CYTOGEN CORP, POS AM, 1999-03-05

CYTOGEN CORP
POS AM, 1999-03-05
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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As filed with the Securities and Exchange Commission on March 5, 1999

Registration No. 333-67947

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
POST EFFECTIVE AMENDMENT NO. 1
TO
AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

CYTOGEN CORPORATION
(Exact name of registrant as specified in its charter)

------------------------------------------------------

Delaware 2835 22-2322400
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Identification No.)
Code Number)
-------------------------------------

600 College Road East CN 5308
Princeton, New Jersey 08540-5308
(609) 987-8200
(Address, including zip code and telephone
number, including area code, of registrant's
principal executive offices)

--------------------------------------

Donald F. Crane, Jr., Esq.
Vice President and General Counsel
CYTOGEN Corporation
600 College Road East CN 5308
Princeton, New Jersey 08540-5308
(609) 987-8200
(Name, address, including zip code, and telephone
number,including area code, of agent for service)

-----------------------------------------

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]

----------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount To Be Offering Price Aggregate Offering Amount of
Securities To Be Registered Registered (1) Per Share Price Registration Fee
- -------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Common Stock ($.01 per share) 6,000,000 Shares $1.172 (2) $7,032,000 $1,955

Common Stock ($.01 par value
per share), issuable upon
exercise of a warrant 200,000 Shares $1.172 (2) $234,400 $65

- -------------------------------------------------------------------------------------------------------------------
Totals: 6,200,000 Shares $7,266,400 $2,020
===================================================================================================================
</TABLE>

(1) In the event of a stock split, stock dividend, or other transaction
involving the Company's Common Stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act
(2) Estimated solely for the purpose of calculating the registration fee,
which applies to stock splits, stock dividends, or similar transactions.
Includes preferred stock purchase rights pursuant to Cytogen
Corporation's Shareholder Rights Agreement.

The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

<PAGE>

PROSPECTUS Subject to Completion, dated March 5, 1999

6,200,000 Shares

CYTOGEN CORPORATION

Common Stock

This Prospectus may be used only in connection with the
resale by Kingsbridge Capital Limited ("Kingsbridge" or the
"Selling Stockholder"), from time to time, of
up to 6,200,000 shares of the common stock of CYTOGEN
Corporation, as follows:

- 6,000,000 shares of common stock which may be issued
by the Company to Kingsbridge pursuant to an equity
line agreement; and

- 200,000 shares of common stock issuable upon
exercise of a warrant held by Kingsbridge.

The shares of common stock offered hereby may be sold from time to time for
the account of the Selling Stockholder. The Company will not receive any of the
proceeds from the sale of the shares by the Selling Stockholder. The Company has
agreed to pay the Selling Stockholder's costs of registering the shares
hereunder, including legal fees up to a maximum of $5,000, commissions, transfer
taxes and certain other expenses of resale of the common stock. The Company also
agreed to pay the Placement Agent a fee equal to 6% of the proceeds to the
Company from sales pursuant to the equity line agreement.

The price at which the common stock will be issued by the
Company to Kingsbridge will be 85% of the market price of such
stock on the date the Company issues shares, as defined in the
equity line agreement.

The Selling Stockholder may offer, pursuant to this
prospectus, shares of common stock to purchasers from time to
time in transactions on the Nasdaq Stock Market, in negotiated
transactions, or otherwise, or by a combination of these methods,
at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to such market prices or
at negotiated prices. Sales of the shares may be effected
through broker-dealers, who may receive compensation from
Kingsbridge in the form of discounts or commissions. Kingsbridge
is an "underwriter" within the meaning of the Securities Act of
1933, as amended, in connection with such sales.

The Company's common stock is listed on the Nasdaq Stock
Market under the symbol "CYTO." The average of the high and low
bid prices for the Company's common stock on the Nasdaq Stock
Market on February 24, 1999 was $1.0625 per share.

Investing in the common stock involves certain risks which are described in
the "Risk Factors" section beginning on page 9. The Selling Stockholders
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.

CYTOGEN's principal executive offices are located at 600
College Road East, CN 5308, Princeton, New Jersey 08540-5308,
(609) 987-8200.

<PAGE>

TABLE OF CONTENTS

Page
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Equity Line Agreement. . . . . . . . . . . . . . . . . . . . 24
Determination of the Offering Price. . . . . . . . . . . . . . . 25
Price Range of our Common Stock. . . . . . . . . . . . . . . . . 26
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . 26
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 26
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 27
Selected Consolidated Financial Data . . . . . . . . . . . . . . 28
Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . 29
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Available Information. . . . . . . . . . . . . . . . . . . . . . 56
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Executive Compensation . . . . . . . . . . . . . . . . . . . . . 60
Description of Capital Stock . . . . . . . . . . . . . . . . . . 68
Selling Stockholder. . . . . . . . . . . . . . . . . . . . . . . 71
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 72
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 74
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Index to Consolidated Financial Statements . . . . . . . . . . . F-1

__________________________

ProstaScint and OncoScint are registered trademarks of
CYTOGEN. PIE and SynGene are trademarks of CYTOGEN,
pending registration. Quadramet is a trademark of Dow,
licensed to CYTOGEN

<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in
this prospectus. It is not complete and may not contain all the
information that you should consider before investing in the
common stock. You should read the entire prospectus carefully,
including the "Risk Factors" section, the financial statements
and the notes to the financial statements.

The Company

CYTOGEN Corporation ("CYTOGEN" or the "Company") is a
biopharmaceutical company engaged in the development,
commercialization and marketing of products to improve diagnosis
and treatment of cancer and other diseases. CYTOGEN was
incorporated in Delaware in 1981. Unless the context otherwise
indicates, as used herein, the term "Company" refers to CYTOGEN
and its subsidiaries, taken as a whole.

Our Products

We introduced to the market during 1997 our two principal
products, each of which have been approved by the U.S. Food and
Drug Administration ("FDA"):

- ProstaScint (kit for the preparation of Indium In111
Capromab Pendetide). ProstaScint has been approved as
a diagnostic imaging agent for prostate cancer, the most
frequently diagnosed malignancy and second leading
cause of cancer death in men.

- Quadramet (Samarium Sm153 Lexidronam Injection).
Quadramet has been approved for the treatment of
bone pain due to cancers that have spread to the
skeleton and that can be visualized on a bone scan.

Our OncoScint CR/OV imaging agent is also approved and
marketed as a diagnostic imaging agent for colorectal and ovarian
cancer.

We believe that our products represent a significant
improvement over existing technologies because our products
provide improved diagnostic information and/or treatment in a
site-specific manner with relatively low levels of toxicity.

We also develop other products and technologies, both
directly and through subsidiaries, and have engaged in
development efforts with other parties.

Research and Development

Historically, we have emphasized research and development of
a broad array of potential products, based on monoclonal
antibodies and other technologies. Having identified and
commercialized products which we believe have substantial
potential, we have:

3
<PAGE>

- Recently curtailed basic research expenditures in
order to allocate resources toward implementing our
business strategy.

Business Strategy

Our business strategy calls for:

- Devoting our primary efforts to the marketing of
ProstaScint and Quadramet to increase revenue and
achieve profitability;
- Expanding the use of ProstaScint and other products
into foreign markets;
- Developing products utilizing our proprietary
technology;
- Expanding our current product portfolio through the
continued in-licensing of additional products and
related technologies, in the same manner as Quadramet;
- Establishing strategic alliances; and
- Acquiring other companies with related or
complementary products, technologies and/or services.

We cannot predict, however, whether we can accomplish these
objectives or whether accomplishment of these objectives will
lead to new commercially viable products or technologies. In
addition, our efforts to develop or acquire new products depend
on our available resources, our ability to commit resources to
potential products or strategic activities without unduly
impacting current operations or financial results, and whether or
not such activities in the near term would affect the marketing
of our products or the efforts of management to commercialize the
Company successfully.

Restructuring Activities

During 1998, we reviewed our assets and business prospects
to determine which projects demonstrated adequate potential for a
continued investment of corporate resources. As a result of this
review, we:

- Terminated our ALT program.
Our subsidiary Cellcor, Inc. ("Cellcor") had been
developing Autologous Lymphocyte Therapy ("ALT")
for the treatment of metastatic renal cell
carcinoma ("mRCC"), a life threatening kidney
cancer for which there are no adequate therapies.
We had planned to submit a Biologics License
Application for ALT. Cellcor completed pivotal
Phase III clinical trials of ALT in mRCC patients
in January 1997. Although we believe the results
of the trials are favorable, ALT was not
considered a priority for allocation of available
resources. We halted our preparation for
submission of the Biologics License Application
and closed our Cellcor facility in September 1998.

- Sold our manufacturing facility and effectively outsourced
manufacturing.
We determined that outsourcing manufacturing of the Company's
products would be more economical and consistent with our
strategies. During early January, 1999, we sold our manufacturing
facility and entered a three year agreement in which the Company's
ProstaScint and OncoScint products would continue to be
manufactured at the facility (see Recent Developments).

4
<PAGE>

- Reduced expenses.
We have downsized the workforce by eliminating
positions which were no longer critical to our
strategic plans and have curtailed expenses for
basic research.

Recent Developments.

- We raised $4.5 million in equity capital by selling 6 million shares of
common stock to our two largest investors, a subsidiary of the Hillman
Company and the State of Wisconsin Investment Board. The price the
investors paid for the common stock was $.75 per share, the market price
at the time we agreed to terms with the investors. We did not pay any
commissions to any underwriters or agents and received all of the
proceeds from the sale.

- We sold our manufacturing facility to Bard Bio Pharma L.P., a subsidiary
of Norwalk, CT based pharmaceutical company Purdue Pharma L.P. We
received $3.9 million in cash for the assets in the facility, and the
lease to the building. We also signed an agreement with Purdue to share
space in the building to continue to manufacture our ProstaScint and
OncoScint products at the same location. Employees involved in
maufacturing currently remain CYTOGEN employees, but Purdue will pay for
their labor costs except while they are working on our products.

5
<PAGE>

The Offering

CYTOGEN Corporation and Kingsbridge entered into a Private
Equity Line of Credit Agreement on October 23, 1998 (the "Equity
Line Agreement"). This agreement entitles us to sell, from time
to time, up to $12,000,000 (after deducting Kingsbridge's
discount) of our common stock to Kingsbridge.
Pursuant to the agreement, we have:

- Filed a registration statement for 6,000,000 shares
of common stock which we may sell to Kingsbridge
pursuant to this agreement, which Kingsbridge may
offer to the public through this prospectus;
- Issued to Kingsbridge a warrant to purchase 200,000
shares of our common stock at an exercise price of
$1.016 per share (the "Kingsbridge Warrant").
Shares issuable on exercise of the Kingsbridge
Warrant may also be offered to the public through
this prospectus;
- Issued to our placement agent, May Davis Group, Inc., a
warrant to purchase 100,000 shares of common stock at an
exercise price of $2.00 per share (the "Placement Agent
Warrant, and
- Agreed to pay the May Davis Group, Inc., a placement agent
(the "Placement Agent")a fee equal to 6% of the net proceeds
from the sale of common stock purchased by Kingsbridge
pursuant to the Equity Line Agreement.

Pursuant to this prospectus, the Selling Stockholder may
offer to the public the common stock acquired pursuant to the
Equity Line Agreement and the Warrants.

Offered by the Selling Stockholder . . . . . . . . 6,200,000 shares of common
stock of CYTOGEN
Corporation, par value $.01
per share.

Offering Price . . . . . . . . . . . . . . . . . . Determined at the time of
sale by the Selling
Stockholder.

Common stock outstanding as of
December 31, 1998 . . . . . . . . . . . . . . . 61,949,670 shares*

Use of Proceeds . . . . . . . . . . . . . . . . . We will not receive any of
the proceeds of the offering
of the shares hereby by the
Selling Stockholder. Any
proceeds we receive from the
sale of common stock pursuant
to the Equity Line Agreement
and the exercise of the
Warrant will be used for
general corporate purposes.
See "The Equity Line
Agreement."

Dividend Policy. . . . . . . . . . . . . . . . . . We currently intend to retain
any future earnings to fund
the development and growth of
our business. Therefore, we
do not currently anticipate
paying cash dividends. See
"Dividend Policy."

<PAGE>

Nasdaq Stock Market Symbol . . . . . . . . . . . . CYTO

*Does not include:
- 1,560,000 shares of common stock issuable upon exercise
of warrants outstanding as of December 31, 1998
(including 300,000 shares issuable upon exercise of the
Warrant);
- 6,235,578 shares of common stock issuable upon exercise
of stock options outstanding as of December 31, 1998;
and
- Shares of common stock issuable to Kingsbridge pursuant
to the Equity Line Agreement.
- 2,666,667 shares of common stock sold during January 1999.
See "Prospectus Summary - Recent Development."

<PAGE>

Summary Consolidated Financial Information
(In thousands, except per share data)

The summary consolidated financial information below has been derived from
the Audited Consolidated Financial Statements of CYTOGEN Corporation included
elsewhere in this prospectus. This information should be read in conjunction
with our Audited Financial Statements, and the Notes thereto, which are included
in this prospectus. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------
STATEMENTS OF OPERATIONS DATA: (ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales .............................. $ 8,976 $ 5,252 $ 1,507 $ 1,377 $ 1,411
Royalties .................................. 1,664 3,282 -- -- --
License and contract ....................... 9,239 5,886 4,223 3,608 1,047
--------- --------- --------- --------- ---------
Total revenues ........................... 19,879 14,420 5,730 4,985 2,458
--------- --------- --------- --------- ---------
Operating Expenses:
Cost of product and contract
manufacturing revenues (1) ............... 12,284 5,939 -- -- --
Research and development .................... 9,967 17,913 20,539 22,594 20,321
Acquisition of in-process technology ........ -- -- -- 45,878 4,647
Equity loss in Targon subsidiary (2) ........ 1,020 9,232 288 -- --
Selling and marketing ....................... 5,103 5,492 4,143 4,493 5,536
General and administrative .................. 7,420 6,871 5,494 4,804 3,962
--------- --------- --------- --------- ---------
Total operating expenses ................. 35,794 45,447 30,464 77,769 34,466
--------- --------- --------- --------- ---------

Operating loss ........................... (15,915) (31,027) (24,734) (72,784) (32,008)

Gain on sale of Targon subsidiary ............. 2,833 -- -- -- --
Other income (expense) ........................ (70) 315 968 264 (798)
--------- --------- --------- --------- ---------
Net loss ...................................... (13,152) (30,712) (23,766) (72,520) (32,806)
Dividends, including deemed
dividends on preferred stock ............... (119) (1,352) (4,571) -- --
--------- --------- --------- --------- ---------
Net loss to common stockholders ............... $(13,271) $(32,064) $(28,337) $(72,520) $(32,806)
========= ========= ========= ========= =========

Basic and diluted net loss per common share ... $ (0.24) $ (0.63) $ (0.59) $ (2.11) $ (1.38)
========= ========= ========= ========= =========

Basic and diluted weighted average
common shares outstanding .................. 56,419 51,134 48,401 34,333 23,822
========= ========= ========= ========= =========
</TABLE>

1998
--------------------
CONSOLIDATED BALANCE SHEET DATA: PRO FORMA(3) ACTUAL 1997 1996 1995 1994
- -------------------------------- ------------ ------ --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash, short term investments and
restricted cash (2) .................. $ 10,522 $ 3,015 $ 7,401 $ 24,765 $ 29,135 $ 7,700
Total assets .............................. 15,620 10,900 27,555 41,543 37,149 19,690
Long-term liabilities ..................... 2,223 2,223 10,171 1,855 3,275 4,310
Redeemable common stock ................... -- -- -- -- -- 2,000
Stockholders' equity ...................... 5,740 443 9,983 32,927 25,276 4,368

</TABLE>

(1) Prior to 1997, product sales were minimal and no revenues were derived from
contract manufacturing, therefore, cost of product sales was immaterial and
was included in research and development expenses.
(2) Restated in 1997 and 1996 to give retroactive effect to the change in
accounting for its investment in Targon. See Note 1 of Notes to the
Consolidated Financial Statements.
(3) Reflects the receipt of cash on the sale of common stock and sale of the
Company's laboratory and manufacturing facilities, both of which
occurred in January 1999. See Note 2 of Notes to the Consolidated
Financial Statements.

<PAGE>
RISK FACTORS

Prospective investors in the common stock offered hereby
should carefully consider the following risk factors, in addition
to the other information contained in this prospectus. This
prospectus contains forward-looking statements which involve
risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set
forth in the following risk factors and elsewhere in this
prospectus.

History of Losses and Accumulated Deficit

We have a history of losses as follows:

Operating Net Loss to Common
Losses Stockholders
------ ------------

Year Ended December 31, 1998 $15,915,000 $ 13,271,000

Year Ended December 31, 1997 31,027,000 32,064,000

Year Ended December 31, 1996 24,734,000 28,337,000

The losses were due in part to limited revenues and to
various expenditures, including:

- - Research and development activities;
- - Acquiring of complementary products and technologies;
- - Seeking regulatory approvals for our products;
- - Preclinical and clinical studies related to our products;
- - Preparing of submissions to the United States Food and Drug Administration;
- - Developing of sales, marketing, manufacturing and distribution channels;
- - Developing of internal manufacturing capabilities relating to ProstaScint; and
- - General and administrative expenses.

We expect that we may incur operating losses in the future due
primarily to:

- - Continuing product development;
- - Acquiring, developing and commercializing complementary products and
technologies; and
- - Expansion of our sales and marketing activities.

As a result of these losses, as of December 31, 1998, we
had an accumulated deficit of approximately $302 million.

<PAGE>

Uncertainty of Profitability

Our ability to achieve and maintain profitability is highly
dependent upon the successful commercialization of our products,
including Quadramet and ProstaScint. There can be no assurance
that we will ever be able to successfully commercialize our
products or that we will ever achieve profitability.

Fluctuating Results of Operations

Our results of operations have fluctuated on an annual and
quarterly basis and may fluctuate significantly from period to
period in the future, due to, among other factors:

- - Variations in revenue from sales of and royalties from our products;
- - Timing of regulatory approvals and other regulatory announcements
relating to our products;
- - Variations in our marketing, manufacturing and distribution channels;
- - Timing of the acquisition and successful integration of complementary
products and technologies;
- - Timing of new product announcements and introductions by the Company
and its competitors, and
- - Product obsolescence resulting from new product introductions.

Many of these factors, and others not listed above, are
outside our control. Due to one or more of these factors, our
results of operations may fall below the expectations of
securities analysts and investors in one or more future quarters.
If this happens, the market price of our common stock could be
materially and adversely affected.

<PAGE>

Need for Additional Capital

We have incurred negative cash flows from operations since
inception, and have expended, and will need to expend,
substantial funds to complete our planned product development
efforts, including:

- - Acquisition of products and complementary technologies;
- - Research and development;
- - Clinical studies and regulatory activities; and
- - Expansion of our marketing, sales and distribution activities.

In addition to the above requirements, we expect that we will
require additional capital either in the form of debt or equity,
irrespective of whether and when we reach profitability, for the
following activities:

- - Working capital;
- - Acquisitions of additional products and technologies; and
- - Further product development.

Our future capital requirements and the adequacy of our
available funds depend on numerous factors, including:

- - Successful commercialization of our products;
- - Acquisition of complementary products and technologies;
- - Magnitude, scope and results of our product development efforts;
- - Progress of preclinical studies and clinical trials;
- - Progress of regulatory affairs activities;
- - Costs of filing, prosecuting, defending and enforcing patent claims and
other intellectual property rights;
- - Competing technological and market developments; and

11
<PAGE>

- - Expansion of strategic alliances for the sale, marketing and distribution
of our products.

We currently expect that our existing cash, together with decreased operating
costs, and revenues generated by product sales and royalties excluding any funds
obtained through the Equity Line Agreement, will be adequate to fund our
operations into the year 2000. While we believe the addition of the Equity Line
Agreement will provide us with additional cash to fund operations, there are
certain conditions we must meet in order to obtain financing under the Equity
Line Agreement. There can be no assurance that we will not consume our available
capital resources before that time. If we experience unanticipated cash
requirements, we may require additional capital to:

- Fund operations;
- Continue research and development programs;
- Continue pre-clinical and clinical testing of
potential products; or
- Commercialize any products that may be developed.

Possible Unavailability of Other Financing

Our ability to raise capital through the Equity Line
Agreement is subject to the satisfaction of certain conditions at
the time of each sale of common stock to Kingsbridge. There can
be no assurance that we will satisfy all conditions of the Equity
Line Agreement or sell shares pursuant thereto.

There can be no assurance we will be able to obtain
additional financing on acceptable terms, if at all. We may seek
to raise additional capital through public or private offerings
of equity or debt or through collaborative agreements, strategic
alliances with corporate partners and others, or through other
contractual arrangements with third parties. We may receive
additional funds upon the exercise of common stock purchase
warrants and stock options, but there can be no assurance that
any warrants or stock options will be exercised or that the
amounts received will be sufficient to meet our capital needs.
If adequate funds are not available, we may be required to delay,
scale back or eliminate one or more of our development programs
or certain aspects of our operations, or to obtain funds by
entering into arrangements with collaborative partners or others
that may require us to relinquish rights to certain of our
products, product candidates, technologies or potential markets,
that we would otherwise not relinquish. If adequate funds are
not available, our business, financial condition and results of
operations will be materially and adversely affected. Our
ability to raise capital through the Equity Line Agreement is
subject to the satisfaction of certain conditions at the time of
each sale of common stock to Kingsbridge.

Possible Dilution or Requirement to Comply with Covenants

Additional equity financing may result in substantial
dilution to shareholders, and additional debt financing may limit
our ability to declare dividends, or may require us to comply
with covenants that would alter the way we conduct business.

<PAGE>

Dependence on Market Acceptance of ProstaScint and Quadramet for Revenues

None of our products has a significant history of revenues.
ProstaScint and Quadramet were introduced to the market during
the first half of 1997 and are expected to account for a
significant percentage of our product-related revenues in the
foreseeable future. For the year ended December 31, 1997,
revenues from ProstaScint and Quadramet accounted for over 86% of
our product related revenues.

Because these products contribute the majority of our
revenues, our business, financial condition and results of
operations depend on their acceptance as safe, effective and cost
efficient alternatives to other available treatment and
diagnostic protocols by the medical community, including:

- health care providers, such as hospitals and physicians
- third-party payors, including Medicare, Medicaid,
private insurance carriers and health maintenance organizations

Market Acceptance of ProstaScint

ProstaScint is marketed by the urological division
of C. R. Bard, Inc. ("BARD"), with CYTOGEN retaining co-
marketing rights. We believe that efforts to market
ProstaScint to physicians and hospitals have been well
received, based on increasing sales, statements by
physicians to our employees as to the benefits of
ProstaScint and presentations on ProstaScint by physicians
at medical association meetings. However, training by
physicians, technicians and other health care professionals
is required before certain of our products can be used for
diagnosis or therapy. In order to use ProstaScint, our
customers, including technologists and physicians, must
successfully complete our Partners in Excellence Program
("PIE Program"), a proprietary training program designed
to promote the correct acquisition and interpretation of
ProstaScint images. This approach is, therefore, technique
dependent and requires a learning commitment on the part of
users. There can be no assurance that additional physicians
will make this commitment or otherwise accept this product
as part of their treatment practices.

CYTOGEN has a program dedicated to providing information to
and resolving issues with managed care organization ("MCOs")
relating to reimbursement. BARD is obligated to market
ProstaScint to MCOs, but has not yet implemented a
significant program in this area. Failure to market
ProstaScint to MCOs could hinder acceptance or
reimbursement, although we cannot quantify what impact, if
any, this marketing effort could have on sales of
ProstaScint.

<PAGE>

Market Acceptance of Quadramet

Berlex Laboratories, Inc. ("Berlex") is responsible for
the marketing of Quadramet, including marketing to MCOs, by
an agreement entered in October 1998, with marketing efforts
to begin in the first quarter of 1999.

Berlex has no previous experience with the marketing of Quadramet.
There can be no assurance that Berlex will be able to successfully market
Quadramet, or that this agreement will be profitable for the Company.

We have licensed the rights to Quadramet from The Dow
Chemical Company ("Dow"). Such rights are currently limited
to North and Latin America with respect to currently
approved indications. We also hold a license from Dow for
use of Quadramet in treatment of refractory rheumatoid
arthritis in North and Latin America and in other
countries, including European countries and Japan. There
can be no assurance that Quadramet will be accepted in the
United States and Canada, where the product is currently
approved. We also can not give any assurance that Quadramet
will be accepted in any markets outside the United States
and Canada, or approved for additional indications in any
locations, due to the influence of established medical
practices and other social and economic factors beyond our
control.

Accordingly, there can be no assurance that ProstaScint
or Quadramet will achieve market acceptance on a timely
basis, or at all. The failure of ProstaScint or Quadramet
to achieve market acceptance would have a material adverse
effect on the Company's business, financial condition and
results of operations.

Risks Relating to Potential Additional Cuts in Company Programs

We are reviewing and prioritizing programs, and there can be
no assurance that we will not cut programs to conserve capital.
After reviewing and prioritizing our business opportunities, we
ceased various developmental and research programs,
including submission of a Biologics License Application for ALT.
In addition, we ceased basic research in our Genetic
Diversity Library ("GDL") program. Any additional cuts would
increase our dependence on our remaining programs, and would
increase the risk from such programs to the Company as a whole,
which could materially and adversely affect our chances of
obtaining profitability. While we plan to allocate our resources
to those programs with the greatest potential to contribute to a
sound financial and operating position, there can be no assurance
that we will be successful in doing so.

Dependence on our Collaborative Partners

Our success depends in significant part upon the success of
our collaborative partners. We have entered into the following
agreements for the sales, marketing, distribution and manufacture
of our products, product candidates and technologies:

- - Sub-license and marketing agreement with Berlex relating to the
Quadramet technology that we have licensed from Dow. Berlex is
responsible for marketing, selling and arranging manufacturing and
distribution of Quadramet in the United States, Canada, and Latin America.
This agreement expires on the later of December 20, 2014 or upon the
expiration of the patents covering Quadramet.
- - Co-promotion agreement with BARD, granting BARD's Urological Division
the exclusive right to market ProstaScint to urologists; and

<PAGE>

- - Agreement for manufacture of Quadramet by The DuPont Pharmaceuticals
Company (formerly the radiopharmaceuticals division of the DuPont Merck
Company, "DuPont").
- - Agreement by which we will manufacture ProstaScint and OncoScint
in the facilities we sold to Purdue Pharma.

Because our collaborative partners are responsible for certain of
our sales, marketing, manufacturing and distribution activities,
these activities are outside our direct control. There can be no
assurance that our partners will perform their obligations under
these arrangements with the Company. In the event that our
collaborative partners do not successfully market and sell our
products, or breach their obligations under the above agreements,
the successful commercialization of Quadramet and ProstaScint
would not be achieved or would be delayed, and new product
development could be inhibited, which could have a material
adverse effect on our business, financial condition and results
of operations.

There can be no assurance that we will be able to maintain
our existing collaborative arrangements; if they expire or are
terminated, there can be no assurance that they will be renewed,
or that new arrangements will be available on acceptable terms,
if at all. In addition, there can be no assurance that any new
arrangements or renewals of existing arrangements will be
successful, that the parties to any new or renewed agreements
will perform their obligations thereunder, or that any potential
collaborators will not compete with us.

There can also be no assurance that our existing or future
collaborations will lead to the development of product candidates
or technologies with commercial potential, that we will be able
to obtain proprietary rights or licenses for proprietary rights
for our product candidates or technologies developed in
connection with these arrangements, or that we will be able to
ensure the confidentiality of proprietary rights and information
developed in such arrangements or prevent the public disclosure
thereof.

Limited Sales, Marketing and Distribution Capabilities

We have limited internal sales, marketing and distribution
capabilities. We are substantially dependent on Berlex for the
sales, marketing and distribution of Quadramet, and on BARD for
the sale and marketing of ProstaScint. If we are unable to
establish and maintain significant sales, marketing and
distribution efforts, either internally or through arrangements
with third parties, our business, financial condition and results
of operations could be materially adversely effected.

We have limited marketing history for our products.

- - ProstaScint was approved for marketing by the FDA in October 1996,
and commercially launched in February 1997. ProstaScint sales have
experienced growth since product launch. However, there can be no
assurance that such growth will continue.
- - Quadramet was approved for marketing by the FDA in March 1997 and
launched by DuPont in June 1997. Quadramet sales during the period from
initial launch were below the levels of minimum royalty payments we
recorded under our agreement with DuPont. Growth during early months was
limited by the need for hospitals to obtain license amendments
under federal and state law to receive and handle this new radioactive
product. In addition, initial marketing efforts by DuPont were directed
primarily to nuclear medicine physicians who directly administer the product
to patients. While we believe this approach was necessary to generate
product understanding, marketing to primary caregivers for likely candidates

15
<PAGE>

for treatment with Quadramet is necessary for extensive penetration
into the market. Berlex maintains a sales force which calls on the physician
oncological community; however, there is no significant experience with
sales efforts for Quadramet and there can be no assurance that sales efforts
will be successful.

The failure of our marketing efforts to achieve commercial
success would have a material adverse effect on our business and
results of operations.

Risks Associated with Manufacturing; Third-Party Manufacturers'
Dependence on Single Source Suppliers; Need to Comply with
Manufacturing Regulations

Our products must be manufactured in compliance with regulatory requirements
and at acceptable costs. While we believe that our manufacturing arrangements
currently address our needs for the production of our products, there can be no
assurance that we will be able to continue to arrange for manufacture on a
commercially reasonable basis, or successfully outsource the manufacturing of
our products. If we are unable to successfully arrange for the manufacture of
our products and product candidates, there would be a material adverse effect on
our business, financial condition and results of operations.

Quadramet is manufactured by DuPont pursuant to an agreement
with both Berlex and CYTOGEN. Certain components of Quadramet,
particularly Samarium-153 and EDTMP, are provided to DuPont by
outside suppliers. Due to radioactive decay, Samarium-153 must
be produced on a weekly basis. On one occasion, DuPont was
unable to manufacture Quadramet on a timely basis due to the
failure of a supplier to provide Samarium-153. If DuPont cannot
obtain sufficient quantities of such components on commercially
reasonable terms, or in a timely manner, it would be unable to
manufacture Quadramet on a timely and cost-effective basis which
could have a material adverse effect on our business, financial
condition and results of operations. Alternative sources for
these components may not be readily available. If DuPont were to
lose its sources of supply for such components, production of
Quadramet would be interrupted, which could have a material
adverse effect on our business, financial condition and results
of operations.

ProstaScint and OncoScint are manufactured in a facility owned by Purdue
Pharma, which we sold to Purdue in January, 1999. We have access to the
facility for three years for our manufacturing needs, and employees involved in
manufacturing currently remain our employees. Purdue Pharma is responsible for
maintaining the overall facility. We are dependent on Purdue Pharma for
maintaining the facility to standards needed for our products. If they do not
perform adequately, or retain employees with skills needed, we would be unable
to manufacture ProstaScint and OncoScint which would have a material adverse
effect on our business and financial condition and results of operations. In
addition, at the end of the three year agreeemnt we may need to locate alternate
manufacturers of ProstScint and OncoScint. We can not give any assurances as to
the costs of supply or our ability to locate suitable alternate manufacture.

The Company and its third party manufacturers are required
to adhere to FDA regulations setting forth requirements for
current Good Manufacturing Practices ("cGMP") and similar
regulations in other countries, which include extensive testing,
control and documentation requirements. Ongoing compliance with
cGMP, labeling and other applicable regulatory requirements is
monitored through periodic inspections and market surveillance by
state and federal agencies, including the FDA, and by comparable
agencies in other countries. Failure of the Company and its
third-party manufacturers to comply with applicable regulations
could result in sanctions being imposed on us, including fines,
injunctions, civil penalties, failure of the government to grant
premarket clearance or premarket approval of drugs, delays,
suspension or withdrawal of approvals, seizures or recalls of
products, operating restrictions and criminal prosecutions.

Risks Associated with Reimbursement by Third-Party Payors

Our business, financial condition and results of operations
will continue to be affected by the efforts of governments and
other third-party payors to contain or reduce the costs of
healthcare through various means. There have been, and we expect
that there will continue to be, a number of federal and state

16
<PAGE>

proposals to implement government control of pricing and
profitability of therapeutic and diagnostic imaging agents such
as our products. In addition, an emphasis on managed increases
possible pressure on pricing of these products. While we cannot
predict whether such legislative or regulatory proposals will be
adopted or the effects such proposals or managed care efforts may
have on our business, the announcement of such proposals and the
adoption of such proposals or efforts could have a material
adverse effect on our business, financial condition and results
of operations. Further, to the extent such proposals or efforts
have a material adverse effect on other companies that are
prospective corporate partners for the Company, our ability to
establish strategic alliances may be materially and adversely
affected.

Sales of our products depend in part on the availability of
reimbursement to the consumer from third-party payors, including
Medicare, Medicaid, and private health insurance plans. Third-
party payors are increasingly challenging the prices charged for
medical products and services. There can be no assurance that
our products will be considered cost-effective and that
reimbursement to consumers will continue to be available, or will
be sufficient to allow us to sell our products on a competitive
basis. Approval of our products for reimbursement by a third
party payor may depend on a number of factors, including the
payor's determination that our products are clinically useful and
cost-effective, medically necessary and not experimental or
investigational. Reimbursement is determined by each payor
individually and in specific cases. The reimbursement process
can be time consuming and costly. If we cannot secure adequate
third party reimbursement for our products, there would be a
material adverse effect on our business, financial condition and
results of operations.

Intense Competition in the Biotechnology and Pharmaceutical Industries

The biotechnology and pharmaceutical industries are subject
to intense competition from large pharmaceutical, biotechnology
and other companies, as well as universities and research
institutions.

Many of these competitors have, compared to us, substantial
advantages with respect to their:

- - Financial, marketing, sales, manufacturing, distribution and technological
resources;
- - Sales and marketing expertise;
- - Distribution channels;
- - Experience in establishing third-party reimbursement for their products;
- - Research and development expertise;
- - Experience in conducting clinical trials;
- - Experience in regulatory matters;
- - Manufacturing efficiency; and
- - Name recognition.

Due to this intensely competitive environment, there can be
no assurance that we will be able to compete effectively against
such existing or potential competitors or that competition will
not have a material adverse effect on our business, financial
condition and results of operations.

Quadramet competes with other more traditional treatments or
therapies, such as:

- - External beam radiation;
- - Chemotherapy agents;
- - Narcotic analgesics; and

17
<PAGE>

- - Radiopharmaceuticals.

In addition, certain of our competitors may be in the
process of seeking FDA or foreign regulatory approval for their
own products, which compete directly or indirectly with ours.

We are highly dependent upon proprietary technology and seek
to protect such technology through a combination of patents,
licenses and trade secrets. We have applied for, obtained and
licensed patents for certain proprietary aspects of our
technology and processes in the U.S. and other countries. We are
particularly dependent upon the enforceability of our license
with Dow with respect to Quadramet. There can be no assurance
that our owned and licensed patents will prove to be enforceable
or that additional patents will be issued. Neither can assurance
be given that the technologies we use do not infringe upon the
proprietary rights of others, although we are not aware of any
such infringement or any adverse claim. Insofar as we rely in
part on trade secrets and unpatented know-how to maintain our
competitive position, there can be no assurance that others will
not independently develop similar or superior technologies or
that our trade secrets and know-how will not become known to
others. We could incur substantial costs in seeking enforcement
of our patents against infringement or preventing unauthorized
use of our trade secrets by others, or in defending patent
infringement claims brought against the Company.

Our success depends, in part, on our ability, and the
ability of our collaborators or licensors, to obtain protection
for products and technologies under United States and foreign
patent laws, to preserve trade secrets, and to operate without
infringing the proprietary rights of third parties. Because of
the substantial length of time and expense associated with
development of new products, the biopharmaceutical industry
places considerable importance on obtaining, and maintaining,
patent and trade secret protection for new technologies, products
and processes. We have obtained rights to certain patents and
patent applications and may obtain or seek rights from third
parties to additional patents and patent applications. There can
be no assurance that patent applications relating to our products
or technologies will result in patents being issued, that any
issued patents will afford us adequate protection, or that such
patents will not be challenged, invalidated, infringed or
circumvented. Furthermore, there can be no assurance that others
have not developed, or will not develop, similar products or
technologies that will compete with ours without infringing upon
our intellectual property rights.

Legal standards relating to the scope of claims and the
validity of patents in the biopharmaceutical industry are
uncertain and still evolving, and no assurance can be given as to
the degree of protection that will be afforded any patents we are
issued or license from others. There can be no assurance that,
if challenged by others in litigation, the patents we have been
assigned or have licensed from others will not be found invalid.
There can be no assurance that our activities would not infringe
patents owned by others. Defense and prosecution of patent
matters can be expensive and time-consuming and, regardless of
whether the outcome is favorable to us, can result in the
diversion of substantial financial, management and other
resources. An adverse outcome could:

- - Subject us to significant liability to third parties,
- - Require us to cease any related research and development activities and
product sales; or
- - Require us to obtain licenses from third parties.

18
<PAGE>

No assurance can be given that any licenses required under
any such patents or proprietary rights would be made available on
terms acceptable to us, if at all. Moreover, the laws of certain
countries may not protect our proprietary rights to the same
extent as United States law.

Our success also depends on the skill, knowledge, and
experience of our scientific and technical personnel. To help
protect our rights, we require all employees, consultants,
advisors and collaborators to enter into confidentiality
agreements that require disclosure, and in most cases, assignment
to us, of their ideas, developments, discoveries and inventions,
and that prohibit the disclosure of confidential information to
anyone outside the Company. There can be no assurance, however,
that these agreements will provide adequate protection for our
trade secrets, know-how or other proprietary information in the
event of any unauthorized use or disclosure.

Product Development

Product development involves a high degree of risk. There
can be no assurance that the product candidates we develop,
pursue or offer will prove to be safe and effective, will receive
the necessary regulatory approvals or will ultimately achieve
market acceptance. These product candidates will require
substantial additional investment, laboratory development,
clinical testing and regulatory approvals prior to their
commercialization. There can be no assurance that we will not
experience difficulties that could delay or prevent the
successful development, introduction and marketing of new
products. If we are unable to successfully develop and
commercialize products on a timely basis or at all, or achieve
market acceptance of such products, there could be a material
adverse effect on our business, financial condition and results
of operations.

Before we obtain regulatory approvals for the commercial
sale of any of our products under development, we must
demonstrate through preclinical studies and clinical trials that
the product is safe and efficacious for use in each target
indication. The results from preclinical studies and early
clinical trials may not be predictive of results that will be
obtained in large-scale testing, and there can be no assurance
that the our clinical trials will demonstrate the safety and
efficacy of any products or will result in marketable products.
A number of companies in the biotechnology industry have suffered
significant setbacks in advanced clinical trials, even after
promising results in earlier trials. In addition, there can be
no assurance that product issues will not arise following
successful clinical trials and FDA approval.

The rate of completion of the our clinical trials is
dependent upon, among other factors, the rate of patient
enrollment. Patient enrollment depends on many factors,
including the size of the patient population, the nature of the
protocol, the proximity of patients to clinical sites and the
eligibility criteria for the study. Delays in planned patient
enrollment may result in increased costs and delays, which could
have a material adverse effect on our business, financial
condition and results of operations.

Government Regulation

Any products tested, manufactured or distributed by us or on
our behalf pursuant to FDA clearances or approvals are subject to
pervasive and continuing regulation by numerous regulatory
authorities, including primarily the FDA. Changes in existing
requirements or adoption of new requirements or policies could
adversely affect our ability to comply with regulatory
requirements. If we fail to comply with regulatory requirements,
there could be a material adverse effect on our business,
financial condition and results of operations. There can be no
assurance that we will not be required to incur significant costs
to comply with laws and regulations in the future or that laws or
regulations will not have a material adverse effect upon our
business, financial condition and results of operations.

19
<PAGE>

Numerous federal, state and local governmental authorities
(each a "Regulatory Agency"), principally the FDA, and similar
agencies in other countries, regulate the preclinical testing,
clinical trials, manufacture and promotion of any compounds we or
our collaborative partners develop and the manufacturing and
marketing of any resulting drugs. The drug development and
regulatory approval process is lengthy, expensive, uncertain and
subject to delays.

- - Any compound we or our collaborative partners
develop must receive Regulatory Agency approval
before it may be marketed as a drug in a particular
country.
- - The regulatory process, which includes preclinical
testing and clinical trials of each compound in
order to establish its safety and efficacy, varies
from country to country, can take many years and
requires the expenditure of substantial resources.
- - In all circumstances, approval of the use of
previously unapproved radioisotopes in certain of
our products requires approval of either the Nuclear
Regulatory Commission or equivalent state regulatory
agencies. A radioisotope is an unstable form of an
element which undergoes radioactive decay, thereby
emitting radiation which may be used, for example,
to image or destroy harmful growths or tissue.
There can be no assurance that such approvals will
be obtained on a timely basis, or at all.
- - Data obtained from preclinical and clinical
activities are susceptible to varying
interpretations which could delay, limit or prevent
Regulatory Agency approval.
- - Delays or rejections may be encountered based upon
changes in Regulatory Agency policy during the
period of drug development and/or the period of
review of any application for Regulatory Agency
approval for a compound. These delays could
adversely affect the marketing of any products we or
our collaborative partners develop, impose costly
procedures upon our activities, diminish any
competitive advantages we or collaborative partners
may attain and adversely affect our ability to
receive royalties.

There can be no assurance that, even after such time and
expenditures, Regulatory Agency approvals will be obtained for
any compounds developed by or in collaboration with the Company.
Moreover, if Regulatory Agency approval for a drug is granted,
such approval may entail limitations on the indicated uses for
which it may be marketed that could limit the potential market
for any such drug. Furthermore, if and when such approval is
obtained, the marketing, manufacture, labeling, storage and
record keeping related to our products would remain subject to
extensive regulatory requirements. Discovery of previously
unknown problems with a drug, its manufacture, or its
manufacturer may result in restrictions on such drug, manufacture
or manufacturer, including withdrawal of the drug from the
market. Failure to comply with regulatory requirements could
result in fines, suspension of regulatory approvals, operating
restrictions and criminal prosecution.

The U. S. Food, Drug and Cosmetics Act requires that our
products be manufactured in FDA registered facilities subject to
inspection. The manufacturer must be in compliance with current
good manufacturing practices, or, cGMP, which imposes certain
procedural and documentation requirements upon us, and our
manufacturing partners with respect to manufacturing and quality
assurance activities. Noncompliance with cGMP can result in,
among other things, fines, injunctions, civil penalties, recalls
or seizures of products, total or partial suspension of
production, failure of the government to grant premarket
clearance or premarket approval for drugs, withdrawal of
marketing approvals and criminal prosecution. If we or our
manufacturing partners were to fail to comply with the

<PAGE>

requirements of cGMP, there could be a material adverse effect on
the Company's business, financial condition and results of
operations.

Attraction and Retention of Key Personnel

We are highly dependent on the principal members of our
management and scientific staff, the loss of whose services might
significantly delay or prevent the achievement of research,
development or strategic objectives. Our success depends on our
ability to retain key employees and to attract additional
qualified employees. Competition for such personnel is intense,
and there can be no assurance that we will be able to retain
existing personnel and to attract, assimilate or retain
additional highly qualified employees in the future.

We have an employment agreement with our President and Chief
Executive Officer, H. Joseph Reiser, Ph.D., which provides for
bonuses and vesting of options for the purchase of shares of
common stock based on continued employment and on the achievement
of performance objectives defined by the Board of Directors. We
do not have employment agreements with our other key personnel.
If we are unable to hire and retain personnel in key positions,
there could be a material adverse effect on the Company's
business, financial condition and results of operations.

Potential Inadequacy of Product Liability Insurance

Our business is subject to product liability risks inherent
in the testing, manufacturing and marketing of our products.
There can be no assurance that product liability claims will not
be asserted against us, our collaborators or licensees. While we
currently maintain product liability insurance in amounts we
believe are adequate, there can be no assurance that such
coverage will be adequate to protect us against future product
liability claims or that product liability insurance will be
available to us in the future on commercially reasonable terms,
if at all. Furthermore, there can be no assurance that we will
be able to avoid significant product liability claims and adverse
publicity. Consequently, a product liability claim or other
claim with respect to uninsured or underinsured liabilities could
have a material adverse effect on our business, financial
condition and results of operations.

Environmental Regulation

We are subject to a variety of local, state and federal
government regulations relating to:

- Storage
- Discharge;
- Handling;
- Emission;
- Generation;
- Manufacture; and
- Disposal

of toxic, infectious or other hazardous substances used to
manufacture our products. If we fail to comply with these
regulations, we could be subject to significant liabilities,
which could have a material adverse effect on our business,
financial condition and results of operations.

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<PAGE>

Volatility of Stock Price

The market prices for securities of biotechnology and
pharmaceutical companies have historically been highly volatile,
and the market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating
performance of particular companies. The market price of our
common stock has fluctuated over a wide range and may continue to
fluctuate for various reasons, including, but not limited to,
announcements concerning the Company or our competitors
regarding:

- - Results of clinical trials;
- - Technological innovations or new commercial products;
- - Changes in governmental regulation or the status of our regulatory approvals
or applications;
- - Changes in earnings;
- - Changes in health care policies and practices;
- - Developments or disputes concerning proprietary rights;
- - Litigation or public concern as to safety of the our potential products; and
- - Changes in general market conditions.

Fluctuations or decreases in the trading price of the common
stock may adversely affect the Company's ability to raise capital
through the Equity Line Agreement or through other future equity
financings.

Impact of Anti-takeover Provisions on the Market Price of Common Stock

We have adopted various anti-takeover provisions which may
affect the market price of the common stock.

Our Board of Directors has the authority, without further
action by the holders of common stock, to issue from time to
time, up to 5,200,000 additional shares of preferred stock in one
or more classes or series, and to fix the rights and preferences
of such preferred stock. Pursuant to these provisions, we have
implemented a Stockholder Rights Plan by which one preferred
stock purchase right is attached to each share of common stock,
as a means to deter coercive takeover tactics and to prevent an
acquirer from gaining control of the Company without some
mechanism to secure a fair price for all of our stockholders if
an acquisition was completed. These rights will be exercisable
if a person or group acquires beneficial ownership of 20% or more
of our common stock and can be made exercisable by action of our
Board of Directors if a person or group commences a tender offer
which would result in such person or group beneficially owning
20% or more of our common stock. Each right will entitle the
holder to buy one one-thousandth of a share of a new series of
junior participating preferred stock for $20. If any person or
group becomes the beneficial owner of 20% or more of CYTOGEN 's
common stock (with certain limited exceptions), then each right
not owned by the 20% stockholder will entitle its holder to
purchase, at the right's then current exercise price, common
shares having a market value of twice the exercise price. In
addition, if after any person has become a 20% stockholder, we
are involved in a merger or other business combination
transaction with another person, each right will entitle its
holder (other than the 20% stockholder) to purchase, at the
right's then current exercise price, common shares of the
acquiring company having a value of twice the right's then
current exercise price.

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<PAGE>

We are subject to provisions of Delaware corporate law
which, subject to certain exceptions, will prohibit us from
engaging in any "business combination" with a person who,
together with affiliates and associates, owns 15% or more of our
common stock (an "Interested Stockholder") for a period of three
years following the date that such person became an Interested
Stockholder, unless the business combination is approved in a
prescribed manner.

These provisions of the Stockholder Rights Plan, our
Certificate of Incorporation, and of Delaware law may have the
effect of delaying, deterring or preventing a change in control
of the Company, may discourage bids for the common stock at a
premium over market price and may adversely affect the market
price, and the voting and other rights of the holders, of the
common stock.

Impact of Shares Eligible for Future Sale on the Market Price of
the Common Stock

A large number of shares of common stock already
outstanding, or issuable upon exercise of options and warrants,
are eligible for resale, which may adversely affect the market
price of the common stock. As of December 31, 1998, the Company
had 61,949,670 shares of common stock outstanding. During January 1999,
we issued an additional 2,666,667 shares directly to an investment fund
of one of the Company's current largest stockholders. An additional
7,602,295 shares of common stock are issuable upon the exercise
of outstanding options and warrants (including 300,000 shares
issuable upon exercise of the Warrants). Substantially all of
such shares subject to outstanding options and warrants will,
when issued upon exercise thereof, be available for immediate
resale in the public market pursuant to currently effective
registration statements under the Securities Act of 1933, as
amended, or pursuant to Rule 701 promulgated thereunder. In
addition, the Equity Line Agreement provides that we are
obligated to issue at least $3,000,000, after deducting
discounts, (up to a maximum of $12,000,000, after deducting
discounts) of common stock during its term, which continues until
the earlier of when:

- We sell $12,000,000 (after deducting discounts) of common stock
to Kingsbridge;
- We fail to meet certain conditions of the Equity Line Agreement; or
- 24 months from the date of this prospectus.

The shares of stock which may be acquired by the Selling
Stockholders under the Equity Line Agreement and Warrants will be
available for immediate resale in the public market pursuant to
this prospectus. Such resales, or the prospect of such resales,
may have an adverse effect on the market price of the common
stock.

Dilutive Effects of Equity Line Agreement

The sale of shares pursuant to the Equity Line Agreement
will have a dilutive impact on our stockholders. As a result, our
net income or loss per share could be materially decreased in
future periods, and the market price of our common stock could be
materially and adversely affected. In addition, the common stock
to be issued under the Equity Line Agreement will be issued at a
discount to the then-prevailing market price of the common stock.
These discounted sales could have an immediate adverse effect on
the market price of the common stock. We also issued to
Kingsbridge a warrant for 200,000 shares of common stock
exercisable until April 2002 at an exercise price of $1.016 per
share and warrants to the May Davis Group for 100,000 shares of
common stock exercisable until October, 2001 at an exercise price
of $2.00 per share. The issuance or resale of such shares and the
shares issuable upon exercise of these warrants would have a
further dilutive effect on our common stock and could adversely
affect on its price.

23
<PAGE>

THE EQUITY LINE AGREEMENT

On October 23, 1998, we entered into the Equity Line
Agreement with Kingsbridge, pursuant to which, subject to the
satisfaction of certain conditions, we may issue and sell, from
time to time, up to an aggregate of $12,000,000, after deducting
discounts, of our common stock.

Beginning on the date the registration statement, of which
this prospectus forms a part, is declared effective by the
Securities and Exchange Commission (the "Commission"), and
continuing for a period of 24 months thereafter, we may from time
to time, in our sole discretion, sell ("put") shares of our
common stock to Kingsbridge at a price equal to 85% of the then
current average market price of our common stock. The current
average market price of our common stock, for purposes of
calculating the purchase price, is the average of the lowest
trading prices of our common stock on the NSM for the five days
beginning two days before and ending two days after we notify
Kingsbridge of our intention to put common stock.

Certain conditions must be satisfied before we can put
shares of common stock, and before Kingsbridge becomes obligated
to purchase shares including, but not limited to, the following:

- - The registration statement, of which this Prospectus forms a part, must
have been declared effective by the Commission;
- - Our representations and warranties to Kingsbridge set forth in the Equity
Line Agreement must be accurate as of the date of each put;
- - No statute, rule, regulation, executive order, decree, ruling or injunction
shall be in effect which prohibits or directly and adversely affects any of
the transactions contemplated by the Equity Line Agreement;
- - At the time of a put, there shall have been no material adverse change in
our business, operations, properties, prospects or financial condition since
the date of filing of our most recent report with the Commission pursuant to
the Securities Exchange Act of 1934;
- - Our common stock shall not have been delisted from the Nasdaq Stock Market
nor suspended from trading;
- - The number of shares already held by Kingsbridge, together with those shares
we are proposing to put, shall not exceed 9.9% of the total amount of our
common stock that would be outstanding upon completion of the put;
- - Our common stock must have a minimum bid price of $.75 per share at the time
of the put;
- - At least 20 trading days must have elapsed since the date of the last put
notice; and
- - The average trading volume of our common stock must be at least 50,000 shares
per day.

Kingsbridge, or other underwriters of the securities, have the right to
review this registration statement and our records and properties to obtain
information about us and the accuracy of this registration statement and
prospectus. Kingsbridge has the opportunity to comment on the registration
statement and prospectus, but is not entitled to reject a put by us based on
their review. Kingsbridge may be entitled to indemnification by us for any
lawsuits based on language in this prospectus with which they do not agree.

There can be no assurance that we will satisfy all conditions required
under the Equity Line Agreement, or will be able to sell any shares to
Kingsbridge thereunder. Kingsbridge has agreed that it will not engage in short
sales of our common stock except that it may engage in short sales or other
hedging investments for three days after we notify Kingsbridge of a put, as long
as the number of shares sold short or used for hedging does not exceed the
number of shares being sold to Kingsbridge under the put.

24
<PAGE>

We have filed a registration statement, of which this
Prospectus forms a part, in order to permit Kingsbridge to resell
to the public any common stock it buys pursuant to the Equity
Line Agreement.

In conjunction with the Equity Line Agreement, on October 23,
1998, we issued to Kingsbridge a warrant to purchase 200,000 shares
of our common stock at an exercise price of $1.016 per share. The
Kingsbridge Warrant is exercisable through April 2002. Also in
connection with the Equity Line Agreement, we issued to the
Placement Agent a warrant to purchase 100,000 shares of our common
stock at an exercise price of $2.00 per share. The Placement Agent
Warrant is exercisable at any time from the present to October
23, 2001.

The Warrant contains provisions that protect the Selling
Stockholder against dilution by adjustment of the exercise price
and the number of shares issuable thereunder upon the occurrence
of certain events, such as a merger, stock split or reverse stock
split, stock dividend or recapitalization. The exercise price of
the Kingsbridge Warrants is payable either in cash or by cashless
exercise, in which that number of shares of common stock issuable
pursuant to the Warrants, having a fair market value at the time
of exercise equal to the aggregate exercise price, are cancelled
as payment of the exercise price. The Placement Agent Warrant is
exercisable only for cash.

Under the Equity Line Agreement, we agreed to register the
common stock for resale by Kingsbridge to permit the resale from
time to time in the market or in privately-negotiated
transactions. We will prepare and file such amendments and
supplements to the registration statement as may be necessary in
accordance with the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, in order to keep it
effective as long as registrable securities are outstanding. We
have agreed to bear certain expenses (other than broker discounts
and commissions, if any) in connection with the registration
statement.

DETERMINATION OF THE OFFERING PRICE

The common stock offered by this prospectus may be offered
for sale, by the Selling Stockholder, from time to time in
transactions on the NSM, in negotiated transactions, or
otherwise, or by a combination of these methods, at fixed prices
which may be changed, at market prices at the time of sale, at
prices related to market prices or at negotiated prices. As
such, the offering price is indeterminate as of the date of this
prospectus. See "Plan of Distribution."

<PAGE>

PRICE RANGE OF OUR COMMON STOCK

Our common stock is currently listed on the Nasdaq Stock
Market under the symbol "CYTO." For each quarter since the
beginning of 1996, the high and low bid quotations for our common
stock, as reported by Nasdaq, were as follows:

1996 High Low
- ---- ---- ---
First Quarter..................... 10 5 1/8
Second Quarter.................... 9 1/2 5 13/16
Third Quarter..................... 9 5 3/16
Fourth Quarter.................... 7 7/8 4 7/16

1997
- ----
First Quarter..................... 6 1/2 4 3/4
Second Quarter.................... 6 5/16 4 11/16
Third Quarter..................... 5 1/16 3 5/8
Fourth Quarter.................... 4 3/4 1 7/16

1998
- ----
First Quarter..................... 2 7/16 1 1/4
Second Quarter.................... 2 5/8
Third Quarter..................... 2 9/16 3/4
Fourth Quarter.................... 1 7/8 11/16

The foregoing bid quotations reflect inter-dealer prices,
without retail mark-ups, mark-downs or commissions, and may not
represent actual transactions.

DIVIDEND POLICY

We have never paid or declared any cash dividends on our
common stock. We currently intend to retain any future earnings
for our business and, therefore, do not anticipate paying cash
dividends in the foreseeable future. Future dividends, if any,
will depend on, among other things, our results of operations,
capital requirements, restrictions in loan agreements and on such
other factors as our Board of Directors, in its discretion, may
consider relevant.

USE OF PROCEEDS

The proceeds from the sale of the common stock will be
received directly by the Selling Stockholders. No proceeds will
be received by the Company from the sale of the common stock
offered hereby. However, the Company will receive the put price
pursuant to the Equity Line Agreement if and to the extent common
stock is sold by the Company pursuant thereto. The put price
equals 85% of the then current average market price of the
Company's common stock, as determined under the Equity Line
Agreement. The Company will also receive the proceeds, if any,
relating to the exercise of the Warrants. See "The Equity Line
Agreement." All proceeds from the sale of common stock under the
Equity Line Agreement and from the exercise of the Warrants will
be used for general corporate purposes.

26
<PAGE>

CAPITALIZATION

The following table sets forth the actual and pro forma capitalization of
the Company as of December 31, 1998. This table should be read in conjunction
with the Company's Consolidated Financial Statements and the Notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this prospectus. <TABLE>
<CAPTION>

December 31, 1998
----------------------------
(All amounts in thousands
except share data)

Actual Pro Forma (1)
----------- -------------
<S> <C>
Long-term Liabilities (2) $ 2,223 $ 2,223
----------- -----------
Stockholders' Equity

Preferred stock, $.01 par value, 5,400,000 shares authorized--
Series C Junior Participating Preferred Stock, $.01 par value
200,000 shares authorized, 0 shares issued and outstanding - -
Common Stock, $.01 par value, 89,600,000 shares authorized,
61,949,670 shares issued and outstanding actual and
64,616,337 shares issued and outstanding pro forma 619 646
Additional paid-in capital 301,836 303,809
Accumulated deficit (302,012) (298,715)
----------- -----------
Total Stockholders' Equity 443 5,740
----------- -----------

Total Capitalization $ 2,666 $ 7,963
============ ===========

</TABLE>

(1) Reflects the sale of common stock and sale of the Company's laboratory and
manufacturing facilities, both of which occurred in January 1999, as if they
occurred on December 31, 1998. See Note 2 of Notes to the Consolidated
Financial Statements.

(2) For information concerning the Company's long-term debt, see
"Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources"
and Notes to Consolidated Financial Statements.

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial information has been derived from the
consolidated financial statements of the Company for each of the five years in
the period ended December 31, 1998, which have been audited by Arthur Andersen
LLP, the Company's independent public accountants. The consolidated financial
summaries set forth below should be read in conjunction with the consolidated
financial statements, including the notes thereto, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and other information
provided elsewhere in this report.

Operating loss ........................... (15,915) (31,027) (24,734) (72,784) (32,008)

Basic and diluted net loss per common share ... $ (0.24) $ (0.63) $ (0.59) $ (2.11) $ (1.38)
========= ========= ========= ========= =========

Basic and diluted weighted average
common shares outstanding .................. 56,419 51,134 48,401 34,333 23,822
========= ========= ========= ========= =========
</TABLE>

</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

From time to time, as used herein, the term "Company" may include CYTOGEN
Corporation ("CYTOGEN") and its subsidiaries AxCell Biosciences Corporation
("AxCell"), Cellcor Inc. ("Cellcor") and Targon Corporation ("Targon"), taken as
a whole, where appropriate. In 1998, the Company sold its interest in Targon and
closed the Cellcor subsidiary (see "Business of the Company").

RESULTS OF OPERATIONS

BACKGROUND. To date, the Company's revenues have resulted primarily from
(i) sales and royalties from ProstaScint, Quadramet and OncoScint CR/OV, (ii)
payments received from contract manufacturing and research services pursuant to
agreements, (iii) fees generated from the licensing of its technology and
marketing rights to its products, (iv) milestone payments received when events
stipulated in the collaborative agreements with third parties have been achieved
and (v) through September 1998, the cost recovery related to the treatment of
patients receiving autolymphocyte therapy ("ALT") for metastatic renal cell
carcinoma ("mRCC") under a Treatment Investigational New Drug program and
compassionate protocol which permits patients who do not qualify for or have
completed treatment under an ongoing study approved by the FDA to receive
treatment.

In October 1998, CYTOGEN entered into an exclusive license and marketing
agreement ("Berlex Agreement") with Berlex for the manufacture and sale of its
third FDA approved product, Quadramet, a treatment for bone pain arising from
cancers which have spread to the skeleton and that can be visualized on standard
bone scans. CYTOGEN and Berlex, in November 1998, jointly finalized a long-term
supply agreement with DuPont, the current contract manufacturer of Quadramet.
Under the terms of the Berlex Agreement, CYTOGEN received an $8 million up-front
payment of which $7.1 million was recorded as revenue with the balance recorded
as proceeds from the common stock warrant issued to Berlex. At the same time,
CYTOGEN charged to its cost of product and contract manufacturing revenues $4
million of expense payable to DuPont for securing a long-term manufacturing
commitment. Berlex will pay CYTOGEN royalties on net sales of Quadramet, as well
as milestone payments based on achievement of certain sales levels. Quadramet is
expected to be relaunched by Berlex in the first quarter of 1999. See Notes 4
and 5 of Notes to the Consolidated Financial Statements.

From June 1997 through June 1998, Quadramet was marketed in the United
States by DuPont. Under this arrangement, CYTOGEN recorded royalty revenues
based on contractual minimum royalty payments, which were greater than actual
sales. On June 3, 1998, pursuant to an agreement (the "Termination Agreement")
between CYTOGEN and DuPont, CYTOGEN reclaimed marketing rights to Quadramet and
the minimum royalty arrangement was terminated. All terms of the Termination
Agreement have been met. As a result, near-term royalty revenues were adversely
affected and Quadramet revenues were based on actual sales for the remainder of
1998.

<PAGE>

In 1998, CYTOGEN implemented a restructuring plan which included operating
expense reductions through the closure of the Cellcor subsidiary and a corporate
downsizing. As a result, significant aspects of the Company's operations were
scaled back or eliminated to increase the Company's focus on marketing of its
products: Quadramet, ProstaScint and OncoScint CR/OV. In conjunction with this
restructuring plan, CYTOGEN recorded a charge of approximately $1.9 million in
1998 to its general and administrative expenses for severances, other closure
related expenses and costs to implement a corporate turnaround plan.

Also in 1998, CYTOGEN completed the sale of its remaining 49.875% interest
in Targon to Elan for $2.0 million As a result, the Company recognized a
non-operating gain of approximately $2.8 million in the third quarter of 1998.
All previous notes among CYTOGEN, Targon and Elan were canceled. In August 1998,
CYTOGEN received $2.0 million from Elan in exchange for a convertible promissory
note. See Notes 3 and 9 of Notes to the Consolidated Financial Statements.

In December 1998 and January 1999, the Company sold $4.5 million of common
stock to its two largest stockholders, a subsidiary of The Hillman Company and
The State of Wisconsin Investment Board. In January 1999, the Company exercised
a put right granted to the Company by an institutional investor to sell CYTOGEN
common stock for $500,000. See Note 10 of Notes to the Consolidated Financial
Statements.

Also, in January 1999, CYTOGEN sold certain of its laboratory and
manufacturing facilities to Bard BioPharma L.P., a subsidiary of Purdue Pharma
L.P. ("Bard BioPharma") for $3.9 million. CYTOGEN also signed a three-year
agreement under which two of CYTOGEN's products, ProstaScint and OncoScint CR/OV
would continue to be manufactured at its former research and development
facility. Employees involved in manufacturing will remain CYTOGEN employees, but
Bard BioPharma will absorb their labor costs except for time spent on
manufacturing CYTOGEN products. The Company believes that the cost of products
will decrease under this new arrangement. As a result of the sale of facilities,
the Company will record a gain of approximately $3.3 million in the first
quarter of 1999.

REVENUES. Total revenues were $19.9 million in 1998, $14.4 million in 1997
and $5.7 million in 1996. Product related revenues, including product sales and
royalty revenues, accounted for 54%, 59% and 26% of revenues in 1998, 1997 and
1996, respectively. The growth in 1998 and 1997 was due to the launch and
revenues generated from ProstaScint and Quadramet. License and contract revenues
accounted for the remainder of revenues.

Product related revenues were $10.6 million, $8.5 million and $1.5 million
in 1998, 1997 and 1996, respectively. ProstaScint accounted for 60%, 48% and 4%
of the revenues in 1998, 1997 and 1996, respectively, while Quadramet royalties
and sales accounted for 31% and 38% of revenues in 1998 and 1997, respectively.
Sales from ProstaScint were $6.4 million, $4.1 million and $55,000 in 1998, 1997
and 1996, respectively while royalties and sales from Quadramet were $3.3
million for each year, 1998 and 1997. From the time of product launch in the
second quarter of 1997 through June 3, 1998, CYTOGEN recorded royalty revenues
for Quadramet based on minimum contractual payments, which were in excess of
actual sales. Subsequent to June 3, 1998, the minimum royalty arrangement was
discontinued and CYTOGEN recorded product revenues from Quadramet based on
actual sales. During the interim period until the re-launch of Quadramet by
Berlex in the first quarter of 1999, the Company does not expect Quadramet sales
to be significant. Although CYTOGEN believes that Berlex is an advantageous
marketing partner, there can be no assurance that Quadramet will, following the
re-launch of the product, achieve market acceptance on a timely basis or
sufficiently to result in significant revenues for CYTOGEN. With respect to
ProstaScint, no significant history of revenues exists, therefore the Company's
future product revenues will be also dependent upon the market place acceptance
of that product.

Other revenues, including sales from OncoScint CR/OV and ALT treatments,
were $923,000, $1.2 million and $1.5 million in 1998, 1997 and 1996,
respectively. Sales from OncoScint CR/OV were $872,000, $950,000 and $1.3
million in 1998, 1997 and 1996, respectively. Revenues from ALT treatments for
mRCC were $52,000 in 1998, $245,000 in 1997 and $178,000 in 1996. Due to the
discontinuance of the program in September 1998, the Company will receive no
additional revenues from ALT treatments.

<PAGE>

License and contract revenues for 1998, 1997 and 1996 were $9.2 million,
$5.9 million and $4.2 million, respectively, and included up-front and milestone
payments, contract manufacturing and research revenues. License and contract
revenues have fluctuated in the past and may fluctuate in the future. Revenues
from up-front and milestone payments were $7.2 million, $2.1 million and
$845,000 in 1998, 1997 and 1996, respectively. In 1998, the payments consisted
primarily of $7.1 million up-front payment from Berlex for the marketing and
manufacturing rights of Quadramet. In 1997, CYTOGEN received a $2.0 million
milestone payment from DuPont upon FDA approval of Quadramet. In 1996, the
payments were derived primarily from C.R. Bard ("BARD") and CIS biointernational
("CISbio"), the Company's marketing partners.

Revenues from contract manufacturing and research revenues were $2.0
million, $3.8 million and $3.4 million in 1998, 1997 and 1996, respectively. The
1998 revenues included $1.7 million in contract manufacturing from eleven
customers. The Company is phasing out contract manufacturing services,
concurrent with the sale of the manufacturing facility, and expects to receive
no further revenues from this service after 1999. The 1997 revenues included
$1.5 million from DuPont for the continued clinical development of Quadramet
(see Note 5 of Notes to the Consolidated Financial Statements), $924,000 from
Elan for a combined research program between CYTOGEN and Elan to collaboratively
develop orally administered products (see Note 7 of Notes to the Consolidated
Financial Statements), and $984,000 from eleven contract manufacturing
customers. The 1996 revenues included $1.5 million from DuPont, $1.3 million
from Elan, and $405,000 from three customers for contract manufacturing
services.

OPERATING EXPENSES. Total operating expenses were $35.8 million in 1998,
$45.4 million in 1997 and $30.5 million in 1996. The 1998 decrease from 1997 was
due to the Company's continued efforts to control spending including the closure
of Cellcor subsidiary, corporate downsizing, and the termination of product
development efforts through Targon. The 1998 operating expenses included $1.4
million of restructuring costs associated with the closure of Cellcor subsidiary
and corporate downsizing, $539,000 in costs related to the implementation of the
Company's turnaround plan, $4.0 million for a Quadramet manufacturing commitment
and $995,000 for manufacturing and distribution of Quadramet. The 1997 operating
expenses included a one-time license fee of $7.5 million for the acquisition of
Morphelan and a milestone payment of $4.0 million to Dow upon FDA clearance of
Quadramet. The operating expenses in 1998 and 1997 were higher than 1996 due to
the one-time charges, cost of sales attributable to increased revenues, product
development efforts by Targon and AxCell, two new strategic business units
established during the second half of 1996, higher administrative costs and
increased selling and marketing efforts to promote ProstaScint and to establish
and maintain PIE Sites.

Costs of product and contract manufacturing revenues were $12.3 million and
$5.9 million in 1998 and 1997, respectively. The 1998 increase over the prior
year was due to a one-time charge of $4.0 million for a Quadramet manufacturing
commitment (see Note 5 of Notes to the Consolidated Financial Statements),
$995,000 for the manufacturing and distribution of Quadramet and increased
manufacturing costs associated with increased revenues. Prior to 1997, product
sales were minimal and no revenues were derived from contract manufacturing;
therefore, costs of products were immaterial and have been included in research
and development expenses.

Research and development expenses were $10.0 million in 1998, $17.9
million in 1997 and $20.5 million in 1996. These expenses principally reflect
product development efforts and support for various ongoing clinical trials. The
1998 decrease from 1997 was due to a $4.0 million milestone payment to Dow in
1997 for FDA clearance of Quadramet. The 1998 expenses were further reduced,
compared to 1997 and 1996, due to reductions in the Company's product
development efforts including the closure of Cellcor and termination of the
Genetic Diversified Library program. Pursuant to the Company's restructuring,
research and development expenses have been curtailed significantly.

<PAGE>

Equity loss in Targon subsidiary were $1.0 million, $9.2 million and
$288,000 in 1998, 1997 and 1996, respectively. The Company did not recognize
Targon's losses after March 1998 based on the completion of the sale of Targon.
The 1997 expenses included a $7.5 million one-time product acquisition fee and
various product development and clinical support programs.

Selling and marketing expenses were $5.1 million in 1998, $5.5 million in
1997 and $4.1 million in 1996. The 1998 expenses reflected the marketing efforts
to increase ProstaScint sales and expenses to establish and maintain PIE Sites.
The 1997 increase over 1998 and 1996 is primarily attributable to expenses
associated with the launch of ProstaScint, including expenses to establish the
PIE Program.

General and administrative expenses were $7.4 million in 1998, $6.9
million in 1997 and $5.5 million in 1996. The increase over prior years is
attributable to $1.4 million of restructuring costs associated with the closure
of Cellcor and work force reduction, $539,000 of expenses related to the
implementation of a corporate turnaround plan and $408,000 of financing related
expenses.

GAIN ON SALE OF TARGON SUBSIDIARY was $2.8 million in 1998 as a result of
the sale of CYTOGEN's ownership interest in Targon to Elan (see Note 3 of Notes
to the Consolidated Financial Statements).

INTEREST INCOME/EXPENSE. Interest income for 1998, 1997 and 1996 was
$582,000, $606,000 and $1.4 million, respectively. The decrease from the prior
years is due to lower cash and short term investment balances during the year.
The decrease is partially offset by interest income realized beginning July 1997
from the $10.0 million note due to CYTOGEN from Targon, which was canceled as a
result of the sale of Targon to Elan (see Note 3 of Notes to the Consolidated
Financial Statements).

Interest expense was $652,000 in 1998, $291,000 in 1997 and $451,000 in
1996. In addition to the imputed interest on liabilities associated with
CYTOGEN's termination agreements with Knoll Pharmaceuticals Company ("Knoll")
and Chiron B.V. ("Chiron"), beginning in July 1997, the Company recorded
interest expense in connection to the $10.0 million note due to Elan which was
canceled as a result of the sale of Targon to Elan in August 1998.

NET LOSS. Net loss to common stockholders was $13.3 million, $32.1 million
and $28.3 million in 1998, 1997 and 1996, respectively. Net loss per common
share was $0.24, $0.63 and $0.59 in 1998, 1997 and 1996, respectively, based on
56.4 million, 51.1 million and 48.4 million average common shares outstanding in
each year, respectively. The 1997 net loss was increased by $1.4 million of
deemed and accrued dividends on the Series B Preferred Stock. The 1996 net loss
was increased by $4.6 million of deemed dividend on the Series A Preferred Stock
(see Note 11 of Notes to the Consolidated Financial Statements).

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents were $3.0 million as of December
31, 1998, compared to $7.4 million as of December 31, 1997 and $24.8 million as
of December 31, 1996. Subsequent to December 31, 1998, the Company received $4.5
million from the sale of its common stock and $3.9 million from the sale of the
manufacturing and laboratory facilities. As a result, the pro forma cash and
cash equivalents were $10.5 million. The cash used for operating activities in
1998 was $8.2 million compared to $22.4 million in the same period of 1997. The
decrease in cash used for operating activities from 1997 was primarily due to
increased receipts from revenues generated by sales and royalties from Quadramet
and ProstaScint, lower research and development expenses associated with Cellcor
and Targon and the 1997 one-time payments including the $7.5 million license fee
for Morphelan by Targon and the $4.0 million milestone payment for Dow.

<PAGE>

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, revenues from contract manufacturing and
research services, fees paid under its license agreements and interest earned on
its cash and short term investments.

In August 1998, CYTOGEN received $4.0 million from Elan consisting of $2.0
million for the sale of CYTOGEN's remaining interest in Targon and $2.0 million
in exchange for a convertible promissory note. The note is convertible into
CYTOGEN common shares at $2.80 per share, subject to adjustments, and matures in
seven years. The note bears annual interest of 7%, compounded semi-annually;
however, such interest is not payable in cash but will be added to the principal
for the first 24 months; thereafter, interest is payable in cash (see Note 9 of
Notes to the Consolidated Financial Statements).

In October 1998, the Company entered into a $750,000 term loan agreement
with The CIT Group/Credit Finance Inc., using the Company's tangible assets as
collateral. The note was repaid in January 1999.

In October 1998, the Company entered into an agreement with Kingsbridge
Capital Ltd. ("Kingsbridge") for a $12 million common stock equity line.
Pursuant to the Equity Line Agreement, the Company, subject to the satisfaction
of certain conditions was granted the right to issue and sell to Kingsbridge,
and Kingsbridge would be obligated to purchase up to $12 million of CYTOGEN
common stock from time to time (collectively, the "Put Rights") over a two year
period at a purchase price per share equal to 85% of the average of lowest
trading prices of CYTOGEN common stock during five designated trading days as
determined under the Equity Line Agreement. The Company can exercise the Put
Rights every 20 trading days in the amounts ranging from $150,000 to $1 million,
subject to the satisfaction of minimum trading volumes and market price of
CYTOGEN common stock and registration of the shares of common stock under the
Securities Act of 1933, as amended. The Company is required to exercise the Put
Rights with respect to a minimum of $3 million over the life of the Equity Line
Agreement. In addition, the Company granted to Kingsbridge a warrant to purchase
up to 200,000 shares of CYTOGEN common stock at an exercise price of $1.016 per
share through April 2002. In January 1999, the Company exercised a Put Right for
the sale of 475,342 shares of common stock at an aggregate price of $500,000 or
$1.0519 per share.

In December 1998 and January 1999, CYTOGEN sold 6,000,000 shares directly
to the Company's two largest investors, a subsidiary of The Hillman Company and
The State of Wisconsin Investment Board at $0.75 per share for a total of $4.5
million. The shares were sold under a registration statement.

In January 1999, the Company sold its manufacturing and laboratory
facilities for $3.9 million. A portion of the proceeds of sale were used to
repay the outstanding principal balance of the $750,000 term loan agreement
entered with the CIT Group/Credit Finance, Inc., in October 1998.

Quadramet. In October 1998 CYTOGEN announced an exclusive license
agreement with Berlex for the manufacture and sale of Quadramet. Under the terms
of the Berlex Agreement, CYTOGEN received an $8 million up front payment.
CYTOGEN recorded a $4 million charge for securing a long-term manufacturing
commitment with DuPont, of which $3 million was paid in 1998 and $1 million will
be paid in March of 1999. Berlex will pay CYTOGEN royalties on net sales of
Quadramet, as well as milestone payments based on achievement of certain sales
levels (see Note 4 of Notes to the Consolidated Financial Statements). In
connection with the Berlex Agreement, CYTOGEN granted Berlex a warrant to
purchase 1,000,000 shares of CYTOGEN common stock at an exercise price of $1.002
per share through October 2003, which is exercisable after the earlier of one
year or the achievement of defined sales levels.

33
<PAGE>

CYTOGEN acquired an exclusive license to Quadramet in the U.S., Canada,
Latin America, Europe and Japan from Dow. The agreement requires the Company to
pay Dow royalties based on a percentage of net sales of Quadramet, or guaranteed
contractual minimum payments, whichever is greater, and future payments upon
achievement of certain milestones. Minimum royalties due Dow are $500,000 in
1999, $750,000 in 2000 and 2001 and $1.0 million per year for the following 11
years. During 1998 and 1997 the Company recorded $500,000 and $375,000,
respectively, in royalty expenses for Quadramet.

ProstaScint. ProstaScint was launched in February 1997. Significant cash
will be required to support the Company's marketing program and expansion and
maintenance of the PIE program.

In 1996, CYTOGEN entered into an agreement with BARD (the "Co-Promotion
Agreement") to market and promote ProstaScint, pursuant to which BARD will make
payments upon the occurrence of certain milestones, which include expansion of
co-marketing rights in selected countries outside the U.S. During the term of
the Co-Promotion Agreement, BARD will receive performance-based compensation for
its services. In 1998 and 1997, the Company recorded $1 million and $586,000,
respectively, for BARD commissions.

OncoScint CR/OV. To date, sales of OncoScint CR/OV have not been material.
In 1994, the Company reacquired all U.S. marketing rights to OncoScint from
Knoll Pharmaceuticals Company ("Knoll") and in 1998 paid the balance of its
obligation to Knoll of $1.8 million.

The Company's capital and operating requirements may change depending upon
various factors, including: (i) the success of the Company and its strategic
partners in manufacturing, marketing and commercialization of its other
products; (ii) the amount of resources which the Company devotes to clinical
evaluations and the expansion of marketing and sales capabilities; (iii) results
of clinical trials and research and development activities; and (iv) competitive
and technological developments.

The Company's financial objectives are to meet its capital and operating
requirements through revenues from existing products, contract manufacturing,
license and research contracts, and control of spending. To achieve its
strategic objectives, the Company may enter into research and development
partnerships and acquire, in-license and develop other technologies, products or
services. Certain of these strategies may require payments by the Company in
either cash or stock in addition to the costs associated with developing and
marketing a product or technology. The Company currently has no commitments or
specific plans for acquisitions or strategic alliances. However, the Company
believes that, if successful, such strategies may increase long term revenues.
There can be no assurance as to the success of such strategies or that resulting
funds will be sufficient to meet cash requirements until product revenues are
sufficient to cover operating expenses. To fund these strategic and operating
activities, the Company may sell equity and debt securities as market conditions
permit or enter into credit facilities.

The Company has incurred negative cash flows from operations since its
inception, and has expended, and expects to continue to expend in the future,
substantial funds to complete its planned product development efforts, including
acquisition of products and complementary technologies, research and
development, clinical studies and regulatory activities, and to further expand
its marketing and sales. The Company expects that its existing capital resources
as of December 31, 1998, together with decreased operating costs, the $4.5
million received from the sale of common stock, and the $3.9 million received
from the sale of the manufacturing and laboratory facilities but exclusive of
the Equity Line Agreement, will be adequate to fund the Company's operations
into the year 2000. Management believes the addition of the Equity Line
Agreement, will provide the Company with additional cash flow to sustain
operations well into year 2000. No assurance can be given that the Company will

34
<PAGE>

not consume a significant amount of its available resources before that time. In
addition, the Company expects that it will have additional requirements for debt
or equity capital, irrespective of whether and when it reaches profitability,
for further development of products, product and technology acquisition costs,
and working capital. The Company's future capital requirements and the adequacy
of available funds will depend on numerous factors, including the successful
commercialization of its products, the costs associated with the acquisition of
complementary products and technologies, progress in its product development
efforts, the magnitude and scope of such efforts, progress with clinical trials,
progress with regulatory affairs activities, the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property rights,
competing technological and market developments, and the expansion of strategic
alliances for the sales, marketing, manufacturing and distribution of its
products. To the extent that the currently available funds and revenues
including the Equity Line Agreement, the $4.5 million received from the sale of
common stock and the $3.9 million received from the sale of facilities are
insufficient to meet current or planned operating requirements, the Company will
be required to obtain additional funds through equity or debt financing,
strategic alliances with corporate partners and others, or through other
sources. Based on the Company's historical ability to raise capital and current
market conditions, the Company believes other financing alternatives are
available. There can be no assurance that the financing commitments described
above or other financial alternatives will be available when needed or at terms
commercially acceptable to the Company. If adequate funds are not available, the
Company may be required to delay, further scale back or eliminate certain
aspects of its operations or attempt to obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies, product candidates, products or potential
markets. If adequate funds are not available, the Company's business, financial
condition and results of operations will be materially and adversely affected.

YEAR 2000 COMPLIANCE

The "Year 2000 problem" describes the concern that certain computer
applications, which use two digits rather than four to represent dates, will
interpret the year 2000 as 1900 and malfunction on January 1, 2000.

CYTOGEN's Internal Systems. The efficient operation of the Company's
business is dependent in part on its computer software programs and operating
systems (collectively, Programs and Systems). These Programs and Systems are
used in several key areas of the Company's business, including clinical,
purchasing, inventory management, sales, shipping, and financial reporting, as
well as in various administrative functions. The Company has completed its
evaluation of the Program and Systems to identify any potential year 2000
compliance problem. Based on present information, the Company believes that it
will be able to achieve year 2000 compliance through a combination of
modifications or replacement of existing Programs and Systems. The majority of
the Company's internal systems have been replaced with fully compliant systems.
The remaining systems are expected to be compliant by April 30, 1999 at a cost
of $10,000. However, there can be no assurance that the required expenditures
will not exceed that amount.

Readiness of Third Parties. The Company is also working with its
processing banks, network providers and manufacturing partners to ensure their
systems are year 2000 compliant. All these costs will be borne by the
processors, network and software companies and manufacturing partners.
Currently, the Company's processing banks and manufacturing partners are in the
process of completing their year 2000 compliance programs. If the manufacturing

<PAGE>

partners systems fail on January 1, 2000 the Company's revenues may be adversely
impacted. In the event that some or all of the processing banks are unable to be
year 2000 compliant, the Company will switch merchant accounts to those that are
compliant.

Risks Associated with the Year 2000. The Company is not aware, at this
time, of any Year 2000 non-compliance that will not be fixed by the Year 2000.
However, some risks that the Company faces include: the failure of internal
information systems, defects in its work environment, a slow down in its
customers' ability to make payments, and the availability of products for sale.

Contingency Plans. The Company is in the process of developing contingency
plans to address a worst case year 2000 scenario. This contingency plan is
expected to be completed by August 31, 1999.

Recently Enacted Accounting Pronouncements

There have been no recently enacted accounting pronouncements which the
Company believes would have an effect on the Company's financial position or
results of operations.

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BUSINESS OF THE COMPANY

GENERAL

CYTOGEN is a biopharmaceutical company engaged in the development,
commercialization and marketing of products to improve diagnosis and treatment
of cancer and other diseases.

Historically, we have emphasized research and development of a broad array
of potential products, based on monoclonal antibodies and other technologies.
Having identified and commercialized products which we believe have substantial
potential, we have:

- Conducted or sponsored clinical studies to evaluate existing
products in additional indications;
- Focused on development of technology with near term commercial
significance;
- Reviewed current research and development programs to assess
their commercial potential; and
- Recently curtailed basic research expenditures in order to allocate
resources toward implementing our business strategy.

During 1998, we reviewed our assets and business prospects to determine
which projects demonstrated adequate potential for a continued investment of
corporate resources. As a result of this review, we:

- Terminated our ALT program.
Our subsidiary Cellcor, Inc. ("Cellcor") had been developing
Autologous Lymphocyte Therapy ("ALT") for the treatment of
metastatic renal cell carcinoma ("mRCC"), a life threatening
kidney cancer for which there are no adequate therapies. We had
planned to submit a Biologics License Application ("BLA") for ALT.
Cellcor completed pivotal Phase III clinical trials of ALT in mRCC
patients in January 1997. Although we believe the results of the
trials are favorable, ALT was not considered a priority for
allocation of available resources. We halted our preparation for
submission of the BLA and closed our Cellcor facility in September
1998.

<PAGE>

- Sold our interest in Targon Corporation.
Our review determined that the projects under development by
Targon Corporation ("Targon") were not consistent with our
corporate strategies. During August 1998, we sold our interest in
Targon to our partner in the venture, Elan Corporation plc
("Elan") for $2 million in cash. In addition, we received $2
million from Elan in exchange for a convertible promissory note.
- Offered for sale and sold our manufacturing and laboratory
facilities.
We determined that outsourcing manufacturing of the
Company's products is more economical and consistent with our
strategies. As a result, we offered the facility for sale and
completed the sale in early January, 1999. We also concurrently
entered into an agreement for the continued manufacturing of
ProstaScint and OncoScint at the facility.

Our Products
We introduced to the market during 1997 our two principal products, each of
which have been approved by the FDA: ProstaScint(R) (kit for the preparation of
Indium In111 Capromab Pendetide) and Quadramet(R) (Samarium Sm153 Lexidronam
Injection). Our OncoScint(R) CR/OV imaging agent is also approved and marketed
as a diagnostic imaging agent for colorectal and ovarian cancer.

CANCER DIAGNOSTIC IMAGING PRODUCTS

Our cancer diagnostic products, ProstaScint and OncoScint, are
monoclonal antibody-based imaging agents for prostate, colorectal and ovarian
cancers. These products utilize our proprietary targeted delivery system,
employing whole monoclonal antibodies, to deliver the diagnostic radioisotope
Indium-111 to malignant tumor sites. A radioisotope is an element which, because
of nuclear instability, undergoes radioactive decay, thereby emitting radiation.
The imaging products are supplied to hospitals and central radiopharmacies
without the radioisotope. Prior to patient administration, the radioisotope is
added to the product by the radiopharmacist using a simple liquid transfer
procedure we have developed, thereby creating the radiolabeled monoclonal
antibody product.

During an imaging procedure, the radiolabeled monoclonal antibody
product is administered intravenously into the patient. The antibody travels
through the body seeking out and binding to tumor sites. The radioactivity from
the isotope that has been attached to the antibody can be detected from outside
the body by a gamma camera. The resultant image identifies the existence,
location and extent of disease in the body. Based on clinical studies conducted
to date by physicians on our behalf, the imaging agents may provide new and
useful information not available from other diagnostic modalities regarding the
existence, location and extent of the disease throughout the body. We believe
that this information has the potential to affect the way physicians manage
their patients' individual treatments.

PROSTASCINT. ProstaScint is a diagnostic imaging agent utilizing a
monoclonal antibody which targets prostate specific membrane antigen ("PSMA"), a
protein expressed by prostate cancer cells and, to a lesser extent, by normal
prostate epithelial cells. We are the exclusive licensee of the antibody
utilized in ProstaScint. ProstaScint is prepared by combining this antibody with
the radioisotope Indium-111 prior to intravenous administration. Due to the
selective expression of PSMA, the ProstaScint imaging procedure can detect the
spread of prostate cancer. Since the patterns of spread of prostate cancer can
vary substantially from one patient to another, by identifying the unique
pattern of metastases in a particular patient, we believe that ProstaScint aids
physicians in the selection of appropriate treatments to meet the special needs
of that patient.

<PAGE>

In 1996, we received FDA approval to market ProstaScint in two clinical
settings:

- As a diagnostic imaging agent in newly-diagnosed patients with
biopsy-proven prostate cancer thought to be clinically localized after
standard diagnostic evaluation and who are at high risk for spread of
their disease to pelvic lymph nodes; and
- For use in post-prostatectomy patients in whom there is a high suspicion
that the cancer has recurred and has spread.

The risk of spread of prostate cancer in both newly-diagnosed and recurrent
disease patients is determined by several factors, including the stage of the
disease when initially diagnosed, microscopic evaluation of the primary tumor,
and the prostate specific antigen ("PSA") level. PSA is a widely used blood test
currently used for detecting and monitoring prostate cancer.

We believe that ProstaScint has clinical utility in newly diagnosed
patients with prostate cancer who are thought to be candidates for therapies
such as:

- Radical prostatectomy; and
- External beam radiation therapy.

Before a physician decides upon a course of therapy, it is critical to
determine whether the prostate cancer has spread to other parts of the body,
thereby dramatically reducing the likelihood of successful treatment. Studies
from The Johns Hopkins University and Stanford University Medical Center have
shown that almost one-third of the prostate cancer patients treated at these two
institutions who have undergone prostatectomy or radiation therapy experienced
disease recurrence within five years following treatment, and half of the
patients had recurrence of their disease within ten years. Prior to the
availability of ProstaScint, determining whether newly diagnosed disease was
limited to the prostate or had spread distantly was based upon statistical
inference from the biopsy appearance of the tumor and the patient's serum level
of PSA. Conventional imaging methods, such as computed tomography, magnetic
resonance imaging and transrectal ultrasound, are all relatively insensitive
since they rely on anatomic structure (form) and therefore require that the
normal structures (i.e. lymph nodes) become enlarged or altered in shape to
indicate suspicion of malignancy. The ProstaScint scan images disease based upon
function (expression of the PSMA molecule) and, therefore, can image low volume
disease not readily detectable with conventional procedures. A clear
understanding of the existence and location of any prostate cancer metastasis is
crucial in selecting the most appropriate form of treatment to be administered.

In the U.S., following prostatectomy, prostate cancer patients are
monitored to ascertain changes in the level of PSA. In this setting, a rise in
PSA is strong and presumptive evidence of recurrence of the patient's prostate
cancer. Knowledge of the extent and location of disease recurrence is a critical
consideration in choosing the most appropriate form of treatment. Patients whose
disease is confined to the prostatic fossa may have the potential to be cured by
receiving "salvage" radiation therapy; patients with more widespread disease are
unlikely to benefit from such an approach and instead systemic treatment such as
hormonal therapy should be considered. We believe that the results of a
ProstaScint scan performed prior to radiation therapy to the pelvis may help
predict which recurrent disease patients are likely to benefit from salvage
radiation therapy. Approximately 70% of recurrent disease patients currently
treated with salvage radiation therapy fail to achieve long-term control of
their disease, since the cancer has already metastasized to other points in the
body. A prospective study is planned to evaluate ProstaScint in this setting.

<PAGE>

PROSTASCINT MARKETING, SALES AND DISTRIBUTION

According to the American Cancer Society, about 185,000 American men were
diagnosed with prostate cancer in 1998, of whom approximately 20% will be at
high risk for metastatic spread of their disease. In addition, estimates
indicate that in 1998, 40,000 to 60,000 patients previously treated for prostate
cancer will develop symptoms of recurrent cancer which has not yet progressed to
the point of skeletal involvement. We believe that there are approximately
75,000 to 100,000 patients with prostate cancer in the U.S. that are candidates,
based on current indications, to receive a ProstaScint scan each year.

In February 1997, we announced the commercial launch of ProstaScint, which
is co-marketed with the urological division of BARD, a marketer of a broad range
of urology products exclusively to the urology community. Pursuant to our
agreement with BARD:

- BARD is responsible for the promotion of ProstaScint to
urologists, the group of physicians most likely to order or generate
referrals for ProstaScint scans
- Our marketing activities are focused on the training of the
nuclear medicine imaging community, including those physicians most
likely to perform ProstaScint scans;
- We are responsible for the manufacture and distribution of
ProstaScint as well as instructing physicians in its proper use;
- BARD will make payments to the Company upon the occurrence of
certain milestones; and
- BARD will receive performance-based compensation for its services.

Our agreement with BARD has an initial term of ten years and is subject to
renewal.

In 1997, we entered into a distribution agreement with Faulding (Canada),
Inc. ("Faulding") related to distribution and sale of ProstaScint in Canada.

ProstaScint 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. We believe that this information regarding the
existence, location and extent of disease has the potential to assist a
physician in making appropriate patient management decisions. We have
established a network of accredited nuclear medicine imaging centers through our
PIE(TM) ("Partners in Excellence") Program (each accredited center, a "PIE
Site"). Each PIE Site receives rigorous training, undergoes proficiency testing,
and is subject to ongoing quality assurance protocols. To qualify as a PIE Site,
each center must be certified as proficient in the interpretation of ProstaScint
scans by the American College of Nuclear Physicians. We developed this program
in preparation for the launch of ProstaScint in February 1997. At the end of
1998, there were over 234 PIE Sites, including a majority of the National Cancer
Institute designated Comprehensive Cancer Centers. ProstaScint is available only
at PIE Sites.

We plan to add PIE Sites on a selective basis in order to ensure that new
sites are adequately qualified and committed to a minimum number of scans for
training purposes At the present time, we bear partial expense of qualification
of each site.

We currently employ 13 field representatives, each of whom is a certified
or registered nuclear medicine technologist with experience working in a nuclear
medicine department. These field representatives assist in training of
physicians and qualification of nuclear imaging centers as PIE Sites, and
provide BARD marketing representatives with sales assistance and technical
support of ProstaScint and its usage.

<PAGE>

We believe that approximately 80% of patients with prostate cancer are
managed by urologists, with the remainder being managed primarily by medical and
radiation oncologists. Through a Joint Marketing Committee, the Company and BARD
coordinate our respective educational and promotional activities to ensure that
PIE Sites receive appropriate patient referrals from urologists and that future
PIE Sites are located in medical facilities served by urologists who are
ordering the ProstaScint test. The product is not marketed directly to managed
care organizations or other payor groups, however, we maintain points of contact
with reimbursement specialists for physicians, patients, and payors to assist
with and ensure reimbursement and insurance coverage. Medical and radiation
oncologists also order diagnostic procedures such as ProstaScint for advanced
prostate cancer patients, and our promotional efforts are addressing this
segment of the medical community directly.

ONCOSCINT CR/OV. OncoScint CR/OV was approved by the FDA in the U.S. in
December 1992. OncoScint CR/OV was initially approved for single use with other
appropriate, commercially available diagnostic tests, to locate malignancies
outside the liver in patients with known colorectal or ovarian cancer. In
November 1995, FDA approved an expanded indication allowing for repeat
administration of OncoScint CR/OV. OncoScint CR/OV is also approved for sale in
eleven European countries and Canada. To date, OncoScint has not realized
substantial sales. We believe this product is effective in imaging both primary
and metastatic colorectal and ovarian tumors. However, this information has not
yet been widely used by physicians for patients with these conditions. We are
currently funding an investigator-initiated study designed to demonstrate the
benefits of performing an OncoScint study as soon as an initial diagnosis of
ovarian cancer is made, to determine which patients would benefit by a more
aggressive initial treatment of their disease. We believe a more aggressive
treatment at an earlier date could provide the potential for improved prognoses
for the patients following diagnosis of their malignancy.

Promotion of OncoScint CR/OV involves several different physician
audiences, including those who prescribe imaging procedures for their patients
as well as those who acquire and interpret the images. Referring physicians are
most likely to be surgeons and oncologists. OncoScint CR/OV, like ProstaScint,
is technique dependent, requiring training and expertise in reviewing and
interpreting images. Acceptance by the medical community of the benefits of
OncoScint CR/OV depends in part on the degree to which physicians acquire such
skills. Since May 1994, we have been the sole marketer of OncoScint CR/OV in the
U.S.

In 1995, we entered into a distribution agreement (the "Faulding
Agreement") with Faulding granting to Faulding the exclusive right to distribute
and sell OncoScint CR/OV in Canada. Faulding received regulatory approvals to
market the product in Canada in January 1998. The Faulding Agreement provides
for payments for minimum annual purchases of OncoScint CR/OV by Faulding, and
for certain royalties based upon net sales, if any, of OncoScint CR/OV by
Faulding. The initial term of the Faulding Agreement is seven years.

In 1996, we entered into a distribution agreement (the "CISbio Agreement")
with CIS biointernational, granting to CISbio the exclusive right to distribute
and sell OncoScint in all the countries of the world, except for the U.S. and
Canada. CISbio markets OncoScint CR/OV in various European countries. The CISbio
Agreement provides for minimum annual purchases of the components of OncoScint
CR/OV by CISbio, and for certain royalties based upon net sales of OncoScint
CR/OV by CISbio. The initial term of the CISbio Agreement is seven years
following the first commercial sale of the product by CISbio.

<PAGE>

CANCER THERAPEUTIC PRODUCT

QUADRAMET. Quadramet, a proprietary cancer therapeutic agent, received
marketing approval from the FDA in March 1997 for the relief of pain in patients
with metastatic bone lesions that image on conventional bone scan, a routinely
performed nuclear medicine procedure. Quadramet consists of a radioactive
isotope, Samarium-153, which omits beta radiation, and chelating agent, EDTMP,
which targets the drug to sites of new bone formation.

According to American Cancer Society and National Cancer Institute
statistics, approximately 600,000 new cases of cancer that typically metastasize
to bone occurred in the U.S. in 1997. We believe that over 200,000 patients each
year will suffer from bone pain that is severe enough to require palliative
intervention.

Once tumors have metastasized to the skeleton, they continue to grow and
cause destruction of the adjacent bone. This erosion of bone stimulates new bone
formation, which encircles the metastatic tumor. The continued growth from the
expanding tumor causes pressure which the patient perceives as pain at the site
of the metastasis. By targeting these areas of bone formation, Quadramet
delivers site-specific radiation, which may result in significant pain
reduction. As such areas of tumor involvement expand, they weaken the bone and
eventually lead to fracture of the affected bone. The medical complications
associated with bone metastases may also include bone fractures, spinal cord
compression and paralysis.

Current competitive treatments for severe cancer bone pain include:

- Narcotic analgesics
These drugs work by masking the brain's ability to
perceive the pain induced by the tumors as they
expand and grow within the bone. While narcotic
analgesics can be effective in addressing
cancer-related bone pain, their prolonged and
escalating use can result in undesirable side
effects, including nausea and vomiting, sedation,
confusion and severe constipation.
- External beam radiation therapy
External beam radiation therapy, while usually
effective in relieving pain, is most appropriately
used to treat solitary lesions. In addition,
retreatment of painful areas is often not feasible
due to unacceptable toxicities to neighboring organs
and tissues. Treatments are generally administered in
five to ten or more sessions over two to three weeks
necessitating frequent visits by the patient and
contributing to the high cost of this procedure.
- Metastron(R), a radiopharmaceutical product of Nycomed Amersham plc
Metastron is the only other therapeutic
radiopharmaceutical approved by the FDA for the
treatment of cancer bone pain. It contains a
non-imageable radionuclide, Strontium-89. This
radionuclide decays with a very long radioactive
half-life (approximately 50 days), resulting in a
delayed onset of pain relief, generally several weeks
after administration. Further, the long half-life
causes a prolonged and variable degree of bone marrow
suppression. Prolonged bone marrow toxicity limits
the usage of other potential therapies such as
chemotherapy and radiation therapy, as well as the
ability to administer additional doses of this drug.
- Novantrone(R), a chemotherapeutic product of Immunex Corporation
("Immunex") Novantrone, a chemotherapeutic drug
frequently used in the management of acute
non-lymphocytic leukemia, is also marketed by
Immunex for use in combination with steroids for
pain related to hormone refractory prostate cancer.

<PAGE>

The Company believes that Quadramet offers
significant advantages over Novantrone,
including lower toxicity, fewer side effects, and
more rapid onset of pain relief. However, Novantrone
is well known to oncologists because of its other
applications and this may provide some marketing
advantages to Immunex.

Quadramet has numerous characteristics which we believe are advantageous
for the treatment of cancer bone pain, including early onset of pain relief;
predictability of recovery from bone marrow toxicity; ease of administration;
and length of pain relief. Quadramet is administered as a single intravenous
injection on an outpatient basis and directly targets sites of new bone
formation which include those areas in the skeleton that have been invaded by
metastatic tumors. Quadramet exhibits high and very selective uptake in bone
with little or no detectable accumulation in soft tissue. The fraction of the
injected dose that is not taken up in the skeleton is excreted in an unmodified
form in the urine over a period of four to six hours. Further studies are
planned to evaluate the safety and efficacy of repeat dosing.

We intend to expand the use of Quadramet within the currently approved
indication and extend its use to new indications by performing additional
clinical trials and seeking regulatory approvals, primarily by and through our
marketing partner, Berlex. Clinical trials are either planned or currently
underway to evaluate the use of Quadramet in combination with other cancer
therapies (such as external beam radiation therapy), as a potential therapeutic
agent for treatment of cancer and as a therapy for children with malignancies
which have either arisen in bone or have spread to bone. Future trials are also
planned to evaluate the extension of the use of Quadramet to patients whose bone
metastases can be visualized on conventional bone scan, but who are not yet
experiencing pain from these metastases. Our continuation of these trials will
depend upon their progress, success and on the ability to obtain funding from
our existing or potential marketing partners.

The first non-cancer use of Quadramet under investigation is the treatment
of patients with refractory rheumatoid arthritis. These patients often
demonstrate enhanced uptake of radionuclide in affected joints on diagnostic
bone scans. In such cases, we believe Quadramet can target the diseased joints
and provide a high but localized dose of radiation to the area. Published
studies by foreign investigators have suggested benefits from Quadramet in the
relatively small number of rheumatoid arthritis patients studied. We are
currently conducting a Phase I dose escalation study of Quadramet to evaluate
the safety and preliminary efficacy of Quadramet in refractory rheumatoid
arthritis patients.

QUADRAMET MARKETING, SALES, MANUFACTURING AND DISTRIBUTION

We have licensed the rights to Quadramet from Dow. Quadramet was previously
marketed by DuPont, which arrangement was terminated during June 1998. In
October 1998, we entered into an exclusive agreement with Berlex for the
marketing of Quadramet. We anticipate that Berlex will re-launch Quadramet
during the first quarter of 1999. Berlex maintains a sales force which calls
upon the oncological community. Pursuant to our agreement with Berlex, we are
entitled to royalty payments based on net sales of the Quadramet product and
milestone payments based upon sales levels achieved.

Quadramet was originally launched in June 1997. During the first year of
launch, Quadramet was marketed principally to the nuclear medicine community,
which administers the treatment to patients. However, the treatment is more
typically prescribed by caregiving physicians, including medical oncologists and
urologists. We believe that successful commercialization of Quadramet will
depend upon marketing to these referring physicians.

43
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DuPont, a leading supplier of radiopharmaceutical products in the U.S.,
will continue to manufacture the product for an initial term of five years.
Berlex has agreed to bear all costs of manufacture of Quadramet.

SALES, MARKETING AND DISTRIBUTION

We have limited sales, marketing and distribution capabilities. With
respect to the sales, marketing and distribution of Quadramet and the
co-promotion of ProstaScint, we are substantially dependent on the efforts of
Berlex and BARD. See "ProstaScint Marketing, Sales, Manufacturing and
Distribution" and "Quadramet Marketing, Sales, Manufacturing and Distribution."
If we are unable to successfully establish and maintain significant sales,
marketing and distribution efforts, either internally or through arrangements
with third parties, there would be a material adverse effect on our business,
financial condition and results of operations.

There can be no assurance that we be able to maintain our existing
collaborative arrangements or enter into collaborative and license arrangements
in the future on acceptable terms, if at all, that such arrangements will be
successful, that the parties with which the Company has or may establish
arrangements will perform their obligations under such arrangements, or that
potential collaborators will not compete with the Company by seeking alternative
means of developing products for the indications targeted by the Company.

PRODUCT CONTRIBUTION FOREIGN REVENUES/RISKS

The Company's currently marketed products and other sources of income
constitute a single business segment. No significant history of revenues exists
with respect to any of the Company's products. ProstaScint and Quadramet were
introduced to the market during the first half of 1997 and account for a
significant percentage of the Company's product and royalty revenues and total
revenues and are expected to do so for the foreseeable future. For the year
ended December 31, 1998, revenues related to ProstaScint and Quadramet accounted
for approximately 91% of the Company's product and royalty revenues. ProstaScint
sales have experienced continued growth since product launch. However, there can
be no assurance that such growth will continue indefinitely. Quadramet sales
during the period from its launch have not grown significantly. From the period
beginning in the second half of 1997, in which the product was launched in the
commercial marketplace, through June 1998, reported revenues related to
Quadramet sales were based on minimum royalty payments due from its original
commercial partner, DuPont. Actual sales were substantially less than the
minimum royalty payments received. Growth of Quadramet sales were initially slow
because of the need for hospitals to obtain license amendments under federal and
state law to receive and handle this new radioactive product. In addition,
marketing efforts by DuPont were directed primarily to nuclear medicine
physicians who directly administer the product to patients. While this sales
effort was necessary to generate product understanding, the Company believes
that marketing to oncologists and urologists, the primary care-givers for
patients who may benefit from Quadramet, is necessary for adequate penetration
into the market.

The marketing agreement with DuPont has been terminated and the Company the
Company has since entered into an exclusive license and marketing agreement for
the marketing of Quadramet with Berlex, which maintains an experienced sales
force calling on the oncology community. The Company and Berlex have entered
into an agreement with DuPont for the manufacture of Quadramet. Pursuant to this
agreement, Berlex bears the manufacturing costs for Quadramet. Marketing by
Berlex is planned to commence during the first quarter of 1999. There can be no

<PAGE>

assurance that ProstaScint and Quadramet will achieve market acceptance on a
timely basis, or at all. The Company's success will be dependent upon the
acceptance of ProstaScint and Quadramet by the medical community, including
health care providers, such as hospitals and physicians, and third-party payors
(such as employers, insurers, and health maintenance organizations), as safe,
effective and cost efficient alternatives to other available treatment and
diagnostic protocols.

PRODUCT DEVELOPMENT

AXCELL BIOSCIENCES. AxCell, a wholly owned subsidiary of the Company
created in August 1996, utilizes an application of Genetic Diversity Library
("GDL") (described below) and other technology to support advances in
combinatorial chemistry, genomics and drug discovery. AxCell has developed an
integrated set of tools to map selective protein-protein interactions and is
using these tools to develop an Inter-Functional Proteomic Database
("IFP-dBase"). The IFP-dBase includes data relating to protein-protein
interaction linked to a variety of other relevant bioinformatic data. We believe
this informational database has potential value in the use by scientists in the
pharmaceutical industry as a means to help identify and validate important new
biological targets. Without the ability to sort and understand the interactions
between proteins, it will be difficult to identify the relatively few important
new targets among the more than 100,000 expected to be identified through
genomic analysis in the next few years. We believe such information will be of
value to pharmaceutical companies in conducting research on new drugs.
Discussions are currently underway with potential pharmaceutical customers who
might take immediate advantage of AxCell's ability to identify protein
interactions for targets which they are currently studying.

AxCell has developed a prototype bioinformatics interface for the
IFP-dBase. We expect that additional effort will be required to refine the
prototype. We will also pursue further research to identify protein-protein
interactions which would be useful in and necessary to a commercially viable
bioinformatics database. Funding is being sought from collaborators for the
AxCell program, from venture capital funds, or from other sources, including
corporate resources if adequate to provide such funding. No assurance can be
provided that the program will be developed, will be successful, or that we will
retain substantially all ownership or even a majority interest of AxCell.

GENETIC DIVERSITY LIBRARY TECHNOLOGY. Long-term research, much of which is
preliminary, had been conducted over a period of time by the Company on GDL
technology. The GDL program consists of research on long peptides that fold to
form three-dimensional structures. These peptides, which are biologically
produced, create vast, highly diverse compound libraries. We believe that the
ability of these compounds to bind to predetermined sites may mediate certain
therapeutic or diagnostic effects more effectively than other existing products.
Unlike conventional small molecule drugs or short peptides, long peptides can
act more like proteins and can fold to take on very precise biological functions
such as specific recognition units ("RUs"). Depending upon the application,
these RUs can act as receptors, as targeting agents, or ligands for biological
receptors. Certain peptides believed to have commercial potential have been
identified from the GDL program and may be subject to further development
efforts, although we would at present pursue such development only in connection
with a commercial partner. Otherwise, the basic research component of the GDL
program has been cancelled as part of our ongoing review of long term research
projects and focus on programs with nearer term economic potential. We are
actively pursuing corporate alliances and basic research and development
agreements to support and advance the GDL technology toward commercialization.

<PAGE>

The Company has entered into a license agreement granting Elan worldwide
rights to a group of peptides and associated GDL technology for orally
administered drugs that are transported across the gastrointestinal epithelium,
as well as rights to other orally delivered drugs derived from the research
program. Elan is responsible for the further development and commercialization
of this technology. CYTOGEN is entitled to royalties from sales of any product
developed and commercialized based on this technology.

PSMA. In 1993, CYTOGEN and Memorial Sloan-Kettering Cancer Center ("MSKCC")
began a development program involving PSMA and CYTOGEN's prostate cancer
monoclonal antibody, CYT-351. PSMA is an unique antigen expressed in prostate
cancer cells and by the normal prostate epithelial cells. In July 1996, a patent
entitled "Prostate-Specific Membrane Antigen" was issued to Sloan-Kettering
Institute for Cancer Research, an affiliate of MSKCC. In November 1996, we
exercised our option for the exclusive license to this technology.

In December 1996, CYTOGEN exclusively licensed the use of PSMA in prostate
cancer vaccines for certain immunotherapeutic treatments of prostate cancer to
Prostagen, Inc. ("Prostagen"), a privately held company in New York. The
agreement with Prostagen provides for an up-front fee, several milestone
payments throughout the development of any potential products, and royalties
payable if and when products come to market. Products are currently under
development by third parties in collaboration with and under license from
Prostagen. Currently, a dendritic cell therapy using PSMA for treatment of
prostate cancer is in Phase II clinical studies.

In January 1997, we granted a non-exclusive option for the PSMA technology
to Boehringer Mannheim in the area of in vitro diagnostics, including reverse
transcriptase-polymerase chain reaction assays, a technique used to detect
circulating prostate cancer cells in the blood of patients. We have issued
licenses to various third parties for different uses of the PSMA technology in
diagnostic and therapeutic applications. These agreements provide the Company
with royalties payable if and when products come to market.

In 1996, Targon was granted exclusive rights to certain other fields of use
for the PSMA technology, including recent developments in the area of prodrugs
for prostate cancer. These rights were relinquished to Cytogen in connection
with the sale of our interest in Targon to Elan.

OTHER APPLICATIONS. While we have retained all rights for therapeutic and
in vivo diagnostic uses of the antibody utilized in ProstaScint for the Company
and its affiliates, we have licensed the antibody for in vitro diagnostic use to
the Pacific Northwest Research Foundation, which in turn, has established a
collaboration with Hybritech Incorporated ("Hybritech") to exploit this antibody
in a serum-based in vitro diagnostic test. We will receive royalties on product
sales by Hybritech, if any.

We believe that certain of our technologies under development may have
medical applications in various other areas, including autoimmune disorders and
infectious diseases. We intend to expand the research and development of these
technologies primarily through strategic alliances with other entities. We
cannot predict the establishment or the timing of such alliances. To the extent
funding is available, we expect to devote resources to these other areas. No
prediction can be made, however, as to when or whether the areas of research
described above will yield new scientific discoveries, or whether such research
will lead to new commercial products.

<PAGE>

RESEARCH AND DEVELOPMENT

Our research and development expenditures include projects conducted by the
Company and payments made to customer sponsored research programs. Our expenses
for research and development activities (including customer sponsored programs)
were:

- 1998 -- $10.0 million
- 1997 -- $17.9 million
- 1996 -- $20.5 million

Research and development expenditures for customer sponsored programs were:

- 1998 -- $2.0 million
- 1997 -- $1.5 million
- 1996 -- $1.1 million

We intend to pursue research and development activities having commercial
potential and to review all of our programs to determine whether possible market
opportunities, near and longer term, provide an adequate return to justify the
commitment of human and economic resources to their initiation or continuation.
Anticipated research and development spending for 1999 has been dramatically
curtailed.

HEALTH CARE REIMBURSEMENT

Our business, financial condition and results of operations will continue
to be affected by the efforts of governments and third-party payors to contain
or reduce the costs of healthcare through various means. There have been, and we
expect that there will continue to be, federal and state proposals to implement
government control of pricing and profitability of therapeutic and diagnostic
imaging agents. In addition, an increasing emphasis on managed care has and will
continue to increase the pressure on pricing of these products. While we cannot
predict whether such legislative or regulatory proposals will be adopted or the
effects such proposals or managed care efforts may have on our business, the
announcement of such proposals and the adoption of such proposals or efforts
could have a material adverse effect on our business, financial condition and
results of operations. Further, to the extent such proposals or efforts have a
material adverse effect on other companies that are prospective corporate
partners of the Company, our ability to establish strategic alliances may be
materially and adversely affected.

Sales of our products depend in part on the availability of reimbursement
to the consumer from third-party payors, including Medicare, Medicaid, and
private health insurance plans. Third-party payors are increasingly challenging
the prices charged for medical products and services. To the extent we succeed
in bringing products to market, there can be no assurance that these products
will be considered cost-effective and that reimbursement to consumers will be
available or will be sufficient to allow us to sell our products on a
competitive basis. Reimbursement by a third-party payor may depend on a number
of factors, including the payor's determination that our products are clinically
useful and cost-effective, medically necessary and not experimental or
investigational. Since reimbursement approval is required from each payor
individually, seeking such approvals can be a time consuming and costly process
which could require us to provide supporting scientific, clinical and
cost-effectiveness data for the use of our products to each payor separately. If
we are unable to secure adequate third party reimbursement for our products,
there would be material adverse effect on its business, financial condition and
results of operations.

<PAGE>

COMPETITION

The biotechnology and pharmaceutical industries are subject to intense
competition, including competition from large pharmaceutical companies,
biotechnology companies and other companies, universities and research
institutions. Competition with the Company's existing therapeutic products is
posed by a wide variety of other firms, including firms which provide products
used in more traditional treatments or therapies, such as external beam
radiation, chemotherapy agents and narcotic analgesics. In addition, the
Company's existing and potential competitors may be able to develop technologies
that are as effective as, or more effective than those offered by the Company,
which would render the Company's products noncompetitive or obsolete. Moreover,
many of the Company's existing and potential competitors have substantially
greater financial, marketing, sales, manufacturing, distribution and
technological resources than the Company. Such existing and potential
competitors may be in the process of seeking FDA or foreign regulatory approval
for their respective products or may also enjoy substantial advantages over the
Company in terms of research and development expertise, experience in conducting
clinical trials, experience in regulatory matters, manufacturing efficiency,
name recognition, sales and marketing expertise and distribution channels. In
addition, many of these companies may have more experience in establishing
third-party reimbursement for their products. Accordingly, there can be no
assurance that the Company will be able to compete effectively against such
existing or potential competitors or that competition will not have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Cancer Diagnostic Imaging Products -- ProstaScint" and "Cancer
Therapeutic Products -- Quadramet".

CELLCOR

In 1995 we acquired Cellcor for the continued development of autologous
lymphocyte therapy in the treatment of metastatic renal cell cancer. As part of
our restructuring activities during 1998, we determined that Cellcor was no
longer in line with our strategic and financial objectives. In September 1998,
we terminated our Cellcor program and closed our facility.

MANUFACTURING

Our ProstaScint and OncoScint products are manufactured at a cGMP-compliant
manufacturing facility in Princeton which is now held by Bard BioPharma L.P., a
subsidiary of Purdue BioPharma ("Bard BioPharma"). We have access to the
facility for continued manufacture of these products under a three year
agreement. An Establishment License Application for the facility for the
manufacture of our products was approved by the FDA for the manufacture of
ProstaScint in October 1996 and for manufacture of OncoScint in December 1992.
It is expected that this facility will allow us to meet our projected production
requirements for ProstaScint and OncoScint for the foreseeable future, although
no assurances can be given to that effect.

In November 1997, the FD&C Act was amended to make the approval and review
process for biologics more similar to that for drugs. The new law requires only
one license to market a biological product, a BLA, eliminating the need for
separate license for the facility. Therefore, while we will continue to maintain
compliance with cGMPs, under the new law, we are not required to obtain separate
licenses of its commercial manufacturing facilities in the future. Moreover, we
will retain the status of having met the FDA's establishment licensing
requirements which we believes is an important competitive advantage in
attracting contract manufacturing business (discussed below).

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Our products must be manufactured in compliance with regulatory
requirements and at commercially acceptable costs. While we believe that our
manufacturing arrangements currently address our needs, there can be no
assurance that we will be able to continue to arrange manufacture of such
products on a commercially reasonable basis, that we will be able to arrange
manufacture of additional products and product candidates or successfully
outsource such manufacturing needs. If we are unable to successfully manufacture
or arrange for the manufacture of our products and product candidates there
could be a material adverse effect on our business, financial condition and
results of operations.

The Company and its third party manufacturers are required to adhere to FDA
regulations setting forth requirements for cGMP and similar regulations in other
countries, which include extensive testing, control and documentation
requirements. Ongoing compliance with cGMP, labeling and other applicable
regulatory requirements is monitored through periodic inspections and market
surveillance by state and federal agencies, including the FDA, and by comparable
agencies in other countries. Failure of the Company and its third-party
manufacturers to comply with applicable regulations could result in sanctions
being imposed on the Company, including fines, injunctions, civil penalties,
failure of the government to grant premarket clearance or premarket approval of
drugs, delays, suspension or withdrawal of approvals, seizures or recalls of
products, operating restrictions and criminal prosecutions.

The annual production capacity of the Princeton facility, now held by Bard
BioPharma, was approximately 100,000 OncoScint or ProstaScint kits. The facility
was utilized approximately 15% in 1998, 15% in 1997, and 20% in 1996 for
manufacture of our products.

RAW MATERIALS AND SUPPLIERS

The active raw materials used for the manufacture of our products include
different antibodies. We have both exclusive and non-exclusive license
agreements which permit the use of specific monoclonal antibodies in our
products. Our first product, OncoScint CR/OV, uses the same monoclonal antibody
which has been supplied in clinical quantities and is being supplied in
commercial quantities by a single contract manufacturer, Lonza Biologics (which
acquired the Company's former supplier, Celltech, in 1996), through a shared
manufacturing agreement. We anticipate that Lonza Biologics will be able to meet
our needs for commercial quantities of monoclonal antibody.

We currently have arrangements necessary for production of projected
commercial quantities of monoclonal antibody for manufacture of ProstaScint
through an agreement with Bard BioPharma, which acquired the Company's
manufacturing facilities in January, 1999. CYTOGEN is responsible for the
production of both OncoScint and ProstaScint at the facility.

Quadramet is manufactured by DuPont pursuant to an agreement with Berlex
and CYTOGEN. Certain components of Quadramet, particularly Samarium-153 and
EDTMP, are provided to DuPont by sole source suppliers. Due to its radiochemical
properties, Samarium-153 must be produced on a weekly basis by its supplier in
order to meet DuPont's manufacturing requirements. On one occasion, DuPont was
unable to manufacture Quadramet on a timely basis due to the failure of the sole
source supplier to provide an adequate supply of Samarium-153. In the event that
DuPont is unable to obtain sufficient quantities of such components on
commercially reasonable terms, or in a timely manner, DuPont would be unable to
manufacture Quadramet on a timely and cost-competitive basis. In addition,
sources for certain of these components may not be readily available. Thus, the
loss by DuPont of its sources for such components could result in an
interruption of supply and could have a material adverse effect on the Company's
business, financial condition and results of operations.

<PAGE>

PATENTS AND PROPRIETARY RIGHTS

Consistent with industry practice, we have a policy of using patent and
trade secret protection to preserve our right to exploit the results of our
research and development activities and, to the extent it may be necessary or
advisable, to exclude others from appropriating our proprietary technology.

Our policy is to protect aggressively our proprietary technology by
selectively seeking patent protection in a worldwide program. In addition to the
U.S., we file patent applications in Canada, major European countries, Japan and
additional foreign countries on a selective basis to protect inventions
important to the development of its business. We believe that the countries in
which we have obtained and are seeking patent coverage for our proprietary
technology represent the major focus of the pharmaceutical industry in which the
Company and certain of our licensees will market our respective products.

We hold 31 current U.S. patents and 66 current foreign patents. We have
filed and currently have pending a number of additional U.S. and foreign patent
applications, covering certain aspects of our technology for diagnostic and
therapeutic products, and the methods for their production and use. We intends
to file patent applications with respect to subsequent developments and
improvements when we believe such protection is in our the best interest.

We are the exclusive licensee of certain patents and patent applications
held by the University of North Carolina at Chapel Hill covering GDL technology.
We hold an exclusive license under certain patent and patent applications held
by the Memorial Sloan Kettering Institute covering PSMA. We are the exclusive
licensee of certain U.S. patents and applications held by Dow covering
Quadramet.

We may be entitled under certain circumstances to seek extension of the
terms of our patents. See "Government Regulation and Product Testing -- FDA
Approval".

We also rely upon, and intend to continue to rely upon, trade secrets,
unpatented proprietary know-how and continuing technological innovation to
develop and maintain our competitive position. We typically enter into
confidentiality agreements with our licensees and any scientific consultants,
and each of our employees have entered into agreements requiring that they
forbear from disclosing confidential information, and assign to us all rights in
any inventions made while in our employ. We believe that our valuable
proprietary information is protected to the fullest extent practicable; however,
there can be no assurance that:

- Any additional patents will be issued to the Company in any or all
appropriate jurisdictions;
- Litigation will not be commenced seeking to challenge the patent
protection or such challenges will not be successful;
- Our processes or products do not or will not infringe upon the patents
of third parties; or
- The scope of patents issued will successfully prevent third parties from
developing similar and competitive products.

It is not possible to predict how any patent litigation will affect the
Company's efforts to develop, manufacture or market its products.

The technology applicable to our products is developing rapidly. A
substantial number of patents have been issued to other biotechnology companies.
In addition, competitors have filed applications for, or have been issued,
patents and may obtain additional patents and proprietary rights relating to
products or processes that are competitive with ours. In addition, others may
have filed patent applications and may have been issued patents to products and
to technologies potentially useful to us or necessary to commercialize our

<PAGE>

products or achieve our business goals. There can be no assurance that we will
be able to obtain licenses of such patents on acceptable terms. See
"Competition."

GOVERNMENT REGULATION AND PRODUCT TESTING

The development, manufacture and sale of medical products utilizing our
technology are governed by a variety of statutes and regulations in the U.S. and
by comparable laws and agency regulations in most foreign countries.

The FD&C Act requires that our products be manufactured in FDA registered
facilities subject to inspection. The manufacturer must be in compliance with
cGMP which imposes certain procedural and documentation requirements upon us and
our manufacturing partners with respect to manufacturing and quality control
activities. Noncompliance with cGMP can result in, among other things, fines,
injunctions, civil penalties, recalls or seizures of products, total or partial
suspension of production, failure of the government to grant premarket clearance
or premarket approval for drugs, withdrawal of marketing approvals and criminal
prosecution. Any failure by us or our manufacturing partners to comply with the
requirements of cGMP could have a material adverse effect on the Company's
business, financial condition and results of operations.

FDA APPROVAL. The major regulatory impact on the diagnostic and therapeutic
products in the U.S. derives from the FD&C Act and the Public Health Service
Act, and from FDA rules and regulations promulgated thereunder. These laws and
regulations require carefully controlled research and testing of products,
government notification, review and/or approval prior to marketing the products,
inspection and/or licensing of manufacturing and production facilities,
adherence to good manufacturing practices, compliance with product
specifications, labeling, and other applicable regulations.

The medical products which we apply our technology is subject to
substantial governmental regulation and may be classified as new drugs or
biologics under the FD&C Act. FDA and similar health authorities in most other
countries must approve or license the diagnostic and therapeutic products before
they can be commercially marketed. In order to obtain FDA approval, an applicant
must submit, as relevant for the particular product, proof of safety, purity,
potency and efficacy. In most cases such proof entails extensive pre-clinical,
clinical and laboratory studies. The studies and the preparation and prosecution
of those applications by FDA is expensive and time consuming, and may take
several years to complete. Difficulties or unanticipated costs may be
encountered by us or our licensees in their respective efforts to secure
necessary governmental approval or licenses, which could delay or preclude the
Company or its licensees from marketing their products. Limited indications for
use or other conditions could also be placed on any such approvals that could
restrict the commercial applications of such products. With respect to patented
products or technologies, delays imposed by the government approval process may
materially reduce the period during which we will have the exclusive right to
exploit them, because patent protection lasts only for a limited time, beginning
on the date the patent is first granted in the case of U.S. patent applications
filed prior to June 6, 1995, and when the patent application is first filed in
the case of patent applications filed in the U.S. after June 6, 1995, and
applications filed in the European Economic Community. We intend to seek to
maximize the useful life of our patents under the Patent Term Restoration Act of
1984 in the U.S. and under similar laws if available in other countries.

The majority of our diagnostic and therapeutic products will likely be
classified as new drugs or biologics and will be evaluated in a series of in
vitro, non-clinical and human clinical testing. Typically, clinical testing is
performed in three phases to further evaluate the safety and efficacy of the
drug. In Phase I, a product is tested in a small number of patients primarily
for safety at one or more dosages. In Phase II, in addition to safety, the

51
<PAGE>

efficacy of the product against particular diseases is evaluated in a patient
population generally somewhat larger than Phase I. Clinical trials of certain
diagnostic and cancer therapeutic agents frequently combine Phase I and Phase II
into a single Phase I/II study. In Phase III, the product is evaluated in a
larger patient population sufficient to generate data to support a claim of
safety and efficacy within the meaning of the FD&C Act. Permission by the FDA
must be obtained before clinical testing can be initiated within the U.S. This
permission is obtained by submission of an IND application which typically
includes the results of in vitro and non-clinical testing and any previous human
testing done elsewhere. FDA has 30 days to review the information submitted and
makes a final decision whether to permit clinical testing with the drug or
biologic. A similar procedure applies to medical device and diagnostic products.

After completion of in vitro, non-clinical and clinical testing
authorization to market a drug or biologic must be granted by FDA. FDA grants
permission to market through the review and approval of either an NDA (New Drug
Application) for drugs or a BLA (Biologic License Application) for biologics.
These applications provide detailed information on the results of the safety and
efficacy of the drug conducted both in animals and humans. Additionally,
information is submitted describing the facilities and procedures for
manufacturing the drug or biologic.

The Prescription Drug User Fee Act and subsequently, the Food and Drug
Administration Modernization Act of 1997 have established application review
times for both NDAs and BLAs. For new drugs and biologics, FDA is to review and
make a recommendation for approval within 12 months. For drugs and biologics
designated as "priority," the review time is six months.

Once a drug or biologic is approved, we are required to maintain approval
status of the products by providing certain safety and efficacy information at
specified intervals. Additionally, the Company is required to meet other
requirements specified by the FD&C Act including but not limited to the
manufacture of products, labeling and promotional materials and the maintenance
of other records and reports. Failure to comply with these requirements or the
occurrence of unanticipated safety effects from the products during commercial
marketing, could lead to the need for product recall, or FDA initiated action,
which could delay further marketing until the products are brought into
compliance. Similar laws and regulations apply in most foreign countries where
these products are likely to be marketed.

ORPHAN DRUG ACT. The Orphan Drug Act is intended to provide incentives to
manufacturers to develop and market drugs for rare diseases or conditions
affecting fewer than 200,000 persons in the U.S. at the time of application for
orphan drug designation. A drug that receives orphan drug designation and is the
first product to receive FDA marketing approval for a particular indication is
entitled to orphan drug status, a seven-year exclusive marketing period in the
U.S. for that indication. Clinical testing requirements for orphan drugs are the
same as those for products that have not received orphan drug designation.
OncoScint CR/OV has received an orphan drug designation for the detection of
ovarian carcinoma. Under the Orphan Drug Act, the FDA cannot approve any
application by another party to market an identical product for treatment of an
identical indication unless (i) such party has a license from the holder of
orphan drug status, or (ii) the holder of orphan drug status is unable to assure
an adequate supply of the drug. However, a drug that is considered by FDA to be
different from a particular orphan drug is not barred from sale in the U.S.
during such seven-year exclusive marketing period even if it receives marketing
approval for the same product claim.

OTHER REGULATIONS. In addition to regulations enforced by FDA, the Company
is also subject to regulation under the state and local authorities and other
federal agencies including Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and Nuclear Regulatory Commission.

<PAGE>

FOREIGN REGULATORY APPROVAL. The regulatory approval process in Europe has
changed over the past few years. There are two regulatory approval processes in
Europe for products developed by the Company. Beginning in 1995, the centralized
procedure became mandatory for all biotechnology products. Under this regulatory
scheme, the application is reviewed by two scientific project leaders referred
to as the rapporteur and co-rapporteur respectively. Their roles are to prepare
assessment reports of safety/efficacy and for recommending the approval for full
European Union marketing.

The second regulatory scheme, referred to as the Mutual Recognition
Procedure is a process whereby a product's national registration in one member
state within the European Union may be "mutually recognized" by other member
states within the European Union.

Substantial requirements, comparable in many respects to those imposed
under the FD&C Act, will have to be met before commercial sale is permissible in
most countries. There can be no assurance, however, as to whether or when
governmental approvals (other than those already obtained) will be obtained or
as to the terms or scope of those approvals.

CUSTOMERS

In 1998, the Company received 54% of its total product related, license and
contract revenues from three customers: Berlex, DuPont and Medi-Physics, a chain
of radiopharmacies (see Note 7 of Notes to the Consolidated Financial
Statements).

EMPLOYEES

As of January 22, 1999, we employed 95 persons full-time, of whom 7 were
engaged in research and development activities, 32 in operations and
manufacturing, 21 in clinical and regulatory activities, 17 in administration
and management, and 18 in marketing. We believe that we have been successful in
attracting skilled and experienced employees; however, competition for such
personnel is intense.

None of the Company's employees is covered by a collective bargaining
agreement. All of the Company's employees have executed confidentiality
agreements. We considers relation with our employees to be excellent.

Important Factors Regarding Forward Looking Statements

=====================
Cautionary Statement

Certain discussions set forth above regarding the
development and commercialization of our products and
technologies are forward looking statements that are subject to
risks and uncertainties. The statements under this caption are
intended to serve as cautionary statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Certain
statements in this prospectus are forward-looking statements
within the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as amended.

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The Company's actual results could differ materially from those
anticipated in such forward-looking statements as a result of
certain factors, including those discussed in Risk Factors,
listed below or discussed elsewhere in this prospectus, and in
the Company's filings with the Securities and Exchange
Commission:

(i) the Company's ability to access the capital
markets in the near term and in the future for continued funding
of existing projects and for the pursuit of new projects; (ii)
the Company's ability to complete its restructuring plans timely
and in a way that permits the Company to operate effectively;
(iii) the ability to attract and retain personnel needed for
business operations and strategic plans; (iv) the timing and
results of clinical studies, and regulatory approvals; (v)
market acceptance of the Company's products, including programs
designed to facilitate use of the products, such as the PIE
Program; (vi) demonstration over time of the efficacy and safety
of the Company's products; (vii) the degree of competition from
existing or new products; (viii) the decision by the majority of
public and private insurance carriers on whether to reimburse
patients for the Company's products; (ix) the profitability of
its products; (x) the ability to attract, and the ultimate
success of, strategic partnering arrangements, collaborations,
and acquisition candidates; (xi) 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; and (xii)
the success of the Company's marketing partners in obtaining
marketing approvals in Canada and in European countries, in
achieving milestones and achieving sales of products resulting in
royalties; and (xiii) the ability to protect and practice the
Company's intellectual property, including patents and know-how.

Any forward-looking statements are made as of the date of
this prospectus and the Company assumes no obligation to update
any such forward-looking statements or to update the factors
which could cause actual results to differ materially from those
anticipated in such forward-looking statements.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange
Commission, Washington, D.C. 20549, a Registration Statement on
Form S-1 under the Securities Act with respect to the shares of
common stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement
and the exhibits and schedules thereto. For further information
with respect to the Company and the common stock offered hereby,
reference is made to the Registration Statement and the exhibits
and schedules filed therewith. Statements contained in this
Prospectus as to the contents of any contract or any other
document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
A copy of the Registration Statement may be inspected without
charge at the offices of the Commission in Washington, D.C.
20549, and copies of all or any part of the Registration
Statement may be obtained from the Public Reference Section of
the Commission, Washington, D.C. 20549 upon the payment of the
fees prescribed by the Commission. The Commission maintains a
Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding
registrants, such as the Company, that file electronically with
the Commission. The Company also maintains a Web site
(http://www.cytogen.com).

<PAGE>

MANAGEMENT

Directors and Executive Officers

The directors and executive officers of the Company are as follows:

Name Age Title
- ---- --- -----

James A. Grigsby 55 Director; Chairman of the Board

H. Joseph Reiser, Ph.D. 52 Director; President and Chief
Executive Officer

John E. Bagalay, Jr., Ph.D. J.D. 64 Director

Ronald J. Brenner, Ph.D. 64 Director

Stephen K. Carter, M.D. 61 Director

Robert F. Hendrickson 65 Director

Donald F. Crane 48 Vice President, General Counsel
and Corporate Secretary

Jane M. Maida 43 Chief Accounting Officer, and
Principal Financial Officer

Graham S. May, M.D. 50 Vice President, Medical Affairs
and Commercial Development

John D. Rodwell, Ph.D. 52 Senior Vice President, Chief
Scientific Officer and
President, AxCell Biosciences

Michael A. Trapani 44 Vice President, Regulatory Affairs
and Quality Assurance

James A. Grigsby has been a director of the Company since May
1996 and Chairman of the Board since June 1998. Since 1994, Mr.
Grigsby has been president of Cancer Care Management LLC, a
consulting firm providing consulting services to managed care
companies regarding cancer disease management issues. From 1989
to 1994, Mr. Grigsby was President of CIGNA Corporation's
International Life and Employee Benefits Division, which operated
in over 20 countries worldwide, and prior to that period also
served as the head of CIGNA's national health care sales force.
Prior to that time, since 1978, he held a number of executive
positions with CIGNA Corporation. Mr. Grigsby received a B.A.
degree in Mathematics from Baylor University and is a Fellow of
the Society of Actuaries.

H. Joseph Reiser, Ph.D. joined CYTOGEN in August 1998 as
President and Chief Executive Officer and as a member of the
Board of Directors. Most recently, Dr. Reiser was Corporate Vice
President and General Manager, Pharmaceuticals, for Berlex
Laboratories Inc., the U.S. subsidiary of Schering AG. During
his 17 year tenure at Berlex, Dr. Reiser held positions of
increasing responsibility, serving as the first President of
Schering Berlin's Venture Corporation, Vice President, Technology
and Industry Relations, and Vice President, Drug Development and
Technology. Dr. Reiser received his Ph.D. in Physiology from
Indiana University School of Medicine, where he also earned his
Master and Bachelor of Science degrees.

55
<PAGE>

John E. Bagalay, Jr., Ph.D., J.D. has been a director of the
Company since October 1995. Dr. Bagalay was a director of Cellcor, Inc.
("Cellcor") prior to the Company's acquisition of Cellcor in October 1995.
He was interim President, CEO and Chief Financial Officer of the Company
from January - August, 1998. He has been Senior Advisor to the Chancellor,
Boston University since January, 1998. He has been Chief Operating
Officer and Chief Financial Officer of Eurus Technologies, Inc. He served
as the Managing Director of Community Technology Fund, the venture
capital affiliate of Boston University, from September 1989 until
January 1998. Dr. Bagalay has also served as General Counsel for Texas
Commerce Bancshares and for Lower Colorado River Authority, a regulated
electric utility. Dr. Bagalay currently also serves on the boards of
directors of Wave Systems Corporation and several privately-held companies
in the biotechnology and information technology industries. Dr. Bagalay
holds a B.A. in Politics, Philosophy and Economics and a Ph.D. in
Political Philosophy from Yale University, and a J.D. from the
University of Texas.

Ronald J. Brenner, Ph.D. has been a director of the Company
since October 1995. Dr. Brenner was President and Chief
Executive Officer of Cellcor from July 1995 until the Company's
acquisition of Cellcor in October 1995. Dr. Brenner has been a
general partner of the managing general partner of the Hillman
Medical Ventures partnerships since 1989. From 1984 to 1988, Dr.
Brenner was President and Chief Executive Officer of Cytogen.
Prior to 1984, he was Vice President, Corporate External
Research, at Johnson & Johnson, a major pharmaceutical company,
and also served as Chairman of McNeil Pharmaceutical, Ortho
Pharmaceutical Corp. and the Cilag Companies, all subsidiaries of
Johnson & Johnson. Dr. Brenner is a director of Aronex
Pharmaceuticals, Inc. He received a B.S. in Pharmacy from the
University of Cincinnati, and an M.S. and Ph.D., both in
Pharmaceutical Chemistry, from the University of Florida.

Stephen K. Carter, M.D. has been a director of the Company
since September, 1998. Dr. Carter was Senior Vice President of
Research and Development at Boehringer Ingelheim Pharmaceuticals,
Inc. from 1995 to 1997. Prior to joining Boehringer, Dr. Carter
was Senior Vice President of Worldwide Clinical Research and
Development at Bristol-Myers Squibb Company. From 1976 to 1982,
Dr. Carter served as Director of the Northern California Cancer
Institute. Dr. Carter was also appointed to President Clinton's
panel for AIDS drug development. Dr. Carter received an AB in
History from Columbia College and an MD from New York Medical
College. He completed a medical internship and residency at
Lenox Hill Hospital.

Robert F. Hendrickson became a director of the Company in
March 1995. Since 1990, Mr. Hendrickson has been a consultant to
the pharmaceutical and biotechnology industries on strategic
management and manufacturing issues with a number of leading
biotechnology companies among his clients. Prior to his
retirement in 1990, Mr. Hendrickson was Senior Vice President,
Manufacturing and Technology for Merck & Co., Inc. He is a
director of Envirogen, Inc., Unigene, Inc., The Liposome Company,
Inc., and a trustee of the Carrier Foundation, Inc. Mr.
Hendrickson received an A.B. degree from Harvard College and an
M.B.A. from the Harvard Graduate School of Business
Administration.

56
<PAGE>

Donald F. Crane joined CYTOGEN in June 1997 as Vice
President, General Counsel and Corporate Secretary. Most
recently, Mr. Crane was Senior SEC Counsel for U.S. Surgical
Corporation since 1993. Previously, Mr. Crane was Assistant
Secretary and Corporate Counsel at BellSouth Corporation in
Atlanta, Georgia. Mr. Crane holds a Bachelor's degree in
Communications from the University of Georgia and a J.D. degree
from the University of Georgia School of Law.

Jane M. Maida joined CYTOGEN in March 1997 as Chief Accounting
Officer, Corporate Controller and Assistant Secretary. Before
joining CYTOGEN, Ms. Maida served as Chief Financial and
Information Officer for Mustard Seed, Inc., a behavioral health
care company, from 1995. Prior to that position, she was Chief
Financial Officer of Morphogenesis, Inc., a biotechnology company
focused on cellular immunology. From 1986 to 1994, Ms. Maida was
Corporate Controller and Assistant Secretary for The Liposome
Company, Inc., a biotechnology company. Ms. Maida holds a B.S.
in Education from the University of Pennsylvania and a M.S. in
Accounting from the State University of New York at Albany. She
is also a Certified Public Accountant.

Graham S. May, M.D. joined CYTOGEN in January 1997 as Vice
President, Medical Affairs. In February 1998, he assumed
additional responsibilities for corporate business development.
Most recently, he was a Principal in the Global Health Care
Practice of Gemini Consulting Inc., an international management
consultant company, from 1995 to 1996. Prior to that, Dr. May
was with Pharmacia, U.S., for almost 10 years, first as Medical
Director of the Hospital Products division, and finally as
Executive Medical Director of Kabi Pharmacia, Inc. Dr. May has
been a visiting scientist at the Clinical Trials Branch, National
Heart, Lung, and Blood Institute at the National Institutes of
Health. He has also worked with AKZO and Ciba-Geigy in Europe,
as well as Hoechst-Roussel Pharmaceuticals in the U.S. Dr. May
holds undergraduate and medical degrees from Cambridge
University, England, and is a member of the Faculty of
Pharmaceutical Medicine.

John D. Rodwell, Ph.D. joined CYTOGEN in September 1981. He
served as Director, Chemical Research, then as Vice President,
Discovery Research from 1984 to 1989, and as Vice President,
Research and Development from 1989 to July 1996, at which time he
assumed his present responsibilities as Sr. Vice President and
Chief Scientific Officer. Dr. Rodwell has also served as
President and a director of AxCell since 1996. From 1980 to
1981, Dr. Rodwell was a Research Assistant Professor and, from
1976 to 1980, he was a postdoctoral fellow, both in the
Department of Microbiology at the University of Pennsylvania
School of Medicine, where he currently is an Adjunct Associate
Professor in the Department of Microbiology. He holds a B.A.
degree from the University of Massachusetts, an M.S. degree in
Organic Chemistry from Lowell Technological Institute and a Ph.D.
degree in Biochemistry from the University of California at Los
Angeles.

Michael A. Trapani joined CYTOGEN in January 1996 as Director,
Regulatory Affairs & Quality Assurance and held that position
until his promotion in March 1998 to Vice President, Regulatory
Affairs and Quality Assurance. In his current position, he is
responsible for regulatory and quality activities world-wide.
Mr. Trapani has approximately 20 years experience in the
pharmaceutical industry with the majority of his experience in
the drug approval area. Most recently, he was Senior Director,
Regulatory Affairs for Pharmacia Adria in Columbus, OH. Prior to
that position, he held the position of Executive Director,
Regulatory Affairs at Kabi Pharmacia in Piscataway, N.J. Mr.
Trapani started his career with the FDA. Mr. Trapani holds a
B.S. degree in Biology from Brooklyn College and an MBA degree
from Seton Hall Graduate School of Business.

57
<PAGE>

Director Compensation

In 1998, each director who is not also an officer of the Company was paid
an annual retainer of $7,500, plus $800 for each Board meeting attended ($400 if
participation was by telephone). Any director who also served on a Board
committee received an additional annual fee of $500 for serving on the
committee, and $1,000 for serving as chairman of any Board committee, plus $250
for each committee meeting attended, except that the members of the Nominating
Committee did not receive any compensation for serving on that committee. The
Chairman of the Board of Directors is currently paid $6,000 a month base
retainer, which contemplates four days per month devoted to Company matters
apart from Board meetings. In addition, the Chairman is paid additional amounts,
at a rate of $1,500 per day, for time spent on Company business beyond the four
days per month. During 1998, when the Chairman devoted considerable time and
efforts to the Company's restructuring, he was paid an aggregate of $172,000 for
such services.

EXECUTIVE COMPENSATION

The following table sets forth the annual and long-term
compensation awarded to, earned by or paid to (i) the Company's
Chief Executive Officer, and (ii) the other four most highly
compensated executive officers of the Company, for services
rendered to the Company during the Company's fiscal years ended
December 31, 1998, 1997 and 1996.

Summary Compensation Table

<TABLE>
<CAPTION>
Annual Compensation (1) Long-Term Compensation
----------------------- ----------------------
Awards
----------------------

Other Securities
Annual Restricted Underlying All Other
Salary Bonus Compen- Stock Options/ Compen-
Name and Principal Position Year ($) ($) sation ($) Awards ($) SARs (#) sation ($) (2)
- --------------------------- ---- ------ ----- ---------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas J. McKearn (3) 1998 223,509 0 0 0 200,000 (5) 5,016 (6)
Chairman, President and Chief 1997 298,012 0 0 0 0 (5) 10,613 (6)
Executive Officer 1996 284,181 49,150 0 0 (4) 155,000 (5) 10,650

John E. Bagalay, Jr. (7) 1998 183,321 0 0 0 110,000 838
President and Chief
Executive Officer

H. Joseph Reiser (8) 1998 89,903 150,000 0 0 2,250,000 (9) 399
President and Chief
Executive Officer

Graham May (10) 1998 226,270 10,000 0 0 203,743 7,674
Vice President, Medical Affairs 1997 206,446 31,100 0 0 45,000 6,515
and Corporate Development

Robert J. Broeze (11) 1998 169,384 0 0 0 150,000 6,387
Vice President, Operations 1997 159,794 27,300 0 0 15,000 6,241

John D. Rodwell 1998 203,000 0 0 0 150,000 8,881
Senior Vice President and 1997 202,999 22,800 0 0 0 8,631
Chief Scientific Officer 1996 187,198 35,150 0 0 82,000 8,499

Donald F. Crane, Jr. (12) 1998 188,308 12,500 0 0 181,763 3,484
Vice President, General Counsel 1997 93,462 30,375 0 0 55,000 374
and Corporate Secretary
</TABLE>
_____________________

(1) Perquisites or personal benefits did not exceed the lesser of
either $50,000 or 10% of total annual salary and bonus reported
for the named executive officers.

(2) The amounts disclosed in this column include amounts
contributed or accrued by the Company in the respective fiscal
years under the Company's Savings Plan, a defined contribution
plan which consists of a 401(k) portion and a discretionary
contribution portion. In fiscal year 1998, these amounts were

58
<PAGE>

as follows: on behalf of Dr. McKearn, $3,977; Dr. Bagalay, $0;
Dr. Reiser, $0; Dr. May, $6,706; Dr. Broeze $5,969; Dr. Rodwell,
$8,000; and Mr. Crane, $3,000. The amounts disclosed also include
insurance premiums paid by the Company with respect to group term
life insurance and with respect to fiscal year 1998, these amounts
were as follows: on behalf of Dr. McKearn, $1,039; Dr. Bagalay, $838;
Dr. Reiser, $399; Dr. May, $968; Dr. Broeze, $418; Dr. Rodwell $881;
and Mr. Crane, $484.

(3) Dr. McKearn resigned from the Company during September, 1998.

(4) On December 8, 1994, Dr. McKearn and the Company entered into
a Stock Compensation and Performance Option Agreement (the
"Compensation Agreement"), which provided for the issuance to
Dr. McKearn of 30,000 shares of Common Stock in three
installments of 10,000 shares in each of 1994, 1995 and 1996.
On December 8, 1994, Dr. McKearn received the first installment
of 10,000 shares upon payment made equal to the aggregate par
value of the shares. On January 3, 1995, Dr. McKearn received
the second installment of 10,000 shares upon payment made equal
to the aggregate par value of the shares. On January 3, 1996,
Dr. McKearn received the third installment of 10,000 shares
upon payment made equal to the aggregate par value of the
shares.

(5) Pursuant to the Compensation Agreement, the Company granted to
Dr. McKearn, effective as of January 3, 1994, an option to
purchase up to 100,000 shares of Common Stock at an exercise
price of approximately $6.188 per share (subject to adjustment
under certain circumstances). Vesting of this option is at
the discretion of the Compensation Committee of the Board of
Directors. Any shares not vested were irrevocably canceled and
ineligible for future vesting under the grant. In December
1995, the Compensation Committee considered the vesting of the
second installment of 20,000 shares and determined that 15,000
shares should vest. In March 1997, the Compensation Committee
considered the vesting of the third installment of 20,000
shares and determined that 17,000 shares should vest. See
"Employment Agreements". Dr. McKearn has resigned, there
will be no further vesting of shares under this Agreement.

(6) Effective March 15, 1995, the Company and Dr. McKearn entered into a
Split Dollar Collateral Assignment Agreement. Under this
agreement, the Company will be responsible for the payment of all
premiums due for two life insurance policies on the life of Dr.
McKearn, having a total face value of $2.3 million. The amount
disclosed in the Summary Compensation Table reflects the
portion of the total premiums ($43,710) paid by the Company
under these insurance policies in fiscal year 1997 that is
attributable to term life insurance coverage (a total of
$2,000). The current dollar value of the benefit to Dr.
McKearn of the remainder of the premiums paid by the Company
during fiscal year 1997 is $0. The benefit was calculated
based upon the difference between the payment of the premium
and its refund at the earliest possible time to the Company.
For a description of the Split Dollar Collateral Assignment
Agreement, see "Employment Agreements". Pursuant to
Dr. McKearn's resignation, both policies were surrendered and the
Company received cash value equal to premiums paid.

(7) Dr. Bagalay served as interim President and Chief Executive Officer
from January 1998, following Dr. McKearn's resignation, until
August 1998 when Dr. Reiser assumed these positions.

(8) Dr. Reiser joined the Company as President and Chief Executive
Officer effective August 24, 1998.

(9) Pursuant to Dr. Reiser's Employment Agreement, the Company
granted to Dr. Reiser an option to purchase up to 2,250,000 shares
of Common Stock at an exercise price of $1.0937, vesting 33.3% annually.
The vesting schedule begins as follows: (a) 900,000 shares begin vesting
upon commencing employment; (b) 450,000 shares begin vesting upon
completion of certain performance objectives, to the satisfaction of the
Board of Directors; (c) 450,000 shares begin vesting upon the completion
of additional performance objectives to the satisfaction of the Board of
Directors; (d) 450,000 shares begin vesting upon the achievement of the
Company's profitability.

(10)Dr.May joined the Company as Vice President, Medical Affairs,
effective January 2, 1997. He assumed additional responsibilities
for Corporate Development in January 1998.

(11)Dr. Broeze was elected Vice President of Operations in February,
1997. He resigned from the Company in January, 1999.

(12)Mr. Crane joined the Company as Vice President, General Counsel
and Corporate Secretary effective June 16, 1997.

59
<PAGE>

The following table sets forth information regarding individual
grants of stock options to the named executive officers during
fiscal year 1998:

OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term (3)
-------------------------------------------------------- ------------------------
Percent of
Number of Total
Securities Options Exercise or
Underlying Granted to Base Price
Options Employees in (per share) Expiration
Name Granted Fiscal Year (2) Date 5% ($) 10% ($)
---- ----------- --------------- ---------- ---------- ------ -------

<S> <C> <C> <C> <C> <C> <C>
Thomas J. McKearn 200,000 (1) 4.45 1.953 09/18/01 245,646 622,516

John E. Bagalay, Jr. 100,000 (1) 2.22 1.953 01/20/08 122,823 311,258
10,000 (4) .22 .8125 10/15/08 5,110 12,949

H. Joseph Reiser 2,250,000 (5) 50.03 1.097 08/18/08 1,552,269 3,933,755

Graham S. May 150,000 (1) 3.34 1.953 01/20/08 184,235 466,887
41,666 (4) .93 1.050 08/26/08 27,514 69,725
12,077 (4) .27 .828 12/28/08 6,289 15,937

Robert J. Broeze 150,000 (1) 3.34 1.9530 01/20/08 184,235 466,887

John D. Rodwell 150,000 (1) 3.34 1.953 01/20/08 184,235 466,887

Donald F. Crane, Jr. 125,000 (1) 2.78 1.953 01/20/08 153,529 389,072
41,666 (4) .93 1.05 08/26/08 27,514 69,725
15,097 (4) .34 .828 12/28/08 7,861 19,222
</TABLE>
_______________________

(1) Options vest over three years at the rate of 33.3% per year beginning on the
first anniversary of the date of grant, subject to acceleration under
certain conditions. The maximum term of each option granted is 10 years
from the date of grant.

(2) The exercise price of all stock options granted during the
last fiscal year is equal to the average of the high and low
sale prices of the Common Stock as reported on the Nasdaq National
Market on the respective dates the options were granted.

(3) These amounts represent certain assumed rates of appreciation
only. Actual gains, if any, on stock option exercises and
Common Stock holdings are dependent on the future performance
of the Common Stock and overall stock market conditions. There
is no assurance that the amounts reflected will be realized.

(4) These options were 100% immediately vested.

(5) Pursuant to Dr. Reiser's Employment Agreement, the Company granted to
Dr. Reiser an option to purchase up to 2,250,000 shares of Common Stock
at an exercise price of $1.0937, vesting 33.3% annually. The vesting
schedule begins as follows: (a) 900,000 shares begin vesting upon
commencing employment; (b) 450,000 shares begin vesting upon completion
of certain performance objectives, to the satisfaction of the Board of
Directors; (c) 450,000 shares begin vesting upon the completion of
additional performance objectives to the satisfaction of the Board of
Directors; (d) 450,000 shares begin vesting upon the achievement of the
Company's profitability.

60
<PAGE>

The following table sets forth information regarding aggregated
exercises of stock options by the named executive officers during
fiscal year 1998 and fiscal year-end values of unexercised
options:

AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End (1) (2)
----------------- --------------------

(#) ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) (1) Unexercisable Unexercisable
---- ---------------- -------------- --------------- --------------

<S> <C> <C> <C> <C>
Thomas J. McKearn 0 0 363,000/0 0/0

John E. Bagalay, Jr. 0 0 18,400/111,600 0/0

H. Joseph Reiser 0 0 0/2,250,000 0/0

Graham S. May 0 0 62,743/186,000 0/0

Robert J. Broeze 0 0 46,000/175,200 0/0

John D. Rodwell 0 0 204,300/247,200 0/0

Donald F. Crane, Jr. 0 0 67,763/169,000 0/0

</TABLE>

________________________

(1) The dollar values in this column were calculated by
determining the difference between the fair market value of the
Common Stock underlying the options at fiscal year-end or the
date of exercise, as the case may be, and the exercise price of
the options.

(2) The fair market value of a share of Common Stock
(calculated as the average of the high and low sale prices as
reported on the Nasdaq National Market)on December 31, 1998 was $0.828.

Stock Option Plan

The Company's 1995 Employee Stock Option Plan (the "Option
Plan") provides for grants of "incentive stock Options" within
the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") and nonqualified stock options. The
Option Plan provides for issuance of up to 4,502,635 shares of
the Company's Common Stock, subject to adjustment in the event of
stock splits, stock dividend, combinations or other similar
changes in the capital structure of the Company. Under the
Option Plan, incentive stock options and nonqualified stock
options may be granted to officers and employees of the Company
and its subsidiaries and affiliate, or in certain instances to
consultants. As of February 1, 1999, there were options to
purchase 2,637,059 shares of Common Stock outstanding under the
Option Plan.

The Option Plan is administered by a committee of the Board
of Directors, which has sole discretion and authority, consistent
with the provisions of the Option Plan, to determine which
eligible participants will receive options, the time at which
options will be granted and the character of the options, the

61
<PAGE>

terms of the options granted, including vesting, and the number
of shares which will be subject to options granted under the
Option Plan.

In the event of a change in control of the Company, as
defined in the Option Plan, all outstanding options granted under
the Option Plan vest, and may at the discretion of the Board of
Directors or a committee of the Board of Directors be assumed by
or converted into options or securities of a successor
corporation.

The exercise price of options may not be less than the fair
market value of the Common Stock on the date of grant of the
option. Options are nontransferable, other than pursuant to the
laws of descent and distribution.

Employee Stock Purchase Plan

The Company also maintains a Stock Purchase Plan for its
eligible employees, intended to qualify as an "employee stock
purchase plan" under section 423 of the Code. Under this plan,
employees with a minimum amount of service are eligible to
purchase common stock of the Company, by regular payroll
deduction, at a 15% discount to the market. Employees can invest
1-10% of base compensation under this plan.

Section 401(k) Plan

The Company also maintains a retirement program under a plan
intended to qualify under Section 401(k) of the Code. Under the
plan, employees with a minimum amount of service can defer
income on a pretax basis. The Company matches contributions at a
level of $.50 for each $1.00 the employee contributes, to a
maximum of 6% of base salary. Employees may, subject to limits
established by the Internal Revenue Service, defer up to 10% of
base salary under the plan. In addition, the Company may provide
on a discretionary basis additional matching contributions.

Employment Agreements

Dr. Thomas J. McKearn served as the President of Cellcor on a
full-time basis since January 1998 through its closure in
September 1998. Prior to this assignment he served as the
Company's Chairman, Chief Executive Officer and President. Dr.
McKearn had entered into agreements with the Company pursuant to
which he earned or received (i) base salary of $298,012 in fiscal
year 1997, (ii) a restricted stock grant of 10,000 shares in each
of 1994, 1995, and 1996, and certain (iii) a stock option granted
effective January 3, 1994 to purchase up to an aggregate of
100,000 shares of Common Stock at an exercise price of
approximately $6.188 per share, with vesting determined by the
Compensation Committee based upon the meeting of certain
performance criteria, and (iv) a $2.3 million split-dollar life
insurance policy (described above) effective in 1995 through his
last employment date. The agreement provided that Dr. McKearn was
entitled to one year's severance pay upon dismissal. Dr. McKearn
left the employment of the Company in September 1998 and will receive
twelve months of salary under the terms of his severance agreement.

Under the terms of severance agreements, Drs. Rodwell and May and
Mr. Crane will also be entitled to receive twelve months of salary if their
employment with the Company is terminated without cause.

<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information as of
February 15, 1999, with respect to the beneficial ownership of
the Company's Common Stock by each person known by the Company to
be the beneficial owner of more than 5% of its outstanding Common
Stock, by each director, by each of the Company's five most
highly compensated executive officers for 1997, and by all
executive officers and directors as a group. Except as indicated
in the footnotes to the table, the persons named in the table
have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. The number of shares
set forth below includes those shares of Common Stock issuable
pursuant to options which are exercisable or shares which are
convertible within 60 days of February 15, 1999.

Number of Shares
of Common Stock Percent
Name and Address of Beneficial Owner (1) Beneficially Owned of Class
- ---------------------------------------- ------------------ --------
Henry L. Hillman,
Elsie Hilliard Hillman and
C.G. Grefenstette, Trustees
2000 Grant Building
Pittsburgh, PA 15219 (2)........................ 8,218,191 12.45%

State of Wisconsin Investment Board
121 E. Wilson Street
2nd Floor
Madison, WI 53702................................ 5,462,834 8.28%

Ronald J. Brenner, Ph.D.
One Tower Bridge
Suite 1350
100 Front Street
West Conshohocken, PA 19428 (4)(5).............. 3,810,509 5.77%

Hillman Medical Ventures Partnerships
824 Market Street, Suite 900
Wilmington, DE 19801 (3)....................... 3,713,909 5.63%

Hal S. Broderson
One Tower Bridge
Suite 1350
100 Front Street
West Conshohocken, PA 19428 (4)................ 3,715,009 5.63%

Charles G. Hadley
One Tower Bridge
Suite 1350
100 Front Street
West Conshohocken, PA 19428 (4)................ 3,714,159 5.63%

63
<PAGE>

Directors and Executive Officers
- --------------------------------

Thomas J. McKearn (5)....................... 710,463 1.08%
John D. Rodwell (5)(6)...................... 325,300 *
John E. Bagalay, Jr. (5).................... 57,734 *
Stephen K. Carter (7)....................... 0 *
James A. Grigsby............................ 62,400 *
Robert F. Hendrickson (5)................... 25,200 *
Graham S. May (5)........................... 121,743 *
Donald F. Crane, Jr. (5).................... 109,429 *
Robert J. Broeze (5)........................ 104,309 *
H. Joseph Reiser (7)........................ 305,000 *

All executive officers
and directors as a group (14 persons) (5).. 5,783,451 8.89%
_________________

*Indicates amount is less than 1%.

(1) All information with respect to beneficial ownership of
shares is based upon filings made by the respective beneficial
owners with the Securities and Exchange Commission or information
provided by such beneficial owners to the Company. Percent of
class for each person and all executive officers and directors as
a group is based on shares of Common Stock outstanding on
January 7, 1999 and includes shares subject to options held by
the individual or the group, as applicable which are exercisable
or as become exercisable within 60 days following such date.

(2) Includes 116,325 shares of Common Stock held by the
Henry L. Hillman Trust U/A dated November 18, 1985 (the "HLH
Trust"), 20,625 shares of Common Stock held by Hillman 1984
Limited Partnership ("Hillman 1984"), 4,125 shares of Common Stock
held by HCC Investments, Inc. ("HCC"), 4,363,207 shares of Common
Stock held by Juliet Challenger, Inc. ("JCI"), 367,445 shares of
Common Stock held by Hillman Medical Ventures 1989 L.P. ("HMV
1989"), 176,470 shares of Common Stock held by Hillman Medical
Ventures 1990 L.P. ("HMV 1990"), 486,622 shares of Common Stock
held by Hillman Medical Ventures 1991 L.P. ("HMV 1991"), 110,522
shares of Common Stock held by Hillman Medical Ventures 1992 L.P.
("HMV 1992"), 1,094,700 shares of Common Stock held by Hillman
Medical Ventures 1994 L.P. ("HMV 1994"), and 1,478,150 shares of
Common Stock held by Hillman Medical Ventures 1995 L.P. ("HMV
1995"). JCI, HCC, and Wilmington Securities, Inc. (which (i) owns
Hillman Properties West, Inc., the sole general partner of Hillman
1984, and (ii) is the sole general partner of Hillman/Dover L.P.,
one of the general partners of HMV 1989, HMV 1990, HMV 1991, HMV
1992, HMV 1994 and HMV 1995 (collectively, "Hillman Medical
Ventures")) are private investment companies owned by Wilmington
Investments, Inc., which, in turn, is owned by The Hillman
Company. The Hillman Company is a private firm engaged in
diversified investments and operations, which is controlled by the
HLH Trust. The trustees of the HLH Trust are Henry L. Hillman,
Elsie Hilliard Hillman and C.G. Grefenstette (the "HLH Trustees").
Consequently, the HLH Trustees share voting and investment power
with respect to the shares held of record by the HLH Trust, JCI,
HCC, Hillman 1984, and Hillman Medical Ventures and may be deemed
to be the beneficial owners of such shares. Does not include an
aggregate of 155,100 shares of Common Stock held by four
irrevocable trusts for the benefit of members of the Hillman
family (collectively, the "Family Trusts"), as to which shares the
HLH Trustees (other than Mr. Grefenstette) disclaim beneficial

64
<PAGE>

interest. C.G. Grefenstette and Thomas G. Bigley are trustees of
the Family Trusts and, as such, share voting and investment power
over the shares held by the Family Trusts.

(3) Includes 367,445 shares of Common Stock held by HMV
1989, 176,470 shares of Common Stock held by HMV 1990, 486,622
shares of Common Stock held by HMV 1991, 110,522 shares of Common
Stock held by HMV 1992, 1,094,700 shares of Common Stock held by
HMV 1994 and 1,478,150 shares of Common Stock held by HMV 1995.

(4) Includes 3,713,909 shares held by Hillman Medical
Ventures. Each of Drs. Broderson and Brenner and Mr. Hadley is a
general partner of Cashon Biomedical Associates, L.P., which is a
general partner of the Hillman Medical Ventures Partnerships and,
therefore, may be deemed to be the beneficial owner of such
shares. Drs. Broderson and Brenner and Mr. Hadley share voting and
investment power with respect to the shares held by Hillman
Medical Ventures and disclaim beneficial ownership of the
1,992,715 shares beneficially owned by the HLH Trustees, Hillman
1984, HCC, JCI and the Family Trusts referred to in note 2 above.

(5) Includes shares of Common Stock which the named persons
have the right to acquire upon the exercise of stock options,
within sixty days of February 15, 1999, as follows: Dr. Reiser: 300,000
Dr. McKearn: 363,000; Dr. Rodwell: 260,300; Dr. May: 121,743;
Dr. Brenner: 8,400; Dr. Bagalay: 51,734; Mr. Grigsby: 4,400;
Mr. Hendrickson: 11,200; Mr. Crane: 109,429; and Dr. Broeze: 99,000.
The group number includes the shares of Common Stock which the
named persons and other executive officer have the right to
acquire upon the exercise of stock options, within sixty days
of February 15, 1999. Dr. McKearn is no longer employed by the Company.

(6) Includes 5,000 shares held by Dr. Rodwell's wife as
custodian for two children under the Pennsylvania Uniform Gift to
Minors Act. Dr. Rodwell disclaims beneficial ownership of the
5,000 shares held by his wife.

(7) Dr. Reiser was elected President and Chief Executive
Officer and as a director on August 24, 1998; Dr. Carter was
elected as a director on September 14, 1998.

<PAGE>

DESCRIPTION OF CAPITAL STOCK

Authorized Stock; Issued and Outstanding Shares

As of the date of this Prospectus, the Company's authorized
capital stock consists of 89,600,000 shares of Common Stock, par
value $0.01 per share, and 5,400,000 shares of preferred stock,
$0.01 per share. 200,000 shares of Series C Junior participating
Preferred Stock have been authorized for issuance pursuant to the
Company's Shareholder Rights Agreement. The description below is
a summary of all material provisions of the Company's common
stock and preferred stock.

Common Stock

The holders of Common Stock are entitled to one vote per
share on all matters voted on by the stockholders, including
elections of directors. Except as otherwise required by law or
as provided in any resolutions adopted by the Board with respect
to the preferred stock of the Company, the holders of shares of
Common Stock will exclusively possess all voting power. Subject
to the preferential rights, if any, of holders of any then
outstanding preferred stock, the holders of Common Stock are
entitled to receive dividends when, as and if declared by the
Board of Directors of the Company out of funds legally available
therefor. The terms of the Common Stock do not grant to the
holders thereof any preemptive, subscription, redemption,
conversion or sinking fund rights. Subject to the preferential
rights of holders of any then outstanding preferred stock, the
holders of Common Stock are entitled to share ratably in the
assets of the Company legally available for distribution to
stockholders in the event of the liquidation, dissolution or
winding up of the Company.

As of December 31, 1998, 61,949,670 shares of Common Stock
were issued and outstanding, and 1,560,000 shares of Common Stock
were reserved for issuance upon the exercise of certain
outstanding warrants and approximately 6,694,623 shares were
reserved for issuance pursuant to stock option plans and Employee
Stock Purchase Plans. The Company has issued to Dow, two
warrants to purchase an aggregate of 260,000 shares of Common
Stock at $3.00 per share in connection with the Company's
acquisition of and amendments to an exclusive license from Dow.
Subsequent to September 30, 1998, the Company has issued to
Berlex warrants for the purchase of one million shares of Common
Stock at an exercise price of $1.0016 per share; to Kingsbridge,
200,000 warrants at $1.016 per share; and to the May Davis Group,
a placement agent for the Equity Line Agreement, 100,000 warrants at
$2.00 per share.

The Certificate of Incorporation and Bylaws of the Company
contain certain provisions which may have the effect of delaying,
deferring, or preventing a change of control of the Company. See
"Risk Factors - Anti-takeover Considerations". In addition, the
Board generally has the authority, without further action by
stockholders, to fix the relative powers, preferences, and rights
of the unissued shares of preferred stock of the Company.
Provisions which could discourage an unsolicited tender offer or
takeover proposal, such as extraordinary voting, dividend,
redemption, or conversion rights, could be included in such
preferred stock. For a description of certain rights which may
also affect a change-in-control transaction, see "Description of
Capital Stock - Preferred Stock."

Preferred Stock

Pursuant to the Certificate of Incorporation, the Company
has the authority to issue up to 5,400,000 shares of preferred
stock, $0.01 par value per share, in one or more series as
determined by the Board of Directors of the Company. The Board
of Directors of the Company may, without further action by the

66
<PAGE>

stockholders of the Company, issue one or more series of
preferred stock and fix the rights and preferences of such
shares, including the dividend rights, dividend rates, conversion
rights, exchange rights, voting rights, terms of redemption,
redemption price or prices, liquidation preferences and the
number of shares constituting any series or the designation of
such series. Shares of any series of preferred stock of the
Company may be represented by depositary shares evidenced by
depositary receipts, each representing a fractional interest in a
share of preferred stock of such series and deposited with a
depository. The use of this mechanism could increase the number
of interests in preferred stock issued by the Company. The
rights of the holders of Common Stock will be subject to, and may
be adversely affected by, the rights of holders of preferred
stock issued by the Company in the future. In addition, the
issuance of preferred stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, control of the Company.

One Series C Junior Participating preferred Stock purchase
right which has a redemption value of $.01 was distributed as a
dividend for each of the Company's common shares held of record
as of the close of business on June 30, 1998, or issued
thereafter (with certain exceptions). The rights will be
exercisable if a person or a group acquires beneficial ownership
of 20% or more of the Company's Common Stock and can be made
exercisable by action of the Company's Board of Directors if a
person or a group commences a tender offer which would result in
such person or group beneficially owning 20% or more of the
Company's Common Stock. Each right will entitle the holder to
buy one one-thousandth of a share of Series C Junior
Participation Preferred Stock for $20. The rights expire on June
19, 2008.

Transfer Agent and Registrar

Chase Mellon Shareholder Services, L.L.C. is the transfer
agent and registrar for the Common Stock.

Section 203 of the Delaware General Corporation Law

The Company is subject to the provisions of Section 203 of
the Delaware General Corporation Law ("Section 203"). Under
Section 203, certain "business combinations" between a Delaware
corporation whose stock generally is publicly traded or held of
record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the
date that such a stockholder became an interested stockholder,
unless (i) the corporation has elected in its original
certificate of incorporation not to be governed by Section 203 ;
(ii) the business combination was approved by the Board of
Directors of the corporation before the other party to the
business combination became an interested stockholder, (iii) upon
consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement
of the transaction (excluding voting stock owned by directors who
are also officers or held in employee benefit plans in which the
employees do not have a confidential right to tender or vote
stock held by the plan); or (iv) the business combination was
approved by the Board of Directors of the corporation and
ratified by two-thirds of the voting stock which the interested
stockholder did not own. The three-year prohibition also does
not apply to certain business combinations proposed by an
interested stockholder following the announcement or notification
of certain extraordinary transactions involving the corporation
and a person who had not been an interested stockholder during
the previous three years or who became an interested stockholder
with the approval of the majority of the corporation's directors.
The term "business combination" is defined generally to include
mergers or consolidations between a Delaware corporation and an
interested stockholder, transactions with an interested
stockholder involving the assets or stock of the corporation or

67
<PAGE>

its majority-owned subsidiaries and transactions which increase
an interested stockholder's percentage ownership of stock. The
term "interested stockholder" is defined generally as a
stockholder who, together with affiliates and associates, owns
(or, within three years prior, did own) 15% or more of a Delaware
corporation's voting stock. Section 203 could prohibit or delay
a merger, takeover or other change in control of the Company and
therefore could discourage attempts to acquire the Company.

68
<PAGE>

Selling Stockholder

The following table sets forth certain information regarding
beneficial ownership of our common stock by the Selling
Stockholder as of November 1, 1998.

Number of Shares of Common Number of Shares of Common
Name and Address of Stock Beneficially Owned Number of Shares of Common Stock Beneficially Owned
Stockholder Prior to the Offering Stock Offered Hereby Following the Offering (4)
----------- --------------------- -------------------- --------------------------
Number Per Cent Number Per Cent
------ -------- ------ --------
<S> <C> <C> <C> <C> <C>
Kingsbridge
Capital Limited
Dawson Building
Main Street
Road Town
Tortola,
British Virgin Islands(1).. 235,000 (3) (2) 6,200,000 (3) 35,000 (2)

</TABLE>
(1) The natural person controlling Kingsbridge Capital Limited is
Valentine O'Donoghue.
(2) Less than 1%.
(3) Includes 200,000 shares of common stock issuable pursuant to
the Kingsbridge Warrant. If all of the shares offered hereby
were purchased and held by Kingsbridge, it would hold 9.62%
of our outstanding common stock.
(4) Assumes that all shares acquired pursuant to the Equity Line
Agreement and the Warrant are sold pursuant to this
prospectus. Kingsbridge has not had any material relationship
with the Company or any of its affiliates other than as a result
of the ownership of common stock or as a result of the negotiation
and the execution of the Equity Line Agreement. The shares offered
hereby are to be acquired by Kingsbridge pursuant to the Equity Line
Agreement or upon exercise of the Warrant.

69
<PAGE>

PLAN OF DISTRIBUTION

We have been advised by the Selling Stockholder that they
may sell the common stock from time to time in transactions on
the Nasdaq Stock Market, in negotiated transactions, or
otherwise, or by a combination of these methods, at fixed prices
which may be changed, at market prices at the time of sale, at
prices related to market prices or at negotiated prices. The
Selling Stockholder may effect these transactions by selling the
common stock to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions
from the Selling Stockholder or the purchasers of the common
stock for whom the broker-dealer may act as an agent or to whom
they may sell the common stock as a principal, or both. The
compensation to a particular broker-dealer may be in excess of
customary commissions. The Selling Stockholder is an
"underwriter" within the meaning of the Securities Act in
connection with the sale of the common stock offered hereby.
Broker-dealers who act in connection with the sale of the common
stock may also be deemed to be underwriters. Profits on any
resale of the common stock as a principal by such broker-dealers
and any commissions received by such broker-dealers may be deemed
to be underwriting discounts and commissions under the Securities
Act. Any broker-dealer participating in such transactions as
agent may receive commissions from the Selling Stockholder (and,
if they act as agent for the purchaser of such common stock, from
such purchaser). Broker-dealers may agree with the Selling
Stockholder to sell a specified number of common stock at a
stipulated price per share, and, to the extent such a broker-
dealer is unable to do so acting as agent for the Selling
Stockholder, to purchase as principal any unsold common stock at
the price required to fulfill the broker-dealer commitment to the
Selling Stockholder. Broker-dealers who acquire common stock as
principal may thereafter resell such common stock from time to
time in transactions (which may involve crosses and block
transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions
or otherwise at market prices prevailing at the time of sale or
at negotiated prices, and in connection with such resales may pay
to or receive from the purchasers of such common stock
commissions computed as described above.

To the extent required under the Securities Act, a
supplemental prospectus will be filed, disclosing (a) the name of
any such broker-dealers; (b) the number of shares of common stock
involved; (c) the price at which such common stock is to be sold;
(d) the commissions paid or discounts or concessions allowed to
such broker-dealers, where applicable; (e) that such broker-
dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this
prospectus, as supplemented; and (f) other facts material to the
transaction.

Under applicable rules and regulations under the Exchange
Act, any person engaged in a distribution of the common stock may
not simultaneously engage in market making activities with
respect to such securities for a period beginning when such
person becomes a distribution participant and ending upon such
person's completion of participation in a distribution, including
stabilization activities in the common stock to effect covering
transactions, to impose penalty bids or to effect passive market
making bids. In addition and without limiting the foregoing, in
connection with transactions in the common stock, the Company and
the Selling Stockholder will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Rule 10b-5 and, insofar as the
Company and the Selling Stockholder are distribution
participants, Regulation M and Rules 100, 101, 102, 103, 104 and
105 thereof. All of the foregoing may affect the marketability of
the common stock.

Kingsbridge has agreed that it will not engage in short
sales of the Company's common stock except for three days after
it receives notice of the company's intent to put common stock.

<PAGE>

Any short sales by Kingsbridge may be covered only with shares of
common stock issued to Kingsbridge pursuant to the Equity Line
Agreement.

Kingsbridge will pay all commissions and certain other
expenses associated with the sale of the common stock. The common
stock offered hereby is being registered pursuant to contractual
obligations of the Company, and the Company has agreed to pay the
costs of registering the shares hereunder, including legal fees
up to a maximum of $5,000, commissions, transfer taxes and
certain other expenses for resale of the common stock. The
Company has also agreed to indemnify the Selling Stockholder
with respect to the common stock offered hereby against certain
liabilities, including, without limitation, certain liabilities
under the Securities Act, or, if such indemnity is unavailable,
to contribute toward amounts required to be paid in respect of
such liabilities.

The May Davis Group, Inc., acted as placement agent in
connection with the Equity Line Agreement and this offering. In
exchange for such services, the May Davis Group will receive from
the Company a cash fee of 6% of each put amount, before deducting
discounts and commissions, and a warrant to purchase 100,000 shares
of common stock of the Company.

We have also agreed to reimburse Kingsbridge for certain
costs and expenses incurred in connection with this offering.
These may include the fees, expenses and disbursements of counsel
for Kingsbridge incurred in the preparation of the Equity Line
Agreement and associated documentation and the registration
statement of which this prospectus forms a part, up to a maximum
of $30,000. In addition, we have agreed to reimburse
Kingsbridge for expenses incurred in obtaining insurance against
liability under the Securities Act of 1933 and Securities
Exchange Act of 1934, as amended, in an amount initially equal to
3% of each put amount.

The price at which the common stock will be issued by
the Company to Kingsbridge shall be 85% of the market price on
the date the Company issues shares, as defined in the Equity Line
Agreement. Assuming an offering price of $1.172 per share (based
on the average of the high and low bid prices of the common stock
as reported by the NSM on November 17, 1998), underwriting
compensation is as follows:

- - Discount to Kingsbridge, $1,054,800;
- - Kingsbridge warrant to purchase 200,000 shares of common
stock at $1.016 per share; and
- - Reimbursement for securities liability insurance equal to
3% of each put amount.

71
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby
will be passed upon for the Company by Donald F. Crane, Jr. Esq.,
Vice President and General Counsel to Cytogen Corporation.

EXPERTS

The audited consolidated financial statements of the Company
as of December 31, 1998 and 1997, and for each of the three
years in the period ended December 31, 1998 included in this
Prospectus and registration statement have been audited by Arthur
Andersen LLP, independent public accounts, as indicated in their
report with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said
reports.

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Page

Report of Independent Public Accountants . . . . . . . . . . . . . . . F-2

Consolidated Balance Sheets as of December 31, 1998 and 1997 . . . . . F-3

Consolidated Statements of Operations--Years Ended December 31, 1998, 1997
and 1996. . . . . . . . . . . . . . . . . . . . . . . . . . F-4

Consolidated Statements of Stockholders' Equity--Years Ended
December 31, 1998, 1997 and 1996. . . . . . . . . . . . . . . F-5

Consolidated Statements of Cash Flows--Years Ended December 31, 1998, 1997
and 1996. . . . . . . . . . . . . . . . . . . . . . . . . . F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . F-7

F-1

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CYTOGEN CORPORATION:

We have audited the accompanying consolidated balance sheets of CYTOGEN
Corporation (a Delaware Corporation) and Subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CYTOGEN Corporation and
Subsidiaries as of December 31, 1998 and 1997 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, PA
January 29, 1999

F-2

<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

DECEMBER 31, 1998
-----------------------
PRO FORMA DECEMBER 31,
ACTUAL (NOTE 2) 1997
---------- ----------- -------------
ASSETS: (Unaudited)
Current Assets:
<S> <C> <C> <C>
Cash and cash equivalents .............................................. $ 3,015 $ 10,522 $ 7,401
Receivable on common stock sold ........................................ 2,500 -- --
Accounts receivable, net ............................................... 1,362 1,362 4,064
Inventories ............................................................ 250 250 443
Other current assets ................................................... 330 330 258
---------- ---------- ----------

Total current assets ............................................... 7,457 12,464 12,166

Property and Equipment, net ................................................. 2,625 2,338 3,912
Investment in Targon Subsidiary ............................................. -- -- 10,343
Other Assets ................................................................ 818 818 1,134
---------- ---------- ----------

$ 10,900 $ 15,620 $ 27,555
========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term liabilities ............................... $ 848 $ 121 $ 1,739
Accounts payable and accrued liabilities ............................... 7,386 7,536 5,662
---------- ---------- ----------

Total current liabilities .......................................... 8,234 7,657 7,401
---------- ---------- ----------

Long-Term Liabilities ....................................................... 2,223 2,223 10,171
---------- ---------- ----------

Commitments and Contingencies (Notes 6 and 16)

Stockholders' Equity:
Preferred stock, $.01 par value, 5,400,000 shares authorized-
Series A Convertible and Exchangeable Preferred Stock, $.01 par
value, 1,000 shares authorized, zero and 1,000 shares issued and
outstanding in 1998 and 1997, respectively ....................... -- -- --
Series B Convertible Preferred Stock, $.01 par value, 750 shares
authorized, zero and 750 shares issued and outstanding in 1998
and 1997, respectively ........................................... -- -- --
Series C Junior Participating Preferred Stock, $.01 par value,
200,000 shares authorized, none issued and outstanding ........... -- -- --
Common stock, $.01 par value, 89,600,000 shares authorized,
61,950,000, 64,616,000 and 51,170,000 shares issued and
outstanding in 1998, 1998 pro forma and 1997, respectively ....... 619 646 512
Additional paid-in capital ............................................. 301,836 303,809 298,212
Accumulated deficit .................................................... (302,012) (298,715) (288,741)
---------- ---------- ----------
Total stockholders' equity ......................................... 443 5,740 9,983
---------- ---------- ----------
$ 10,900 $ 15,620 $ 27,555
========== ========== ==========

The accompanying notes are an integral part of these statements.

</TABLE>

F-3

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31,
---------------------------------

1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Product related:
ProstaScint .............................................. $ 6,378 $ 4,057 $ 55
Quadramet ................................................ 1,675 -- --
Others ................................................... 923 1,195 1,452
--------- --------- ---------
Total product sales ............................. 8,976 5,252 1,507

Quadramet royalties ...................................... 1,664 3,282 --
--------- --------- ---------
Total product related ........................... 10,640 8,534 1,507

License and contract ............................................ 9,239 5,886 4,223
--------- --------- ---------

Total revenues ........................................... 19,879 14,420 5,730
--------- --------- ---------
OPERATING EXPENSES:
Cost of product and contract manufacturing revenues .......... 12,284 5,939 --
Research and development ..................................... 9,967 17,913 20,539
Equity loss in Targon subsidiary ............................. 1,020 9,232 288
Selling and marketing ........................................ 5,103 5,492 4,143
General and administrative ................................... 7,420 6,871 5,494
--------- --------- ---------

Total operating expenses ................................. 35,794 45,447 30,464
--------- --------- ---------

Operating loss ........................................... (15,915) (31,027) (24,734)

Gain on sale of Targon subsidiary ................................. 2,833 -- --
Interest income ................................................... 582 606 1,419
Interest expense .................................................. (652) (291) (451)
--------- --------- ---------

Net loss .......................................................... (13,152) (30,712) (23,766)
Dividends, including deemed dividends on preferred stock .......... (119) (1,352) (4,571)
--------- --------- ---------

Net loss to common stockholders ................................... $(13,271) $(32,064) $(28,337)
========= ========= =========

Basic and diluted net loss per common share ....................... $ (0.24) $ (0.63) $ (0.59)
========= ========= =========

Basic and diluted weighted average common shares outstanding ...... 56,419 51,134 48,401
========= ========= =========

The accompanying notes are an integral part of these statements.

</TABLE>

F-4

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

UNREALIZED
GAIN (LOSS)
ADDITIONAL ON ACCU- TOTAL
PREFERRED COMMON PAID-IN SHORT-TERM MULATED STOCKHOLDERS'
STOCK STOCK CAPITAL INVESTMENTS DEFICIT EQUITY
--------- -------- ---------- ----------- ---------- -------------

<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 $ -- $460 $253,122 $ 34 $(228,340) $ 25,276

Issued 1,000 shares of Series A
preferred stock ................................... -- -- 4,854 -- -- 4,854
Series A preferred stock conversion
discount deemed dividends ......................... -- -- 4,571 -- (4,571) --
Issued 5,029,402 shares of common
stock ............................................. -- 51 26,525 -- -- 26,576
Granted 10,000 shares of common
stock ............................................. -- -- 26 -- -- 26
Unrealized loss on investments ....................... -- -- -- (39) -- (39)
Net loss ............................................. -- -- -- -- (23,766) (23,766)
------- ---- -------- ------ ---------- ---------

BALANCE, DECEMBER 31, 1996 -- 511 289,098 (5) (256,677) 32,927

Issued 750 shares of Series B
preferred stock ................................... -- -- 7,45 -- -- 7,455
Issued 100,282 shares of common
stock ............................................. -- 1 335 -- -- 336
Series B preferred stock conversion
discount deemed dividends ......................... -- -- 1,324 -- (1,324) --
Accrued dividends on Series B
preferred stock ................................... -- -- -- -- (28) (28)
Unrealized gain on investments ....................... -- -- -- 5 -- 5
Net loss ............................................. -- -- -- -- (30,712) (30,712)
------- ---- -------- ------ ---------- ---------

BALANCE, DECEMBER 31, 1997 -- 512 298,212 -- (288,741) 9,983

Issued 3,403,011 shares of
common stock ...................................... -- 34 2,583 -- -- 2,617
Dividends on Series B preferred stock ................ -- -- -- -- (119) (119)
Issued 7,377,054 shares of common stock
upon conversion of Series B preferred stock
and accumulated dividends ........................ -- 73 55 -- -- 128
Issued warrant to purchase 1,000,000
shares of common stock ............................ -- -- 855 -- -- 855
Modification of existing warrants to purchase
260,000 shares of common stock ................... -- -- 131 -- -- 131
Net loss ............................................. -- -- -- -- (13,152) (13,152)
------- ---- -------- ------ ---------- ---------

BALANCE, DECEMBER 31, 1998 ........................... $ -- $619 $301,836 $ -- $(302,012) $ 443
======= ==== ======== ====== ========== =========

The accompanying notes are an integral part of these statements.
</TABLE>

F-5

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ALL AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................... $(13,152) $(30,712) $(23,766)
--------- --------- ---------
Adjustments to reconcile net loss to cash used for operating activities:
Depreciation and amortization ........................................... 1,196 1,513 1,532
Write down of property and equipment .................................... 657 384 --
Imputed interest ........................................................ 81 261 451
Warrant, stock and stock option grants .................................. 163 45 70
Equity loss in Targon subsidiary ........................................ 1,020 9,232 288
Gain on sale of Targon subsidiary ....................................... (2,833) -- --
Changes in assets and liabilities:
Accounts receivable, net ............................................ 2,702 (3,625) (155)
Inventories ......................................................... 193 (185) 98
Other assets ........................................................ 4 (74) 205
Accounts payable and accrued liabilities ............................ 1,944 727 (1,517)
--------- --------- ---------

Total adjustments .......................................... 5,127 8,278 972
--------- --------- ---------

Net cash used for operating activities .............................. (8,025) (22,434) (22,794)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in short-term investments ................................ -- 4,474 (3,307)
Decrease in restricted cash .................................................. -- -- 383
Purchases of property and equipment .......................................... (100) (621) (874)
Investment in Targon subsidiary .............................................. -- (10,000) (9,850)
Proceeds from sale of Targon subsidiary ...................................... 2,000 -- --
--------- --------- ---------

Net cash provided by (used in) investing activities .......................... 1,900 (6,147) (13,648)
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable ...................................... 2,750 10,000 --
Payments of long-term debt ................................................... (1,898) (2,030) (2,243)
Proceeds from issuance of common stock ....................................... 51 261 26,576
Proceeds from issuance of series A preferred stock ........................... -- -- 4,854
Proceeds from issuance of series B preferred stock ........................... -- 7,455 --
Dividends on series B preferred stock ........................................ (19) -- --
Proceeds from issuance of warrants ........................................... 855 -- --
--------- --------- ---------
Net cash provided by financing activities ........................... 1,739 15,686 29,187
--------- --------- ---------

Net decrease in cash and cash equivalents .................................... (4,386) (12,895) (7,255)
Cash and cash equivalents, beginning of year ................................. 7,401 20,296 27,551
--------- --------- ---------
Cash and cash equivalents, end of year ....................................... $ 3,015 $ 7,401 $ 20,296
========= ========= =========

The accompanying notes are an integral part of these statements
</TABLE>

F-6

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BUSINESS

CYTOGEN Corporation ("CYTOGEN" or the "Company") is a biopharmaceutical
company engaged in the development, commercialization and marketing of products
to improve diagnosis and treatment of cancer and other disease. In March 1997,
CYTOGEN received clearance from the U.S. Food and Drug Administration ("FDA") to
market Quadramet(R), CYTOGEN's product for the relief of pain due to cancers
that have spread to the skeleton and that can be visualized on a bone scan. In
October 1996, CYTOGEN received marketing approval from FDA for the
ProstaScint(R) imaging agent, CYTOGEN's prostate cancer diagnostic imaging
product. In December 1992, FDA approved OncoScint CR/OV(R) imaging agent,
CYTOGEN's colorectal and ovarian cancer specific diagnostic imaging product, for
single administration per patient. In November 1995, FDA approved an expanded
indication allowing for repeat administration of OncoScint CR/OV. All three
products are currently available in the marketplace. Operations of the Company
are subject to certain risks and uncertainties including, but not limited to,
access to capital, product market acceptance, product efficacy and clinical
trials, technological uncertainty, uncertainties of future profitability,
dependence on collaborative relationships and key personnel.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of CYTOGEN and
its wholly-owned subsidiaries, AxCell Biosciences Corporation ("AxCell") and
Cellcor Inc. ("Cellcor"). The financial statements also include the investment
results of Targon Corporation ("Targon"), which were accounted for on the equity
method (see Investment in Targon Subsidiary). Intercompany balances and
transactions have been eliminated in consolidation. In the third quarter of
1998, the Company sold Targon and closed Cellcor.

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.

STATEMENT OF CASH FLOW

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. Cash paid for interest expense was $500,000, $524,000 and $307,000 in
1998, 1997 and 1996, respectively.

F-7

<PAGE>

RECEIVABLES

At December 31, 1998, the Company had a $2.5 million receivable due from
The State of Wisconsin Investment Board relating to the sale of 3,333,334 shares
of CYTOGEN common stock at $0.75 per share. The Company received the proceeds
from the stock sale in January 1999 (see Note 2).

At December 31, 1998 and 1997, accounts receivable were net of an allowance
for doubtful accounts of $73,000 and $576,000, respectively. The Company charged
to expense $23,000 and $30,000 as a provision for doubtful accounts in 1998 and
1997, respectively. At December 31, 1998, approximately $91,000 of the Company's
accounts receivable balance was due from The DuPont Pharmaceutical Company
formerly the Radiopharmaceutical Division of The DuPont Merck Pharmaceutical
Company ("DuPont") compared to $3 million at December 31, 1997.

INVENTORY

The Company's inventory is primarily related to ProstaScint and OncoScint
CR/OV. Inventory is stated at the lower of cost or market using the first-in,
first-out method and consisted of the following:

December 31,
------------------------
1998 1997
--------- ---------
Raw materials . . . . . . . . . . . . . $ 57,000 $ 145,000
Work-in-process . . . . . . . . . . . . 143,000 158,000
Finished goods . . . . . . . . . . . . 50,000 140,000
--------- ---------
$ 250,000 $ 443,000
========= =========

PROPERTY AND EQUIPMENT

Equipment and furniture are stated at cost, net of depreciation and a
$102,000 reserve for idle equipment. Leasehold improvements are amortized on a
straight-line basis over the lease period or the estimated useful life,
whichever is shorter. Equipment and furniture are depreciated on a straight-line
basis over five years. Expenditures for repairs and maintenance are charged to
expense as incurred. For 1998, 1997 and 1996, repairs and maintenance expenses
were $242,000, $350,000 and $394,000, respectively. Property and equipment
consisted of the following:

<TABLE>
<CAPTION>
December 31,
-------------------------------
1998 1997
------------- --------------
<S> <C> <C>
Leashold improvements............................... $ 9,438,000 $ 10,126,000
Equipment and furniture............................. 7,350,000 7,696,000
------------- --------------
16,788,000 17,822,000

Less - accumulated depreciation and amortization..... (14,163,000) (13,910,000)
------------- --------------
$ 2,625,000 $ 3,912,000
============= ==============
</TABLE>

F-8

<PAGE>

INVESTMENT IN TARGON SUBSIDIARY AND RECLASSIFICATION

As a result of the 1998 reduction of CYTOGEN's ownership interest in Targon,
the Company began accounting for its investment in Targon using the equity
method. In addition, the Company retroactively adopted Emerging Issues Task
Force ("EITF") 96-16. Under the equity method, the Company recognized 100% of
Targon's losses through March 31, 1998 in its consolidated statement of
operations as "Equity Loss in Targon Subsidiary," with a corresponding reduction
in the carrying amount of its investment. The Company did not recognize Targon's
losses after March 31, 1998 based on the completion of the sale of Targon (see
Note 3).

As a result of the adoption of EITF 96-16 and the equity method,
approximately $1.9 million and $376,000 of research and development expenses
recorded in 1997 and 1996, respectively, and $7.5 million of acquisition of
product rights expense recorded in 1997, were reclassified to "Equity Loss in
Targon Subsidiary". The primary effect on the December 31, 1997 balance sheet
was the reclassification of Restricted Cash to "Investment in Targon
Subsidiary". All other changes were immaterial.

In August 1998 the Company sold its remaining ownership interest in Targon
to Elan Corporation, plc ("Elan") for $2.0 million (see Note 3). As a result,
the Company recorded a gain of approximately $2.8 million in its 1998
consolidated statement of operations.

OTHER ASSETS

Other assets consist primarily of undeveloped land with a net book value of
$660,000, which is valued at the lower of cost or market. During 1998 and 1997,
the Company charged to expense $240,000 and $384,000, respectively to write down
the land to estimated market value.

REVENUE RECOGNITION

Product related revenues include product sales by CYTOGEN to its customers
and Quadramet royalties. Product sales are recognized upon shipment of the
finished goods. From the time of Quadramet's launch in the second quarter of
1997 to June 1998, CYTOGEN recorded Quadramet royalty revenues from DuPont based
on minimum contractual payments, which were in excess of actual Quadramet sales.
Pursuant to an agreement between CYTOGEN and DuPont, the minimum royalty
arrangement was discontinued and CYTOGEN reclaimed the marketing rights to
Quadramet. Subsequent to June 1998, CYTOGEN recorded product revenues from
Quadramet based on actual sales. Starting in 1999, Quadramet royalties will be
based on sales of Quadramet by Berlex Laboratories ("Berlex"), CYTOGEN's new
marketing partner for Quadramet (see Note 4).

License and contract revenues include milestone payments and fees under
collaborative agreements with third parties, revenues from contract
manufacturing and research services, and revenues from other miscellaneous
sources. The Company's contract manufacturing services include filling, testing,
validation, and process development of monoclonal antibodies; process
development and clinical development of biopharmaceutical products; and the
preclinical manufacturing of an antibody product. The Company is phasing out
contract manufacturing services, concurrent with the sale of the manufacturing
and laboratory facilities (see Note 2) and expects to receive no further
revenues from this service after 1999. Revenues from milestone payments are

F-9
<PAGE>

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. Revenues from up-front payments are recognized when the
Company has no obligation to return the fee under any circumstances.

COST OF PRODUCT AND CONTRACT MANUFACTURING REVENUES

Beginning in 1997, the Company began providing contract manufacturing
services to third parties, and its second product ProstaScint was approved
resulting in significantly higher product sales. In 1998, the Company paid
DuPont $995,000 for manufacturing and distributing Quadramet as a result of
CYTOGEN's reacquiring the marketing rights of Quadramet in June 1998. In
addition, the Company recorded a $4 million charge for securing a long-term
manufacturing commitment for Quadramet from DuPont (see Note 5). Pursuant to the
marketing agreement with Berlex (see Note 4), beginning in 1999, there will be
no manufacturing and distribution costs related to Quadramet. Prior to 1997,
product sales were minimal and no revenues were derived from contract
manufacturing, therefore, cost of product sales was immaterial and included in
research and development expenses.

RESEARCH AND DEVELOPMENT

Research and development expenditures consist of projects conducted by the
Company and payments made to sponsored research programs and consultants. All
research and development costs are charged to expense as incurred. Research and
development expenditures for customer sponsored programs were $2.0 million, $1.5
million and $1.1 million in 1998, 1997 and 1996, respectively.

PATENT COSTS

Patent costs are charged to expense as incurred.

NET LOSS PER SHARE

Basic net loss per common share is based upon the weighted average common
shares outstanding during each year. Diluted net loss per common share is the
same as basic net loss per common share, as the inclusion of common stock
equivalents would be antidilutive.

2. UNAUDITED PRO FORMA BALANCE SHEET:

In January 1999, the Company sold certain of its laboratory and
manufacturing facilities to Bard BioPharma L.P., a subsidiary of Purdue Pharma
L.P., for $3.9 million. CYTOGEN also signed a three-year agreement under which
two of CYTOGEN's products, ProstaScint and OncoScint CR/OV, would continue to be
manufactured by CYTOGEN at its former facility. The Company will recognize a
gain of approximately $3.3 million in its consolidated statement of operations
in the first quarter of 1999. In connection with the sale, the Company was
required to repay the remaining outstanding balance of the note due to CIT
Group/Credit Finance Inc. (see Note 9).

F-10

<PAGE>

In addition, in January 1999, the Company sold 2,666,667 shares of CYTOGEN
common stock at $0.75 per share to a subsidiary of The Hillman Company for an
aggregate of $2.0 million and received $2.5 million in proceeds from the
December 1998 sale of CYTOGEN common stock to The State of Wisconsin Investment
Board (see Note 1).

The unaudited pro forma balance sheet reflects the above transactions as if
they had occurred on December 31, 1998.

3. SALE OF TARGON CORPORATION:

Targon was established in September 1996 pursuant to agreements between
CYTOGEN and Elan, and was a majority-owned (99.75%) subsidiary of CYTOGEN. In
March 1998, Elan exchanged its shares of the Company's Series A Convertible and
Exchangeable Preferred Stock ("Series A") for 50% of CYTOGEN's interest in
Targon. In August 1998, CYTOGEN sold its remaining 49.875% interest in Targon to
Elan for $2.0 million (see Note 1). As a result of the sale, a warrant to
purchase up to 1,000,000 shares of CYTOGEN common stock previously granted to
Elan and all notes among CYTOGEN, Elan and Targon were canceled. In addition, in
August 1998, CYTOGEN received $2.0 million from Elan in exchange for a
convertible promissory note (see Note 9). The Company recognized a gain of
approximately $2.8 million on the Targon transaction.

4. BERLEX LABORATORIES:

In October 1998, CYTOGEN entered into an exclusive license and marketing
agreement ("Berlex Agreement") with Berlex for the manufacture and sale of
Quadramet. Under the terms of the Berlex Agreement, CYTOGEN received a one-time
license fee of $8 million in 1998 and Berlex will pay CYTOGEN royalties on net
sales of Quadramet, as well as milestone payments based on achievement of
certain sales levels. Quadramet is expected to be re-launched by Berlex in the
first quarter of 1999.

In connection with the Berlex Agreement, CYTOGEN granted Berlex a warrant to
purchase 1,000,000 shares of CYTOGEN common stock at an exercise price of $1.002
per share through October 2003, which is exercisable after the earlier of
October 1999 or the achievement of defined sales levels. Using the Black Scholes
model, the estimated value of the warrant was calculated at $855,000, and was
recorded as a reduction of the one-time license fee revenue, with a
corresponding increase in stockholders' equity.

5. THE DUPONT PHARMACEUTICAL COMPANY:

Pursuant to the terms of an agreement between CYTOGEN and DuPont, CYTOGEN
received from DuPont (i) $1.5 million in each of 1997 and 1996 to fund clinical
programs to expand the use and marketing of Quadramet; (ii) a $2.0 million
milestone payment in 1997 upon the FDA clearance of Quadramet and (iii) royalty
revenues of $1.7 million and $3.3 million in 1998 and 1997, respectively, based
on minimum contractual payments which were in excess of actual sales. In June
1998, the agreement was amended and the minimum royalty arrangement was
discontinued. In 1998, CYTOGEN recorded a charge of $4 million as Cost of
Product and Contract Manufacturing Revenues for securing a long-term
manufacturing commitment for Quadramet from DuPont of which $3 million was paid
in 1998 and $1 million is payable in March 1999.

F-11
<PAGE>

6. THE DOW CHEMICAL COMPANY:

In 1993, CYTOGEN acquired from The Dow Chemical Company ("DOW") an exclusive
license for the treatment of osteoblastic bone metastases in the U.S. for
Quadramet. This license was amended in 1995 and 1998 to expand the territory to
include Canada, Latin America, Europe and Japan, in 1996 to expand the field to
include all osteoblastic diseases and in 1998 to include rheumatoid arthritis.
In 1997, the Company recorded a $4.0 million milestone payment to Dow upon FDA
clearance of Quadramet. The agreement also requires the Company to pay Dow
royalties based on a percentage of net sales of Quadramet, or a guaranteed
contractual minimum payments, whichever is greater, and future payments upon
achievement of certain milestones. During 1998 and 1997, the Company recorded
$500,000 and $375,000, respectively in royalty expense.

Future annual minimum royalties due to Dow are as follows:

1999 500,000
2000 750,000
2001 750,000
2002 through 2012 1,000,000 per year

7. REVENUES FROM MAJOR CUSTOMERS:

Revenues from major customers as a percentage of total were as follows:

Year Ended December 31,
-----------------------------
Customer 1998 1997 1996
-------- ---- ---- ----
Berlex (see Note 4) 36% -% -%
DuPont (see Note 5) 8 47 27
Medi-Physics 10 9 10
Elan - 6 23

Medi-Physics is a chain of radiopharmacies which distributes ProstaScint and
OncoScint CR/OV kits.

Pursuant to an agreement between CYTOGEN and Elan in 1995, CYTOGEN performed
research services which resulted in contract revenues of $62,000, $924,000 and
$1.3 million in 1998, 1997 and 1996, respectively.

F-12

<PAGE>

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

December 31,
-----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Accounts payable $2,465,000 $1,160,000
Accrued payroll and related expenses 1,222,000 1,689,000
Severances and restructuring accruals 856,000 --
Accrued research contracts and materials 474,000 602,000
Accrued commission and royalties 828,000 647,000
Accrued professional and legal 655,000 835,000
Other accruals 886,000 729,000
---------- ----------
$7,386,000 $5,662,000
========== ==========
</TABLE>

In connection with the closure of the Company's Cellcor subsidiary and
corporate downsizing in 1998, CYTOGEN incurred a restructuring charge of
approximately $1.9 million relating to severances, other closure related
expenses and costs to implement a corporate turnaround plan, of which $856,000
was still accrued at December 31, 1998.

9. LONG TERM LIABILITIES:

<TABLE>
<CAPTION>
December 31,
-----------------------------
1998 1997
----------- ------------
<S> <C> <C>
Due to Knoll Pharmaceuticals $ -- $ 1,619,000
Due to Elan 2,054,000 10,000,000
Due to CIT Group/Credit Finance 744,000 --
Capital lease obligations 273,000 291,000
3,071,000 11,910,000
Less: Current portion (848,000) (1,739,000)
----------- ------------
$2,223,000 $10,171,000
=========== ============
</TABLE>

In July 1997, the Company obtained a $10.0 million loan from Elan. The funds
were used by CYTOGEN to provide funding to Targon, including funding for the
$7.5 million license fee paid by Targon to Elan. As a result of the sale of
Targon to Elan in August 1998 (see Note 3), all notes among CYTOGEN, Elan and
Targon, were canceled.

In August 1998, CYTOGEN received $2.0 million from Elan in exchange for a
convertible promissory note. The note is convertible into shares of CYTOGEN
common stock at $2.80 per share, subject to adjustments, and matures in seven
years. The note bears annual interest of 7%, compounded semi-annually, however,
such interest is not payable in cash but will be added to the principal for the
first 24 months; thereafter, interest is payable in cash. In 1998, the Company
accrued $54,000 in interest expense on this note.

In October 1998, the Company entered into a $750,000 term loan agreement
with The CIT Group/Credit Finance Inc., using the Company's tangible assets as
collateral. The note bore interest at prime plus 3% and was payable monthly with
principal payments of $12,500 plus interest. In January 1999, the Company paid
the remaining balance of the loan with the proceeds from the sale of its
laboratory and manufacturing facilities (see Note 2).

F-13

<PAGE>

The Company leases certain equipment under capital lease obligations which
will expire on various dates through 2002. Property and equipment leased under
non-cancelable capital leases have a net book value of $336,000 at December 31,
1998. Payments to be made under capital lease obligations (including interest of
$66,000) are as follows: $138,000 in 1999, $111,000 in 2000, $78,000 in 2001 and
$12,000 in 2002.

10. COMMON STOCK:

In October 1998, the Company entered into an agreement (the "Equity Line
Agreement") with an institutional investor (the "Investor") for a $12 million
common stock equity line. Pursuant to the Equity Line Agreement, the Company,
subject to the satisfaction of certain conditions, was granted the right to
issue and sell to the Investor, and the Investor would be obligated to purchase
up to $12 million of CYTOGEN common stock from time to time (collectively, the
"Put Rights") over a two year period at a purchase price per share equal to 85%
of the average of lowest trade prices of CYTOGEN common stock during five
designated trading days as determined under the Equity Line Agreement. The
Company can exercise the Put Rights every 20 trading days in the amounts ranging
from $150,000 to $1 million, subject to the satisfaction of minimum trading
volume, market price of CYTOGEN common stock and registration of the shares of
common stock under the Securities Act of 1933, as amended. The Company is
required to exercise Put Rights with respect to a minimum of $3 million over the
life of the Equity Line Agreement. In addition, the Company granted to the
Investor a warrant to purchase up to 200,000 shares of CYTOGEN common stock at
an exercise price of $1.016 per share through April 2002. In January 1999, the
Company exercised a Put Right for the sale of 475,342 shares of common stock at
an aggregate price of $500,000 or $1.0519 per share.

In December 1998, the Company sold to The State of Wisconsin Investment
Board 3,333,334 shares of CYTOGEN common stock at an aggregate price of $2.5
million or $0.75 per share.

In January 1999, the Company sold to a subsidiary of The Hillman Company
2,666,667 shares of CYTOGEN common stock at an aggregate price of $2.0 million
or $0.75 per share.

11. CONVERTIBLE PREFERRED STOCK:

In September 1996, CYTOGEN issued 1,000 shares of Series A in connection
with the formation of Targon. Since the Series A was immediately convertible
into common stock, the most beneficial conversion discount was recorded
analogous to a deemed dividend of $4.6 million in 1996. In March 1998, Elan
exchanged all of its shares of the Company's Series A for 50% of CYTOGEN's
interest in Targon (see Note 3).

In December 1997, CYTOGEN obtained a financing commitment from private
investors for the purchase of up to $20.0 million of its Convertible Preferred
Stock subject to satisfaction of certain conditions. CYTOGEN completed the first
tranche of the financing in December 1997 by issuing 750 shares of Series B
Preferred Stock ("Series B") for an aggregate price of $7.5 million. The Series
B carried a dividend rate of 6% which was payable in cash or common stock at the
option of CYTOGEN.

F-14

<PAGE>

In connection with the conversion feature of the Series B, the Company
recorded a deemed dividend of $1.3 million in 1997, which represented the
maximum 15% conversion discount given to the holders of the Series B. In 1998,
all of the outstanding Series B was converted into 7,377,054 shares of CYTOGEN
common stock including $128,000 of accrued dividends.

12. STOCK OPTIONS AND GRANTS:

The Company has various stock option plans that provide for the issuance of
incentive and non-qualified stock options to employees, non-employee directors
and outside consultants, for which an aggregate of 6,233,357 shares of common
stock have been reserved. The persons to whom options may be granted and the
number, type, and terms of the options vary among the plans. Options are granted
with an exercise term of 10 years and generally become exercisable in
installments over periods of up to 5 years at an exercise price determined
either by the plan or equal to the fair market value of the common stock at the
date of grant. Under certain circumstances, vesting may accelerate. In January
1998, the Company cancelled unexercised stock option grants to purchase 671,555
shares ranging in price from $3.687 to $16.50 per share and issued stock option
grants to purchase 537,244 shares at $1.95 per share which equaled fair market
value at the date of grant. This repricing was not available to officers,
directors, executives and consultants of the Company. Activity under these plans
was as follows:

Number of Price Range
Shares Per Share
---------- --------------
Balance at December 31, 1995 2,952,857 $ 2.69 - 17.00

Granted 1,073,770 5.00 - 9.28
Exercised (254,907) 2.69 - 7.50
Cancelled (248,780) 2.69 - 7.50
-----------

Balance at December 31, 1996 3,522,940 $ 2.69 - 17.00

Granted 822,400 2.06 - 6.13
Excersised (60,350) 1.77 - 5.47
Cancelled (459,530) 2.69 - 8.88

Balance at December 31, 1997 3,825,460 $ 2.06 - 17.00
Granted 2,285,920 0.70 - 2.13
Cancelled (2,319,085) 1.36 - 17.00

Balance at December 31, 1998 3,792,295 $ 0.70 - 16.63
==========

At December 31, 1998, options to purchase 1,497,586 shares of common stock
were exercisable and 1,242,024 shares of common stock were available for
issuance under approved plans of additional options that may be granted under
the plans. All options under the Cellcor stock option plan, which was reserved
in connection with the Cellcor merger in 1995, were cancelled as a result of the
closure of Cellcor.

F-15

<PAGE>

In August 1998, the Company granted to a key employee an option to purchase
2,250,000 shares of CYTOGEN common stock at an exercise price of $1.0937 per
share, of which the vesting of 1,350,000 shares are subject to the completion of
certain performance based milestones as determined by the Board of Directors.
This option was granted outside of the approved plans. As of December 31, 1998,
300,000 shares under this option was exercisable.

In 1997, the Company adopted an employee stock purchase plan under which
eligible employees may elect to purchase shares of common stock at the lower of
85% of fair market value as of the first trading day of each quarterly
participation period, or as of the last trading day of each quarterly
participation period. In 1998 and 1997, employees purchased 54,023 shares and
16,017 shares, respectively, for aggregate proceeds of $41,000 and $32,000,
respectively. The Company has reserved 429,960 shares for future issuance under
its employee stock purchase plan.

The Company applies Accounting Principle Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and the related interpretations in accounting
for its stock option plans. The disclosure requirement of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," was adopted by the Company in 1996. Had compensation cost of the
Company's common stock option plan been determined under SFAS No. 123, the
Company's net loss would have been increased to the following pro forma amounts:

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Net loss to common stockholders, as reported $(13,271,000) $(32,064,000) $(28,337,000)
Pro forma net loss to common stockholders $(16,566,000) $(34,946,000) $(30,594,000)

Net loss per common share, as reported $(0.24) $(0.63) $(0.59)
Pro forma net loss per common share $(0.29) $(0.68) $(0.63)

</TABLE>

The average fair value per option of the options granted under the stock
option plans during 1998, 1997 and 1996 is estimated as $0.92, $2.10 and $3.35,
respectively, on the date of grant using the Black-Scholes option pricing model
with the following assumptions for 1998, 1997 and 1996: dividend yield of zero,
volatility of 78.42%, 69.87% and 70.72%, respectively, risk-free interest rate
of 5.37%, 6.07% and 5.90%, respectively, and an expected life of 5 years. The
average fair value per option ascribed to the employee stock purchase plan
during 1998 and 1997 is estimated at $0.65 and $2.17, respectively on the date
of grant using the Black-Scholes option pricing model with the following
assumptions for 1998 and 1997: divided yield of zero, volatility of 84.75% and
50.20%, respectively, risk free interest rate of 4.88% and 5.13%, respectively,
and expected life of three months. Because the SFAS No. 123 method of accounting
is not required to be applied to options granted prior to January 1, 1995, the
resulting pro forma compensation charge may not be representative of that to be
expected in future years.

13. RELATED PARTY TRANSACTION:

Consulting services have been provided to the Company under an agreement
with the Chairman of the Board of Directors related to time spent in that
function on Company matters. Fees and expenses under this agreement were
$172,000 in 1998.

F-16
<PAGE>

14. PENSION PLANS:

The Company maintains a defined contribution pension plan. The
contribution is determined by the Board of Directors each year and is based upon
a percentage of gross wages of eligible employees. The plan provides for vesting
over five years, with credit given for prior service. The Company also makes
contributions under a 401(k) plan in amounts which match up to 50% of the salary
deferred by the participants. Matching is capped at 6% of deferred salaries.
Total pension expense was $310,000, $405,000 and $328,000 for 1998, 1997 and
1996, respectively.

15. INCOME TAXES:

As of December 31, 1998, CYTOGEN had federal net operating loss
carryforwards of approximately $177 million. The Company also had federal and
state research and development tax credit carryforwards of approximately $5.4
million. The net operating loss and credit carryforwards began to expire in
1995.

The Tax Reform Act of 1986 contains provisions that limit the utilization
of net operating loss and tax credit carryforwards if there has been an
"ownership change". Such an "ownership change" as described in Section 382 of
the Internal Revenue Code may limit the Company's utilization of its net
operating loss and tax credit carryforwards.

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes. Based upon the Company's
loss history, a valuation allowance for deferred tax assets has been provided:

<TABLE>
<CAPTION>
1998 1997
------------- -------------

<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 60,300,000 $ 52,700,000
Capitalized research and development expenses 19,500,000 23,500,000
Research and development credit 5,400,000 5,000,000
Acquisition of in-process technology 1,200,000 3,800,000
Other, net 300,000 140,000
------------- -------------
Total deferred tax assets 86,700,000 85,140,000
Valuation allowance for deferred tax assets (86,700,000) (85,140,000)
------------- -------------
Net deferred tax assets $ -- $ --
============= =============
</TABLE>

In 1995, CYTOGEN acquired CytoRad and Cellcor, both of which had net
operating loss carryforwards. Due to Section 382 limitations, approximately $10
million of CytoRad and $12.0 million of Cellcor carryforwards may be available
to offset future taxable income. A 100% valuation allowance was established on
the acquisition dates as realization of these tax assets is uncertain.

16. COMMITMENTS AND CONTINGENCIES:

The Company leases its facilities and certain equipment under
non-cancelable operating leases that expire at various times through 2002. Rent
expense incurred on these leases was $1.6 million, $1.8 million and $1.8 million
in 1998, 1997 and 1996, respectively. Minimum future obligations under the
operating leases are $3.6 million as of December 31, 1998 and will be paid as
follows: $990,000 in 1999, $1.1 million in 2000, $1.2 million in 2001, and
$288,000 in 2002.

F-17

<PAGE>

The Company is obligated to make minimum future payments under research and
development contracts that expire at various times. As of December 31, 1998, the
minimum future payments under contracts are $120,000 in 1999 and $130,000 in
2000 and thereafter. In addition, the Company is obligated to pay
performance-based compensation to its marketing partner for ProstaScint and
royalties on revenues from commercial product sales including certain guaranteed
minimum payments.

F-18

<PAGE>

6,200,000 Shares

CYTOGEN CORPORATION

Common Stock

____________________

PROSPECTUS
____________________

March __, 1999

<PAGE>

Part II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. Other Expenses of Issuance and Distribution

The following is an itemized statement of the estimated
amounts of all expenses payable by the Registrant in connection
with the registration of the common stock offered hereby, other
than underwriting discounts and commissions:

Registration Fee-Securities and Exchange Commission........... $ 1,955
Blue Sky fees and expenses.................................... -
Accountants' fees and expenses................................ 15,000
Legal fees and expenses....................................... 25,000
Printing and engraving expenses............................... -
Transfer agent and registrar fees............................. 250
Miscellaneous................................................. 500
---------
Total.................................................... $ 42,705
=========

ITEM 14. Indemnification of Directors and Officers

Section 145(a) of the General Corporation Law of the State
of Delaware (the "DGCL") provides that a Delaware corporation
may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or
enterprise, against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no cause to
believe his conduct was unlawful.

Section 145(b) of the DGCL provides that a Delaware
corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above,
against expenses actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit
if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
court in which such action or suit was brought shall determine
that despite the adjudication of liability, such person is
fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.

Section 145 of the DGCL further provides that to the extent
a director or officer of a corporation has been successful in
the defense of any action, suit or proceeding referred to in
subsections (a) and (b) or in the defense of any claim, issue,
or matter therein, he shall be indemnified against any expenses
actually and reasonably incurred by him in connection therewith;
that indemnification provided for by Section 145 shall not be
deemed exclusive of any rights to which the indemnified party
may be entitled; and that the corporation may purchase and
maintain insurance on behalf of a director or officer of the

II-1

<PAGE>

corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his
status as such whether or not the corporation would have the
power to indemnify him against such liabilities under Section
145.

Section 102(b)(7) of the DGCL provides that a corporation
in its original certificate of incorporation or an amendment
thereto validly approved by stockholders may eliminate or limit
personal liability of members of its board of directors or
governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability
of a director for breaching his duty of loyalty, failing to
action good faith, engaging in intentional misconduct or
knowingly violating a law, paying a dividend or approving a
stock repurchase which was illegal, or obtaining an improper
personal benefit. A provision of this type has no effect on the
availability of equitable remedies, such as injunction or
rescission, for breach of fiduciary duty. The Company's
Restated Certificate of Incorporation contains such a provision.

The Company's Certificate of Incorporation and By-Laws
provide that the Company shall indemnify officers and directors
and, to the extent permitted by the Board of Directors,
employees and agents of the Company, to the full extent
permitted by and in the manner permissible under the laws of the
State of Delaware. In addition, the By-Laws permit the Board of
Directors to authorize the Company to purchase and maintain
insurance against any liability asserted against any director,
officer, employee or agent of the Company arising out of his
capacity as such.

ITEM 15. Recent Sales of Unregistered Securities

In the three years preceding the filing of this
Registration Statement, the Company has issued securities that
were not registered under the Securities Act of 1933, as amended
(the "Securities Act") to a limited number of persons, as
described below.

On October, 1998, the Company entered into the Equity Line
Agreement with Kingsbridge, pursuant to which the Company may
issue and sell, from time to time, shares of its Common Stock
for cash consideration up to an aggregate of $12 million.
Pursuant to the requirements of the Equity Line Agreement, the
Company has filed this Registration Statement in order to permit
the investor to resell to the public any shares that it acquires
pursuant to the Equity Line Agreement. Commencing as of the
date this Registration Statement is declared effective by the
Securities and Exchange Commission and continuing for a period
of 24 months thereafter, the Company may from time to time at
its sole discretion, and subject to certain restrictions set
forth in the Equity Line Agreement, sell ("put") shares of its
Common Stock to the investor at a price equal to 85 percent of
the then current average market price of the Company's Common
Stock, as determined under the Equity Line Agreement. Puts can
be made every 20 trading days in amounts ranging from a minimum
of $150,000 to a maximum of $1,000,000, depending on the trading
volume and the market price of the Common Stock at the time of
each put. The Company is required to put at least $3,000,000 of
its Common Stock to the investor over the life of the Equity
Line Agreement. To date, no shares of Common Stock have been
issued under the Equity Line Agreement.

In conjunction with the Equity Line Agreement, in October,
1998, the Company issued to the investor a warrant (the
"Warrant") which entitles the holder to purchase 200,000 shares
of Common Stock of the Company at a price of $1.0165 per share.
The Warrant is exercisable at any time beginning in April, 1999
and ending in April, 2002. The Warrant contains provisions that
protect against dilution by adjustment of the exercise price and
the number of shares issuable thereunder upon the occurrence of
certain events, such as a merger, stock split or reverse stock
split, stock dividend or recapitalization. The exercise price

II-2
<PAGE>

of the Warrant is payable either (i) in cash or (ii) by a
"cashless exercise", in which that number of shares of Common
Stock underlying the Warrant having a fair market value at the
time of exercise equal to the aggregate exercise price are
cancelled as payment of the exercise price. Also in connection
with the Equity Line Agreement, in October, 1998, the Company
issued currently exercisable warrants for 100,000 shares of
common stock to the Placement Agent. Such warrants expire in
October, 2001.

In December 1997, the Company issued $7.5 million of
convertible preferred stock to a group of private investors in a
private placement. The preferred stock and the underlying
common shares into which it was convertible were subsequently
registered for resale.

In November 1995, the Company sold 1,256,565 shares of
CYTOGEN common stock to a European institutional investor (the
"Investor") in a private placement transaction pursuant to
Regulation S of the Securities Act for an aggregate price of
$5.0 million. The Company also sold to the Investor (i) 729,394
shares of CYTOGEN common stock in April 1996 for an aggregate
price of $5.0 million, (ii) 913,909 shares of CYTOGEN common
stock in October 1996 for an aggregate price of $5.0 million
pursuant to a Stock Purchase Agreement between CYTOGEN and the
Investor, dated as of August 27, 1996, as amended (the "Purchase
Agreement"), and (iii) 776,791 shares of CYTOGEN common stock in
November 1996 for an aggregate price of $4.0 million under the
Purchase Agreement.

The securities issued and to be issued by the Company
pursuant to the transactions described above have been and will
be issued without registration under the Securities Act of 1933
in reliance upon the exemptions from registration provided under
Section 4(2) of the Securities Act and Rule 506 of Regulation D
promulgated thereunder, or other exemptions. The foregoing
transactions did not involve any public offering, the investors
either received or had access to adequate information about the
Company in order to make an informed investment decision, and
the Company reasonably believed that each of the investors was
"sophisticated" within the meaning of Section 4(2) of the
Securities Act.

ITEM 16. Exhibits and Financial Statement Schedules

(a) Exhibits

1.1 - Equity Line Agreement. Filed herewith.

3.1 - Certificate of Incorporation of the Registrant, restated
and amended. Filed as an exhibit to Form 10-Q Quarterly
Report for the quarter ended June 30, 1996 (Commission File
No. 0-14879) and incorporated herein by reference.

3.2 - By-Laws of the Registrant, as amended. Filed as an exhibit to
Form S-4 Registration Statement (No. 33-88612) and incorporated
herein by reference.

4.1 - Specimen Certificate for common stock of the Registrant.
Filed as an exhibit to Amendment No. 1 to Form S-1
Registration Statement (No. 33-5533) and incorporated
herein by reference.

5.1 - Opinion re legality. Filed herewith.

10.1- Manufacturing Space Agreement. Filed as an exhibit to
Amendment No. 1 to Form S-1 Registration Statement (Commission
File No. 333-67947) and incorporated herein by reference.

21.1- List of Subsidiaries. Filed as an exhibit to Form 10-K
Annual Report for the year ended December 31, 1997
(Commission File No. 0-14879) and incorporated herein by
reference.

II-3
<PAGE>

23.1 - Consent of Arthur Andersen LLP. Filed herewith.

23.2 - Consent of counsel as to legal opinion. (included in Exhibit 5.1)

24.1 - Power of Attorney (included on page II-5)

27.1 - Financial Data Schedule
_________________

(b) Consolidated Financial Statement Schedules

All schedules have been omitted because they are not
required or because the required information is given in the
Consolidated Financial Statements or Notes thereto.

ITEM 17. Undertakings

The undersigned Registrant hereby undertakes to provide to
the underwriters, at the closing specified in the underwriting
agreement, certificates in such denominations and registered in
such names as required by the underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this registration statement as of
the time it was declared effective.

(2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial
bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Post Effective Amendment to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Princeton, State of New Jersey, on March 5, 1999.

CYTOGEN CORPORATION

/s/ H. Joseph Reiser
By: H. Joseph Reiser

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints
H. Joseph Reiser, Jane M. Maida, or Donald F. Crane, Jr.,
and each of them, as his or her true and lawful attorney-in-fact and
agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments)
and supplements to this registration statement or any prospectus included
herein, and to file the same, with the Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agents, or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post Effective Amendment to Registration Statement has been signed by the
following persons on March 5, 1999 in the capacities indicated:

Signature Title Date
/s/ H. Joseph Reiser Chief Executive Officer and March 5, 1999
- -------------------- President (Principal Executive
H. Jospeh Reiser Officer and Director

/s/ Jane M. Maida Chief Accounting Officer March 5, 1999
- -------------------- (Principal Accounting Officer)
Jane M. Maida

/s/ * Director March 5, 1999
- --------------------
John E. Bagalay

/s/ * Director March 5, 1999
- -------------------
Ronald J. Brenner
II-5

/s/ * Director March 5, 1999
- -------------------
Stephen K. Carter

/s/ * Director March 5, 1999
- -------------------
James A. Grigsby

II-6

<PAGE>

PRIVATE EQUITY LINE AGREEMENT

by and between

KINGSBRIDGE CAPITAL LIMITED

and

CYTOGEN CORPORATION

dated as of October 23, 1998

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . 1
Section 1.1 [RESERVED] . . . . . . . . . . . . . . . . 1
Section 1.2 "Average Daily Trading Volume" . . . . . . 1
Section 1.3 "Bid Price". . . . . . . . . . . . . . . . 1
Section 1.4 "Blackout Shares". . . . . . . . . . . . . 2
Section 1.5 "Capital Shares" . . . . . . . . . . . . . 2
Section 1.6 "Closing". . . . . . . . . . . . . . . . . 2
Section 1.7 "Closing Date" . . . . . . . . . . . . . . 2
Section 1.8 "Commitment Period". . . . . . . . . . . . 2
Section 1.9 "Common Stock" . . . . . . . . . . . . . . 2
Section 1.10 "Common Stock Equivalents" . . . . . . . . 2
Section 1.11 "Condition Satisfaction Date". . . . . . . 2
Section 1.12 "Damages". . . . . . . . . . . . . . . . . 2
Section 1.13 "Discount" . . . . . . . . . . . . . . . . 2
Section 1.14 "Effective Date" . . . . . . . . . . . . . 2
Section 1.15 "Escrow Agreement" . . . . . . . . . . . . 2
Section 1.16 "Exchange Act" . . . . . . . . . . . . . . 3
Section 1.17 "Floor Price". . . . . . . . . . . . . . . 3
Section 1.18 "Investment Amount". . . . . . . . . . . . 3
Section 1.19 "Legend" . . . . . . . . . . . . . . . . . 3
Section 1.20 "Market Price" . . . . . . . . . . . . . . 3
Section 1.21 "Maximum Commitment Amount" . . . . . . . 3
Section 1.22 "Minimum Commitment Amount" . . . . . . . 3
Section 1.23 "Material Adverse Effect". . . . . . . . . 3
Section 1.24 "Maximum Put Amount" . . . . . . . . . . . 3
Section 1.25 "Minimum Put Amount" . . . . . . . . . . . 3
Section 1.26 "NASD" . . . . . . . . . . . . . . . . . . 3
Section 1.27 "Outstanding". . . . . . . . . . . . . . . 3
Section 1.28 "Person" . . . . . . . . . . . . . . . . . 3
Section 1.29 "Preferred Stock". . . . . . . . . . . . . 4
Section 1.30 "Principal Market" . . . . . . . . . . . . 4
Section 1.31 "Purchase Price" . . . . . . . . . . . . . 4
Section 1.32 "Put". . . . . . . . . . . . . . . . . . . 4
Section 1.33 "Put Date" . . . . . . . . . . . . . . . . 4
Section 1.34 "Put Notice" . . . . . . . . . . . . . . . 4
Section 1.35 "Put Shares" . . . . . . . . . . . . . . . 4
Section 1.36 "Registrable Securities" . . . . . . . . . 4
Section 1.37 "Registration Rights Agreement". . . . . . 5
Section 1.38 "Registration Statement" . . . . . . . . . 5
Section 1.39 "Regulation D" . . . . . . . . . . . . . . 5

<PAGE>
Section 1.40 "SEC". . . . . . . . . . . . . . . . . . . 5
Section 1.41 "Section 4(2)" . . . . . . . . . . . . . . 5
Section 1.42 "Securities Act" . . . . . . . . . . . . . 5
Section 1.43 "SEC Documents". . . . . . . . . . . . . . 5
Section 1.44 "Subscription Date . . . . . . . . . . . . 5
Section 1.45 "Trading Cushion". . . . . . . . . . . . . 5
Section 1.46 "Trading Day". . . . . . . . . . . . . . . 5
Section 1.47 "Underwriter" . . . . . . . . . . . . . . 5
Section 1.48 "Valuation Event". . . . . . . . . . . . . 5
Section 1.49 "Valuation Period" . . . . . . . . . . . . 6
Section 1.50 "Warrant". . . . . . . . . . . . . . . . . 6
Section 1.51 "Warrant Shares" . . . . . . . . . . . . . 7

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF
OBLIGATIONS; WARRANT; BLACKOUT SHARES. . . . . . 7
Section 2.1 Investments. . . . . . . . . . . . . . . . 7
Section 2.2 Mechanics. . . . . . . . . . . . . . . . . 7
Section 2.3 Closings . . . . . . . . . . . . . . . . . 8
Section 2.4 Termination of Investment Obligation . . . 8
Section 2.5 The Warrant. . . . . . . . . . . . . . . . 8
Section 2.6 Blackout Shares. . . . . . . . . . . . . . 8
Section 2.7 Liquidated Damages . . . . . . . . . . . . 9

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR . . . . 9
Section 3.1 Intent . . . . . . . . . . . . . . . . . . 9
Section 3.2 Sophisticated Investor . . . . . . . . . . 9
Section 3.3 Authority. . . . . . . . . . . . . . . . . 9
Section 3.4 Not an Affiliate . . . . . . . . . . . . . 9
Section 3.5 Organization and Standing. . . . . . . . . 9
Section 3.6 Absence of Conflicts . . . . . . . . . . . 10
Section 3.7 Disclosure; Access to Information. . . . . 10
Section 3.8 Manner of Sale . . . . . . . . . . . . . . 10

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . 10
Section 4.1 Organization of the Company. . . . . . . . 10
Section 4.2 Authority. . . . . . . . . . . . . . . . . 10
Section 4.3 Capitalization . . . . . . . . . . . . . . 11
Section 4.4 Common Stock . . . . . . . . . . . . . . . 11
Section 4.5 SEC Documents. . . . . . . . . . . . . . . 11
Section 4.6 Exemption from Registration; Valid
Issuances. . . . . . . . . . . . . . . . . 12
Section 4.7 No General Solicitation or Advertising in
Regard to this Transaction . . . . . . . . 12

ii
<PAGE>

Section 4.8 Corporate Documents. . . . . . . . . . . . 12
Section 4.9 No Conflicts . . . . . . . . . . . . . . . 12
Section 4.10 No Material Adverse Change . . . . . . . . 13
Section 4.11 No Undisclosed Liabilities . . . . . . . . 13
Section 4.12 No Undisclosed Events or Circumstances . . 13
Section 4.13 No Integrated Offering . . . . . . . . . . 13
Section 4.14 Litigation and Other Proceedings . . . . . 13
Section 4.15 No Misleading or Untrue Communication. . . 14
Section 4.16 Material Non-Public Information. . . . . . 14

ARTICLE V
COVENANTS OF THE INVESTOR. . . . . . . . . 14

ARTICLE VI
COVENANTS OF THE COMPANY. . . . . . . . . 15
Section 6.1 Registration Rights. . . . . . . . . . . . 15
Section 6.2 Reservation of Common Stock. . . . . . . . 15
Section 6.3 Listing of Common Stock. . . . . . . . . . 15
Section 6.4 Exchange Act Registration. . . . . . . . . 15
Section 6.5 Legends. . . . . . . . . . . . . . . . . . 16
Section 6.6 Corporate Existence. . . . . . . . . . . . 16
Section 6.7 Additional SEC Documents . . . . . . . . . 16
Section 6.8 Notice of Certain Events Affecting
Registration; Suspension of Right
to Make a Put. . . . . . . . . . . . . . . 16
Section 6.9 Expectations Regarding Put Notices . . . . 16
Section 6.10 Consolidation; Merger. . . . . . . . . . . 17
Section 6.11 Issuance of Put Shares, Warrant Shares
and Blackout Shares. . . . . . . . . . . . 17
Section 6.12 Legal Opinion on Subscription Date . . . . 17
Section 6.13 No Other Equity Lines. . . . . . . . . . . 17

ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING. . . . . . 17
Section 7.1 Conditions Precedent to the Obligation of
the Company to Issue and Sell
Common Stock . . . . . . . . . . . . . . . 17
Section 7.2 Conditions Precedent to the Right of the
Company to Deliver a Put Notice and
the Obligation of the Investor to
Purchase Put Shares. . . . . . . . . . . . 18
Section 7.3 Due Diligence Review; Non-Disclosure of
Non-Public Information . . . . . . . . . . 20

ARTICLE VIII
LEGENDS . . . . . . . . . . . . . 21
Section 8.1 Legends. . . . . . . . . . . . . . . . . . 21
Section 8.2 No Other Legend or Stock Transfer
Restrictions . . . . . . . . . . . . . . . 22

iii
<PAGE>

Section 8.3 Investor's Compliance. . . . . . . . . . . 23

ARTICLE IX
INDEMNIFICATION . . . . . . . . . . . 23
Section 9.1 Indemnification. . . . . . . . . . . . . . 23
Section 9.2 Method of Asserting Indemnification
Claims . . . . . . . . . . . . . . . . . . 23

ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . 27
Section 10.1 Fees and Expenses. . . . . . . . . . . . . 27
Section 10.2 Reporting Entity for the Common Stock. . . 27
Section 10.3 Brokerage. . . . . . . . . . . . . . . . . 27
Section 10.4 Notices. . . . . . . . . . . . . . . . . . 28
Section 10.5 Assignment . . . . . . . . . . . . . . . . 29
Section 10.6 Amendment; No Waiver . . . . . . . . . . . 29
Section 10.7 Annexes and Exhibits; Entire Agreement . . 29
Section 10.8 Termination; Survival. . . . . . . . . . . 29
Section 10.9 Severability . . . . . . . . . . . . . . . 30
Section 10.10 Title and Subtitles. . . . . . . . . . . . 30
Section 10.11 Counterparts . . . . . . . . . . . . . . . 30
Section 10.12 Choice of Law. . . . . . . . . . . . . . . 30

PRIVATE EQUITY LINE AGREEMENT

by and between

KINGSBRIDGE CAPITAL LIMITED

and

CYTOGEN CORPORATION

dated as of October 23, 1998

This PRIVATE EQUITY LINE AGREEMENT is entered into as of the
23rd day of October, 1998 (this "Agreement"), by and between
KINGSBRIDGE CAPITAL LIMITED (the "Investor"), an entity organized
and existing under the laws of the British Virgin Islands, and
CYTOGEN CORPORATION a corporation organized and existing under the
laws of the State of Delaware (the "Company").

<PAGE>

WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and
sell to the Investor, from time to time as provided herein, and the
Investor shall purchase, up to $12,000,000 of the Common Stock (as
defined below); and

WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("Section 4(2)") and Regulation D
("Regulation D") of the United States Securities Act of 1933, as
amended and the rules and regulations promulgated thereunder (the
"Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be
made hereunder.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
CERTAIN DEFINITIONS

Section 1.1 [RESERVED]

Section 1.2 "Average Daily Trading Volume" shall mean, with
respect to any date, the average of the daily trading volumes for
the Common Stock on the Principal Market for twenty-six (26) of
the thirty (30) Trading Days immediately preceding such date, after
removing the Trading Days with the two (2) highest trading volumes
and the Trading Days with the two (2) lowest trading volumes.

Section 1.3 "Bid Price" shall mean, with respect to any
Trading Day, the closing bid price on such Trading Day (as reported
by Nasdaq) of the Common Stock on the Principal Market.

Section 1.4 "Blackout Shares" shall have the meaning
assigned to them in Section 2.6.

Section 1.5 "Capital Shares" shall mean the Common Stock
and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the
distribution of dividends (as and when declared) and assets (upon
liquidation of the Company).

Section 1.6 "Closing" shall mean one of the closings of a
purchase and sale of the Common Stock pursuant to Section 2.1.

Section 1.7 "Closing Date" shall mean, with respect to a
Closing, the fifth Trading Day following the Put Date related to
such Closing, provided all conditions to such Closing have been
satisfied on or before such Trading Day.

Section 1.8 "Commitment Period" shall mean the period
commencing on the earlier to occur of (i) the Effective Date or
(ii) such earlier date as the Company and the Investor may mutually
agree in writing, and expiring on the earlier to occur of (x) the
date on which the Investor shall have purchased Put Shares pursuant
to this Agreement for an aggregate Purchase Price equal to the
Maximum Commitment Amount, (y) the date this Agreement is

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terminated pursuant to Section 2.4, or (z) the date occurring
twenty four (24) months from the date of commencement of the
Commitment Period.

Section 1.9 "Common Stock" shall mean the Company's common
stock, $0.01 par value per share.

Section 1.10 "Common Stock Equivalents" shall mean any
securities that are convertible into or exchangeable for Common
Stock or any warrants, options or other rights to subscribe for or
purchase Common Stock or any such convertible or exchangeable
securities.

Section 1.11 "Condition Satisfaction Date" shall have the
meaning set forth in Section 7.2 of this Agreement.

Section 1.12 "Damages" shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements and costs and expenses
of expert witnesses and investigation).

Section 1.13 "Discount" shall mean fifteen percent (15%).

Section 1.14 "Effective Date" shall mean the date on which
the SEC first declares effective a Registration Statement
registering resale of the Registrable Securities as set forth in
Section 7.2(a).

Section 1.15 "Escrow Agreement" shall mean the escrow
agreement in the form of Exhibit A entered into pursuant to Section
7.2(o) hereof.

Section 1.16 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder.

Section 1.17 "Floor Price" shall mean seventy-five cents
($0.75) per share.

Section 1.18 "Investment Amount" shall mean the dollar
amount (within the range specified in Section 2.2) to be invested
by the Investor to purchase Put Shares with respect to any Put
Notice as provided by the Company to the Investor in accordance
with Section 2.2 hereof.

Section 1.19 "Legend" shall have the meaning specified in
Section 8.1.

Section 1.20 "Market Price" on any given date shall mean the
average of the lowest intra-day prices of the Common Stock over the
Valuation Period. "Lowest intra-day price" shall mean the lowest
price of the Common Stock (as reported by Bloomberg L.P.) during
any Trading Day.

Section 1.21 "Maximum Commitment Amount" shall mean
$12,000,000.

Section 1.22 "Minimum Commitment Amount" shall mean
$3,000,000.

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Section 1.23 "Material Adverse Effect" shall mean any effect
on the business, operations, properties or financial condition of
the Company that is material and adverse to the Company or to the
Company and such other entities controlled by the Company, taken as
a whole, and/or any condition, circumstance, or situation that
would prohibit or otherwise interfere with the ability of the
Company to enter into and perform its obligations under any of (i)
this Agreement, (ii) the Registration Rights Agreement, (iii) the
Escrow Agreement and (iv) the Warrant.

Section 1.24 "Maximum Put Amount" shall mean with respect to
any Put the amount determined in accordance with the table set
forth on Annex A hereto.

Section 1.25 "Minimum Put Amount" shall mean $150,000.

Section 1.26 "NASD" shall mean the National Association of
Securities Dealers, Inc.

Section 1.27 "Outstanding" when used with reference to
Common Shares or Capital Shares (collectively the "Shares"), shall
mean, at any date as of which the number of such Shares is to be
determined, all issued and outstanding Shares, and shall include
all such Shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not refer to any such
Shares then directly or indirectly owned or held by or for the
account of the Company.

Section 1.28 "Person" shall mean an individual, a
corporation, a partnership, an association, a trust or other entity
or organization, including a government or political subdivision or
an agency or instrumentality thereof.

Section 1.29 "Principal Market" shall mean the Nasdaq
National Market, the Nasdaq SmallCap Market, the American Stock
Exchange or the New York Stock Exchange, whichever is at the time
the principal trading exchange or market for the Common Stock.

Section 1.30 "Purchase Price" shall mean, with respect to a
Put, the Market Price on a the applicable Put Date (or such other
date on which the Purchase Price is calculated in accordance with
the terms and conditions of this Agreement) less the product of the
Discount and the Market Price.

Section 1.31 "Put" shall mean each occasion the Company
elects to exercise its right to tender a Put Notice requiring the
Investor to purchase a specified amount of the Company's Common
Stock, subject to the terms and conditions of this Agreement.

Section 1.32 "Put Date" shall mean the Trading Day during
the Commitment Period that a Put Notice to sell Common Stock to the
Investor is deemed delivered pursuant to Section 2.2(b) hereof.

Section 1.33 "Put Notice" shall mean a written notice to the
Investor setting forth the Investment Amount that the Company
intends to require the Investor to purchase pursuant to the terms
of this Agreement.

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Section 1.34 "Put Shares" shall mean all shares of Common
Stock issued or issuable pursuant to a Put that has been exercised
or may be exercised in accordance with the terms and conditions of
this Agreement.

Section 1.35 "Registrable Securities" shall mean the (i) Put
Shares, (ii) the Warrant Shares, (iii) the Blackout Shares and (iv)
any securities issued or issuable with respect to any of the
foregoing by way of exchange, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (w) the Registration
Statement has been declared effective by the SEC and all
Registrable Securities have been disposed of pursuant to the
Registration Statement, (x) all Registrable Securities have been
sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force)
under the Securities Act ("Rule 144") are met, (y) such time as all
Registrable Securities have been otherwise transferred to holders
who may trade such shares without restriction under the Securities
Act, and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive
legend or (z) in the opinion of counsel to the Company, which
counsel shall be reasonably acceptable to the Investor, all
Registrable Securities may be sold without registration or the need
for an exemption from any registration requirements and without any
time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.

Section 1.36 "Registration Rights Agreement" shall mean the
registration rights agreement in the form of Exhibit B hereto.

Section 1.37 "Registration Statement" shall mean a
registration statement on Form S-3 (if use of such form is then
available to the Company pursuant to the rules of the SEC and, if
not, on such other form promulgated by the SEC for which the
Company then qualifies and which counsel for the Company shall deem
appropriate and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement, the Registration Rights
Agreement, and the Warrant and in accordance with the intended
method of distribution of such securities), for the registration of
the resale by the Investor of the Registrable Securities under the
Securities Act.

Section 1.38 "Regulation D" shall have the meaning set forth
in the recitals of this Agreement.

Section 1.39 "SEC" shall mean the Securities and Exchange
Commission.

Section 1.40 "Section 4(2)" shall have the meaning set forth
in the recitals of this Agreement.

Section 1.41 "Securities Act" shall have the meaning set
forth in the recitals of this Agreement.

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Section 1.42 "SEC Documents" shall mean the Company's latest
Form 10-K as of the time in question, all Forms 10-Q and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as
of the time in question until such time the Company no longer has
an obligation to maintain the effectiveness of a Registration
Statement as set forth in the Registration Rights Agreement.

Section 1.43 "Subscription Date" shall mean the date on
which this Agreement is executed and delivered by the parties
hereto.

Section 1.44 "Trading Cushion" shall mean the mandatory
twenty (20) Trading Days between Put Dates.

Section 1.45 "Trading Day" shall mean any day during which
the Principal Market shall be open for business.

Section 1.46 "Underwriter" shall mean any underwriter
participating in any disposition of the Registrable Securities on
behalf of the Investor pursuant to the Registration Statement.

Section 1.47 "Valuation Event" shall mean an event in which
the Company at any time during a Valuation Period takes any of the
following actions:

(a) subdivides or combines its Common Stock;

(b) pays a dividend in its Capital Stock or makes any
other distribution of its Capital Shares, except for
dividends paid or distributions made in respect of
preferred stock;

(c) issues any additional Capital Shares ("Additional
Capital Shares"), otherwise than as provided in the
foregoing Subsections (a) and (b) above, at a price per
share less, or for other consideration lower, than the
Bid Price in effect immediately prior to such issuance,
or without consideration;

(d) issues any warrants, options or other rights to
subscribe for or purchase any Additional Capital Shares
and the price per share for which Additional Capital
Shares may at any time thereafter be issuable pursuant to
such warrants, options or other rights shall be less than
the Bid Price in effect immediately prior to such
issuance;

(e) issues any securities convertible into or
exchangeable for Capital Shares and the consideration per
share for which Additional Capital Shares may at any time
thereafter be issuable pursuant to the terms of such
convertible or exchangeable securities shall be less than
the Bid Price in effect immediately prior to such
issuance;

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(f) makes a distribution of its assets or evidences of
indebtedness to the holders of its Capital Shares as a
dividend in liquidation or by way of return of capital
(except for dividends paid or distributions made in
respect of preferred stock) or other than as a dividend
payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to
such holders made in respect of the sale of all or
substantially all of the Company's assets (other than
under the circumstances provided for in the foregoing
subsections (a) through (e); or

(g) takes any action affecting the number of Outstanding
Capital Shares, other than an action described in any of
the foregoing Subsections (a) through (f) hereof,
inclusive, which in the opinion of the Company's Board of
Directors, determined in good faith, would have a
materially adverse effect upon the rights of the Investor
at the time of a Put or exercise of the Warrant.

Section 1.48 "Valuation Period" shall mean the period of
five (5) Trading Days during which the Purchase Price of the Common
Stock is valued, which period shall be with respect to the Purchase
Price on any Put Date, the two (2) Trading Day preceding and the
two (2) Trading Days following the Trading Day on which the
applicable Put Notice is deemed to be delivered, as well as the
Trading Day on which such notice is deemed to be delivered;
provided, however, that if a Valuation Event occurs during any
Valuation Period, a new Valuation Period shall begin on the Trading
Day immediately after the occurrence of such Valuation Event and
end on the fifth Trading Day thereafter.

Section 1.49 "Warrant" shall mean the Warrant in the form of
Exhibit C hereto issued pursuant to Section 2.5 of this Agreement.

Section 1.50 "Warrant Shares" shall mean all shares of
Common Stock issued or issuable pursuant to exercise of the
Warrant.

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF
OBLIGATIONS; WARRANT; BLACKOUT SHARES
Section 2.1 Investments.

(a) Puts. Upon the terms and conditions set forth
herein (including, without limitation, the provisions of
Article VII hereof), on any Put Date the Company may
exercise a Put by the delivery of a Put Notice. The
number of Put Shares that the Investor shall receive
pursuant to such Put shall be determined by dividing the
Investment Amount specified in the Put Notice by the
Purchase Price with respect to such Put Date.

(b) Minimum Amount of Puts. The Company shall, in
accordance with Section 2.2(a), issue and sell Put Shares
to the Investor and the Investor shall purchase Put
Shares from the Company totaling (in aggregate Purchase

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Prices) at least the Minimum Commitment Amount. If the
Company for any reason fails to issue and deliver such
Put Shares during the Commitment Period, on the first
Trading Day after the expiration of the Commitment
Period, the Company shall wire to the Investor a sum in
immediately available funds equal to the product of (X)
the Minimum Commitment Amount minus the aggregate
Investment Amounts of the Put Shares delivered to the
Investor hereunder and (Y) the Discount; provided,
however, that if the Investor's obligation to purchase
Common Stock hereunder or this Agreement is terminated
pursuant to Section 2.4 hereof, the Discount shall be
increased by five (5) percentage points for the purposes
of this Section.

(c) Maximum Amount of Puts. Unless the Company obtains
the requisite approval of its shareholders in accordance
with the corporate laws of Delaware and the applicable
rules of the Principal Market (unless a waiver is
obtained therefrom), no more than 19.9% of the
Outstanding shares of Common Stock may be issued and sold
pursuant to Puts.

Section 2.2 Mechanics.

(a) Put Notice. At any time during the Commitment
Period, the Company may deliver a Put Notice to the
Investor, subject to the conditions set forth in Section
7.2; provided, however, the Investment Amount for each
Put as designated by the Company in the applicable Put
Notice shall be neither less than the Minimum Put Amount
nor more than the Maximum Put Amount.

(b) Date of Delivery of Put Notice. A Put Notice shall
be deemed delivered on (i) the Trading Day it is received
by facsimile or otherwise by the Investor if such notice
is received prior to 12:00 noon New York time, or (ii)
the immediately succeeding Trading Day if it is received
by facsimile or otherwise after 12:00 noon New York time
on a Trading Day or at any time on a day which is not a
Trading Day. No Put Notice may be deemed delivered, on a
day that is not a Trading Day.

Section 2.3 Closings. On each Closing Date for a Put, (i)
the Company shall deliver into escrow one or more certificates, at
the Investor's option, representing the Put Shares to be purchased
by the Investor pursuant to Section 2.1 herein, registered in the
name of the Investor and (ii) the Investor shall deliver into
escrow the Investment Amount specified in the Put Notice by wire
transfer of immediately available funds to the account provided for
in the Escrow Agreement. In addition, on or prior to such Closing
Date, each of the Company and the Investor shall deliver to the
other all documents, instruments and writings required to be
delivered or reasonably requested by either of them pursuant to
this Agreement in order to implement and effect the transactions
contemplated herein. Payment of the Investment Amount to the
Company and delivery of such certificate(s) to the Investor shall
occur out of escrow in accordance with the Escrow Agreement;
provided, however, that to the extent the Company has not paid the
fees, expenses and disbursements of the Investor's counsel in
accordance with Section 12.1, the amount of such fees, expenses and
disbursements shall be paid in immediately available funds, at the
direction of the Investor, to Investor's counsel with no reduction
in the number of Put Shares issuable to the Investor on such

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Closing Date; provided, further, that so long as the Investor shall
maintain professional liability, errors and omissions liability
and/or directors' and officers' liability insurance for its
activities related to the Put Shares, the Warrant Shares or the
Blackout Shares, three percent (3%) of such Investment Amount shall
be either (i) retained by the Investor in respect of such insurance
or (ii) paid in immediately available funds, at the direction of
the Investor in respect of such insurance, in either case, with no
reduction in the number of Put Shares issuable to the Investor on
such Closing Date. Notwithstanding anything to the contrary in
this Section 2.3, if the Purchase Price calculated for a Valuation
Period with respect to any Put is less than sixty-five percent
(65%) of the Bid Price on the Put Date with respect to such Put,
then either party may, upon delivery by facsimile transmission of
written notice to the other party within one (1) Trading Day after
such Valuation Period, cancel the Closing in respect of such Put
and all of the rights and obligations of the parties with respect
to such Put shall terminate effective immediately prior to such Put
Date.

Section 2.4 Termination of Investment Obligation. This
Agreement and the Investor's obligation to purchase shares of
Common Stock hereunder shall automatically terminate (including
with respect to any Put, notice of which has been given but the
applicable Closing Date has not yet occurred) and the Investor may,
at its sole discretion, terminate this Agreement in the event that
(i) the Registration Statement is not effective within ninety (90)
days following the date required therefor in the Registration
Rights Agreement; (ii) there shall occur any stop order or
suspension of the effectiveness of the Registration Statement for
an aggregate of thirty (30) Trading Days during the Commitment
Period, for any reason other than deferrals or suspension during a
Blackout Period in accordance with the Registration Rights
Agreement, as a result of corporate developments subsequent to the
Subscription Date that would require such Registration Statement to
be amended to reflect such event in order to maintain its
compliance with the disclosure requirements of the Securities Act
or (iii) the Company shall at any time fail to comply with the
requirements of Section 6.3, 6.4, 6.5 or 6.6.

Section 2.5 The Warrant. On the Subscription Date, the
Company shall issue the Warrant to the Investor. The Warrant shall
be delivered by the Company to the Investor upon execution of this
Agreement by the parties hereto. The Warrant Shares shall be
registered for resale pursuant to the Registration Rights
Agreement.

Section 2.6 Blackout Shares. In the event that, (a) within
five (5) Trading Days following any Closing Date, the Company gives
a Blackout Notice to the Investor of a Blackout Period in
accordance with the Registration Rights Agreement, and (b) the Bid
Price on the Trading Day immediately preceding such Blackout Period
("Old Bid Price") is greater than the Bid Price on the first
Trading Day following such Blackout Period that the Investor may
sell its Registrable Securities pursuant to an effective
Registration Statement ("New Bid Price"), then the Company shall
issue to the Investor the number of additional shares of
Registrable Securities (the "Blackout Shares") equal to the
difference between (X) the product of the number of Registrable
Securities held by Investor immediately prior to the Blackout
Period multiplied by the Old Bid Price, divided by the New Bid
Price, and (Y) the number of Registrable Securities held by
Investor immediately prior to the Blackout Period.

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Section 2.7 Liquidated Damages. The parties hereto
acknowledge and agree that the sum payable under Section 2.1(b) and
the requirement to issue Blackout Shares under Section 2.6 above
shall give rise to liquidated damages and not penalties. The
parties further acknowledge that (a) the amount of loss or damages
likely to be incurred is incapable or is difficult to precisely
estimate, (b) the amounts specified in such Sections bear a
reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by the
Investor in connection with the failure by the Company to make Puts
with aggregate Purchase Prices totalling at least the Minimum
Commitment Amount or in connection with a Blackout Period under the
Registration Rights Agreement, and (c) the parties are
sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR

The Investor represents and warrants to the Company that:

Section 3.1 Intent. The Investor is entering into this
Agreement for its own account and the Investor has no present
arrangement (whether or not legally binding) at any time to sell
the Common Stock to or through any person or entity; provided,
however, that by making the representations herein, the Investor
does not agree to hold the Common Stock for any minimum or other
specific term and reserves the right to dispose of the Common Stock
at any time in accordance with federal and state securities laws
applicable to such disposition.

Section 3.2 Sophisticated Investor. The Investor is a
sophisticated investor (as described in Rule 506(b)(2)(ii) of
Regulation D) or an accredited investor (as defined in Rule 501 of
Regulation D), and Investor has such experience in business and
financial matters that it is capable of evaluating the merits and
risks of an investment in Common Stock. The Investor acknowledges
that an investment in the Common Stock is speculative and involves
a high degree of risk.

Section 3.3 Authority. Each of this Agreement, the
Registration Rights Agreement, and the Escrow Agreement has been
duly authorized by all necessary corporate action and no further
consent or authorization of the Company, or its Board of Directors
or stockholders is required. Each of this Agreement, the
Registration Rights Agreement, and the Escrow Agreement was validly
executed and delivered by the Investor and each is a valid and
binding agreement of the Investor enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other
equitable principles of general application.

Section 3.4 Not an affiliate. The Investor is not an
officer, director or "affiliate" (as that term is defined in Rule
405 of the Securities Act) of the Company.

Section 3.5 Organization and Standing. Investor is duly
organized, validly existing, and in good standing under the laws of
the British Virgin Islands.

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Section 3.6 Absence of Conflicts. The execution and
delivery of this Agreement and any other document or instrument
contemplated hereby, and the consummation of the transactions
contemplated thereby, and compliance with the requirements thereof,
will not (a) violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Investor, or, to
the Investor's knowledge, (b) violate any provision of any
indenture, instrument or agreement to which Investor is a party or
is subject, or by which Investor or any of its assets is bound, (c)
conflict with or constitute a material default thereunder, (d)
result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute
a breach of any fiduciary duty owed by Investor to any third party,
or (e) require the approval of any third-party (that has not been
obtained) pursuant to any material contract to which Investor is
subject or to which any of its assets, operations or management may
be subject.

Section 3.7 Disclosure; Access to Information. Investor
has received all documents, records, books and other information
pertaining to Investor's investment in the Company that have been
requested by Investor. The Investor has reviewed or received copies
of the SEC Documents.

Section 3.8 Manner of Sale. At no time was Investor
presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of
general solicitation or advertising.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor that:

Section 4.1 Organization of the Company. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power
and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Except as set forth in the
SEC Documents, the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other
business entity. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, other than
those in which the failure so to qualify would not have a Material
Adverse Effect.

Section 4.2 Authority. (i) The Company has the requisite
corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights
Agreement, the Warrant and the Escrow Agreement and to issue the
Put Shares, the Warrant, the Warrant Shares and the Blackout
Shares; (ii) the execution and delivery of this Agreement and the
Registration Rights Agreement, and the execution, issuance and
delivery of the Warrant, by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no further consent
or authorization of the Company or its Board of Directors or
stockholders is required; and (iii) each of this Agreement and the
Registration Rights Agreement has been duly executed and delivered,

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and the Warrant has been duly executed, issued and delivered, by
the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

Section 4.3 Capitalization. As of September 30, 1998, the
authorized capital stock of the Company consisted of 89,600,000
shares of Common Stock, of which 58,603,000 shares were issued and
outstanding. Except as set forth on Schedule 4.3 hereof, there are
no options, warrants, or rights to subscribe to, securities, rights
or obligations convertible into or exchangeable for or giving any
right to subscribe for any shares of capital stock of the Company.
All of the outstanding shares of Common Stock of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable.

Section 4.4 Common Stock. The Company has registered its
Common Stock pursuant to Section 12(b) or 12(g) of the Exchange Act
and is in full compliance with all reporting requirements of the
Exchange Act, and the Company has maintained all requirements for
the continued listing or quotation of its Common Stock, and such
Common Stock is currently listed or quoted on the Principal Market.
As of the date hereof, the Principal Market is the Nasdaq National
Market ("Nasdaq").

Section 4.5 SEC Documents. The Company has delivered or
made available to the Investor true and complete copies of the SEC
Documents (including, without limitation, proxy information and
solicitation materials). The Company has not provided to the
Investor any information that, according to applicable law, rule or
regulation, should have been disclosed publicly prior to the date
hereof by the Company, but which has not been so disclosed. As of
their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and other federal, state and
local laws, rules and regulations applicable to such SEC Documents,
and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in
the SEC Documents comply as to form and substance in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

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Section 4.6 Exemption from Registration; Valid Issuances.
The sale and issuance of the Warrant, the Warrant Shares, the Put
Shares and any Blackout Shares in accordance with the terms and on
the bases of the representations and warranties set forth in this
Agreement, may and shall be properly issued pursuant to Rule 4(2),
Regulation D and/or any applicable state law. When issued and paid
for as herein provided, the Put Shares, the Warrant Shares and any
Blackout Shares shall be duly and validly issued, fully paid, and
nonassessable. Neither the sales of the Put Shares, the Warrant,
the Warrant Shares or any Blackout Shares pursuant to, nor the
Company's performance of its obligations under, this Agreement, the
Registration Rights Agreement, or the Warrant shall (i) result in
the creation or imposition of any liens, charges, claims or other
encumbrances upon the Put Shares, the Warrant Shares, any Blackout
Shares or any of the assets of the Company, or (ii) entitle the
holders of Outstanding Capital Shares to preemptive or other rights
to subscribe to or acquire the Capital Shares or other securities
of the Company. The Put Shares, the Warrant Shares and any
Blackout Shares shall not subject the Investor to personal
liability by reason of the ownership thereof.

Section 4.7 No General Solicitation or Advertising in
Regard to this Transaction. Neither the Company nor any of its
affiliates nor any distributor or any person acting on its or their
behalf (i) has conducted or will conduct any general solicitation
(as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to any of the Put Shares, the Warrant, the
Warrant Shares or any Blackout Shares, or (ii) made any offers or
sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the
Common Stock under the Securities Act.

Section 4.8 Corporate Documents. The Company has furnished
or made available to the Investor true and correct copies of the
Company's Certificate of Incorporation, as amended and in effect on
the date hereof (the "Certificate"), and the Company's By-Laws, as
amended and in effect on the date hereof (the "By-Laws").

Section 4.9 No Conflicts. The execution, delivery and
performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby, including
without limitation the issuance of the Put Shares, the Warrant, the
Warrant Shares and the Blackout Shares do not and will not (i)
result in a violation of the Certificate or By-Laws or (ii)
conflict with, or constitute a material default (or an event that
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party,
or (iii) result in a violation of any federal, state, local or
foreign law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to
the Company or by which any property or asset of the Company is
bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a
Material Adverse Effect) nor is the Company otherwise in violation
of, conflict with or in default under any of the foregoing;
provided, however, that for purposes of the Company's
representations and warranties as to violations of foreign law,
rule or regulation referenced in clause (iii), such representations
and warranties are made only to the best of the Company's knowledge
insofar as the execution, delivery and performance of this

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Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby are or may be affected by the
status of the Investor under or pursuant to any such foreign law,
rule or regulation. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either
singly or in the aggregate do not and will not have a Material
Adverse Effect. The Company is not required under federal, state
or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or
issue and sell the Common Stock or the Warrant in accordance with
the terms hereof (other than any SEC, NASD or state securities
filings that may be required to be made by the Company subsequent
to any Closing, any registration statement that may be filed
pursuant hereto, and any shareholder approval required by the rules
applicable to companies whose common stock trades on Nasdaq);
provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of
the relevant representations and agreements of the Investor herein.

Section 4.10 No Material Adverse Change. Since December 31, 1997,
no event has occurred that would have a Material Adverse Effect on the
Company, except as disclosed in the SEC Documents.

Section 4.11 No Undisclosed Liabilities. The Company has no
liabilities or obligations that are material, individually or in
the aggregate, and that are not disclosed in the SEC Documents or
otherwise publicly announced, other than those incurred in the
ordinary course of the Company's businesses since December 31, 1997
and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.

Section 4.12 No Undisclosed Events or Circumstances. Since
December 31, 1997, no event or circumstance has occurred or exists
with respect to the or its businesses, properties, operations or
financial condition, that, under applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof
by the Company but which has not been so publicly announced or
disclosed in the SEC Documents.

Section 4.13 No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, other than
pursuant to this Agreement, under circumstances that would require
registration of the Common Stock under the Securities Act.

Section 4.14 Litigation and Other Proceedings. Except as
may be set forth in the SEC Documents, there are no lawsuits or
proceedings pending or to the best knowledge of the Company
threatened, against the Company, nor has the Company received any
written or oral notice of any such action, suit, proceeding or
investigation, which might have a Material Adverse Effect. Except
as set forth in the SEC Documents, no judgment, order, writ,

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injunction or decree or award has been issued by or, so far as is
known by the Company, requested of any court, arbitrator or
governmental agency which might result in a Material Adverse
Effect.

Section 4.15 No Misleading or Untrue Communication. The
Company and any duly authorized Person representing the Company in
connection with the transactions contemplated by this Agreement,
have not made, at any time, any oral communication in connection
with the offer or sale of the same which contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.16 Material Non-Public Information. The Company
is not in possession of, nor has the Company or its agents
disclosed to the Investor, any material non-public information that
(i) if disclosed, would, or could reasonably be expected to have,
a material effect on the price of the Common Stock or (ii)
according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but
which has not been so disclosed.

ARTICLE V
COVENANTS OF THE INVESTOR

Section 5.1 Compliance with Law. The Investor's trading
activities with respect to shares of the Company's Common Stock
will be in compliance with all applicable state and federal
securities laws, rules and regulations and the rules and
regulations of the Principal Market on which the Company's Common
Stock is listed.

Section 5.2 Limitation on Short Sales. The Investor and
its affiliates shall not engage in short sales of the Company's
Common Stock; provided, however, that the Investor may enter into
any short sale or other hedging or similar arrangement it deems
appropriate with respect to Put Shares after it receives a Put
Notice with respect to such Put Shares so long as such sales or
arrangements do not involve more than the number of such Put Shares
(as determined by the Investor as of the date of such Put Notice).

ARTICLE VI
COVENANTS OF THE COMPANY

Section 6.1 Registration Rights. The Company shall cause
the Registration Rights Agreement to remain in full force and
effect and the Company shall comply in all respects with the terms
thereof.

Section 6.2 Reservation of Common Stock. As of the date
hereof, the Company has available and the Company shall reserve and
keep available at all times, free of preemptive rights, shares of
Common Stock for the purpose of enabling the Company to satisfy any
obligation to issue the Put Shares, the Warrant Shares and the
Blackout Shares; such amount of shares of Common Stock to be
reserved shall be calculated based upon the minimum Purchase Price

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for the Put Shares under the terms and conditions of this Agreement
and the Exercise price of the Warrant and a good faith estimate by
the Company in consultation with the investor of the number of
Blackout Shares that will need to be issued. The number of shares
so reserved from time to time, as theretofore increased or reduced
as hereinafter provided, may be reduced by the number of shares
actually delivered hereunder.

Section 6.3 Listing of Common Stock. The Company shall
maintain the listing of the Common Stock on a Principal Market, and
as soon as practicable (but in any event prior to the commencement
of the Commitment Period) will cause the Put Shares and the Warrant
Shares to be listed on the Principal Market. The Company further
shall, if the Company applies to have the Common Stock traded on
any other Principal Market, include in such application the Put
Shares, the Warrant Shares and any Blackout Shares, and shall take
such other action as is necessary or desirable in the opinion of
the Investor to cause the Common Stock to be listed on such other
Principal Market as promptly as possible. The Company shall take
use its best efforts to continue the listing and trading of its
Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will
comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD and the
Principal Market.

Section 6.4 Exchange Act Registration. The Company shall
(i) cause its Common Stock to continue to be registered under
Section 12(g) or 12(b) of the Exchange Act, will comply in all
respects with its reporting and filing obligations under said Act,
and will not take any action or file any document (whether or not
permitted by said Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act.

Section 6.5 Legends. The certificates evidencing the Put
Shares, the Warrant Shares and the Blackout Shares shall be free of
legends, except as provided for in Article VIII.

Section 6.6 Corporate Existence. The Company shall take
all steps necessary to preserve and continue the corporate
existence of the Company.

Section 6.7 Additional SEC Documents. The Company shall
deliver to the Investor, as and when the originals thereof are
submitted to the SEC for filing, copies of all SEC Documents so
furnished or submitted to the SEC.

Section 6.8 Notice of Certain Events Affecting
Registration; Suspension of Right to Make a Put. The Company shall
immediately notify the Investor upon the occurrence of any of the
following events in respect of a registration statement or related
prospectus in respect of an offering of Registrable Securities:
(i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period
of effectiveness of the registration statement or for amendments or
supplements to the registration statement or related prospectus;
(ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification

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with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose; (iv) the happening of any event that makes any
statement made in such Registration Statement or related prospectus
or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires the
making of any changes in the registration statement, related
prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and that in the case of the related prospectus, it will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the
registration statement would be appropriate, and the Company shall
promptly make available to the Investor any such supplement or
amendment to the related prospectus. The Company shall not deliver
to the Investor any Put Notice during the continuation of any of
the foregoing events.

Section 6.9 Expectations Regarding Put Notices. Within ten
(10) days after the commencement of each calendar quarter occurring
subsequent to the commencement of the Commitment Period, the
Company undertakes to notify the Investor as to its reasonable
expectations as to the dollar amount it intends to raise during
such calendar quarter, if any, through the issuance of Put Notices.
Such notification shall constitute only the Company's good faith
estimate with respect to such calendar quarter and shall in no way
obligate the Company to raise such amount during such calendar
quarter or otherwise limit its ability to deliver Put Notices
during such calendar quarter. The failure by the Company to comply
with this provision can be cured by the Company's notifying the
Investor at any time as to its reasonable expectations with respect
to the current calendar quarter.

Section 6.10 Consolidation; Merger. The Company shall not,
at any time after the date hereof, effect any merger or
consolidation of the Company with or into, or a transfer of all or
substantially all of the assets of the Company to, another entity
unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to
the Investor such shares of stock and/or securities as the Investor
is entitled to receive pursuant to this Agreement and the Warrant.

Section 6.11 Issuance of Put Shares, Warrant Shares and
Blackout Shares. The sale of the Put Shares, the issuance of the
Warrant Shares pursuant to exercise of the Warrant and the issuance
of any Blackout Shares shall be made in accordance with the
provisions and requirements of Regulation D and any applicable
state law. Issuance of the Warrant Shares pursuant to exercise of
the Warrant through a cashless exercise shall be made in accordance
with the provisions and requirements of Section 3(a)(9) under the
Securities Act and any applicable state law.

Section 6.12 Legal Opinion on Subscription Date. The
Company's general or outside counsel shall deliver to the Investor
on the Subscription Date an opinion in the form of Exhibit E,
except for paragraph 6 thereof.

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Section 6.13 No Other Equity Lines. The Company shall
refrain from entering into any other agreements, arrangements or
understandings granting to the Company the right to put shares of
its securities to one or more investors through private placements.

ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING

Section 7.1 Conditions Precedent to the Obligation of the
Company to Issue and Sell Common Stock. The obligation hereunder of
the Company to issue and sell the Put Shares to the Investor
incident to each Closing is subject to the satisfaction, at or
before each such Closing, of each of the conditions set forth
below.

(a) Accuracy of the Investor's Representation and
Warranties. The representations and warranties of the
Investor shall be true and correct in all material
respects as of the date of this Agreement and as of the
date of each such Closing as though made at each such
time.

(b) Performance by the Investor. The Investor shall
have performed, satisfied and complied in all respects
with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Closing.

Section 7.2 Conditions Precedent to the Right of the
Company to Deliver a Put Notice and the Obligation of the Investor
to Purchase Put Shares. The right of the Company to deliver a Put
Notice and the obligation of the Investor hereunder to acquire and
pay for the Put Shares incident to a Closing is subject to the
satisfaction, on (i) the applicable Put Date and (ii) the
applicable Closing Date (each a "Condition Satisfaction Date"), of
each of the following conditions:

(a) Registration of the Registrable Securities with the
SEC. As set forth in the Registration Rights Agreement,
the Company shall have filed with the SEC a Registration
Statement with respect to the resale of the Registrable
Securities by the Investor that shall have been declared
effective by the SEC prior to the first Put Date, but in
no event later than ninety (90) days after Subscription
Date.

(b) Effective Registration Statement. As set forth in
the Registration Rights Agreement, the Registration
Statement shall have previously become effective and
shall remain effective on each Condition Satisfaction
Date and (i) neither the Company nor the Investor shall
have received notice that the SEC has issued or intends
to issue a stop order with respect to the Registration
Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends
or has threatened to do so (unless the SEC's concerns
have been addressed and the Investor is reasonably

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satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other
suspension of the use or withdrawal of the effectiveness
of the Registration Statement or related prospectus shall
exist.

(c) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the
Company shall be true and correct as of each Condition
Satisfaction Date as though made at each such time
(except for representations and warranties specifically
made as of a particular date).

(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with
all covenants, agreements and conditions required by this
Agreement, the Registration Rights Agreement and the
Warrant to be performed, satisfied or complied with by
the Company at or prior to each Condition Satisfaction
Date.

(e) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or adopted by any
court or governmental authority of competent jurisdiction
that prohibits the transactions contemplated by this
Agreement or otherwise has a Material Adverse Effect, and
no actions, suits or proceedings shall be in progress,
pending or threatened by any Person, that seek to enjoin
or prohibit the transactions contemplated by this
Agreement or otherwise could reasonably be expected to
have a Material Adverse Effect. For purposes of this
paragraph (e), no proceeding shall be deemed pending or
threatened unless one of the parties has received written
or oral notification thereof prior to the applicable
Closing Date.

(f) No Suspension of Trading In or Delisting of Common
Stock. The trading of the Common Stock shall not have
been suspended by the SEC, the Principal Market or the
NASD and the Common Stock shall have been approved for
listing or quotation on and shall not have been delisted
from the Principal Market (including, without limitation,
delisted to the Nasdaq Bulletin Board). The issuance of
shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.

(g) Legal Opinion. The Company shall have caused to be
delivered to the Investor, within five (5) Trading Days
of the Effective Date, an opinion of the Company's
independent or general counsel in the form of Exhibit E
hereto, addressed to the Investor.

(h) Ten Percent Limitation. On each Closing Date, the
number of Put Shares then to be purchased by the Investor
shall not exceed the number of such shares that, when
aggregated with all other shares of Registerable
Securities then owned by the Investor beneficially or
deemed beneficially owned by the Investor, would result
in the Investor owning no more than 9.9% of all of such
Common Stock as would be outstanding on such Closing
Date, as determined in accordance with Section 16 of the

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Exchange Act and the regulations promulgated thereunder.
For purposes of this Section, in the event that the
amount of Common Stock outstanding as determined in
accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder is greater on a
Closing Date than on the date upon which the Put Notice
associated with such Closing Date is given, the amount of
Common Stock outstanding on such Closing Date shall
govern for purposes of determining whether the Investor,
when aggregating all purchases of Common Stock made
pursuant to this Agreement and, if any, Warrant Shares
and Blackout Shares, would own more than 9.9% of the
Common Stock following such Closing Date.

(i) Minimum Bid Price. The Bid Price equals or exceeds
the Floor Price throughout the applicable Valuation
Period (or, with respect to any Put Date, the portion of
the Valuation Period preceding such Put Date).

(j) Minimum Average Daily Trading Volume. The Average
Daily Trading Volume for the Common Stock with respect to
the applicable Put Date and Closing Date equals or
exceeds 50,000 shares.

(k) No Knowledge. The Company shall have no knowledge
of any event more likely than not to have the effect of
causing such Registration Statement to be suspended or
otherwise ineffective (which event is more likely than
not to occur within the fifteen Trading Days following
the Trading Day on which such Notice is deemed
delivered).

(l) Trading Cushion. The Trading Cushion shall have
elapsed since the immediately preceding Put Date.

(m) Shareholder Vote. The issuance of shares of Common
Stock with respect to the applicable Closing, if any,
shall not violate the shareholder approval requirements
of the Principal Market.

(n) Escrow Agreement. The parties hereto shall have
entered into the Escrow Agreement.

(o) Other. On each Condition Satisfaction Date, the
Investor shall have received and been reasonably
satisfied with such other certificates and documents as
shall have been reasonably requested by the Investor in
order for the Investor to confirm the Company's
satisfaction of the conditions set forth in this Section
7.2., including, without limitation, a certificate in
substantially the form and substance of Exhibit F hereto,
executed in either case by an executive officer of the
Company and to the effect that all the conditions to such
Closing shall have been satisfied as at the date of each
such certificate.

Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public
Information.

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(a) The Company shall make available for inspection and
review by the Investor, advisors to and representatives
of the Investor (who may or may not be affiliated with
the Investor and who are reasonably acceptable to the
Company), any Underwriter, any Registration Statement or
amendment or supplement thereto or any blue sky, NASD or
other filing, all financial and other records, all SEC
Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may
be reasonably necessary for the purpose of such review,
and cause the Company's officers, directors and employees
to supply all such information reasonably requested by
the Investor or any such representative, advisor or
Underwriter in connection with such Registration
Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time
after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Investor
and such representatives, advisors and Underwriters and
their respective accountants and attorneys to conduct
initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.

(b) Each of the Company, its officers, directors,
employees and agents shall in no event disclose non-public
information to the Investor, advisors to or
representatives of the Investor unless prior to
disclosure of such information the Company identifies
such information as being non-public information and
provides the Investor, such advisors and representatives
with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a
condition to disclosing any non-public information
hereunder, require the Investor's advisors and
representatives to enter into a confidentiality agreement
in form reasonably satisfactory to the Company and the
Investor.

(c) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or
representatives, and the Company represents that it does
not disseminate non-public information to any investors
who purchase stock in the Company in a public offering,
to money managers or to securities analysts; provided,
however, that notwithstanding anything herein to the
contrary, the Company shall, as hereinabove provided,
immediately notify the advisors and representatives of
the Investor and any Underwriters of any event or the
existence of any circumstance (without any obligation to
disclose the specific event or circumstance) of which it
becomes aware, constituting non-public information
(whether or not requested of the Company specifically or
generally during the course of due diligence by such
persons or entities), which, if not disclosed in the
prospectus included in the Registration Statement would
cause such prospectus to include a material misstatement
or to omit a material fact required to be stated therein
in order to make the statements, therein, in light of the
circumstances in which they were made, not misleading.
Nothing contained in this Section 7.3 shall be construed
to mean that such persons or entities other than the
Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain
non-public information in the course of conducting due

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diligence in accordance with the terms and conditions of
this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of their
opinion that based on such due diligence by such persons
or entities, that the Registration Statement contains an
untrue statement of a material fact or omits a material
fact required to be stated in the Registration Statement
or necessary to make the statements contained therein,
in light of the circumstances in which they were made,
not misleading.

ARTICLE VIII
LEGENDS

Section 8.1 Legends. Each of the Warrant and, unless
otherwise provided below, each certificate representing Registrable
Securities will bear the following legend (the "Legend"):

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF
THE COMPANY SET FORTH IN A PRIVATE EQUITY LINE AGREEMENT
BETWEEN CYTOGEN CORPORATION AND KINGSBRIDGE CAPITAL
LIMITED DATED AS OF OCTOBER 23, 1998. A COPY OF THE
PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE
OFFICES.

As soon as practicable after the execution and delivery
hereof, but in any event within 5 Trading Days hereafter, the
Company shall issue to the transfer agent for its Common Stock (and
to any substitute or replacement transfer agent for its Common
Stock upon the Company's appointment of any such substitute or
replacement transfer agent) instructions in substantially the form
of Exhibit G hereto, with a copy to the Investor. Such
instructions shall be irrevocable by the Company from and after the
date hereof or from and after the issuance thereof to any such
substitute or replacement transfer agent, as the case may be,
except as otherwise expressly provided in the Registration Rights
Agreement. It is the intent and purpose of such instructions, as

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provided therein, to require the transfer agent for the Common
Stock from time to time upon transfer of Registrable Securities by
the Investor to issue certificates evidencing such Registrable
Securities free of the Legend during the following periods and
under the following circumstances and without consultation by the
transfer agent with the Company or its counsel and without the need
for any further advice or instruction or documentation to the
transfer agent by or from the Company or its counsel or the
Investor:

(a) At any time after the Effective Date, upon surrender
of one or more certificates evidencing Common Stock that
bear the Legend, to the extent accompanied by a notice
requesting the issuance of new certificates free of the
Legend to replace those surrendered; provided that (i)
the Registration Statement shall then be effective and
(ii) if reasonably requested by the transfer agent the
Investor confirms to the transfer agent that the Investor
has complied with the prospectus delivery requirement.

(b) At any time upon any surrender of one or more
certificates evidencing Registrable Securities that bear
the Legend, to the extent accompanied by a notice
requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing
representations that (i) the Investor is permitted to
dispose of such Registrable Securities without limitation
as to amount or manner of sale pursuant to Rule 144(k)
under the Securities Act or (ii) the Investor has sold,
pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Registrable Securities
in a manner other than pursuant to an effective
registration statement, to a transferee who shall upon
such transfer be entitled to freely tradeable securities.

Section 8.2 No Other Legend or Stock Transfer Restrictions.
No legend other than the one specified in Section 8.1 has been or
shall be placed on the share certificates representing the Common
Stock and no instructions or "stop transfers orders," so called,
"stock transfer restrictions," or other restrictions have been or
shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article VIII.

Section 8.3 Investor's Compliance. Nothing in this Article
VIII shall affect in any way the Investor's obligations under any
agreement to comply with all applicable securities laws upon resale
of the Common Stock.

ARTICLE IX
INDEMNIFICATION

Section 9.1 Indemnification. (i) The Company agrees to
indemnify and hold harmless the Investor, its partners, affiliates,
officers, directors, employees, and duly authorized agents, and
each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the Controlling Persons (as defined in
the Registration Rights Agreement) from and against any Damages,
joint or several, and any action in respect thereof to which the
Investor, its partners, affiliates, officers, directors, employees,
and duly authorized agents, and any such Controlling Person becomes
subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of Company
contained in this Agreement, as such Damages are incurred, except
to the extent that such damages result solely from the Investor's
failure to perform any covenant or agreement contained in this
Agreement, provided, however, that the Company shall not be liable
in any such case to the extent that any such Damages arise out of
or are based upon information furnished to the Company by or on
behalf of the Investor in writing and (ii) the Investor agrees to
indemnify and hold harmless the Company, its partners, affiliates,
officers, directors, employees and duly authorized agents and its
Controlling Persons (as defined in the Registration Rights
Agreement) from and against any Damages, joint or several, and any
action in respect thereof to which the Company, its partners,
affiliates, officers, directors, employees, and duly authorized
agents, and any such Controlling Person becomes subject to,
resulting from, arising out of or relating to any

xxvi
<PAGE>

misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of
Investor contained in this Agreement; provided, however, that the
indemnification obligation of the Investor under this Section 9.1
shall not exceed an aggregate maximum amount of $280,000.

Section 9.2 Method of Asserting Indemnification Claims.
All claims for indemnification by any Indemnified Party (as defined
below) under Section 9.1 shall be asserted and resolved as follows:

(a) In the event any claim or demand in respect of which
any person claiming indemnification under any provision
of Section 9.1 (an "Indemnified Party") might seek
indemnity under Section 9.1 is asserted against or sought
to be collected from such Indemnified Party by a person
other than the Company, the Investor or any affiliate of
the Company or (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a
copy of all papers served, if any, and specifying the
nature of and basis for such Third Party Claim and for
the Indemnified Party's claim for indemnification that is
being asserted under any provision of Section 12.2
against any person (the "Indemnifying Party"), together
with the amount or, if not then reasonably ascertainable,
the estimated amount, determined in good faith, of such
Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified
Party fails to provide the Claim Notice with reasonable
promptness after the Indemnified Party receives notice of
such Third Party Claim, the Indemnifying Party shall not
be obligated to indemnify the Indemnified Party with
respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been
irreparably prejudiced by such failure of the Indemnified
Party. The Indemnifying Party shall notify the In-
demnified Party as soon as practicable within the period
ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute
Period") whether the Indemnifying Party disputes its
liability or the amount of its liability to the
Indemnified Party under Section 9.1 and whether the
Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party
Claim.

xxvii
<PAGE>

(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that
the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party
Claim pursuant to this Section 9.2(a), then the
Indemnifying Party shall have the right to defend,
with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of
the Indemnifying Party, such Third Party Claim by
all appropriate proceedings, which proceedings
shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or
will be settled at the discretion of the
Indemnifying Party (but only with the consent of
the Indemnified Party in the case of any settlement
that provides for any relief other than the payment
of monetary damages or that provides for the
payment of monetary damages as to which the
Indemnified Party shall not be indemnified in full
pursuant to Section 9.1). The Indemnifying Party
shall have full control of such defense and
proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified
Party may, at the sole cost and expense of the
Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice
referred to in the first sentence of this
clause (i), file any motion, answer or other
pleadings or take any other action that the
Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests;
and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at
the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to
contest. The Indemnified Party may participate in,
but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying
Party pursuant to this clause (i), and except as
provided in the preceding sentence, the Indemnified
Party shall bear its own costs and expenses with
respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the
control of the defense or settlement of a Third
Party Claim at any time if it irrevocably waives
its right to indemnity under Section 9.1 with
respect to such Third Party Claim.

(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that
the Indemnifying Party desires to defend the Third
Party Claim pursuant to Section 9.2(a), or if the
Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party
fails to give any notice whatsoever within the
Dispute Period, then the Indemnified Party shall
have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified
Party in a reasonable manner and in good faith or
will be settled at the discretion of the
Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will

xxviii
<PAGE>

have full control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any
Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing
provisions of this clause (ii), if the Indemnifying
Party has notified the Indemnified Party within the
Dispute Period that the Indemnifying Party disputes
its liability or the amount of its liability
hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the
manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred
by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to
this clause (ii), and the Indemnifying Party shall
bear its own costs and expenses with respect to
such participation.

(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its
liability or the amount of its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or
the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the
Loss in the amount specified in the Claim Notice
shall be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the
Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its
liability or the amount of its liability with
respect to such claim, the Indemnifying Party and
the Indemnified Party shall proceed in good faith
to negotiate a resolution of such dispute, and if
not resolved through negotiations within the
Resolution Period, such dispute shall be resolved
by arbitration in accordance with paragraph (c) of
this Section 9.2.

(b) In the event any Indemnified Party should have a
claim under Section 9.1 against the Indemnifying Party
that does not involve a Third Party Claim, the
Indemnified Party shall deliver to the Indemnifying Party
a written notification of a claim for indemnity under
Section 9.1 specifying the nature of and basis for such
claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an "Indemnity
Notice") with reasonable promptness to the Indemnifying

xxix
<PAGE>

Party. The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying
Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party notifies
the Indemnified Party that it does not dispute the claim
or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within
the Dispute Period whether the Indemnifying Party
disputes the claim or the amount of the claim described
in such Indemnity Notice, the Loss in the amount
specified in the Indemnity Notice will be conclusively
deemed a liability of the Indemnifying Party under
Section 9.1 and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its
liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute
shall be resolved by arbitration in accordance with
paragraph (c) of this Section 9.2.

(c) Any dispute under this Agreement or the Warrant
shall be submitted to arbitration (including, without
limitation, pursuant to this Section 12.3) and shall be
finally and conclusively determined by the decision of a
board of arbitration consisting of three (3) members (the
"Board of Arbitration") selected as hereinafter provided.
Each of the Indemnified Party and the Indemnifying Party
shall select one (1) member and the third member shall be
selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third
member within twenty (20) days after their selection,
such third member shall thereafter be selected by the
American Arbitration Association upon application made to
it for such purpose by the Indemnified Party. The Board
of Arbitration shall meet on consecutive business days in
New York County, New York or such other place as a
majority of the members of the Board of Arbitration
determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the

xxx
<PAGE>

amount, if any, which the Indemnifying Party is required
to pay to the Indemnified Party in respect of a claim
filed by the Indemnified Party. In connection with
rendering its decisions, the Board of Arbitration shall
adopt and follow such rules and procedures as a majority
of the members of the Board of Arbitration deems
necessary or appropriate. To the extent practical,
decisions of the Board of Arbitration shall be rendered
no more than thirty (30) calendar days following
commencement of proceedings with respect thereto. The
Board of Arbitration shall cause its written decision to
be delivered to the Indemnified Party and the
Indemnifying Party. Any decision made by the Board of
Arbitration (either prior to or after the expiration of
such thirty (30) calendar day period) shall be final,
binding and conclusive on the Indemnified Party and the
Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court
of competent jurisdiction. Each party to any arbitration
shall bear its own expense in relation thereto, including
but not limited to such party's attorneys' fees, if any,
and the expenses and fees of the Board of Arbitration
shall be divided between the Indemnifying Party and the
Indemnified Party in the same proportion as the portion
of the related claim determined by the Board of
Arbitration to be payable to the Indemnified Party bears
to the portion of such claim determined not to be so
payable.

ARTICLE X
MISCELLANEOUS

Section 10.1 Fees and Expenses. Each of the Company and the
Investor agrees to pay its own expenses incident to the performance
of its obligations hereunder, except that the Company shall pay the
fees, expenses and disbursements of the Investor's counsel in an
amount not to exceed $25,000 for the preparation, negotiation,
execution and delivery of this Agreement, the Registration Rights
Agreement, the Escrow Agreement and the Warrant.

Section 10.2 Reporting Entity for the Common Stock. The
reporting entity relied upon for the determination of the trading
price or trading volume of the Common Stock on any given Trading
Day for the purposes of this Agreement shall be Nasdaq or any
successor thereto. The written mutual consent of the Investor and
the Company shall be required to employ any other reporting entity.

Section 10.3 Brokerage. Each of the parties hereto
represents that it has had no dealings in connection with this
transaction with any finder or broker who will demand payment of
any fee or commission from the other party. The Company on the one
hand, and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or
finder's fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with
this Agreement or the transactions contemplated hereby.

Section 10.4 Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice
given in accordance herewith. Any notice or other communication
required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:

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<PAGE>

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

if to the Investor:

Adam Gurney
Kingsbridge Capital Limited
c/o Kingsbridge Corporate Services Limited
Main Street
Kilcullen, County Kildare
Republic of Ireland
Telephone: 011-353-45-481-811
Facsimile: 011-353-45-482-003

with a copy (which shall not constitute notice) to:

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

Either party hereto may from time to time change its address or
facsimile number for notices under this Section by giving at least
ten (10) days' prior written notice of such changed address or
facsimile number to the other party hereto.

Section 10.5 Assignment. Neither this Agreement nor any
rights of the Investor or the Company hereunder may be assigned by
either party to any other person. Notwithstanding the foregoing,

xxxii
<PAGE>

(a) the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any transferee of any of the Common Stock
purchased or acquired by the Investor hereunder with respect to the
Common Stock held by such person, and (b) the Investor's interest
in this Agreement may be assigned at any time, in whole or in part,
to any other person or entity (including any affiliate of the
Investor) upon the prior written consent of the Company, which
consent shall not to be unreasonably withheld.

Section 10.6 Amendment; No Waiver. No party shall be liable
or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth in
this Agreement or therein. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the
either party to insist on strict compliance with this Agreement, or
to exercise any right or remedy under this Agreement, shall not
constitute a waiver of any rights provided under this Agreement,
nor estop the parties from thereafter demanding full and complete
compliance nor prevent the parties from exercising such a right or
remedy in the future.

Section 10.7 Annexes and Exhibits; Entire Agreement. All
annexes and exhibits to this Agreement are incorporated herein by
reference and shall constitute part of this Agreement. This
Agreement, the Warrant, the Registration Rights Agreement and the
Escrow Agreement set forth the entire agreement and understanding
of the parties relating to the subject matter hereof and thereof
and supersede all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and
written, relating to the subject matter hereof.

Section 10.8 Termination; Survival. This Agreement shall
terminate on the earlier of (i) twenty four (24) months after the
commencement of the Commitment Period (ii) such date that the
Investor terminates this Agreement pursuant to Section 2.4 hereof
and (iii) the date on which the Company has made Puts with an
aggregate Investment Amount equal to the Maximum Commitment Amount;
provided, however, that the provisions of Articles VI, VIII, IX and
X, and of Section 2.1(b) and Section 7.3, shall survive the
termination of this Agreement.

Section 10.9 Severability. In the event that any provision
of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision;
provided that such severability shall be ineffective if it
materially changes the economic benefit of this Agreement to any
party.

Section 10.10 Title and Subtitles. The titles and subtitles
used in this Agreement are used for the convenience of reference
and are not to be considered in construing or interpreting this
Agreement.

Section 10.11 Counterparts. This Agreement may be executed in
multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument
which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one
and the same instrument.

xxxiii
<PAGE>

Section 10.12 Choice of Law. This Agreement shall be
construed under the laws of the State of New York.

xxxiv

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
Private Equity Line Agreement to be executed by the undersigned,
thereunto duly authorized, as of the date first set forth above.

KINGSBRIDGE CAPITAL LIMITED

By: /s/ Valentine O'Donoghue
------------------------
Valentine O'Donoghue
Director

CYTOGEN CORPORATION

By: /s/ H. Joseph Reiser
-------------------------
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

<PAGE>

ANNEX A
MAXIMUM PUT AMOUNT

The Maximum Put Amount with respect to a Put shall be
determined based upon the Average Daily Trading Volume of shares of
Common Stock with respect to the relevant Put Date and the Market
Price as of such Put Date of shares of Common Stock on such Put
Date as follows:

Average Daily Trading Volume

Market Price ($ 125,001-
per share) 50,000-75,000 75,001-125,000 200,000 200,001-Above
- ----------------------------------------------------------------------------
0.75-1.00 $150,000 $250,000 $325,000 $400,000
- ----------------------------------------------------------------------------
1.01-1.50 $225,000 $350,000 $375,000 $500,000
- ----------------------------------------------------------------------------
1.51-1.75 $300,000 $400,000 $450,000 $550,000
- ----------------------------------------------------------------------------
1.76-2.00 $400,000 $450,000 $500,000 $600,000
- ----------------------------------------------------------------------------
2.01-2.50 $500,000 $550,000 $600,000 $750,000
- ----------------------------------------------------------------------------
2.51-3.00 $550,000 $600,000 $700,000 $800,000
- ----------------------------------------------------------------------------
3.01-3.50 $550,000 $650,000 $700,000 $850,000
- ----------------------------------------------------------------------------
3.51-Above $600,000 $750,000 $850,000 $1,000,000
- ----------------------------------------------------------------------------

<PAGE>

EXHIBIT A

FORM OF ESCROW AGREEMENT

ESCROW AGREEMENT

ESCROW AGREEMENT, dated as of October 23, 1998 among CYTOGEN
CORPORATION a Delaware corporation, as escrow agent (the "Escrow Agent"),
CYTOGEN CORPORATION a Delaware corporation (the "Company"), and KINGSBRIDGE
CAPITAL LIMITED, a British Virgin Islands entity ("Investor"). Any capitalized
terms not defined herein shall have the meanings ascribed to them in the Private
Equity Line Agreement by and between the Company and the Investor, dated as of
October 23, 1998 (the "Equity Line Agreement").

WHEREAS, Investor and the Company have entered into the Equity Line
Agreement whereby Investor agreed to purchase capital stock of the Company upon
certain Puts made by the Company, subject to the terms and conditions of the
Equity Line Agreement;

WHEREAS, pursuant to Section 7.2(o) of the Equity Line Agreement,
Investor and the Company agreed to enter into this Agreement with Escrow Agent
in order for Escrow Agent to hold the Investment Amount with respect to a Put
(as delivered to Escrow Agent by Investor) and the certificates representing
the Put Shares with respect to such Put (as delivered to Escrow Agentby the
Company) for release to the Company and Investor, respectively, in
accordance with this Agreement; and

NOW, THEREFORE, Investor, the Company and the Escrow Agent hereby
agree as follows:

a. Appointment of the Escrow Agent; Deposit of Escrow Amount and
Share Certificate. The Company and Investor hereby constitute and appoint the
Escrow Agent as, and the Escrow Agent hereby agrees to assume and perform the
duties of, the escrow agent under and pursuant to this Agreement. The Escrow
Agent acknowledges that it will, with respect to any Put made by the Company
in accordance with the Equity Line Agreement, (i) receive from the Investor
the Investment Amount with respect to such Put (the "Escrow Fund") as provided
in Article II of the Equity Line Agreement and (ii) receive from the Company
certificate(s) representing all the Put Shares corresponding to such
Investment Amount and Put (collectively, the "Share Certificate"), as provided
in Article II of the Equity Line Agreement.

b. Escrow Fund; Share Certificate. The Escrow Fund shall be held
by the Escrow Agent in a separate account maintained for the purpose of
effecting the Closings, on the terms and subject to the conditions of this
Agreement. The Escrow Agent shall hold in escrow the Share Certificate
separately from the Escrow Fund and agrees that the Share Certificate shall
be held on the terms and subject to the conditions set forth herein. The Share
Certificate and the Escrow Fund shall not be subject to lien or attachment by

<PAGE>

any creditor of any party hereto and shall be used solely for the purpose set
forth in this Agreement. The Share Certificate and the Escrow Fund shall not
be available to, and shall not be used by, the Escrow Agent to set off any
obligations of either Investor or the Company owing to the Escrow Agent in
any capacity.

(c) Deliveries to Effect Closing. Upon the receipt by the Escrow
Agent of a certificate in substantially the form of Annex I attached hereto
("Mutual Closing Certificate"), jointly executed by the Company and Investor,
Investor and the Company irrevocably instruct the Escrow Agent (i) to release
the Share Certificate to Investor, and simultaneously (ii) to pay over to
Investor's counsel, in immediately available funds to a bank account of the
Investor's counsel's designation, the portion of the Escrow Fund representing
any reduction in the Investment Amount due to fees, expenses and
disbursements owing to the Investor's counsel as provided for in Section 2.3 of
the Equity Line Agreement and (iii) to pay over to the Company the
remaining portion of the Escrow Fund, in immediately available funds to a
bank account of the Company's designation.

(d) Release of Escrow Fund and Share Certificate upon Failure to
Close. If, upon the expiration of two (2) Trading Days after any Closing Date,
the Escrow Agent has not received a Mutual Closing Certificate with respect
to such Closing Date, the Investor and the Company irrevocably instruct the
Escrow Agent to release the Share Certificate to the Company and to pay
over to Investor all amounts of the Escrow Fund, in immediately available
funds, to a bank account of Investor's designation.

(e) Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent are purely ministerial and shall be limited to
and determined solely by the provisions of this Agreement. The Escrow Agent
is not charged with knowledge of or any duties or responsibilities in
respect of any other agreement or document. In furtherance and not in
limitation of the foregoing:

(i) the Escrow Agent shall not be liable for any loss of
interest sustained as a result of investments made hereunder in accordance
with the terms hereof, including any liquidation of any investment of the
Escrow Fund prior to its maturity effected in order to make a payment
required by the terms of this Agreement;

(ii) the Escrow Agent shall be fully protected in relying
in good faith upon any written certification, notice, direction, request,
waiver, consent, receipt or other document that the Escrow Agent
reasonably believes to be genuine and duly authorized, executed and
delivered;

(iii) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in
fact or law, or for anything that it may do or refrain from doing in
connection herewith; provided, however, that notwithstanding any other
provision in this Agreement, the Escrow Agent shall be liable for its
willful misconduct or gross negligence or breach of this Agreement;

(iv) the Escrow Agent may seek the advice of legal counsel
selected with reasonable care in the event of any dispute or question as

<PAGE>

to the construction of any of the provisions of this Agreement or its
duties hereunder, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in
good faith in accordance with the opinion of such counsel;

(v) in the event that the Escrow Agent shall in any
instance, after seeking the advice of legal counsel pursuant to the
immediately preceding clause, in good faith be uncertain as to its
duties or rights hereunder, it shall be entitled to refrain from taking
any action in that instance and its sole obligation, in addition to
those of its duties hereunder as to which there is no such uncertainty,
shall be to keep safely all property held in the Escrow Fund until it
shall be directed otherwise in writing by each of the parties hereto
or by a final, nonappealable order of a court of competent jurisdiction;
provided, however, in the event that the Escrow Agent has not received
such written direction or court order within one hundred eighty (180)
calendar days after requesting the same, it shall have the right to
interplead Investor and the Company in any court of competent jurisdiction
and request that such court determine its rights and duties hereunder; and

(vi) the Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either
directly or by or through agents or attorneys selected with reasonable care,
nothing in this Agreement shall be deemed to impose upon the Escrow Agent any
duty to qualify to do business or to act as fiduciary or otherwise in any
jurisdiction other than the State of New York and the Escrow Agent shall not be
responsible for and shall not be under a duty to examine into or pass upon
the validity, binding effect, execution or sufficiency of this Agreement or
of any agreement amendatory or supplemental hereto.

(f) Cooperation. Investor and the Company shall provide to the
Escrow Agent all instruments and documents within their respective powers to
provide that are necessary for the Escrow Agent to perform its duties and
responsibilities hereunder.

(g) Expenses; Indemnity. The Company hereby agrees to pay or
reimburse the Escrow Agent upon request for all expenses, disbursement and
advances, including reasonable attorney's fees, incurred or made by it in
connection with the preparation, execution, performance, delivery,
modification and termination of this Agreement; provided that Investor shall
bear all expenses of the investment and reinvestment of the Escrow Fund. The
Company hereby agrees to indemnify the Escrow Agent for, and to hold it
harmless against, any loss, liability or expense arising out of or in
connection with this Agreement and carrying out its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Escrow Agent has been guilty of
gross negligence, willful misconduct or in breach of this Agreement.
Anything in this Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action. The provisions of this Section
shall survive any termination of this Agreement, whether by disbursement of
the collateral held, resignation of the Escrow Agent, or otherwise.

v
<PAGE>

(h) Resignation and Removal of the Escrow Agent.

(a) The Escrow Agent may resign as such thirty (30) calendar days
following the giving of prior written notice thereof to the Company and
Investor. In addition, the Escrow Agent may be removed and replaced on a
date designated in a written instrument signed by the Company and Investor
and delivered to the Escrow Agent. Notwithstanding the foregoing, no
such resignation r removal shall be effective until a successor escrow agent
has acknowledged its appointment as such as provided in paragraph (c) below.
In either event, upon the effective date of such resignation or removal,
the Escrow Agent shall deliver the property comprising the Escrow Fund and
the Stock Certificate to such successor escrow agent, together with such
records maintained by the Escrow Agent in connection with its duties
hereunder and other information with respect to the Escrow Fund
as such successor may reasonably request.

(b) If a successor escrow agent shall not have acknowledged its
appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following
the date of a notice of resignation or, in the case of a removal, on the date
designated for the Escrow Agent's removal, as the case may be, because the
Company and Investor are unable to agree on a successor escrow agent, or for
any other reason, the Escrow Agent may select a successor escrow agent and
any such resulting appointment shall be binding upon all of the parties to
this Agreement, provided that any such successor selected by the Escrow
Agent shall be a depository institution or trust company that is designated
in writing by the Investor and is incorporated under the laws of the United
States of America, any State thereof or the District of Columbia and has
total assets in excess of U.S. $500 million.

(c) Upon written acknowledgment by a successor escrow agent
appointed in accordance with the foregoing provisions of this Section of its
agreement to serve as escrow agent hereunder and the receipt of the property
then comprising the Escrow Fund and the Stock Certificate, the Escrow Agent
shall be fully released and relieved of all duties, responsibilities and
obligations under this Agreement, subject to the proviso contained in clause
(iii) of Section 5, and such successor escrow agent shall for all purposes
hereof be the Escrow Agent.

(i) Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given if
delivered personally or by facsimile transmission (with confirmation
generated by the sending machine) or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

vi
<PAGE>

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

if to the Investor:

with a copy (which shall not constitute notice) to:

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

and if to the Escrow Agent:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon receipt, and (iii)
if delivered by mail in the manner described above to the address as provided
in this Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile

vii
<PAGE>

number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.

(j) Amendments, etc.. This Agreement may be amended or modified,
and any of the terms hereof may be waived, only by a written instrument duly
executed by or on behalf of Investor and the Company and, with respect to any
amendment that would adversely affect the Escrow Agent, the Escrow Agent.
No waiver by any party of any term or condition contained of this Agreement,
in any one or more instances, shall be deemed to be or construed as a waiver
of the same or any other term or condition of this Agreement on any future
occasion.

(k) Governing Law. This Agreement shall be construed under the
laws of the State of New York.

(l) Business Day. For all purposes of this Agreement, the term
"business day" shall mean a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.

(m) Entire Agreement. It is understood and agreed that this
Escrow Agreement supersedes all understandings and agreements heretofore had
between the parties hereto with respect to the subject matter hereof, and
contains the sole and entire agreement between the parties with
respect to the subject matter hereof.

(n) Assignment. Neither this Agreement nor any right, interest
or obligation hereunder may be assigned by any party without the prior written
consent of the other parties and any attempt to do so will be void, except
that Investor may assign all of its rights, interests and obligations
hereunder at any time, in whole or in part, to any other person or entity
(including any affiliate of the Investor) upon the prior written consent of the
Company, which consent shall not to be unreasonably withheld. Investor and
the Company shall provide to the Escrow Agent written notice of such an
assignment by Investor.

(o) Miscellaneous. This Agreement is binding upon and will inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof. This Escrow Agreement may be signed by facsimile copy (followed by
originals) and, in addition, may be executed in several counterparts, each
of which shall be deemed an original but all of which shall constitute one
instrument.

viii
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.

KINGSBRIDGE CAPITAL LIMITED:

By: /s/ Valentine O'Donoghue
--------------------------
Valentine O'Donoghue
Director

CYTOGEN CORPORATION

By: /s/ H. Joseph Reiser
_____________________________
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

CYTOGEN CORPORATION, as Escrow Agent

By: /s/ Donald F. Crane
-----------------------------------
Name: Donald F. Crane, Jr.
Title: Vice President General Counsel and
Corporate Secretary

1
<PAGE>

ANNEX I

MUTUAL CLOSING CERTIFICATE

CYTOGEN CORPORATION

as Escrow Agent

The undersigned, KINGSBRIDGE CAPITAL LIMITED, a British Virgin
Islands entity ("Investor"), and CYTOGEN CORPORATION, a Delaware corporation
("the Company"), pursuant to Section 3 of the Escrow Agreement dated as of
October 23, 1998 among Investor, the Company and you (terms defined in said
Escrow Agreement have the same meanings when used herein), hereby instruct
you:

(i) to deliver to Investor the Share Certificate,

(ii) to pay to May Davis Group the amount of $_________, by wire transfer
of immediately available funds to an account at Chase Manhattan Bank, New
York, New York, (Account # 140082322865; ABA # 021 000 021),

[(iii) to pay to Investor's counsel from the Escrow Fund, the amount
of $_________, by wire transfer of immediately available funds to
Investor's counsel's account at __________________, _________, _________
(Account No.:_________).]

(iii) to pay to the Company from the Escrow Fund, all amounts remaining,
by wire transfer of immediately available funds to the Company's account
at __________________, _________, _________ (Account No.:_________),

KINGSBRIDGE CAPITAL LIMITED

By:________________________________
Name:
Title:

Dated:____________, ____

CYTOGEN CORPORATION

By:________________________________
Name:
Title:

Dated:____________, ____

<PAGE>

EXHIBIT B

FORM OF REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October
23, 1998 is made and entered into by and between CYTOGEN CORPORATION, a Delaware
corporation (the "Company"), and KINGSBRIDGE CAPITAL LIMITED (the "Investor").

WHEREAS, the Company and the Investor have entered into that certain
Private Equity Line Agreement, dated as of the date hereof (the "Equity Line
Agreement"), pursuant to which the Company will issue, from time to time, to
the Investor up to $12,000,000 worth of shares of Common Stock, par value $.01
per share, of the Company (the "Common Stock");

WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor entering into the Investment Agreement, the Company has issued to
the Investor a warrant dated as of the date hereof, exercisable from time to
time within three (3) years following the six-month anniversary
of the date of issuance (the "Warrant") for the purchase of an aggregate
of up to 200,000 shares of Common Stock at a price specified in such Warrant;

WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Investment Agreement, the Company
has agreed to provide the Investor with certain registration rights with
respect to the Registrable Securities;

NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrant, and in
the Investment Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be
legally bound hereby, the parties hereto agree as follows (capitalized
terms used herein and not defined herein shall have the respective meanings
ascribed to them in the Investment Agreement):

ARTICLE XI
REGISTRATION RIGHTS

Section 11.1. REGISTRATION STATEMENTS.

(a) Filing of Registration Statement. Subject to the terms and
conditions of this Agreement, the Company shall file with the SEC within
forty-five (45) days following the Subscription Date a registration statement
on Form S-3 under the Securities Act or such other form as the SEC deems

<PAGE>

appropriate (the "Registration Statement") for the registration of the resale
by the Investor of the Registrable Securities.

(b) Effectiveness of the Registration Statement. The Company shall
use its best efforts to have the Registration Statement declared effective by
the SEC by no later than ninety (90) days after Subscription Date and to
ensure that the Registration Statement remains in effect throughout the term
of this Agreement as set forth in Section 4.2, subject to the terms and
conditions of this Agreement.

(c) Failure to Obtain Effectiveness of Registration Statement. In
the event the Company fails for any reason to obtain the effectiveness of a
Registration Statement within the time period set forth in Section 1.1(b),
the Company shall pay to the Investor, within three (3) Trading Days of the
date by which such Registration Statement was required to have been declared
effective, $15,000 in immediately available funds into an account designated
by the Investor; provided, however, that such amount shall not be payable
with respect to the postponement of the effectiveness of a Registration
Statement (or use of the underlying prospectus) pursuant to Section 1.1(e).
Such payment shall be made by wire transfer of immediately available funds to
an account designated by the Investor.

(d) Failure to Maintain Effectiveness of Registration Statement.
In the event the Company fails to maintain the effectiveness of a Registration
Statement (or the underlying prospectus) throughout the period set forth in
Section 4.2, other than temporary suspensions as set forth in Section 1.1(e),
and the Investor holds any Registrable Securities at any time during the
period of such ineffectiveness (an "Ineffective Period"), the Company shall
pay to the Investor in immediately available funds into an account designated
by the Investor an amount equal to one percent (1%) of the aggregate Purchase
Price of all of the Registrable Securities then held by the Investor for
the each of the seven-calendar-day periods (or portion thereof) of an
Ineffective Period. Such amounts shall not be payable with respect to
suspensions of the effectiveness of a Registration Statement (or use of the
underlying prospectus), in accordance with Section 1.1(e). Such payments
shall be made on the first Trading Day after the earliest to occur of (i) the
expiration of the Commitment Period, (ii) the expiration of an Ineffective
Period, (iii) the expiration of the first twenty-eight calendar days of an
Ineffective Period and (iv) the expiration of each additional twenty-eight
calendar-day period during an Ineffective Period.

(e) Deferral or Suspension During a Blackout Period. Sections 1.1
(c) and (d) notwithstanding, if the Company shall furnish to the Investor
notice signed by the President and Chief Executive Officer of the Company
stating that the Board of Directors of the Company has, by duly authorized
resolution, determined in good faith that it would be seriously detrimental
to the Company and its shareholders for the Registration Statement to be filed
(or remain in effect) and it is therefore essential to defer the filing of
such Registration Statement (or temporarily suspend the effectiveness of
such Registration Statement or use of the related prospectus) (a "Blackout
Notice"), the Company shall have the right (i) immediately to defer such filing
for a period of not more than thirty (30) days beyond the date by which such
Registration Statement was otherwise required hereunder to be filed or (ii)
suspend such effectiveness for a period of not more than thirty (30) (any
such deferral or suspension period of up to thirty days, a "Blackout Period").
The Investor acknowledges that it would be seriously detrimental to the Company

<PAGE>

and its shareholders for such Registration Statement to be filed (or remain in
effect) during a Blackout Period and therefore essential to defer such filing
(or suspend such effectiveness) during such Blackout Period and agrees
to cease any disposition of the Registrable Securities during such Blackout
Period. The Company may not utilize any of its rights under this Section
1.1(e) to defer the filing of a Registration Statement (or suspend its
effectiveness) more than twice in any twelve (12) month period.
Following such deferral or suspension, the Investor shall be entitled to
such additional number of shares of Common Stock as set forth in Section 2.6
of the Investment Agreement.

(f) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the sums payable under subsections 1(c) or 1(d)
above shall constitute liquidated damages and not penalties. The parties
further acknowledge that (i) the amount of loss or damages likely to be
incurred is incapable or is difficult to precisely estimate, (ii) the amounts
specified in such subsections bear a reasonable proportion and are not
plainly or grossly disproportionate to the probable loss likely to be
incurred in connection with any failure by the Company to obtain or maintain
the effectiveness of a Registration Statement, (iii) one of the reasons for
the Company and the Investor reaching an agreement as to such amounts was
the uncertainty and cost of litigation regarding the question of actual
damages, and (iv) the Company and the Investor are sophisticated
business parties and have been represented by sophisticated and able legal
and financial counsel and negotiated this Agreement at arm's length.

ARTICLE XII
REGISTRATION PROCEDURES

Section 12.1 FILINGS; INFORMATION. The Company will effect the registration
and sale of such Registrable Securities in accordance with the intended
methods of disposition thereof. Without limiting the foregoing, the Company
in each such case will do the following as expeditiously as possible, but in
no event later than the deadline, if any, prescribed therefor in this Agreement:

(a) The Company shall (i) prepare and file with the SEC a
Registration Statement on Form S-3 (if use of such form is then available to
the Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies, that counsel
for the Company shall deem appropriate and which form shall be available for
the sale of the Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement and in accordance with the intended
method of distribution of such Registrable Securities); (ii) use reasonable
best efforts to cause such filed Registration Statement to become and remain
effective (pursuant to Rule 415 under the Securities Act or otherwise); (iii)
prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the time
period prescribed by Section 1.1(b); and (iv) comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such Registration Statement during such period in accordance with the
intended methods of disposition by the Investor set forth in such
Registration Statement.

<PAGE>
(b) The Company shall file all necessary amendments to the
Registration Statement in order to effectuate the purpose of this Agreement,
the Investment Agreement, and the Warrant.

(c) If so requested by the managing underwriters, if any, or the
holders of a majority in aggregate principal amount of the Registrable
Securities being sold in connection with the filing of a Registration
Statement under the Securities Act for the offering on a continuous or
delayed basis in the future of all of the Registrable Securities (a "Shelf
Registration"), the Company shall (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such holders agree should be included therein,
and (ii) make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment; provided, however, that
the Company shall not be required to take any action pursuant to this Section
2.1(c)(ii) that would, in the opinion of counsel for the Company, violate
applicable law.

(d) In connection with the filing of a Shelf Registration, the
Company shall enter into such agreements and take all such other reasonable
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the holders of a majority in aggregate
principal amount of the Registrable Securities being sold) in order to
expedite or facilitate the disposition of such Registrable Securities, and in
such connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an underwritten registration, the
Company shall (i) make such representations and warranties to the holders of
such Registrable Securities and the underwriters, if any, with respect to the
business of the Company (including with respect to businesses or assets
acquired or to be acquired by the Company), and the Registration Statement,
prospectus and documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm such representations and warranties if and when requested; (ii) if
an underwriting agreement is entered into, it shall contain indemnification
provision and procedures no less favorable to the selling holders of such
Registrable Securities and the underwriters, if any, than those set forth
herein (or such other provisions and procedures acceptable to the holders of
a majority in aggregate principal amount of Registrable Securities covered
by such Registration Statement and the managing underwriters, if any); and
(iii) deliver such documents and certificates as may be reasonably requested
by the holders of a majority in aggregate principal amount of the Registrable
Securities being sold, their counsel and the managing underwriters, if any,
to evidence the continued validity of their representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.

(e) Five (5) Trading Days prior to filing the Registration Statement
or prospectus, or any amendment or supplement thereto (excluding amendments
deemed to result from the filing of documents incorporated by reference
therein), the Company shall deliver to the Investor and one firm of counsel
representing the Investor, in accordance with the notice provisions of
Section 4.8, copies of the Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be subject to review by
the Investor and such counsel, and thereafter deliver to the Investor and
such counsel, in accordance with the notice provisions of Section 4.8, such

<PAGE>

number of copies of the Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in the Registration Statement (including each preliminary prospectus) and such
other documents or information as the Investor or counsel may reasonably
request in order to facilitate the disposition of the Registrable Securities.

(f) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable Securities covered by
the Registration Statement such number of conformed copies of the Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in the Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
seller's Registrable Securities, and such other documents, as such seller
may reasonably request to facilitate the disposition of its Registrable
Securities.

(g) After the filing of the Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.

(h) The Company shall use its reasonable best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Investor may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such
other governmental agencies or authorities in the United States as may be
necessary by virtue of the business and operations of the Company and do any
and all other acts and things that may be reasonably necessary or advisable
to enable the Investor to consummate the disposition of the Registrable
Securities; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (h), subject
itself to taxation in any such jurisdiction, or consent or subject itself to
general service of process in any such jurisdiction.

(i) The Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request by the SEC or any other federal
or state governmental authority for additional information, amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) receipt
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; (iv) the happening of any event that makes any statement
made in the Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case
of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated

<PAGE>

therein or necessary to make the statements therein not misleading, and that in
the case of the related prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate, and the Company will promptly
make available to the Investor any such supplement or amendment to the related
prospectus.

(j) The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).

(k) The Company shall make available to the Investor (and will
deliver to Investor's counsel), subject to restrictions imposed by the United
States federal government or any agency or instrumentality thereof, copies of
all correspondence between the SEC and the Company, its counsel or its
auditors concerning the Registration Statement and will also make available for
inspection by the Investor and any attorney, accountant or other professional
retained by the Investor (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers and employees to supply all information reasonably requested by any
Inspectors in connection with the Registration Statement. Records that the
Company determines, in good faith, to be confidential and that it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement or (ii) the disclosure
or release of such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or
other order from a court of competent jurisdiction or other process; provided,
however, that prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any such request
or requirement so that the Company may seek an appropriate protective order
or waive such Inspectors' obligation not to disclose such Records; and,
provided, further, that if failing the entry of a protective order or the
waiver by the Company permitting the disclosure or release of such Records,
the Inspectors, upon advice of counsel, are compelled to disclose such Records,
the Inspectors may disclose that portion of the Records that counsel has advised
the Inspectors that the Inspectors are compelled to disclose. The Investor
agrees that information obtained by it solely as a result of such inspections
(not including any information obtained from a third party who, insofar as is
known to the Investor after reasonable inquiry, is not prohibited from
providing such information by a contractual, legal or fiduciary obligation
to the Company) shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or
its affiliates unless and until such information is made generally available
to the public. The Investor further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.

(l) To the extent required by law or reasonably necessary to effect
a sale of Registrable Securities in accordance with prevailing business
practices at the time of any sale of Registrable Securities pursuant to a
Registration Statement, the Company shall deliver to the Investor a signed

<PAGE>

counterpart, addressed to the Investor, of (1) an opinion or opinions of
counsel to the Company, and (2) a comfort letter or comfort letters from the
Company's independent publicaccountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters,
as the case may be, as the Investor therefor reasonably requests.

(m) The Company shall otherwise comply with all applicable rules
and regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.

(n) The Company shall appoint a transfer agent and registrar for
all of the Registrable Securities covered by such Registration Statement not
later than the effective date of such Registration Statement.

(o) The Company may require the Investor to promptly furnish in
writing to the Company such information as may be legally required in
connection with such registration including, without limitation, all such
information as may be requested by the SEC or the National Association of
Securities Dealers. The Investor agrees to provide such information requested
in connection with such registration within ten (10) business days after
receiving such written request and the Company shall not be responsible for
any delays in obtaining or maintaining the effectiveness of the Registration
Statement caused by the Investor's failure to timely provide such information.

Section 12.2 REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities
exchange listing and fees required by the National Association of Securities
Dealers, (ii) all registration, filing, qualification and other fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications
of the Registrable Securities), (iii) all word processing, duplicating,
printing, messenger and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred by the Company in connection with the listing of the Registrable
Securities, (vi) reasonable fees and disbursements of counsel for the Company
and customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any special audits or
comfort letters or costs associated with the delivery by independent certified
public accountants of such special audit(s) or comfort letter(s) requested
pursuant to Section 2.1(l) hereof), (vii) the fees and expenses of any special
experts retained by the Company in connection with such registration, (viii)
all reasonable fees and expenses of one firm of counsel for the Investor
retained as the Investor's counsel with respect to such Registration
Statement up to an amount of $5,000, unless a greater amount is required due
the nature of the review performed by Investor's counsel (an estimate of such
greater fees and expenses of such firm of counsel to be provided to the Company
prior to the undertaking of such counsel's review), (ix) premiums and other
costs of policies of insurance against liabilities arising out of any public
offering of the Registrable Securities being registered, and (x) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities,

<PAGE>

which shall be payable by each holder of Registrable Securities pro rata on
the basis of the number of Registrable Securities of each such holder that
are included in a registration under this Agreement.

ARTICLE XIII
INDEMNIFICATION AND CONTRIBUTION

Section 13.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Investor, its partners, Affiliates, officers, directors,
employees and duly authorized agents, and each Person or entity, if any, who
controls the Investor within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the partners, Affiliates,
officers, directors, employees and duly authorized agents of such controlling
Person or entity (collectively, the "Controlling Persons"), from and against
any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements and costs and expenses
of investigating and defending any such claim) (collectively, "Damages"), joint
or several, and any action or proceeding in respect thereof to which the
Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, and any Controlling Person, may become subject under the
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are based upon, any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
the Investor, its partners, affiliates, officers, directors, employees
and duly authorized agents, and each such Controlling Person, for any legal
and other expenses reasonably incurred by the Investor, its partners,
affiliates, officers, directors, employees and duly authorized agents, or
any such Controlling Person, as incurred, in investigating or defending or
preparing to defend against any such Damages or actions or proceedings;
provided, however, that the Company shall not be liable to the extent that
any such Damages arise out of the Investor's failure to send or give a copy
of the final prospectus or supplement to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to
such person if such statement or omission was corrected in such final
prospectus or supplement; provided, further, that the Company shall not be
liable to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, or any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by the
Investor or any other person who participates as an underwriter in the
offering or sale of such securities, in either case, specifically stating that
it is for use in the preparation thereof.

Section 13.2 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by any person or entity in respect of which indemnity may be sought pursuant to
Section 3.1 (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity may be sought
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the

<PAGE>

claim or the commencement of such action. In the event an Indemnified Party
shall fail to give such notice as provided in this Section 3.2 and the
Indemnifying Party to whom notice was not given was unaware of the proceeding
to which such notice would have related and was materially prejudiced by the
failure to give such notice, the indemnification provided for in Section 3.1
shall be reduced to the extent of any actual prejudice resulting from such
failure to so notify the Indemnifying Party; provided, however, that the failure
to notify the Indemnifying Party shall not relieve the Indemnifying Party
from any liability that it may have to an Indemnified Party otherwise
than under Section 3.1. If any such claim or action shall be brought against
an Indemnified Party, and it shall notify the Indemnifying Party thereof, the
Indemnifying Party shall be entitled to participate therein, and, to the
extent that it wishes, jointly with any other similarly notified Indemnifying
Party, to assume the defense thereof with counsel reasonably satisfactory to
the Indemnified Party. After notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Indemnified Party shall have the
right to employ separate counsel to represent the Indemnified Party and its
Controlling Persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party, unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) in the reasonable judgment of the Company and such
Indemnified Party, representation of both parties by the same counsel would
be inappropriate due to actual or potential conflicts of interest between them,
it being understood, however, that the Indemnifying Party shall not, in
connection with any one such claim or action or separate but substantially
similar or related claims or actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of
any claim or pending or threatened proceeding in respect of which the
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.

Section 13.3 OTHER INDEMNIFICATION. Indemnification similar to that specified
in the preceding paragraphs of this Article 3 (with appropriate modifications)
shall be given by the Company with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act. The provisions of
this Article III shall be in addition to any other rights to indemnification,
contribution or other remedies which an Indemnified Party may have pursuant to
law, equity, contract or otherwise.

Section 13.4 CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any

<PAGE>

Damages referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the
one hand and the Investor on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the Investor in connection
with such statements or omissions, as well as other equitable considerations.
The relative fault of the Company on the one hand and of the Investor on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The Company and the Investor agree that it would not be just and equitable if
contribution pursuant to this Section 3.4 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of the Damages referred
to in the immediately preceding paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor shall in no event be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of the Investor were sold to the public (less underwriting discounts
and commissions) exceeds the amount of any damages which the Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

ARTICLE XIV
MISCELLANEOUS

Section 14.1 NO OUTSTANDING REGISTRATION RIGHTS. The Company represents and
warrants to the Investor that, except as disclosed in the SEC Documents, there
is not in effect on the date hereof any agreement by the Company pursuant to
which any holders of securities of the Company have a right to cause the
Company to register or qualify such securities under the Securities Act or
any securities or blue sky laws of any jurisdiction.

Section 14.2 TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities.
Notwithstanding the foregoing, paragraphs (c) and (d) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.

Section 14.3 RULE 144. The Company will file in a timely manner, information,
documents and reports in compliance with the Securities Act and the Exchange
Act and will, at its expense,promptly take such further action as holders of
Registrable Securities may reasonably request to enable such holders of
Registrable Securities to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by

<PAGE>

(a) Rule 144 under the Securities Act ("Rule 144"), as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. If at any time the Company is not required to file such reports, it
will, at its expense, forthwith upon the written request of any holder of
Registrable Securities , make available adequate current public information
with respect to the Company within the meaning of paragraph (c)(2) of Rule 144
or such other information as necessary to permit sales pursuant to Rule 144.
Upon the request of the Investor, the Company will deliver to the Investor a
written statement, signed by the Company's principal financial officer, as to
whether it has complied with such requirements.

Section 14.4 CERTIFICATE. The Company will, at its expense, forthwith upon
the request of any holder of Registrable Securities, deliver to such holder
a certificate, signed by the Company's principal financial officer, stating
(a) the Company's name, address and telephone number (including area code),
(b) the Company's Internal Revenue Service identification number, (c) the
Company's Commission file number, (d) the number of shares of each class of
Stock outstanding as shown by the most recent report or statement published
by the Company, and (e) whether the Company has filed the reports required to
be filed under the Exchange Act for a period of at least ninety (90) days prior
to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder.

Section 14.5 AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
both parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a
majority of the then outstanding Registrable Securities. Notwithstanding the
foregoing, the waiver of any provision hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and does not
directly or indirectly affect the rights of other holders of Registrable
Securities may be given by holders of at least a majority of the Registrable
Securities being sold by such holders; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. No course of dealing
between or among any Person having any interest in this Agreement will be
deemed effective to modify, amend or discharge any part of this Agreement or
any rights or obligations of any person under or by reason of this Agreement.

Section 14.6 SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Investment Agreement and the Warrant(s) sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

<PAGE>

Section 14.7 SEPARABILITY. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.

Section 14.8 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and shall be (i) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (ii) delivered by reputable air courier service with
charges prepaid, or (iii) transmitted by hand delivery, telegram or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

<PAGE>

if to the Investor:

with a copy (which shall not constitute notice) to:

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

Either party hereto may from time to time change its address or facsimile
number for notices under this Section 4.8 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the other
party hereto.

Section 14.9 GOVERNING LAW. This Agreement shall be construed under the
laws of the State of Delaware, without giving effect to provisions regarding
conflicts of law or choice of law.

Section 14.10 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.

Section 14.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute one and the same instrument.

Section 14.12 FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the transactions contemplated
hereby.

Section 14.13 ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.

Section 14.14 REMEDIES. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance

<PAGE>

of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.

CYTOGEN CORPORATION

By:
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

KINGSBRIDGE CAPITAL LIMITED

By:
Valentine O'Donoghue
Director

<PAGE>

EXHIBIT C

FORM OF WARRANT

WARRANT

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A
PRIVATE EQUITY LINE AGREEMENT, DATED AS OF OCTOBER 23, 1998,
BETWEEN CYTOGEN CORPORATION AND KINGSBRIDGE CAPITAL LIMITED. A
COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM CYTOGEN CORPORATION'S EXECUTIVE
OFFICES.

OCTOBER 23, 1998

Warrant to Purchase up to 200,000 Shares of Common Stock of
Cytogen Corporation.

Cytogen Corporation, a Delaware corporation (the "Company"),
hereby agrees that Kingsbridge Capital Limited (the "Investor") or
any other Warrant Holder is entitled, on the terms and conditions
set forth below, to purchase from the Company at any time during
the Exercise Period up to 200,000 fully paid and nonassessable
shares of Common Stock, par value $.01 per share, of the Company
(the "Common Stock"), as the same may be adjusted from time to time
pursuant to Section 6 hereof, at the Exercise Price (hereinafter
defined), as the same may be adjusted pursuant to Section 6 hereof.
The resale of the shares of Common Stock or other securities
issuable upon exercise or exchange of this Warrant is subject to
the provisions of the Registration Rights Agreement (as defined
below).

Section 1. Definitions.

"Agreement" shall mean the Private Equity Line Agreement,
dated the date hereof, between the Company and the Investor.

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<PAGE>

"Capital Shares" shall mean the Common Stock and any
shares of any other class of common stock whether now or hereafter
authorized, having the right to participate in the distribution of
earnings and assets of the Company.

"Date of Exercise" shall mean the date that the advance
copy of the Exercise Form is sent by facsimile to the Company,
provided that the original Warrant and Exercise Form are received
by the Company within reasonable time thereafter. If the Warrant
Holder has not sent advance notice by facsimile, the Date of
Exercise shall be the date the original Exercise Form is received
by the Company.

"Exercise Period" shall mean that period beginning on the
181st day after the Subscription Date and continuing until the
expiration of the three-year period thereafter; provided that such
period shall be extended one day for each day after such 181st day
after the Subscription Date, that a Registration Statement is not
effective during the period such Registration Statement is required
to be effective pursuant to the Registration Rights Agreement.

"Exercise Price" as of the date hereof shall mean one
hundred twenty five percent (125%) of the average of the lowest
intra-day prices per share of Common Stock for the five (5) days
preceeding the Subscription Date and shall hereafter be subject to
the adjustments provided for in Section 6 of this Warrant. "Lowest
intra-day price" shall mean the lowest price of the Common Stock
(as reported by Bloomberg L.P.) during any Trading Day.

"Per Share Warrant Value" shall mean the difference
resulting from subtracting the Exercise Price from the Bid Price of
one share of Common Stock on the Trading Day next preceding the
Date of Exercise.

"Registration Rights Agreement" shall mean the
registration rights agreement, dated the date hereof between the
Company and the Investor.

"Subscription Date" shall mean the date on which the
Agreement is executed and delivered by the parties hereto.

"Warrant Holder" shall mean the Investor or any assignee
or transferee of all or any portion of this Warrant; and

other capitalized terms used but not defined herein shall
have their respective meanings set forth in the Agreement.

Section 2. Exercise; Cashless Exercise.

a. Method of Exercise. This Warrant may be
exercised in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the
Exercise Period, by the Warrant Holder by (i) surrender of this
Warrant, with the form of exercise attached hereto as Exhibit A
duly executed by the Warrant Holder (the "Exercise Notice"), to the
Company at the address set forth in Section 13 hereof, accompanied
by payment of the Exercise Price multiplied by the number of shares
of Common Stock for which this Warrant is being exercised (the

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<PAGE>

"Aggregate Exercise Price") or (ii) telecopying an executed and
completed Exercise Notice to the Company and delivering to the
Company within three business days thereafter the original Exercise
Notice, this Warrant and the Aggregate Exercise Price. Each date
on which an Exercise Notice is received by the Company in
accordance with clause (i) and each date on which the Exercise
Notice is telecopied to the Company in accordance with clause (ii)
above shall be deemed an "Exercise Date".

b. Payment of Aggregate Exercise Price. Subject to
paragraph (c) below, payment of the Aggregate Exercise Price shall
be made by check or bank draft payable to the order of the Company
or by wire transfer to an account designated by the Company. If
the amount of the payment received by the Company is less than the
Aggregate Exercise Price, the Warrant Holder will be notified of
the deficiency and shall make payment in that amount within five
(5) business days. In the event the payment exceeds the Aggregate
Exercise Price, the Company will refund the excess to the Warrant
Holder within three (3) business days of receipt.

c. Cashless Exercise. If a Registration Statement
is not effective for the resale of the Warrant Shares by the
Warrant Holder, as an alternative to payment of the Aggregate
Exercise Price in accordance with paragraph (b) above, the Warrant
Holder may elect to effect a cashless exercise by so indicating on
the Exercise Notice and including a calculation of the number of
shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "Cashless Exercise"). In the
event of a Cashless Exercise, the Warrant Holder shall surrender
this Warrant for that number of shares of Common Stock determined
by (i) multiplying the number of Warrant Shares for which this
Warrant is being exercised by the Per Share Warrant Value and (ii)
dividing the product by the Bid Price of one share of the Common
Stock on the Trading Day next preceding the Date of Exercise.

d. Replacement Warrant. In the event that the
Warrant is not exercised in full, the number of Warrant Shares
shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised, and the Company, at its expense, shall
forthwith issue and deliver to or upon the order of the Warrant
Holder a new Warrant of like tenor in the name of the Warrant
Holder or as the Warrant Holder may request, reflecting such
adjusted number of Warrant Shares.

Section 3. Ten Percent Limitation. The Warrant
Holder may not exercise this Warrant such that the number of
Warrant Shares to be received pursuant to such exercise aggregated
with all other shares of Common Stock then owned by the Warrant
Holder beneficially or deemed beneficially owned by the Warrant
Holder would result in the Warrant Holder owning more than 9.9% of
all of such Common Stock as would be outstanding on such Closing
Date, as determined in accordance with Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder. As of
any date prior to the Date of Exercise, the aggregate number of
shares of Common Stock into which this Warrant is exercisable,
together with all other shares of Common Stock then beneficially
owned (as such term is defined in Rule 16a-1 under the Exchange
Act) by such Warrant Holder and its affiliates, shall not exceed
9.9% of the total outstanding shares of Common Stock as of such
date.

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<PAGE>

Section 4. Delivery of Stock Certificates.

a. Subject to the terms and conditions of this Warrant,
as soon as practicable after the exercise of this Warrant in full
or in part, and in any event within three (3) Trading Days
thereafter, the Company at its expense (including, without
limitation, the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Warrant
Holder, or as the Warrant Holder may lawfully direct, a certificate
or certificates for the number of validly issued, fully paid and
non-assessable Warrant Shares to which the Warrant Holder shall be
entitled on such exercise, together with any other stock or other
securities or property (including cash, where applicable) to which
the Warrant Holder is entitled upon such exercise in accordance
with the provisions hereof; provided, however, that any such
delivery to a location outside of the United States shall be made
within five (5) Trading Days after the exercise of this Warrant in
full or in part.

b. This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this
Warrant, in full or in part, would result in the issuance of any
fractional share of Common Stock, then in such event the Warrant
Holder shall receive in cash an amount equal to the Bid Price of
such fractional share within three (3) Trading Days.

Section 5. Representations, Warranties and Covenants
of the Company.

a. The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law,
rule and regulation for the legal and valid issuance of this
Warrant and the Warrant Shares to the Warrant Holder.

b. From the date hereof through the last date on which
this Warrant is exercisable, the Company shall take all steps
reasonably necessary and within its control to insure that the
Common Stock remains listed or quoted on the Principal Market.

c. The Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or
issued in accordance with the terms hereof, shall be validly
issued, fully paid and non-assessable.

d. The Company has authorized and reserved for issuance
to the Warrant Holder the requisite number of shares of Common
Stock to be issued pursuant to this Warrant. The Company shall at
all times reserve and keep available, solely for issuance and
delivery as Warrant Shares hereunder, such shares of Common Stock
as shall from time to time be issuable as Warrant Shares.

Section 6. Adjustment of the Exercise Price. The
Exercise Price and, accordingly, the number of Warrant Shares
issuable upon exercise of the Warrant, shall be subject to
adjustment from time to time upon the happening of certain events
as follows; provided, however, that nothing contained in this
Section 6 shall be construed to require such adjustment to the
exercise price of this Warrant for the payment of any placement
agent, in Capital Stock or otherwise, in consideration of the
transactions contemplated by the Agreement:

<PAGE>

a. Reclassification, Consolidation, Merger or Mandatory
Share Exchange. If the Company, at any time while this Warrant is
unexpired and not exercised in full, (i) reclassifies or changes
its Outstanding Capital Shares (other than a change in par value,
or from par value to no par value per share, or from no par value
per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon exercise of the
Warrant) or (ii) consolidates, merges or effects a mandatory share
exchange with or into another corporation (other than a merger or
mandatory share exchange with another corporation in which the
Company is a continuing corporation and that does not result in any
reclassification or change, other than a change in par value, or
from par value to no par value per share, or from no par value per
share to par value, or as a result of a subdivision or combination
of Outstanding Capital Shares issuable upon exercise of the
Warrant) at any time while this Warrant is unexpired and not
exercised in full, then in any such event the Company, or such
successor or purchasing corporation, as the case may be, shall,
without payment of any additional consideration therefore, amend
this Warrant or issue a new Warrant providing that the Warrant
Holder shall have rights not less favorable to the holder than
those then applicable to this Warrant and to receive upon exercise
under such amendment of this Warrant or new Warrant, in lieu of
each share of Common Stock theretofore issuable upon exercise of
the Warrant hereunder, the kind and amount of shares of stock,
other securities, money or property receivable upon such
reclassification, change, consolidation, merger, mandatory share
exchange, sale or transfer by the holder of one share of Common
Stock issuable upon exercise of the Warrant had the Warrant been
exercised immediately prior to such reclassification, change,
consolidation, merger, mandatory share exchange or sale or
transfer. Such amended Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6.1. The provisions of
this subsection (a) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, mandatory
share exchanges and sales and transfers.

b. Subdivision or Combination of Shares. If the
Company, at any time while this Warrant is unexpired and not
exercised in full, shall subdivide its Common Stock, the Exercise
Price shall be proportionately reduced as of the effective date of
such subdivision, or, if the Company shall take a record of holders
of its Common Stock for the purpose of so subdividing, as of such
record date, whichever is earlier. If the Company, at any time
while this Warrant is unexpired and not exercised in full, shall
combine its Common Stock, the Exercise Price shall be
proportionately increased as of the effective date of such
combination, or, if the Company shall take a record of holders of
its Common Stock for the purpose of so combining, as of such record
date, whichever is earlier.

c. Stock Dividends. If the Company, at any time while
this Warrant is unexpired and not exercised in full, shall pay a
dividend in its Capital Shares, or make any other distribution of
its Capital Shares, then the Exercise Price shall be adjusted, as
of the date the Company shall take a record of the holders of its
Capital Shares for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by
multiplying the Exercise Price in effect immediately prior to such
payment or other distribution by a fraction:

1. the numerator of which shall be the total number of
Outstanding Capital Shares immediately prior to such dividend or
distribution, and

22
<PAGE>

2. the denominator of which shall be the total number
of Outstanding Capital Shares immediately after such dividend or
distribution. The provisions of this subsection (c) shall not
apply under any of the circumstances for which an adjustment is
provided in subsections (a) or (b).

d. Issuance of Additional Capital Shares. If the Company,
at any time while this Warrant is unexpired and not exercised in
full, shall issue any additional Capital Shares ("Additional
Capital Shares"), otherwise than as provided in the foregoing
subsections (a) through (c) above, at a price per share less, or
for other consideration lower, than the Bid Price in effect
immediately prior to such issuance, or without consideration, then
upon such issuance the Exercise Price shall be reduced to that
price determined by multiplying the Exercise Price in effect
immediately prior to such event by a fraction:

1. the numerator of which shall be the number of
Outstanding Capital Shares immediately prior to the issuance of the
Additional Capital Shares plus the number of Capital Shares that
the aggregate consideration for the total number of such Additional
Capital Shares so issued would purchase at the then effective Bid
Price, and

2. the denominator of which shall be the number of
Outstanding Capital Shares immediately after the issuance of the
Additional Capital Shares. The provisions of this subsection (d)
shall not apply under any of the circumstances for which an
adjustment is provided in subsections (a), (b) or (c).

The provisions of this subsection (d) shall not apply to the
issuance of any Additional Capital Shares that are issued pursuant
to the exercise of any warrants, options or other subscription or
purchase rights or pursuant to the exercise of any conversion or
exchange rights in any convertible or exchangeable securities.

e. Issuance of Warrants, Options or Other Rights. If
the Company, at any time while this Warrant is unexpired and not
exercised in full, shall issue any warrants, options or other
rights to subscribe for or purchase any Additional Capital Shares,
other than employee stock option and stock purchase plans granted
in the ordinary course of business, and the price per share for
which Additional Capital Shares may at any time thereafter be
issuable pursuant to such warrants, options or other rights shall
be less than the Bid Price in effect immediately prior to such
issuance, then, upon the issuance of such warrants, options or
other rights, the Exercise Price shall be adjusted as provided in
subsection (d) hereof on the basis that:

1. the maximum number of Additional Capital Shares
issuable on the date of determination (subject to adjustment on the
date(s) of exercise) pursuant to all such warrants, options or
other rights shall be deemed to have been issued as of the date of
actual issuance of such warrants, options or other rights, and

2. the aggregate consideration for such maximum number
of Additional Capital Shares issuable pursuant to such warrants,
options or other rights, shall be deemed to be the consideration
received by the Company for the issuance of such warrants, options,

23
<PAGE>

or other rights plus the minimum consideration to be received by
the Company for the issuance of Additional Capital Shares pursuant
to such warrants, options, or other rights.

f. Issuance of Convertible or Exchangeable Securities.
If the Company, at any time while this Warrant is unexpired and not
exercised in full, shall issue any securities convertible into or
exchangeable for Capital Shares and the consideration per share for
which Additional Capital Shares may at any time thereafter be
issuable pursuant to the terms of such convertible or exchangeable
securities shall be less than the Bid Price in effect immediately
prior to such issuance, then, upon the issuance of such convertible
or exchangeable securities, the Exercise Price shall be adjusted as
provided in subsection (d) hereof on the basis that:

1. the maximum number of Additional Capital Shares
necessary on the date of determination (subject to adjustment on
the date(s) of conversion or exchange) to effect the conversion or
exchange of all such convertible or exchangeable securities shall
be deemed to have been issued as of the date of issuance of such
convertible or exchangeable securities, and

2. the aggregate consideration for such maximum number
of Additional Capital Shares shall be deemed to be the
consideration received by the Company for the issuance of such
convertible or exchangeable securities plus the minimum
consideration received by the Company for the issuance of such
Additional Capital Shares pursuant to the terms of such convertible
or exchangeable securities.

No adjustment of the Exercise Price shall be made under this
subsection (f) upon the issuance of any convertible or exchangeable
securities that are issued pursuant to the exercise of any
warrants, options or other subscription or purchase rights
therefor, if the issuance of such warrants, options or other rights
was subject to subsection (e) hereof.

g. Adjustment of Number of Shares. Upon each
adjustment of the Exercise Price pursuant to any provisions of this
Section 6.1, the number of Warrant Shares issuable hereunder at the
option of the Warrant Holder shall be calculated, to the nearest
one hundredth of a whole share, multiplying the number of Warrant
Shares issuable prior to an adjustment by a fraction:

1. the numerator of which shall be the Exercise Price
before any adjustment pursuant to this Section 6.1; and

2. the denominator of which shall be the Exercise Price
after such adjustment.

h. Liquidating Dividends, Etc. If the Company, at any
while this Warrant is unexpired and not exercised in full, makes a
distribution of its assets or evidences of indebtedness to the
holders of its Capital Shares as a dividend in liquidation or by
way of return of capital (other than dividends paid or
distributions made in respect of preferred stock) or other than as
a dividend payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to such holders
made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for
in the foregoing subsections (a) through (g)) while an exercise is
pending, then the Warrant Holder shall be entitled to receive upon

<PAGE>

such exercise of the Warrant in addition to the Warrant Shares
receivable in connection therewith, and without payment of any
consideration other than the Exercise Price, an amount in cash
equal to the value of such distribution per Capital Share
multiplied by the number of Warrant Shares that, on the record date
for such distribution, are issuable upon such exercise of the
Warrant (with no further adjustment being made following any event
which causes a subsequent adjustment in the number of Warrant
Shares issuable), and an appropriate provision therefor shall be
made a part of any such distribution. The value of a distribution
that is paid in other than cash shall be determined in good faith
by the Board of Directors of the Company.

i. Other Provisions Applicable to Adjustments Under
this Section. The following provisions will be applicable to the
making of adjustments in any Exercise Price hereinabove provided in
this Section 6.1:

1. Computation of Consideration. To the extent that
any Additional Capital Shares or any convertible or exchangeable
securities or any warrants, options or other rights to subscribe
for or purchase any Additional Capital Shares or any convertible or
exchangeable securities shall be issued for a cash consideration,
the consideration received by the Company therefor shall be deemed
to be the amount of the cash received by the Company therefor, or,
if such Additional Capital Shares or convertible or exchangeable
securities are offered by the Company for subscription, the
subscription price, or, if such Additional Capital Shares or
convertible or exchangeable securities are sold to or through
underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case
excluding any amounts paid or incurred by the Company for and in
the underwriting of, or otherwise in connection with the issue
thereof. To the extent that such issuance shall be for a
consideration other than cash, then, the amount of such
consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good
faith by the Company's Board of Directors. The consideration for
any Additional Capital Shares issuable pursuant to any warrants,
options or other rights to subscribe for or purchase the same shall
be the consideration received by the Company for issuing such
warrants, options or other rights, plus the additional
consideration payable to the Company upon the exercise of such
warrants, options or other rights. The consideration for any
Additional Capital Shares issuable pursuant to the terms of any
convertible or exchangeable securities shall be the consideration
paid or payable to the Company in respect of the subscription for
or purchase of such convertible or exchangeable securities, plus
the additional consideration, if any, payable to the Company upon
the exercise of the right of conversion or exchange in such
convertible or exchangeable securities. In case of the issuance at
any time of any Additional Capital Shares or convertible or
exchangeable securities in payment or satisfaction of any dividend
upon any class of stock preferred as to dividends in a fixed
amount, the Company shall be deemed to have received for such
Additional Capital Shares or convertible or exchangeable securities
a consideration equal to the amount of such dividend so paid or
satisfied.

2. Readjustment of Exercise Price. Upon the expiration
of the right to convert or exchange any convertible or exchangeable
securities, or upon the expiration of any rights, options or
warrants, the issuance of which convertible or exchangeable
securities, rights, options or warrants effected an adjustment in
Exercise Price, if any such convertible or exchangeable securities
shall not have been converted or exchanged, or if any such rights,

<PAGE>

options or warrants shall not have been exercised, the number of
Capital Shares deemed to be issued and Outstanding by reason of the
fact that they were issuable upon conversion or exchange of any
such convertible or exchangeable securities or upon exercise of any
such rights, options, or warrants shall no longer be computed as
set forth above, and such Exercise Price shall forthwith be
readjusted and thereafter be the price that it would have been (but
reflecting any other adjustments in the Exercise Price made
pursuant to the provisions of this Section 6.1 after the issuance
of such convertible or exchangeable securities, rights, options or
warrants) had the adjustment of the Exercise Price made upon the
issuance or sale of such convertible or exchangeable securities or
issuance of rights, options or warrants been made on the basis of
the issuance only of the number of Additional Capital Shares
actually issued upon conversion or exchange of such convertible or
exchangeable securities, or upon the exercise of such rights,
options or warrants, and thereupon only the number of Additional
Capital Shares actually so issued, if any, shall be deemed to have
been issued and only the consideration actually received by the
Company (computed as set forth in sub-subsection (1. hereof) shall
be deemed to have been received by the Company. If the purchase
price provided for in any rights, options or warrants, or the
additional consideration (if any) payable upon the conversion or
exchange of any convertible or exchangeable securities, or the rate
at which any convertible or exchangeable securities are convertible
into or exchangeable for Capital Shares changes at any time (other
than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of the change
shall be adjusted to the Exercise Price that would have been in
effect at such time had such rights, options, warrants or
convertible or exchangeable securities still outstanding provided
for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted,
issued or sold.

j. In the event the Company shall, at a time while the
Warrant is unexpired and outstanding, take any action which
pursuant to subsections (a) through (h) of this Section 6.1 may
result in an adjustment of the Exercise Price, the Company shall
give to the Warrant Holder at its last address known to the Company
written notice of such action ten (10) days in advance of its
effective date in order to afford to the Warrant Holder an
opportunity to exercise the Warrant prior to such action becoming
effective.

Section 6.1 Notice of Adjustments. Whenever the
Exercise Price or number of Warrant Shares shall be adjusted
pursuant to Section 6.1 hereof, the Company shall promptly make a
certificate signed by its President or a Vice President and by its
Treasurer or Assistant Treasurer or its Secretary or Assistant
Secretary, setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which
such adjustment was calculated (including a description of the
basis on which the Company's Board of Directors made any
determination hereunder), and the Exercise Price and number of
Warrant Shares purchasable at that Exercise Price after giving
effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by first class and postage prepaid) to
the Holder of the Warrant. In the event the Company shall, at a
time while the Warrant is unexpired and not exercised in full, take
any action that pursuant to subsections (a) through (g) of Section
6.1 may result in an adjustment of the Exercise Price, the Company
shall give to the Holder of the Warrant at its last address known
to the Company written notice of such action ten (10) days in
advance of its effective date in order to afford to the Holder of
the Warrant an opportunity to exercise the Warrant prior to such
action becoming effective.

26
<PAGE>

Section 7. No Impairment. The Company will not, by
amendment of its Articles of Incorporation or By-Laws or through
any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to
protect the rights of the Warrant Holder against impairment.
Without limiting the generality of the foregoing, the Company
(a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all
such action as may be reasonably necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant.

Section 8. Rights As Stockholder. Prior to exercise
of this Warrant, the Warrant Holder shall not be entitled to any
rights as a stockholder of the Company with respect to the Warrant
Shares, including (without limitation) the right to vote such
shares, receive dividends or other distributions thereon or be
notified of stockholder meetings. However, in the event of any
taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend)
or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company
shall mail to each Warrant Holder, at least ten (10) days prior to
the date specified therein, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such
dividend, distribution or right.

Section 9. Replacement of Warrant. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of the Warrant and, in the case of any
such loss, theft or destruction of the Warrant, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of
like tenor.

Section 10. Choice of Law. This Agreement shall be
construed under the laws of the State of New York.

Section 11. Entire Agreement; Amendments. This
Warrant, the Registration Rights Agreement, and the Agreement
contain the entire understanding of the parties with respect to the
matters covered hereby and thereby. No provision of this Warrant
may be waived or amended other than by a written instrument signed
by the party against whom enforcement of any such amendment or
waiver is sought.

Section 12. Restricted Securities.

a. Registration or Exemption Required. This Warrant has
been issued in a transaction exempt from the registration
requirements of the Securities Act in reliance upon the provisions
of Section 4(2) promulgated by the SEC under the Securities Act.

<PAGE>

This Warrant and the Warrant Shares issuable upon exercise of this
Warrant may not be resold except pursuant to an effective
registration statement or an exemption to the registration
requirements of the Securities Act and applicable state laws.

b. Legend. Any replacement Warrants issued pursuant to
Section 2 hereof and any Warrant Shares issued upon exercise
hereof, shall bear the following legend:

"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN
ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
EQUITY LINE AGREEMENT, DATED AS OF OCTOBER 23,
1998, BETWEEN CYTOGEN CORPORATION AND KINGSBRIDGE
CAPITAL LIMITED. A COPY OF THE PORTION OF THE
AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY
BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES."

Removal of such legend shall be in accordance with the legend
removal provisions in the Agreement.

c. No Other Legend or Stock Transfer Restrictions. No
legend other than the one specified in Section 12(b) has been or
shall be placed on the share certificates representing the Warrant
Shares and no instructions or "stop transfer orders," so called,
"stock transfer restrictions" or other restrictions have been or
shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Section 12.

d. Assignment. Assuming the conditions of Section
12(a) above regarding registration or exemption have been
satisfied, the Warrant Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. The
Warrant Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as
Exhibit B, indicating the person or persons to whom the Warrant
shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment
within ten (10) days, and shall deliver to the assignee(s)
designated by the Warrant Holder a Warrant or Warrants of like
tenor and terms for the appropriate number of shares.

28
<PAGE>

e. Investor's Compliance. Nothing in this Section 12
shall affect in any way the Investor's obligations under any
agreement to comply with all applicable securities laws upon resale
of the Common Stock.

Section 13. Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile (with accurate confirmation
generated by the transmitting facsimile machine) at the address or
number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications
shall be:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

if to the Investor:

29
<PAGE>

with a copy (which shall not constitute notice) to:

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

Either party hereto may from time to time change its address or
facsimile number for notices under this Section 13 by giving at
least ten (10) days' prior written notice of such changed address
or facsimile number to the other party hereto.

Section 14. Miscellaneous. This Warrant and any term
hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. The
headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.

<PAGE>

IN WITNESS WHEREOF, this Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set
forth above.

CYTOGEN CORPORATION

By:
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

Attested:

By:
Donald F. Crane, Jr., Esq.
Vice President, General Counsel and Secretary

<PAGE>

EXHIBIT A TO THE WARRANT

EXERCISE FORM

CYTOGEN CORPORATION

The undersigned hereby irrevocably exercises the right to
purchase __________________ shares of Common Stock of Cytogen
Corporation, a Delaware corporation, evidenced by the attached
Warrant, and herewith makes payment of the Exercise Price with
respect to such shares in full in the form of [cash or certified
check in the amount of $___________], [______] Warrant Shares,
which represent the amount of Warrant Shares as provided in the
attached Warrant to be canceled in connection with such exercise],
all in accordance with the conditions and provisions of said
Warrant.

The undersigned requests that stock certificates for such
Warrant Shares be issued, and a Warrant representing any
unexercised portion hereof be issued, pursuant to this Warrant in
the name of the registered Holder and delivered to the undersigned
at the address set forth below.

Dated:_______________________________________
_____________________________________________
Signature of Registered Holder
Name of Registered Holder (Print)

_____________________________________________
Address

<PAGE>

NOTICE

The signature to the foregoing Exercise Form must correspond
to the name as written upon the face of the attached Warrant in
every particular, without alteration or enlargement or any change
whatsoever.

A-ii

<PAGE>

EXHIBIT B TO THE WARRANT

ASSIGNMENT

(To be executed by the registered Warrant Holder desiring to
transfer the Warrant)

FOR VALUED RECEIVED, the undersigned Warrant Holder of the
attached Warrant hereby sells, assigns and transfers unto the
persons below named the right to purchase ______________ shares of
the Common Stock of Cytogen Corporation evidenced by the attached
Warrant and does hereby irrevocably constitute and appoint
______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the
premises.

Dated:
______________________________
Signature

<PAGE>

Fill in for new Registration of Warrant:

_________________________________________
Name

_________________________________________
Address

_________________________________________
Please print name and address of assignee
(including zip code number)

<PAGE>

NOTICE

The signature to the foregoing Assignment must correspond to
the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.

B-iii

<PAGE>

EXHIBIT D

[RESERVED]

<PAGE>

EXHIBIT E

FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL

[Date]

Kingsbridge Capital Limited
Main Street
Kilcullen, County Kildare
Republic of Ireland

Re: Private Equity Line Agreement Between Kingsbridge Capital
Limited and CYTOGEN Corporation

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section [6.12]
[7.2(g)] of the Private Equity Line Agreement by and between
Kingsbridge Capital Limited, a British Virgin Islands entity (the
"Investor") and Cytogen Corporation, a Delaware corporation (the
"Company"), dated as of October 23, 1998 (the "Equity Line
Agreement"), which provides for the issuance and sale by the
Company of up to an indeterminate number of shares of Common
Stock of the Company (the "Put Shares"), certain additional
shares upon the occurrence of certain events as set forth in
Section 2.6 thereof (the "Blackout Shares"), and a warrant
to purchase 200,000 shares of Common Stock of the Company (the
"Warrant", and the shares of Common Stock issued or issuable
pursuant to exercise of the Warrant, the "Warrant Shares").
All terms used herein have the meanings defined for them in
the Equity Line Agreement unless otherwise defined herein.

I have acted as counsel for the Company in connection with
the negotiation of the Equity Line Agreement, the Warrant, the
Registration Rights Agreement between the Investor and the Company,
dated as of October 23, 1998 (the "Registration Rights Agreement"),
and the Escrow Agreement between the Investor, the Company and myself,
as Escrow Agent, dated as of October 23, 1998 (the "Escrow
Agreement", and together with the Equity Line Agreement and the
Registration Rights Agreement, the "Agreements"). As counsel, I
have made such legal and factual examinations and inquires as I
have deemed advisable or necessary for the purpose of rendering
this opinion. In addition, I have examined, among other things,
originals or copies of such corporate records of the Company,
certificates of public officials and such other documents and
questions of law that I consider necessary or advisable for the
purpose of rendering this opinion. In such examination I have
assumed the genuineness of all signatures on original documents,
the authenticity and completeness of all documents submitted to me
as originals, the conformity to original documents of all copies
submitted to me as copies thereof, the legal capacity of natural
persons, and the due execution and delivery of all documents
(except as to due execution and delivery by the Company) where due
execution and delivery are a prerequisite to the effectiveness
thereof. With respect to certain factual matters, I have relied,
without independent investigation on the facts stated in the
representations and warranties contained in the Equity Line Agreement
and the schedules thereto and the SEC documents (other than in each case
conclusion of law).

<PAGE>

Page ii

As used in this opinion, the expression "to my knowledge"
refers to my current actual knowledge.

For purposes of this opinion, I have assumed that you have
all requisite power and authority, and have taken any and all
necessary corporate action, to execute and deliver the Agreements,
and I am assuming that the representations and warranties made by
the Investor in the Agreements and pursuant thereto are true and
correct.

Based upon and subject to the foregoing, I am of the opinion
that:

1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority (corporate and
other) to carry on its business and to own, lease and operate its
properties and assets as described in the Company's SEC Documents.
To our knowledge, the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other
business entity, except for subsidiaries of the Company, namely, AxCell
BioSciences, Inc., Cellcor, Inc., and CytoRad, Inc. The Company
is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the Company owns or
leases property, other than those in which the failure so to qualify
would not have a Material Adverse Effect.

2. The Company has the requisite corporate power and
authority to enter into and perform its obligations under the
Agreements and the Warrant and to issue the Put Shares, the
Warrant, the Warrant Shares and the Blackout Shares. The execution
and delivery of the Agreements, and the execution, issuance and
delivery of the Warrant, by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized
by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or
stockholders is required. Each of the Agreements has been duly
executed and delivered, and the Warrant has been duly executed,
issued and delivered, by the Company and each of the Agreements and
the Warrant constitutes valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

3. The execution, delivery and performance of the Agreements
and the Warrant by the Company and the consummation by the Company
of the transactions contemplated thereby, including without

<PAGE>
Page iii

limitation the issuance of the Put Shares, the Warrant, the Warrant
Shares and the Blackout Shares, do not and will not (i) result in
a violation of the Company's Articles or By-Laws; (ii) to my
knowledge, conflict with, or constitute a material default (or an
event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement,
indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party,
except for such conflicts, defaults, terminations, amendments,
accelerations and cancellations as would not, individually or in
the aggregate, have a Material Adverse Effect; or (iii) result in
a violation of any federal or state law, rule or regulation
applicable to the Company or by which any property or asset of the
Company is bound or affected, except for such violations as would
not, individually or in the aggregate, have a Material Adverse
Effect. To my knowledge, the Company is not in violation of any
terms of its Articles or Bylaws.

4. The issuance of the Put Shares, the Warrant and the
Blackout Shares in accordance with the Equity Line Agreement, and
the issuance of the Warrant Shares in accordance with the Warrant,
will be exempt from registration under the Securities Act of 1933
and will be in compliance with applicable state securities laws. When
so issued, the Put Shares, the Blackout Shares and the Warrant
Shares will be duly and validly issued, fully paid and
nonassessable, and free of any liens, encumbrances and preemptive
or similar rights contained in the Company's Articles of
Incorporation (the "Articles") or Bylaws or, to my knowledge, in
any agreement to which the Company is party.

5. To my knowledge, except as disclosed in the SEC
Documents, there are no claims, actions, suits, proceedings or
investigations that are pending against the Company or its
properties, or against any officer or director of the Company in
his or her capacity as such, nor has the Company received any
written threat of any such claims, actions, suits, proceedings, or
investigations which are required to be and have not been disclosed
in the SEC Documents and which are reasonably likely to have a material adverse
affect upon the Company's financial position or results of operations.

<PAGE>
Page iv

This opinion is furnished to the Purchaser solely for its
benefit in connection with the transactions described above and may
not be relied upon by any other person or for any other purpose
without my prior written consent.

Very truly yours,

/s/ Donald F. Crane
Donald F. Crane, Jr.
Vice President General Counsel and
Corporate Secretary

<PAGE>

Page v

EXHIBIT F

COMPLIANCE CERTIFICATE
CYTOGEN CORPORATION

The undersigned, H. Joseph Reiser, Ph.D., hereby certifies,
with respect to shares of common stock of Cytogen Corporation (the
"Company") issuable in connection with the Put Notice, dated
_____________ (the "Notice"), delivered pursuant to Article II of
the Private Equity Line Agreement, dated as of October 23, 1998, by
and between the Company and Kingsbridge Capital Limited (the
"Agreement"), as follows:

1. The undersigned is the duly elected President and Chief
Executive Officer of the Company.

2. The representations and warranties of the Company set
forth in Article V of the Agreement are true and correct in all
material respects as though made on and as of the date hereof.

3. The Company has performed in all material respects all
covenants and agreements to be performed by the Company on or prior
to the Closing Date related to the Notice and has complied in all
material respects with all obligations and conditions contained in
Article VII of the Agreement.

The undersigned has executed this Certificate this ____ day of
________, 199_.

____________________________________
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

<PAGE>
Page i

EXHIBIT G

INSTRUCTIONS TO TRANSFER AGENT
CYTOGEN CORPORATION

October ___, 1998

[Name, address and phone and facsimile number of Transfer Agent]

Dear Sirs:

Reference is made to the Private Equity Line Agreement (the
"Agreement"), dated as of October 23, 1998 between Kingsbridge
Capital Limited (the "Investor") and Cytogen Corporation(the
"Company"). Pursuant to the Agreement, subject to the terms and
conditions set forth in the Agreement the Investor has agreed to
purchase from the Company and the Company has agreed to sell to the
Investor from time to time during the term of the Agreement shares
of Common Stock of the Company, $.01 par value per share (the
"Common Stock"). As a condition to the effectiveness of the
Agreement, the Company has agreed to issue to you, as the transfer
agent for the Common Stock (the "Transfer Agent"), these
instructions relating to the Common Stock to be issued to the
Investor (or a permitted assignee) pursuant to the Agreement. All
terms used herein and not otherwise defined shall have the meaning
set forth in the Agreement.

1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND

Pursuant to the Agreement, the Company is required to prepare
and file with the Commission, and maintain the effectiveness of, a
registration statement or registration statements registering the
resale of the Common Stock to be acquired by the Investor under the
Agreement. The Company will advise the Transfer Agent in writing
of the effectiveness of any such registration statement promptly
upon its being declared effective. The Transfer Agent shall be
entitled to rely on such advice and shall assume that the
effectiveness of such registration statement remains in effect
unless the Transfer Agent is otherwise advised in writing by the
Company and shall not be required to independently confirm the
continued effectiveness of such registration statement. In the
circumstances set forth in the following two paragraphs, the
Transfer Agent shall deliver to the Investor certificates
representing Common Stock not bearing the Legend without requiring
further advice or instruction or additional documentation from the

<PAGE>

Company or its counsel or the Investor or its counsel or any other
party (other than as described in such paragraphs).

At any time after the effective date of the applicable
registration statement (provided that the Company has not informed
the Transfer Agent in writing that such registration statement is
not effective) upon any surrender of one or more certificates
evidencing Common Stock which bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates
free of the Legend to replace those surrendered, the Transfer Agent
shall deliver to the Investor the certificates representing the
Common Stock not bearing the Legend, in such names and
denominations as the Investor shall request, provided that:

(15) in connection with such event, if so requested by the
Transfer Agent, the Investor (or its permitted assignee) shall
confirm in writing to the Transfer Agent that the Investor has
complied with the prospectus delivery requirement under the
Securities Act;

(16) if so requested by the Transfer Agent, the Investor (or
its permitted assignee) shall represent that it is permitted
to dispose thereof with limitation as to amount of manner of
sale pursuant to Rule 144(k) under the Securities Act; or

(17) the Investor, its permitted assignee, or either of their
brokers confirms to the transfer agent that (i) the Investor
has held the shares of Common Stock for at least one year,
(ii) counting the shares surrendered as being sold upon the
date the unlegended Certificates would be delivered to the
Investor (or the Trading Day immediately following if such
date is not a Trading Day), the Investor will not have sold
more than the greater of (a) ____ percent (___%) of the total
number of outstanding shares of Common Stock or (b) the
average weekly trading volume of the Common Stock for the
preceding four weeks during the three months ending upon such
delivery date (or the Trading Day immediately following if
such date is not a Trading Day), and (iii) the Investor has
complied with the manner of sale and notice requirements of
Rule 144 under the Securities Act.

Any advice, notice or instructions to the Transfer Agent
required or permitted to be given hereunder may be transmitted via
facsimile to the Transfer Agent's facsimile number of (___)-___-____.

2. MECHANICS OF DELIVERY OF CERTIFICATES
REPRESENTING COMMON STOCK

In connection with any Closing pursuant to which the Investor
acquires Common Stock under the Agreement, the Transfer Agent shall
deliver certificates representing Common Stock (with or without the

<PAGE>
Page iii

Legend, as appropriate) as promptly as practicable, but in no event
later than three business days, after such Closing.

3. FEES OF TRANSFER AGENT; INDEMNIFICATION

The Company agrees to pay the Transfer Agent for all fees
incurred in connection with these Irrevocable Instructions. The
Company agrees to indemnify the Transfer Agent and its officers,
employees and agents, against any losses, claims, damages or
liabilities, joint or several, to which it or they become subject
based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.

4. THIRD PARTY BENEFICIARY

The Company and the Transfer Agent acknowledge and agree that
the Investor is an express third party beneficiary of these
Irrevocable Instructions and shall be entitled to rely upon, and
enforce, the provisions hereof.

CYTOGEN CORPORATION

By:____________________________________
Name
Title

AGREED:

[NAME OF TRANSFER AGENT]

By:__________________________
Name:
Title:

EXHIBIT 5.1

January 26, 1999

Cytogen Corporation
600 College Road East
Princeton, New Jersey 08540

Ladies and Gentlemen:

The undersigned has acted as counsel to Cytogen Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company of a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), for the
registration of 6,200,000 shares of common stock, $.01 par value per share (the
"Common Stock"), of the Company which may be issued pursuant to an equity line
agreement (the "Equity Line Agreement"), under which the Company may issue
shares of Common Stock to an investor from time to time, together with shares
of Common Stock which may be issued on the exercise of warrant (the "Warrant").

I have examined and am familiar with originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and officers of the Company and such other
instruments as I have deemed necessary or appropriate as a basis for the
opinions expressed below, including the Registration Statement, the Restated
Certificate of Incorporation of the Company and the By-laws of the Company.

Based on the foregoing, I am of the opinion that the Common Stock issuable
pursuant to the Equity Line Agreement or pursuant to the Warrant has been duly
authorized and reserved for issuance and, when duly issued and delivered, will
be validly issued, fully paid and nonassessable.

I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving such consent, I do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and Exchange
Commission thereunder.

I express no opinion as to the laws of any jurisdiction other than the laws
of the State of New York, the general corporate laws of the State of Delaware
and the federal law of the United States of America. I have relied in part
upon the advice of New York counsel with respect to the laws of New York as
applicable. The foregoing opinion is rendered as of the date hereof, and I
assume no obligation to update such opinion to reflect any facts or
circumstances which may hereafter come to my attention or any changes in
the law which may hereafter occur.

Very truly yours,

/s/ Donald F. Crane
-------------------------
Donald F. Crane, Jr.

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of
our report and to all references to our Firm included in or made a
part of this S-1 Registration Statement.

ARTHUR ANDERSEN LLP

Philadelphia, PA
March 1, 1999

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1998 AND THE CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,015,000
<SECURITIES> 0
<RECEIVABLES> 3,935,000
<ALLOWANCES> (73,000)
<INVENTORY> 250,000
<CURRENT-ASSETS> 330,000
<PP&E> 16,788,000
<DEPRECIATION> (14,163,000)
<TOTAL-ASSETS> 10,900,000
<CURRENT-LIABILITIES> 8,234,000
<BONDS> 0
0
0
<COMMON> 619,000
<OTHER-SE> (176,000)
<TOTAL-LIABILITY-AND-EQUITY> 10,900,000
<SALES> 10,640,000
<TOTAL-REVENUES> 19,879,000
<CGS> 12,284,000
<TOTAL-COSTS> 17,387,000
<OTHER-EXPENSES> 18,407,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 652,000
<INCOME-PRETAX> (13,271,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,271,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,271,000)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)

</TABLE>