<PAGE>
SECURITIES AND EXCHANGE COMMISSION Conformed
Washington, D.C. 20549 Copy
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1996
-------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
of 1934
For the transition period from to
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Commission file number 0-14879
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Cytogen Corporation
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 22-2322400
- ------------------------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
600 College Road East, CN 5308, Princeton, NJ 08540-5308
---------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code (609) 987-8200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days : Yes X No .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at July 24, 1996
- ---------------------------- ----------------------------
Common Stock, $.01 par value 47,925,175
Warrants to Purchase One Share of Common Stock, 4,023,495
$.01 par value
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
June 30, 1996
PART I - FINANCIAL INFORMATION
- ------ ---------------------
Item 1 - Consolidated Financial Statements
INTRODUCTORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------
The accompanying consolidated financial statements have been prepared by
the Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosure
normally included in annual consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations. It is suggested that these
condensed consolidated financial statements be read in conjunction with CYTOGEN
Corporation's (the "Company' or "CYTOGEN") audited consolidated financial
statements and notes thereto for the year ended December 31, 1995. In the
opinion of the Registrant, these consolidated financial statements contain all
adjustments necessary to present fairly the financial position of CYTOGEN as of
June 30, 1996, the results of operations for the three and six months ended June
30, 1996 and 1995, and the cash flows for the six months ended June 30, 1996 and
1995.
The results of operations for the periods ended June 30, 1996 are not
necessarily indicative of the operating results for the full year.
2
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
(Unaudited)
=============== ===============
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 20,373 $ 27,551
Short term investments 5,070 1,201
Restricted cash 383 383
Accounts receivable, net 595 284
Inventories 300 356
Other current assets 370 360
------------- --------------
Total current assets 27,091 30,135
------------- --------------
Property and Equipment:
Leashold improvements 9,977 9,850
Equipment and furniture 6,941 6,535
------------- --------------
16,918 16,385
Less--Accumulated depreciation and amortization (11,684) (10,923)
------------- --------------
Net property and equipment 5,234 5,462
------------- --------------
Other Assets 1,550 1,552
------------- --------------
$ 33,875 $ 37,149
============= ==============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable and accrued liabilities $ 3,442 $ 6,385
Current portion of long term liabilities 1,901 2,213
------------- --------------
Total current liabilities 5,343 8,598
------------- --------------
Long Term Liabilities 3,425 3,275
------------- --------------
Stockholders' Equity:
Preferred stock, $.01 par value, 5,400,000 shares
authorized- none issued - -
Common stock, $.01 par value, 89,600,000 shares
authorized, 48,052,000 and 46,040,000 shares
issued and outstanding in 1996 and 1995, respectively 481 460
Additional paid-in capital 264,033 253,122
Unrealized gains on short term investments 12 34
Accumulated deficit (239,419) (228,340)
------------- --------------
Total stockholders' equity 25,107 25,276
------------- --------------
$ 33,875 $ 37,149
============= ==============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- -----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C>
REVENUES:
Product related $ 359 $ 354 $ 742 $ 728
License and contract 1,194 458 2,009 792
------------ ------------ ------------ ------------
Total Revenues 1,553 812 2,751 1,520
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Research and development 4,683 5,033 9,619 10,537
Selling and marketing 971 778 1,698 1,720
Acquisition of technology rights - - - 19,663
General and administrative 1,454 1,328 3,055 2,948
------------ ------------ ------------ ------------
Total Operating Expenses 7,108 7,139 14,372 34,868
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS $ (5,555) $ (6,327) $ (11,621) $ (33,348)
------------ ------------ ------------ ------------
GAINS ON INVESTMENTS, net 387 213 767 376
INTEREST EXPENSE (111) (148) (225) (296)
------------ ------------ ------------ ------------
NET LOSS $ (5,279) $ (6,262) $ (11,079) $ (33,268)
------------ ------------ ------------ ------------
NET LOSS PER COMMON SHARE $ (0.11) $ (0.20) $ (0.23) $ (1.11)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 47,825 31,923 47,378 29,982
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1996 1995
===============================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (11,079) $ (33,268)
------------- -------------
Adjustments to Reconcile Net Loss to Cash Used for
Operating Activities:
Depreciation and Amortization 761 729
Imputed Interest 207 296
Amortization of Deferred Charges (17) (18)
Acquisition of Technology Rights - 19,663
Inventory Writedown - 1,144
Stock Grants - 37
Changes in Assets and Liabilities, Net of Effect
from Acquisition:
Accounts receivable, net (311) (239)
Inventories 56 (142)
Other current assets (8) (263)
Accounts payable and accrued liabilities (2,943) 208
Other liabilities (352) (230)
------------- -------------
Total adjustments (2,607) 21,185
------------- -------------
Net cash used for operating activities (13,686) (12,083)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) in Short Term Investments (3,891) (1,293)
Purchases of Property and Equipment (533) (390)
Net Cash Acquired in CytoRad Acquisition (See Note 6) - 11,009
------------- -------------
Net cash (used for) provided by investing activities (4,424) 9,326
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock 10,932 4,300
------------- -------------
Net cash provided by financing activities 10,932 4,300
------------- -------------
Net (Decrease) Increase in Cash and Cash Equivalents (7,178) 1,543
Cash and Cash Equivalents, Beginning of Period 27,551 7,700
------------- -------------
Cash and Cash Equivalents, End of Period $ 20,373 $ 9,243
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
From time to time, the term "Company" as used herein, may include CYTOGEN and
its wholly-owned subsidiary Cellcor, Inc. ("Cellcor") taken as a whole, where
appropriate.
(Information as of June 30, 1996 and for the three and six months ended June 30,
1996 and 1995 is unaudited.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. Intercompany balances and transactions have
been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks and all
highly-liquid investments with a maturity of three months or less at the time
of purchase.
Short Term Investments
Management determines the appropriate classification of debt and equity
securities at the time of purchase and re-evaluates such designation as of each
balance sheet date. At June 30, 1996, the Company's short term investments are
classified as available for sale and are carried at fair value based on quoted
market prices. Differences between an investment's amortized cost and fair
value are charged directly to stockholders' equity, net of income taxes.
Accordingly, a net unrealized gain of approximately $12,000 has been recorded as
a separate component of stockholders' equity at June 30, 1996.
Restricted Cash
The Company has entered into equipment lease financing arrangements that
require the issuance of letters of credit that are secured by certain cash and
cash equivalents. The aggregate amount of these cash and cash equivalents total
$383,000 and are segregated and classified as restricted cash in the
accompanying consolidated balance sheets.
<PAGE>
Other Assets
Other assets consist primarily of undeveloped real property with a net book
value of $1.3 million, which is valued at the lower of cost or market (see
Note 9.)
Revenue Recognition
Product related revenues include product sales by CYTOGEN to its customers
and in 1996, to its European distributor, CIS biointernational ("CISbio") (see
Note 2). Product sales are recognized upon shipment of finished goods.
Beginning in October 1995, as a result of CYTOGEN's acquisition of Cellcor (see
Note 4), product related revenues also include the recovery of costs associated
with the treatment of patients who have received the autolymphocyte therapy
("ALT") for metastatic renal cell carcinoma ("mRCC") under a compassionate
protocol and in 1996, also include the cost recovery associated with the
Treatment IND program.
License and contract revenues include milestone payments and fees under
collaborative agreements with third parties, the sale of research and
manufacturing services and materials, and revenues from other miscellaneous
sources. Revenues from milestone payments are recognized when all parties concur
that the events stipulated in the agreement have been achieved. Revenues from
cost-plus contracts are recognized when the costs are incurred.
Common Stock Outstanding
As a result of the Cellcor merger, the issued and outstanding shares of
Cellcor common stock and preferred stock ("Cellcor Shares") were converted into
the right to receive shares of CYTOGEN common stock. As of June 30, 1996,
certain holders of Cellcor Shares had not yet exchanged their Cellcor Shares of
CYTOGEN common stock. For accounting purposes, all Cellcor Shares were deemed
exchanged for issued and outstanding shares of CYTOGEN common stock as of the
date of the Cellcor merger. See Note 4.
New Accounting Pronouncements
The Company will be required to adopt the disclosure requirement of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," for the year ended December 31, 1996. The adoption of this
pronouncement will have no impact on the Company's statement of operations.
Reclassifications
Certain reclassifications have been reflected in the 1995 financial
statements to conform with the 1996 presentation.
2. CIS BIOINTERNATIONAL AND FAULDING:
In January 1996, CYTOGEN entered into a distribution agreement (the "CISbio
Agreement") with CISbio, granting to CISBio the exclusive right to distribute
and sell OncoScint CR/OV in all the countries of the world, except for the U.S.
and Canada. The CISbio Agreement provides for payments upon execution of the
agreement and upon achievement of a certain milestone, payments for minimum
annual purchases of the components of OncoScint CR/OV by
7
<PAGE>
CISbio, and certain royalties based upon net sales, if any, of OncoScint CR/OV
by CISbio. For the three and six months ended June 30, 1996, CYTOGEN recorded
$100,000 and $244,000, respectively, in license and product revenues from
CISbio.
In December 1995, CYTOGEN entered into a distribution agreement (the
"Faulding Agreement") with Faulding (Canada) Inc. ("Faulding") granting to
Faulding the exclusive right to distribute and sell OncoScint CR/OV in Canada.
Faulding is currently pursuing the necessary regulatory approvals to market the
product in Canada. In addition to a one-time, up-front cash payment for
execution of the agreement, which amount was recognized by the Company in 1996,
Faulding will be required to make additional payments upon achievement of
certain milestones, payments for minimum annual purchases of OncoScint CR/OV by
Faulding, and certain royalties based upon net sales, if any, of OncoScint CR/OV
by Faulding.
3. ELAN CORPORATION:
In December 1995, CYTOGEN entered into a research and development and
option agreement (the "Elan Agreement") with Elan Corporation, plc ("Elan")
under which both parties will implement a research program that combines
CYTOGEN's Genetic Diversity Library ("GDL") technology with Elan's drug delivery
system technology to collaboratively develop orally administered products.
Thereunder, Elan has been granted an option for the exclusive worldwide
licensing rights to any products so developed and the Company will receive
royalties based on sales, if any, of such products. Elan will provide the
funding necessary for the Company to fulfill its obligations under the research
program with aggregate payments for work performed by CYTOGEN not to exceed $1.5
million during the first sixteen months of the research program. For the three
and six months ended June 30, 1996, CYTOGEN recorded $488,000 and $644,000,
respectively, in contract revenues from Elan.
4. CELLCOR, INC.:
Pursuant to an Agreement and Plan of Merger dated June 15, 1995, as
amended, in October 1995, CYTOGEN completed its acquisition of Cellcor and the
related subscription offering (the "Subscription Offering"). As a result,
CYTOGEN issued (i) 4,713,564 shares of CYTOGEN common stock to acquire Cellcor
(see Note 1) and (ii) 5,144,388 shares of CYTOGEN common stock in connection
with the Subscription Offering raising a total of $20.0 million, and has
reserved for issuance up to 606,952 shares of CYTOGEN common stock issuable upon
the exercise of the options that were outstanding under the Cellcor employee
stock option plans at the time of merger. The transaction was accounted for by
using the purchase method of accounting, whereby the Company recorded a
one-time, non-cash charge of approximately $26.2 million for acquisition of
technology rights to its statement of operations during the three months ended
December 31, 1995, which charge represented the amount by which the purchase
price exceeded the fair value of net assets acquired from Cellcor.
5. DUPONT MERCK:
Pursuant to a license agreement dated as of December 20, 1994 and as
amended on March 29, 1996 (the "DP/Merck Agreement"), CYTOGEN has sub-licensed
to The DuPont Merck Pharmaceutical Company ("DuPont Merck") CYTOGEN's
manufacturing and marketing rights to Quadramet in the U.S., Canada and Latin
America (the "Territory Rights"), if and when approved for marketing in each
applicable country. CYTOGEN has retained the right to co-
8
<PAGE>
promote the product to nuclear medicine specialists. Quadramet is a therapy
agent for treatment of severe pain associated with cancers that spread to the
bone. CYTOGEN acquired the Territory Rights to Quadramet from The Dow Chemical
Company ("Dow") pursuant to a license agreement, under which it assumed
responsibility for the development and commercialization of the product (see
Note 7). The New Drug Application ("NDA") for Quadramet was officially filed by
FDA in August 1995.
Pursuant to the terms of the DP/Merck Agreement, in January 1995,
CYTOGEN received from DuPont Merck $4.0 million for the sale of 908,265 shares
of CYTOGEN common stock to DuPont Merck and $1.3 million to fund additional
clinical programs to expand the use and marketing of Quadramet, of which
$334,000 and $667,000 were recognized as license and contract revenues during
the three and six months ended June 30, 1995, respectively. The remaining
$667,000 was classified as deferred revenues, and was recognized ratably
throughout 1995 as services under the contract were performed. For the three and
six months ended June 30, 1996, CYTOGEN recorded $365,000 and $796,000,
respectively, as license and contract revenues from DuPont Merck. The DP/Merck
Agreement further provides for future payments of up to $2.2 million toward
additional clinical programs, a $2.0 million milestone payment if and when
Quadramet receives FDA approval, additional payments upon achievements of
certain other milestones and royalty payments based on sales, including
guaranteed minimum payments.
6. CYTORAD INCORPORATED:
In February 1995, CYTOGEN completed its acquisition of CytoRad
Incorporated ("CytoRad") pursuant to an Agreement and Plan of Merger dated
November 15, 1994, under which CYTOGEN exchanged for each outstanding CytoRad
unit (i) 1.5 shares of CYTOGEN common stock, (ii) a warrant to acquire one share
of CYTOGEN common stock for $8.00 that expires January 31, 1997 and (iii) a
contingent value right ("CVR") to receive, under certain circumstances and at no
additional cost, up to one-half share of CYTOGEN common stock. On February 29,
1996, the Company announced that the CVRs had expired by their terms and were of
no further value. Accordingly, the Company no longer has an obligation to issue
shares of its common stock to holders of CVRs on January 31, 1997.
As a result of the merger, the Company acquired $11.7 million of
CytoRad's cash and securities, before payment of certain transaction costs. In
addition, CYTOGEN recorded approximately $19.7 million for acquisition of
technology and marketing rights as a charge to its statement of operations
during the three months ended March 31, 1995, which charge represented the
amount by which the purchase price exceeded the fair value of net assets
acquired from CytoRad.
7. THE DOW CHEMICAL COMPANY:
In 1993, CYTOGEN acquired from Dow an exclusive license in the U.S. for
Quadramet. This license was amended in 1995 to expand the territory to include
Canada and Latin America, and in 1996 to expand the field to include all
osteoblastic diseases. The Company will be required to pay to Dow $4.0 million
if and when Quadramet receives FDA approval. The agreement provides for
additional payments by the Company upon achievement of certain milestones and
royalties on net sales of the product once commercialized, including guaranteed
minimum payments.
9
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8. REVENUES FROM MAJOR CUSTOMERS:
Customers who contributed 10% or more of the Company's total product
related, license and contract revenues were as follows:
<TABLE>
<CAPTION>
3 Months Ended June 30, 6 Months Ended June 30,
------------------------- -------------------------
1996 1995 1996 1995
------ ------ ------ ------
Customer
- ------------
<S> <C> <C> <C> <C>
DuPont Merck (See Note 5) 23% 41% 29% 44%
Medi-Physics 10% 21% 12% 21%
Elan (See Note 3) 31% - 23% -
</TABLE>
Medi-Physics is a chain of radiopharmacies.
9. LONG TERM LIABILITIES:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Due to Knoll $ 4,415,000 $ 4,237,000
Due to Chiron 514,000 785,000
Capital lease obligations 397,000 448,000
Deferred charges - 18,000
---------- ----------
5,326,000 5,488,000
Less: Current portion 1,901,000 2,213,000
---------- ----------
$ 3,425,000 $ 3,275,000
========== ==========
</TABLE>
In November 1994, CYTOGEN executed a termination agreement (the
"Termination Agreement") with Knoll Pharmaceutical Company ("Knoll"). Pursuant
to the Termination Agreement, the Company has reacquired from Knoll all U.S.
marketing rights to OncoScint CR/OV (the "U.S. Rights"), which were previously
granted to Knoll. The resulting liability of CYTOGEN to Knoll will be paid over
a four-year period and without interest, as follows: $3.1 million in 1995 (which
amount has been paid); $1.6 million in 1996 (which amount was paid in July
1996); $1.6 million in 1997; and $1.7 million in 1998. Imputed interest of
$90,000 and $178,000 relating to the obligation, which was discounted based upon
a 10% interest rate, was recorded for the three and six months ended June 30,
1996, respectively. For the three and six months ended June 30, 1995, imputed
interest was $131,000 and $260,000, respectively.
In December 1994, the Company entered into a disengagement agreement
(the "Disengagement Agreement") with Chiron B.V., formerly EuroCetus B.V.,
successor in interest to EuroCetus International, N.V. ("Chiron"). Under the
Disengagement Agreement, the Company reacquired the exclusive marketing and
distribution rights in Europe (the "European Rights"), which were previously
granted to Chiron, and purchased certain business assets relating to the
European Rights. The resulting liability of CYTOGEN to Chiron will be paid over
three years and without interest, as follows: $200,000 in 1995 (which amount has
been paid), $300,000 in 1996 (of which $100,000 has been paid) and $377,181 in
1997. Payment is secured by a mortgage covering approximately 11 acres of
undeveloped real property owned by the Company in Ewing, New Jersey. This
obligation is non-recourse to the Company. Imputed interest of $14,000 and
$29,000 relating to the obligation, which was discounted based upon a 10%
interest
10
<PAGE>
rate, was recorded for the three and six months ended June 30, 1996,
respectively. For the three and six months ended June 30, 1995, imputed
interest was $18,000 and $36,000, respectively.
10. COMMON STOCK:
Under an option agreement (the "Option") granted to Fletcher Capital
Market, Inc. ("Fletcher") in May 1994, as amended, Fletcher purchased
(i) 1.8 million shares of CYTOGEN common stock in August 1995, at an aggregate
price of approximately $7.3 million, or $4.058 per share, (ii) 500,000 shares of
CYTOGEN common stock in November 1995, at an aggregate price of $2.3 million, or
$4.696 per share, and (iii) an aggregate of 1.0 million shares of CYTOGEN common
stock in January 1996, at an aggregate price of $4.7 million, or $4.70 per
share.
Pursuant to an Investment Agreement between the Company and Fletcher Fund,
L.P., a Delaware limited partnership ("Fletcher Fund"), dated as of
September 8, 1995 (as amended, the "Investment Agreement"), the Company sold
665,352 shares of CYTOGEN common stock, for an aggregate purchase price of
approximately $2.7 million. Under the Investment Agreement, as amended by the
First Amendment to Investment Agreement dated April 26, 1996 (the "Amendment"),
the Company was also granted the right to issue and sell to Fletcher Fund, and
Fletcher Fund will be obligated to purchase, up to 675,000 shares of CYTOGEN
common stock from time to time (collectively, the "Put Rights") at a purchase
price per share equal to 101% of the average of the daily volume weighted
average price of CYTOGEN common stock on the Nasdaq National Market ("NASDAQ")
during (a) a designated twenty-one business day period or (b) the last three
business days of said designated twenty-one business day period, whichever is
less. The Put Rights, which were originally scheduled to expire on
March 29, 1996, were extended until December 15, 1996 pursuant to the Amendment.
Under certain circumstances, Fletcher Fund will have the right to decrease or
increase the number of shares of CYTOGEN Common Stock to be purchased in
connection with the exercise of a Put Right by the Company, but in no event
shall the total number of shares sold by the Company and purchased by Fletcher
Fund pursuant to the Investment Agreement exceed 4.9% of the total number of
shares of CYTOGEN common stock outstanding, after giving effect to the proposed
sale and purchase of the shares in question. The shares to be issued and sold
in this transaction were registered pursuant to a registration statement on
Form S-3 filed with the Securities and Exchange Commission ("SEC") in April
1994.
In November 1995, CYTOGEN sold 1,256,565 shares of common stock to a
private institutional investor in a private placement transaction pursuant to
Regulation S of the Securities Act for an aggregate price of $5.0 million. In
April 1996, CYTOGEN sold an additional 729,394 shares of common stock to that
same investor for an aggregate price of $5.0 million, pursuant to the exercise
of the put right that was previously granted to the Company.
CYTOGEN and Nomura Securities International, Inc. ("Nomura") executed an
agreement effective as of February 23, 1996 that terminated the Purchase
Agreement between CYTOGEN and Nomura dated March 28, 1995. No sales of stock
occurred under the terms of the agreement.
See Notes 4,5 and 6 for information related to the Company's issuance of
common stock in connection with the Cellcor merger, DP/Merck Agreement, and
CytoRad merger.
11
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Background
Historically, CYTOGEN's revenues have resulted primarily from (i) payments
received from the sale of research services pursuant to collaborative
agreements, (ii) fees generated from the licensing of its technology and
marketing rights to its products and (iii) product related revenues on sale of
its OncoScint products in the U.S. and Western Europe.
In January 1995, CYTOGEN received from DuPont Merck $5.3 million pursuant
to the DP/Merck Agreement (see Note 5 to the Consolidated Financial Statements),
of which $1.3 million was to fund additional clinical programs to expand the use
and marketing of Quadramet and $4.0 million was to purchase 908,265 shares of
CYTOGEN common stock. In addition, for the three and six months ended June 30,
1996, CYTOGEN recorded $365,000 and $796,000, respectively, in license and
contract revenues from DuPont Merck. The NDA for Quadramet was accepted for
filing by FDA effective August 1995. The timing and outcome of FDA's decision
regarding Quadramet cannot be predicted by the Company.
In February 1995, CYTOGEN acquired CytoRad by merging CytoRad with and into
a wholly-owned subsidiary of CYTOGEN. See Note 6 to the Consolidated Financial
Statements. As a result of the merger, the Company acquired $11.7 million of
CytoRad's cash and securities, before payment of certain transaction costs. In
addition, during the three months ended March 31, 1995, the Company recorded a
one-time non-cash charge to the statement of operations of $19.7 million for the
acquisition of technology rights pertaining to the merger.
In December 1995, CYTOGEN entered into the Elan Agreement with Elan under
which Elan will provide the funding necessary for the Company to fulfill its
obligations under a research program with aggregate payments for work performed
by CYTOGEN not to exceed $1.5 million during the first sixteen months of that
research program. See Note 3 to the Consolidated Financial Statements. For the
three and six months ended June 30, 1996, CYTOGEN recorded $488,000 and
$644,000, respectively, in contract revenues from Elan.
In 1996, the Company has organized itself into strategic business units
("SBUs") -- manufacturing, medical affairs, marketing and sales, Cellcor and
Genetic Diversity Library -- which SBUs are offering their respective resources
and expertise in drug discovery, drug development, manufacturing and marketing
to other emerging biotechnology companies or large pharmaceutical companies with
programs outside of their own core capabilities. The Company believes that, if
successful, such organization will enable it to leverage existing assets and
capabilities to attract new collaborations and partnership and increase
revenues. There can be no assurance as the strategy's success or that revenues
will increase markedly.
To date, sales of OncoScint CR/OV in both the U.S. and European markets
have been limited, in part, because OncoScint CR/OV is a "technique-dependent"
product that requires a high degree of proficiency in nuclear imaging, as well
as a thorough appreciation of the information the scan can provide. CYTOGEN is
developing a new distribution and marketing approach by establishing a network
of qualified nuclear medicine physicians through its Partners in Excellence of
PIE Program (the "PIE Program"), through which the use of OncoScint can
12
<PAGE>
be directed to sites trained and certified in acquiring, processing and
interpreting antibody-derived images, thus providing additional quality control
and support. The PIE Program is being further developed in preparation for the
launch of ProstaScint, for which a Product License Application ("PLA") was
accepted as filed by FDA in March 1995. ProstaScint was unanimously recommended
for approval by the Medical Imaging Drug Advisory Committee (an FDA advisory
committee) during its July 1996 meeting. The timing and outcome of FDA's formal
decision regarding ProstaScint cannot by predicted by the Company.
In December 1995 and January 1996, CYTOGEN entered into agreements with
Faulding and CISbio, respectively, to market and distribute OncoScint CR/OV
outside the U.S. Faulding is currently pursuing the necessary regulatory
approvals in Canada. CISbio has advised the Company that, as of June 30, 1996,
it had relaunched OncoScint CR/OV in seven of the twelve European countries
where the product has been approved for marketing, and that it is in the process
of relaunching in the rest of the countries while initiating steps to obtain
regulatory approvals for additional markets in accordance with the terms of the
CISbio Agreement. See Note 2 to the Consolidated Financial Statements.
On August 1, 1996, Cytogen entered into a co-promotion agreement (the
"Co-Promotion Agreement") with C.R. Bard, Inc. ("Bard") pursuant to which
Cytogen granted to Bard (i) the exclusive right to market and promote
ProstaScint to urologists in the United States and (ii) the co-exclusive right
with Cytogen to market and promote ProstaScint to managed care organizations in
the United States. The Co-Promotion Agreement provides that Bard shall make
payments upon the occurrence of certain milestones or to obtain additional
rights in selected countries outside the United States. During the term of the
Co-Promotion Agreement, Bard will receive performance-based compensation for its
services. The initial term of the Co-Promotion Agreement is ten (10) years from
the date of the product launch of ProstaScint.
In October 1995, CYTOGEN completed its acquisition of Cellcor by merging
Cellcor with and into a wholly-owned subsidiary of CYTOGEN. See Note 4 to the
Consolidated Financial Statements. Cellcor is a biotechnology company focused on
the development and commercialization of ALT, a proprietary immunotherapy using
a patient's own white blood cells to augment the immune system and thereby treat
cancer and certain infectious diseases. In the fourth quarter of 1995, Cellcor
completed patient accrual for its Phase III pivotal clinical trial using ALT to
treat metastatic kidney cancer patients. The study is expected to conclude in
the fourth quarter of 1996. If results from the trial are favorable and FDA
concurs, the Company and FDA will determine the timing and contents of the
formal application with FDA seeking marketing approval. It is likely that ALT
would qualify for a new application called a Biologics License Application
("BLA"). The BLA is a result of FDA's initiative to accelerate review and
approval of cancer products specifically for autologous cell therapies (such as
Cellcor's ALT). There can be no assurance regarding the results of the study or
the timing or outcome of FDA's review.
Cellcor has received FDA approval to proceed with a Treatment IND that
allows ALT to be available as a treatment option for patients who have no
satisfactory alternative therapy to treat their metastatic kidney cancer. The
Treatment IND also allows the Company to recover costs associated with the
treatment. ALT will be available through the Treatment IND while the Company
continues to pursue FDA approval of ALT. As a result of the Cellcor merger,
beginning October 1995, the Company's product related revenues included the cost
recovery related to the treatment of patients receiving ALT under a
compassionate protocol and in 1996, also included the cost recovery related to
the Treatment IND program. In addition, during the three months ended December
31, 1995, the Company recorded a one-time non-cash charge to the statement of
operations of approximately $26.2 million for acquisition of Cellcor technology
rights.
13
<PAGE>
Results of Operations
Revenues. Total revenues for the three and six months ended June 30, 1996
were $1.6 million and $2.8 million, respectively, compared to $812,000 and $1.5
million recorded in the same periods of 1995. The increase from the prior year
periods is primarily attributable to license and contract revenues realized
under the agreements executed in the fourth quarter of 1995 and the first
quarter of 1996 with Elan and CISbio, respectively. In addition, during the
three and six months ended June 30, 1996, CYTOGEN recorded $365,000 and
$796,000, respectively, in license and contract revenues from DuPont Merck
compared to $334,000 and $667,000 recorded in the same periods of the prior
year.
For the three and six months ended June 30, 1996, product related revenues
were $359,000 and $742,000, respectively, compared to $354,000 and $728,000
recorded for the same periods of 1995. In addition to sales of OncoScint CR/OV,
the 1996 product related revenues included cost recovery associated with the ALT
Treatment, for which $31,000 and $45,000 were recognized during the three and
six months ended June 30, 1996, respectively. The 1995 product related revenues
were from the sales of OncoScint CR/OV.
License and contract revenues for three and six months ended June 30, 1996
were $1.2 million and $2.0 million, respectively, compared to $458,000 and
$792,000 recorded in the same periods of 1995. The increase over the prior year
periods is primarily attributable to license and contract revenues from Elan,
CISbio, Faulding and DuPont Merck.
Operating Expenses. Operating expenses for the three and six months ended
June 30, 1996 were $7.1 million and $14.4 million, respectively, compared to
$7.1 million and $34.9 million recorded in the same periods of 1995. The
year-to-date decrease from the prior year period is largely attributable to a
one-time non-cash charge of $19.7 million recorded in the three months ended
March 31, 1995 for the acquisition of technology rights associated with the
CytoRad merger. After excluding this one-time charge, 1996 operating expenses,
which included $893,000 and $1.9 million of expenses for the three and six
months ended June 30, 1996, respectively, from Cellcor operations, were lower
than those recorded in the comparable periods of 1995. The level of current year
operating expenses reflects the Company's objective to control spending and to
focus its efforts on its highest priority products and technology, which are (i)
OncoScint CR/OV, (ii) Quadramct, (iii) ProstaScint, (iv) the GDL technology and
(v) ALT therapy for mRCC.
Research and development expenses for the three and six months ended June
30, 1996 were $4.7 million and $9.6 million, respectively, compared to $5.0
million and $10.5 million recorded in the same periods of 1995. These expenses
principally reflect product development efforts and support for various ongoing
clinical trials. The 1996 research and development expenses included $910,000
and $1.8 million of expenses for the three and six months ended June 30, 1996,
respectively, from Cellcor operations. The 1995 research and development
expenses for the three and six months ended June 30, 1995 included a charge of
$446,000 and $1.1 million, respectively, for inventory writedown of commercial
inventory relating to OncoScint CR/OV.
Selling and marketing expenses for the three and six months ended June 30,
1996 were $971,000 and $1.7 million, respectively, compared to $778,000 and $1.7
million recorded in the same periods of 1995. The current three months increase
from the prior year period is primarily
14
<PAGE>
attributable to expenses associated with establishing the PIE Program.
The acquisition of technology rights expense of $19.7 million was a one-time
non-cash charge recorded during the three months ended March 31, 1995,
representing the amount by which the purchase price exceeded the fair value of
net assets acquired in connection with the CytoRad merger.
General and administrative expenses for the three and six months ended
June 30, 1996 were $1.5 million and $3.1 million, respectively, compared to $1.3
million and $2.9 million recorded in the comparable periods of 1995. The
increase from the prior year periods is primarily attributable to expenses to
support Cellcor operations and to increased spending for professional and
consulting services.
Other Income/Expense. Net gains on investments for the three and six months
ended June 30, 1996 were $387,000 and $767,000, respectively, compared to
$213,000 and $376,000 realized in the same periods of 1995. The increase from
the prior year periods is due primarily to higher average cash and short term
investment balances for the periods.
Interest expense for the three and six months ended June 30, 1996 was
$111,000 and $225,000, respectively, compared to $148,000 and $296,000 recorded
in the same periods of 1995. Imputed interest on liabilities associated with
CYTOGEN's termination agreements with Knoll and Chiron were $104,000 and
$207,000 for the three and six months ended June 30, 1996, respectively,
compared to $148,000 and $296,000 recorded for the comparable periods of 1995.
Net Loss. Net loss for the three months ended June 30, 1996 was $5.3 million
compared to a net loss of $6.3 million incurred in the same period of 1995. The
loss per common share was $0.11 on 47.8 million average shares outstanding
compared to $0.20 on 31.9 million average shares outstanding for the same period
in 1995. For the six months ended June 30, 1996, the net loss was $11.1 million
compared to a $33.3 million loss recorded in the comparable period of the prior
year. The loss per common share was $0.23 on 47.4 million average shares
outstanding compared to $1.11 on 30.0 million average shares outstanding in
1995. As discussed above, the decrease in the net loss and net loss per common
share for the six months is primarily attributable to the charge to the
statement of operations for the acquisition of technology rights. At June 30,
1996, the Company had outstanding (i) options to purchase up to 3.2 million
shares of CYTOGEN common stock under its various stock option plans with
exercise prices ranging from $0.83 to $18.33 per share; (ii) warrants to
purchase 4.3 million shares of CYTOGEN common stock with exercise prices ranging
from $8.00 to $18.87 per share; and (iii) certain put rights to issue and sell
up to approximately 0.7 million shares of CYTOGEN common stock, subject to
adjustment. The loss per share calculation stated above does not take into
account the shares issuable in connection with such options, warrants and put
rights as their effect is antidilutive.
Liquidity and Capital Resources
The Company's cash and short term investments were $25.4 million as of
June 30, 1996, compared to $28.8 million as of December 31, 1995. The cash used
for operating activities and purchases of property and equipment for the six
months ended June 30, 1996 were $13.7 million and $533,000, respectively,
compared to $12.1 million and $390,000 used in the same period of 1995. This
increase over the prior year period primarily reflects the cash used to fund
Cellcor
15
<PAGE>
operations.
Historically, the Company's primary sources of cash have been proceeds
from the issuance and sale of its stock through public offerings and private
placements, product related revenues, the sale of research services, fees paid
under its license agreements and interest earned on its cash and short term
investments.
CYTOGEN Common Stock. In January 1996, Fletcher purchased an aggregate of
1.0 million shares of CYTOGEN common stock at an aggregate price of
approximately $4.7 million, or $4.70 per share, pursuant to the Option granted
to Fletcher in May 1994, as amended. See Note 10 to the Consolidated Financial
Statements.
CYTOGEN and Nomura executed an agreement effective as of February 23, 1996
that terminated the Purchase Agreement between CYTOGEN and Nomura dated March
28, 1995. No sales of stock occurred under the terms of the agreement.
In April 1996, CYTOGEN sold 729,394 shares of common stock to a private
institutional investor for an aggregate price of $5.0 million, pursuant to the
exercise of a put right that was previously granted to the Company by that
investor. See Note 10 to the Consolidated Financial Statements.
Pursuant to the Investment Agreement, as amended in April 1996, between
CYTOGEN and Fletcher Fund, CYTOGEN has the right until December 15, 1996 to
issue and sell to Fletcher Fund, and Fletcher Fund will be obligated to
purchase, up to 675,000 shares of CYTOGEN common stock from time to time at a
purchase price per share equal to 101% of the average of the daily volume
weighted average price of CYTOGEN common stock on NASDAQ during (a) a designated
twenty-one business day period or (b) the last three business days of said
designated twenty-one business day period, whichever is less. Under certain
circumstances, Fletcher Fund will have the right to decrease or increase the
number of shares of CYTOGEN Common Stock to be purchased in connection with the
exercise of a Put Right by the Company, but in no event shall the total number
of shares sold by the Company and purchased by Fletcher Fund pursuant to the
Investment Agreement exceed 4.9% of the total number of shares of CYTOGEN common
stock outstanding, after giving effect to the proposed sale and purchase of the
shares in question. The shares to be issued and sold in this transaction were
registered pursuant to a registration statement on Form S-3 filed with the SEC
in April 1994. See Note 10 to the Consolidated Financial Statements.
In April 1996, the SEC declared effective the Company's new shelf
registration statement on Form S-3, which registers 5.0 million shares of common
stock. Under the shelf registration, CYTOGEN may sell shares on a negotiated or
competitive bid basis through underwriters, dealers or agents designated from
time to time, or directly to other purchasers from time to time, as market
conditions permit. CYTOGEN has not entered into any agreement relating to the
sale of these shares.
Product Related Revenues. To date, sales of OncoScint CR/OV have not been
significant and are not expected to become a significant source of cash flow in
1996. CYTOGEN is developing the PIE Program as described above. Depending on
the success of the PIE Program, significant resources might be required. There
can be no assurance that this marketing strategy,
16
<PAGE>
if successful, will result in increased revenues.
In November 1994, the Company executed the Termination Agreement with
Knoll, pursuant to which the Company is required to pay to Knoll, over a
four-year period and without interest, $3.0 million to reacquire the U.S. Rights
and $5.0 million of liabilities previously incurred under the terms of a
license, supply and marketing agreement executed in December 1991. The payment
of these liabilities will be made as follows: $3.1 million in 1995 (which amount
has been paid); $1.6 million in 1996 (which amount was paid in July 1996); $1.6
million in 1997; and $1.7 million in 1998.
In December 1994, CYTOGEN entered into the Disengagement Agreement with
Chiron to reacquire the European Rights and purchase certain business assets
relating to the European Rights. The resulting liability of CYTOGEN to Chiron
will be paid over three years and without interest, as follows: $200,000 in 1995
(which amount has been paid); $300,000 in 1996 (of which $100,000 has been
paid); and $377,000 in 1997. Payment is secured by a mortgage covering
approximately 11 acres of undeveloped real property owned by the Company in
Ewing, New Jersey. This obligation is non-recourse to the Company.
In December 1995 and January 1996, CYTOGEN entered into agreements with
Faulding and CISbio, respectively, to market and distribute OncoScint CR/OV
outside the U.S. Faulding is currently pursuing the necessary regulatory
approvals in Canada. As described above, CISbio is actively marketing OncoScint
CR/OV in certain countries in Europe. In addition to one-time, up-front cash
payments for execution of the agreements, which amounts were recognized by the
Company in 1996, each of Faulding and CISbio will be required to make payments
upon the achievement of certain milestones, payments for the purchase of
products and royalties on net sales, if any. See Note 2 to the Consolidated
Financial Statements.
Beginning October 1995, as a result of the Cellcor merger, the Company's
product related revenues included the cost recovery related to the treatment of
patients receiving ALT under a compassionate protocol, and in 1996 also included
the cost recovery associated with the Treatment IND program.
Research Services and Licenses. Pursuant to the terms of the DP/Merck
Agreement between CYTOGEN and DuPond Merck, CYTOGEN will receive from DuPont
Merck future payments of up to $2.2 million towards additional clinical
programs, a $2.0 million milestone payment if and when Quadramet receives FDA
approval and royalty payments based on sales, including guaranteed minimum
payments. For the three and six months ended June 30, 1996, CYTOGEN recorded
$365,000 and $796,000, respectively, in license and contract revenues from
DuPont Merck. See Note 5 to the Consolidated Financial Statements.
CYTOGEN acquired an exclusive license in the U.S. from Dow for Quadramet in
1993. This license was later amended in 1995 and 1996. See Note 7 to the
Consolidated Financial Statements. The Company will be required to pay to Dow
$4.0 million if and when Quadramet receives FDA approval. The agreement provides
for additional payments by the Company upon achievement of certain milestones
and royalties on net sales of the product once commercialized, including
guaranteed minimum payments.
In December 1995, the Company and Elan entered into the Elan Agreement,
under which
17
<PAGE>
Elan will provide the funding necessary for the Company to fulfill its
obligations under the research program, with aggregate payments for work
performed by CYTOGEN not to exceed $1.5 million during the first sixteen months
of the research program. For the three and six months ended June 30, 1996,
CYTOGEN recorded $488,000 and $644,000, respectively, in contract revenues from
Elan. See Note 3 to the Consolidated Financial Statements.
The Company's capital and operating requirements, as described above, may
further change depending upon several factors, including: (i) the amount of
resources which the Company devotes to clinical evaluations and the
establishment of manufacturing, marketing and sales capabilities; (ii) results
of preclinical testing, clinical trials and research and development activities;
and (iii) competitive and technological developments. The Company plans to
continue to control spending and expects that its existing cash and short term
investments of $25.4 million at June 30, 1996, together with other financing and
acquisition opportunities which may become available, the potential sales of
stock pursuant to the Put Rights described above and the receipt of additional
funds from DuPont Merck and Elan in accordance with the terms of the DP/Merck
Agreement and Elan Agreement, respectively, will be adequate to support the
Company's operations into 1997.
The Company's financial strategy is to meet its capital and operating
requirements through revenues from existing products, the establishment of
strategic marketing alliances and research and development partnerships, the
acquisition, in-licensing and development of other technologies, products or
services, subcontract manufacturing revenues, license and contract revenues,
sale of equity securities as market conditions permit, interest income, and a
continued commitment to control spending. Certain of these transactions may
require payments by the Company in either cash or stock in addition to the costs
associated with developing and marketing any product or technology and, if
successful, increase long term revenues. There can be no assurance as to the
strategy's success or that any resulting funds will be sufficient to meet the
Company's cash requirements through the time that product related resources are
sufficient to cover the Company's operating expenses.
The foregoing discussion contains historical information as well as forward
looking statements that involve a number of risks and uncertainties. In addition
to the risks discussed above, among other factors that could cause actual
results to differ materially from expected results are the following: (i) the
timing and results of clinical studies; (ii) market acceptance of the Company's
products, including programs designed to facilitate use of the products, such as
the PIE Program and the use of teleradiology; (iii)the profitability of its
products; (iv) the ability to attract, and the ultimate success of strategic
partnering arrangements, collaborations, and acquisition candidates; (v) the
ability of the Company and its partners to identify new products as a result of
those collaborations that are capable of achieving FDA approval, that are
cost-effective alternatives to existing products and that are ultimately
accepted by the key users of the product; (vi) the success of the Company's
distributors in obtaining marketing approvals in Canada and in additional
European countries, in achieving milestones and achieving sales of products
resulting in royalties; and (vii) the Company's ability to access the capital
markets in the future for continued funding of existing projects and for the
pursuit of new projects.
18
<PAGE>
PART II - OTHER INFORMATION
- ------- -----------------
Item 4 - Submission of Matters to the Vote of Security Holders
- ------
On May 22, 1996, the Company held its annual meeting of stockholders to
(i) elect directors, (ii) consider and act upon a proposal to amend the
Company's Certificate of Incorporation to increase the total number of
authorized shares of capital stock from 75,000,000 shares to 95,000,000
shares and to increase the total number of authorized shares of Common
Stock from 69,600,000 shares to 89,600,000 shares, (iii) consider and act
upon a proposal to amend the CYTOGEN Corporation 1988 Stock Option Plan
for Non-Employee Directors, (iv) consider and act upon a proposal to amend
the CYTOGEN Corporation 1995 Stock Option Plan, (v) ratify the appointment
of Arthur Andersen LLP as independent auditors, and (vi) transact such
other business as might be brought before the meeting.
The following tables set forth information regarding the number of votes
cast for, against or withheld, abstentions and broker non-votes, with
respect to each matter presented at the meeting.
(i) Election of Directors:
<TABLE>
<CAPTION>
Against or Broker
Nominee For Withheld Abstentions Non-Votes
------- --- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Charles E. Austin 42,069,006 1,189,970 0 0
John E. Bagalay Jr. 42,114,033 1,144,943 0 0
Ronald J. Brenner 42,112,891 1,146,085 0 0
James A. Grigsby 42,081,606 1,177,370 0 0
Robert F. Hendrickson 42,093,681 1,165,295 0 0
T. Jerome Madison 42,113,877 1,145,099 0 0
Thomas J. McKearn 42,115,980 1,142,996 0 0
William C. Mills III 42,116,609 1,142,367 0 0
Donald E. O'Neill 42,090,040 1,168,936 0 0
</TABLE>
(ii) Amend the Company's Certificate of Incorporation:
<TABLE>
<CAPTION>
Against or Broker
For Withheld Abstentions Non-Votes
--- ---------- ----------- ---------
<S> <C> <C> <C> <C>
40,235,954 2,735,666 287,356 0
</TABLE>
(iii) Amend the CYTOGEN Corporation 1988 Stock Option Plan for
Non-Employee Directors:
<TABLE>
<CAPTION>
Against or Broker
For Withheld Abstentions Non-Votes
--- ---------- ----------- ---------
<S> <C> <C> <C> <C>
40,639,222 2,218,538 401,216 0
</TABLE>
(iv) Amend the CYTOGEN Corporation 1995 Stock Option Plan:
19
<PAGE>
Against or Broker
For Withheld Abstentions Non-Votes
--- ---------- ----------- ---------
38,566,669 4,305,944 386,363 0
(v) Appointment of Arthur Andersen LLP as independent auditors:
Against or Broker
For Withheld Abstentions Non-Votes
--- ---------- ----------- ---------
42,817,539 238,496 202,947 0
(vi) No other business was transacted at the meeting.
Item 6 - Exhibits and Reports on Form 8-K
- ------
(a) Exhibits:
3.- Certificate of Incorporation of CYTOGEN Corporation.
10.1- Second Amendment to the License Agreement between CYTOGEN
Corporation and The Dow Chemical Company dated May 20,
1996.*
10.2- Amendment No. 1 to the CYTOGEN Corporation 1995 Stock
Option Plan dated May 22, 1996.
10.3- Amendment No. 2 to the CYTOGEN Corporation 1988 Stock
Option Plan for Non-Employee Directors dated May 22, 1996.
27- Financial Data Schedule (Submitted to SEC only in electronic
format).
CYTOGEN Corporation has requested confidential treatment of certain
provisions contained in this exhibit. The copy filed as an exhibit omits
the information subject to the confidentiality request.
(b) Reports on Form 8-K:
None
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CYTOGEN CORPORATION
Date August 2, 1996 By /s/ T. Jerome Madison
---------------------------- ---------------------------------
T. Jerome Madison
Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)
21
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
CYTOGEN CORPORATION
Cytogen Corporation, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
FIRST: The name of the corporation is Cytogen Corporation. Cytogen
-----
Corporation was originally incorporated under the name of Hybridex, Inc., and
the original Certificate of Incorporation of the corporation was filed with the
Secretary of State of the State of Delaware on March 3, 1980.
SECOND: This Restated Certificate of Incorporation was duly
------
adopted in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware by the Board of Directors without a
vote of the stockholders of the corporation and only restates and integrates and
does not further amend the provisions of the Certificate of Incorporation of the
corporation as heretofore amended or supplemented. There is no discrepancy
between those provisions and the provisions of this Restated Certificate of
Incorporation.
THIRD: The text of the Restated Certificate of Incorporation of the
-----
corporation reads in its entirety as follows:
CERTIFICATE OF INCORPORATION
OF
CYTOGEN CORPORATION
FIRST: The name of the Corporation is Cytogen Corporation.
-----
SECOND: The address of the Corporation's registered office in the
------
State of Delaware is 229 South State Street, in the City of Dover, County of
Kent, Delaware 19901. The name of its registered agent at such address is
United States Corporation Company.
FOURTH: The purpose of the Corporation is to engage in any lawful act
------
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FIFTH: A. Total Capital Stock. The total number
-----
of shares of all classes of capital stock which the Corporation shall have
authority to issue is twenty-seven million (27,000,000) shares, of which twenty-
one million six hundred
<PAGE>
thousand (21,600,000) shall be shares of common Stock, the par value of which is
one cent ($.01) per share, amounting in the aggregate to two hundred sixteen
thousand dollars ($216,000), and five million four hundred thousand (5,400,000)
shall be shares of Preferred Stock, the par value of which is one cent ($.01)
per share, amounting in the aggregate to fifty-four thousand dollars ($54,000).
B. Common Stock. Each holder of Common Stock shall be
entitled to one vote for each share of Common Stock held on all matters on which
holders of Common Stock shall be entitled to vote.
C. Preferred Stock. The Board of Directors of the
Corporation is authorized to cause the Preferred Stock to be issued in one or
more series, with such voting powers, full or limited, or no voting powers, and
with such designations, preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions providing for the
issue of such stock adopted by the Board of Directors. The Board of Directors of
the Corporation is expressly authorized to adopt such resolution or resolutions
and to issue such stock as may be desirable.
D. Residual Rights. All rights accruing to the outstan-
ding shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the outstanding shares of Common Stock and Preferred Stock
pari passu.
- ---- -----
SIXTH: Elections of directors need not be by written ballot
-----
unless the bylaws of the Corporation shall otherwise provide.
SEVENTH: Whenever a compromise or arrangement is proposed between
-------
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code, or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this
- 2 -
<PAGE>
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which said application has
been made, be binding on all the creditors or class of creditors, and/or on all
of the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
EIGHTH: The Board of Directors of the Corporation is authorized and
------
empowered from time to time in its discretion to make, alter, amend or repeal
bylaws of the Corporation, except as such power may be restricted by the General
Corporation Law of the State of Delaware.
NINTH: No director of the Corporation shall be personally liable to
-----
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article NINTH
shall not eliminate or limit the liability of a director to the extent provided
by applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after
approval by the stockholders of the Corporation of this Article NINTH to further
eliminate or limit the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated to the fullest extent permitted
by the General Corporation Law of the State of Delaware, as so amended.
TENTH: The Corporation reserves the right to amend, alter, change or
-----
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by Statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed on its behalf
- 3 -
<PAGE>
by Ronald J. Brenner, its President, and attested by William J. Ryan, its
Secretary, this 15th day of October, 1987.
Attest:
/s/ Ronald J. Brenner
------------------------------
President
/s/ William J. Ryan
- -------------------------
Secretary
- 4 -
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF CYTOGEN CORPORATION
__________________________
Adopted in Accordance
with the
Provisions of Section 242
of the
General Corporation Law
of the
State of Delaware
__________________________
CYTOGEN CORPORATION, a corporation organized and existing under and by
the virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that amendments to the Certificate of
Incorporation of the Corporation amending (1) Article Fourth thereof to read in
its entirety as attached hereto as Exhibit A and (2) adding a new Article Eighth
(redesignating the presently designated Article Eighth to Article Tenth) thereof
to read in its entirety as Exhibit B have been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware by a vote of Stockholders on these amendments, at the Annual Meeting of
Stockholders duly called and held on June 15, 1987 at which a quorum was
present.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed on its behalf by Ronald J. Brenner,
<PAGE>
its President, and attested by its Secretary, this 10th day of July, 1987.
CYTOGEN CORPORATION
By:/s/ Ronald J. Brenner
---------------------------
Ronald J. Brenner,
President
Attest:
/s/ William J. Ryan
- -------------------------
William J. Ryan,
Secretary
- 2 -
<PAGE>
EXHIBIT A
"FOURTH: A. Total Capital Stock. The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is
twenty-seven million (27,000,000) shares, of which twenty-one million six
hundred thousand (21,600,000) shall be shares of Common Stock, the par value of
which is one cent ($.01) per share, amounting in the aggregate to two hundred
sixteen thousand dollars ($216,000), and five million four hundred thousand
(5,400,000) shall be shares of Preferred Stock, the par value of which is one
cent ($.01) per share, amounting in the aggregate to fifty-four thousand dollars
($54,000).
B. Common Stock. Each holder of Common Stock shall be
entitled to one vote for each share of Common Stock held on all matters on which
holders of Common Stock shall be entitled to vote.
C. Preferred Stock. The Board of Directors of the
Corporation is authorized to cause the Preferred Stock to be issued in one or
more series, with such voting powers, full or limited, or no voting powers, and
with such designations, preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions providing for the
issue of such stock adopted by the Board of Directors. The Board of Directors of
the Corporation is expressly authorized to adopt such resolution or resolutions
and to issue such stock as may be desirable.
D. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the outstanding shares of Common Stock and Preferred Stock
pari passu."
- ---- -----
<PAGE>
EXHIBIT B
"EIGHTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article EIGHTH
shall not eliminate or limit the liability of a director to the extent provided
by applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) for
any transaction from which the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after
approval by the stockholders of the Corporation of this Article EIGHTH to
further eliminate or limit the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated to the fullest
extent permitted by the General Corporation Law of the State of Delaware, as so
amended."
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CYTOGEN CORPORATION
Cytogen Corporation, a corporation organized and existing under and by
virtue of the Delaware General Corporation Law (the "Corporation"), for the
purpose of increasing the total number of authorized shares of common stock of
the Corporation pursuant to Section 242 of the Delaware General Corporation Law,
does hereby certify:
FIRST: That at a meeting of the Board of Directors of the Corporation
held on February 1, 1991, the Board adopted resolutions: (a) setting forth
a proposed amendment to the Corporation's Restated Certificate of
Incorporation, a copy of which certificate was filed in the office of the
Delaware Secretary of State on October 19, 1987; (b) declaring the
advisability of the amendment; and (c) directing the amendment be
considered at the next annual meeting of the stockholders of the
Corporation.
SECOND: That the amendment to the Restated Certificate of
Incorporation set forth in the minutes of the Board of Directors is as
follows:
The FIFTH Article of the Restated Certificate of Incorporation is
amended in its entirety to be and read as follows:
"FIFTH A. Total Capital Stock. The total number of
-----
shares of all classes of capital stock which the Corporation
shall have authority
<PAGE>
to issue is fifty million (50,000,000) shares, of which forty-four
million six hundred thousand (44,600,000) shall be shares of Common
Stock, the par value of which is one cent ($.01) per share, amounting
in the aggregate to four hundred forty-six thousand dollars
($446,000), and five million four hundred thousand (5,400,000) shall
be shares of Preferred Stock, the par value of which is one cent
($.01) per share, amounting in the aggregate to fifty-four thousand
dollars ($54,000).
B. Common Stock. Each holder of Common Stock shall be
entitled to one vote for each share of Common Stock held on all
matters on which holders of Common Stock shall be entitled to vote.
C. Preferred Stock. The Board of Directors of the
Corporation is authorized to cause the Preferred Stock to be issued in
one or more series, with such voting powers, full or limited, or no
voting powers, and with such designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, as shall be stated and expressed
in the resolution or resolutions providing for the issue of such stock
adopted by the Board of Directors. The Board of Directors of the
Corporation is expressly authorized to adopt such resolution or
resolutions and to issue such stock as may be desirable.
D. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary
herein shall be vested in the outstanding shares of Common Stock and
Preferred Stock pari passu."
---- -----
THIRD: That at the Annual Meeting of Stockholders of the Corporation
held on April 19, 1991, a majority of the outstanding stock entitled to
vote therein was voted in
- 2 -
<PAGE>
favor of the aforesaid amendment. No class was entitled to vote thereon as
a class.
FOURTH: That the aforesaid amendment was duly adopted in accordance
with the applicable provision of Section 242 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by George W. Ebright, its President, and attested by William J. Ryan, its
Secretary, this 19th day of April 1991.
/s/ George W. Ebright
------------------------------
George W. Ebright, President
ATTESTED BY:
/s/ William J. Ryan
- ------------------------------
William J. Ryan, Secretary
(SEAL)
- 3 -
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CYTOGEN CORPORATION
INCREASING THE TOTAL NUMBER OF AUTHORIZED SHARES
OF THE COMMON STOCK OF CYTOGEN CORPORATION
CYTOGEN CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), for the purpose of increasing the total number of authorized
shares of common stock of the Corporation pursuant to Section 242 of the
Delaware General Corporation Law,
DOES HEREBY CERTIFY:
FIRST: That by unanimous action taken by the Board of Directors of
the Corporation on March 21, 1994 by written consent without a meeting and in
lieu of a special meeting of the Board of Directors, with full force and effect
as if adopted by the unanimous affirmative vote of the Board of Directors at a
duly constituted meeting, resolutions were duly adopted (a) setting forth a
proposed amendment to the Corporation's Restated Certificate of Incorporation,
as amended, a copy of which certificate was filed in the office of the Delaware
Secretary of State on October 19, 1987 and a copy of which certificate of
amendment thereto was filed in the office of the Delaware Secretary of State on
April 22, 1991; (b) declaring the advisability of the amendment; and (c)
directing the amendment be considered at the next annual meeting of the
stockholders of the Corporation.
SECOND: That the amendment to the Restated Certificate of
Incorporation set forth in the minutes of the Board of Directors is as follows:
The FIFTH Article of the Restated Certificate of Incorporation is
amended in its entirety to be and read as follows:
"FIFTH: A. Total Capital Stock. The total number of shares of
-----
all classes of capital stock which the Corporation shall have the authority
to issue is seventy-five million (75,000,000) shares, of which sixty-nine
million six hundred thousand (69,600,000) shall be shares of Common Stock,
the par value of which is one cent ($.01) per share, amounting in the
aggregate to six
<PAGE>
hundred ninety-six thousand dollars ($696,000), and five million four
hundred thousand (5,400,000) shall be shares of Preferred Stock the par
value of which is one ($.01) per share, amounting in the aggregate to
fifty-four thousand dollars ($54,000).
B. Common Stock. Each holder of Common Stock shall be
entitled to one vote for each share of Common Stock held on all matters on
which holders of Common Stock shall be entitled to vote.
C. Preferred Stock. The Board of Directors of the
Corporation is authorized to cause the Preferred Stock to be issued in one
or more series, with such voting powers, full or limited, or no voting
powers, and with such designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in
the resolution or resolutions providing for the issue of such stock adopted
by the Board of Directors. The Board of Directors of the Corporation is
expressly authorized to adopt such resolution or resolutions and to issue
such stock as may be desirable.
D. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the outstanding shares of Common Stock and Preferred
Stock pari passu.
---- -----
THIRD: That at the Annual Meeting of Stockholders of the Corporation
held on May 24, 1994, a majority of the outstanding stock entitled to vote
therein was voted in favor of the aforesaid amendment. No class was entitled to
vote thereon as a class.
FOURTH: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Thomas J. McKearn, its President, and
- 2 -
<PAGE>
attested by Mitchell G. Mackler, its Assistant Secretary, this the 24th day of
May 1994.
/s/ Thomas J. McKearn
-----------------------------------
Thomas J. McKearn, M.D., Ph.D.,
President
ATTESTED BY:
/s/ Mitchell G. Mackler
- -------------------------
Mitchell G. Mackler,
Assistant Secretary
(Seal)
- 3 -
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CYTOGEN CORPORATION
CYTOGEN CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), for the purpose of increasing the total number of authorized
shares of common stock of the Corporation pursuant to Section 242 of the
Delaware General Corporation Law,
DOES HEREBY CERTIFY:
FIRST: That by action taken at a meeting of the Board of Directors of the
Corporation on January 23, 1996, resolutions were duly adopted (a) setting forth
a proposed amendment to the Corporation's Restated Certificate of Incorporation,
as amended, a copy of which certificate was filed in the office of the Delaware
Secretary of State on October 19, 1987 and a copy of which certificates of
amendments thereto were filed in the office of the Delaware Secretary of State
on April 22, 1991 and May 27, 1994; (b) declaring the advisability of the
amendment; and (c) directing the amendment be considered at the next annual
meeting of the stockholders of the Corporation.
SECOND: That the amendment to the Restated Certificate of Incorporation set
forth in the minutes of the Board of Directors is as follows:
The FIFTH Article of the Restated Certificate of Incorporation of the
Corporation is amended in its entirety to be and read as follows:
"FIFTH A. Total Capital Stock. The total number of
-----
shares of all classes of capital stock which the corporation
shall have the authority to issue is ninety-five million
(95,000,000) shares, of which eighty-nine million, six
hundred thousand (89,600,000) shall be shares of Common
Stock, the par value of which is one cent ($.01) per share,
amounting in the aggregate to eight hundred ninety-six
thousand dollars ($896,000) and five million, four hundred
thousand (5,400,000) shall be shares of Preferred Stock, the
par value of which is one cent ($.01) per share, amounting in
the
<PAGE>
aggregate to fifty-four thousand dollars ($54,000).
B. Common Stock. Each holder of Common Stock shall be
entitled to one vote for each share of Common Stock held on
all matters on which holders of Common Stock shall be
entitled to vote.
C. Preferred Stock. The Board of Directors of the
Corporation is authorized to cause the Preferred Stock to be
issued in one or more series, with such voting powers, full
or limited, or no voting powers, and with such designations,
preferences and relative, participating, optional or other
special rights and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in
the resolution or resolutions providing for the issue of
such stock adopted by the Board of Directors. The Board of
Directors of the Corporation is expressly authorized to
adopt such resolution or resolutions and to issue such stock
as may be desirable.
D. Residual Rights. All rights accruing to the
outstanding shares of the Corporation not expressly provided
for to the contrary herein shall be vested in the
outstanding shares of Common Stock and Preferred Stock pari
----
passu."
-----
THIRD: That at the Annual Meeting of Stockholders of the Corporation held
on May 22, 1996, a majority of the outstanding stock entitled to vote thereon
was voted in favor of the aforesaid amendment. No class was entitled to vote
thereon as a class.
FOURTH: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 242 of the Delaware General Corporation
Law.
- 2 -
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Thomas J. McKearn, as President and Chief Executive Officer, this 22nd
day of May, 1996.
CYTOGEN CORPORATION
By:/s/ Thomas J. McKearn
--------------------------------
Thomas J. McKearn
President and
Chief Executive Officer
- 3 -
<PAGE>
SECOND AMENDMENT OF THE LICENSE AGREEMENT EFFECTIVE MAY 30, 1993
----------------------------------------------------------------
BETWEEN THE DOW CHEMICAL COMPANY AND CYTOGEN CORPORATION
--------------------------------------------------------
This Second Amendment ("Second Amendment") to the License Agreement effective
May 30, 1993 ("License") between The Dow Chemical Company ("DOW") and CYTOGEN
Corporation ("CYTOGEN") is desired to expand the fields in which CYTOGEN is
licensed and to modify the terms of the first Amendment (effective September 5,
1995) to the License.
NOW, THEREFORE, DOW and CYTOGEN, in consideration of the commercial development
of the PRODUCT and EXPANSION OF LICENSED FIELD, the mutual covenants contained
herein, the adequacy and sufficiency of which are acknowledged, agree as
follows:
I. The original Articles of the License are modified as follows:
------------------------------------------------------------
Article 1 -
- ---------
1.11 At line 4, after the word "humans" insert "or for the treatment of
disease characterized by osteoblastic response in humans".
Article 6 -
- ---------
6.1.4, 6.1.7 and 6.1.8 are also to apply to this Second Amendment expanded
indication for EXPANSION OF LICENSED FIELD.
Article 8 -
- ---------
8.1.3 Added as a new provision - "As an initial consideration for this
Second Amendment, within ten (10) days from the Effective Date,
CYTOGEN shall pay DOW One Thousand Dollars (US$1,000)."
8.2 d) [ Information omitted and filed separately with the Commission
under Rule 24b-2. ]
<PAGE>
II. The original Articles of the Amendment are modified as follows:
--------------------------------------------------------------
Article 6 -
- ---------
6.19 Amend the Article to read: "File the NDA packaged, modified as
needed, with the CANADIAN governmental authorities for PRODUCT for
the FIELD using CYTOGEN's best efforts by October 31, 1996;"
All other terms of the prior License and Amendment remain as stated
therein.
IN WITNESS WHEREOF, the Parties have duly executed this Second Amendment in
duplicate by their appropriate authorized representative, effective as of the
last date set forth below ("Effective Date").
THE DOW CHEMICAL COMPANY CYTOGEN CORPORATION
By /s/Fred P. Corson By /s/Richard J. Walsh
----------------------------- -------------------------
Name Fred P. Corson Name Richard J. Walsh
Title Vice President Title Vice President
Research and Development Corporate Development
Date May 17, 1996 Date May 20, 1996
--------------------------- ------------------------
-2-
<PAGE>
CYTOGEN CORPORATION 1995 STOCK OPTION PLAN
Amendment No. 1
---------------
Pursuant to the power reserved to it in Section 14 of the Cytogen
Corporation 1995 Stock Option Plan (the "Plan"), the Board of Directors of
Cytogen Corporation hereby amends the Plan as follows:
1. Section 1(a) is hereby amended and restated
in its entirety to read as follows:
" (a) The purposes of this Plan are to further the interests of
Cytogen Corporation (the "Company") and its Subsidiaries by retaining
the services of persons now serving as officers and other employees
and consultants of the Company and its Subsidiaries, attracting and
retaining the services of persons capable of serving as officers,
employees and consultants of the Company and its Subsidiaries and
providing incentives for such employees and consultants to exert
maximum efforts to promote the success of the Company and its
Subsidiaries."
2. The definition of "Employee" in Section 2 is hereby amended and
restated in its entirety to read as follows:
"'Employee' means any person employed by the Company or any of its
--------
Subsidiaries (including, without limitation, a person employed by the
Company or any of its Subsidiaries who is also an officer or director
of the Company or any of its Subsidiaries)."
3. The definition of "Plan" in Section 2 is hereby amended and
restated in its entirety to read as follows:
"'Plan' means the Cytogen Corporation 1995 Stock Option Plan, as
----
amended."
4. The definition of "Termination of Employment" in Section 2 is
hereby deleted in its entirety and replaced by the following:
"'Termination of Service' means (a) the time when the employee-
----------------------
employer relationship between an Employee and the Company ceases to
exist for any reason, or (b) the time when an officer who is not also
an Employee ceases to be an officer of the Company for any reason or
(c) the time when an Eligible Consultant ceases to be such a
consultant for any reason, including, but not limited to, a
termination by resignation, discharge,
<PAGE>
death, Total Disability or retirement. Any leave of absence taken
with the consent of the Company for a period of not more than 90 days
shall not be a Termination of Service, or if longer, so long as the
optionee's right to reemployment with the Company is guaranteed by
contract. If the period of leave exceeds 90 days and if the right to
reemployment is not guaranteed by contract, the Termination of Service
will be deemed to occur on the 91st day of the leave."
5. The definition of "Total Disability" in Section 2 is hereby
amended and restated in its entirety to read as follows:
"'Total Disability' means inability of an Employee or Eligible
----------------
Consultant to engage in any substantial gainful activity by reason of
a medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months. All
determinations as to the date and extent of disability of an Employee
or Eligible Consultant will be made by the Committee."
6. Section 2 is hereby amended to add the following
definition:
"'Eligible Consultant' means a consultant providing services to, and
-------------------
who is not an employee of, the Company or any of its Subsidiaries."
7. Section 2 is hereby amended to add the following
definition:
"'Subsidiary' means any corporation that, at the time in question is a
----------
subsidiary corporation of the Company within the meaning of section
424(f) of the Code."
8. Section 3(a) is hereby amended and restated in its entirety to
read as follows:
" (a) This Plan shall be administered by a Committee, which shall be
composed of not less than two Outside Directors who are also
Disinterested Directors. The Committee may, from time to time, adopt
or rescind rules and regulations for carrying out the provisions and
purposes of this Plan. Subject to the express provisions of this
Plan, the Committee shall have sole
- 2 -
<PAGE>
authority, in its absolute discretion, to determine which officers,
Employees and Eligible Consultants shall receive Options, the time
when Options shall be granted, the terms and provisions of the Options
(which may differ from one another) and to do everything necessary or
appropriate to administer this Plan, including, without limitation,
interpreting the provisions of this Plan and the Options. All
determinations made by the Committee with respect to this Plan and the
Options shall be final, binding and conclusive."
9. Section 4(a) is hereby amended and restated in its entirety to
read as follows:
" (a) Options may be granted under this Plan only to persons who at
the Date of Grant either (i) are officers, Employees or Eligible
Consultants of the Company or any of its Subsidiaries or (ii) have
agreed to become officers, Employees or Eligible Consultants of the
Company or any of its Subsidiaries, and, in either case, are
determined by the Committee to be of substantial importance to the
Company or any of its Subsidiaries."
10. Section 4(b) is hereby amended and restated in its entirety to
read as follows:
" (b) Options granted to persons who are not yet officers,
Employees or Eligible Consultants at the Date of Grant may not be
exercised until the optionee has become an officer, Employee or
Eligible Consultant, and shall expire if the optionee fails to
commence service as an officer, Employee or Eligible Consultant within
six months (or such other period as the Committee may determine) after
the Date of Grant."
11. Section 4(c) is hereby amended and restated in its entirety to
read as follows:
" (c) Incentive Stock Options may be granted only to persons who
are Employees at the Date of Grant, and only on such terms as are
provided in paragraphs 6, 7 and 8 hereof."
12. Section 4(d) is hereby amended and restated in its entirety to
read as follows:
- 3 -
<PAGE>
" (d) No Employee or Eligible Consultant to whom Options may be
granted under this Plan may be granted Options to purchase more than
200,000 shares in any one calendar year."
13. Section 5(a) is hereby amended and restated in its entirety to
read as follows:
" (a) Subject to any adjustment as provided in paragraph 9, the
maximum number of shares of Common Stock as to which Options may be
granted under this Plan is 4,502,635 shares reduced by the number of
outstanding options granted under the Cytogen Corporation 1989
Employee Stock Option Plan (the "1989 Plan") that are exercised after
the effective date of this Plan. If any Option expires or is cancelled
or surrendered without being exercised in full, the number of shares
as to which the Option is not exercised will once again become shares
as to which new Options may be granted. The Common Stock which is
issued on exercise of Options may be authorized but unissued shares or
shares which have been issued and reacquired by the Company."
14. Section 5(b) is hereby amended and restated in its entirety to
read as follows:
" (b) For administrative purposes only, the Committee shall
establish an account indicating the number of shares of Common Stock
as to which Options may then be granted under this Plan (the "Current
Account"), and the Committee may issue Options only with respect to
the shares of Common Stock available for grant as set forth in the
Current Account. The Current Account shall contain the number of
shares available for grant calculated as follows: (a) 4,502,635, minus
(b) the number of shares of Common Stock subject to options granted
under the 1989 Plan that are exercised after the effective date of
this Plan, minus (c) the number of shares of Common Stock subject to
outstanding options granted under the 1989 Plan and this Plan, plus
(d) the number of shares of Common Stock subject to outstanding
options granted under the 1989 Plan and/or this Plan that expire, are
cancelled or surrendered without being exercised in full."
15. Section 6(a) is hereby amended and restated in its entirety to
read as follows:
- 4 -
<PAGE>
" (a) Subject to paragraph 4(d), the Committee will have complete
discretion to determine when, and to which officers or other Employees
or Eligible Consultants, Options are to be granted, the number of
shares of Common Stock to which Options granted to each officer or
other Employee or Eligible Consultant, will relate, whether and to
what extent Options granted to an officer or other Employee or
Eligible Consultant, will be Incentive Stock Options or Non-Qualified
Options and, subject to the provisions of paragraphs 7 and 8, the
Exercise Price and the term of each Option. The Committee may, in its
discretion at the time of granting the Option, provide that the
Exercise Price may be paid in cash, by the surrender of Common Stock,
by an interest-bearing promissory note, or by other means; subject,
however, to any requirements of applicable law which may limit the
type or amount of such non-cash consideration. If payment by
promissory note is permitted: (i) the optionee shall be required to
make a cash payment upon exercise of the Option of not less than 20%
of the Exercise Price; (ii) the note shall provide for full recourse
against the maker; and (iii) the note shall be payable in full prior
to its stated maturity upon the optionee's Termination of Service for
any reason other than death or Total Disability."
16. Section 7(f) is hereby amended and restated in its entirety to
read as follows:
" (f) Termination of Service of Holder of Option Other Than Because
of Total Disability or Death. If there is a Termination of Service of
a person to whom an Option has been granted, other than by reason of
the person's death or Total Disability, each Option held by the person
may be exercised (if otherwise exercisable) until the earlier of (i)
the end of the three-month period immediately following the date of
the Termination of Service, (ii) the expiration of the term specified
in the Option, or (iii) such earlier time as may be determined by the
Committee at the time of granting the Option."
17. Section 7(g) is hereby amended and restated in its entirety to
read as follows:
" (g) Total Disability of Holder of Option. If there is a
Termination of Service of a person to whom an Option has been granted
by reason of his or her
- 5 -
<PAGE>
Total Disability, each Option held by the person may be exercised (if
otherwise exercisable) until the earlier of (i) the end of the one-
year period immediately following the date of the Termination of
Service, (ii) the expiration of the term specified in the Option, or
(iii) such earlier time as may be determined by the Committee at the
time of granting the Option."
18. Section 7(h) is hereby amended and restated in its entirety to
read as follows:
" (h) Death of Holder of Option. If there is a Termination of
Service of a person to whom an Option has been granted by reason of
his or her death, or a former officer or Employee or Eligible
Consultant dies following the date of his or her Termination of
Service but at a time when an Option still would be exercisable by
that person but for the death of the person, each Option held by the
person at the time of his or her death may be exercised by the person
or persons to whom the Option passed by will or by the laws of descent
and distribution (but by no other persons) until the earlier of (i)
the end of the one-year period immediately following the date of death
(or such other period as may be determined by the Committee at the
time of granting the Option), (ii) the expiration of the term
specified in the Option, or (iii) if the death occurs after the
Termination of Service, the end of the period in which the Option
could be exercised under paragraph 7(f) or (g)."
19. Section 14 is hereby amended and restated in its entirety to read
as follows:
"14. Amendment of the Plan.
The Board of Directors may at any time and from time to time
modify or amend this Plan in any respect effective at any date the
Board of Directors determines; provided, that without the approval of
the stockholders of the Company the Board of Directors may not, (i)
except as provided in paragraph 9, increase the maximum number of
shares of Common Stock which may be issued on exercise of Options
granted under this Plan; (ii) change the categories of persons
eligible to receive Options; (iii) increase the per-optionee limit
specified in paragraph 4(d), or (iv) take any other action requiring
the approval of the stockholders of the Company in order to maintain
the exemption
- 6 -
<PAGE>
available under Rule 16b-3 (or any similar rule) of the Securities and
Exchange Commission. No modification or amendment of this Plan will,
without the consent of the holder of an outstanding Option, adversely
affect the holder's rights under that Option."
20. This Amendment No. 1 to the Plan shall be effective only after
approval of a majority of the Company's stockholders as set forth in Section 14.
- 7 -
<PAGE>
To record the adoption of this Amendment No. 1, the Company has caused
its authorized officers to affix its corporation name and seal this 22nd day of
May, 1996.
CORPORATE SEAL CYTOGEN CORPORATION
Attest:/s/ T. Jerome Madison By: /s/ Thomas J. McKearn
--------------------- -----------------------
- 8 -
<PAGE>
CYTOGEN CORPORATION 1988 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
Amendment No. 2
---------------
Pursuant to the power reserved to it in Section 12 of the Cytogen
Corporation 1988 Stock Option Plan for Non-Employee Directors (the "Plan"), the
Board of Directors of Cytogen Corporation hereby amends the Plan as follows:
1. The first sentence of Section 5 is hereby amended and restated to read
as follows:
"The maximum number of shares of Common Stock as to which Options may
be granted under this Plan is 300,000 shares."
2. This Amendment No. 2 to the Plan shall be effective only after
approval of a majority of the Company's stockholders as set forth in Section 12.
To record the adoption of this Amendment No. 2, the Company has caused its
authorized officers to affix its corporation name and seal this 22nd day of May,
1996.
CORPORATE SEAL CYTOGEN CORPORATION
Attest: /s/ T. Jerome Madison By: /s/ Thomas J. McKearn
--------------------- -----------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM "THE
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1996 AND THE CONSOLIDATED STATEMENTS
OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 20,373,000
<SECURITIES> 5,070,000
<RECEIVABLES> 1,131,000
<ALLOWANCES> (536,000)
<INVENTORY> 300,000
<CURRENT-ASSETS> 753,000
<PP&E> 16,918,000
<DEPRECIATION> (11,684,000)
<TOTAL-ASSETS> 33,875,000
<CURRENT-LIABILITIES> 5,343,000
<BONDS> 0
0
0
<COMMON> 481,000
<OTHER-SE> 24,626,000
<TOTAL-LIABILITY-AND-EQUITY> 33,875,000
<SALES> 742,000
<TOTAL-REVENUES> 2,751,000
<CGS> 0
<TOTAL-COSTS> 1,755,000
<OTHER-EXPENSES> 12,617,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 225,000
<INCOME-PRETAX> (11,079,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,079,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,079,000)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> 0
</TABLE>
