UPDATE 2-Italy's Gentium plummets as EU says "no" to key drug

* Company expects negative CHMP decision on defibrotide

* Stock down 41 percent in pre-market Nasdaq trading

LONDON, Feb 21 (Reuters) - Shares in Italian biotech company Gentium plunged more than 40 percent after it failed to convince European regulators of the benefits of its most advanced drug candidate for a rare liver condition.

Gentium, which is based in Como and listed on Nasdaq, said it expected an opinion recommending against approval of defibrotide from the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP).

The news sent Gentium stock 41 percent lower to $7.00 in pre-market trading.

"While not a final decision, the company considers it unlikely that this position will change before the formal vote is undertaken next month," Gentium said in a statement.

"If a formal negative recommendation is issued, and depending upon the nature of the objections, the company may appeal such negative decision."

Investor hopes have been pinned on defibrotide since it would be the first drug approved for hepatic veno-occlusive disease (VOD), a rare a condition in which some veins in the liver are blocked as a result of cancer therapy given prior to stem cell transplants.

Gentium's drug, based on single-stranded DNA extracted from pig intestines, has not yet been approved by the U.S. Food and Drug Administration.