<PAGE>
PROSPECTUS SUPPLEMENT File No. 333-02015
(TO PROSPECTUS DATED MARCH 28, 1996) Filed Pursuant to Rule 424(b)(2)
under the Securities Act of 1933
932,535 Shares
CYTOGEN CORPORATION
Common Stock
Pursuant to a Stock Purchase Agreement between Cytogen Corporation (the
"Company") and Elan International Services, Ltd., a Bermuda corporation (the
"Investor"), a subsidiary of Elan Corporation plc ("Elan"), dated as of
September 26, 1996 (the "Purchase Agreement"), the Company agreed to sell to the
Investor 932,535 shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock") for an aggregate purchase price of $5.0 million or
approximately $5.36 per share. The price per share equals .925 multiplied by
the average closing bid prices reported on Nasdaq during a designated trading
period of ten trading days. The closing of the sale of the shares occurred on
September 26, 1996.
Persons who participate in the distribution of the Shares may be deemed to
be underwriters as the term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), and may be subject to the prospectus delivery
requirements thereunder. Any discounts or commissions received by them from the
Company and any profits on the resale of the Shares by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The Investor
has advised the Company that it believes that it is not a statutory underwriter
under the Securities Act.
On September 25, 1996, the last reported sale price of the Common Stock, as
reported on Nasdaq was $5-13/16 per share.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
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Sales Price Proceeds To Company/(1)/
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<S> <C> <C>
Per Share..................... $ 5.36 $ 5.36
Total......................... $ 5,000,000 $ 5,000,000
================================================================================
</TABLE>
/(1)/ Before deducting expenses which were negligible.
The date of this Prospectus Supplement is September 26, 1996
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DILUTION
The net tangible book value per share of the Common Stock at June 30,
1996 was $0.522. Without taking into account any change in the Company's net
tangible book value after June 30, 1996, other than giving effect to the
issuance and sale of the Shares at $5.36 per share as shown on the cover page
(after deducting estimated expenses), the pro forma net tangible book value per
share of the Common Stock would have been $0.614. This represents an immediate
increase in net tangible pro forma book value per share of $0.092 to present
stockholders and an immediate dilution of $4.746 per share to the Investor. The
following table illustrates the per share effect of this dilution on the
Investor's purchase of Common Stock:
<TABLE>
<CAPTION>
<S> <C>
Sales price of Common Stock.............................................. $ 5.36
Net tangible book value before sale.......................... $0.522
Increase attributable to payments by the Investor............ $0.092
Pro forma net tangible book value after sale /(1)/....................... $0.614
Dilution of the Investor /(2)/........................................... $4.746
</TABLE>
RECENT DEVELOPMENTS
On September 6, 1996, 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 to Fletcher 225,000 shares of Common Stock at an aggregate
purchase price of $1,469,025 or $6.529 per share. Under the Investment
Agreement, the Company also has the right to issue and sell to the Investor
until December 15, 1996, and the Investor will be obligated to purchase, up to
an additional 450,000 shares of Common Stock from time to time (collectively,
the "Fletcher Put Rights") at a purchase price per share equal to 101% of the
average of the daily volume weighted average price of the Common Stock on the
Nasdaq National Market 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.
On September 26, 1996, the Company entered into a Joint Development
and Operating Agreement with Elan regarding the formation and operation of a
newly formed joint venture company called Targon Corporation ("Targon"). Targon
will concentrate on the development, registration, manufacturing and
commercialization of differentiated oncology products.
In connection with the formation of the new company, the Company sold
to the Investor 932,535 shares of Common Stock of the Company for an aggregate
purchase price of $5 million. The Company used these proceeds to fund its
obligation to contribute $5 million in cash to Targon. The Company also sold to
the Investor 1,000 shares of a new Series A Preferred Stock of the Company for
$15 million. The Company also contributed the proceeds of this sale to Targon
along with certain technology owned by the Company.
Initially Targon Corporation will be wholly-owned by the Company.
However, the Investor has the right to exchange its shares of the Company's
Series A Preferred Stock for one-half of the Company's interest in Targon. If
the Investor exercises this exchange right, then the Company and the Investor
will be equal owners of Targon. If the Investor exercises the exchange right it
will receive a warrant to purchase up to 1 million shares of Common Stock of the
Company at exercise prices (based on the time of exercise) between $8.40 to
$14.00 over time.
The Investor also has the right to convert its shares of Series A
Preferred Stock into a maximum of 1,785,715 shares of the Company's Common Stock
(reducing over time, based on the time of conversion). If the Investor
exercises its conversion right, then the Company will retain its full ownership
of Targon.
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/(1)/ Excludes 4,291,342 shares of Common Stock issuable upon exercise of
outstanding warrants, approximately 3,142,103 shares of Common Stock
issuable upon the exercise of outstanding stock options and any shares
of Common Stock issuable upon conversion of the Series A Preferred
Stock and exercise of the Fletcher Put Rights described above.
/(2)/ The above calculation does not give affect to the sale of 225,000
shares of Common Stock to Fletcher Fund described above. The effect of
the sale of those shares is to increase the pro forma net tangible book
value by $0.027 per share. to $0.641 per share.
2
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Targon used $10 million of the amount contributed to it by the Company
to purchase two products, EL530 and EL532, from Advanced Therapeutic Systems,
Inc. If the Investor exercises its right to convert its shares of Series A
Preferred stock into Common Stock of the Company, rather than stock of Targon,
then Elan generally will be required to purchase from Targon the EL530 and EL532
products for $10 million plus a royalty on sales of the products.
3
