We are currently dependent on third parties to market and distribute defibrotide in finished dosage form, and we may continue to be dependent on third parties to market and distribute defibrotide.

 

Our internal ability to handle the marketing and distribution functions for defibrotide is limited and we do not expect to develop the capability to provide marketing and distribution for defibrotide.  Our long-term strategy includes either developing marketing and distribution capacity internally or entering into alliances with third parties to assist in the marketing and distribution of our product candidates. We have entered into an agreement with Sigma-Tau Pharmaceuticals, Inc. to market defibrotide to treat and prevent VOD in North America, Central America and South America and we may need to develop these capabilities internally or enter into similar agreements to market and distribute defibrotide to prevent VOD outside the Americas.  We face, and will continue to face, intense competition from other companies for collaborative arrangements with pharmaceutical and biotechnology companies, for establishing relationships with academic and research institutions, for attracting investigators and sites capable of conducting our clinical trials, and for licenses of proprietary technology. Moreover, these arrangements are complex to negotiate and time-consuming to document. Our future profitability will depend in large part on our ability to enter into effective marketing agreements and our product revenues will depend on those marketers’ efforts, which may not be successful.

 

If we are unable to attract and retain qualified personnel and key relationships, we may be unable to successfully develop and commercialize defibrotide or otherwise manage our business effectively.

 

We are highly dependent on our senior management, whose services are critical to the successful implementation of research and development, manufacturing and regulatory strategies and develop and maintain relationships with qualified researchers. If we lose their services or the services of one or more of the other members of our senior management or other key researcher, our ability to successfully commercialize defibrotide or otherwise manage our business effectively could be seriously harmed.

 

Replacing key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of specific skills and experience required to develop, gain regulatory approval of and commercialize defibrotide successfully. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these additional key personnel. In addition, under Italian law, we cannot incentivize such key employees with certain forms of equity grants, such as restricted stock awards, or grant stock options with an exercise price at or near the recent trading prices of our ADSs, both of which could further limit our ability to retain and hire key personnel.

 

On March 1, 2010, we announced our decision to close our New York office and began transitioning the New York activities to our headquarters in Como, Italy.  If we are unsuccessful in transitioning these activities, our business and results of operations could be negatively impacted.  In addition, we may need to hire additional personnel and add corporate functions that we currently do not have.  Our ability to manage our operations and growth will require us to continue to improve our operational, financial and management controls and reporting system and procedures, or contract with third parties to provide these capabilities for us.

 

All of our manufacturing capability is located in one facility that is vulnerable to natural disasters, telecommunication and information system failures, terrorism and similar problems, and we are not insured for losses caused by all of these incidents.

 

We conduct all of our manufacturing operations in one facility located in Villa Guardia, near Como, Italy. This facility could be damaged by fire, floods, earthquake, power loss, telecommunication and information system failures, terrorism or similar events. Our insurance covers losses to our facility, including the buildings, machinery, electronic equipment and goods, for approximately €15 million, but does not insure against all of the losses listed above, including terrorism and some types of flooding. Although we believe that our insurance coverage is adequate for our current and proposed operations, there can be no guarantee that it will adequately compensate us for any losses that may occur.  We are not insured for business interruption and we have no replacement manufacturing facility readily available.

 

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We have sold Prociclide and Noravid (two formulations of defibrotide) in Italy to treat vascular disease with risk of thrombosis, which may affect the pricing of defibrotide in Europe for the prevention or treatment of VOD.

 

Until December 31, 2008, through our distribution agreement with Crinos S.p.A., we sold Prociclide and Noravid (both forms of defibrotide) in Italy to treat vascular disease with risk of thrombosis.  While we have stopped selling Prociclide and Noravid for this treatment in Italy, if defibrotide is approved for sale in Europe or Italy to treat and prevent VOD, or both, we may need to also obtain approval from regulators as to what price we can charge for these uses of defibrotide.  The regulators may impose an artificially low cap on defibrotide based on the relatively low price-point of Prociclide and Noravid previously sold in Italy for the treatment of vascular disease with risk of thrombosis.

 

Our industry is highly competitive and subject to rapid technological changes. As a result, we may be unable to compete successfully or to develop innovative products, which could harm our business.

 

Our industry is highly competitive and subject to significant and rapid technological change as researchers learn more about diseases and develop new technologies and treatments.  Incidence of VOD may decrease with new technologies and conditioning regimens, which will negatively impact our sales opportunities. While we are unaware of any other products or product candidates that treat or prevent VOD, we believe that other companies have products or are currently developing products to treat some of the same disorders and diseases that defibrotide is designed to treat. These companies include Genzyme Corp., Millennium Pharmaceuticals, Inc., Otsuka Pharmaceutical Co., Ltd., Eisai Co., Ltd.,  and Celgene Corp.

 

Many of these competitors have substantially greater research and development capabilities and experience, and greater manufacturing, marketing and financial resources than we do. In addition, these companies’ products and product candidates are in more advanced stages of development than ours or have been approved for sale by the FDA and other regulatory agencies. As a result, these companies may be able to develop their product candidates faster than we can or establish their products in the market before we can or develop a generic form of defibrotide. Their products may also prove to be more effective, safer or less costly than defibrotide, which could hurt our ability to recognize any significant revenues.

 

In May 2003, the FDA designated defibrotide as an orphan drug to treat severe VOD.  In January 2007, the FDA designated defibrotide as an orphan drug to prevent VOD as well.  If the FDA approves the New Drug Applications that we intend to file before approving a New Drug Application filed by anyone else for these uses of defibrotide, the orphan drug status will provide us with limited market exclusivity for seven years from the date of the FDA’s approval of our New Drug Application. However, a marketing authorization to another applicant may be granted for the same product if we give our consent to the second applicant, we are unable to supply sufficient quantities of defibrotide, or the second applicant can establish in its application that its product is safer, more effective or otherwise clinically superior to our product. In that case, our product would not have market exclusivity. Additionally, while we are not aware of any other company researching defibrotide for these uses, if another company does develop defibrotide for these uses, there is no guarantee that the FDA will approve our New Drug Application before approving the other company’s defibrotide product for these uses, in which case the first product approved would have market exclusivity and our products would not be eligible for approval until that exclusivity expires.

 

In July 2004, EMEA designated defibrotide as an orphan medicinal product to both treat and prevent VOD. If the European regulators grant us a marketing authorization for those uses of defibrotide, we will have limited market exclusivity for those uses for ten years after the date of the approval. However, a marketing authorization may be granted to another applicant for the same product if we give our consent to the second applicant, we are unable to supply sufficient quantities of defibrotide, or the second applicant can establish in its application that its product is safer, more effective or otherwise clinically superior to our product.  In that case, our product would not have market exclusivity.

 

If we are unable to adequately protect our intellectual property, our ability to compete could be impaired.

 

Our long-term success largely depends on our ability to create and market competitive products and to protect those creations. Our pending patent applications, or those we may file in the future, may not result in patents being issued. Until a patent is issued, the claims covered by the patent may be narrowed or removed entirely and, therefore, we may not obtain adequate patent protection.  As a result, we may face unanticipated competition, or conclude that without patent rights the risk of bringing products to the market is too great, thus adversely affecting our operating results.

 

Because of the extensive time required for the development, testing and regulatory review of a product candidate, it is possible that before defibrotide can be approved for sale and commercialized, our relevant patent rights may expire or remain in force for only a short period following commercialization.  We have been issued a patent in the U.S. and several other countries which covers the method for determining the biological activity of defibrotide.  This patent expires in 2022 in most countries.    We believe this to be an important patent because the analytical release of a biological product like defibrotide is a key step in confirming the purity and biological activity of the final product.  There may be no opportunities to extend this patent and thereby extend exclusivity related to FDA and EMEA, in which case we could face increased competition for defibrotide.  Patent expiration could adversely affect our ability to protect future product development and, consequently, our operating results and financial position.  In addition, generic innovators may be able to circumvent this patent and design a novel analytical method for determining the biological activity of defibrotide.  In this case, a generic defibrotide could potentially be on the market once the relevant protections offered by our orphan designations end.

 

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We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. We intend to eventually license or sell our products in China, South Korea and other countries which do not have the same level of protection of intellectual property rights that exists in the United Sates and Europe. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

 

Risks Related to Ownership of the American Depositary Shares

 

Our ADSs have generally had low trading volume, and its public trading price has been volatile.

 

Between our initial public offering on June 21, 2005 and December 31, 2009, the closing price of our American Depositary Shares, or ADSs, have fluctuated between $.33 and $24.40 per share, with an average daily trading volume for the twelve months ended December 31, 2009 of approximately 54,736 ADSs.  The market may experience significant price and volume fluctuations that are often unrelated to the operating performance of individual companies.

 

In addition to general market volatility, many factors may have a significant adverse effect on the market price of our ADSs, including:

 

·

continuing operating losses, which we expect over the next several years as we continue our development activities;

 

·

announcements of decisions made by regulators;

 

·

results of our preclinical studies and clinical trials;

 

·

announcements of improvements, new commercial products, failures of products, or progress toward commercialization by our competitors or peers;

 

·

influence and control by our commercial partner and significant shareholder, Sigma-Tau Finanziaria S.p.A.;

 

·

developments concerning proprietary rights, including patent and litigation matters;

 

·

publicity regarding actual or potential results with respect to product candidates under development by us or by our competitors;

 

·

regulatory developments; and

 

·

quarterly fluctuations in our financial results.

 

We may not remain listed on the Nasdaq Global Market.

 

Between our public offering and May 2006, our ADSs were listed on the American Stock Exchange.  Since May 2006, our ADSs have been listed on the Nasdaq Global Market.  The Nasdaq Global Market sets forth various requirements that we must meet in order for our ADSs to continue to be listed on the Nasdaq Global Market.  Violations of the continued listing requirements include:

 

·

if the closing bid price of our ADSs drops below $1.00 for a period of 30 consecutive trading days;

 

·

if our stockholders’ equity falls below $10 million; or

 

·

if we fail to maintain a market value of publicly held securities of at least $5 million for 30 consecutive trading days.

 

If we violate any of these continued listing requirements, our ADSs could be delisted from the Nasdaq Global Market.  The delisting of our ADSs could have negative results, including the potential loss of confidence by suppliers and employees, the loss of institutional investor interest, and fewer business development opportunities.

 

As of December 31, 2009, our stockholders’ equity was $10.5 million (€7.33 million).  If we fail to meet the stockholders’ equity or fail to meet the minimum bid price and minimum market value requirements, we may be delisted from the Nasdaq Global Market.

 

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Our largest shareholders exercise significant control over us, which may make it more difficult for you to elect or replace directors or management and approve or reject mergers and other important corporate events, including obtaining potential financing.

 

Our largest shareholder, FinSirton S.p.A., will own approximately 25% of our outstanding ordinary shares at March 31, 2010. Dr. Laura Ferro, who is our former Chief Executive Officer and President and a current member on our board of directors, together with members of her family controls FinSirton.  In addition, Sigma-Tau Finanziaria S.p.A., along with its affiliates, will own approximately 18% of our outstanding ordinary shares at March 31, 2010.  Marco Codella, who is the chief financial officer of Sigma-Tau Finanziaria, serves as a member of our board of directors.  Moreover, we have licensed our rights in defibrotide to treat and prevent VOD to Sigma-Tau Pharmaceuticals, Inc., a wholly owned subsidiary of Sigma-Tau Finanziaria.

 

Both FinSirton and Sigma-Tau Finanziaria may substantially control the outcome of all matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other important corporate events.  They may exercise this ability in a manner that advances their best interests and not necessarily yours.  Also, the concentration of our beneficial ownership may have the effect of delaying, deterring or preventing a change in our control, or may discourage bids for the ADSs or our ordinary shares at a premium over the market price of the ADSs. The significant concentration of share ownership may adversely affect the trading price of the ADSs due to investors’ perception that conflicts of interest may exist or arise.

 

As discussed in our risk factor entitled “Our shareholders can prevent us from executing a financing by alleging that our board of directors acted with serious irregularities when approving such financing, because the terms of such financing could harm our company,” both FinSirton and Sigma-Tau Finanziaria own enough of our ordinary shares to bring legal action against our board of directors and may be able to prevent us from completing an important corporate event, such as a financing. In addition, under Italian law, directors are not required to recuse themselves from any discussion even if a conflict of interest exists. Accordingly, directors that are affiliated with our shareholders may be present for certain discussions that involve or impact the shareholders to which such directors are affiliated.

 

If a significant number of ADSs are sold into the market, the market price of the ADSs could significantly decline, even if our business is doing well.

 

Our outstanding ordinary shares, ordinary shares issuable upon exercise of warrants and ordinary shares issuable upon exercise of options are not subject to lock-up agreements.  We have filed registration statements registering the resale of most of our outstanding ordinary shares and related ADSs and all of our ordinary shares and related ADSs issuable upon exercise of our outstanding warrants and options.  Such registration and ultimate sale of the securities in the markets may adversely affect the market for the ADSs.

 

You may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your right to vote.

 

Except as described in this annual report and in the deposit agreement for the ADSs with our depositary, holders of the ADSs will not be able to exercise voting rights attaching to the ordinary shares evidenced by the ADSs on an individual basis. Holders of the ADSs will have the right to instruct the depositary as their representative to exercise the rights attached to the ordinary shares represented by the ADSs. You may not receive voting materials in time to instruct the depositary to vote, and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

 

You may not be able to participate in rights offerings and may experience dilution of your holdings as a result.

 

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under our deposit agreement for the ADSs with our depositary, the depositary will not offer those rights to ADS holders unless both the rights and the underlying securities to be distributed to ADS holders are either registered under the Securities Act of 1933, as amended, or exempt from registration under the Securities Act with respect to all holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective. In addition, we may not be able to take advantage of any exemptions from registration under the Securities Act. Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings as a result.

 

You may be subject to limitations on transfer of your ADSs.

 

Your ADSs represented by the ADRs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

 

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Risks Relating to Being an Italian Corporation

 

The process of seeking to raise additional funds is cumbersome, subject to the verification of an Italian notary public in compliance with our bylaws and applicable law, and may require prior approval of our shareholders at an extraordinary shareholders’ meeting.

 

We are incorporated under the laws of the Republic of Italy. The principal laws and regulations that apply to our operations, those of Italy and the European Union, are different from those of the United States. In order to issue new equity or debt securities convertible into equity, with some exceptions, we must increase our authorized capital. In order to do so, our board of directors must meet and resolve to recommend to our shareholders that they approve an amendment to our bylaws to increase our capital. Our shareholders must then approve that amendment to our bylaws in an extraordinary meeting duly called, upon the favorable vote of the required majority, which may change depending on whether the meeting is held on a first or second call. These meetings take time to call. In addition, an Italian notary public must verify the compliance of the capital increase with our bylaws and applicable Italian law. Further, in general, under Italian law, our existing shareholders and any holders of convertible securities (except in specific cases) have preemptive rights to acquire any such shares pro rated on their percentage interest in our company and on the same terms as approved for such capital increase. Also, our shareholders can authorize the board of directors to increase our capital, but the board may exercise such power for only five years. If the authorized capital by the board is not issued by the end of those five years, the authorized capital expires, and our board and shareholders would need to meet again to authorize a new capital increase.

 

Italian law provides, with respect to shareholders’ resolutions approving capital increase, that, in the event of absence of the minutes of the meeting, impossibility or illegality of the resolution, any interested person may, for a period of 180 days following the filing of the shareholders’ resolution with the Register of Companies, challenge such resolution. If a shareholders’ meeting was not called to approve the capital increase, the relevant resolution should be considered invalid and, any interested person may challenge the capital increase for a period of 90 days following the approval of the financial statements referring to the year during which the shareholders’ resolution has been, also partially, executed. In addition, once our shareholders authorize a capital increase, all those authorized shares that have been subscribed need to be entirely paid-up before the shareholders may authorize a new capital increase. These restrictions could limit our ability to issue new equity or convertible debt securities on a timely basis.

 

Our shareholders can prevent us from executing a financing by alleging that our board of directors acted with serious irregularities when approving such financing, because the terms of such financing could harm our company.

 

On August 12, 2008, Sigma-Tau Finanziaria S.p.A., together with one of its affiliates, filed a claim in the Court of Como claiming that our board of directors acted with serious irregularities in violation of their duties as directors when approving a potential financing, because such financing could harm the company.  On August 18, 2008, the Court of Como issued a temporary order preventing us from moving forward with a potential financing.  While this claim was later dismissed for lack of damages, it did, nonetheless, prevent the directors from implementing the potential financing.  Any group of shareholders constituting at least 10% of our outstanding ordinary shares could bring a similar action on a future board resolution regarding a financing or other important corporate action, and an Italian court could prevent the transaction from moving forward by issuing an order to that effect.

 

We are restricted under Italian law as to the amount of debt securities that we may issue relative to our equity.

 

Italian law provides that we may not issue debt securities for an amount exceeding twice the amount of our capital, of our legal reserve and of any other disposable reserves appearing on our latest Italian GAAP balance sheet approved by our shareholders. The legal reserve is a reserve to which we allocate 5% of our Italian GAAP net income each year until it equals at least 20% of our capital. One of the other reserves that we maintain on our balance sheet is a “share premium reserve,” meaning amounts paid for our ordinary shares in excess of the amount of such ordinary shares that is allocated to the capital. At December 31, 2009, the sum of our capital, legal reserves and other reserves on our unaudited Italian GAAP balance sheet was €28.6 million. If we issue debt securities in the future, until such debt securities are repaid in full, we may not voluntarily reduce our capital or allocate our reserves (such as by declaring dividends) if it results in the aggregate of the capital and reserves being less than half of the outstanding amount of the debt. If our equity is reduced by losses or otherwise such that the amount of the outstanding debt securities is more than twice the amount of our equity, some legal scholars are of the opinion that the ratio must be restored by a recapitalization of our company. If our equity is reduced, we could recapitalize by issuing new shares or having our shareholders contribute additional capital to our company, although there can be no assurance that we would be able to find purchasers for new shares or that any of our current shareholders would be willing to contribute additional capital.

 

If we suffer losses that reduce our capital to less than €120 thousand, we would need to either recapitalize, change our form of entity or be liquidated.

 

Italian law requires us to reduce our shareholders’ equity and, in particular, our capital to reflect on-going losses, in certain cases of losses exceeding 1/3 of the capital of the Company. We are also required to maintain a minimum capital of €120 thousand. At December 31, 2009, our Italian GAAP capital was approximately €14.9 million. If we suffer losses from operations that reduce our capital to less than €120 thousand, then either we must increase our capital (which we could do by issuing new shares or having our shareholders contribute additional capital to our company) to at least €120 thousand or convert the form of our company into an S.r.l., which has a lower capital requirement of €10 thousand. If we did not take these steps, our company could be liquidated.

 

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We apply our losses from operations against our legal reserves and capital. If our capital is reduced for more than one-third as a result of losses, our board of directors must call a shareholders’ meeting as soon as possible. The shareholders should take appropriate measures, which may include, inter alia, either the reduction of the legal reserves and capital by the amount of the remaining losses, or the carrying out of the losses forward for up to one year. If the shareholders vote to elect to carry the losses forward up to one year, and at the end of the year, the losses are still more than one-third of the amount of the capital, then we must reduce our capital by the amount of the losses.

 

Due to the differences between Italian and U.S. law, the depositary (on your behalf) may have fewer rights as a shareholder than you would if you were a shareholder of a U.S. company.

 

We are incorporated under the laws of the Republic of Italy. As a result, the rights and obligations of our shareholders are governed by Italian law and our bylaws, and are in some ways different from those that apply to U.S. corporations. Some of these differences may result in the depositary (on your behalf) having fewer rights as a shareholder than you would if you were a shareholder of a U.S. corporation. We have presented a detailed comparison of the Italian laws applicable to our company against Delaware law in “Item 10, Additional Information, Comparison of Italian and Delaware Corporate Laws.” We compared the Italian laws applicable to our company against Delaware law because Delaware is the most common state of incorporation for U.S. public companies.

 

Italian labor laws could impair our flexibility to restructure our business.

 

In Italy, our employees are protected by various laws giving them, through local and central works councils, rights of consultation with respect to specific matters regarding their employers’ business and operations, including the downsizing or closure of facilities and employee terminations. In particular, the following laws are worth mentioning: (i) Law no. 604/1966, regulating the individual dismissals; (ii) Law no. 223/1991, concerning the collective dismissal procedure; (iii) Law no. 428/1990, providing for the information and consultation procedure in case of transfer of the undertaking or part thereof and (iv) Legislative decree no. 25/2007, introducing a general right to information and consultation for employees. These laws and the collective bargaining agreements to which we are subject could impair our flexibility if we need to restructure our business.

 

 

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

 

Not applicable.

 

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PART II

 

ITEM 13. DEFAULTS, DIVIDEND ARRANGEMENTS AND DELINQUENCIES

 

None.

 

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

 

None.

 

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5. ACQUISITION OF MARKETING AUTHORIZATION AND TRADEMARKS

 

On December 28, 2006, the Company entered into a Master Agreement with Crinos S.p.A. to acquire the Italian marketing authorizations and related trademarks to Prociclide and Noravid (both forms of defibrotide) for €16,000.  Prociclide and Noravid have been sold in Italy to treat vascular disease with risk of thrombosis.  As part of the transaction, Crinos waived its right of first refusal to market future therapeutic indications for defibrotide in the European market, and the Company agreed to pay Crinos a 1.5% royalty on net sales of defibrotide for the treatment and/or prevention of VOD in Europe for seven years.  The transfer of the market authorizations was subject to approval by the Italian regulators, which occurred on April 26, 2007.

 

The Company entered into this transaction for long term strategic purposes. Specifically, to allow the Company to be able to manage defibrotide globally with control over the distribution of defibrotide and the flexibility to market defibrotide itself or seek marketing partners for the European market. As a result, in 2007 the Company wrote off all but €2,260 of the €16,000 purchase price (€13,740 charge) based primarily on an analysis of the net present value of the estimated future cash flows from the sales of only the oral formulation of defibrotide to treat vascular disease of thrombosis through December 31, 2008, as well as other cash flows through 2012.

 

In 2008, the Company decided not to renew the agreements entered into with Crinos for the distribution of Prociclide and Noravid in Italy, and allowed such agreements to expire on December 31, 2008.  Accordingly, the Company evaluated the recoverability of the marketing authorizations and trademarks from its expected future cash flows and, as reported in footnote 9, as of December 31, 2008, the Company wrote down the remaining net book value of such assets amounting to €847 and €848, respectively. 

On August 19, 2009, the Italian Agency accepted the Company’s request to withdraw the marketing authorization for Prociclide and Noravid.  On September 30, 2009, the Italian Agency granted an additional 180 days to complete the sale of products that were previously distributed.  The Company made the request to withdraw the marketing authorization of these forms of defibrotide as part of the Company’s overall strategy regarding the development of defibrotide to treat and prevent VOD.

 

6.    INVENTORIES

 

The Company’s inventories consisted of:

 

		December 31,
		2008				2009
Raw materials		€	526			€	407
Semi-finished goods			117				136
Finished goods			264				1,008
Total		€	907			€	1,551

 

At December 31, 2008 and 2009, respectively, the Company reserved €56 and €75 to adjust a by-product cost to its net realizable value.  As of December 31, 2008, the Company, in connection with the expiration and non-renewal of the distribution agreement entered into with Crinos, wrote down  €1,228 of semi-finished and finished Prociclide and Noravid in our inventory which included products returned by Crinos in January 2009. Prior to signing the named-patient and cost recovery agreements, all costs associated with the production of defibrotide were expensed as research and development expenses.

 

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7.    PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

The Company’s prepaid expenses and other current assets consisted of:

 

		December 31,
		2008				2009
VAT receivables		€	1,161			€	581
Tax credit			299				582
Other prepaid expenses and current assets			222				268
Total prepaid expenses and current assets		€	1,682			€	1,431

The value added tax (“VAT”) amounts represent a tax on the value of consumption. VAT has no effect on the Company’s operating results, as payments and receipts are allowed to be netted against each other in periodic filings with the tax authorities. The VAT payment system is a “custodial” relationship. VAT liabilities are generated when the Company invoices customers, including the VAT amount, and VAT receivables are created when the Company purchases goods and services subject to VAT.  The decrease in VAT receivable is due to the utilization of €516 to offset the payment of an equivalent amount of social securities and withholding tax,  reimbursement of quarterly VAT credit of €516 and the increase in 2009 VAT receivables of €452.

The tax credit includes a residual amount of €350 as government grants received, in the form of a tax credit, for 2008 research and development activities, which is expected to be utilized in the first quarter of 2010 to offset social securities and withholding tax due.  Additionally, the tax credit includes €232 of government grants due in the form of a tax credit for 2009 research and development activities, which will be utilized in the fourth quarter of 2010 after the Company has filed its 2009 tax return.

2008 and 2009 tax credit benefits have been accounted for in the second quarter of 2009 based on reliable estimates of the amount of tax credit to which the Company is entitled. The credits were accounted for in compliance with Law 244/07 and Law 296/06 enacted by the Italian Parliament, which established a tax credit in the measure of 10% of the research and development costs incurred in taxable year 2007/2009 (increased to 40% of the costs incurred on contracts entered into with University and Public Research Centers). On January 28, 2009, Decree N. 185/2008, released by the Italian Authorities, which amended Law 244/07 and Law 296/06 regarding the utilization of the tax credit, was converted into Law N. 2/2009. The law indicates that pre-approval (so called “nulla osta”) by the Tax Authority is required for the utilization of the tax credit and that filing the annual tax return is not alone sufficient to claim the utilization of such credit. On June 15 2009, we obtained such pre-approval for our 2008 and 2009 tax credits, which eliminated the uncertainty on the recoverability of such credit. For these reasons, the tax credit on 2008 and 2009 research and development activities, were recognized in the second quarter of 2009.

 

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8.    PROPERTY, MANUFACTURING FACILITY AND EQUIPMENT

 

The Company’s property, manufacturing facility and equipment consisted of:

 

		December 31,
		2008												2009
		Cost				Accumulated Depreciation				Net book value				Cost				Accumulated Depreciation				Net book  value
Land and building		€	2,686				1,254				1,432			€	2,687				1,327				1,360
Plant and machinery			14,977				7,587				7,390				15,184				8,508				6,676
Industrial equipment			1,264				695				569				1,269				764				505
Furniture and fixtures			1,060				473				587				1,084				562				522
Leasehold improvements			322				154				168				325				231				94
Internally Developed Software			674				105				569				685				153				532
Construction in progress			36				-				36				28				-				28
		€	21,019				10,268				10,751			€	21,262				11,545				9,717

		Number of warrants issued				Number of warrants exercised				Number of warrants cancelled				Number of warrants outstanding
Warrant issued in conjunction with Promissory note			503,298				22,734				-				480,564
Initial Public Offering			151,200				107,990				-				43,210
2005 private placement			713,518				713,518				-				-
2006 private placement			466,446				143,920				-				322,526
Total			1,834,462				988,162								846,300

In conjunction with the convertible promissory notes sold in a private placement from October 2004 to January 2005, the Company issued warrants for the purchase of an aggregate of 503,298 ordinary shares at a purchase price (as adjusted) of $9.52 per share. The warrants are fully vested, exercisable at the option of the holder, in whole or in part, and expire on the later of five years and three months from the date of grant or four years and three months from our initial public offering date. Through December 31, 2009, the Company issued 22,734 ordinary shares upon exercise of these warrants for proceeds of $216 (€170). As of  the date of the filing of these financial statements 395,586 warrants expired.

 

In connection with its initial public offering (“IPO”), the Company granted warrants to purchase 151,200 ordinary shares to the underwriters for services rendered during the IPO. The warrants are fully vested, exercisable at the option of the holder, in whole or in part, and expire five years from the date of grant. Through December 31, 2009, we had issued 107,990 ordinary shares upon exercise of these warrants at a price per share of $11.25, for proceeds of $1,215 (€914).

 

In connection with a private placement in 2005, the Company issued warrants for the purchase of an aggregate of 620,450 ordinary shares at an exercise price of $9.69 per ordinary share. The warrants are fully vested, exercisable at the option of the holder, in whole or in part, and expire five years from the date of grant. In addition, the Company issued to one of the placement agents a five year warrant for the purchase of 93,068 ordinary shares at an exercise price of $9.69 per ordinary share.  As of December 31, 2009, all of the warrants had been exercised and the Company had issued 713,518 ordinary shares underlying these warrants for aggregate proceeds of $6,914 (€5,000).

 

In connection with a private placement in 2006, the Company issued warrants for the purchase of an aggregate of 388,705 ordinary shares at an exercise price of $14.50 per ordinary share. In addition, the Company issued to one of the placement agents a five year warrant for the purchase of 77,741 ordinary shares at an exercise price of $17.40 per ordinary share. The warrants are fully vested, exercisable at the option of the holder, in whole or in part, and expire five years from the date of grant. Through December 31, 2009, we had issued 143,920 ordinary shares upon exercise of these warrants for proceeds of $2,087 (€1,490).

16.      EQUITY INCENTIVE PLANS.

 

Amended and Restated 2004 Equity Incentive Plan

 

Certain of the Company’s employees and directors participate in the Amended and Restated 2004 Equity Incentive Plan and Italy Stock Award Plan.  These plans were initially adopted on September 30, 2004 and amended on April 27, 2007.  The plans provide for the issue of incentives awards for up to 1,500,000 ordinary shares to employees, consultants, directors, and non-employee directors. Awards may be in the form of either incentive or non-qualified options.  Our compensation committee determines the price of share options granted under the incentive plan, provided that the exercise price for an incentive share option cannot be less than 100% of the fair market value of our ordinary shares on the date of grant.  The term of share options granted under the incentive plan generally may not exceed ten years, although the capital increase relating to the ordinary shares issuable upon exercise of such options expires on September 30, 2019.  As of December 31, 2009, there were 1,355,000 shares underlying outstanding options and 145,000 shares available for future grants under this plan.

 

Options granted under the incentive plan vest at the rate determined by our compensation committee. Typically, options granted under the incentive plan to officers and employees vest over three years, with one-third of the shares covered by the option vesting on the first anniversary of the grant date and the remainder vesting monthly over the next two years.

 

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2004 Italy Stock Award Sub-Plan

 

Our Amended and Restated 2004 Italy Stock Award Sub-Plan is a part of our Amended and Restated 2004 Equity Incentive Plan and provides for the grant of share options and the issuance of share grants to certain of our employees who reside in the Republic of Italy and who are liable for income tax in the Republic of Italy. Generally, the exercise price for a share option under the Italy sub-plan cannot be less than the average of the closing price of our ordinary shares listed on the American Stock Exchange or The Nasdaq Global Market System, as applicable, over the 30 days preceding the date of grant.

 

2007 Stock Option Plan

 

On April 27, 2007, the Company’s shareholders approved the 2007 Stock Option Plan providing for options that may be granted to the Company’s directors, employees and consultants to purchase up to 1,000,000 ordinary shares. As of December 31, 2009, there were 242,030 shares underlying outstanding options and 757,970 shares available for future grants under this plan.  Shares subject to options that have expired or otherwise terminated without being exercised in full again become available for issuance under the plan.

 

The 2007 Stock Option Plan is administered by our board of directors or a committee appointed by our board of directors. The board or the committee determines recipients and types of options to be granted, including the number of shares subject to an option, the vesting schedule of options, the exercisability of options, and subject to applicable restrictions, other terms of options. The board of directors has delegated administration of the 2007 Stock Option Plan to the compensation committee.

 

The term of share options granted under the 2007 Stock Option Plan generally may not exceed the earlier of ten years or March 26, 2022.  Our compensation committee determines the price of share options granted under the 2007 Stock Option Plan, subject to certain limitations.

 

Options granted under the 2007 Stock Option Plan vest at the rate determined by our compensation committee. Typically, options granted to employees under the 2007 Stock Option Plan vest over three years, at the rate of one-third of the shares covered by the option vesting on the first anniversary of the grant date and the remainder vesting monthly over the next two years.

 

The board of directors may amend the 2007 Stock Option Plan at any time. Amendments will be submitted for shareholder approval to the extent required by applicable laws, rules and regulations. The 2007 Stock Option Plan will terminate on March 26, 2022 unless sooner terminated by the board of directors or a committee appointed by the board of directors.

 

The following table lists the balance available by the Plans at December 31, 2009.

 

		Amended and Restated Nonstatutory Plan and Agreement				Amended and Restated 2004 Stock Option Plan				2007 Stock Option Plan
Number of shares authorized			60,000				1,500,000				1,000,000
Number of option granted since inception			60,000				1,500,000				327,178
Number of options exercised			60,000				-				-
Number of shares cancelled/expired			-				145,000				85,148
Number of shares available for grant			-				145,000				757,970

Stock-based compensation cost is measured at the grant date based on the fair value of the award ultimately expected to vest and is recognized as expense over the service period, which is generally the vesting period.  The Company recorded non-cash compensation expense of €1,804, €1,973 and €1,386 for the years ended December 31, 2007, 2008 and 2009, respectively.

 

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		Year ended December 31, 2007				Year ended December 31, 2008				Year ended December 31, 2009
Cost of goods sold			5				87				59
Research and development			437				385				267
General and administrative			1,362				1,501				1,060
Total stock based compensation			1,804				1,973				1,386

 

The Company expects to incur significant non-cash compensation expense for option grants in the future.  As of December 31, 2009 total compensation cost not yet recognized was €602, which is expected to be expensed over a maximum vesting period of 24 months.

 

The weighted average grant-date fair market value of options granted to officers, employees, directors and consultants for the years ended December 31, 2007 and 2008, as of the date of the grants, was $10.03 and $5.37, respectively. There were no options granted to officers, employees, directors and consultants for the year ended December 31, 2009.  The fair value of each option grant is estimated on the grant date using the Black-Scholes option-pricing model. The valuation of options granted was based on the following weighted average assumptions:

 

		Year ended December 31, 2007				Year ended December 31, 2008				Year ended December 31, 2009
Risk free interest rate			4.47%				2.60%				-
Expected dividend yield			0%				0%				-
Expected stock price volatility			60%				60%				-
Expected term		4.9 years				5.62 years					-

 

All of the Company’s stock options vest ratably through continued employment over the vesting period. The number of options expected to vest is based on estimated forfeitures of options that were outstanding at December 31, 2009. Once vested, options become exercisable immediately.

 

Exhibit		Description
Charter documents
1(i)		Articles of Association of Gentium S.p.A., formerly known as Pharma Research S.r.l. dated November 11, 1993, incorporated by reference to Exhibit 3(i) to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on January 24, 2005.
1(ii)		Amended and Restated Bylaws of Gentium S.p.A. dated April 27, 2007, incorporated by reference to Exhibit 1(ii) to the Annual Report on Form 20-F previously filed with the SEC on April 30, 2007.
American Depositary Share Documents
2.1		Form of Deposit Agreement among Gentium S.p.A., The Bank of New York and the owners and beneficial owners from time to time of American Depositary Receipts (including as an exhibit the form of American Depositary Receipt), incorporated by reference to Exhibit 4.6 to Amendment No. 5 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on June 9, 2005.
2.2		Form of American Depositary Receipt (see Exhibit 2.1).
Security Subscription Agreements
2.3		Securities Subscription Agreement among Gentium S.p.A. and the other parties thereto dated as of May 31, 2006, incorporated by reference to Exhibit 4.9.1 to the Registration Statement on Form F-3, Registration No. 333-135622, previously filed with the SEC on July 6, 2006.
2.4		Securities Subscription Agreement among Gentium S.p.A. and the other parties thereto, dated as of February 6, 2007, incorporated by reference to Exhibit 2 to the report on Form 6-K, previously filed with the SEC on February 7, 2007.
Warrants
2.5		Form of warrant (regarding Series A financing), incorporated by reference to Exhibit 4.2.2 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on January 24, 2005.
2.6		Form of Representatives’ Purchase Option between Gentium S.p.A. and Maxim Group LLC and I-Bankers Securities Inc., incorporated by reference to Exhibit 1.2 to Amendment No. 5 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on June 9, 2005.
2.7		Form of American Depositary Shares Purchase Warrant by Gentium S.p.A. dated October 14, 2005, incorporated by reference to Exhibit 4.8.2 to the Registration Statement on Form F-1, Registration No. 333-130796, previously filed with the SEC on December 30, 2005.
2.8.1		Form of American Depositary Shares Purchase Warrant by Gentium S.p.A. dated June 6, 2006, incorporated by reference to Exhibit 4.9.2 to the Registration Statement on Form F-3, Registration No. 333-135622, previously filed with the SEC on July 6, 2006.

 

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Exhibit

Description

2.8.2		Form of Ordinary Share Warrant by Gentium S.p.A. dated June 6, 2006, incorporated by reference to Exhibit 4.9.3 to the Registration Statement on Form F-3, Registration No. 333-135622, previously filed with the SEC on July 6, 2006.
Investor Rights and Registration Rights Agreements
2.9.1		Form of Investors’ Rights Agreement between Gentium S.p.A. and holders of the Series A senior convertible promissory notes and warrants dated October 15, 2004, incorporated by reference to Exhibit 4.2.4 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on January 24, 2005.
2.9.2		Amendment No. 1 to Gentium S.p.A. Series A Senior Convertible Promissory Notes, Warrants, Subscription Agreements and Investor Rights Agreements among Gentium S.p.A. and the other parties thereto dated May 27, 2005, incorporated by reference to Exhibit 4.2.6 to Amendment No. 4 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on May 31, 2005.
2.10		Investors’ Rights Agreement by and among Gentium S.p.A., Alexandra Global Master Fund Ltd. and Generation Capital Associates made as of January 10, 2005, incorporated by reference to Exhibit 4.3 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on January 24, 2005.
2.11		Investors’ Rights Agreement by and among Gentium S.p.A. and Sigma-Tau Finanziaria S.p.A. made as of April 4, 2005, incorporated by reference to Exhibit 4.5 to Amendment No. 1 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on April 7, 2005.
2.12		Registration Rights Agreement among Gentium S.p.A. and the other parties thereto made and entered into as of October 14, 2005, incorporated by reference to Exhibit 4.8.3 to the Registration Statement on Form F-1, Registration No. 333-130796, previously filed with the SEC on December 30, 2005.
2.13		Registration Rights Agreement among Gentium S.p.A. and the other parties thereto made and entered into as of June 6, 2006, incorporated by reference to Exhibit 4.9.4 to the Registration Statement on Form F-3, Registration No. 333-135622, previously filed with the SEC on July 6, 2006.
2.14		Registration Rights Agreement among Gentium S.p.A. and the other parties thereto made and entered into as of February 9, 2007, incorporated by reference to Exhibit 4.10.3 to the Registration Statement on Form F-3, Registration No. 333-141198, previously filed with the SEC on March 9, 2007.
Equity Incentive and Stock Option Plans
4.1.1		Amended and Restated 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8, Registration No. 333-137534, previously filed with the SEC on September 22, 2006.
4.1.2		Amendment No. 1 to Amended and Restated 2004 Equity Incentive Plan, made as of March 26, 2007, incorporated by reference to Exhibit 4.1.2 to the Annual Report on Form 20-F for the year ended December 31, 2007, previously filed with the SEC on April 30, 2007.
4.2.1		Amended and Restated Nonstatutory Share Option Plan and Agreement dated March 23, 2006, incorporated by reference to Exhibit 4.2 to the Annual Report on Form 20-F for the year ended December 31, 2005, previously filed with the SEC on May 30, 2006.

 

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Exhibit

Description

4.2.2		Amendment No. 1 to Amended and Restated Nonstatutory Share Option Plan and Agreement, made as of March 26, 2007, incorporated by reference to Exhibit 4.2.2 to the Annual Report on Form 20-F for the year ended December 31, 2007, previously filed with the SEC on April 30, 2007.
4.3		2007 Stock Option Plan, dated March 26, 2007, incorporated by reference to Exhibit 4.42 to the Annual Report on Form 20-F for the year ended December 31, 2007, previously filed with the SEC on April 30, 2007.
Loan Agreements
4.4		Ministry for Universities, Scientific and Technological Research Loan granted to Gentium S.p.A., successor in interest to Crinos Industria Farmacobiologica S.p.A., by Sanpaolo Imi S.p.A., dated September 27, 2000, incorporated by reference to Exhibit 10.6 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on January 24, 2005.
4.5		Loan Agreement between Banca Nazionale del Lavoro S.p.A. and Gentium S.p.A. dated June 14, 2006 incorporated by reference to Exhibit 10.7.3 to the Registration Statement on Form F-3, Registration No. 333-135622, previously filed with the SEC on July 6, 2006.
4.6		Loan Agreement for €230,000 with Banca Intesa S.p.A., dated December 20, 2006, incorporated by reference to Exhibit 2 to the report on Form 6-K, previously filed with the SEC on February 2, 2007.
4.7		Loan Agreement for €500,000 with Banca Intesa S.p.A., dated December 20, 2006, incorporated by reference to Exhibit 3 to the report on Form 6-K, previously filed with the SEC on February 2, 2007.
4.8		Loan Agreement for €225,000 with Banca Intesa S.p.A., dated December 20, 2006, incorporated by reference to Exhibit 4 to the report on Form 6-K, previously filed with the SEC on February 2, 2007.
4.9		Financing Contract between Banca Intesa Mediocredito S.p.A. and Gentium S.p.A. dated April 20, 2006, incorporated by reference to Exhibit 4.36.2 to the Annual Report on Form 20-F for the year ended December 31, 2005, previously filed with the SEC on May 30, 2006.
4.10		Loan Agreement, dated June 30, 2006, between San Paolo IMI S.p.A. and Gentium S.p.A. , incorporated by reference to Exhibit 4.43 to the Annual Report on Form 20-F for the year ended December 31, 2006, previously filed with the SEC on April 30, 2007.
Clinical Trial Agreements
4.11.1		Master Services Agreement, dated March 14, 2007, between MDS Pharma Services (US), Inc. and Gentium S.p.A., incorporated by reference to Exhibit 1 to the report on Form 6-K, previously filed with the SEC on March 20, 2007.
4.11.2		Statement of Work, effective August 8, 2007, between Gentium S.p.A. and MDS Pharma Services, Inc. (prospective arm), incorporated by reference to Exhibit 3 to the report on Form 6-K, previously filed with the SEC on August 22, 2007.
4.11.3		Statement of Work, effective August 8, 2007, between Gentium S.p.A. and MDS Pharma Services, Inc. (historical arm), incorporated by reference to Exhibit 4 to the report on Form 6-K, previously filed with the SEC on August 22, 2007.

 

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Exhibit

Description

License and Distribution Agreements
4.12.1		License and Supply Agreement by and between Gentium S.p.A. and Sigma-Tau Pharmaceuticals, Inc. (assignee of Sigma-Tau Industrie Farmaceutiche Riunite S.p.A.) dated December 7, 2001, incorporated by reference to Exhibit 10.15 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on January 24, 2005.
4.12.2		Letter Agreement, dated October 12, 2007, between Gentium S.p.A. and Sigma-Tau Pharmaceuticals, Inc., incorporated by reference to Exhibit 99.4 to the report on Form 6-K, previously filed with the SEC on December 12, 2007.
4.12.3*		Amendments to License and Supply Agreement and Letter Agreement, dated December 7, 2001 and October 12, 2007, respectively, effective January 7, 2010, between Gentium S.p.A. and Sigma-Tau Pharmaceuticals, Inc., incorporated by reference to Exhibit 2 to the Form 6-K, previously filed with the SEC on January 11, 2010.
4.13.1		Contract to Supply Active Ingredients between  Sirton Pharmaceuticals S.p.A. and Gentium S.p.A. dated January 2, 2006, incorporated by reference to Exhibit 4.24.2 to the Annual Report on Form 20-F for the year ended December 31, 2005, previously filed with the SEC on May 30, 2006.
4.13.2		Amendment No. 1 to Contract to Supply Active Ingredients, effective as of December 7, 2007, by and between Gentium S.p.A. and Sirton Pharmaceuticals S.p.A.
4.14.1		Master Agreement, dated December 28, 2006, among Gentium S.p.A., Crinos S.p.A., SFI Stada Financial Investments Ltd. and SFS Stada Financial Services International Ltd., incorporated by reference to Exhibit 2 to the report on Form 6-K, previously filed with the SEC on January 3, 2007.
4.14.2		Distribution Agreement, dated December 28, 2006, between Gentium S.p.A. and Crinos S.p.A., incorporated by reference to Exhibit 6 to the report on Form 6-K, previously filed with the SEC on January 3, 2007.
4.21*		Technical Transfer Services Agreement, dated February 2, 2009, between Gentium S.p.A. and Patheon Italia S.p.A, incorporated by reference to Exhibit 4.21 to the Annual Report on Form 20-F for the year ended December 31, 2008, previously filed with the SEC on March 31, 2009.
4.22.1		Technical Agreement, dated February 26, 2009, between Gentium S.p.A. and IDIS Limited, incorporated by reference to Exhibit 4.22.1 to the Annual Report on Form 20-F for the year ended December 31, 2008, previously filed with the SEC on March 31, 2009.
4.22.2*		Supply and Distribution Agreement, dated March 6, 2009, between Gentium S.p.A. and IDIS Limited, incorporated by reference to Exhibit 4.22.2 to the Annual Report on Form 20-F for the year ended December 31, 2008, previously filed with the SEC on March 31, 2009.
4.23*		Master Contract Clinical Research Agreement, dated September 29, 2009, between US Oncology Clinical Development and Gentium S.p.A., incorporated by reference to Exhibit 2 to the report on Form 6-K, previously filed with the SEC on December 8, 2009.
Management Services Agreements
4.15		Service Agreement between FinSirton S.p.A. and Gentium S.p.A. dated January 2, 2006, incorporated by reference to Exhibit 10.25.2 to the Annual Report on Form 20-F for the year ended December 31, 2005, previously filed with the SEC on May 30, 2006.

 

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Exhibit

Description

4.16		Service Agreement between Sirton Pharmaceuticals S.p.A. and Gentium S.p.A. dated January 2, 2006, incorporated by reference to Exhibit 10.26.2 to the Annual Report on Form 20-F for the year ended December 31, 2005, previously filed with the SEC on May 30, 2006.
Leases
4.17		Commercial Lease Contract between Gentium S.p.A. and Sirton Pharmaceuticals S.p.A. dated January 1, 2005, incorporated by reference to Exhibit 10.33 to Amendment No. 2 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on May 10, 2005.
4.18		Commercial Lease Contract between Gentium S.p.A. and FinSirton S.p.A. dated January 1, 2005, incorporated by reference to Exhibit 10.32 to Amendment No. 2 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on May 10, 2005.
4.19		Commercial Lease Contract between Gentium S.p.A. and FinSirton S.p.A. dated January 1, 2007, incorporated by reference to Exhibit 4.32.2 (improperly coded as Exhibit 4.43(2)) to the Annual Report on Form 20-F for the year ending December 31, 2006, previously filed with the SEC on April 30, 2007.
Miscellaneous
4.20		Form of indemnification agreement between Gentium S.p.A. and each officer and director, incorporated by reference to Exhibit 10.34 to Amendment No. 2 to the Registration Statement on Form F-1, Registration No. 333-122233, previously filed with the SEC on May 10, 2005.
Certifications and Consents
12.1		Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2		Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1		Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2		Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15(a)		Consent of Reconta Ernst & Young S.p.A. dated March 31, 2010.

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*	Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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