, our business is not significantly seasonal.

Product development programs

Our early-stage product development programs comprise vaccines against influenza, West Nile virus, Ebola, HIV, malaria, and tuberculosis as well as antibody products against rabies and preclinical research on the blood clotting Factor V a coagulation factor that is a central regulator in the early phases of blood clot formation.

In late-stage development, our yellow fever vaccine is in the process of finalizing its registration. We also have programs in various stages of pre-clinical development, including programs focused on therapeutic hepatitis B vaccines and Recombinant Live Paramyxovirus vaccines intended to combat HIV.

Our Core Technologies

Our product portfolio is supported through a range of proprietary technology platforms. Besides revenues generated from product sales, we also generate revenues and other operating income from licensing our proprietary technologies to pharmaceutical and biotechnology companies, from grants and government subsidies obtained to support the development of our technologies and potential products, and from service fees earned under development contracts with our partners. We intend to increase our 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.

Our core proprietary technologies are described below.

PER.C6 technology

Overview

Our PER.C6 technology provides a manufacturing system that consists of a human cell line that 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. To obtain the PER.C6 cell line, we 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 our PER.C6 technology, therefore, represents a key analytical tool in the discovery of new genes and their role in biological pathways and human disease.

Key features and advantages

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

High yields. PER.C6 technology potentially offers a system for high yield, large-scale biopharmaceutical product production. PER.C6 can be cultured at high densities and engineered to produce large quantities of biopharmaceuticals and may reduce production expense.

Scalability in serum-free conditions. PER.C6 cells can be cultured in a serum-free medium, without micro-carriers, using a variety of scaling systems, including bioreactors. This simplifies the expansion from laboratory- to industrial-scale production, potentially leading to the production of cost-efficient biopharmaceuticals in large quantities. The use of a serum-free medium also offers the potential to significantly improve the purification of biopharmaceuticals produced using the PER.C6 technology and may facilitate regulatory approval.

Biologics Master File at the FDA. We have filed a Cell Substrate Biologics Master File (BMF) with the U.S. Food and Drug Administration (FDA) describing the PER.C6 technology, including its establishment, development and potential use in production processes. The FDA will only evaluate the PER.C6 technology in the context of Investigational New Drug (IND) applications. We believe that the information in the BMF will facilitate the FDA’s appraisal of any biopharmaceutical product that our licensees or we produce using the PER.C6 technology.

Broad industry endorsement. The PER.C6 technology can now claim to have achieved a broad endorsement within the industry, with more than 45 licensees and partners. For a list of licensees, see “—Licensing and Collaborations—Licenses and Partners”.

Human-based. We believe that antibody and other protein products based on the human based PER.C6 technology will demonstrate enhanced biological properties, rendering them potentially more efficacious. In addition, PER.C6 technology efficiently supports the growth of certain human viruses for vaccine development.

AdVac technology

Overview

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 such as HIV and Ebola, parasites such as malaria and bacteria such as Mycobacterium tuberculosis. Recombinant vaccines are necessary for these diseases because 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 technology supports the practice of inserting DNA coding for pathogen-derived proteins into a vector. AdVac technology may also be used to develop gene therapy products.

Key features and advantages

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

Safety and efficacy. Because AdVac technology is based on adenovirus vectors not commonly found in the human population, pre-existing immunity to the vector is rare. This may allow for lower dosage schedules.

Scale and manufacturing. The cell cultures that complement AdVac technology are based on PER.C6 technology, and we expect PER.C6 technology to help make large-scale manufacturing of recombinant vaccines possible. We believe that the biopharmaceutical industry requires this capability to meet the global demand for vaccines required to eradicate existing and emerging infectious diseases.

MAbstract technology

Overview

Our MAbstract technology can be applied for the discovery of novel drug targets and the identification of human antibodies against those drug targets. 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.

Key features and advantages

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:

Subtraction method of selection. MAbstract technology selects antibodies for possible therapeutic use and discovers novel drug targets using whole cells, tissues or infectious agents. The subtraction method of selection is not available when generating human antibodies in transgenic mice.

No inherent limitation on antibody specificity. MAbstract technology does not have the inherent limitation on antibody specificity that is seen in transgenic mice.

Production using PER.C6 technology. MAbstract technology has been used to isolate antibodies for numerous disease applications. Selected antibody specificities can be directly reformatted into antibodies for production using PER.C6 technology.

STAR technology

STAR technology is a gene expression technology based on epigenetic control mechanisms that block repression of gene expression. STAR’s production technology is particularly useful for the production of recombinant human antibodies and proteins. It has a potentially broad application and is effective for production of antibodies and proteins on mammalian cell lines such as the widely used Chinese hamster ovary (CHO) cell line and has the potential to work on our PER.C6 cell line. In an evaluation program, Genentech, Genzyme, Medarex, Xoma, UCB, Novartis, Novo Nordisk and Abbott are currently

investigating whether STAR technology can increase production yields of biologicals. We acquired STAR technology in 2004 through the purchase of ChromaGenics B.V., a privately held biotechnology company based in Amsterdam. In connection with the purchase, we also entered into a contingent payment agreement that could result in an additional payment of € 7.0 million upon receipt of revenues generated from the STAR technology and royalties. In 2007 and beyond we are strongly focused on signing new licensees.

Key features and advantages

We believe our STAR technology has the following key advantages over other gene expression technologies:

· Established mammalian cell banks for antibody and protein production are the starting point for STAR technology, thus specially engineered mammalian cells are not needed.

· The STAR technology allows for very rapid stable mammalian cell clone generation.

· The STAR technology typically yields stable mammalian cell clones that produce 5 to 10 fold higher antibody or other therapeutic proteins as compared to cell clones generated without STAR.

Virosomal technology

One of the challenges in vaccine development is the creation of products that contain defined antigens of high purity that efficiently induce a protective immune response. Many antigen preparations are therefore supplemented with adjuvants to enhance the body’s immune response to the specific antigens. The most commonly used and approved adjuvants for human use are aluminum salt derivatives, which are known to cause adverse reactions such as irritation and inflammation at the injection site. Virosomes are a broadly applicable adjuvant and carrier system with prospective applications in areas beyond conventional antigen-based vaccines. Our virosome technology offers a tool for developing novel, predominantly synthetic vaccines applicable for infectious and chronic diseases. These vaccines offer additional benefits because they are effective even in immune-suppressed patients and also in infants.

Key features and advantages

We believe our Virosome technology has the following key advantages over other antigen delivery technologies:

· Virosome technology provides a broadly applicable delivery system for antigens or DNA/RNA encoding specific immune stimulatory proteins.

· Virosome technology enables target-specific delivery of antigens and amplification of the immune response.

· Virosomes stimulate both arms of the immune system—eliciting antibody and cellular immune responses—against inserted immune stimulatory proteins derived from human pathogens.

· Virosomes are completely biodegradable and can exert an immune response via different routes of administration.

· Virosome technology is used in the manufacture of several of Crucell’s registered products and as such has an excellent safety record and manufacturing know-how.

Hansenula polymorpha

The yeast expression technology Hansenula polymorpha provides us a highly efficient process production technology for protein, which can be used as a basis for developing and manufacturing new

vaccines. The yeast Hansenula polymorpha production system provides superior characteristics for a wide range of industrial applications. Particularly the lack of pyrogens, pathogens or viral inclusions, its ease of genetic manipulation and its robustness in industrial scale fermentations add to its attractiveness for the synthesis of pharmaceutical compounds. Our registered HBV vaccine Hepavax-Gene is based on recombinant production in this yeast.

Key features and advantages

We believe our Hansenula polymorpha technology has the following key advantages over other yeast expression technologies:

· Hansenula polymorpha provides an expression system with superior characteristics for the synthesis of pharmaceutical compounds, including vaccines.

· Hansenula polymorpha provides a safe production platform lacking pyrogens, pathogens or viral inclusions.

· Hansenula polymorpha is easy with regard to genetic manipulation and robust in industrial scale fermentations.

Other Technology Platforms

We, through either our own resources or through our research collaborations, have in addition to our core proprietary technologies, access to the following technology platforms.

Polysaccharide-protein conjugates

The causative agents of many common bacterial infections contain surface structures made of polysaccharides, against which protective antibodies are directed. However, vaccines based on polysaccharide antigens alone do not induce a T-cell response and therefore are not able to elicit immunological memory (memory immune responses). By linking the specific antibody-inducing polysaccharides with T-cell activating carrier proteins it is possible to induce the desired immune response and enhance long term protection against the corresponding pathogen.

Recombinant live bacteria

Recombinant live bacteria are harmless but highly immunogenic bacteria that elicit immunity against specific pathogens. The technology can also be applied for therapeutic vaccines against cancer.

Recombinant live paramyxoviruses

The use of live attenuated viruses in vaccines is a well established method of conferring immunity against a number of diseases. But these viruses can also be used to introduce genes encoding foreign antigens into their genomes, thus creating a recombinant vaccine that would simultaneously confer immunity against more than one disease, e.g. measles and malaria.

Therapeutic human monoclonal antibodies (MAb)

A monoclonal antibody is a special class of antibody that originates from a single clone of lymphocyte. A single MAb is highly specific for a unique antigen and can be isolated at a high level of purity. The purity of the product combined with the uniqueness of source and specificity, as well as high consistency makes MAbs attractive both as research tools and as potential products.

Particle presentation technology

The immune system is activated by antigens. For each immune cell, there is only one corresponding antigen/epitope which activates it. Our Particle Presentation Technology combines the desired antigens in a form that elicits an efficient immune response. Our therapeutic hepatitis B vaccine, currently in pre-clinical development, uses this technology. This technology can potentially be applied to the development of other therapeutic vaccines.

Industry and Scientific Overview

Manufacturing systems for biopharmaceutical products

Biopharmaceutical products are therapeutics produced by means of biological production systems. Modified bacteria and yeast were initially used to produce the first generation of biopharmaceutical products for humans. 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 including those for 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.” Examples of cell lines that were made by E1 immortalization include 293, 911, N52.E6 and our proprietary PER.C6 cell line.

Vaccines

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;

· parasites such as those that cause malaria;

· bacteria such as those that cause tuberculosis; and

· 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

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 playing 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, such as a cancer cell,

· bind to and block a key interaction of a disease-related cell, such as an inflammatory cell,

· block infectious agents.

Antibodies may also be used to bind and neutralize toxic products, to develop diagnostic products to detect viruses or bacteria and as tools in scientific research such as genomics and proteomics.

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 allows human antibody genes to be 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.

Therapeutic proteins

Proteins are main constituents of the human body. They consist of amino acid peptide chains folded in a specific conformation, and often contain a number of so-called posttranslational modifications (one of the later steps in protein biosynthesis) which include glycosylation, sulphation, phosphorylation, gamma-carboxylation, and others. Since the 1950s, proteins have been increasingly used as therapeutic drugs, especially diseases caused by a deficiency of certain proteins. According to various market research reports the total market size (based on sales) of therapeutic proteins was in 2005 over US$ 38 billion. Hematology, endocrinology and oncology are the main disease areas in which therapeutic proteins are applied.

Scientific progress in recombinant therapeutic proteins.

Initially therapeutic proteins were isolated from natural sources such as blood, urine and tissue. Clinical experience with these proteins in the 1960s, and afterwards, revealed a significant risk of transmission of infectious pathogens, particular viruses, from the source material to the recipient. Hence, production of proteins in vitro was investigated. Since the 1970s, developments in molecular biology have made it possible to produce proteins in the laboratory. In addition, transgenics were developed that secrete the protein of interest in milk. Today, there are a number of production platforms for non-mammalian cells such as yeast, as well as mammalian cells.

Mammalian cell-based protein production systems mostly use non-human cell lines such as CHO, BHK and others. The type of post-translational modifications carried out by the platform is often determined by the cell-type used. Current thought holds that recombinant proteins should be produced by cell lines in culture media that are completely devoid of human serum components.

Vaccine markets

Important segments of the vaccine market are influenza vaccines, paediatric vaccine combinations that include protection against hepatitis B as well as travel vaccines.

Influenza

Influenza, commonly known as “flu”, affects large sections of the world’s population each year. The disease is characterized by annual winter outbreaks, which often reach epidemic, and sometimes pandemic, proportions due to the fact that the virus can mutate quickly, often producing new strains against which human beings do not have immunity. Typical symptoms of flu include fever and respiratory symptoms, such as a cough, sore throat, runny or stuffy nose, as well as headaches, muscle aches, and, often, extreme fatigue. These symptoms are usually relatively mild but can become life threatening in vulnerable patient groups, such as the elderly and immunodeficient individuals. Transmission of the flu virus occurs via droplets of respiratory secretions and, following infection, the incubation period ranges from one to three days.

The influenza vaccine market is the fastest growing vaccine market. Global sales of influenza vaccine are, according to a market research report (Datamonitor) and to Crucell’s own estimates, expected to grow from an estimated US$ 1.4 billion in 2004 to US$ 3.7 billion in 2010.

Several factors contribute to the rapid growth of the influenza market. National governments are strongly in favor of influenza vaccination and tend to continually increase their target vaccination coverage. Influenza vaccinations save millions of dollars each year in reduced hospitalizations and fewer lost workdays. The past few years have seen significant growth in the use of influenza vaccines in China, Taiwan, Mexico, Japan and Eastern Europe.

It is expected that the threat of a pandemic of avian flu, higher awareness of the public at large as well as due to specific production contracts for vaccines that combat strains of pandemic flu and ongoing activities to increase the preparedness for a flu pandemic will lead to further growth in the interpandemic flu markets.

Sanofi pasteur dominates the influenza vaccine market with approximately a 50% share of the world market. GlaxoSmithKline (GSK) is also well established, with an approximate market share of 15%. Following its acquisition of ID Biomedical, GSK increased its market share and became a significant participant in the U.S. market. Following Chiron’s acquisition of PowderJect, it is also one of the main producers of the influenza vaccine for the U.S., and commands a leading position in Europe. Fluad, Chiron’s adjuvant flu vaccine, is the main direct competitor of Inflexal, our influenza product. Fluad has been particularly successful in Germany and Italy. In 2006, Novartis acquired all of the remaining publicly held shares of Chiron it did not currently own.

Paediatric vaccines including hepatitis B

Hepatitis B (“HBV”) is a viral infection of the liver which causes various complications if left untreated. Infection with HBV leads to one of three outcomes. An infected individual may die of fulminant hepatitis within days or weeks after the onset of the disease, recover after symptomatic or asymptomatic infection and develop lifelong immunity against the disease, or develop chronic infection for which no specific treatment is available and which may ultimately cause death from cirrhosis of the liver and liver cancer.

Transmission of HBV occurs as a result of the exchange of blood, the exchange of fluids during sexual intercourse, and the exchange of body fluids between an infected mother and a new-born baby during birth (perinatal transmission). Groups of persons at risk for HBV infection include sexually active men and women, healthcare workers, infants born to infected mothers, injection drug users, hemodialysis patients, hemophiliacs and travelers to endemic areas. According to the WHO, approximately 350 million people are chronically infected.

The market for HBV monovalent vaccine was close to US$ 0.5 billion in 2004 according to a market research report (Frost & Sullivan) and our own recent estimates, split between the United States (50%), Europe (30%) and the rest of the world (20%). However, the market is in steady decline. This is due to the increasing number of people being vaccinated at birth with a combination vaccine in the United States and Europe, the largest markets. The same trend is seen in the developing countries in the rest of the world, where there is a strong demand for HBV combination vaccines.

The key participants in the HBV market are GSK, Merck & Co. and Novartis. In addition to our monovalent HBV vaccine, Hepavax-Gene, we have collaborated with Novartis (then Chiron) to develop Quinvaxem, a combination vaccine against HBV, diphtheria, tetanus, pertussis, and Haemophilus influenzae type b. The Korean FDA awarded a license to Quinvaxem and the World Health Organization awarded a pre-qualification to the vaccine, making it eligible for sale to various supranational organizations. The vaccine is being produced in Korea.

Travel vaccines

Travel vaccines include all vaccine products that protect against diseases which are not endemic to specific countries. Generally, the target population groups for these vaccine products are individuals traveling to endemic regions, although in regions where certain diseases combated by travel vaccines are prevalent, widespread immunization programs are sometimes undertaken.

According to the World Tourism Organization, the number of travelers from developed countries to regions with endemic diseases is set to grow each year. This growth in the number of travelers is driven by decreasing relative costs and journey times of travel, increased accessibility to travel and a social trend to travel abroad. Vaccines for hepatitis A, yellow fever, typhoid and cholera can all be classified as travel vaccines.

Hepatitis A. Hepatitis A (HAV) is a highly contagious infection that causes acute inflammation of the liver. HAV is generally contracted orally through fecal contamination of food or water, and is considered the least dangerous form of hepatitis because it does not lead to chronic inflammation of the liver. HAV commonly spreads through improper handling of food, contact with household members, sharing toys at day-care centers, and eating raw shellfish taken from polluted waters.

The HAV market is estimated to be worth approximately US$ 340 million in 2004 according to a market research report (Frost & Sullivan) and our own recent estimates.

GSK, Merck and sanofi pasteur dominate the monovalent HAV market. In addition, GSK markets Twinrix, a combination vaccine for HAV and HBV, while sanofi pasteur and GSK have recently introduced combination vaccines for HAV and typhoid fever. We currently market Epaxal for HAV in Europe, Latin America and Asia.

Typhoid fever. Typhoid fever is a debilitating and life-threatening illness caused by the bacteria Salmonella typhi. Symptoms of typhoid fever include fever, stomach pains, weight loss, loss of appetite, delirium, severe diarrhea (in children) and constipation (in adults).

Typhoid fever is transmitted by fecal contamination of food or water, or by person to person contact. Approximately 17 million people worldwide develop typhoid fever each year and approximately 4% of patients with typhoid fever die. The disease is endemic to Africa, Asia (except Japan) and Latin America.

The key participants in the typhoid market are sanofi pasteur and GSK, with their injected vaccine products TyphimVi and Typherix respectively. We market Vivotif, the only oral vaccine for active immunization against typhoid fever.

Cholera. Cholera is an acute, diarrheal illness caused by infection of the intestine with the bacterium Vibrio cholerae. The infection is often mild or without symptoms, but sometimes it can be severe. Approximately 5% of infected persons has a severe case characterized, by profuse watery diarrhea, leg cramps and vomiting, resulting in rapid loss of body fluids leading to shock and dehydration. Without treatment, death can occur within hours.

According to the Centers for Disease Control and Prevention cholera has been very rare in industrialized nations for the last 100 years; however, the disease is still common today in other parts of the world, including the Indian subcontinent and sub-Saharan Africa.

We produce and market Dukoral, our recently developed and licensed oral vaccine registered for the treatment of cholera and in some regions for ETEC (travelers diarrhea).

Blood-clotting factors. In 2006, we began development of a blood-clotting Factor V product. We have acquired intellectual property rights for the novel Factor V Leiden/Cambridge blood clotting factor. With a market potential, estimated by us to be over US$ 3 billion, Factor V is designed to treat bleeding in haemophiliacs and to treat other bleeding conditions. We are also working on the production of improved versions of currently marketed protein products on our PER.C6 production technology.

Licensing and Collaborations

Licensees and partners

Our current licensees and partners are as follows:

VACCINES

PARTNER/LICENSEE	STARTING DATE	TECHNOLOGY	DISEASE TARGET	DEVELOPMENT STAGE
AdImmune Corp.	Oct. 2006	PER.C6	Japanese Encephalitis	Pre-clinical
Aeras Global TB Vaccine Foundation	Mar. 2004	PER.C6 and AdVac	Tuberculosis	Phase 1
Bestewil Holding BV	Jan. 2006	Co-micelles	Influenza	Pre-clinical
Chiron Corp.	Dec. 2004	PER.C6	Alphavirus vectors	Pre-clinical
Harvard School of Medicine	Dec. 2003	AdVac + Ad5HVR48	HIV	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)	Marketed in Israel
Merck & Co. Inc.	Oct. 2005	PER.C6	Hepatitis C	Pre-clinical
Merck & Co. Inc.	Oct. 2000	PER.C6	HIV	Phase II
Merck & Co Inc.	Dec 2006	Ad5HVR48	HIV	Pre-clinical
Merial LLC	Oct. 2004	PER.C6	Veterinary vaccine—Foot and mouth disease	Pre-clinical
National Institutes of Health (NIH)	Mar. 2002	PER.C6 and AdVac	Ebola, Lassa and Marburg	Phase 1
National Institutes of Health (NIH)	Mar. 2004	PER.C6 and AdVac	Malaria	Phase 1
New York University	Aug. 2002	PER.C6 and AdVac	Malaria	Terminated
Sanofi Pasteur	Dec. 2003	PER.C6	Influenza	Phase 1
Singvax	Mar. 2005	PER.C6	Japanese Encephalitis	Pre-clinical
Tibotec Pharmaceuticals Limited	Nov. 2005	PER.C6	Undisclosed vaccine	Pre-clinical
Vakzine Project Management	Dec. 2005	PER.C6	Undisclosed vaccine	Terminated
Vaxin, Inc.	Sep. 2004	PER.C6	Respiratory viruses	Phase 1
Walter Reed Army Institute of Research & GlaxoSmithKline Biologicals	Mar. 2003	PER.C6 and AdVac	Malaria	Pre-clinical

ANTIBODIES AND THERAPEUTIC PROTEINS

PARTNER/LICENSEE	STARTING DATE	TECHNOLOGY	DISEASE TARGET	DEVELOPMENT STAGE
Abbott	Jan. 2007	STAR	Portfolio antibodies	Pre-clinical
Applied Molecular Evolution, Inc. (Lilly)	Oct. 2002	PER.C6	Portfolio antibodies	Phase I
Chiron Corp.	Aug. 2004	PER.C6	HCV protein	Pre-clinical
Ferring International Research Center SA	May 2005	PER.C6	Women’s healthcare	Pre-clinical
Ferring International Research Center SA	Dec. 2005	PER.C6	Women’s healthcare	Pre-clinical
Genentech	Feb. 2004	STAR	—	—
Genzyme Corporation	Dec. 2005	STAR	Portfolio proteins	Pre-clinical
Innogenetics	Jan. 2002	PER.C6	Portfolio antibodies	Pre-clinical
IQ Corporation	Oct. 2005	PER.C6	Anti-anthrax antibody	Pre-clinical
JCR Pharmaceuticals Co. Ltd	Mar. 2005	PER.C6	Undisclosed proteins	Pre-clinical
Medarex	May 2005	STAR	Portfolio antibodies	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
Millennium Pharmaceuticals	Apr. 2006	STAR	Portfolio antibodies	Terminated
Mitsubishi Pharma Corporation	Mar. 2005	PER.C6	Undisclosed proteins	Pre-clinical
MorphoSys AG	Sep. 2004	PER.C6	Portfolio antibodies	Pre-clinical
Novartis	Sep. 2006	STAR	Portfolio antibodies, Proteins	Pre-clinical
Novo Nordisk	Jan. 2007	STAR	Portfolio antibodies	Pre-clinical
Roche	Jan. 2005	PER.C6	Undisclosed proteins	Pre-clinical
Symphogen	Apr. 2005	PER.C6	Portfolio antibodies	Pre-clinical
Synergenics/Synco Biopartners Investments B.V.	Aug. 2004	PER.C6	Portfolio antibodies	Pre-clinical
UCB S.A.	Mar. 2006	PER.C6	Portfolio antibodies	Pre-clinical
UCB Celltech	Sep. 2006	STAR	Portfolio antibodies	Pre-clinical
UMN Pharma	Mar. 2006	PER.C6	Undisclosed protein	Pre-clinical
XOMA Ltd	Jan. 2006	STAR	Portfolio antibodies, Proteins	Pre-clinical
Zystor Therapeutics	Dec. 2005	PER.C6	Undisclosed protein	Pre-clinical

GENE THERAPY

PARTNER/LICENSEE	STARTING DATE	TECHNOLOGY	DISEASE TARGET	DEVELOPMENT STAGE
Ark Therapeutics	Jan. 2006	PER.C6	Portfolio	Phase II
BIOA&D Co. Ltd	May 2006	PER.C6 and ceNOS	Cardiovascular disease	Pre-clinical
Edwards Life Sciences Corp.	Nov. 2004	PER.C6	Portfolio	Pre-clinical
EMD Lexigen Pharmaceuticals Corp. (Merck KgaA)	Dec. 2001	PER.C6	Portfolio	Pre-clinical
GeneMax Corp.	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
Merial Ltd.	Dec. 2005	PER.C6	Veterinary	Pre-clinical
NeoTropix	Mar. 2004	PER.C6	Oncology	Pre-clinical
Upstate USA	May 2006	PER.C6	Portfolio	Pre-clinical
Selective Genetics Inc.	Jun. 2001	PER.C6	Portfolio	Phase I/II
Transgene SA	Apr. 2001	PER.C6	Portfolio	Phase I/II
Vascular Biogenics Ltd	Mar. 2005	PER.C6	Portfolio	Pre-clinical

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)
Saskatchewan Research Council	Dec. 2005	PER.C6	Terminated
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

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 in pre-clinical experiments conducted by the Vaccine Research Centre (VRC) of the U.S. National Institutes of Health (NIH) in 2005 that a single-dose immunization with a recombinant adenovirus (expressing Ebola virus proteins) vaccine protects 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.

In May 2002 we entered into a Collaborative Research and Development Agreement (CRADA) with the VRC to develop jointly, 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. This was subsequently confirmed in a contract signed in April 2005.

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 in preclinical testing 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 cells. All preclinical material was produced at our FDA-compliant production facilities in Leiden. For potential safety reasons, VRC switched the development of the vaccine from the use of the wild-type Ebola glycoprotein sequences to mutant sequences, after a single dose of this new candidate vaccine showed protection in pre-clinical testing against Ebola.

Phase I clinical testing commenced in the third quarter of 2006. In the randomized, double-blind, placebo-controlled study in 48 healthy volunteers the single-shot vaccine is being tested in a dose-escalation trial. The start of the trial follows the successful completion of the Investigational New Drug (IND) application process required by the Food and Drug Administration (FDA). The Phase I study is being carried out by the VRC at the NIH Clinical Center in Bethesda, Maryland.

Malaria

Malaria is a life-threatening infectious disease caused by the plasmodium parasite and transmitted from person-to-person through the bite of a female Anopheles mosquito. It is one of today’s top three killers among communicable diseases. The disease currently represents one of the most prevalent infections in tropical and subtropical areas causing severe illness in 300 to 500 million individuals worldwide according to the World Health Organization 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 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 covers process development of the candidate AdVac-based malaria vaccine. The work is being done under a subcontract agreement with Science Applications International Corporation (SAIC). In September 2006, we extended the collaboration with the NIAID with the signing of a clinical trial agreement. The clinical trial started in January 2007 and is a randomized, double-blind, placebo-controlled study that will test the vaccine in a dose-escalation trial involving 96 healthy volunteers. The Phase I trial is funded by NIAID and conducted by researchers at Vanderbilt University, one of NIAID’s Vaccine and Treatment Evaluation Units.

In December 2004 we received a grant up to a maximum of € 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.

In December 2006 we were awarded a grant to our subsidiary toward the development of a malaria vaccine. The € 1.7 million grant was given to a consortium of four leading groups in the field of malaria research including Etna Biotech, a fully-owned Crucell group company. The malaria vaccine the group is developing will be based on our Recombinant Paramyxovirus technology.

In January 2007 we received a European Union-funded grant aimed at advancing the development of a malaria vaccine. The € 2.4 million grant, which was awarded to a Crucell-led consortium of six leading European universities and companies in the field of malaria research, will finance pre-clinical studies toward an affordable, safe and efficacious two-component pediatric malaria vaccine.

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 according to the World Health Organization.

TB is spread when people who have the active form of the disease cough or sneeze and people nearby breathe in these bacteria and become infected. Only 5-10% 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 TB vaccines. The Crucell-Aeras TB vaccine program is focusing on improvement of BCG, using our PER.C6 and AdVac technologies. Aeras has agreed to pay us up to US$ 2.9 million, contingent upon meeting certain development milestones, for process development and production of clinical material of TB vaccine candidates. We began Phase 1 clinical trials of the AdVac-based tuberculosis vaccine in the fourth quarter of 2006. The trial is an open-label study that will test the vaccine in a dose-escalation trial involving 32 healthy volunteers. The trial is funded and managed by Aeras through a contract research organization, PRA Clinical Pharmacology Center in Lenexa, Kansas, USA. The main parameters under examination will be safety, tolerability and immunogenicity.

Rabies

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. 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 according to various medical publications.

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 recognized 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. CDC in Atlanta, using MAbstract and PER.C6 technology.

In experiments conducted during 2004 in collaboration with TJU under a Collaborative Research and Development Agreement with the CDC, the antibody product demonstrated protection in the industry standard hamster model at least equivalent to HRIG. The pre-clinical evaluation of the antibody product was performed in collaboration with the CDC’s Rabies Program. The product is a combination of two monoclonal antibodies for the post-exposure prophylaxis of rabies, produced using our MAbstract and PER.C6 technology. In the fourth quarter of 2006, we began a Phase I clinical study in the United States. The Crucell-funded trial is a randomized, double-blind, placebo controlled study in 60 healthy volunteers that will test the antibody product alone in a dose escalation study as well as in combination with a rabies vaccine. We expect a second Phase I study to start in the first half of 2007 in India, selected as a prototype of a rabies endemic country.

Other Collaborations and Agreements

DSM

In January 2006 the Company and DSM signed an amended collaboration agreement to strengthen and expand the development of the PER.C6 protein and monoclonal antibody licensing business. The two companies will create an integrated solution for the production of recombinant proteins and monoclonal antibodies on PER.C6 in order to increase licensing and royalty income and accelerate the development and roll-out of the PER.C6 technology platform in the market. The existing collaboration agreement was terminated, resulting in release of deferred revenues and recognition of certain milestones and agreed to by DSM.

On November 8, 2006 the Company and DSM Biologics already announced the opening of the joint venture PERCIVIA PER.C6 Development Center in Cambridge, Massachusets. This development center provides a fully integrated technology platform and turn-key solutions for the production of pharmaceutical proteins to the biotech industry and scientific community. The center is involved in the development and optimization of the human PER.C6 cells as an expression platform for proteins and monoclonal antibodies for therapeutic use in humans.

Pevion Biotech AG

In 2002 Pevion Biotech was founded as joint venture by Berna Biotech and Bachem AG. The company is dedicated to creating novel virosomal formulated vaccines and bringing them from research into clinical development. We indirectly own 50% of the share capital since our acquisition of Berna Biotech AG in February 2006.

Kenta Biotech AG

In 2006, Kenta Biotech AG was founded. The Crucell Company, Berna Biotech AG contributed investments in kind of million in exchange for shares equal to 36.74% of Kenta Biotech’s share capital. Kenta Biotech AG is focusing on the discovery and development of innovative, fully human monoclonal antibodies for the life-saving treatment of patients with serious infectious diseases.

Talecris Biotherapeutics

In April 2007, we announced a long-term distribution deal with North Carolina-headquartered Talecris Biotherapeutics, GmbH. Under the terms of the agreement, we will serve as the exclusive distributor of Talecris’ Prolastin (alpha-1 proteinase inhibitor) in 9 Western European countries, replacing current distributor, Bayer.

ADImmune Corporation

In March 2007, we announced that we have completed an influenza alliance with Taiwanese-based ADImmune Corporation. Under the terms of the deal, ADImmune will use our virosome technology to produce a virosomal adjuvanted influenza vaccine for specified markets: Taiwan, Japan and Macau. Additionally, ADImmune will produce influenza antigen, which we may purchase for the production of our vaccine product, Inflexal V.

In consideration of the rights and licenses granted in respect of the technology, ADImmune shall pay an amount of € 8.7 million (NT$ 394,887). We will obtain a 20% equity stake in ADImmune for which we will pay ADImmune an amount € 8.7 million (NT$ 394,887). We expect to complete these transactions during 2007.

Galapagos N.V.

Galapagos N.V. (“Galapagos”) is a 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. The company is listed on the Euronext Brussels and Euronext Amsterdam stock exchanges (ticker symbol: GLPG).

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 we have agreed not to compete with the activities of Galapagos, which holds the rights to the products and technology that it develops.

Crucell has an investment in Galapagos N.V, which is a publicly traded company. Crucell owns 6.2% as of December 31, 2006 (December 31, 2005: 11.7%).

Novartis (formerly Chiron)

In 2001, Berna entered into a worldwide collaboration agreement with Novartis (then Chiron) to develop and commercialize Quinvaxem. This agreement was amended in 2004. Under the agreements, the parties agreed to jointly develop, manufacture, register and market Quinvaxem. In addition to the right to manufacture the product on behalf of the parties, Berna has the commercial rights to market the product worldwide, with the exception of two undisclosed countries, in the public markets via supranational institutions. Chiron has the worldwide rights, with the exception of the two countries, to market the vaccine in private markets. In addition, the agreements provide for Novartis to supply Berna with the DTP and Hib components required to manufacture the vaccine. The parties agreed not to compete outside the collaboration in the pediatric markets.

CSL Pharmaceuticals

In November 2001 Berna Biotech entered into an agreement with CSL Pharmaceuticals, pursuant to which CSL supplies flu antigen to Berna for the manufacture and sale of virosome-based flu vaccines, such as Inflexal. Under the agreement, Berna is entitled to a minimum quantity of seasonal flu antigens, which is adjusted upward each year. However, due to external factors, such as slower growth rates of certain seasonal flu strains, even the minimum quantities may be difficult to obtain in time for a particular year’s flu season, or at all. This may affect revenues in any given year in which this occurs. The agreement terminates after 2009. Due to the shortage of antigen production capacity worldwide, it may be difficult to renew the contract against the same terms and conditions, or at all. If this risk materializes it will adversely affect our results.

University collaborations

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 Crucell provides the applicable university with a specific amount of funding, and in consideration of such, Crucell receives certain intellectual property rights and access to the results of the university research.

Consulting arrangements

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

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

In addition to 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 1,325 active cases (i.e. granted patents in force or pending patent applications) as of December 31, 2006 in total for the group. 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, 2006, 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, live viral vector vaccines based on our proprietary measles technology, our virsomal technology and classical whole inactivated virus, split and sub-unit vaccines. Patent filings classified under “antibodies” relate to antibodies and/or drug targets, excluding the enabling technologies which are classified as technology. Patent filings classified under “technology” relate primarily to cell-based production technology, adenoviral vector technology, STAR-technology and related technology, functional genomics and target and antibody discovery technology.

	Patent Filings
	Pending		Granted		Total Active
Vaccines		250		425		675
Antibodies		146		31		177
Technology		189		149		338
Gene Therapy		57		78		135
Total		642		683		1,325

Patent filings

In 2006 we filed patent applications for 16 new inventions, in the fields of vaccines (4), antibodies (9) and technology (3). Our new filings in the antibody and vaccine fields in 2006 reflect our efforts to further strengthen our patent portfolio in support of product development programs in that area. 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, as well as the STAR technology. Since we are not actively involved in gene therapy research and development, no new filings were made in that area during 2006.

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, 2006, we have 84 pending applications in the EU(1), 108 pending applications in the U.S.(2), 19 international patent applications (so-called “PCT(3) applications”) and 431 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. 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.

(1) EU refers to filings made under the European patent convention. The EU figures do not include European patent applications designated in Patent Cooperation Treaty (PCT) applications while still in the international phase.

(2) U.S. figures do not include U.S. patent applications designated in PCT applications while still in the international phase.

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 was provided by Directive 93/41/EEC and Council Regulation No 2309/93, which established EU procedures for the authorization and supervision of medicinal products for human and veterinary use and established a European Medicines Agency (EMEA). Under this centralized procedure, which has been implemented for so-called high technology medicinal products, and especially for 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. For biopharmaceuticals the centralized procedure is mandatory.

Since May 1, 2004, the Clinical Trial Directive (2001/20/EC) has been in 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 the Clinical Trial Directive, the Good Manufacturing Practice (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, 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 GMP incorporated into EU legislation (2003/94/EC). 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. In the Netherlands we have a license to manufacture clinical trial material under GMP conditions. To maintain this license we are inspected every two years by the Dutch regulatory authorities. The most recent inspections were in July 2005 for our temporary BSL-3 manufacturing facilities at NVI in Bilthoven, and in November 2005 for our facilities in Leiden. Both inspections were satisfactory. Additionally we employ two Qualified Persons in Leiden for product release according to the European Clinical Trial Directive.

Manufacturers of pharmaceutical products operating within the EU must hold a manufacturer’s authorization and must comply with the requirements of “Good Manufacturing Practice” incorporated into EU legislation. These requirements are intended to set minimum standards with respect to manufacturing facilities. Failure to comply with these requirements may result in the suspension or revocation of the manufacturer’s manufacturing authorization. EU legislation provides for a centralized procedure for authorizations to market certain specific pharmaceutical products. The procedure is initiated with the submission of an application for a marketing authorization to the European Agency for the Evaluation of Medicinal Products. This agency processes the application and co-ordinates an evaluation of the product candidate. EU legislation provides for mutual recognition, whereby an authorization for a product granted in one member state is recognized by and forms the basis for granting an authorization in other member states. The wholesale distribution of pharmaceutical products within the EU is regulated by “Good Distribution Practice” guidelines.

Both the Netherlands and Sweden are members of the European Union. As such both fully comply with EU legislation on medicines, meaning that their national legislation is in accordance to all relevant EC Council Directives and EC Regulations including procedures for the authorisation and supervision for

medicinal products for human use and the establishment of the European Agency for the Evaluation of Medicinal Products

Switzerland

Marketing a new pharmaceutical product requires a product marketing authorization. In Switzerland this is granted by Swissmedic if rigorous pre-clinical and clinical trials have shown that the product fulfils the legal criteria of quality, safety and efficacy. Marketing authorizations and maintenance of approved products in our home markets are of major importance.

In addition to the requirements of pre-marketing authorization, production licenses for the manufacture of pharmaceuticals in Switzerland is an important requirement. Obtaining and maintaining this license requires a production standard according to Good Manufacturing Practice (GMP). We believe rules and regulations in Switzerland set standards comparable with those of the EU. Crucell has at its disposal all necessary licenses to manufacture pharmaceuticals in Switzerland.

United States

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.

To gain FDA approval to conduct clinical trials, pre-clinical studies must generally be conducted in the laboratory 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.

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. 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. After 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.

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 clinical trial proposals is a public process and usually involves review and approval by its Recombinant DNA Advisory Committee. In addition, before a product can receive approval from the FDA, a process for manufacturing the product in accordance with good manufacturing practice requirements must be developed. Failure to comply with good manufacturing practice or other U.S. regulatory requirements could result in a product being denied approval from the FDA or, once approval for a product is issued, could result in the FDA withdrawing its approval until regulatory compliance is re-established.

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. The companies to which we license our PER.C6 technology can refer to the BMF 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 to supplement our BMF when new information arises.

During 2003, we expanded our cooperation agreement 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.

South Korea

The Korean Food and Drug Administration (“KFDA”) is the regulatory authority for the regulation of the vaccine industry in Korea. KFDA is one of the leading regulatory authorities in Asia and employs competent staff for the review of vaccine product submissions, the control of manufacturing and the release of vaccines of Korean production. KFDA regulates vaccines under the Korean Pharmaceutical Law, which establishes the requirements for the lawful marketing of pharmaceutical products, i.e. quality, efficacy and safety. Different kinds of product permits are foreseen for the approval of products for the domestic market, respectively for the export situation. International standards as established by the International Conference on Harmonization for the structure and content of product dossiers are recognized by KFDA while the authority reserves the right to ask for specific input and data as result of the regulatory review. The timelines for the review of submission dossiers are defined by the law and, therefore, predictable to a certain extent.

Regulation outside the European Union, Switzerland, the United States and South Korea

Highly regulated countries such as the United States of America, Australia and Canada are to be distinguished from those where similar regulation is only just emerging. Harmonization of standards and formats between the EU, the United States and Japan, which is coordinated by the International Conference on Harmonization, will have a global impact. In some countries, limitations may be placed on the price at which products may be sold and the amount of royalties payable to licensors.

Competition in Product and Technology Development

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 its 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.

Vaccines

Other biotechnology and pharmaceutical companies that are focused on developing vaccines against infectious diseases include Wyeth, sanofi pasteur, Merck & Co., GlaxoSmithKline, Novartis, Acambis, Baxter, GenVec, Bavarian Nordic, Baxter, Solvay, Vical and Nobilon.

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 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.

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 GlaxoSmithKline (including IDB/Shire), Nobilon 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 has completed successfully Phase II 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 against West Nile virus. We are also 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. GSK has secured significant funding from NGOs for its malaria vaccine RTS,S. 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/IIa 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 2004 Nature Medicine announced 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.

Antibodies

Other biotechnology companies, including Celltech Group plc and Protein Design Laboratories, Inc., currently generate humanized antibodies, and Medarex, Inc., GenMab AG, 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, our antibody product may 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.

Production of recombinant proteins and monoclonal antibodies

Monoclonal antibodies and recombinant proteins are produced by other companies on a variety of platforms. Simple proteins that do not demand extensive post-translational modifications are produced in bacterial systems (E. coli). For example, the human recombinant insulin is produced entirely on E. coli.

Monoclonal antibodies and complex recombinant proteins are produced mainly on mammalian cell lines like Chinese Hamster Ovary (CHO), murine myeloma cells like NS0 and Sp2/0, and occasionally on human 293 cells. CHO, NS0 and Sp2/0 are used for 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.

In addition to microbial and mammalian cell culture systems, transgenics are also exploited for the manufacture of complex recombinant proteins. Transgenics are, for example, used for the manufacture of recombinant C1 inhibitor by Pharming. This product is currently in Phase III clinical testing for angio-edema. Other examples are GTC therapeutics which produces amongst other things, monoclonal

antibodies in transgenics, and PPL therapeutics manufactures a number of complex recombinant proteins, amongst which are blood clotting factors, in transgenic sheep. Transgenic plants are also used as a platform for the manufacture of monoclonal antibodies and complex recombinant proteins. Cell culture systems derived from plants are currently used as well, like moss and cultured plant cells, which are currently used for manufacturing recombinant proteins. None if the products produced in transgenics have reached the market yet.

Adenoviral vector technology and other recombinant vectors

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. We jointly own intellectual property on other vectors with Harvard.

Property, Plant and Equipment

Our corporate offices and research activities are located in facilities of approximately 7,800 square meters in Leiden, The Netherlands. We sublease 1,000 square meters of this space to Pharming Technologies B.V. and 500 square meters to Galapagos N.V. The section of this building that we use in Leiden includes 2,100 square meters of laboratories, with BioSafety Level (BSL) 1, BSL 2 and BSL 3 labs. 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.

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 in the Netherlands 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 lease contract of this facility ended September 1, 2006, except for the production space, which ended April 30, 2007. We do not anticipate any problems in renewing the lease until our new production facility is ready for use.

In 2005, we began to construct a new GMP production facility of 4,100 square meters in Leiden. This new facility is built as a BioSafety Level (BSL) 3 facility, in which two concurrent products can be produced, on either BSL 2 and/or BSL 3 safety level. The building will consist of 1,200 square meters of production space; 220 square meters of quality control labs; 185 square meters BSL 3 research and development labs; 80 square meters filling (up to 2,000 ampoules); 40 square meters of buffer and medium preparation; 310 square meters of offices; 350 square meters of storage and 1,715 square meters for utilities, washing area, waste destruction and sterilization and technical areas.

The new center is to take the name of Crucell co-founder Dinko Valerio, becoming the “Valerio Building”. The Valerio Building will give us the in-house capability to support vaccine, protein and monoclonal antibody process design and development, minimizing requirements for outsourcing. Bioreactors of 2, 10, 30 and 100 liter capacities have already been constructed off-site and are currently being installed. There is also room for expansion, with multiple 100-liter wave-bags, disposable stirred tank bioreactions, large scale down stream processing equipment and scale-up of fill and finish capacity.

When fully operational, the Valerio Building will meet the highest environmental and safety standards recommended for the laboratory activities to be conducted there. The facility must receive approval from the Dutch government to produce material for use in humans. Extensive precautions will be taken to ensure safety and continuity of operations. Product quality will be strictly monitored, maintained and administered in-house. The facility is currently scheduled to become operational by the end of 2007.

Upon our 2006 acquisitions, we also have office space, laboratories, production facilities, pre-clinical facilities and storage space in Switzerland, Spain, Germany, Sweden and Korea.

The following table sets out information regarding our main facilities outside the Netherlands:

Location				Use
Berne, Switzerland (two locations)				Research and development (including pre-clinical facilities) 8,618 m2 and production facilities (12,427 m2); office space (5,635 m2) and storage buildings (15,988 m2) (owned)
Madrid, Spain				Production facilities (1600 m2), storage buildings (2400 m2) and office space/labs (1409 m2) (owned)
Seoul, Korea				Development and production facilities (2,201 m2), pre-clinical facilities (999 m2), storage facilities (1,243 m2), office space (1,819 m2) (leased until 2010)
Stockholm, Sweden				Development and production facilities (8,764 m2), pre-clinical facilities (999 m2), storage facilities (4,319m2), office space (2,396 m2) (leased until 2010)

Our manufacturing facilities in Switzerland are FDA/EMEA-approved and are used primarily for the production of Inflexal, Vivotif, Epaxal and mammalian cell culture-based products. One of our facilities also include facilities for lyophilization and a Center of Mammalian Cell Culture, which is not in use any more.

Our manufacturing facilities in Korea are World Health Organization-approved and are used primarily for the production of Quinvaxem and Hepavax-Gene and for formulating and filling vials. The manufacturing process used at our Korean facilities are based on the patented Hansenula polymorpha yeast expression technology.

In Spain, the center of our European filling and packaging operations, we operate a filling line for syringes.

Insurance

We have in place general third party public and product liability insurance. Our policy 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 members of the Management Board, management committee and the Supervisory Board.

Sales and Business Development

Business Development

We currently employ thirteen people in our business development operations in the Netherlands and an additional two in the U.S. Our business development strategy has historically involved contacting prospective licensees and partners, assessing their interest in our technologies and products, and, if the prospective licensee or partner indicates interest, negotiating a license and/or collaboration agreement pursuant to which we deliver the applicable technology to, or collaborate with, the licensee or partner. For some of the contracts we provide services, for which we are paid at different rates.

Marketing and sales

We have our own sales and marketing infrastructure in our core markets Switzerland, Unites States, Korea, Sweden, Italy and Spain. To ensure broader market access for our products, we have established a strong network of partnerships for commercialization. Through our dedicated sales force for supranational organizations, our own sales and marketing infrastructures in Korea and key European markets and the United States, and our network of distributors in other countries, we have established a global position in both public and private markets.

Item 4A. Unresolved Staff Comments

Not applicable.

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 included elsewhere in this annual report.

Unless otherwise mentioned all amounts in this Item 5 are in thousands, except share and option data.

Crucell N.V. reports its financial results in Euro and in conformity with International Financial reporting Standards (“IFRS”) as endorsed by the EU and effective for each of the reporting years. There is no difference between IFRS as applied to Crucell and IFRS as issued by the IASB. Please see “Key Information—Selected Financial Data” and the notes to our consolidated financial stements for a more detailed discussion on the basis of preparation.

Overview

The year ended December 31, 2006 formed a turning point in the history of our Company as we transformed from a start-up company geared exclusively towards developing technologies and biotech products into a fully integrated vaccine and other biopharmaceuticals producer. Our internationally oriented activities now cover the entire range from laboratory to sales, from product and process development to production and distribution. This change was due to a number of acquisitions and divestments described below. This made 2006 a year of rapidly integrating the companies and assets acquired, streamlining our corporate organization and upgrading of our internal financial and administrative procedures. In addition, we set new priorities in terms of research and development and drafted an active and focused sales strategy to maximize the revenues from our current portfolio.

Summary of the full year results

Total revenue and other operating income for the year ended December 31, 2006 were € 140.9 million, which represents a more than 275%-fold increase over the € 37.6 million in revenues and other operating income reported in 2005. The increase in total revenues is attributable to sales of respiratory, travel and paediatric vaccines added to our product portfolio in the acquisition of Berna Biotech by the company during 2006. Total other operating expenses amounted to € 148.3 million and included restructuring and impairment charges of € 33.5 million. Research and development expenses of € 67.6 million reflect increasing emphasis on clinical development, since we successfully initiated clinical

trials for nine programs during the year, and reflect research spending in Berna Biotech AG and SBL Vaccin AB. Reported loss over 2006 amounted to € 87.6 million. Reported loss includes amortization charges of € 19.7 million related to purchase price accounting, in addition to the impairment and restructuring charges of € 33.5 million. For income taxes the company reported a € 10.6 million benefit, which was mainly related to the impairment charge.

Cash and cash equivalents at December 31, 2006 amounted € 157.8 million, which includes the cash acquired in the Berna Biotech business combination and the proceeds of the € 80.0 million equity offering the company executed in November 2006.

Acquisitions and divestments

In early 2006, Crucell acquired 98.4% of the Swiss biotech company Berna Biotech AG (Berna Biotech) in a share exchange. In February and March 2006, Crucell issued a total of 16.9 million ordinary shares to Berna Biotech’s shareholders with an average fair value of € 20.93 per share resulting in total purchase price of € 354.4 million (excluding acquisition costs). In the second quarter of 2006, we divested Dr. E. Gräub AG, which was sold to German based Vetinvest GmbH for € 5,390 in cash. In the same quarter, the biopharmaceutical and vaccine manufacturer Rhein Biotech GmbH was sold to Dynavax Technologies Corporation, a U.S. based biotech company, for € 6,383 in cash. Both divestments were steps towards aligning our portfolio of activities with our strategic priorities.

In September 2006, we squeezed-out the remaining shareholders, purchasing the remaining 1.6% minority interest in Berna Biotech. After the squeeze-out, the SWX Swiss Exchange approved the delisting of Berna Biotech’s shares, which was effected on September 18, 2006.

In October 2006 we purchased the assets and liabilities of Florida-based Berna Products Corp. (“BPC”) from Acambis plc for € 13.8 million in cash, excluding acquisition costs. BPC markets and distributes Vivotif, Berna Biotech’s oral typhoid fever vaccine, in the US and Canada.

In November 2006, we acquired Stockholm-based SBL Vaccine Holding AB (“SBL”), a fully integrated independent biotechnology company, from the private equity firm 3i and the financial group SEB for € 39.3 million in cash, excluding acquisition costs.

On December 28, 2006, Crucell squeezed-out the remaining 7.3% minority shareholders of Rhein Biotech N.V. Upon approval by the its shareholders, Rhein Biotech N.V. legally merged into Berna Rhein BV, a fully owned subsidiary of the Crucell group in exchange for 0.3 million Crucell shares with a fair value of € 18.51 per share, resulting in a transaction value of € 6.4 million. As a result, Rhein Biotech N.V. ceased to exist and its shares were delisted at the Frankfurt Stock Exchange. With this transaction, Crucell completed the integration of the Berna Biotech.

Economic factors

Our financial strength and ability to adapt to the current market and economic conditions are dependent, in part, on the success of our existing products, the cost of bringing novel vaccines to market, the success of our licensees in developing commercial products using our technology, and effective management of our working capital.

Critical Accounting policies

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 on our historical operations include:

· Revenue recognition.

· Utilization of tax carry forward losses.

· Accounting for business combinations.

· Impairment reviews of property, plant and equipment, intangible assets and goodwill.

· Valuation of defined benefit plans.

· Valuation of stock option plans.

· Recognition of provisions for litigations and claims.

· Valuation of inventories.

Below we discuss these policies further, as well as the estimates and judgments involved.

Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received excluding discounts, rebates, value added taxes and duties.

Revenues are recognized on a gross basis when the Group acts as the principal in an arrangement. Revenues are recognized on a net basis when the Group acts as agent.

Goods or services traded for items of a similar nature are not regarded as transactions that generate revenue. Goods or services traded for dissimilar items are regarded as transactions that generate revenue.

Product sales

Revenue from product sales is recognized when the significant risks and rewards of ownership of the products have passed to the buyer. In addition the Group does not retain managerial involvement to the degree usually associated with ownership nor effective control over the goods sold and the cost of the transaction can be measured reliably.

Licence revenues

We recognize initial fees to the licensing of our technology as revenues over the period of our significant continuing performance obligations, if any, and upon transfer of the significant risks and rewards to the buyer.

Under certain arrangements, the Group 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 when significant risks and rewards pass to the buyer, which is the moment, the transfer of developed technology is completed. The Group’s arrangements provide for continuing support of its technology at standard consulting rates. Revenues derived from consulting services that are not essential to licensee’s ability to use the Company’s technology, are recognized as earned during the period that the consulting services are performed.

In certain arrangements, the Group collaborates with third parties to develop novel products or processes using the Company’s proprietary technology. These arrangements generally include an initial license fee upon the delivery of the Company’s proprietary technology and incremental fees for the 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. When significant risks and rewards pass to the buyer, initial fees from these arrangements are recognized as revenues over the period of continuing performance obligations. Incremental fees from research and development activities are recognized as revenues earned over the period of the development collaboration or the manufacturing obligation. 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. These 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 Group’s arrangements generally provide that the licensee make semi-annual or annual payments (called “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. License maintenance fees are recognized as revenues when the amounts become fixed and payable. The aggregate of license maintenance fees paid will generally reduce any royalty payments which may be due on future product sales of the licensee, if any, under the license agreement. Royalties are recognized as revenue when they become fixed and payable.

Service fees

As part of various collaboration agreements, the Company receives service fees for work performed under such agreements. Revenues and related costs associated with completing performance services are recognized when the service is completed and the collectibility of the receivable is deemed probable. Revenues associated with time and material performance contracts are recognized when the costs incurred and the costs to complete the transaction can be measured reliably.

Utilization of tax carry forward losses

We are required to estimate our income taxes in jurisdictions in which we operate. This involves estimating our actual current tax exposure together with assessing the valuation for carry forward losses and temporary differences resulting from different treatment for tax purposes compared to IFRS. These temporary differences mainly relate to intangible fixed assets, property, plant and equipment and inventories.

As at December 31, 2006 we have tax carry forward losses for € 222,238 (2005: € 103,714, 2004: € 85,766) that are available, with certain restrictions in time, for offset against future taxable profits of the companies in which the losses arose. We assessed the likelihood that our carry forward losses will be recovered from future taxable profit, and to the extent we believe that recovery is probable we recognized a deferred tax asset, which is € 308 as at December 31, 2006. To the extent the likelihood of a recovery of deferred tax assets changes, we include an expense or a gain within the tax charge in our Income Statement for the relevant period. Significant management judgment is required in the valuation of our deferred tax assets. We consider future taxable profit projections, historical results and ongoing tax planning strategies in assessing the recoverability of deferred tax assets. In the event that actual results differ from these estimates due to future changes in income tax law or results from final review of our tax returns by tax authorities, we may need to adjust the valuation of our deferred tax assets, which could materially impact our financial position and results of operations.

Accounting for business combinations

acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

Goodwill includes intangible assets that were identified in a business combination, but not valued separately because the assets were either not separable or could not be measured reliably. Assets identified and included as part of goodwill can be specific customer relationships, supply contracts not meeting the recognition requirements or the workforce acquired.

Assigning fair values to the assets and liabilities acquired in a business combination inherently requires the use of estimates. Under IFRS 3 Business Combinations, these fair values can be adjusted up to one year after the acquisition date, which can affect the amount recognized as goodwill. The acquisition of SBL has been accounted for on a provisional basis.

The accounting for business combinations is discussed in detail in Note 3 of the financial statements.

Impairment reviews of property, plant and equipment, intangible assets and goodwill

For property, plant and equipment and intangible assets, Crucell assesses at each reporting date whether there is an indication that an asset may be impaired. If this indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

An impairment loss of € 19,568 was recognized relating to two buildings in Switzerland. The buildings and their equipment were used to manufacture products whose production ended or was phased out during 2006. The buildings are specially set up for biotechnology purposes and it is impractible to separate the buildings and the equipment. Thus there is no direct use for these buildings in any of the other activities of the Company, nor is there any market for the sale of the buildings to outside parties. The Company believes that the outlook for these buildings is not likely to change in the forseeable future, accordingly the carrying value has been impaired for the total amount of € 19,568.

The intangible assets were impaired for the in process research and development of the Tetra vaccine. In February 2006 Crucell acquired Berna Biotech, including rights to the Tetra vaccine. Management decided to stop the development of Tetra after Quinvaxem received approval by the WHO. Consequently the carrying value of Tetra has been impaired for the total amount of € 10,848.

Goodwill is reviewed annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Where the recoverable amount of the cash-generating unit is less than the carrying amount of the cash-generating unit to which goodwill has been allocated an impairment loss is recognized.

Management believes that any reasonable possible change in the key assumptions would not decrease the value in use to the extent that the related goodwill would exceed the recoverable amount. Reference is made to the key assumptions below as they have a significant impact on the calculated recoverable amount. The recoverable amount for the goodwill of Berna and Berna Biotech Korea Corp. exceeds its carrying amount by € 58,600 and € 2,600 respectively. The implications of the key assumptions on the recoverable amount are discussed below:

· The recoverable goodwill amounts of Berna Biotech AG based and Berna Biotech Korea Corp. were determined with a pre-tax weighted average cost of capital (“WACC”) of 11.0% and 14.8% respectively. A higher WACC percentage would reduce the recoverable amount of the goodwill;

· In determining the goodwill of Berna Biotech Korea calculations were made with a 50% chance of a possible relocation of the site. If calculations were made with an estimated chance of relocation between the 50% and 100% this would lead to a reduction of the recoverable amount of the goodwill.

Valuation of defined benefit plans

Under defined benefit plans, the pension entitlements are calculated using the projected unit credit actuarial method. The pension liability recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date, less the fair value of the plan assets after adding or subtracting unrecognized actuarial gains or losses and past-service costs.

The weighted average of the principal assumptions used in determining the employee benefit obligations for the defined benefit plans of the Group are shown below:

	2006
Discount rate		3.32	%
Expected return on plan assets		4.55	%
Future salary increases		1.19	%
Future pension increases		0.66	%

Prior to the acquisition of Berna Biotech and SBL the Group did not operate any defined benefit plans.

Valuation of stock-option plans

Option plans

Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The Group accounts for its employee stock options under the fair value method. The fair value of options was estimated at the date of grant using the Black-Scholes option-pricing model.

The following weighted average assumptions are key in determining the fair value of the stock options.

	Year ended December 31,
	2006			2005			2004
Risk-free interest rate		3.6	%		4.1	%		2.9	%
Expected dividend yield		—			—			—
Expected volatility		52.6	%		52.8	%		62.3	%
Expected life (years)		4.25			4.31			4.00

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Crucell (“market conditions”), if applicable.

The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

Recognition of provisions for litigations and claims

The Group is subjected to (potential) lawsuits and other legal proceedings, resulting from the ordinary course of business. The current status of any pending proceedings has been reviewed with a legal counsel. Upon consideration of known relevant facts and circumstances, provisions were recognized for losses that are considered to be more likely than not and that can be reasonably estimabled as of the balance sheet date.

The Group uses significant judgement in determining the provision for litigations and exposure to contingent liabilities related to pending litigation or other outstanding claims. Judgement is used in assessing the likelihood that a pending claim will succeed or a liability will arise and to quantify the possible range of the final settlement.

Valuation of inventories

Inventories are stated at the lower of cost and net realisable value. The cost of inventories includes expenditures for materials acquired, directly attributable costs and related production overhead expenses. Allowances are made for obsolete inventory. Management exercises judgment in determining the allowance for obsolete inventory. The allowance recognised in 2006 is € 4,722.

Results of Operations

Revenues

The following table shows our revenues for each of the years in the three-year period ended December 31, 2006 and the percentage change between these periods.

	Year ended December 31,			%-Change
	2006	2005	2004	06 vs. 05			05 vs. 04
Product sales	103,918	—	—		—			—
License revenues	16,955	20,848	12,429		(18.7	)		67.7
Service fees	10,694	11,881	5,712		(10.0	)		108.0
Total revenues	131,567	32,729	18,141		302.0			80.4

In 2006, our revenues increased to € 131,567 from € 32,729 in 2005 and € 18,141 in 2004. The total revenue for the year ended December 31, 2006 increased by 302% compared to the year ended December 31, 2005. The increase in total revenues is mainly attributable to product sales after the acquisition of our product portfolio as a result of Crucell’s acquisitions of Berna Biotech in February 2006 and SBL in November 2006.

Product sales

Product sales amounted to € 103,918 in 2006. Total revenue from sales of those products added to our portfolio by the acquisition of Berna Biotech, or legacy-Berna Biotech products (including BPC sales) amount to € 100,404 total revenue generated by sales of those products added to our portfolio by the acquisition of SBL, or legacy-SBL products, amounted to € 3,513.

By the end of the year, our core product portfolio contains of six vaccines, Quinvaxem, Hepavax-Gene (Paediatric vaccines), Inflexal (Respiratory), Dukoral, Epaxal and Vivotif (Travel vaccines). The aggregated revenues for our core product portfolio amounted to € 91,664 in 2006 and represented 88.2% of our total product sales.

In October 2006 we successfully launched Quinvaxem, a pentavalent combination vaccine. It was approved by the Korean FDA in March 2006 and received World Health Organization (WHO) pre-qualification in September 2006. We have been awarded contracts totaling over $ 230 million for our Quinvaxem pediatric vaccines by supranational organizations. The contracts cover the next three years until 2009, with the awarded amount growing over those three years. We received an additional order totaling over US$ 20 million for Quinvaxem from a supranational organization serving Latin America. The contract covers sales in 2007. Current demand for the Quinvaxem vaccine exceeds 50 million doses a year. We estimate the total market potential to be 150 million doses per year in 3 to 4 years.

License revenues

License revenues decreased by € 3,893 in 2006 to a total of € 16,955. The decrease is caused by developments under a limited number of contracts. Total license revenues generated on IAVI (Internation AIDS Vaccine Initiative) contracts decreased by € 2.6 million; license revenues on DSM contracts decreased by € 1.4 million; license revenues on Sanofi contracts decreased by € 1 million. This reduction was partially offset by several contracts with other parties such as Merck and Ferring.

In 2005, the increase in license revenues of € 8,419 or 67.7% compared to 2004 was primarily due to an increase in license revenues from new and existing contracts, and realization of contractual milestones. For example, in 2005, we recognized revenue of € 4,754 from 15 new PER.C6 license arrangements versus € 3,886 from twenty new PER.C6 license arrangements in 2004. Also, a significant initial license fee from an arrangement we entered into with Sanofi Pasteur in 2003 was not immediately recognized as revenue, but was deferred and is being recognized as revenue over three years, the period of our expected continuing involvement.

Service fees

Service fees decreased to € 10,694, a decrease of € 1,187 or 10% compared to 2005. This decrease was mainly due to lower service fees generated on contracts related to the National Institute of Allergy and Infectious Diseases (NIAID).

In 2005 service fees for colloboration agreements increased by € 6,919 or 108.0% compared to 2004 due to increased activities performed under various collaboration agreements.

Cost of goods sold

The following table shows our cost of goods sold for each of the years in the three-year period ended December 31, 2006 and the percentage change between these periods.

	Year ended December 31,			%-Change
	2006	2005	2004	06 vs. 05			05 vs. 04
Cost of product sales	83,518	—	—		—			—
Cost of service fees	6,971	7,156	5,644		(2.6	)		26.8
Total cost of goods sold	90,489	7,156	5,644		1164.5			26.8

Cost of product sales

Costs of product sales and costs of service fees both comprise direct labor, materials, and overhead costs incurred in performing work under various collaboration agreements that directly relate to revenues earned through product sales. The 2006 cost of product sales includes additional expenses of € 16,186 relating to the purchase price allocations of the acquired businesses. The gross margin on product sales amounts to 57.5%.

Cost of service fees

Cost of service fees comprise direct labor, materials and overhead costs related to work under various collaboration agreements excluding collaboration agreement relate to product sales. The decrease of 2.6% in these costs reflects the lower level of services provided by fee revenues offset by slightly increased costs. Gross margin on service fees was 54.4% in 2006 compared to 66.0% and 1.2% in 2005 and 2004, respectively.

The costs increased in 2005 compared to 2004 by 26.8% because the number of activities performed under the various collaboration agreements increased as well.

Other operating income

The following table shows our other operating income for each of the years in the three-year period ended December 31, 2006 and the percentage change between these periods.

	Year ended December 31,			%-Change
	2006	2005	2004	06 vs. 05		05 vs. 04
	In thousands of Euro
Government grants	6,901	4,137	3,441		66.8		20.2
Other income	2,455	703	1,040		249.2		(32.4	)
Total other operating income	9,356	4,840	4,481		93.3		8.0

Government grants

Revenues generated from government grants increased 66.8% in 2006 to € 6,901 after increasing by 20.2% in 2005. The increase in 2006 is primary the result of additional subsidies from NIAID for further research on HIV.

The increase in 2005 was primarily a result of additional subsidies granted by the Dutch government.

Other income

Other income results from non-core business transactions and mainly consists of the sale of tangible and intangible assets incidental to the business, reimbursement of development costs and sublet of

premises. The increase in 2006 compared to 2005 is due to the other income generated in the acquired subsidiaries.

Other operating expenses

The following table shows our other operating expenses for each of the years in the three-year period ended December 31, 2006 and the percentage change between these periods.

	Year ended December 31,			%-Change
	2006	2005	2004	06 vs. 05		05 vs. 04
Research and development	67,606	34,048	23,676		98.6		43.8
Selling, general and administrative	47,199	13,689	16,819		244.8		(18.7	)
Restructuring	3,120	—	—		—		—
Impairment	30,416	—	—		—		—
Total other operating expenses	148,341	47,737	40,495		210.7		17.9

Research and development expenses

Research and development expenses consist of personnel expenses, laboratory expenses, technology purchases, patent related fees, technology license fees, depreciation and amortization of tangible assets related to research and development, and lease expenses for lab space and equipment lease. Research and development expenses also include fees we pay to third parties who conduct research on our behalf.

Research and development expenses increased in 2006 by € 33,558 or 98.6% compared to 2005. € 27,339 of this increase can be attributed to the research and development programs of businesses we acquired during 2006. The remaining increase of € 6,219 is the result of the increased number of development programs progressing into the clinical phase. Research and development expenses increased by 43.8% in 2005 compared to 2004, due to a significant increase in R&D staffing levels, reflecting the scaling up of our then-core activity.

Research and development expenses comprised 45.6% of total other operating expenses in 2006 (and 58.9% of our total operating expenses excluding restructuring and impairment). We expect that research and development expenses will continue to be a significant portion of our overall expenses. The expenses of our R&D activities support the development of our technology platforms and research on potential new products.

Selling, General and administrative expenses

Selling, general and administrative expenses consist of personnel expenses and other operating expenses in the areas of marketing and sales, finance, human resources, investor relations, legal and general management.

Selling, general and administrative expenses amounted to € 47,199 in 2006, compared to € 13,689 in 2005. Selling costs increased as a result of the cost base of the sales force and other selling costs of the acquired companies. General and administrative expenses also included integration costs of the 2006 acquisitions and incremental costs relating to compliance with the internal control over financial reporting requirements under U.S. law.

In 2005, selling, general and administrative expenses were € 13,689, a decrease of 18.7% compared to € 16,819 in 2004. This decrease was primarily driven by warrants and non-employee stock options that vested in 2004, as these costs did not recur in 2005. In addition to employee salaries, our compensation program includes the issuance of options to employees as a means of attracting and retaining talented personnel. Total expenses employee shares and option plans amount to € 4,296; € 3,927; € 3,357 in 2006, 2005 and 2004, respectively.

Restructuring

The restructuring expense is related to centralizing R&D functions in Leiden and phasing out of R&D projects, including Aerugen, in Switzerland.

The decision to concentrate R&D in Leiden was made to increase efficiency in R&D spending. The provision was recognized in 2006 as recognition criteria were met at that time. The actual reduction in the number of staff employed was effected in the first quarter of 2007.

Furthermore, due to the suspension in July 2006 of research related to Aerugen, the candidate vaccine for the prevention of Pseudomonas aeruginosa infection in cystic fibrosis patients, there are fewer projects requiring development support at Bern. Additionally, part of the restructuring costs relate to the Center of Mammalian Cell Culture, which is not in use any more.

Impairment

The impairment relates to two buildings in Switzerland and to acquired in-process research and development related to the Tetra vaccine.

The impairment loss of € 10,848 is related to the in process research and development of the Tetra vaccine. In February 2006 Crucell acquired Berna Biotech, including rights to the Tetra vaccine. Management decided to stop the development of Tetra after Quinvaxem received approval by the WHO. Consequently, the carrying value of Tetra has been impaired for the total amount of € 10,848.

Operating loss

The following table shows our operating loss, net for each of the years in the three-year period ended December 31, 2006 and the percentage change between these periods.

	Year ended December 31,						%-Change
	2006		2005		2004		06 vs. 05		05 vs. 04
Operating loss	(97,907	)	(17,324	)	(23,517	)		465.2		(26.3	)

The movements in operating loss are explained by the operating results discussed above.

Financial income and expense, net

The following table shows our financial income and expenses, net for each of the years in the three-year period ended December 31, 2006 and the percentage change between these periods.

	Year ended December 31,						%-Change
	2006		2005		2004		06 vs. 05			05 vs. 04
Financial income	13,453		2,332		1,789			476.9			30.4
Financial expenses	(11,706	)	(131	)	(394	)		8835.9			(66.8	)
Results investments non-consolidated companies	(1,956	)	(455	)	(704	)		329.9			(35.4	)
Total Financial income/(expense), net	(209	)	1,746		691			(112.0	)		152.7

Financial income

Financial income consists of interest income and currency gains. Interest income totaled € 3,718, an increase of € 1,753 compared to 2005. This is primarily due to higher cash balances resulting from proceeds from share issuances and cash acquired in business combinations.

Foreign exchange results are the effect of the translation of transactions and balances denominated in foreign currencies. Total currency gains amounted to € 9.5 million in 2006.

The 2005 and 2004, financial income consists primarily of interest income. Interest income increased primarily due to higher cash balances resulting from the private share placement in May 2005.

Foreign exchange results had limited impact in 2005 and 2004 as Crucell was not an international company at the time.

Financial expense

Financial expense consist mainly of interest expenses and currency losses. Interest expense increased by € 1,737 compared to 2005. The increase is due to the mortgage loan in the Netherlands, which is being used to finance the new production facility, and the loan obligations of the companies acquired in 2006.

Foreign exchange results are the effect of the translation of transactions and balances denominated in foreign currencies. Total foreign currency expenses amounted to € 9.6 million in 2006.

Financial expenses decreased by € 263 in 2005 compared to 2004 mainly due to a reduction in the interest expenses.

Results investments associates and joint ventures

Crucell has two investments in Joint ventures (Pevion Biotech AG in Switzerland and Percivia LLC in the United States) and holds a 37% investment in the associated company Kenta Biotech AG in Switzerland. These investments have either been made in 2006 or result from the acquisition of Berna Biotech. The results of the companies are accounted for under the equity method and amount to a total loss of € 1,956. In 2005 and 2004 losses of € 455 and € 704, respectively, reflected the investment in Galapagos B.V. in the Netherlands. In 2006, our holding in Galapagos decreased to 6.2% of its share capital. Since then, the investment has been treated as an available-for-sale-investment, as it no longer qualifies as an associate.

Income Tax

Change in deferred taxes

Deferred income tax is provided by using the asset and liability method on temporary differences between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Changes in the base in 2006 result in a taxation income of € 11,022. This includes taxation income of € 7,027 as a result of the impairment charges discussed above.

Tax loss carry forwards

The Group has tax carry forward losses in 2006 of € 222,238, of € 103,714 in 2005 , and € 85,766 in 2004 that are available, with certain restrictions in time, for offset against future taxable profits of the companies in which the losses arose.

The unrecognized carry forward losses expire as follows:

Before 2011	2011		After 2011		Unlimited		Total
€ 16,504	€	98,202	€	88,902	€	18,630	€	222,238

The Company has evaluated evidence impacting the recoverability 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 not probable that the benefits of these tax loss carry forwards will be realized in the near term. Accordingly, the Company did not recognize any deferred tax assets relating to the carry forward losses.

Transfer pricing

The acquisition of Berna Biotech, SBL and the assets and liabilities of Berna Products Corp. and the integration of those businesses and assets into the Group, has resulted in a significant increase of inter-company transactions. Therefore, in January 2007, the Company began a transfer pricing study and analysis, with a view to ensuring its transfer pricing regime remains in good order.

Liquidity and capital resources

Sources of liquidity

The following table shows our cash position for each of the years in the three-year period ended December 31, 2006 and the percentage changes between these periods.

	Year ended December 31,			%-Change
	2006	2005	2004	06 vs. 05		05 vs. 04
Cash at banks and in hand	87,761	71,559	7,808		22.6		816.5
Call deposits	70,076	40,175	68,903		74.4		(41,7	)
Total	157,837	111,734	76,711		41.3		45.7

Cash and cash equivalent include the following main currencies:

	Year ended December 31,
	2006	2005	2004
Euros (€)	109,465	109,324	76,620
Swiss Francs (CHF)	26,364	—	—
Korean Won (KRW)	7,268	—	—
US Dollars ($)	7,363	2,410	91
Swedish Crowns (SEK)	7,113	—	—
Other currencies	264	—	—
Total	157,837	111,734	76,711

We have a strong cash position, which we believe makes it possible to continue financing important development programs.

We have the following financial liabilities outstanding December 31, 2004, 2005 and 2006:

	Date of maturity		2006	2005	2004
Mortgage loan	31 December 2021		17,091	8,982	—
Berna Biotech Korea loan	1 August 2010		5,819	—	—
Equipment finance leases	December 31, 2011	*	6,967	1,296	2,597
Privately placed bond	13 June 2008		16,536	—	—
			46,413	10,278	2,597

* Date financial lease with longest term expires.

We expect to repay our financial liabilities that are outstanding December 31, 2006 as follows:

	Total	2007	2008	2009	2010	2011	More than 5 years
Mortgage loan agreement*	17,091	338	353	370	387	405	15,238
Berna Biotech Korea loan	5,819	1,455	1,455	1,455	1,454	—	—
Equipment finance leases	6,967	1,139	794	851	913	1,133	2,137
Privately placed bond	16,536	—	16,536	—	—	—	—
	46,413	2,932	19,138	2,676	2,754	1,538	17,375

* Interest rate until December 31, 2010.

Mortgage loan

In December 2005, the Company entered into a mortgage loan for a maximum amount of € 17,091 and as of December 31, 2006 the Company had drawn the maximum amount. The loan bears interest at 4.55% for the first five years. After this period the rate will be renegotiated. The land, building and a compensating cash balance arrangement secure the loan in the amount of € 10,000. For the first year, interest was accrued to the loan and no payments of principal or interest were required. The loan will be repaid through monthly payments over 15 years, starting January 1, 2007, with a balloon repayment of € 10,000 after 15 years. The maturity date of the loan is December 31, 2021.

Berna Biotech Korea loan

Berna Biotech Korea Corp. has entered into a loan that will be repaid within four years and bears interest at 2.48%. The maturity date of the loan is August 1, 2010. The loan is unsecured.

Equipment finance leases

Crucell leases certain of its lab equipment in the Netherlands. All leases are on a fixed repayment basis and interest rates are fixed at the contract date. See Note Tabular disclosure of contractual obligations in this item.

Privately placed bond

Berna Biotech Korea Corp issued this bond with an interest percentage of 6.73%. The bond matures June 13, 2008, and contains covenants that require Berna Biotech Korea to maintain certain profit and liquidity ratios. Berna Biotech Korea was required to be in ongoing compliance with the covenants as of January 1, 2006, but was not. Consequently the bond is presented as a short-term bond, although, the Company does not have any indications that the bond has to be repaid before the end of its term. It is expected that Berna Biotech Korea Corp. will be in compliance with the covenants during 2007.

Cash flows

The following table shows our cash flow statement for each of the years in the three-year period ended December 31, 2006 and the percentage changes between these periods.

	Year ended December 31,						% change
	2006		2005		2004		06 vs. 05		05 vs. 04
Loss of the period	(87,565	)	(15,578	)	(22,826	)	462.1			31.8
Reversal of non-cash items	58,872		9,616		11,860		512.2			(18.9	)
Changes in net working capital	(23,174	)	(8,915	)	4,184		166.0			(313.1	)
Interest/Taxes/Provisions paid	(2,087	)	(132	)	(212	)	1,481.1			(37.7	)
Net cash flows (used in) operating activities	(53,954	)	(15,009	)	(6,994	)	259.5			114.6
Net cash flows from/(used in) investing activities	23,159		(15,273	)	(3,782	)	(251.6	)		303.8
Net cash flows from financing activities	78,731		65,305		277		20.6			—
Effect of exchange rates on cash and cash equivalent	(1,833	)	—		—		—			—
Net increase/(decrease) in cash and cash equivalents	46,103		35,023		(10,499	)	31.6			(433.6	)
Cash and cash equivalents at beginning of the period	111,734		76,711		87,210		45.7			(12.0	)
Cash and cash equivalents at end of the period	157,837		111,734		76,711		41.3			45.7

Net cash flows from/(used in) operating activities

Net cash flows used in operating activities increased in 2006 by € 38,945 compared to 2005. This is mainly due to increase of the operations resulting from the business acquisitions made in 2006.

Net cash flows from/(used in) investing activities

Our cash flow from/(used in) in investing activities amounted to € 23,159 in 2006, compared to (€ 15,273) in 2005 and (€ 3,782) in 2004.

In 2006, the most significant cash flows from investing activities were from the following transactions:

· The acquisition of Berna Biotech caused a net cash in-flow of € 67.8 million. Although the acquisition itself was completed by a share exchange, the cash used for acquisition costs amounted to € 10.1 million. Crucell acquired an amount of € 77.6 million cash with the subsidiary.

· The sale of Berna Biotech’s veterinary division, which included Dr. E. Gräub AG and Berna Veterinary AG and the divestment of the biopharmaceutical and vaccine manufacturer Rhein Biotech caused a cash in-flow of € 11,772.

· Reduction of restricted cash with Berna Biotech accounted for a net cash inflow of € 7,627.

· Interest received for the amount of € 3,075 in 2006 compared to € 1,864 in 2005.

The increase is partly offset by investing cash flows used in investing activities:

· The acquisition of SBL caused a net cash-outflow of € 33.4 million. The acquisition price, including acquisition costs, amounted to € 40.5 million. Crucell acquired an amount of € 7.1 million cash with the subsidiary.

· Purchase of property, plant and equipment for an amount of € 20,337 in 2006 compared to € 17,137 in 2005. Investments in each of 2005 and 2006 are mainly related to building and equipping our new GMP production facility in Leiden, the Netherlands.

· Acquisitions of intangible assets in 2006 in the amount of € 12,371 that are related to the acquisition of the business of BPC. The company paid goodwill in the amount of € 4,055 and purchased the customer list from Acambis for € 8,316.

· Interest received for the amount of € 1,864 in 2005 compared to € 1,864 in 2005.

In 2005, the Company used € 17,137 cash to invest in property, plant and equipment, in particular in the new production and development facility in Leiden. This expenditure was partially offset by the receipt of interest in the amount of € 1,864, on cash deposits. In 2004, the Company invested € 2,114 cash in property, plant and equipment. This expenditure was partially offset by receipt of € 1,608 on cash deposits.

In 2004 we acquired the outstanding capital stock of ChromaGenics B.V., a privately held biotechnology company based in Amsterdam, the Netherlands for an amount of € 4,017 in cash. The acquisition was accounted for as an acquisition of developed technology.

Net cash flows from financing activities

Our cash flow from financing activities amounted to € 78,731 in 2006, € 65,305 in 2005 and € 277 in 2004.

Proceeds from the issuance of share capital amounted in 2006 to € 82,797. The Company received proceeds of € 76,835 from the private placement of ordinary shares in November 2006. The remaining amount represents proceeds from the issuance of ordinary shares in relation to the exercise of employee stock options. In 2005, the company received proceeds from a private placement of ordinary shares in May 2005 of € 50,112. Together with the issuance of ordinary shares in relation to the exercise of employee stock options in the amount of € 7,423, the total proceeds from the issuance of share capital in 2005 amounted to € 57,535.

Crucell issued a mortgage loan contract to finance its production facility in Leiden, Netherlands. The Company used in 2006 € 8,109 (2005: € 8,982) of this loan. The mortgage amounts to € 17,091 as at December 31, 2006, which is the maximum amount under this contract. For further details reference is made to the “borrowings” described in this section.

Crucell entered into new finance lease contracts in 2006 with proceeds of € 6,493. These finance leases mainly relate to equipment for the new production and development facility in Leiden.

In 2006 Crucell repaid € 17,834 in loans that had been made to Berna Biotech. An amount of € 462 (2005: € 1,212, 2004: € 1,132) is related to repayments of finance leases.

Outlook

Continued investment in R&D is required to progress our development program in clinical trials and eventually obtain regulatory approval. We want to increase the overall effectiveness of our global sales network to increase product sales and among others sell more third-party products through our sales channels to gain additional revenue. We are expecting to reach operational cash break-even in 2007, despite increased investment in R&D, sales and marketing. Further guidance will be given during the year.

Quantative and Qualatative disclosure about Market risk

Market risk is the risk of loss related to adverse changes in market prices, including foreign exchange rates and interest rates, of financial instruments. During the ordinary course of business, the Group is exposed to various financial market risks, primarily from foreign exchange and interest rates and credit risk.

Foreign Exchange and Interest Rate Risk

Although we prepare our combined financial statements in Euro, most of our sales volumes, as well as most of our costs, (primarily those relating to manufacturing, selling, marketing, general and administrative functions, and research and development of products), are denominated in other currencies, primarily U.S. dollars, Swedish Kroner, Swiss Franc and Korean Won. The portions of our sales and expenses denominated in currencies other than the Euro are exposed to exchange rate fluctuations in the values of these currencies relative to the Euro. We are therefore subject to both transaction and translation risk. Exchange rate fluctuations may have substantial effects on our sales, our costs and our overall results of operations.

Transaction Risk

Transaction risk arises where sales of a product are generated in one currency but costs relating to those revenues are incurred in a different currency. In the case of transaction risk, changes in the value of the Euro relative to the U.S. dollar and other currencies generally have interrelated consequences. For example, an increase in the value of the Euro relative to the U.S. dollar and other currencies generally has these effects:

· Our margins (in Euros) decline or become negative to the extent our costs were incurred in Euros and the sales were generated in currencies weaker than the Euro, and

· Our competitiveness may decline as compared with competitors based in the countries with weaker currencies because our products manufactured in the Euro-zone will have been produced at constant costs (in Euro) while their (constant) costs denominated in weaker currencies will appear to have declined.

Conversely, a decrease in the value of the Euro relative to the U.S. dollar and other currencies generally has these effects:

· Our margins (in Euros) increase to the extent our costs were incurred in Euros and the sales were generated in currencies stronger than the Euro, and

· Our competitiveness may increase as compared with competitors based in the countries with stronger currencies because our products manufactured in the Euro-zone will have been produced at constant costs (in Buro) while their (constant) costs denominated in stronger currencies will appear to have increased.

If our non-Euro denominated expenses do not match our non-Euro denominated sales, this currency difference may have an adverse effect on our operative result.

Over time, transaction risk could adversely affect our cash flows and results of operations to the extent we are unable to reflect changes in exchange rates in the pricing of the products in local currency. Given our revenue and expense structure, in which most of our revenues are denominated in dollars but a substantial portion of the costs relating to those revenue are in Euro, we could experience pressure, on our gross margin in particular as a result of transaction risk. The effects of transaction risk are not quantified in our financial statements.

Translation Risk

Translation risk refers to the fact that the Euro-denominated amounts in our consolidated financial statements will differ based on the exchange rates we use to prepare our Euro-denominated financial statements. Our subsidiaries located outside the Euro zone prepare their financial statements in their local currencies. When we prepare our financial statements, we translate the local currency amounts in which the financial statements of our non-Euro zone subsidiaries are prepared into Euro. Changes in the value of

these currencies relative to the Euro from period to period therefore affect our results of operations and financial condition as expressed in Euro. Currency translation risks do not affect local currency cash flows or results of operations, but do affect our consolidated annual financial statements. In general, an increase in the Euro value relative to the U.S. dollar, Swiss Franc and Korean Won will result in a lower Euro value of the sales generated in currencies that have depreciate relative to the Euro. Even if the margin on these sales remains constant in a non-Euro currency, its value translated into Euro will be reduced.

Impact of inflation

Crucell does not operate subsidiaries in countries with hyperinflation. Sales to countries with hyperinflation are made in hard currency, mainly Euro, USD and CHF.

Derivative transactions

In general, the Group does not engage in derivative transactions to hedge its currency exposure. Prior to SBL’s acquisition by the Company, it had engaged in four forward exchange contracts to hedge its currency exposure. At December 31, 2006, the Group continued to hold these contracts. The terms of these contracts are as follows:

	Expiry date	Exchange rate	Fair value in Euros
Forward contracts to hedge expected future sales
Sell
€ 1,000	February, 20 2007	SEK/€ 9,181		€	1,016
€ 1,000	February, 28 2007	SEK/€ 9,220		€	1,021
€ 1,000	April, 10 2007	SEK/€ 9,311		€	1,031
Forward contracts to hedge expected future purchases
Buy
CHF 500	March, 5 2007	SEK/CHF 5,719		€	317

The total fair value of the forward exchange contracts at December 31, 2006 amounts to SEK 516 (€ 57). The Group did not have any additional derivative financial instruments at December 31, 2006.

The Group is currently in the process of determining the most optimal manner of mitigating the effects of its structural currency exposures. The Group did not apply formal hedge accounting in 2006.

Interest rate risk

We are exposed to interest rate risk through out fixed term deposits and loans. We have historically kept a substantial amount of cash and cash equivalents. These assets are mainly invested in instruments with contractual maturities ranging from three to twelve months, bearing interest at short-term rates. The Group has cash balances for an amount of € 172,200 of which € 14,396 is restricted (2005: € 111,700 of which € 13,322 is restricted). Details on these cash balances are provided in note 5.12 and 5.13 of the financial statement. There are no other receivables that generate interest.

The Group runs risks as a result of changes in market interest rates compared to its loans with fixed rates. The Group has several loans with fixed interest rates, which total € 46,413. For tabular information on the expected cash flows of the loans and additional information on the relevant contract terms see
“—sources of liquidity’’ in this section.

Credit risk

Credit risk represents the risk of financial loss caused by default of the counter party. The principal financial assets of the Group are cash and cash equivalents, short-term deposits, trade and other receivables and securities available for sale. These assets represent the Company’s maximum exposure to credit risk in relation to financial assets. The Company’s credit risk is primarily attributable to its trade and other receivables. The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis. Allowances are recognized for receivable balances deemed uncollectible upon identification.

The credit risk on cash and cash equivalents, and short-term deposits is limited because the counter parties are banks with high credit ratings assigned by international credit-rating agencies. The credit risk for the securities available for sale is limited as these stocks are traded in an active market.

Price risk

In addition to currency risks and interest rate risks the Company is exposed to other market price risks in relation to its financial instruments due to changes in the market prices. The Company has no direct influence on this risk. Specifically the investment in Galapagos, which is valued at fair value, is subjected to this risk.

Liquidity risk

Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The liquidity risk is considered to be limited as the Group has sufficient funding to meet its obligations in the forthcoming period. The Group has a total cash balance of € 157,800 as per December 31, 2006 (2005: € 111,700).

Fair values

The fair values of the financial instruments of the Group approximate the carrying amount of the Group’s financial instruments, except for the following:

· a loan entered into by Berna Biotech Korea Corp. with an amount of € 5,819. The fair value of this loan is estimated to be € 6,082 as the current interest rate in the market is higher than the interest percentage of the loan.

· The total fair value of the forward exchange contracts as per December 31, 2006 amounts to SEK 516 (€ 57).

The fair values of the loans have been calculated by discounting the face values with the interest rate of financial instruments with a similar risk profile and term. The fair values of the forward exchange contracts were calculated making use of the spot rate of the underlying exchange rates as per December 31, 2006.

Trend information

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

Off-balance sheet arrangements

As of December 31, 2006 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.

The Company has an investment in an associate and two investments in joint ventures. Details on these investments are provided in note 5.9 of the financial statements.

Tabular disclosure of contractual obligations

Future minimum payments for all contractual obligations for years subsequent to December 31, 2006 are as follows:

	Total	Less than one year		1-3 years		3-5 years		More than 5 years
*Contractual Obligations*
Long-term debt obligations (excluding finance lease obligations)	41,146		1,792		21,870		2,246		15,238
Finance lease obligations(1)	6,967		1,139		1,645		2,046		2,137
Operating lease obligations(2)	11,100		3,897		4,597		2,495		111
Capital expenditure commitments(3)	11,693		11,693		—		—		—
Total	70,906		18,521		28,112		6,787		17,486

(1) Finance lease obligations

Certain of the Company’s fixtures and equipment are finance leases. The finance leases mainly relate to equipment for the new production facility in Leiden, the Netherlands. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The fair value of the company’s lease obligations approximates their carrying amount.

(2) Operating lease obligations

Crucell leases certain motor vehicles and items of machinery and equipment.

(3) Capital expenditure commitments

The remaining contractual commitments for purchases of property, plant and equipment amount to approximately € 11,693.These commitments mainly relate to the new production facility in Leiden, the Netherlands.

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.

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. Our Supervisory Board nominates its members. To be binding, there must be at least two nominees for each vacancy on the Supervisory 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 the Supervisory Board does not make any nominations within three months after the vacancy has occurred, our general meeting of shareholders can fill Supervisory Board vacancies. If the Supervisory Board 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 if the resolution to suspend or dismiss a Supervisory Board member is not proposed by our Supervisory Board. Within three months after a suspension, our general meeting of shareholders must either dismiss the Supervisory Board member, 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, until the end of our 2004 fiscal year we paid our Supervisory Board members in options on our ordinary shares as well as cash, and as of the beginning of our 2005 fiscal year in ordinary shares and cash, or cash only, at the member’s discretion 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 April 30, 2007 our Supervisory Board members held an aggregate of 0.14% of our ordinary shares. See “Share Ownership.”

The following table sets forth the name, age and position of the members of our Supervisory Board:

Name	Age		Position	Service period according to rotation scheme
Pieter Strijkert(1)		71
Jan Oosterveld(2)		63	Chairman		2008
Phillip Satow		65	Member		2009
Claes Wilhelmsson		68	Member		2011
Seán Lance		59	Member		2011
Arnold Hoevenaars		58	Member		2009
Dominik Koechlin		48	Member		2010
Jürg Witmer(3)		58
Claude Thomann(3)		55

(1) Mr. Strijkert resigned from the Supervisory Board on June 2, 2006.

(2) Mr. Oosterveld was appointed Chairman on June 2, 2006.

(3) Mr. Witmer and Mr. Thomann resigned from the Supervisory Board on June 1, 2007.

At the extraordinary general meeting of shareholders, scheduled in relation to the exchange offer for the Berna Biotech shares, held on January 10, 2006, the proposal to appoint 3 new members of the Supervisory Board, upon the exchange offer becoming or being declared unconditional, was adopted. Subsequent to the declaration in February 2006 that the exchange offer was unconditional, Mr. Koechlin, Mr. Witmer and Mr. Thomann, all former members of the supervisory board of Berna Biotech, joined our Supervisory Board.

The following paragraphs contain brief biographies of each of our Supervisory Board members:

Jan Oosterveld has served as chairman of our Supervisory Board since June 2006. He retired from Royal Philips Electronics N.V. on April 1, 2004, after an international career of 32 years. At his retirement he was responsible for Corporate Strategy, Corporate Alliances and the joint ventures with LGE on Cathode Ray Tubes (CRTs) and Liquid Cristal Displays (LCDs). In the latter responsibility he was the chairman of the board of LG. Philips Ltd, which went public in April 2004, and vice-hairman 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 was appointed as member during the annual general meeting of shareholders on June 3, 2004. Alternately 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 Satow has 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 was executive vice president of marketing at Forest Laboratories, Inc. From 1998 to 1999 he was president of Forest Pharmaceuticals, and executive vice president of Forest Laboratories Inc. In addition to the Forest Laboratories Board which he served on from 1999 to 2005, Mr. Satow was formerly a member of the board of Eyetech Pharmaceuticals Inc. Mr. Satow is currently Chairman of the board of directors and CEO of JDS Pharmaceuticals LLC, a privately held pharmaceutical company. Mr. Satow received a Masters in Economics from Georgetown University and a B.A. degree from Columbia College.

Claes Wilhelmsson has 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 working for 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 Lance has 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 Hoevenaars has served as a member of our Supervisory Board since June 2005 and has been attending our Supervisory Board meetings as an observer since July 2004. 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 CFO of Royal Boskalis Westminster N.V.

Dominik Koechlin has served as a member of our Supervisory Board since February 2006 upon settlement of Crucell’s exchange offer for Berna Biotech AG, where he was a member of the Board of Directors. His career began in 1986 as a financial analyst at Bank Sarasin & Cie in Basel. In 1990 he was a founding partner of Ellipson AG, a consultancy specialized in strategy, corporate finance and sustainability. In 1996 he became a member of the executive board of Telecom PTT, now known as Swisscom AG. In 1999 he took over responsibility for all of Swisscom’s international participations. He has served on the boards of Debitel AG (Stuttgart), Bluewin AG, Swisscom USA, SAM and was chairman of the board of UTA (Vienna) and a member of the supervisory board of Cesky Telecom (Prague). He is currently a member of the supervisory boards and audit committees of LGT Bank (Liechtenstein), EGL AG and Swissmetal AG, and a board member at M2, Corris AG, Avaloq and the University of Basel.

Jürg Witmer has served as a member of our Supervisory Board since February 2006 upon settlement of Crucell’s exchange offer for Berna Biotech AG, where he was a member of the board of directors. Dr Witmer started his professional career in 1978 as legal counsel of Hoffmann-La Roche AG in Basel. In 1982 he was appointed as personal assistant to the CEO of the Roche Group and in 1984 became regional manager of Roche Far East, based in Hong Kong. He was promoted to general manager in 1988 before returning to Switzerland as head of corporate communications and public affairs at Roche. In 1994 he took over as general manager of Roche’s operations in Austria and parts of Eastern Europe, before becoming CEO at Givaudan Group in Geneva. In this function he lead the spin-off of Givaudan from the Roche Group and its Swiss stock exchange listing. In April 2005 he took over the chair of the board of directors of Givaudan. Dr Witmer is also a member of the board of directors of Bank Sal. Oppenheim Jr. & Cie (Schweiz) AG, Syngenta AG and Clariant AG.

Claude Thomann has served as a member of our Supervisory Board since February 2006 upon settlement of Crucell’s exchange offer for Berna Biotech AG, where he was a member of the board of directors. He began his career as a lawyer in 1979 at the Kellerhals firm in Berne where he became a partner in 1985 and managing partner from 1989 to 2000. He is a member of the board of directors of Securitas AG (Bern), Keymile Holding AG (Freienbach SZ), Keymile AG (Bern) and Bonotec AG (Konolfingen BE) and former chairman of the Medicinal-Cluster Berne and of the Compensation Fund of the Bernese Entrepreneurs. Dr Thomann is also managing director of various employers’ associations and legal advisor to the Swiss Cancer League and the Swiss Institute for Applied Cancer Research.

Remuneration Committee

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), Claes Wilhelmsson, Jan Oosterveld and Jürg Witmer.

Audit Committee

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 is responsible 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 Arnold Hoevenaars (chairman), Seán Lance and Dominik Koechlin.

Nomination Committee

Our Supervisory Board has established a nomination committee. The nomination committee consists of all Supervisory Board members. This committee (a) draws up selection criteria and appointment

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 members to the Supervisory Board.

Scientific Committee

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 is responsible 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:

· expand into a new, or cease an existing, line of business;

· participate in, sell an interest in, or change its participation in, or otherwise take an interest in, or assume the management of another business enterprise;

· enter into, terminate or amend any joint venture or pooling arrangement;

· acquire fixed assets exceeding price limits set by the Supervisory Board; and

· enter into financial commitments exceeding price limits set by the Supervisory Board or for longer than a year.

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 nominations made by our Supervisory Board. A member of the Management Board may be appointed or reappointed for a term of not more than four years at a time. To be binding, 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 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 if the resolution to suspend or dismiss a Management Board member is not proposed by our Supervisory Board. 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, date of appointment and position of the members of our Management Board are:

Name	Date of appointment	Position
Ronald H.P. Brus	January 26, 2004	Chairman of the Management Board, president and chief executive officer
Leonard Kruimer	January 1, 2005	Chief financial officer
Jaap Goudsmit	January 26, 2004	Chief scientific officer

Management Board Service Contracts

The contracts for the Management Board members have been entered into for an indefinite period and provide for a notice period of up to six months upon termination by us and a notice period of three months upon termination by the individual. A dismissal arising from an unwanted change of control will result in a severance arrangement limited to two years’ worth of base salaries for the Management Board members.

The contracts of the Management Board members contain non-compete provisions that would apply for a period of one year after the end of their employment with us.

Management committee

We have a management committee that advises the Management Board on strategic, general managerial and executive matters and assists the Management Board in implementing these matters. 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 generally meets once a month, and works closely with other members of our management team. Our Management Board may establish rules governing its relationship with our management committee. Our Supervisory Board must approve the adoption of and any changes to these rules.

As a result of the acquisition of Berna Biotech, Kuno Sommer and Simon Rothen joined our management committee in March 2006. 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	43	Chairman of Management Board, president and chief executive officer
Leonard Kruimer	48	Chief financial officer
Jaap Goudsmit	55	Chief scientific officer
Simon Rothen	44	Chief operations officer
Kuno Sommer	50	Chief business officer
René K. Beukema	43	General counsel and corporate secretary
Arthur Lahr	38	Chief strategy officer and executive vice president sales & 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. Brus is chairman of the Management Board and president and chief executive officer since January 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 until 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.

Leonard Kruimer became a member of the Management Board on January 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.

Jaap Goudsmit is a member of the Management Board since January 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 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.

Simon Rothen, served as chief operations officer of Berna Biotech since 2004. He joined Berna Biotech in 1998 where he fulfilled several positions in production, quality, IT/IS, supply chain and operations. He studied at and worked for Novartis biotechnology at ETH Zurich where he earned his Ph.D. in bioprocess engineering in 1997, before joining Berna Biotech Pharma Biotechnology Development & Production (Technical Cell Biology).

Kuno Sommer was chief executive officer of Berna Biotech from 2000 until 2006. He studied economic science at Basel University and earned a doctorate in political science. Before 1990, he held various positions with Roche AG Vitamin Marketing. From 1990 to 1994, he served as head of the North American branch of the Roche animal feed and health division. From 1995 he served as manager of Roche global marketing for the vitamin and speciality chemicals division in Basel. Mr. Sommer was CEO of Givaudan-Roure in Geneva and member of the executive committee of Roche AG in 1998/99.

René K. Beukema has 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.

Arthur Lahr is Crucell’s chief strategy officer and executive vice president sales & business development. He joined Crucell in April 2001 as executive director business development, was appointed vice president business development in December 2003, a member of the management committee in January 2004, executive vice president in January 2006 and assumed responsibility for European marketing & sales and company strategy in the summer of 2006. From 1994 to 2001 he was a consultant with 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 Netherlands.

Disclosure Committee

The disclosure committee is 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 selected senior managers. 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 disclosure committee is an integrated part of our organization and is an essential to our internal controls over financial reporting. The disclosure committee and additional actions taken for further improvement of disclosure and internal controls are intended to help us comply with the requirements of the Sarbanes-Oxley Act of 2002 and regulations promulgated by the Securities and Exchange Commission under that Act.

Remuneration of the Management Board and Supervisory Board

Remuneration Policy

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 our value. 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.

The remuneration committee has advised the Supervisory Board on the remuneration policy and structure for the Management Board. The Supervisory Board reviewed the remuneration policy. The annual general meeting of shareholders has approved the current remuneration policy. The remuneration policy is based on the following key principles:

· overall remuneration levels need to be sufficient to attract, retain and motivate top management given the dynamic business environment in which we compete for talent;

· base salaries should be broadly in line with average market levels, whereas short- and long-term incentive levels should reflect an upside potential in case of outstanding performance;

· to enhance the effectiveness of the short-term incentive, clearly measurable and challenging targets are set, which reflect our strategic focus in the short-term; and

· the long-term incentive plan should ensure a focus on longer-term strategic performance targets, which aim for shareholder alignment and motivation and retention of qualified executives.

Remuneration structure 2006. The balance in fixed and variable pay for at target performance for the CEO amounts to 48% fixed and 52% variable compensation. For the other two Management Board members, the balance equals 54% fixed and 46% variable compensation.

Base Salary. In 2006, base salary levels of the Management Board have been increased by 2% in order to account for an inflation correction. Each consecutive year the Supervisory Board considers whether base salary levels should be adjusted by taking account of our external and internal business environment.

Short-term incentive. At the annual general meeting of shareholders in 2005, our shareholders approved the short-term share-based incentive plans, which has not been changed since. The short-term incentive is linked to the achievement of predetermined collective milestones in combination with a budget hurdle and individual milestones. The collective milestones are based on pre-determined annual milestones for research, development, business development, finance, intellectual property and corporate legal affairs. The specific details of the milestones are not disclosed as these qualify as commercially sensitive information. All predetermined collective milestones are contingent upon achievement of our annual pre-determined cash burn rate, which we define as the amount of net cash spent as a result of our operations.

In addition, part of the short-term incentive award is based on individual milestones, assessed on the basis of predefined measurable milestones set for each executive. These milestones depend on the specific responsibilities of the individual and are approved by our Supervisory Board. All milestones linked to the short-term incentive plan are revised annually and approved by our Supervisory Board to ensure that they remain challenging but realistic.

The table below shows the relative weight of the collective and individual milestones:

Management Board	Collective milestones			Individual milestones
CEO, CFO, CSO		70	%		30	%

The target bonus of the CEO amounts to 75% of base salary and for the chief financial officer and chief scientific officer a target bonus of 60% of base salary is applicable. In the event performance exceeds expectations to a considerable extent, up to 125% of the target bonus could be rewarded as a maximum bonus.

The bonus is payable in restricted shares or cash, at the option of the participant. Our Management Board members are encouraged to opt for restricted shares to maximize alignment of shareholders’ interest. Therefore when opted for cash, a penalty of up to 25% reduction will be applied.

Long-term incentive. At the annual general meeting of shareholders in 2005, our shareholders approved the long-term share-based incentive plan, which has not been changed since.

Target long-term incentive levels amount to 34% of base salary for the CEO and 26% for the chief scientific officer and the chief financial officer. When achieving maximum performance, a maximum of 200% of the target award can be awarded. Overall, no vesting takes place for below median performance.

The performance shares will be conditionally granted and vest if pre-set performance targets have been met at the end of a three-year performance period. The performance targets are based on a combination of absolute share price growth on the stock markets, and our Total Shareholder Return (“TSR”). TSR reflects the return received by a shareholder, taking into account both the change in share price and dividends received, while assuming dividends are re-invested in us.

The absolute share price growth serves as a hurdle which must be overcome to qualify for any possible vesting of the shares. After the share price hurdle is met, the TSR performance measurement is twofold: relative to a peer group consisting of 26 constituents of the Goldman Sachs European Biotech Index and relative to the NASDAQ Biotech Index. Fifty percent of the conditionally awarded shares vest subject to our ranking within the Goldman Sachs European Biotech Index on the date of vesting. The table below shows the vesting scheme:

Goldman Sachs European Biotech Index Vesting Scheme

Ranking	Vesting as % of 50% of target award
1		200	%
2		183	%
3		167	%
4		150	%
5		133	%
6		117	%
7		100	%
8		89	%
9		79	%
10		68	%
11		57	%
12		46	%
13		36	%
14		25	%
15–27		0	%

The remaining fifty percent of the conditionally granted performance shares vest based on the positive difference in percentage-points between Crucell’s American Depository Shares (ADS), TSR performance and the NASDAQ Biotech Index. The following table shows the vesting scheme:

NASDAQ Biotech Index Vesting Scheme

Positive difference in Crucell’s TSR performance and the NASDAQ Biotech Index	Vesting as % of 50% in % points of target award
³ 50		200	%
³ 35 and < 50		150	%
³ 20 and < 35		100	%
³ 10 and < 20		50	%
³ 0 and < 10		25	%
< 0		0	%

In December 2005, 36,842 LTI Plan shares were granted to selected executives, of which 28,582 were granted to members of the Management Board. There were no forfeitures of the LTI Plan grants through 31 December 2006 and all shares granted were unvested as of year-end. No LTI plan shares were granted in 2006.

Pension. At the beginning of our 2005 fiscal year a new pension plan for our Management Board was introduced. The new plan is still a defined contribution plan, with a pensionable age of 65 years. Both the employer and the employee contribution are adjusted with regard to the fiscal requirements. The employee contribution is set at 7% of the pensionable salary (base pay minus an offset). The table below outlines the annual contribution rates, including the employee contribution. The risk premium for the survivor’s pension is financed separately by the employer.

Total contribution rates for our Board members

Age	Contribution rate
25 to 30		8.4	%
30 to 35		10.2	%
35 to 40		12.5	%
40 to 45		15.2	%
45 to 50		18.7	%
50 to 55		23.0	%
55 to 60		28.6	%
60 to 65		36.1	%

Management Board

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

	2006	2005	2004
	(In thousands of Euro)
Salaries	1,005	874	598
Bonuses	893	1,058	494
Pension costs	205	189	215
Severance costs(1)	—	—	454
Other	37	58	170
	2,140	2,179	1,931

(1) In connection with his stepping down as our chief executive officer, president and chairman of our Management Board, we agreed to pay Mr. Valerio an amount equal to € 454 in severance and up to € 19 as partial compensation for advisory costs. On January 26, 2004, we also entered into an advisory agreement with Mr. Valerio under which he received an advisory fee totaling € 227 through the end of 2004.

The remuneration of the individual members of our Management Board during 2006, excluding stock options, was as follows:

	2006
Name	Salaries		Bonuses(1)		Pension Costs(2)		Other Costs(3)		Total
	(In thousands of Euro)
R. H.P. Brus		400		391		28		—	819
J. Goudsmit		330		260		152		21	763
L. Kruimer		275		242		25		16	558
Total		1,005		893		205		37	2,140

(1) Bonus expense includes the grant date fair value of the short-term incentive plan, including compensation for wage taxes.

(2) “Pension Costs” include pensions, social security costs and disability insurance. Disability insurance costs represent 19.3% of the pension cost.

(3) “Other costs” include company cars.

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 the defined contribution plan, and we do not have further pension obligations beyond the annual premium contribution.

Supervisory Board

In 2005 and 2006, compensation of Supervisory Board members consists of a fixed fee in cash and an annual share grant. The fixed fee in cash amounts to € 25 per Supervisory Board member. The chairman receives a fixed fee of € 40. The annual share grant awarded to each member of the Supervisory Board is equal to 2,500 ordinary shares. This amount will be revised every 3 years. The shares should be held for as long as an individual is a member of the Supervisory Board. Instead of the share grant, a Supervisory

Board member may also choose to receive a cash amount equaling the value of 2,500 shares at the date of grant minus 25%. An allowance of € 10 is awarded annually to the chairman of the Supervisory Board.

In 2004 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.

The individual members of the Supervisory Board received the following remuneration, excluding stock options.

	2006	2005	2004
Pieter Strijkert	16.7	44.9	24.9
Jan Oosterveld	38.7	25.0	22.5
Arnold Hoevenaars	25.0	25.0	N/A
Seán Lance	25.0	25.0	22.5
Phillip Satow	25.0	25.0	20.0
Claes Wilhelmsson	25.0	25.0	20.0
Dominik Koechlin(1)	25.0	N/A	N/A
Jürg Witmer(1)	25.0	N/A	N/A
Claude Thomann(1)	25.0	N/A	N/A
Jean Deleage(2)	N/A	N/A	5.0
Patrick van Beneden(3)	N/A	N/A	5.0
Total	230.4	169.9	119.9

(1) Mr Koechlin, Mr. Witmer and Mr. Thomann were appointed member of the Supervisory Board on June 2, 2006, but have attended meetings since January 2006.

(2) Mr. Deleage resigned from the Supervisory Board in June 2004.

(3) Mr. van Beneden resigned from the Supervisory Board in June 2004.

For details regarding share and option ownership by our Supervisory Board members, see “Share and Option Ownership”.

Share and Option Ownership

As of December 31, 2005 and 2006 and April 30, 2007, members of our Management Board and Supervisory Board held the following options and the following ordinary shares as of April 30, 2007.

Name of holder	Numbers of ordinary shares held as of April 30, 2007		% of total ordinary shares		Options held as of December 31, 2005		Year of expiration		Exercise price(s) in Euros		Granted 2006		Exercised 2006		Forfeited 2006		Options held as of December 31, 2006		Options held as of April 30, 2007
Management Board:
Ronald H.P. Brus		142,699				250,000		2009		9.40		—		—		—		250,000		250,000
						225,000		2011		3.49		—		25,000		—		200,000		200,000
						90,000		2011		2.64		—		—		—		90,000		90,000
						125,000		2011		5.94		—		—		—		125,000		125,000
Jaap Goudsmit		151,240				100,000		2006		5.92		—		100,000		—		—		—
						100,000		2006		3.66		—		100,000		—		—		—
						85,000		2009		9.40		—		—		—		85,000		85,000
						60,000		2011		2.64		—		—		—		60,000		60,000
						125,000		2011		5.94		—		—		—		125,000		125,000
Leon Kruimer		22,084				85,000		2009		9.40		—		—		—		85,000		85,000
						105,000		2011		3.49		—		40,000		—		65,000		65,000
						125,000		2011		5.94		—		—		—		125,000		125,000
Subtotal		316,023		0.49		1,475,000						—		265,000		—		1,210,000		1,210,000
Supervisory Board:
Jan Oosterveld		7,000				10,000		2009		8.81		—		—		—		10,000		10,000
						10,000		2009		11.55		—						10,000		10,000
Phillip Satow		61,300				10,000		2009		11.55		—		—		—		10,000		10,000
						22,000		2011		3.49		—		—		—		22,000		22,000
						10,000		2011		6.48		—		—		—		10,000		10,000
Claes Wilhelmsson		5,000				10,000		2009		11.55		—		—		—		10,000		10,000
						10,000		2011		6.48		—		—		—		10,000		10,000
Seán Lance		—				10,000		2009		11.55		—		—		—		10,000		10,000
						10,000		2011		8.81		—		—		—		10,000		10,000
Arnold Hoevenaars		5,000				5,000		2009		8.81		—		—		—		5,000		5,000
						10,000		2009		11.55		—		—		—		10,000		10,000
Dominik Koechlin		6,341				—		—		—		—		—		—		—		—
						—		—		—		—		—		—		—		—
Jürg Witmer		17,160				—		—		—		—		—		—		—		—
						—		—		—		—		—		—		—		—
Claude Thomann		5,001				—		—		—		—		—		—		—		—
						—		—		—		—		—		—		—		—
Subtotal		106,802		0.16		117,000						—		—		—		117,000		117,000
Total		422,825		0.65		1,592,000						—		265,000		—		1,327,000		1,327,000

Options generally expire in December or January of the relevant year.

We account for stock-based compensation in accordance with the provisions of IFRS 2 Share based payment. 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. Further reference is made to the notes to the financial statements.

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 and the Dutch corporate governance code (the “Code”), which came into effect as of the financial year starting on or after January 1, 2004. According to Dutch law, 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 current or following financial years.

Important principles of the Code are:

· strengthening the role of the Supervisory Board and its committees and to increase its independence, quality and expertise;

· strengthening the role of the shareholders with respect to control on the functioning of the Management Board and the Supervisory Board, as well as with respect to nomination and remuneration of members of the Management Board and the Supervisory Board;

· facilitating and stimulating shareholders to use their voting power and to actively participate in the general meeting of shareholders;

· defining the role of the external auditor vis-à-vis the Supervisory Board as its principal contact; and

· maintaining an appropriate internal risk and control system.

We refer to item 15, “Controls and Procedures’’ for our management’s report on internal control over financial reporting as required by section 404 of the Sarbanes-Oxley Act of 2002.

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:

· We are exempt from Nasdaq’s quorum requirements applicable to meetings of shareholders. In keeping with Dutch law and Netherlands generally accepted business practice, our articles of association provide that there are no quorum requirements generally applicable to general meetings of shareholders.

· We are exempt from Nasdaq’s requirements regarding the solicitation of proxies and provision of proxy statements for meetings of shareholders. We inform shareholders of meetings in a public notice, but we do not solicit proxies for general meetings of shareholders. Dutch law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in The Netherlands. In connection with our American Depositary Shares (“ADSs”), the Bank of New York, as depositary under our depositary agreement relating to our ADSs, distributes proxy materials to holders of our ADSs.

· We are exempt from Nasdaq’s requirements regarding shareholder approval. In keeping with Dutch law and Netherlands generally accepted business practices, our articles of association do not include a shareholder approval requirement. Our articles of association provide that the general meeting of shareholders may resolve to amend our articles of association, or dissolve, merge or demerge the Company, if our Supervisory Board first proposes the measure.

· We do not distribute annual reports to all of our shareholders in accordance with Nasdaq rules. As our shares are bearer shares according to Dutch law, we are not able to distribute to shareholders copies of annual and interim reports. Copies of such reports are available to shareholders at our corporate headquarters, and are filed with Nasdaq and the Bank of New York as depositary under our depositary agreement relating to our ADSs. Under the terms of the depositary agreement, the Bank of New York distributes our annual reports to holders of our ADSs.

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, 2006, we had 1,073 employees.

	2006	2005			2004
Research and Development	313		240			171
General and administrative	125		42	(*)		39	(*)
Operations	539		—			—
Marketing and sales	96		—			—
Total	1,073		282			210

* The 2004 and 2005 figures for general and administrative also include business development positions.

The Group employs personnel in the Netherlands, Switzerland, Spain, Italy, Korea, Sweden, the United States. The split per geographical area is as follows:

	2006	2005		2004
Europe	902		282		210
North America	17		—		—
Asia	154		—		—
Total	1,073		282		210

In compliance with Dutch legal requirements, Crucell has a workers council for our employees in the Netherlands. 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.

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

The following table sets forth certain information concerning the beneficial ownership of our ordinary shares as of April 30, 2007 by:

· each shareholder who is known by us to beneficially own (approximately) 5% or more of our outstanding ordinary shares; and

· our Supervisory Board members and Management Board members, each as a group.

Percentage of beneficial ownership is based on an aggregate of 64,802,325 ordinary shares outstanding at April 30, 2007 except as otherwise noted:

	Ordinary Shares Beneficially Owned(1)
Beneficial Owner	Number of Ordinary Shares		Holding (%)
A. van Herk B.V.		6,967,956		11.8	(2)
Global Opportunities (GO) Capital Asset Management B.V.		4,716,106		8.0	(3)
Aviva plc		3,514,230		5.9	(4)
Ordinary shares held by our Management Board members		316,023		0.49
Ordinary shares held by our Supervisory Board members		106,802		0.16

(1) Under Rule 13d-3 of the Exchange Act, more than one person may be deemed to beneficially own certain ordinary shares (if, for example, persons share the power to vote or the power to dispose of the ordinary shares). In addition, a person is deemed to beneficially own ordinary shares if the person has the right to acquire the ordinary shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. As a result, the percentage of outstanding ordinary shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of ordinary shares actually outstanding. In addition, filings with The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) with respect to shareholdings in public companies do not specify the number of shares held by the filing party.

(2) Percentage holding is derived from a filing made by A. van Herk B.V. with The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten).

(3) Percentage holding is derived from a filing made by Global Opportunities (GO) Capital Asset Management B.V. with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten).

(4) Percentage holding is derived from a filing made by Aviva plc. with The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten).

As of April 30, 2007 there were 10,919,295 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 April 30, 2007 represent 16.9% of our ordinary shares that were issued and outstanding on that date.

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

Obligations of Shareholders to Disclose Holdings under Dutch law

On 1 October 2006, the Act on Disclosure of Voting and Capital Interest in Listed Companies (the “Act on Disclosure”) came into force in the Netherlands. As part of the introduction of the new Act on Disclosure, listed companies were obliged to notify their capital interest and voting rights as at October 1, 2006 to the AFM before October 27, 2006 and investors with a substantial shareholding or priority shares as at November 1, 2006 had to notify the AFM before November 29, 2006.

As of January 1, 2007, the Act on Disclosure is incorporated in the new Financial Supervision Act. Under the Act on Disclosure and, since January 1, 2007, the Financial Supervision Act and the decree regarding disclosure of holding, partly implementing the Transparency Directive, any person who, directly or indirectly, acquires or disposes of an interest in the capital and/or the voting rights of a public limited liability company incorporated under Dutch law with an official listing on a stock exchange within the European Economic Area must immediately give written notice to the Dutch securities regulator AFM by means of a standard form, of such acquisition or disposal if, as a result of such acquisition or disposal, the percentage of capital interest and/or voting rights held by such person meets, exceeds or falls below the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.

The notification requirement also applies if a person’s capital interest or voting right meets, exceeds or falls below the above mentioned thresholds as a result of a change in the share capital or voting rights, and the notification must be made no later than the fourth trading day after the AFM has published our notification as described in the following sentence. We are required to notify the AFM immediately if our share capital or voting rights change by 1% or more since the previous notification. Other changes must be notified periodically.

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 on its website. Noncompliance with the obligations of the Financial Supervision 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 Financial Supervision Act, including suspension of the voting rights in respect of such person’s ordinary shares.

Related Party Transactions

Transactions Involving Our Senior Management

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 is 3.5% per annum since 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 April 30, 2007			Current Interest Rate
Ronald H.P. Brus		€	132		€	99		3.5	%
Jaap Goudsmit		€	25		€	8		3.5	%
René K. Beukema		€	59		€	52		3.5	%

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.

Item 8. Financial Information

See Item 17, “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, except for those disclosed in Item 4.

Dividends and Dividend Policy

Neither we or our principal subsidiaries have paid any paid dividens in 2006. We do not intend to pay dividends on our ordinary shares for the coming years, and thereafter only on the condition that our financial performance is adequate and it is in the shareholders’ interest to pay dividends instead of investing the proceeds into the company. 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, 2006, the date of our most recent audited financial statements.

Item 9. The Offer and Listing

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

As of April 30, 2007, 64,984,325 ordinary shares were issued and outstanding. On the same date, there were 10,919,295 ADSs, each representing one ordinary share.

Our ordinary shares have been listed on Eurolist by 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”. Since 22 February 2006, our shares have been listed on the SWX Swiss Exchange in Zürich, under the symbol “CRX” as a result of our acquisition of Berna Biotech.

The following table sets forth the range of high and low closing prices, in U.S. dollars, for our ADSs on the Nasdaq National Market for the periods indicated.

	ADSs
	High	Low
Annual information for the past five years
2002	6.40	2.45
2003	6.16	1.54
2004	13.77	6.38
2005	29.95	12.30
2006	28.82	17.27
Quarterly information for the past two years
2005
First Quarter	15.29	12.30
Second Quarter	24.64	14.20
Third Quarter	26.81	20.00
Fourth Quarter	29.95	23.85
2006
First Quarter	28.62	23.92
Second Quarter	28.82	17.27
Third Quarter	24.40	17.75
Fourth Quarter	25.63	22.83
2007
First Quarter	28.96	23.85
Monthly information for the most recent six months
December 2006	25.63	24.24
January 2007	27.63	26.00
February 2007	28.96	25.27
March 2007	26.73	23,85
April 2007	26.01	25.34
May 2007	25.97	22.70

Our ordinary shares trade on Eurolist by 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.

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 Shares
	High	Low
Annual information for the past five years
2002	7.29	2.50
2003	4.92	1.40
2004	10.10	4.83
2005	24.77	9.50
2006	23.49	14.04
Quarterly information for the past two years
2005
First Quarter	11.67	9.50
Second Quarter	20.39	10.29
Third Quarter	22.01	16.30
Fourth Quarter	24.77	19.72
2006
First Quarter	23.49	20.07
Second Quarter	23.29	14.04
Third Quarter	19.29	14.58
Fourth Quarter	19.61	17.53
2007
First Quarter	22.27	18.30
Monthly information for the most recent six months
December 2006	19.50	18.16
January 2007	21.15	19.92
February 2007	22.27	19.28
March 2007	19.90	18.30
April 2007	19.35	18.72
May 2007	19.15	16.87

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 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). 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 4-6, 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.

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Corporate Purpose

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

Limitation of Liability and Indemnification Matters

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

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

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.

Share Capital

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

At December 31, 2006, there were 64,802,325 ordinary shares issued and outstanding. No preference shares are currently issued and outstanding. The ordinary shares can be issued in bearer or registered form. The preference shares can only be issued in registered form. No share certificates will be issued for shares in registered form.

Ordinary Shares

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 Euronext Amsterdam.

Bearer Ordinary Shares

All of our bearer ordinary shares are 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.

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Registered Ordinary Shares

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

Preference Shares

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 objective is to safeguard the interests of us, our business and parties connected therewith by blocking any influences that may threaten these interests, which interests may include the continuity, indentity or identity of us, our business and the parties connected therewith. The preferred foundation can safeguard these interests through acquiring and managing our preference shares and by exercising the rights attaching to these shares, in particular, the voting rights.

The agreement between us and the Preferred Foundation was amended to grant an option to the Preferred Foundation to acquire a number of preference shares equal to the number of our outstanding shares, necessary to match the total number of statutory votes on all of the ordinary shares then outstanding. The amendment allows the Preferred Foundation to acquire a number of shares equal to 100% of our then outstanding shares; prior to the amendment, it could only acquire a number of shares equal to 50% of our then outstanding shares. The new agreement was explained to our shareholders at the annual general meeting of shareholders in 2005. 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. Jan Oosterveld, 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:

· voluntary retirement, reaching the age of 72, death or bankruptcy;

· for our non-independent members, resignation, or dismissal by the members of our Supervisory Board;

· for our independent members, if they cease to be independent;

· dismissal by the complete board of the Preferred Foundation; or

· periodic retirement in accordance with a rotation plan to be drawn up by the Preferred Foundation’s board of governors, however, these members may be reappointed.

Issue of Shares and Pre-emptive Rights

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 of such issuance. Our Management Board is the authorized corporate body (orgaan) for this purpose until June 1, 2010 and this authorization may at

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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 grant 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 ordinary shares issued to a person who exercises a previously-acquired right to subscribe for ordinary shares. Holders of preference shares do not have pre-emptive rights if we issue ordinary shares, and holders of ordinary shares have no pre-emptive rights to purchase preference shares if we issue preference shares.

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 June 1, 2010 and the general meeting of shareholders may at any time extend this authorization for periods of up to five years.

Our shares cannot be issued below par. 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.

Acquisition by Us of Shares in Our Own Capital

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

· our general meeting of shareholders has authorized our Management Board to acquire the shares;

· the authorization specifies the number of shares which we may acquire, the manner in which they may be acquired and the limits within which the price must be set;

· our shareholders’ equity, after deduction of the price of acquisition, is not less than the sum of the paid and called up portion of the share capital and the reserves that provisions of Dutch law or our articles of association require us to maintain; and

· the aggregate par value of the shares to be acquired, together with the shares in our share capital that we already hold directly, indirectly or as pledgee, does not equal more than one-tenth the aggregate par value of our total issued share capital.

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.

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Capital Reduction

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.

Other Key Provisions of our Articles of Association

Voting Rights and Shareholders’ Meetings

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:

· shareholders and holders of depositary receipts for shares together representing at least one-tenth of our outstanding share capital request it in writing, listing the topics to be discussed; and

· our Management Board or our Supervisory Board deems appropriate.

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 or preference, 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 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.

Annual Report

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”.

Dividends

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 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.

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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.

Amendment of Our Articles of Association and Liquidation Rights

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. 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 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:

· the United States court assumed jurisdiction on grounds which are acceptable from an international law perspective;

· the final judgment results from proceedings compatible with Dutch concepts of due process; and

· the final judgment does not contravene public policy of The Netherlands.

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 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

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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.

On April 13, 2005 we entered into a manufacturing contract with the Vaccine Research Center (VRC), part of the National Institute of Allergy and Infectious Diseases (NIAID) of the National Institutes of Health (NIH), to manufacture up to ten batches of clinical material of the PER.C6-based Ebola vaccine in its own manufacturing facility. These materials will be used for Phase I and early Phase II clinical studies in humans. We will receive up to € 21.4 million (US$ 27.6 million) from the VRC for the manufacturing of these clinical lots, over a period of 5 years, commencing April 15, 2005.

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, “Additional information—Taxation”.

Taxation

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

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.

Dutch Taxation of Resident Shareholders

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

· individuals who are resident or deemed to be resident or who have opted to be resident in the Netherlands for purposes of Dutch taxation and who invest in the ordinary shares or ADSs, excluding individuals who invest in the ordinary shares or ADSs that form part of a substantial interest in us and excluding individuals who are our employees or who are deemed to be our employees or employees of any entity related to us (the “Dutch Individuals”); and

· corporate entities (including associations which are taxable as corporate entities) that are resident or deemed to be resident in The Netherlands for purposes of Dutch taxation and who invest in the ordinary shares or ADSs, excluding:

· corporate entities that are not subject to Dutch corporate income tax;

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· pension funds (pensioenfondsen) and other entities that are wholly or partly exempt from Dutch corporate income tax;

· corporate entities that hold ordinary shares or ADSs that qualify for application of the participation exemption (as laid down in the Dutch Corporate Income Tax Act 1969); and

· investment institutions (beleggingsinstellingen) as defined in the Dutch Corporate Income Tax Act 1969; (the “Dutch Corporate Entities”).

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

Individual and Corporate Income Tax.

Dutch Individuals not engaged or deemed to be engaged in an enterprise and Dutch Individuals for whom the benefits derived from the ordinary shares or ADSs are not treated as “results from other activities.”

Under current legislation, the taxable benefit from a Dutch (private) Individual’s “savings and investments” (sparen en beleggen) is set annually at 4% of the average of the so-called “yield basis” (rendementsgrondslag) at the beginning and at the end of a year, insofar as the average exceeds the “exempt net asset amount” (heffingvrij vermogen). Such taxable benefit is reduced by such portion of the personal allowance as has not been taken into account in respect of certain other types of income. This benefit shall be taxed at the rate of 30%. For Dutch 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 realized on the disposal thereof) that are attributable to an enterprise carried on in the Netherlands by a Dutch Individual or to an enterprise effectively managed in the Netherlands 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 realized on the disposal thereof) that are held by a Dutch Corporate Entity are generally subject to corporate income tax in its hands.

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Withholding Tax.

Dividends we distribute generally are subject to a withholding tax imposed by The Netherlands at a rate of 15%. The concept “dividends we distribute” used in this section includes, but is not limited to:

· distributions in cash or in kind, deemed and constructive distributions and repayments of paid-in capital not recognized for Dutch dividend withholding tax purposes;

· liquidation proceeds, proceeds of redemption of the ordinary shares or ADSs or, as a rule, consideration for the repurchase of the ordinary shares or ADSs by us in excess of the average paid-in capital recognized for Dutch dividend withholding tax purposes;

· the par value of the ordinary shares or ADSs issued to a holder of the ordinary shares or ADSs or an increase of the par value of the ordinary shares or ADSs, as the case may be, to the extent that it does not appear that a contribution, recognized for Dutch dividend withholding tax purposes, has been made or will be made; and

· partial repayment of paid-in capital, recognized for Dutch dividend withholding tax purposes, if and to the extent that there are net profits (zuivere winst), unless:

· the general meeting of our shareholders has resolved in advance to make such repayment; and

· the par value of the ordinary shares or ADSs concerned has been reduced by an equal amount by way of an amendment of the articles of association.

Dutch Individuals and Dutch Corporate Entities generally can credit the dividend withholding tax against their income tax or corporate income tax liability and will be entitled to a refund of dividend withholding tax insofar as such tax, together with any other creditable domestic and/or foreign taxes, exceeds their aggregate income tax or corporate income tax liability. A condition to avoid “dividend stripping” is that the recipient of proceeds from the ordinary shares or ADSs qualifies 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 retains, directly or indirectly, an interest in the ordinary shares or ADSs and the recipient is entitled to a (partial) refund or exemption to which the other person is not entitled to.

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.

Dutch Taxation of Non-Resident Shareholders

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”).

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Withholding Tax

Dividends we distribute generally are subject to a withholding tax imposed by The Netherlands at a rate of 15%. Reference is made to the section “Dutch Taxation of Resident Shareholders—Withholding Tax” for a description of the concept “dividends we distributed.”

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 “ 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 and the recipient is entitled to a (partial) refund or exemption to which the other person is not entitled to.

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 realized on the disposal of the ordinary shares or ADSs, provided that:

· such Non-Resident Shareholder does not 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 to which enterprise or part of an enterprise, as the case may be, the ordinary shares or ADSs are attributable;

· such Non-Resident Shareholder does not have a substantial interest or a deemed substantial interest in us (for as far a double tax convention does not refrain the Netherlands from taxation of income or capital gains from the substantial interest);

If such Non-Resident Shareholder is an individual, the benefits derived from the ordinary shares or ADSs are not taxable in the hands of such holder as a benefit from other activities in the Netherlands; such Non-Resident Shareholder is not entitled to a share in the profits of an enterprise effectively managed in the Netherlands, other than by way of the holding of securities or through an employment contract, to which enterprise the ordinary shares or ADSs or payments in respect of the ordinary shares or ADSs are attributable; such Non-Resident Shareholder does not carry out and has not carried out employment activities in the Netherlands with which the holding of or income derived from the ordinary shares or ADSs is connected; and if the Non-Resident Shareholder is an individual, he or she does not opt to be taxed as a resident of the Netherlands for purposes of Dutch taxation.

Reference is made to the section “Dutch Taxation of Resident Shareholders” for a description of the concepts “substantial interest” and “deemed substantial interest.”

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:

· such Non-Resident Shareholder at the time of the gift has or at the time of his death had an enterprise or an interest in an enterprise that is or was, in whole or in part, carried on through a

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permanent establishment or a permanent representative in The Netherlands and to which enterprise or part of an enterprise, as the case may be, the ordinary shares or ADSs are or were attributable; or

· in the case of a gift of the ordinary shares or ADSs by an individual who at the time of the gift was a Non-Resident Shareholder, such individual dies within 180 days after the date of the gift, while (at the time of his death) being resident or deemed to be resident in The Netherlands.

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.

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 to 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 (the “tax treaty”) 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:

· the beneficial owner of ordinary shares or ADSs (and of the dividends paid with respect to such ordinary shares or ADSs);

· an individual resident of the United States, a U.S. corporation, or a partnership, estate or trust to the extent your income is subject to taxation in the United States as the income of a resident, in your hands or in the hands of your partners or beneficiaries;

· not resident in The Netherlands for Dutch tax purposes; and

· not subject to an anti-treaty shopping rule.

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

110

ordinary shares or ADSs in light of your particular circumstances, including the U.S. tax considerations discussed below and the effect of any state, local or other national laws.

Based on our audited financial statements and relevant market data, we believe that we were not treated as a “passive foreign investment company” or “PFIC” for U.S. federal income tax purposes with respect to the year 2006. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market data, we do not anticipate becoming a PFIC in the year 2007 or thereafter. We believe, however, that we were or may have been a PFIC for U.S. federal income tax purposes with respect to the years before 2005. In order to avoid being subject to unfavorable U.S. federal income tax rules applicable to PFICs (the “PFIC rules”) with respect to our ordinary shares or ADSs in the future, U.S. holders that held our ordinary shares or ADSs at any time before 2005 may wish to make a deemed sale election with respect to their ordinary shares or ADSs. 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.

Taxation of Dividends

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 2011, unless we were 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 not a PFIC for U.S. tax purposes with respect to the year 2006, and also do not anticipate becoming a PFIC with respect to the year 2007. 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 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

111

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.

Taxation of Capital Gains

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, 2011 generally is subject to taxation at a maximum rate of 15%.

Passive Foreign Investment Company Rules

Unfavorable U.S. tax rules (the “PFIC 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:

· 75% or more of our gross income is treated as passive income for purposes of the PFIC rules; or

· the average percentage of the value of our assets that produce or are held for the production of passive income is at least 50%.

Based on our audited financial statements and relevant market data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to the year 2006. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market data, we do not anticipate becoming a PFIC in the year 2007 or thereafter. We believe, however, that we were or may have been a PFIC for U.S. federal income tax purposes with respect to the years before 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 or a qualified electing fund (“QEF”) election will be subject to a special tax at ordinary income tax rates on certain dividends that we pay and on gains realized on the sale of ordinary shares or ADSs (“excess distributions”) in all subsequent years, without regard to whether we were a PFIC in the year the excess distribution was received. The amount of this tax will be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions had been earned ratably over the period the U.S. holder held its ordinary shares or ADSs. 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.

If we were a PFIC in the past, U.S. holders that held our ordinary shares or ADSs at any time during the years when we were a PFIC and did not make a mark-to-market election or a QEF election will generally continue to be subject to the PFIC rules described above, even though we later ceased to qualify as a PFIC. You can generally avoid the future application of the PFIC rules by making a deemed sale election with respect to your ordinary shares or ADSs for your taxable year that includes the last day of our last taxable year during which we qualified as a PFIC (the “termination date”). If you make the deemed sale election with respect to our ordinary shares or ADSs, you generally will be treated as having sold all your ordinary shares or ADSs for their fair market value on the termination date. The deemed sale generally will be taxed to you as an excess distribution. Any loss realized on the deemed sale will not be recognized. If you made a mark-to-market election or a QEF election with respect to your ordinary shares or ADSs in the past, you will not be required to include any mark-to-market gain or loss with respect to our ordinary shares or ADSs (in the case of the mark-to-market election) or to include your pro rata share of

112

our ordinary earnings and net capital gain (in the case of the QEF election) for the years during which we do not qualify as a PFIC.

The PFIC rules are extremely complex, and you should consult your own tax advisers regarding the U.S. federal income tax considerations discussed above and the desirability of making a deemed sale election.

U.S. Backup Withholding Tax and Information Reporting

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:

· are a corporation or other exempt recipient; or

· provide an IRS Form W-9 or an acceptable substitute form, certifying your taxpayer identification number and that no loss of exemption from backup withholding has occurred.

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
100 F Street, N.E.
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, 100 F Street, N.E., 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 at http://www.sec.gov and at our website at http://www.crucell.com.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures about market risk see Item 5 “Operating and Financial Review and Prospects—Quantitative and Qualitative Disclosures about Market Risk”.

Item 12. Description of Securities Other than Equity Securities

This item is not applicable.

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Consolidated Balance Sheets
(amounts in thousands of Euro)

	Year ended December 31,
	Notes		2006		2005
ASSETS
Non-current assets
Property, plant and equipment		5.6	138,018		24,629
Intangible assets		5.7	113,077		2,577
Goodwill		5.8	47,419		—
Investments in associates and joint ventures		5.9	5,998		—
Pension asset		5.10	2,555		—
Available-for-sale investments		5.11	12,339		11,299
Other financial assets		5.12	16,430		194
Deferred tax asset		5.4	308		—
			336,144		38,699
Current assets
Cash and cash equivalents		5.13	157,837		111,734
Trade accounts receivable		5.14	58,563		1,824
Inventories		5.15	75,519		—
Other current assets		5.16	25,152		17,480
			317,071		131,038
TOTAL ASSETS			653,215		169,737
LIABILITIES AND EQUITY
Equity attributable to equity holders of the parent
Share capital			15,553		9,946
Other reserves			737,539		288,222
Translation reserve			(7,920	)	—
Accumulated deficit			(247,872	)	(160,559	)
			497,300		137,609
Minority interests			—		—
Total equity		5.17	497,300		137,609
Non-current liabilities
Long-term provisions		5.19	5,132		—
Long-term financial liabilities		5.20	26,945		9,380
Deferred tax liability		5.4	33,586		—
			65,663		9,380
Current liabilities
Trade accounts payable		5.21	38,512		8,770
Short-term financial liabilities		5.20	19,468		898
Other current liabilities			29,132		13,080
Income tax payable			266		—
Short-term provisions		5.19	2,874		—
			90,252		22,748
Total liabilities			155,915		32,128
TOTAL LIABILITIES AND EQUITY			653,215		169,737

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

F-5

Consolidated Statements of Changes in Equity
(amounts in thousands of Euro)

	Attributable to equity holders of the parent
	Issued capital		Share premium		Net unrealized gains reserve		Translation reserve		Accumulated deficit			Total		Minority interests		Total equity
At January 1, 2004		8,642		207,986		—		—		(122,155	)	94,473			—	94,473
Total income and expense for the year recognized directly in equity		—		—		—		—		—		—			—	—
Loss for the year		—		—		—		—		(22,826	)	(22,826	)		—	(22,826	)
Total income and expense for the year		—		—		—		—		(22,826	)	(22,826	)		—	(22,826	)
Issue of shares		208		1,201		—		—		—		1,409			—	1,409
Costs share based payment transactions		—		3,357		—		—		—		3,357			—	3,357
Issue of warrants and non-employee stock options to acquire ordinary shares in exchange for services		—		4,246				—		—		4,246			—	4,246
At December 31, 2004		8,850		216,790		—		—		(144,981	)	80,659			—	80,659
Unrealized gain on available for sale securities		—		—		9,630		—		—		9,630			—	9,630
Total income and expense for the year recognized directly in equity		—		—		9,630		—		—		9,630			—	9,630
Loss for the year		—		—		—		—		(15,578	)	(15,578	)		—	(15,578	)
Total income and expense for the year		—		—		9,630		—		(15,578	)	(5,948	)		—	(5,948	)
Issue of shares		1,096		56,439		—		—		—		57,535			—	57,535
Costs share based payment transactions		—		2,349		—		—		—		2,349			—	2,349
Issue of warrants and non-employee stock options to acquire ordinary shares in exchange for services		—		2,992		—		—		—		2,992			—	2,992
Stockbased incentive plan		—		22		—		—		—		22			—	22
At December 31, 2005		9,946		278,592		9,630		—		(160,559	)	137,609			—	137,609

Foreign currency translation	—	—	—	(7,920	)	—		(7,920	)	(814	)	(8,734	)
Net unrealized gain on available for sale securities	—	—	1,040	—		—		1,040		—		1,040
Total income and expense for the year recognized directly in equity	—	—	1,040	(7,920	)	—		(6,880	)	(814	)	(7,694	)
Loss for the year	—	—	—	—		(87,313	)	(87,313	)	(252	)	(87,565	)
Total income and expense for the year	—	—	1,040	(7,920	)	(87,313	)	(94,193	)	(1,066	)	(95,259	)
Issue of shares	5,458	433,104	—	—		—		438,562		12,093		450,655
Costs share based payment transactions	—	4,000	—	—		—		4,000		—		4,000
Acquisition of minority interest	149	10,878	—	—		—		11,027		(11,027	)	—
Issue of warrants and non-employee stock options to acquire ordinary shares in exchange for services	—	295	—	—		—		295		—		295
At December 31, 2006	15,553	726,869	10,670	(7,920	)	(247,872	)	497,300		—		497,300

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

F-6

Consolidated Cash Flow Statements

		Year ended December 31,
	Notes	2006		2005		2004
Cash flows from (used in) operating activities
Loss of the year		(87,565	)	(15,578	)	(22,826	)
Reversal of non-cash items
Income tax	5.4	(10,551	)	—		—
Results investments associates and joint ventures	5.9	1,956		455		704
Financial income	5.2	(13,453	)	(2,332	)	(1,789	)
Financial costs	5.3	11,706		131		394
Depreciation	5.6	14,275		2,973		2,982
Amortization	5.7	7,560		1,470		1,966
Impairment	5.6/5.7	30,416		—		—
Fair value adjustments on inventory	5.15	11,272		—		—
Change in long-term provisions	5.19	180		—		—
Gain on disposal of assets	5.7	(176	)	—		—
Stock based compensation	5.18	5,687		6,919		7,603
Changes in net working capital
Trade accounts receivable		(25,755	)	196		7,527
Inventories		(15,674	)	—		—
Other current assets		1,136		(11,557	)	(1,330	)
Trade accounts payable		18,509		6,662		21
Other current liabilities		(3,211	)	(4,216	)	(2,034	)
Short-term provisions		1,821		—		—
Interest paid		(2,211	)	(132	)	(212	)
Income taxes paid		124		—		—
Net cash flows from (used in) operating activities		(53,954	)	(15,009	)	(6,994	)
Cash flows from (used in) investing activities
Purchase of property, plant and equipment	5.6	(20,337	)	(17,137	)	(2,114	)
Proceeds from sale of equipment	5.6	197		—		741
Acquisition of intangible assets	5.7	(12,371	)	—		(4,017	)
Proceeds from sale intangible assets	5.7	225		—		—
Acquisition of Berna Biotech, Switzerland, net of cash acquired	3.1	67,784		—		—
Acquisition of SBL, Sweden, net of cash acquired	3.3	(33,386	)	—		—
Investments/capital increase in joint ventures	5.9	(1,427	)	—		—
Assets classified as held for sale	3.1	11,772		—		—
Proceeds from financial assets		7,627		—		—
Interest received	5.2	3,075		1,864		1,608
Net cash flows from (used in) investing activities		23,159		(15,273	)	(3,782	)
Cash flows from financing activities
Proceeds from issue of share capital	5.17	82,797		57,535		1,409
Proceeds from financial liabilities	5.20	14,703		8,982		—
Repayment of financial liabilities	5.20	(18,769	)	(1,212	)	(1,132	)
Net cash flows from financing activities		78,731		65,305		277
Effects of exchange rate on cash and cash equivalents		(1,833	)	—		—
Net increase (decrease) in cash and cash equivalents		46,103		35,023		(10,499	)
Cash and cash equivalents at beginning of the year	5.13	111,734		76,711		87,210
Cash and cash equivalents at end of the year	5.13	157,837		111,734		76,711

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

F-7

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data)

1 General information

1.1 Corporate information

General

Crucell N.V. (the “Company” or “Crucell”) is incorporated and domiciled in Leiden, the Netherlands. Its shares are publicly traded at Euronext Amsterdam (CRXL), NASDAQ New York (CRXL) and SWX Swiss Exchange Zurich (CRX). The Company and its subsidiaries together constitute the Crucell Group (the “Group”). The Group has subsidiaries in the Netherlands, Switzerland, Spain, Italy, Sweden, Korea and the United States. Crucell employed 1,073 people at December 31, 2006.

Crucell is a fully integrated biopharmaceutical company, focused on developing, producing and marketing products to combat infectious diseases. Its core vaccine portfolio includes Inflexal, a vaccine against influenza, Paediatric vaccines Hepavax-Gene and Quinvaxem and travel vaccines Vivotif, Dukoral, and Epaxal. In addition to these portfolio vaccines, the Group has a broad pipeline of new potential vaccines, antibodies and a blood clotting protein. The Group has developed various proprietary technologies such as the PER.C6, MAbstract, AdVac, STAR and virosome-adjuvanted technologies. Crucell licenses these proprietary technologies to others in the biopharmaceutical industry.

Changes in the scope of consolidation

The most significant changes in the scope of consolidation were due to:

· the acquisition of the shares of Berna Biotech AG (February 2006);

· the establishment of Crucell Vaccines Inc. followed by the acquisition of the assets and liabilities of Berna Products Corporation (October 2006) and

· the acquisition of the shares of SBL Vaccin Holding AB (November 2006).

The consolidated financial statements include the results of the acquired companies for the period from the date of acquisition unless mentioned otherwise. Further details on these acquisitions are provided in Note 3.

F-8

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

List of consolidated companies

The most significant subsidiaries, which were part of the Group as of December 31, 2006:

Subsidiaries (fully consolidated)

			2006			2005
Name	Legal Seat	Country	Ownership %			Ownership %
Crucell Holland B.V.	Leiden	the Netherlands		100	%		100	%
U-BiSys B.V.	Utrecht	the Netherlands		100	%		100	%
ChromaGenics B.V.	Amsterdam	the Netherlands		100	%		100	%
Berna Biotech AG	Bern	Switzerland		100	%		0	%
Berna Biotech España SA	Madrid	Spain		100	%		0	%
Berna Biotech Italia Srl	Milano	Italy		100	%		0	%
Etna Biotech Srl	Catania	Italy		100	%		0	%
Berna Rhein B.V.	Leiden	the Netherlands		100	%		0	%
Rhein Vaccines B.V.	Maastricht	the Netherlands		100	%		0	%
Berna Biotech Korea corp.	Seoul	Korea		100	%		0	%
Crucell Holding Inc.	Wilmington, DE	United States		100	%		0	%
Crucell Vaccines Inc.	Wilmington, DE	United States		100	%		0	%
Crucell Biologics Inc.	Wilmington, DE	United States		100	%		0	%
SBL Vaccin Holding AB	Stockholm	Sweden		100	%		0	%
SBL Vaccin AB	Stockholm	Sweden		100	%		0	%
Vitec AB	Stockholm	Sweden		100	%		0	%

Joint Ventures and Associated companies (not consolidated)

2006

2005

Name

Legal Seat

Country

Ownership
%

Pevion Biotech AG

Joint venture

Bern

Switzerland

Kenta Biotech AG

Associated company

Bern

Switzerland

Percivia LLC

Joint venture

Cambridge, MA

United States

1.2 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and are prepared on a historical cost basis unless stated otherwise. There are no differences between IFRS applied by the Group and IFRS as issued by the International Accounting Standards Board.

The consolidated financial statements of the Company for the year ended December 31, 2006 on form 20-F were authorized for issue in accordance with a director’s resolution on June 6, 2007.

In conformity with article 402, Book 2 of the Dutch Civil Code, the Company income statement is presented in abbreviated form.

F-9

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Foreign currency translation

The functional and presentation currency of the Company is the Euro. All values are rounded to the nearest thousand (€ 000) unless indicated otherwise.

Each entity in the group determines its own functional currency based on the primary economic environment in which the entity operates. Items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

At the reporting date, the assets and liabilities of subsidiaries with different functional currencies are translated into Euro at the rate of exchange ruling at the balance sheet date and their income statements and cash flow statements are translated into Euro at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to the translation reserve, a separate component of equity.

1.3 Use of estimates and judgments

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and use of critical judgements in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes:

· Note 2.1 Revenue recognition

· Note 3 Accounting for business combinations

· Note 5.4 Utilization of tax carry forward losses

· Note 5.6/5.7/5.8 Impairment reviews of property, plant and equipment, intangible assets and goodwill

· Note 5.10 Valuation of defined benefit plans

· Note 5.15 Valuation of inventories

· Note 5.18 Valuation of share-based-payments

· Note 5.19 Recognition of provisions for litigations and claims

F-10

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

1.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries per December 31 and for the period then ended. The financial statements of the subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. All intra-group balances and transactions are eliminated in full.

Subsidiaries

Subsidiaries are entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operational policies of an enterprise so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date of acquisition, which is the date on which the Group obtains control and continue to be consolidated until the date such control ceases.

Minority interests represent the portion of profit or loss for the year and net assets at the end of the year not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from the equity attributable to equity holders of the parent.

Joint ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. The Group recognizes its interest in joint ventures using the equity method. Under the equity method, the investment in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. The income statement reflects the share of the results of operations of the associate. Periodically the Group determines whether it is necessary to recognize an impairment loss with respect to the Group’s net investment in the joint venture.

The reporting dates of the joint ventures are the same as those of the Group and the accounting policies of the joint ventures conform to those used by the Group.

Associates

The Group’s investments in associates are accounted for under the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. The reporting dates of the associates are the same as those of the Group and the associates’ accounting policies conform to those used by the Group.

1.5 Changes in accounting policies

1.5.1 New adopted accounting policies in the financial year 2006

The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any significant effect on the financial statements of the Group. They did however give rise to additional disclosures.

· IAS 19 Amendment Employee Benefits

· IAS 21 Amendment The Effect of Changes in Foreign Exchange Rates

F-11

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

· IAS 39 Amendments Financial Instruments Recognition and Measurement

· IFRIC 4 Determining whether an Arrangement contains a Lease

· IFRIC 5 Rights to Interests Arising from Decommissioning Restoration and Environmental Rehabilitation Funds

· IFRIC 6 Liabilities arising from Participations in a Specific Market—Waste Electrical and Electronic Equipment

The Group did not early adopt any IFRS or IFRIC Interpretations. The principal effects of these changes in policies are discussed below.

IAS 19 Employee Benefits

As of January 1, 2006, the Group adopted the amendments to IAS 19, although the Group did not operate any defined benefit plans prior to the acquisition of the subsidiaries as described in Note 3.

The amended IAS 19:

· Allows an option for recognition of actuarial gains and losses in full in the period in which they occurred outside the profit and loss in a statement of recognized income and expense.

· Requires additional disclosures concerning the reconciliations showing the changes in plan assets and defined benefit obligations; information about trends in the assets and liabilities in the defined benefit plans; future contributions to the plan and assumptions used in the determination of the defined benefit obligation.

The Group chose not to apply the new option offered to recognize actuarial gains and losses in the statement of recognized income and expense. The required disclosures have been included in the consolidated financial statements.

IAS 21 The Effects of Changes in Foreign Exchange Rates

As of January 1, 2006, the Group adopted the amendments to IAS 21. As a result, all exchange differences arising from a monetary item that forms part of the Group’s net investment in a foreign operation are recognized in a separate component of equity in the consolidated financial statements regardless of the currency in which the monetary item is denominated. This change has no significant impact on the financial statements of the Group.

IAS 39 Financial Instruments: Recognition and Measurement

Amendment for financial guarantee contracts (issued August 2005)—amended the scope of IAS 39 to require financial guarantee contracts that are not considered to be insurance contracts to be recognized initially at fair value and to be remeasured at the higher of the amount determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognized less, when appropriate, cumulative amortization recognized in accordance with IAS 18 Revenue. This amendment did not have an effect on the financial statements.

Amendment for hedges of forecast intragroup transactions (issued April 2005)—amended IAS 39 to permit the foreign currency risk of a forecast intragroup transaction to qualify as the hedged item in a cash

F-12

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

flow hedge, provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and that the foreign currency risk will affect the consolidated income statement. As the Group currently has no such transactions, the amendment did not have an effect on the financial statements.

Amendment for the fair value option (issued June 2005)—amended IAS 39 to restrict the use of the option to designate any financial asset or any financial liability to be measured at fair value through the income statement. The Group had not previously used this option; hence the amendment did not have an effect on the financial statements.

IFRIC 4 Determining Whether an Arrangement contains a Lease

The Group adopted IFRIC Interpretation 4 as of January 1, 2006, which provides guidance in determining whether arrangements contain a lease to which lease accounting must be applied. This change in accounting policy has no significant impact on the financial statements of the Group.

IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

The Group adopted IFRIC Interpretation 5 as of January 1, 2006, which establishes the accounting treatment for funds established to help finance decommissioning for companies assets. This interpretation has no impact on the financial statements.

IFRIC 6 Liabilities arising from Participating in a Specific Market—Waste Electrical and Electronic Equipment

The Group adopted IFRIC Interpretation 6 as of January 1, 2006, which established the recognition date for liabilities arising from the EU Directive relating to the disposal of Waste Electrical and Electronic Equipment. As the directive only came into effect towards the end of 2005, there was no impact on the financial position as at December 31, 2005. No additional provision of has been recognized for the period ended December 31, 2006.

1.5.2 Future changes in accounting policies

IAS 1 Presentation to financial statements

The standard becomes effective for annual periods beginning on or January 1, 2007 and introduces new disclosures to enable users of the financial statements to evaluate the capital of the Group and how its capital is managed. The amendment does not have impact on the financial position of Group. The Group is in process of embedding the additional required information as part of its reporting procedures.

IFRIC 8 Scope of IFRS 2

The interpretation becomes effective for annual periods beginning on or after May 1, 2006 and requires IFRS 2 to be applied for transactions in which an entity cannot identify specifically some or all of the goods or services received as consideration for equity instruments. In particular, if the identifiable consideration received (if any) appears to be less then the fair value of the equity instruments granted or liability incurred, typically this circumstance indicates that other consideration has been received. Crucell is currently investigating the impact of the Standard.

F-13

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

IFRIC 9 Reassessment of Embedded Derivatives

The interpretation becomes effective for financial years beginning on or after June 1, 2006. This interpretation establishes that the date to assess the existence of an embedded derivative is the date that an entity first becomes party to the contract with reassessment only if there is a change to the contract that significantly modifies the cash flows. The interpretation is not expected to have a significant impact on the financial statements.

IFRS 7 Financial Instruments Disclosures

The Standard becomes effective for annual periods beginning on or after January 1, 2007. IFRS 7 introduces new disclosures to enable users of the financial statements to evaluate the significance of financial instruments and to determine the nature and extent of risks arising from financial instruments, including how these risks are managed. The Group is in process of embedding the additional required information as part of its reporting procedures.

IFRS 8 Operating Segments

The Standard becomes effective for annual periods beginning on or after January 1, 2009. IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” The interpretation is not expected to have an impact on the financial statements.

2 Summary of significant accounting policies

2.1 Revenue recognition

General

Revenues are recognized on a gross basis when the Group acts as the principal in an arrangement. Revenues are recognized on a net basis when the Group acts as agent.

Product sales

License revenues

The Group recognizes initial fees to the licensing of our technology as revenues over the period of our significant continuing performance obligations, if any, and upon transfer of the significant risks and rewards to the buyer.

F-14

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Under certain arrangements, the Group 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 when significant risks and rewards pass to the buyer, which is the moment, the transfer of developed technology is completed. The Group’s arrangements provide for continuing support of its technology at standard consulting rates. Revenues derived from consulting services, that are not essential to licensee’s ability to use the Group’s technology, are recognized as earned during the period that the consulting services are performed.

In certain arrangements, the Group collaborates with third parties to develop novel products or processes using the Group’s proprietary technology. These arrangements generally include an initial license fee upon the delivery of the Company’s proprietary technology and incremental fees for the Group providing ongoing research and development activities. The research and development activities performed by the Group are substantive and critical to the licensees’ exploitation of the delivered technology. When significant risks and rewards pass to the buyer, initial fees from these arrangements are recognized as revenues over the period of continuing performance obligations. Incremental fees from research and development activities are recognized as revenues earned over the period of the development collaboration or the manufacturing obligation.

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 Group’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 to 90 days’ notice. License maintenance fees are recognized as revenues when the amounts become fixed and payable. The aggregate of license maintenance fees paid will generally reduce any royalty payments which may be based on future product sales of the licensee, if any, under the license agreement.

Service fees

As part of various collaboration agreements, the Group receives service fees for work performed under such agreements. Revenues, and related costs, associated with completing performance services are recognized when the service is completed and the collectibility of the receivable is deemed probable. Revenues associated with time and material performance contracts are recognized when the costs incurred and the costs to complete the transaction can be measured reliably.

2.2 Cost of product sales and cost of service fees

Cost of product sales and cost of service fees both comprise direct labour, materials, and overhead costs, incurred in performing work under various collaboration agreements that directly relate to revenues earned.

2.3 Other operating income

Government grants

The Group receives certain government grants that support the Group’s research effort in defined research and development projects. These grants generally provide for reimbursement of approved costs

F-15

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

incurred as defined in various grants. Income associated with these grants is 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 and all attaching conditions will be achieved. Where the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Other Income

Other income results from none-core business transactions and mainly consists of the sale of tangible and intangible assets incidental to the business, reimbursement of development costs and sublet of premises.

2.4 Research and Development Expenses

Expenditure on research activities is recognized as an expense in the period in which it is incurred. Internally generated intangible assets arising from the Group’s development activities are recognized if all of the recognition criteria for internally generated intangible assets are met. This also includes the following conditions:

· an asset is created that can be identified;

· it is probable that the asset created will generate future economic benefits; and

· the development cost of the asset can be measured reliably.

Product registration fees will in principle meet these recognition requirements. Where no internally generated intangible asset can be recognized, development expenditure is recognized as an expense in the period in which it is incurred. Research and development expenses are comprised of the following types of costs incurred in performing research and development activities: salaries and benefits, allocated overhead and facility costs, preclinical study costs, clinical trials, amortization of developed technology, contract services and other outside costs.

2.5 Taxes

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted at the balance sheet date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the income statement. Current tax assets and current tax liabilities are offset, if a legally enforceable right exists to offset the recognized amounts and the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

F-16

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Deferred tax

Deferred income tax is provided using the asset and liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts under IFRS. Deferred tax liabilities are recognized for all taxable temporary differences, except:

· where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

· in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences and carry-forwards of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forwards of unused tax credits and unused tax losses can be utilised.

The unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted at the balance sheet date.

Income tax relating to items recognized directly in equity is recognized in equity and not in the income statement. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.6 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.

2.7 Cash and cash equivalents

The Group considers all highly liquid investments with maturities 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 equivalent.

2.8 Financial assets

Trade accounts receivable

Trade receivables do not carry any interest and are recognized and carried at original nominal invoice amount less an allowance for any uncollectible amounts. Allowance is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

F-17

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale. After initial measurement, available for sale financial assets are measured at fair value with unrealized gains or losses being recognized directly in equity in the net unrealized gains reserve. When the investment is disposed of, the cumulative gain or loss previously recorded in equity is recognized in the income statement.

Other financial assets

Other financial assets are valued at their nominal value.

Derecognition of financial assets

A financial asset is derecognized when:

· the rights to receive cash flows from the asset have expired;

· the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or

· the Group has transferred its rights to receive cash flows from the asset and either has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

2.9 Inventories

Inventories are stated at the lower of cost or net realisable value. The cost of inventories includes expenditures for materials acquired, directly attributable costs and related production overhead expenses. Net realisable value is determined as the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Allowances are made for obsolete inventory.

2.10 Other current assets

Other curent assets are stated at amortized cost, which generally corresponds with face value, less an adjustment for bad debts.

2.11 Property, plant and equipment

Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment in value. The cost of replacing a part of a plant or equipment is capitalized if the recognition criteria for property, plant and equipment are met. Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. Depreciation is charged to the income statement on a straight-line basis over the estimated useful life of the assets:

· freehold land is not depreciated;

· buildings: twenty years to fifty years;

· computer equipment: three years;

F-18

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

· furniture and laboratory equipment: five years;

· leasehold improvements: the shorter of the lease term and ten years.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is included in the income statement. The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year-end.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of these assets until they are substantially ready for their intended use. Qualifying assets are those assets that necessarily take a substantial period of time to be completed for their intended use. All other borrowing costs are recognized as an expense in the income statement when incurred.

2.12 Intangible assets

Intangible assets acquired are measured at cost on initial recognition. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangible assets are not capitalised if the recognition requirements are not met, rather, expenses are recognized in the income statement. The useful lives if intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life. The amortization period and the amortization method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the income statement consistent with the function of the intangible asset.

The estimated useful life of the assets is as follows:

· Patents and licenses: one year to twenty years;

· Customer lists: three years;

· Developed technology: five years to twenty years;

· In process R&D is not depreciated until completion of the asset.

2.13 Goodwill and business combinations

Business combinations are accounted for using the purchase method. This involves recognising identifiable assets (including previously unrecognized intangible assets) and liabilities (including contingent liabilities, but excluding future restructuring) of the acquired business at fair value. Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

F-19

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Goodwill includes intangible assets that were identified in a business combination, but not valued separately as the assets were either not separable or could not be measured reliably. Assets identified and included as part of goodwill can be specific customer relationships or supply contracts not meeting the requirements and the workforce acquired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

2.14 Impairment of non-financial assets

For non-financial assets the Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The impact of the impairment calculations is discussed in Note 5.6 and 5.7.

Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit, to which the goodwill has been allocated. Where the recoverable amount of the cash-generating unit is less than the carrying amount of the cash-generating unit to which goodwill has been allocated an impairment loss is recognized. Impairment losses relating to Goodwill cannot be reversed in future periods. The impact of the impairment calculations is discussed in Note 5.8.

2.15 Employee benefits

Pensions

The Group operates both defined benefit plans and defined contribution plans. For defined contribution plans obligations for contributions are recognized as an expense when they are due. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Under defined benefit plans the pension entitlements are calculated using the projected unit credit actuarial method. The pension liability as recognized in the balance sheet is the present value of the defined benefit obligation at the balance sheet date, less the fair value of the plan assets after adding or subtracting unrecognized actuarial gains or losses and past-service costs.

F-20

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The defined benefit obligation is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value and any unrecognized past service costs and the fair value of any plan assets are deducted. For each plan the recognized assets are limited to the net total of any cumulative unrecognized net actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan (the “asset ceiling”). Actuarial gains and losses in excess of a threshold of the higher of 10% of the pension liabilities and 10% of the fair value of the plan assets are charged or credited to the income statement over the employees’ expected average remaining working lives.

Share-based payment transactions

Option plans

Employees of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which the equity instruments are granted. The fair value is determined using a stock option pricing model. Further reference is made to Note 5.18. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Crucell (“market conditions”), if applicable.

Short-term incentive plans

The fair value of share grants under these plans is estimated on the date of grant by multiplying the number of shares available to be granted by the fair value of the Company’s shares on the grant date. Management assumes any performance goals required by the short term incentive plan will be achieved and the award will vest in full.

Long-term incentive plans

The fair value of share grants under these plans is estimated on the date of grant using a lattice-based option valuation model. The model calculates the likelihood of achievement of the market-based measures at various levels and once a value is determined for the shares, compensation cost is recognized over the measurement period of three years regardless of whether those market-based targets are achieved. Key input assumptions for the lattice-based option valuation model include expected volatilities, expected term, dividend yield and risk free interest rates. Expected volatilities are based on historical volatilities of the Company’s stock measured over a period commensurate with the expected term of the grants. The expected term used is the three-year measurement period. Dividend yields used were based on historical

F-21

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

information as to dividends declared by the Company. Risk-free interest rates used were equal to the implied yield currently available on zero-coupon government issues in countries whose currency the share price is expressed for Crucell with a remaining term equal to the expected term of the share-based instrument being valued.

2.16 Interest-bearing loans and borrowings

Short-term financial liabilities consist of all liabilities with maturities up to one year. Long-term financial liabilities are liabilities with maturities over one year. All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the amortization process. A financial liability is derecognized when the obligation underlying the liability is discharged, cancelled or expired.

2.17 Derivative financial instruments and hedging

In principle the Group does not engage in derivative transactions to hedge its currency exposure. At year-end a limited number of forward contracts were outstanding. The Group is currently in the process of determining the most optimal manner to mitigate the effects of its structural currency exposures.

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The Group does not apply formal hedge accounting and consequently any gains or losses arising from changes in fair value on derivatives are taken directly to net profit or loss for the year.

2.18 Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is significant, provisions are discounted. Where discounting is used, the increase in the provision due to the passage of time is recognized as a financial expense.

2.19 Leases

Leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Finance leases are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or, over the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

F-22

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Leases where the Group does not assume substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

3 Business combinations

3.1 Acquisition of Berna Biotech AG

On February 22, 2006, Crucell acquired approximately 97.0% percent of the outstanding common shares of Berna Biotech AG (“Berna Biotech”). The Company issued 16,691,492 ordinary shares with a fair value of € 20.90 each, being the published price of the shares of Crucell at the date of exchange to acquire Berna. On March 31, 2006 the Company purchased an additional 1.4% of the issued shares of Berna Biotech, for which the Company issued 239,270 ordinary shares with a fair value of € 23.25. The consolidated financial statements include the results of Berna Biotech since March 1, 2006. There were no significant transactions between February 22, 2006 and March 1, 2006.

In September 2006 the Company was able to squeeze-out the remaining 1.6% minority interest of Berna Biotech. With the squeeze-out, the delisting of Berna Biotech shares was approved and effected by the SWX Swiss Exchange on September 18, 2006.

	Recognized on acquisition			Carrying value
Property, plant and equipment		119,072		101,544
Intangible assets		118,717		—
Investments		6,716		2,949
Other long term and financial assets		8,348		7,528
Cash and cash equivalents		77,859		77,859
Trade and other receivables		28,995		28,733
Inventory		55,417		34,468
Prepayments and other current assets		23,185		21,892
Assets of disposal group classified as held for sale		11,811		—
Minority interests		(6,763	)	(2,735	)
Long-term financial liabilities		(28,765	)	(28,765	)
Long-term provisions and other long-term liabilities		(2,107	)	(2,185	)
Deferred tax liability		(42,915	)	(10,269	)
Trade and other payables		(7,664	)	(7,664	)
Short-term financial liabilities		(12,995	)	(12,995	)
Other short-term liabilities		(15,763	)	(15,145	)
Fair value of net assets recognized		333,148
1.6% minorities		(5,330	)
Fair value of net assets acquired		327,818
Purchase price		364,490
Goodwill		36,672

F-23

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Cost:
Shares issued, at fair value	354,415
Costs associated with the acquisition	10,075
Total	364,490
Cash outflow on acquisition:
Net cash acquired with the subsidiary	77,859
Cash paid	(10,075	)
Net of cash acquired	67,784

From the date of acquisition Berna Biotech has contributed € 52,742 to the net loss of the Group. If the combination had taken place on January 1, 2006, the loss for the period from January, 2006 to the date of acquisition would have been approximately € 11,900 (unaudited) and the complementary revenue from continuing operations would have been approximately € 8,600 (unaudited).

During 2006, the Company acquired Rhein Biotech GmbH and Dr. E. Graub AG. These were subsidiary companies of Berna Biotech and were acquired solely with a view to being divested after completion of the acquisition of Berna Biotech. On March 27, 2006 Rhein Biotech GmbH was sold for € 6,341. As of April 5, 2006 Dr. E. Graub AG was sold for € 5,390. The net result of these disposals amounts to € 716, which was already taken into consideration in the acquisition of the Berna Biotech Group as a part of the fair value adjustments made.

3.2 Acquisition of the assets and liabilities of Berna Products Corp.

In October 2006, the Group purchased, via its subsidiary Crucell Vaccines Inc. the assets and liabilities of the Florida-based Berna Products Corp. (“BPC”) from Acambis plc for an amount of € 13,806, excluding acquisition costs. BPC was originally established in 1990 by Berna Biotech to market Vivotif, Berna’s oral typhoid fever vaccine, in the United States and Canada and was acquired by Acambis plc in 2003.

	Recognized on acquisition			Carrying value
Property, plant and equipment		90			90
Intangible assets		8,543			—
Other long term assets		49			49
Cash and cash equivalents		142			142
Trade and other receivables		926			926
Inventory		924			379
Current liabilities		(782	)		(782	)
Fair value of net assets acquired		9,892
Purchase price		14,057
Goodwill		4,165

F-24

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Cost:
Cash payment	13,806
Costs associated with the acquisition	251
Total	14,057
Cash outflow on acquisition:
Net cash acquired with the subsidiary	142
Cash paid	(14,057	)
Net cash outflow	(13,915	)

From the date of acquisition BPC has contributed € 92 to the net loss of the Group. From January 1, 2006 through the date of acquisition BPC’s net result according to US GAAP approximately amounts to € 2,400 (unaudited) and the revenue amounts to € 6,400 (unaudited).

3.3 Acquisition of SBL Vaccin Holding AB

On November 23, 2006 Crucell acquired the shares of Stockholm-based SBL Vaccin Holding AB (SBL) from 3i and SEB for a total consideration of € 39,341 in cash, excluding acquisition costs.

SBL is a fully integrated independent Swedish biotechnology company employing 120 people. SBL’s main product is Dukoral, an oral vaccine that offers protection against cholera and is registered in more than 50 countries excluding the US. In addition SBL has a sales and distribution organization for vaccines in Scandinavia. SBL markets a broad range of vaccines sourced from global vaccine companies.

The acquisition of SBL has been accounted for on a provisional basis as the acquisition was only completed late in the year.

	Recognized on acquisition			Carrying value
Property, plant and equipment		11,098		5,800
Intangible assets		6,001		1,149
Cash and cash equivalents		7,130		7,130
Trade and other receivables		10,565		10,564
Inventory		16,228		10,520
Long-term provisions and financial liabilities		(4,007	)	(10,029	)
Deferred tax (liability)/asset		(2,584	)	1,969
Trade and other payables		(10,497	)	(10,497	)
Fair value of net assets acquired		33,934
Purchase price		40,516
Goodwill		6,582

F-25

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Cost:
Cash payment	39,341
Costs associated with the acquisition	1,175
Total	40,516
Cash outflow on acquisition:
Net cash acquired with the subsidiary	7,130
Cash paid	(40,516	)
Net cash outflow	(33,386	)

From the date of acquisition SBL has contributed € 209 to the net loss of the Group. From January 1, 2006 through the date of acquisition SBL’s net result according to Swedish GAAP approximately amounts to € 6,000 (unaudited) and the revenue amounts to € 32,700 (unaudited).

4 Segment reporting

4.1 General

Segment information is presented in respect of the Group’s business and geographical segments. The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically.

4.2 Business segments

The Group is managed as one business segment. Following the acquisitions made in 2006, management reporting includes further segmentation of the product sales along the different types of vaccines:

	Year ended December 31,
	2006	2005		2004
Paediatric vaccines	35,933		—		—
Respiratory vaccines	40,386		—		—
Travel vaccines	23,072		—		—
Other vaccines	2,998		—		—
Proteins and other business	1,529		—		—
	103,918		—		—

Management is currently in the process of redefining the primary business segments. Going forward the Group will be reporting in two separate segments:

· Vaccines: the development, production and marketing of vaccines worldwide to combat infectious diseases;

· Proteins: leverage Crucell’s novel, proprietary technologies to develop monoclonal antibodies and therapeutic protein products.

F-26

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The operating businesses shall be organised and managed separately according to the nature of these products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. This segmentation was not applicable throughout 2006 and cannot be made without significant arbitrary allocations. Providing this information would have limited added value to users of the financal statements.

4.3 Geographical segments

The Group principally operates in three geographical areas, Europe, North America and Asia. Segment revenue is based on the geographical location of the customers, which is the billing location of the customers. Segmentation of the assets is based on the geographical location of the assets.

	Year ended December 31,
	2006	2005	2004
Revenue
Europe	80,401	9,382	6,601
North America	3,469	22,871	11,495
Asian	16,506	476	45
Other*	31,191	—	—
Total	131,567	32,729	18,141

* This mainly includes the sales to supranational organizations.

	2006	2005	2004
Assets (excluding investment in associates and joint ventures)
Europe	502,054	169,737	101,015
North America	7,235	—	—
Asia	137,928	—	—
Other	—	—	—
Total	647,217	169,737	101,015
Investment in associates and joint ventures
Europe	5,741	—	—
North America	257	—	—
Asia	—	—	—
Other	—	—	—
Total	5,998	—	—
Total assets
Europe	507,795	169,737	101,015
North America	7,492	—	—
Asia	137,928	—	—
Other	—	—	—
Total	653,215	169,737	101,015

F-27

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

	Year ended December 31,
	2006	2005	2004
Capital expenditure tangible fixed assets
Europe	120,652	17,137	2,114
North America	101	—	—
Asia	28,237	—	—
Other	—	—	—
Total	148,990	17,137	2,114
Capital expenditure intangible assets (including goodwill)
Europe	110,761	—	4,017
North America	4,165	—	—
Asia	63,097	—	—
Other	—	—	—
Total	178,023	—	4,017

5 Notes to the specific items of the consolidated financial statements

5.1 Personnel expenses

	Year ended December 31,
	2006	2005	2004
Wages and salaries	48,841	18,666	13,449
Social security costs	4,469	1,124	935
Pension defined benefit plans	2,179	—	—
Pension defined contribution plans	1,770	867	1,032
Expenses for employee shares and option plans	4,296	3,927	3,357
Other personnel expenses	6,464	—	—
	68,019	24,584	18,773

The Group employed 1,073 people at December 31, 2006 compared to 282 at December 31, 2005.

5.2 Financial income

	Year ended December 31,
	2006	2005	2004
Currency gains	9,461	295	74
Interest income, third parties	3,718	1,965	1,715
Other financial income	274	72	—
	13,453	2,332	1,789

5.3 Financial expenses

	Year ended December 31,
	2006		2005		2004
Currency losses	(9,625	)	(61	)	(182	)
Interest expense, third parties	(1,737	)	—		(212	)
Other financial expenses	(344	)	(70	)	—
	(11,706	)	(131	)	(394	)

F-28

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

5.4 Income tax

	Year ended December 31,
	2006		2005		2004
Current income tax	(258	)		—		—
Adjustments current income tax of previous years	(213	)		—		—
Deferred taxation	11,022			—		—
Income tax	10,551			—		—

The reconciliation between the loss for the year multiplied by the applicable tax rate and the actual taxation is as follows:

	Year ended December 31,
	2006		2005		2004
Loss for the year before income tax	(98,116	)	(15,578	)	(22,826	)
At gross weighted average income tax rate	21,437		4,908		7,876
Adjustments in respect of current income tax of previous years	(213	)	—		—
Stock option compensation expense	(220	)	(1,409	)	(2,567	)
Timing difference revenue recognition	—		1,716		1,466
Timing difference amortisation expense	—		(463	)	(678	)
Permanent differences	1,096		—		—
Effect of tax rate changes	3,894		—		—
Other effects	395		(143	)	(243	)
Effect of current tax losses not recognized as deferred tax assets	(15,838	)	(4,609	)	(5,854	)
Effective income tax rate 10.8%, (2005: nil, 2004: nil)	10,551		—		—

No current or deferred tax charges were recognized in equity. In 2005 and 2004 the Group did not have temporary differences. In 2006 the changes in deferred income tax assets and liabilities were as follows:

	2006
January 1,	—
Acquisition of subsidiaries	(44,300	)
Changes in deferred tax liabilities during the year	11,006
Losses available for offset against future taxable income	16
December 31,	(33,278	)

F-29

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The composition of the temporary differences and tax loss carry forwards in the balance sheet is as follows:

	December 31,
	2006			2005
Deferred income tax liability
Valuation differences attributable to:
Inventories		(3,318	)		—
Other assets		(867	)		—
Property, plant and equipment		(8,261	)		—
Intangible assets		(21,634	)		—
Liabilities		(255	)		—
		(34,335	)		—
Deferred income tax assets
Losses available for offset against future taxable income		288			—
Valuation differences assets and liabilities		769			—
		1,057			—
Offset of deferred tax balances		749			—
Reflected in the balance sheet as follows:
Deferred tax assets		308			—
Deferred tax liability		(33,586	)		—
Deferred tax liabilities, net		(33,278	)		—

The Group has tax carry forward losses for an amount of € 222,238 (2005: € 103,714, 2004: € 85,766) that are available, with certain restrictions in time, for offset against future taxable profits of the companies in which the losses arose.

The unrecognized carry forward losses expire as follows:

Before 2011	2011		After 2011		Unlimited		Total
€ 16,504	€	98,202	€	88,902	€	18,630	€	222,238

The Group has evaluated evidence impacting the recoverability of its deferred tax assets, which consist principally of tax loss carry forwards. Management has considered the Group’s history of net losses and concluded that it is probable that the full benefits of these tax loss carry forwards will not be realized in the near term. Accordingly, the Group did not recognize any deferred tax assets relating to the carry forward losses.

Tax rate changes

The Netherlands domestic statutory corporate income tax rate is 29.6% for 2006 (a lower tax rate of 25.5% applies to the first € 22,689 of profits), 31.5% for 2005 and 34.5% for 2004. As of January 1, 2007, the statutory corporate income tax rate has been reduced to 25.5%.

In Korea the tax holiday granted by the government is decreasing over time. In financial year 2006, Crucell’s Korean subsidiary was not yet subject to income tax. From financial year 2007 to financial year 2009 the applicable tax rate will be 16.5%. As of 2010 the tax rate will be 27.5%.

F-30

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The Spanish domestic statutory income tax rate amounts to 35% in 2006 and will be decreased to 32.5% in 2007 and 30% in 2008.

Exposures

In Italy the fiscal years 2001 and 2002 of Berna Biotech Italia Srl. are subject to a tax audit. The corporate income tax returns for 2001 and 2002 as filed by Berna Biotech Italia Srl. are currently under discussion with the Italian tax authorities.

5.5 Net loss per share

	Year ended December 31,
	2006		2005		2004
Profit attributable to ordinary shareholders
Net loss attributable to ordinary shareholders	(87,565	)	(15,578	)	(22,826	)
*Weighted average number of ordinary shares*
Weighted average number of ordinary shares for the year	57,064,034		39,852,064		36,382,662
Net loss per share—basic	(1.53	)	(0.39	)	(0.63	)
Net loss per share—diluted	(1.53	)	(0.39	)	(0.63	)

Because the effect of issuing potential ordinary shares under stock options plas, stock plans and warrants is anti-dilutive, these shares do not have an impact on the calculation of diluted net loss per share.

F-31

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

5.6 Property, plant and equipment

	Freehold Land and buildings			Plant and equipment			Assets under construction			Total
*Cost*
*At January 1, 2005*		4,204			14,757			318		19,279
Additions		1,500			1,167			14,470		17,137
Reclassifications		—			310			(310	)	—
Disposals		—			(116	)		—		(116	)
*At December 31, 2005*		5,704			16,118			14,478		36,300
Additions		1,902			6,318			12,117		20,337
Acquisition of subsidiaries		63,753			55,639			9,261		128,653
Disposals		(149	)		(2,188	)		—		(2,337	)
Reclassifications		417			939			(1,356	)	—
Effect of movements in exchange rates		(1,880	)		(1,736	)		(202	)	(3,818	)
At December 31, 2006		69,747			75,090			34,298		179,135
*Depreciation and impairment*
*At January 1, 2005*		(1,368	)		(7,446	)		—		(8,814	)
Depreciation charge for the year		(405	)		(2,568	)		—		(2,973	)
Disposals		—			116			—		116
*At December 31, 2005*		(1,773	)		(9,898	)		—		(11,671	)
Depreciation charge for the year		(3,836	)		(10,439	)		—		(14,275	)
Impairment		(7,746	)		(11,822	)		—		(19,568	)
Disposals		33			2,060			—		2,093
Effect of movements in exchange rates		956			1,348			—		2,304
At December 31, 2006		(12,366	)		(28,751	)		—		(41,117	)
Net book value
At December 31, 2006		57,381			46,339			34,298		138,018
At December 31, 2005		3,931			6,220			14,478		24,629

Depreciation is included in the cost of goods sold for € 8,995, research and development costs for € 4,448 and selling, general and administrative costs for € 832.

Impairment

An impairment loss of € 19,568 was recognized relating to two buildings in Switzerland. The buildings are specially set up for biotechnology purposes and it is impractible to separate the buildings and the equipment. These premises were used to manufacture products of which the production was stopped or phased out during 2006. As there is no direct use for these buildings in any of the other activities of the Group and it is not likely this will change in the near future, the carrying value has been impaired for the total amount of € 19,568.

F-32

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Lease and borrowing costs

At December 31, 2006 and 2005, the Group held laboratory equipment under capital leases with a cost of € 10,912 and € 4,021, respectively and a net book value of € 7,291 and € 1,186. These leases are secured by the value of the underlying assets and a compensating cash balance. The capital lease equipment is amortized over the useful life of the equipment, or the lease term, whichever is shorter.

At December 31, 2006 an amount of € 744 of borrowing costs related to the construction of a new production facility in the Netherlands have been capitalised (2005: nil). The borrowing costs are capitalised at a capitalisation rate of 4.55%.

Commitments

The remaining contractual commitments amount to € 11,693 (2005: € 10,500) for purchases of property, plant and equipment.

5.7 Intangible assets

	Customer lists			Patents and licenses			Developed technologies			In process R&D			Total
*Cost*
*At January 1, 2005 and at December 31, 2005*		—			—			10,669			—		10,669
Additions		8,316			—			—			—		8,316
Disposals		—			(19	)		—			—		(19	)
Acquisition of subsidiaries		—			26,771			34,729			60,788		122,288
Transfer in process R&D		—			—			42,838			(42,838	)	—
Effect of movements in exchange rates		(104	)		(613	)		(1,022	)		(257	)	(1,996	)
At December 31, 2006		8,212			26,139			87,214			17,693		139,258
*Amortization and impairment*
*At January 1, 2005*		—			—			(6,622	)		—		(6,622	)
Amortization		—			—			(1,470	)		—		(1,470	)
*At December 31, 2005*					—			(8,092	)		—		(8,092	)
Amortization		(693	)		(3,704	)		(3,163	)		—		(7,560	)
Impairment		—			—			—			(10,848	)	(10,848	)
Disposals		—			19			—			—		19
Effect of movements in exchange rates		6			139			38			117		300
At December 31, 2006		(687	)		(3,546	)		(11,217	)		(10,731	)	(26,181	)
Net book value
At December 31, 2006		7,525			22,593			75,997			6,962		113,077
At December 31, 2005		—			—			2,577			—		2,577

Amortization of intangible assets is included in research and development costs.

F-33

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Impairment

The impairment loss of € 10,848 relates to the in process research and development of the Tetra vaccine. In February 2006 Crucell acquired Berna Biotech, including rights to the Tetra vaccine. Management decided to stop the development of Tetra after Quinvaxem received approval by the WHO. Consequently the carrying value of Tetra has been impaired for the total amount of € 10,848.

5.8 Goodwill

	Goodwill
*Cost*
*At January 1, 2005 and December 31, 2005*		—
Additions		4,165
Effect of movements in exchange rates		43,254
At December 31, 2006		47,419
Net book value
At December 31, 2006		47,419
At December 31, 2005		—

No impairment losses were recognized on the acquired goodwill. Goodwill acquired through business combinations have been allocated the following individual cash-generating units:

	2006		2005
Berna Biotech AG		29,970		—
Berna Biotech Korea Corp.		6,702		—
Crucell Vaccines Inc.		4,165		—
SBL Vaccin AB		6,582		—
Total goodwill		47,419		—

Berna Biotech AG

The recoverable amount of the Berna Biotech has been determined based on a value in use calculation using the traditional discounted cash flow model with a terminal value after the last planning year in 2017. The Group uses a planning period longer than 5 years, which is a commonly used approach for biotechnology companies as the development and lifecycle of a single product can be substantially longer than the aforementioned period. Using a period of only 5 years would not lead to a fair valuation of Berna Biotech and its products. Berna Biotech is a solid production and distribution company, which was the main reason for the acquisition and therefore the terminal value is considered to be fully sustainable.

Berna Biotech Korea Corp.

The recoverable amount of the Berna Biotech Korea Corp. has been determined based on a value in use calculation using the traditional discounted cash flow model. The valuation was made by adding the discounted cash flows until 2017, as management did not see the terminal value as sustainable.

The Korean site may possibly be relocated over the next five years, which could have an impact on the recoverable amount. Refer to the sensitivity analysis below.

F-34

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Other entities

Goodwill related to the acquisition of SBL, the acquisition of the assets of Berna Products Inc. by Crucell Vaccines Inc. and the share exchange for the Rhein N.V. minority shares has not been explicitly tested as these individual cash-generating units have been acquired recently. In these situations the consideration paid to acquire these individual cash-generating units in an arm’s length transaction provides the best evidence of the individual cash-generating units fair values. Since the respective acquisition dates of these companies there have not been any events or circumstances that are indicators that would trigger an impairment review.

Sensitivity to changes in assumptions

Management believes that any reasonable possible change in the key assumptions would not decrease the value in use to the extent that the related goodwill would exceed the recoverable amount. Reference is made to the key assumptions below as these have a significant impact on the calculated recoverable amount. The recoverable amount for the goodwill of Berna and Berna Biotech Korea Corp. exceeds its carrying amount by € 58,600 and € 2,600 respectively. The implications of the key assumptions on the recoverable amount are discussed below:

· The recoverable goodwill amounts of Berna Biotech and Berna Biotech Korea Corp. were determined based on a pre-tax weighted average cost of capital (“WACC”) of 11.0% and 14.8% respectively. A higher WACC percentage would reduce the recoverable amount of the goodwill;

· In determining the goodwill of Berna Biotech Korea Corp. calculations were made with a 50% chance of a possible relocation of the site. If calculations were made with an estimated chance of relocation between the 50% and 100% this would lead to a reduction of the recoverable amount of the goodwill.

5.9 Investments in associates and joint ventures

5.9.1 Associated companies

Kenta Biotech AG, Switzerland

On February 9, 2006, Kenta Biotech AG was founded with a capital of € 9,061 (CHF 14,290). Berna Biotech contributed investments in kind of € 3,329 (CHF 5,250) in exchange for shares equal to 36.74% of Kenta Biotech’s share capital. Kenta Biotech AG is focusing on the discovery and development of innovative, fully human monoclonal antibodies for the life-saving treatment of patients with serious infectious diseases.

F-35

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Summary financial information for Kenta Biotech AG from February 9, 2006 through December 31, 2006 is represented below:

	2006
Associate’s balance sheet:
Current assets		3,386
Non-current assets		3,293
Current liabilities		(349	)
Non-current liabilities		—
Net assets		6,330
Associate revenues and expenses:
Revenues		59
Expenses		(2,664	)
Loss for the period		(2,605	)

5.9.2 Joint ventures

Pevion Biotech AG, Switzerland

Pevion Biotech AG is a joint venture between Berna Biotech and Bachem AG, Switzerland. Both companies hold 50% of the shares. In 2006 the capital of the joint venture was increased by € 2,536 (CHF 4,000) of which CHF 2 million was contributed by the Group. It is planned that the Group will contribute an additional € 1,268 (CHF 2,000) in a capital increase in 2007.

Pevion Biotech AG develops vaccines based on its proprietary technology platforms PeviPRO and PeviTER. By combining established technological processes with innovative concepts, Pevion Biotech AG promotes novel vaccine candidates from research into clinical testing.

Percivia LLC, United States

In August 2006 DSM Pharmaceutical Products Inc. and the Group established the joint venture Percivia LLC (Percivia) to operate the PERCIVIA PER.C6 Development Center in Cambridge, Mass, USA. Both companies hold 50% of the shares. The initial contribution amounts to € 158 (US$ 200). The joint venture will further develop the PER.C6 cell line and provide a unique solution for the production of pharmaceutical proteins to licensees utilizing the PER.C6 human cell line in the biotech industry. Percivia recharges the costs incurred to the venturers. No additional fundings are planned.

F-36

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Summary financial information for these joint ventures, not adjusted for the percentage ownership held by the Group:

	Pevion January 1- December 31			Percivia August 1- December 31			Total 2006
Joint venture balance sheet:
Current assets		1,958			3,206		5,164
Non-current assets		396			—		396
Current liabilities		(154	)		(2,887	)	(3,041	)
Non-current liabilities		(156	)		—		(156	)
Net assets		2,044			319		2,363
Joint venture revenues and expenses:
Revenues		274			2,454		2,728
Expenses		(2,833	)		(2,231	)	(5,064	)
Profit/(loss) for the period		(2,559	)		223		(2,336	)

The Group accrued an amount of € 1.2 million for expenses that will be recharged by Percivia.

5.10 Retirement benefit obligations

The Group provides employee benefit plans to most of its employees by means of various pension plans. These plans comply with local regulations and practices in the countries in which they operate and differ based on legal requirements, tax legislation, local customs and economic conditions in the countries in which the Group operates. Consequently it follows that the nature of the plans varies by country. In general the benefits provided depend on remuneration and years of service. Most of these benefits are administrated by insurance companies or pension funds.

Recognition of pension expenses in the income statement:

	Year ended December 31
	2006	2005
*Income statement*
Defined benefit plans	2,179		—
Defined contribution plans	1,770		867
Total	3,949		867

Defined benefit plan

	December 31,
	2006		2006
*Balance sheet*
Defined benefit plans
Pension assets	2,555			—
Pension liability	(3,919	)		—
Net pension liability	(1,364	)		—

F-37

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Prior to the acquisition of Berna Biotech and SBL the Group did not operate any defined benefit plans. As a result of the acquisitions, the Group now operates defined benefit plans in Switzerland, Korea and Sweden. The pension asset of € 2,555 relates to the Swiss pension fund while the pension liability of € 3,919 relates to the Swedish and the Korean pension funds. In total 97% of the plan assets and 89% of the defined benefit obligation relates to the Swiss pension fund.

The weighted average of the principal assumptions used in determining the employee benefit obligations for the defined benefit plans of the Group are shown below:

	2006		2005
Discount rate	3.32	%		—
Expected return on plan assets	4.55	%		—
Future salary increases	1.19	%		—
Future pension increases	0.66	%		—

Changes in these key assumptions can have a significant impact on the defined benefit obligations, funding requirements and periodic costs incurred. The Group consults at least annually with external actuaries regarding these assumptions.

Changes in the present value of the defined benefit obligation are as follows:

	2006		2005
Opening defined benefit obligation	—			—
Acquisition of subsidiaries	72,703			—
Interest cost	2,012			—
Current service cost	3,105			—
Benefits paid	(2,535	)		—
Actuarial (gains)/losses	(834	)		—
Exchange differences	(1,772	)		—
Closing defined benefit obligation	72,679			—

Changes in the fair value of plan assets are as follows:

	2006		2005
Opening fair value of plan assets	—			—
Acquisition of subsidiaries	100,677			—
Expected return on plan assets	3,758			—
Contributions by employer	2,137			—
Contributions by participants	981			—
Benefits paid	(2,355	)		—
Actuarial gains/(losses)	(211	)		—
Exchange differences	(2,681	)		—
Fair value of plan assets, December 31	102,306			—

In 2007, the Group expects to contribute an amount similar to the amount contributed in 2006 to its defined benefit pension plans. The actual return on plan assets for the year ended December 31, 2006 amounts to € 3,547.

F-38

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The cost for defined benefit plans is as follows:

	Year ended December 31,
	2006		2005
Current service cost	3,105			—
Interest cost	2,012			—
Expected return on plan assets	(3,758	)		—
Additional pension expense due to asset ceiling	1,865			—
Employee contributions	(981	)		—
Other	(64	)		—
	2,179			—

	December 31,
	2006		2005
Defined benefit obligation	(72,679	)		—
Fair value of plan assets	102,306			—
Funded status	29,627			—
Unrecognized net actuarial losses	8,334			—
Amount not recognized as asset due to asset ceiling	(39,325	)		—
Net pension liability	1,364			—

	December 31,
	2006		2005
Defined benefit obligation	(72,679	)		—
Plan assets	102,306			—
Surplus	29,627			—
Experience adjustments on plan liabilities—gain	834			—
Experience adjustments on plan assets—loss	(211	)		—

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

	Year ended December 31,
	2006		2005
Bonds	36.5	%		—
Equity	26.9	%		—
Property	31.8	%		—
Other	4.8	%		—
	100.0	%		—

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled and the relative weight of the separate categories of plan assets.

5.11 Available-for-sale investments

The Group has an investment in Galapagos N.V. (“Galapagos”), which is a publicly traded company. The Group’s ownership interest is 6.2% as of December 31, 2006, which represents a value of € 12,339 (2005: € 11,299).

F-39

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

5.12 Other financial assets (non-current)

	December 31,
	2006	2005
Long-term restricted cash	14,396		—
Long-term deposits and guarantees	2,034		—
Director’s loan	—		194
	16,430		194

TheGroup has € 14,396 restricted cash. An amount of € 10,000 is related to the mortgage loan and the remainder mainly relates to leases.

5.13 Cash and cash equivalents

	December 31,
	2006	2005
Cash at banks and in hand	87,761	71,559
Call deposits	70,076	40,175
	157,837	111,734

Cash and cash equivalents include the following main currencies:

	December 31,
	2006	2005
Euros (€)	109,465	109,324
Swiss Francs (CHF)	26,364	—
US Dollar ($)	7,363	2,410
Korean Won (KRW)	7,268	—
Swedish Crowns (SEK)	7,113	—
Other currencies	264	—
	157,837	111,734

5.14 Trade accounts receivable

	December 31,
	2006	2005
Trade receivables from third party customers	58,550	1,824
Trade receivables from associates and joint ventures	13	—
	58,563	1,824

F-40

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

At December 31, 2006 trade receivables are shown net of an allowance for doubtful debts for an amount of € 4,069 (2005: € 176). Receivables are denominated in several currencies and can be specified as follows:

	December 31,
	2006	2005
Euros (€)	31,153	1,824
US Dollar ($)	19,644	—
Swiss Francs (CHF)	1,411	—
Swedish Crowns (SEK)	4,595	—
Korean Won (KRW)	1,021	—
Other currencies	739	—
	58,563	1,824

5.15 Inventories

	December 31,
	2006	2005
Raw materials and consumables	18,418		—
Work in progress	45,623		—
Finished products	11,478		—
	75,519		—

In order to be able to meet the demand from the market (e.g. in case of outbreak of a disease) the Group stocks certain inventories to a level that they may not be realised in one year. This is in line with policies of the Company. Provisions are recognised for obsolete inventory. The amount of write-down of inventories recognized as an expense is € 4,722.

The amount of inventories recognized as an expense of cost of product sales is € 37,972.

5.16 Other current assets

	December 31,
	2006	2005
Accrued income	11,129	10,330
Prepaid expenses	2,271	3,535
Other short-term receivables	11,341	3,262
Director’s loan	168	—
Income tax receivables	243	353
	25,152	17,480

5.17 Issued capital and reserves

Crucell’s authorized share capital amounts to 85,000,000 ordinary shares and 85,000,000 preferent shares, each with a par value of € 0.24. As of December 31, 2006, there were 64,802,325 ordinary shares issued and outstanding (2005: 41,440,613). No preference shares are issued and outstanding as of December 31, 2006.

F-41

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

On October 25, 2000, the Company established a foundation called Stichting Preferente Aandelen Crucell, also referred to as the Preferred Foundation. The Preferred Foundation’s object is to safeguard the interests of Crucell, its business and parties connected therewith by blocking any influences that may threaten these interests, which interests may include the continuity, independence or identity of Crucell, its business and parties connected therewith. The Preferred Foundation can safeguard the interests through acquiring and managing the preference shares and by exercising the rights attaching to these shares, in particular, the voting rights.

The agreement between the Company and the Preferred Foundation grants an option to the Preferred Foundation to acquire preference shares up to 100% of the number of our outstanding shares, necessary to match the total number of statutory votes on all of the ordinary shares outstanding at the time of the acquisition. The Preferred Foundation must pay at least 25% of the nominal value of the preference shares it acquires from the Company. If the Company acquires any preference shares, they may be cancelled.

A board of governors of up to five persons directs the Preferred Foundation. Mr J.P. Oosterveld, in his capacity as chairman of our Supervisory Board, and Mr P. Bouw, Mr M.W. den Boogert, Mr S. van Wijnbergen and Mr G.P. Krans, have been appointed to the board of governors. A majority of these members may not be members or former members of the Management or Supervisory Board of the Company, or an employee of any of our advisers, any of our banks or us. The board of governors appoints these independent members. The Supervisory Board appoints the non independent members after consultation with the Management Board.

Ordinary shares Issued and fully paid	Shares	Issued capital
	€ 000	€ 000
At January 1, 2005	36,874		8,850
Effect of shares issued in May 2005 for cash	3,600		864
Shares issued relating to share-based payments	967		232
At January 1, 2006	41,441		9,946
Issued in February 2006 in exchange for issued share capital of Berna Biotech	16,931		4,064
Shares issued in relating to private placement and acquisition of minority interests	5,022		1,205
Shares issued relating to share-based payments	1,408		338
At December 31 2006	64,802		15,553

Net unrealized gains reserve

The net unrealized gains reserve of € 10,670 (2005: € 9,630) records the fair value changes on available-for-sale investments.

Translation reserve

The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

F-42

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

5.18 Share-based payment plans

Stock-Based Compensation

Stock Option Plans

The Group maintains stock option plans whereby the remuneration committee of the Supervisory Board may grant options to employees, directors and members of the Supervisory Board, which are described further below. The compensation cost that has been included in operating expenses for those plans was € 4,000, € 2,349 and € 3,357 in 2006, 2005 and 2004 respectively.

In December 2004, the Supervisory Board approved a new option plan (the “2005 Plan”) providing for the grant of stock options to non-management committee members for a maximum of 1% of issued ordinary shares. Options granted under this stock option plan are exercisable when the options have vested. Granted options vest straight line over a period of 4 years. Compensation costs are recognized in accordance with the accelerated method. The options expire 5 years after date of grant. Upon termination of employment with Crucell, options must be exercised within 90 days. Options granted under the stock option plan are granted at exercise prices, which equals the fair value of the ordinary shares of the Company at the date of grant.

All options granted under previous stock option plans (the “Prior Plans”) are exercisable immediately upon grant. Upon exercise of the options, employees are subject to profit-retribution provisions. Such provisions entitle the Group 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 Group decreases rateably over one to 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 Group 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 Group. Upon termination of employment with the Group, options must be exercised within 90 days. Compensation costs for prior plans are recognized in accordance with the accelerated method. Generally, options granted under the Prior Plans are granted at exercise prices, which exceed the fair value of the Company’s ordinary shares at the date of grant. No further grants are to be made from the Prior Plans.

The Group accounts for its employee stock options under the fair value method. 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,
	2006		2005		2004
Risk-free interest rate	3.6	%	4.1	%	2.9	%
Expected dividend yield	—		—		—
Expected volatility	52.6	%	52.8	%	62.3	%
Expected life (years)	4.25		4.31		4.00

The risk free interest rate is based on Dutch treasury securities in effect at the time of grant. Expected volatility is based on the historical volatility of the Company’s stock. The expected life of the options granted is an estimate based on the contractual term of the options and historical behaviour. The weighted average fair value of options granted during the years ended December 31, 2006, 2005 and 2004 was € 6.96, € 9.03 and € 3.28, respectively.

F-43

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

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

	Number of options		Weighted average exercise price
Balance at January 1, 2004	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
Granted	123,000			19.45
Exercised	(887,182	)		8.09
Forfeited	(25,325	)		9.07
Balance at December 31, 2005	4,029,504			6.43
Granted	953,466			18.76
Exercised	(1,284,655	)		4.16
Forfeited	(12,875	)		19.40
Balance at December 31, 2006	3,685,440			10.36

Included in the options outstanding as of December 31, 2006 are options to acquire ordinary shares held by former employees and consultants. These individuals have been permitted to continue vesting in these options for services rendered.

The following table summarizes information about the Company’s stock options outstanding at December 31, 2006:

Exercise price	Outstanding Options at December 31, 2006		Weighted average exercise price			Weighted average remaining contractual life (years)		Exercisable options	Weighted average exercise price—exercisable options
€ 2.35-€ 3.49		715,470		€	3.31		4.08	715,470		€	3.31
€ 3.50-€ 9.99		1,731,104		€	8.00		4.00	1,731,104		€	8.00
€ 10.00-€ 19.99		789,191		€	16.03		4.20	8,750		€	15.51
€ 20.00-€ 22.22		449,675		€	20.75		4.15	18,250		€	22.13
Total		3,685,440						2,473,574

As of December 31, 2006, a total of 9,720,349 ordinary shares, representing 15% of the issued share capital, have been reserved for issuance under the option plan, of which 3,785,440 are subject to outstanding options (including 100,000 warrants).

Warrants

In 2003, Crucell 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 consultant earned the warrants over the service period that ended in 2004. The warrants expire in July 2008. Per December 31, 2006 in total 100,000 warrants are outstanding.

F-44

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Share-Based Incentive Plans

Under its Short-term Incentive Plan (the “STI Plan”), Crucell granted executives share awards whose vesting was contingent upon meeting various Group-wide, departmental and individual performance goals in fiscal 2006. The employees granted shares under the STI Plan were allowed to elect to receive either cash (at a 25% discount from the total award) or shares if the performance criteria were met. As such, grants under the STI Plan are accounted for as liabilities and included in accrued compensation and related benefits in the accompanying balance sheets. In 2007 a total of 23,032 STI Plan shares that relate to 2006 were issued to executives. Shares granted under the STI Plan were issued at the share price of € 19.08.

Crucell also has a 2005 Long-term Incentive Plan (the “LTI Plan”), which allowed for the issuance for up to 36,842 shares of common stock to be granted to executives with vesting contingent upon meeting various market-based goals. Depending on the level of achievement of these market measures, at the end of three years, the number of shares vesting could be 0%-200%. Shares granted in 2005 under the LTI Plan were at the share price at the beginning of the year at € 10.10, which is lower than the fair value of the shares on the date of grant of € 21.10, which is the measurement date for the awards. In December 2005 all 36,842 LTI Plan shares were granted to executives. There were no forfeitures of the LTI Plan grants through December 31, 2006 and all shares granted were unvested as of year-end.

As of December 31, 2006, there was € 532 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the LTI Plan, which will be recognized in 2007. Compensation cost recognized during the year ended December 31, 2006 related to the LTI Plan amounted to € 531.

Stock Option Grants to Non-Employees

Crucell has issued stock options to various non-employees in connection with consulting agreements over the years. These non-employee stock options included exercise prices greater than or equal to the fair value of the underlying common stock on the date of grant. The exercise prices range from € 3.49 to € 21.38 per share and expires on dates ranging from May 2010 through December 2011. During 2006, the Company issued stock options to purchase 10,000 shares of common stock to a consultant with an exercise price of € 18.22 and expiration date in May 2011.

Crucell can terminate the consulting agreements at any time and only those stock options vested as of the date of termination are exercisable. As of December 31, 2006, total options to purchase 57,604 shares of common stock related to consulting agreements were outstanding with an average exercise price of € 13.76 and expiration dates ranging from May 2010 through December 2011.

Stock compensation expense for options granted to non-employees has been determined as the fair value of the equity instruments at the date the goods are received. In connection with these stock option grants to non-employees, Crucell is required to record compensation expense based on a Black-Scholes valuation model and amortized over the consulting or vesting period of the grant. The assumptions used in the Black-Scholes valuation model for these non-employee grants are based on the same criteria as used for employee grants except that the expected term is equal to the contractual life of the grant. The Company re-values the unvested portion of these stock options at each reporting period as a result of the requirement for variable accounting for non-employee grants. As of December 31, 2006, assuming the valuation at December 31, 2006 would remain consistent over the future service periods, the Company would recognize compensation expense related to these non-employee grants amounting to € 78 over the next 41 months. Crucell recorded compensation expense associated with these stock options of € 295,

F-45

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

€ 2,800 and € 3,542 for the years ended December 31, 2006, 2005 and 2004, respectively. In 2005 the Company entered into several consulting agreements where the consultant is considered to be a person providing similar services as an employee. Compensation expense associated with these options amounted to € 192.

Stock option grants to non-employees are made pursuant to approved stock option plans and activity related thereto is included in the tables above with the employee grants of the approved plans.

5.19 Provisions, commitments and contingencies

	Restructuring			Litigation			Employee benefits			Other		Total
At January 1, 2006		—			—			—		—		—
Acquisition of a subsidiary (Note 3)		71			1,180			3,918		999		6,168
Arising during the year		3,120			259			71		1,145		4,595
Utilised		(1,147	)		(212	)		(10	)	(6	)	(1,375	)
Unused amounts reversed		(393	)		(215	)		(66	)	(678	)	(1,352	)
Exchange adjustment		(5	)		(12	)		6		(19	)	(30	)
At December 31, 2006		1,646			1,000			3,919		1,441		8,006
Current 2006		1,646			52			—		1,176		2,874
Non-current 2006		—			948			3,919		265		5,132

Restructuring

A restructuring charge for an amount € 2,421 is recognized in relation to centralization of R&D functions in Leiden and the phasing out of R&D projects in Switzerland.

The decision to concentrate R&D in Leiden was made to increase efficiency in R&D spending and will result in a reduction in the number of staff employed, which was effectuated in the first quarter of 2007.

Due to the suspension in July 2006 of Aerugen, the candidate vaccine for the prevention of Pseudomonas aeruginosa infection in cystic fibrosis patients, there are fewer projects requiring development support at Bern.

Litigations and claims

The Group is subjected to (potential) lawsuits and other legal proceedings, resulting from the ordinary course of business. The current status of any pending proceedings has been reviewed with a legal counsel. Upon consideration of known relevant facts and circumstances, provisions were recognized for losses that are considered to be probable and that can be reasonably estimabled as of the balance sheet date.

F-46

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Contingent liability STAR

STAR technology is a gene expression technology based on epigenetic control mechanisms that block repression of gene expression. The Group acquired STAR technology in 2004 through the purchase of ChromaGenics B.V., a privately held biotechnology company based in Amsterdam. In connection with the purchase, we also entered into a contingent payment agreement that could result in an additional payment of € 7.0 million upon receipt of revenues generated from the STAR technology and royalties.

Employee benefits

Further reference is made to retirement benefit obligations. See Note 5.10.

Other

Other provisions mainly relate to warranties.

Guarantees

The Group issued a letter of Credit for an amount of $ 1.6 million expiring on April 14, 2013 relating to the Percivia Development Center.

5.20 Short and long-term financial liabilities

This Note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings as at December 31, 2006 and 2005. For more information about the Group’s exposure to interest rate and foreign currency risk, see Note 5.24.

	2006					2005
	Short-term		Long-term		Total	Short-term		Long-term		Total
Secured bank loans		1,793		21,117	22,910		—		8,982	8,982
Finance lease liabilities		1,139		5,828	6,967		898		398	1,296
Bonds		16,536		—	16,536		—		—	—
		19,468		26,945	46,413		898		9,380	10,278

Terms and debt repayment schedule at December 31, 2006:

	Total	2007	2008	2009	2010	2011	More than 5 years
Mortgage loan*	17,091	338	353	370	387	405		15,238
Loan Berna Biotech Korea Corp.	5,819	1,455	1,455	1,455	1,454	—		—
Equipment lease	6,967	1,139	794	851	913	1,133		2,137
Privately placed bond Berna Biotech Korea Corp.	16,536	—	16,536	—	—	—		—
	46,413	2,932	19,138	2,676	2,754	1,538		17,375

* Interest rate until December 31, 2010.

F-47

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Terms and debt repayment schedule at December 31, 2005:

	Total	2006		2007		2008		2010		2011		More than 5 years
Mortgage loan	8,982		—		338		353		370		387		7,534
Equipment lease	1,296		898		398		—		—		—		—
	10,278		898		736		353		370		387		7,534

Mortgage loan

In December 2005, the Group entered into a mortgage loan for a maximum amount of € 17,091 and as of December 31, 2006, the Group has drawn the maximum amount. The loan bears interest at 4.55 percent for the first five years. After this period the rates will be renegotiated. The land, building and a compensating cash balance arrangement secure the loan with a bank in the amount of € 10,000. For the first year, interest was accrued to the loan and no payments of principal or interest were required. The loan will be repaid through monthly payments over 15 years, starting January 1, 2007, with a balloon repayment of € 10,000 after 15 years. The maturity date of the loan is December 31, 2021.

Loan Berna Biotech Korea Corp.

Berna Biotech Korea Corp. has entered into the loan that will be repaid within four years and bears interest at 2.48%. The maturity date of the loan is August 1, 2010. The loan is unsecured.

Finance lease liabilities

Crucell leases certain of its lab equipment in the Netherlands. All leases are on a fixed repayment basis and interest rates are fixed at the contract date. For further information see Note 5.22.

Privately placed bond Berna Biotech Korea Corp.

Berna Biotech Korea Corp issued this bond with an interest percentage of 6.73%. The bond matures June 13, 2008, and contains covenants that require Berna Biotech Korea Corp. to maintain certain profit and liquidity ratios. Berna Biotech Korea Corp. was required to be in compliance with the covenants as of January 1, 2006. In 2006 these covenants were not met, consequently the bond is presented as a short-term bond. The Group does not have any indications that the bond has to be repaid before the end of its term. It is expected that Berna Biotech Korea Corp. will be in compliance with the covenants for 2007.

5.21 Trade accounts payables

	December 31,
	2006	2005
Trade accounts payables to third parties	38,360	8,770
Trade accounts payables to joint ventures	152	—
	38,512	8,770

Trade accounts payables are in general paid in line with the payment terms, which vary per company and region. In our most significant regions general payment terms approximate 30 days.

F-48

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

5.22 Operating and finance leases

Operating lease commitments—Group as lessor

The Group entered into operating leases for the sub-lease of certain research and corporate facilities. Future minimal rentals receivable under non-cancellable operating leases as at December 31, 2006 and 2005 are as follows:

	2006		2005
Within one year		86		266
After one year but not more than five years		232		318
More than five years		—		—
		318		584

Operating lease commitments—Group as lessee

The Group leases certain research and corporate facilities, motor vehicles and items of machinery and equipment. No restrictions are placed upon the lessee by entering into these leases. Future minimum lease payments leases as at December 31, 2006 and 2005 are as follows:

	2006	2005
Within one year	3,897	1,742
After one year but not more than five years	7,092	5,474
More than five years	111	1,319
	11,100	8,535

Most operating leases are increased annually based on a general price index.

Finance lease commitments

Certain of the Group’s fixtures and equipment are finance leases. The finance leases mainly relate to equipment for the new production facility in Leiden. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The fair value of the Group’s lease obligations approximates their carrying amount. The Group’s obligations under finance leases are secured by the value of the underlying assets. Future minimum lease payments under finance leases as at December 31, 2005 and 2006 are as follows:

	2006				2005
	Minimum payments		Present value of payments		Minimum payments		Present value of payments
Within one year		1,637		1,139		949		898
After one year but not more than five years		5,073		3,691		407		398
More than five years		2,319		2,137		—		—
		9,029		6,967		1,356		1,296

Finance leases are increased annually based on a general price index.

F-49

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

5.23 Related party disclosures

Related party transactions within the group

The Group has related party transactions and/ or balances with its subsidiaries, joint ventures, associate, directors and executive officers. All transactions with related parties were carried out under normal market conditions (arm’s length principle). There are no related party transactions outside the normal course of business.

The following table provides the total amount of transactions, which have been entered into with related parties for the relevant financial year.

	Transaction value Year ended December 31,					Balance outstanding as at December 31,
Related party	2006			2005		2006			2005
*Sales of goods and services*
Pevion Biotech AG		251			—		47			—
Kenta Biotech AG		168			—		33			—
*Expenses*
Avv Falaguerra		(12	)		—		(12	)		—
Kellerhals & Partner AG		(134	)		—		(155	)		—
Kenta Biotech AG		(60	)		—		—			—

Mr Falaguerra, the chairman of the Board of Directors of the Italian subsidiary is related to Avv. Falaguerra, an Italian firm that provides taxation services to an Italian subsidiary.

Kellerhals & Partner AG is a Swiss firm that provides legal advice to Berna Biotech. This company is related the one of the Supervisory Board members of Crucell.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made at normal market prices. Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided by the Group or received in respect of any related party receivables or payables. For the year ended December 31, 2006, the Group has not made any provision for doubtful debts relating to amounts owned by related parties (2005: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this Note.

F-50

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Management Board

The total remuneration and related costs (excluding share based payments—see information below on stock options and performance stock) of the members of the Management Board over the past three years, is as follows:

	Year ended December 31,
	2006	2005	2004
Salaries	1,005	874	598
Bonuses	893	1,058	494
Pension costs	205	189	215
Severance costs(1)	—	—	454
Other	37	58	170
	2,140	2,179	1,931

(1) In connection with his stepping down as the chief executive officer, president and chairman of the Management Board, the Group agreed to pay Mr. Valerio an amount equal to € 454 in severance and up to € 19 as partial compensation for advisory costs. On January 26, 2004, the Group also entered into an advisory agreement with Mr. Valerio under which he received an advisory fee totalling € 227 through the end of 2004.

The 2006 remuneration of the individual members of the Management Board (excluding share based payments—see information below on stock options and performance stock) was as follows:

	2006
Name	Salaries		Bonuses(1)		Pension Costs(2)		Other costs		Total
R. H.P. Brus		400		391		28		—	819
J. Goudsmit		330		260		152		21	763
L. Kruimer		275		242		25		16	558
Totals		1,005		893		205		37	2,140

(1) 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 the Group’s financial and commercial performance, scientific performance and progress, and the accrual of value of the Group. External compensation survey data available for the biotechnology industry are also used as another factor to benchmark the compensation levels.

(2) Pension costs include disability insurance costs.

F-51

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The Company’s Management Board members held the following options per December 31, 2005 and 2006:

Name of Holder	Options held at December 31, 2005		Year of expiration		Exercise Price		Granted 2006		Exercised 2006		Forfeited 2006		Options held at December 31, 2006
R.H.P. Brus		250,000		2009		9.40		—		—		—		250,000
		225,000		2011		3.49		—		25,000		—		200,000
		90,000		2011		2.64		—		—		—		90,000
		125,000		2011		5.94		—		—		—		125,000
J. Goudsmit		100,000		2006		5.92		—		100,000		—		—
		100,000		2006		3.66		—		100,000		—		—
		85,000		2009		9.40		—		—		—		85,000
		60,000		2011		2.64		—		—		—		60,000
		125,000		2011		5.94		—		—		—		125,000
L. Kruimer		85,000		2009		9.40		—		—		—		85,000
		105,000		2011		3.49		—		40,000		—		65,000
		125,000		2011		5.94		—		—		—		125,000
Totals		1,475,000						—		265,000		—		1,210,000

The Company’s Management Board members held the following shares in the Company at December 31, 2006:

Name of holder	Ordinary shares held at December 31, 2006		% of total ordinary shares
R.H.P. Brus		134,249		0.21
J. Goudsmit		146,600		0.23
L. Kruimer		17,952		0.03
		298,801		0.47

F-52

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

The following table describes loans granted to the members of Crucell’s Management Board and senior management since January 1, 1998. Crucell has not granted any loans to any Supervisory Board members. The Company sets these interest rates in relation to Dutch income tax law, which changes on an annual basis. Crucell granted loans to the persons listed below in connection with options granted to them on Crucell’s ordinary shares. These loans become payable at the time shares received on exercise of the related options are sold or, in case the employee ceases to work for Crucell before this time, immediately. Crucell funds payments due under the loans prior to July 30, 2002, the date legislation was passed in The United States prohibiting the granting of additional loans to Company officers.

Name	Largest amount of loan outstanding since January 1, 1998		Amount of loan outstanding at December 31, 2006		2006 Interest rate
R.H.P. Brus		132		99		3.5	%
J. Goudsmit		25		8		3.5	%
Other personnel		61		61		3.5	%
				168

The Group is no 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 other than those transactions disclosed in these financial statements.

Board of Supervisory Directors

Due to the fact that Crucell operates on a global scale with many of its directors used to the international arena, Crucell offers compensation to its supervisory directors, in accordance with customary practice in the biotechnology sector. For 2005 and onwards compensation of all Supervisory Board members consists of a fixed fee in cash and an annual share grant. The fixed fee in cash amounts to € 25 per Supervisory Board member. The Chairman will receive a fixed fee of € 40. The annual share grant awarded to each member of the Supervisory Board shall equal 2,500 ordinary shares. This amount will be revised on a tri-annual basis. The shares should be held for as long as an individual is a member of the Supervisory Board. Instead of the share grant, a Supervisory Board member may also choose to receive a cash amount equalling the value of 2,500 shares at the date of grant minus 25%. The shares (or cash equivalent minus 25%) were awarded in 2006 for the first time, because in December 2004, stock options were awarded to the Supervisory Board with respect to the year 2005. Committee fees and Committee Chairmanship fees are no longer granted. An allowance of € 10 is awarded annually to the Chairman of the Supervisory Board.

F-53

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

During 2006 and 2005, the individual members of the Supervisory Board received the following remuneration (excluding share based payments—see information below on stock options and performance stock):

	2006	2005
P. Strijkert(1)	16.7	44.9
J.P. Oosterveld(2)	38.7	25.0
A. Hoevenaars(3)	25.0	25.0
S.P. Lance	25.0	25.0
P.M. Satow	25.0	25.0
C.E. Wilhelmsson	25.0	25.0
D. S. Koechlin(4)	25.0	—
J. Witmer(4)	25.0	—
C.E. Thomann(4)	25.0	—
Totals	230.4	169.9

(1) Mr P. Strijkert resigned from the Supervisory Board in June 2006.

(2) Mr J.P. Oosterveld was appointed Chairman on June 2, 2006.

(3) Mr A. Hoevenaars became a member of the Supervisory Board on June 2, 2005.

(4) Mr D.S. Koechlin, Mr J. Witmer and Mr C.E. Thomann were appointed member of the Supervisory Board on June 2, 2006, but have attended meetings since January 2006.

The Company’s Supervisory Board members held the following options at December 31, 2005 and 2006:

Name of Holder	Options held per December 31, 2005		Year of expiration		Exercise Price		Granted 2006		Exercised 2006		Forfeited 2006		Options held per December 31, 2006
					€
J.P. Oosterveld		10,000		2009		8.81		—		—		—		10,000
		10,000		2009		11.55		—		—		—		10,000
S.P. Lance		10,000		2009		8.81		—		—		—		10,000
		10,000		2009		11.55		—		—		—		10,000
P.M. Satow		10,000		2009		11.55		—		—		—		10,000
		22,000		2011		3.49		—		—		—		22,000
		10,000		2011		6.48		—		—		—		10,000
C.E. Wilhelmsson		10,000		2009		11.55		—		—		—		10,000
		10,000		2011		6.48		—		—		—		10,000
A.Hoevenaars		5,000		2009		8.81		—		—		—		5,000
		10,000		2009		11.55		—		—		—		10,000
Totals		117,000						—		—		—		117,000

F-54

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Crucell’s Supervisory Board members held the following shares in the Company per December 31, 2006:

Name of holder	Ordinary shares held per December 31, 2006		% of total ordinary shares
J.P. Oosterveld		4,500		0.01
A. Hoevenaars		2,500		—
S.P. Lance		—		—
P.M. Satow		58,800		0.09
C.E. Wilhelmsson		2,500		—
D.S. Koechlin		3,841		0.01
J Witmer		15,910		0.02
C.E. Thomann		3,751		0.01
		91,802		0.14

Pursuant to Dutch law, each member of Crucell’s Supervisory Board and Management Board 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 Crucell’s Supervisory Board or Crucell’s Management Board. The Company’s Articles of Association provide that Crucell’s Management Board members and Crucell’s Supervisory Board members are discharged from liability for their actions as board members, if Crucell’s 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 the Company’s general meeting of shareholders.

Mandatory provisions of Dutch law may limit this discharge of liability, for example in the case of bankruptcy. Under Dutch law, the Company’s Supervisory Board members and members of the Company’s Management Board generally cannot be held personally liable for decisions made exercising their reasonable business judgement.

The Company’s Articles of Association provide that the Company shall generally indemnify any person who is or was a member of the Company’s Supervisory Board or of the Company’s Management Board or one of the Group’s employees, officers or agents, and suffers any loss as a result of any action in connection with their service to the Group, 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 wilful misconduct in the performance of his or her duties to the Group. A court in which an action is brought, may however determine that indemnification is appropriate nonetheless.

5.24 Financial instruments

Financial risk management

The main risks arising from the Group’s financial instruments are foreign currency risk, interest rate risk and credit risk.

F-55

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Foreign currency risk

The Group has significant transactional currency exposures. Such exposure arises from sales or purchases by an operating unit in currencies other than the functional currency of the Group. The majority of the of the Group’s purchases and sales are denominated in currencies other than Euro, the functional currency of the Group. Movements in the US Dollar/Euro exchange rates can significantly affect the results of the Group as there are significant purchases and sales in US Dollar.

As a result of significant operations in Switzerland and Korea movements in the Swiss Franc and the Korean Won compared to the Euro can also affect the Group’s balance sheet and income statement significantly as the balance sheet and the income statement of the Swiss and Korean subsidiaries are translated into Euro, the functional currency of the Group.

In principle the Group does not engage in derivative transactions to hedge its currency exposure. The Group is currently in the process of determining the most optimal manner of mitigating the effects of its structural currency exposures. The Group did not apply formal hedge accounting in 2006.

Prior to SBL’s acquisition by the Company, SBL had engaged in four forward exchange contracts to hedge its currency exposure. At December 31, 2006, the Group continued to hold these exchange contracts. The terms of these contracts are as follows:

	Expiry date	Exchange rate	Fair value in Euros
Forward contracts to hedge expected future sales
Sell
€ 1,000	February 20, 2007	SEK/€ 9,181		€	1,016
€ 1,000	February 28, 2007	SEK/€ 9,220		€	1,021
€ 1,000	April 10, 2007	SEK/€ 9,311		€	1,031
Forward contracts to hedge expected future purchases
Buy
CHF 500	March 5, 2007	SEK/CHF 5,719		€	317

The total fair value of the forward exchange contracts as per December 31, 2006 amounts to € 57. The Group did not have any additional derivative financial instruments as per December 31, 2006.

Interest rate risk

The Group runs risks as a result of changes in the market interest rates compared to loans with fixed rates. The Group has several loans with fixed interest rates, which total € 46,413. Details on the interest rates and maturity of these loans are provided in note 5.20.

In addition the Group has cash balances for an amount of € 172,200 of which € 14,396 is restricted. (2005: € 111,700 of which € 13,322 is restricted.) There are no other receivables that generate interest.

F-56

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Credit risk

Credit risk represents the risk of financial loss caused by default of the counter party. The principal financial assets of the Group are cash and cash equivalents, short-term deposits, trade and other receivables and securities available for sale. These assets represent the Group’s maximum exposure to credit risk in relation to financial assets. The Group’s credit risk is primarily attributable to its trade and other receivables. The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis. Allowances are recognized for receivable balances deemed uncollectible upon identification.

Price risk

In addition to currency risks and interest rate risks the Group is exposed to other market price risks in relation to its financial instruments due to changes in the market prices. The Group has no direct influence on this risk. Specifically the investment in Galapagos, which is valued at fair value, is subjected to this risk.

Liquidity risk

Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The liquidity risk is considered to be limited as the Group has sufficient funding to meet its obligations in the next 12 months. The Group has a total cash balance of € 157,800 as per December 31, 2006 (2005: € 111,700).

Fair values

The fair values of the financial instruments of the Group approximate the carrying amount of the Group’s financial instruments, except for the following:

· a loan entered into by Berna Biotech Korea Corp. with an amount of € 5,819. The fair value of this loan is estimated to be € 6,082.

· The total fair value of the forward exchange contracts as per December 31, 2006 amounts to € 57.

6 Reconciliation between IFRS to US GAAP

The Company’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU, which as applied by the Group. These consolidated financial statements differ in certain significant respects from US GAAP. The principal differences between IFRS and US GAAP are presented below, together with explanations of the

F-57

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

adjustments that affect consolidation net loss for each of the last three years in the period ended December 31, 2006 and total shareholders’ equity as of December 31, 2006, 2005 and 2004.

			Year ended December 31
	Note		2006			2005			2004
Loss for the year in accordance with IFRS			€	(87,565	)	€	(15,578	)	€	(22,826	)
Minority interests		a	252			—			—
Share based compensation		b	(510		)	(402		)	791
Results of investments in associates and joint ventures		c	—			455			704
IPR&D Expense for US GAAP purposes		d	(59,130		)	—			—
Reversal of IFRS Impairment on IPR&D, net of tax		d	8,025			—			—
Reversal of IFRS IPR&D Amortization, net of tax		d	523			—			—
Loss for the year in accordance with US GAAP			€	(138,405	)	€	(15,525	)	€	(21,331	)
Loss per share (basic and diluted) under US GAAP			(2.43		)	(0.39		)	(0.59		)

			December 31
	Note		2006			2005			2004
Shareholders’ equity in accordance with IFRS			€	497,300		€	137,609		€	80,659
Minority interests		a	—			—			—
Investments in associates and joint ventures		c	—			—			(2,124		)
IPR&D Expense for US GAAP purposes		d	(59,130		)	—			—
Reversal of IFRS Impairment on IPR&D, net of tax		d	8,025			—			—
Reversal of IFRS IPR&D Amortization, net of tax		d	523			—			—
Notes receivable from officers and employees		e	(168		)	(194		)	(224		)
Business combinations—purchase price		f	22,853			—			—
Employee benefits, net of tax of € 40		g	2,625			—			—
Cumulative Translation Adjustments		h	1,423			—			—
Shareholders’ equity in accordance with US GAAP			€	473,451		€	137,415		€	78,311

Note a Minority Interests

In contrast to IFRS, minority interests are deducted in the determination of US GAAP net income and excluded from total equity. The Group purchased Berna Biotech and Rhein Biotech in 2006 resulting in minority interest for a portion of the year. The remaining minority interests of Berna Biotech and Rhein Biotech N.V. were purchased by the Group by the end of 2006; consequently there is no equity adjustment necessary in 2006 or previous years. As a result of the minority interest outstanding for part of fiscal 2006, a reconciling item in the amount of € 252 was recorded in 2006 to adjust net loss for this classification difference. As a result of the purchase of the remaining minority interests during 2006 there is no net difference in the calculation of the minority interests in the consolidated income statement between IFRS and US GAAP.

Note b Share-Based Compensation

General

For IFRS purposes, share-based compensation is accounted for under the fair value method in accordance with IFRS 2 Share-based Payment.

F-58

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

For US GAAP purposes, share-based compensation is accounted for under the fair value method in accordance with Statement of Financial Accounting Standard 123 Accounting for Stock-Based Compensation (FAS 123R). The Group 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.

Difference between US GAAP and IFRS with respect to Non-employees

IFRS 2 clarifies that consultants can be considered persons providing similar services as an employee, resulting in similar accounting treatment of share-based payments as employees. During 2004, 2005 and 2006 the Group entered into several consulting agreements where for IFRS accounting purposes, the consultant is considered a person providing similar services as an employee.

Stock compensation expense for options granted to non-employees has been determined in accordance with FAS 123R 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 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 measurable. In accordance with US GAAP these consultants are considered to be non-employees and unvested stock options granted to consultants are recorded at fair value, which are re-measured at each reporting date, until a measurement date occurs (as the consultant agreements of the Group do not define a strict performance target, final measurement date is considered to be the contract-end date). An adjustment to decrease net loss is recorded under US GAAP for € 50 as of December 31, 2006, increase net loss for € 47 as of December 31, 2005 and nil change to 2004, to account for this difference.

Difference between IFRS and US GAAP with respect to option accounting method

Prior to 2005, Crucell granted options to employees which are exercisable immediately from date of grant. However, the option plan contains profit retribution clauses which apply when an employee leaves. Under IFRS and US GAAP the option plan is treated as an option plan with graded vesting periods. As of 2005 the Group grants options that vest straight line over a period of 4 years.

Graded vesting under IFRS is to be accounted for using the accelerated method for share-based compensation. In certain circumstances under US GAAP a choice can be made to recognize share-based compensation in accordance with the accelerated method or straight-line method. Crucell’s accounting policy under US GAAP for the prior option plans is the straight-line method. Therefore, there is a difference between the expenses recorded under the straight line versus the accelerated method for these options. An adjustment to increase net loss is recorded under US GAAP for € 560, € 355 and € 791 for the periods ended December 31, 2006, 2005 and 2004, respectively, to account for this difference.

Note c Results Investments associates and joint ventures

In accordance with IFRS, prior to the Initial Public Offering (IPO) of Galapagos in 2005 the Company’s investment in Galapagos was considered an “associate”. IAS 28 Investments in Associates (IAS 28) clarifies that investments in associates over which the investor has significant influence must be accounted for using the equity method. Contrary to US GAAP, which requires the investment to be carried at cost less its proportionate portion Galapagos losses with a minimum of nil, the investment in Galapagos should be reported using the net asset value of Galapagos, with a minimum of nil (as Crucell has no obligation to fund the incurred losses of the investment). As a result under IFRS dilution gains

F-59

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

resulting from capital increases of Galapagos resulted in gains for Crucell in the amounts of € 455 and € 704 in the years ended December 31, 2005 and 2004, respectively.

As the Group’s shareholding decreased to 11.7%, due to the IPO of Galapagos, the Group ceased to have significant influence. IAS 28 states that an investor shall discontinue the use of the equity method from the date that it ceases to have significant influence over an associate and shall account for the investment in accordance with IAS 39 from that date.

Under IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) the shareholding in Galapagos is classified as “available for sale”. A gain or loss on an available-for-sale financial asset shall be recognized directly in equity, through the statement of changes in equity, except for impairment losses, until the financial asset is derecognized, at which time the cumulative gain or loss previously recognized in equity shall be recognized in profit or loss. Dividends on an available-for-sale equity instrument is recognized in profit or loss when the entity’s right to receive payment is established. As of the date of dilution, the investment had a carrying value of € 1.7 million, resulting in an unrealized gain of € 9.6 million in accordance with IFRS. For US GAAP purposes, as of the date of dilution the investment had a carrying value of nil resulting in an unrealised gain of € 11.3 million. The current accounting treatment under IFRS is in line with the US GAAP accounting treatment as the investment is carried at fair value, hence there is no difference for 2006.

Note d Acquired In-Process Research and Development Expense

Under IFRS in accordance with IAS 38 Intangible Assets, acquired in-process research and development (“IPR&D”) projects are capitalized as intangible assets at fair value, with annual impairment tested and subsequent amortization when the product receives market authorization. Further, under IFRS, deferred tax is provided for IPR&D assets acquired in a business combination. For US GAAP purposes, in accordance with FAS 141 Business Combinations (FAS 141), such projects are expensed immediately following the acquisition as the feasibility of the acquired research and development project has not been fully tested and the technology has no alternative future use. US GAAP does not provide for deferred tax on these assets, resulting in an adjustment to deferred tax and goodwill. The differences in the treatment in IPR&D resulted in the following reconciling items in the net loss and shareholder’s equity reconciliations:

	Year ended December 31, 2006
IPR&D Expense for US GAAP purposes		€	(59,130	)
Reversal of IFRS Impairment on IPR&D		8,025
Reversal of IFRS IPR&D Amortization		523
Total		€	(50,582	)

Note e Notes Receivables from Employees

Under IFRS, director loans issued for financing options are presented as non-current assets. US GAAP requires director loans issued for financing options to be presented as part of shareholders’ equity. An adjustment to equity of € 168, € 194 and € 224 as of December 31, 2006, 2005 and 2004, respectively, was recorded under US GAAP to properly classify these loans.

F-60

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Note f Business Combinations

For financial reporting purposes, the cost of acquiring a business is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition for both IFRS and US GAAP. Any excess of purchase cost over the fair values of the acquired net assets is reported as goodwill.

Under IFRS in accordance with IFRS 3 Business Combinations, the date of exchange, which is when the acquirer effectively obtains control of the acquiree, is used as the measurement date for determining the fair value of shares given as consideration in a business combination. Under US GAAP and FAS 141 the announcement date (or the average of dates within a certain range) is used as the measurement date when securities are issued to purchase the acquiree. As a result, there is a difference in the purchase price to be allocated to the acquired entities under IFRS and US GAAP. The purchase price adjustment between IFRS and US GAAP is due to different dates used to value the Crucell securities issued for the acquisitions of Berna Biotech and acquisition of the remaining Rhein Biotech shares totaling € 22.9 million. This difference directly effects goodwill on the balance sheet.

Under US GAAP the impairment test for intangible assets subject to amortization is conducted in two steps. The first step is to compare the carrying amount to undiscounted cash flows. If the carrying amount is higher than the sum of the undiscounted cash flows, the second step is to calculate the impairment based on discounted cash flows expected from the use and eventual disposition of the asset. For intangible assets not subject to amortization, the impairment test consists of a comparison of the fair value of intangible asset to its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equity to that excess.

Under US GAAP goodwill is tested for impairment annually. The impairment test is also comprised of two steps. The initial step is designed to identify potential goodwill impairment by comparing an estimate of the reporting unit’s fair value of all assets and liabilities, including goodwill, to their carrying amounts. If the carrying amount exceeds the fair value of the reporting unit, a second step if performed, which compares the implied fair value to the applicable reporting unit’s goodwill with the carrying amount of that goodwill, to measure the amount of goodwill impairment, if any.

No differences in impairment of goodwill between IFRS and US GAAP were noted by the Group.

Note g Employee Benefits

Pension Assets and Liabilities Fair Value Adjustments Included in Equity

The difference recorded in other comprehensive income under US GAAP for an amount of € 2.8 million relates to the change in market value on pension assets, which are treated differently under US GAAP.

Under IFRS certain pension assets receive off-balance sheet treatment as the recognized assets are limited to the net total of any cumulative unrecognized net actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan (the “asset ceiling”). In addition the assets of a specific Swiss pension foundation, the “Wellfare foundation” do not qualify for recognition under IFRS.

Under US GAAP, these amounts are required under FAS 87 Employers Accounting for Pensions (FAS 87), FAS 88 Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension

F-61

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Plans and for Termination Benefits (FAS 88) and FAS 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R) (FAS 158) to be included on the balance sheet. Adjustments related to deferred taxes were also applied in purchase accounting relating to these assets. Due to the difference in accounting for certain assets under US GAAP this resulted in a reduction of goodwill in the purchase price allocation.

Adoption of FAS 158

IFRS (IAS 19, Employee Benefits) allows deferred recognition, in both the income statement and the balance sheet, of changes to the plan assets, plan amendments, changes in the actuarial assumptions used to measure the benefit obligation and experience gains and losses compared to those assumptions. Under US GAAP, these items are all recognized in the balance sheet as they occur, but their recognition in net income is deferred using the corridor method for actuarial gains and losses, and is amortized over expected future service for plan amendments. In addition FAS 158, Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans, requires the funded status of the Group’s plans to be recognized in full as an asset or liability in the employer’s balance sheet. Under US GAAP, shareholder’s equity as of December 31, 2006 is lower, and the net benefit liability recorded on the balance sheet is higher by the post-tax amount of actuarial gains and losses and past service costs. See the below reconciliation for the impact of adoption in 2006 of FAS 158. No other differences in the accounting for the pension plans are present between IFRS and US GAAP.

US GAAP equity at December 31, 2006 prior to adoption of FAS 158	€	473,595
Adoption of SFAS 158	(184		)
Deferred tax on above	40
US GAAP equity after adoption of FAS 158 at December 31, 2006	€	473,451

Note h Differences in Cumulated Translation Adjustment

Due to the differences discussed above, such as the difference in the purchase price of acquisitions and the difference in the treatment of acquired in-process research and development, there are differences in the related cumulated translation adjustment during re-measurement and translation. The differences in cumulative translation adjustments represents differences created as a result of applying US GAAP.

Tax Effect on US GAAP Adjustments

The tax effect on US GAAP adjustments represent the temporary differences created as a result of applying US GAAP. However, as there is a full valuation allowance recorded on the Group’s net deferred tax assets, the results of applying US GAAP does not significantly change the Group’s deferred tax position.

Cash Flow Statement

For IFRS, the Group prepares and reports financial information on its cash flows using the guidance in IAS 7, Cash Flow Statements. Since the information required under IAS 7 is similar to the content and presentation of cash flow information prepared under US GAAP under FASB Statement No. 95, Statement of Cash Flows, Item 17 of SEC Form 20-F does not require additional information, disclosure or a different presentation of cash flow information for the Group.

F-62

Notes to the Consolidated Financial Statements
(amounts in thousands of Euro, except per share data) (Continued)

Recently Issued Accounting Pronouncements

In February 2006, the FASB issued FAS 155 Accounting for Certain Hybrid Financial Instruments (FAS 155), an amendment of FASB Statements No. 133 and 140. FAS 155 nullifies the guidance from the FASB’s Derivatives Implementation Group (DIG) in Issue D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets, which deferred the application of the bifurcation requirements of FAS 133 for certain beneficial interests. FAS 155 provides a fair value measurement option for certain hybrid financial instruments that contain an embedded derivative that would otherwise require bifurcation and requires that beneficial interests in securitized financial assets be analyzed to determine whether they are freestanding derivatives or whether they are hybrid instruments that contain embedded derivatives requiring bifurcation. FAS 155 also provides clarification on specific points related to derivative accounting. FAS 155 is effective for fiscal years beginning after September 15, 2006. The Group does not currently expect FAS 155 to have a material impact on its financial position, results of operations or cash flows.

In July 2006, the FASB issued FAS Interpretation 48 Accounting for Uncertainty in Income Taxes, an Interpretation of SFAS 109, Accounting for Income Taxes (FIN 48). FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. FIN 48 requires that a tax benefit from an uncertain position may only be recognized if it is more likely than not that the position is sustainable based on its technical merits and the amount of the benefit recognized is the largest amount of the tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority. The Company will assess all material open positions in all tax jurisdictions as of adoption date and determine the appropriate amount of tax benefits that are recognizable under FIN 48. Any difference between the amounts previously recognized and the benefit at the adoption date will be recorded as an adjustment to retained earnings. FIN 48 is effective for annual periods beginning after December 15, 2006 and the Group plans to adopt as of January 1, 2007. The Group is currently evaluating the potential impact, if any, that the adoption of FIN 48 will have on the Group’s consolidated financial statements.

In September 2006, the FASB issued FAS 157 Fair Value Measurements (FAS 157). This Statement defines fair value, establishes a framework for measuring fair value in US GAAP, and expands disclosures about fair value measurements. This Statement applies to other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. The Group plans to adopt this statement beginning January 1, 2007.

In February 2007, the FASB issued FAS 159 The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159). This Statement permits entities to choose, at specified election dates, to measure eligible financial instruments at fair value. Unrealized gains and losses on items for which the fair value option has been elected would be reported in net income at each subsequent reporting date, and upfront costs and fees related to those items would be recognized in net income as incurred and not deferred. The Group is unlikely to elect the Fair Value Option.

F-63

	UNITED STATES	OMB APPROVAL
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		hours per response... 2631.00
	FORM 20-F

Title of each class		Name of each exchange on which registered
American Depositary Shares,		Nasdaq Global Market
each representing one ordinary share,
par value € 0.24

	As of December 31,
	2006	2005	2004	2003	2002
	(in thousands of Euro)
Consolidated Balance Sheet Data:
Assets:
Cash and cash equivalents	157,837	111,734	76,711	87,210	110,645
Total current assets	316,679	131,038	84,155	99,753	113,576
Total assets	623,838	169,543	98,667	113,744	128,956
Liabilities and shareholders’ equity:
Total current liabilities	89,403	15,977	14,773	11,716	12,799
Total non-current liabilities	60,984	16,151	5,583	11,045	5,649
Total shareholders’ equity	473,451	137,415	78,311	90,983	110,508
Total liabilities and shareholders’ equity	623,838	169,543	98,667	113,744	128,956

Year ended December 31,	High	Low	Average(1)		End of Period
	€	€	€		€
2002	1.16	0.95		1.06		0.95
2003	0.97	0.80		0.89		0.80
2004	0.85	0.73		0.81		0.73
2005	0.86	0.73		0.80		0.84
2006	0.84	0.75		0.80		0.76

Presentation of Financial and Other Information		1
Forward-Looking Statements		1
Other		1
PART I
Item 1.	Identity of Directors, Senior Management and Advisors	2
Item 2.	Offer Statistics and Expected Timetable	2
Item 3.	Key Information	2
Item 4.	Information on the Company	19
Item 5.	Operating and Financial Review and Prospects	61
Item 6.	Directors, Senior Management and Employees	80
Item 7.	Major Shareholders and Related Party Transactions	96
Item 8.	Financial Information	98
Item 9.	The Offer and Listing	98
Item 10.	Additional Information	100
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	113
Item 12.	Description of Securities Other than Equity Securities	113
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	114
Item 14.	Material Modifications to the Rights of Security Holders	114
Item 15.	Controls and Procedures	114
Item 16.	Reserved	117
Item 16A.	Audit Committee Financial Expert	117
Item 16B.	Code of Ethics	117
Item 16C.	Principal Accountant Fees and Services	117
Item 16D.	Exemptions from the Listing Standards for Audit Committees	118
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	118
PART III
Item 17.	Financial Statements	119
Item 18.	Financial Statements	119
Item 19.	Exhibits	119

	Years ended December 31,
	2006		2005		2004
	(In thousands of Euro, except share data)
Consolidated Income Statement Data:
Revenues
Product sales	103,918		—		—
License fees	16,955		20,848		12,429
Service fees	10,694		11,881		5,712
Total revenues	131,567		32,729		18,141
Cost of goods sold	(90,489	)	(7,156	)	(5,644	)
Other operating income	9,356		4,840		4,481
Operating expenses:
Research and development	(67,606	)	(34,048	)	(23,676	)
Selling, general and administrative	(47,199	)	(13,689	)	(16,819	)
Restructuring	(3,120	)	—		—
Impairment	(30,416	)	—		—
Total Operating expenses	(148,341	)	(47,737	)	(40,495	)
Operating loss	(97,907	)	(17,324	)	(23,517	)
Financial income	13,453		2,322		1,789
Financial expenses	(11,706	)	(131	)	(394	)
Result investments associates and joint ventures	(1,956	)	(455	)	(704	)
Loss before tax	(98,116	)	(15,578	)	(22,826	)
Income tax	(10,551	)	—		—
Loss for the year	(87,565	)	(15,578	)	(22,826	)
Net loss per share—basic and diluted	(1.53	)	(0.39	)	(0.63	)
Weighted average shares outstanding—basic and diluted	57,064,034		39,852,064		36,382,662

	Year ended December 31,
	2005*		2006**
Audit fees	€	636		1,178
Audit-related fees	12			58
Tax fees	31			—
Total	€	679 679		1,236

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 between Crucell Holland B.V. and R.H.P. Brus—dated June 30, 2006
4.6				Employment contract between Crucell Holland B.V. and Prof. Dr. J. Goudsmit—dated June 30, 2006
4.7				Employment contract between Crucell Holland B.V. and L. Kruimer—dated June 30, 2006
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)†****
4.9				Transaction Agreement dated December 1, 2005 by and between Crucell N.V. and Berna Biotech AG******
4.10				Supply Agreement dated November 12, 2001 and the Letter of Amendment to the same Agreement, dated June 24, 2004 between CSL Limited and Berna Biotech Limited******
4.11				Collaboration Agreement, dated December 1, 2000, between Chiron Behring GmbH & Co. and Rhein Biotech N.V. and Green Cross Vaccine Corporation*****
8.1				List of Subsidiaries of Crucell N.V.—See item 4 “Information on the Company”
12.1				Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002—dated June 11, 2007
12.2				Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002—dated June 11, 2007
13.1				Certification of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002—dated June 11, 2007
99.1				Crucell Code of Ethics****

By:	/s/ RONALD H.P. BRUS	By:	/s/ LEONARD KRUIMER
	Ronald H.P. Brus		Leonard Kruimer
	Chief executive Officer		Chief Financial Officer

Reports of Independent Registered Public Accounting Firms	F-2
Consolidated Income Statements	F-4
Consolidated Balance Sheets	F-5
Consolidated Statements of Changes in Equity	F-6
Consolidated Cash Flow Statements	F-7
Notes to the Consolidated Financial Statements	F-8

	/s/ Ernst & Young Accountants
Amsterdam, The Netherlands
April 18, 2006