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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

  (Mark One)

        |X|    QUARTERLY  REPORT  UNDER  SECTION  13 OR 15(d) OF THE  SECURITIES
               EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

        |_|    TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
               SECURITIES  EXCHANGE  ACT  OF  1934  FOR  THE  TRANSITION  PERIOD
               FROM       TO

                        COMMISSION FILE NUMBER: 000-14879

                               Cytogen Corporation
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           Delaware                              22-2322400
           --------                              ----------
   (State of Incorporation)         (I.R.S. Employer Identification No.)


       650 College Road East, Suite 3100, Princeton, New Jersey 08540-5308
--------------------------------------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                                 (609) 750-8200
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
         (Former name, former address and former fiscal year, if changed
                               since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such  reports),  and (2) has been subject to the
filing requirements for at least the past 90 days. Yes |X| No |_|

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer.

Large Accelerated Filer |_|  Accelerated Filer |X|   Non- Accelerated Filer  |_|

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12, 13 or  15(d)of  the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
                                                       |_| Yes |_| No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Class: Common Stock, $.01 par value          Outstanding  at  August 7, 2006:
                                             22,496,889

================================================================================


<PAGE>


                               CYTOGEN CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                                  JUNE 30, 2006

                                TABLE OF CONTENTS
                                -----------------
                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION............................................    1

   Item 1.   Consolidated Financial Statements (unaudited)................    1

             Consolidated Balance Sheets as of June 30, 2006 and
                 December 31, 2005........................................    2

             Consolidated Statements of Operations for the Three Months
                 and Six Months  Ended June 30, 2006 and 2005.............    3

             Consolidated Statements of Cash Flows for the Six Months
                 Ended June 30, 2006 and 2005.............................    4

             Notes to Consolidated Financial Statements...................    5

   Item 2.   Management's Discussion and Analysis of Financial Condition
                 and Results of Operations................................    23

   Item 3.   Quantitative and Qualitative Disclosures About Market Risk...    39

   Item 4.   Controls and Procedures......................................    39

PART II. OTHER INFORMATION................................................    41

   Item 1.   Legal Proceedings............................................    41

   Item 1A.  Risk Factors.................................................    41

   Item 4.   Submission of Matters to a Vote of Security Holders..........    47

   Item 5.   Other Information............................................    48

   Item 6.   Exhibits.....................................................    48

SIGNATURES................................................................    51


     PROSTASCINT(R),  QUADRAMET(R) and ONCOSCINT(R) are registered United States
trademarks  of  Cytogen  Corporation.  All  other  trade  names,  trademarks  or
servicemarks appearing in this Quarterly Report on Form 10-Q are the property of
their respective owners,  and not the property of Cytogen  Corporation or any of
its subsidiaries.


<PAGE>













                         PART I - FINANCIAL INFORMATION
                         ------------------------------
              ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


















                                       -1-
<PAGE>


                      CYTOGEN CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
           (All amounts in thousands, except share and per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                               June 30,               December 31,
                                                                                 2006                     2005
                                                                           ----------------         ----------------
<S>                                                                         <C>                      <C>
ASSETS:
Current assets:
     Cash and cash equivalents..........................................    $      31,400            $      30,337
     Accounts receivable, net...........................................            1,894                    1,743
     Inventories........................................................            1,959                    3,582
     Prepaid expenses...................................................              668                      906
     Other current assets...............................................               53                      354
                                                                            -------------            -------------

       Total current assets.............................................           35,974                   36,922

     Property and equipment, less accumulated depreciation and amortization
       of $1,173 and $981 at June 30, 2006 and December 31, 2005,
       respectively.....................................................              842                      886
     QUADRAMET license fee, less accumulated amortization of $2,021 and
       $1,673 at June 30, 2006 and December 31, 2005, respectively......            5,979                    6,327
     SOLTAMOX license fee, less accumulated amortization of $27 at June
       30, 2006.........................................................            1,973                       --
     Other assets.......................................................              320                      655
                                                                            -------------            -------------

                                                                            $      45,088            $      44,790
                                                                            =============            =============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
     Current portion of long-term liabilities...........................               59                       26
     Accounts payable and accrued liabilities...........................            5,283                    5,271
                                                                            -------------            -------------

       Total current liabilities........................................            5,342                    5,297

Warrant liability.......................................................            1,687                    1,869
Other long-term liabilities.............................................               92                       46
                                                                            -------------            -------------
       Total liabilities................................................            7,121                    7,212
                                                                            -------------            -------------

Commitments and contingencies

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, none issued and outstanding...................               --                       --
     Common stock, $.01 par value, 50,000,000 shares authorized,
       22,496,889 and 22,473,762 shares issued and outstanding at June
       30, 2006 and December 31, 2005, respectively.....................              225                      225
     Additional paid-in capital.........................................          450,700                  450,502
     Unearned compensation..............................................               --                     (610)
     Accumulated other comprehensive income.............................               69                       28
     Accumulated deficit................................................         (413,027)                (412,567)
                                                                            -------------            -------------

       Total stockholders' equity.......................................           37,967                   37,578
                                                                            -------------            -------------

                                                                            $      45,088            $      44,790
                                                                            =============            =============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      -2-
<PAGE>


                      CYTOGEN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (All amounts in thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS                          SIX MONTHS
                                                                           ENDED JUNE 30,                       ENDED JUNE 30,
                                                                 -------------------------------      ------------------------------
                                                                      2006               2005              2006            2005
                                                                   ---------           --------         ----------      ----------

<S>                                                              <C>               <C>               <C>               <C>
REVENUES:
     Product revenue:
       QUADRAMET.............................................    $     1,988       $     2,153       $     4,244       $     4,207
       PROSTASCINT...........................................          2,180             1,924             4,364             3,823
                                                                 -----------       -----------       -----------       -----------
           Total product revenue.............................          4,168             4,077             8,608             8,030

     License and contract revenue............................              4                79                 6               120
                                                                 -----------       -----------       -----------       -----------

           Total revenues....................................          4,172             4,156             8,614             8,150
                                                                 -----------       -----------       -----------       -----------

OPERATING EXPENSES:
     Cost of product revenue.................................          2,594             2,251             5,010             4,678
     Selling, general and administrative.....................          6,994             6,692            13,231            13,716
     Research and development................................          1,463             1,362             4,445             2,101
     Equity in (income) loss of joint venture................            (13)            1,704               120             2,202
                                                                 -----------       -----------       -----------       -----------

           Total operating expenses..........................         11,038            12,009            22,806            22,697
                                                                 -----------       -----------       -----------       -----------

           Operating loss....................................         (6,866)           (7,853)          (14,192)          (14,547)

INTEREST INCOME..............................................            392               154               689               297
INTEREST EXPENSE.............................................             (6)              (42)              (12)              (84)
GAIN ON SALE OF EQUITY INTEREST IN JOINT VENTURE.............         12,873                --            12,873                --
DECREASE IN VALUE OF WARRANT LIABILITY.......................            813                --               182                --
                                                                 -----------       -----------       -----------       -----------

NET INCOME (LOSS)............................................    $     7,206       $    (7,741)      $      (460)      $   (14,334)
                                                                 ===========       ===========       ===========       ===========

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE................    $      0.32       $     (0.50)      $     (0.02)      $     (0.92)
                                                                 ===========       ===========       ===========       ===========

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING................................................         22,474            15,525            22,474            15,519
                                                                 ===========       ===========       ===========       ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -3-
<PAGE>


                      CYTOGEN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (All amounts in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED JUNE 30,
                                                                        ------------------------------------
                                                                              2006                2005
                                                                        ----------------    ----------------

<S>                                                                       <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                  $      (460)       $    (14,334)
Adjustments to reconcile net loss to net cash used
     in operating activities:
       Depreciation and amortization.................................             601                 492
       Decrease in value of warrant liability........................            (182)                 --
       Share-based compensation expense..............................             772                  13
       Share-based milestone obligation..............................              --                 500
       Increase (decrease) in provision for doubtful
         accounts....................................................              22                 (39)
       Amortization of premiums on investments.......................              --                  52
       Gain on sale of equity interest in joint venture..............         (12,873)                 --
       Deferred rent.................................................             (10)                 21
       Changes in assets and liabilities:
         Accounts receivable.........................................            (173)               (376)
         Inventories.................................................           1,623              (1,474)
         Other assets................................................             656                 690
         Liability related to joint venture..........................              --                 704
         Accounts payable and accrued liabilities....................              22              (1,535)
                                                                          -----------        ------------

       Net cash used in operating activities.........................         (10,002)            (15,286)
                                                                          -----------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of SOLTAMOX license.........................................          (2,000)                 --
Purchases of property and equipment..................................             (86)               (163)
Proceeds from sale of equity interest in joint venture...............          13,132                  --
Maturities of short-term investments.................................              --              22,727
                                                                          -----------        ------------

       Net cash provided by investing activities.....................          11,046              22,564
                                                                          -----------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock...............................              36                 215
Payment of long-term liabilities.....................................             (17)                 (7)
                                                                          -----------        ------------

       Net cash provided by financing activities.....................              19                 208
                                                                          -----------        ------------

Net increase in cash and cash equivalents............................           1,063               7,486

Cash and cash equivalents, beginning of period.......................          30,337              13,046
                                                                          -----------        ------------
Cash and cash equivalents, end of period.............................     $    31,400        $     20,532
                                                                          ===========        ============
Supplemental disclosure of non-cash information:
Capital lease of equipment...........................................     $        96        $          1
                                                                          ===========        ============
Unrealized holding gain on marketable securities.....................     $        41        $         50
                                                                          ===========        ============
Supplemental disclosure of cash information:
Cash paid for interest...............................................     $        12        $         84
                                                                          ===========        ============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      -4-
<PAGE>


                      CYTOGEN CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1. THE COMPANY

BACKGROUND

     Founded in 1980,  Cytogen  Corporation  (the  "Company"  or  "Cytogen")  of
Princeton, NJ is a biopharmaceutical company dedicated to improving the lives of
patients with cancer by acquiring,  developing  and  commercializing  innovative
molecules  targeting the sites and stages of cancer  progression.  The Company's
marketed  products include  QUADRAMET  (samarium Sm-153  lexidronam  injection),
PROSTASCINT  (capromab  pendetide)  kit for the  preparation  of  Indium  In-111
capromab  pendetide in the United States and  SOLTAMOX(TM)  (tamoxifen  citrate,
oral solution 10mg/5mL) which the Company expects to launch in the United States
during the third quarter of 2006. The Company's development pipeline consists of
CYT-500,  a  therapeutic   radiolabeled  antibody  targeting   prostate-specific
membrane  antigen (PSMA),  a protein highly expressed on the surface of prostate
cancer  cells and the  neovasculature  of solid  tumors.  The  Company  also has
exclusive United States marketing rights to COMBIDEX(R) (ferumoxtran-10) for all
applications, and the exclusive right to market and sell ferumoxytol (previously
Code 7228) for oncology applications in the United States.

     On  April  21,  2006,  the  Company  and  Savient   Pharmaceuticals,   Inc.
("Savient") entered into a distribution agreement granting the Company exclusive
marketing  rights for  SOLTAMOX(TM)  (tamoxifen  citrate) in the United  States.
SOLTAMOX,  a cytostatic estrogen receptor  antagonist,  is the first oral liquid
hormonal  therapy  approved in the U.S. It is  indicated  for the  treatment  of
breast  cancer in adjuvant  and  metastatic  settings  and to reduce the risk of
breast cancer in women with ductal carcinoma in situ (DCIS) or with high risk of
breast cancer.  In addition,  the Company  entered into a supply  agreement with
Rosemont  Pharmaceuticals  Limited,  previously  a  wholly-owned  subsidiary  of
Savient ("Rosemont"), for the manufacture and supply of SOLTAMOX.

     Cytogen has a history of operating losses since its inception.  The Company
currently relies on two products,  PROSTASCINT and QUADRAMET,  for substantially
all of its revenues.  In addition,  the Company has, from time to time,  stopped
selling certain products,  such as NMP22 BLADDERCHEK,  BRACHYSEED and ONCOSCINT,
that the Company previously believed would generate  significant  revenues.  The
Company's  products are subject to significant  regulatory review by the FDA and
other  federal  and  state  agencies,   which  requires   significant  time  and
expenditures  in  seeking,  maintaining  and  expanding  product  approvals.  In
addition,  the Company relies on collaborative partners to a significant degree,
among other things, to manufacture its products, to secure raw materials, and to
provide  licensing rights to their  proprietary  technologies for the Company to
sell and market to others.  The  Company is also  subject to revenue  and credit
concentration  risks  as a small  number  of its  customers  account  for a high
percentage of total revenues and corresponding  receivables.  The loss of one of
these  customers  or changes in their  buying  patterns  could result in reduced
sales, thereby adversely affecting the Company's operating results.


                                      -5-
<PAGE>


     The Company has  incurred  negative  cash flows from  operations  since its
inception, and has expended, and expects to continue to expend substantial funds
to implement its planned product development efforts,  including  acquisition of
products and  complementary  technologies,  research and  development,  clinical
studies and regulatory  activities,  and to further the Company's  marketing and
sales programs.  The Company expects its existing  capital  resources  should be
adequate to fund  operations  and  commitments  at least into 2007.  The Company
cannot  assure you that its business or  operations  will not change in a manner
that would  consume  available  resources  more  rapidly than  anticipated.  The
Company  expects that it will have  additional  requirements  for debt or equity
capital,  irrespectively  of whether  and when  profitability  is  reached,  for
further  product  development,  product and technology  acquisition  costs,  and
working capital.

BASIS OF CONSOLIDATION

     The consolidated  financial  statements include the financial statements of
Cytogen and its  subsidiaries.  All intercompany  balances and transactions have
been eliminated in consolidation.

BASIS OF PRESENTATION

     The  consolidated  financial  statements  and notes  thereto of Cytogen are
unaudited and include all adjustments  which, in the opinion of management,  are
necessary to present fairly the financial condition and results of operations as
of  and  for  the  periods  set  forth  in  the  Consolidated   Balance  Sheets,
Consolidated Statements of Operations and Consolidated Statements of Cash Flows.
All  such  accounting  adjustments  are  of  a  normal,  recurring  nature.  The
consolidated  financial  statements  do not include all of the  information  and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with U.S. generally accepted accounting principles and should be read
in  conjunction  with the  consolidated  financial  statements and notes thereto
included in the Company's  Annual Report on Form 10-K, filed with the Securities
and Exchange  Commission,  which includes financial statements as of and for the
year ended  December 31, 2005.  The results of the Company's  operations for any
interim  period are not  necessarily  indicative of the results of the Company's
operations for any other interim period or for a full year.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

     The preparation of financial  statements in conformity with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

     Cash and cash  equivalents  include  cash on  hand,  cash in banks  and all
highly-liquid investments with a maturity of three months or less at the time of
purchase.


                                      -6-
<PAGE>


Inventories

     The  Company's  inventories  include  PROSTASCINT  and  SOLTAMOX  with  the
majority of the inventories  related to  PROSTASCINT.  Inventories are stated at
the lower of cost or market using the first-in,  first-out  method and consisted
of the following (all amounts in thousands):

                                                JUNE 30, 2006  DECEMBER 31, 2005
                                                -------------  -----------------

   Raw materials.............................    $       287      $       291
   Work-in-process...........................            457            2,625
   Finished goods............................          1,215              666
                                                 -----------      -----------
                                                 $     1,959      $     3,582
                                                 ===========      ===========

Net Income (Loss) Per Share

     Basic net income  (loss) per common  share is  calculated  by dividing  the
Company's net income (loss) by the  weighted-average  common shares  outstanding
during each period.  Diluted  income per common share for the three months ended
June 30, 2006 is computed by dividing net income by the weighted-average  common
shares outstanding during the period, increased to include all additional common
shares that would have been  outstanding  assuming  potentially  dilutive common
share equivalents had been issued. Dilutive common share equivalents include the
dilutive effect of in-the-money shares, which is calculated based on the average
share price for the three months  ended June 30, 2006 using the  treasury  stock
method.  Under the treasury stock method, the exercise price of a security,  the
average amount of unrecognized  compensation cost during the period, if any, and
the amount of tax benefits that would be recorded in additional paid-in-capital,
if any,  when the security is  exercised,  are assumed to be used to  repurchase
shares in the current  period.  Weighted-average  common  stock  equivalents  to
purchase  5,264,022  shares of the Company's common stock were excluded from the
computation  of diluted net income per common  share for the three  months ended
June 30, 2006 because  their effect  would have been  antidilutive.  Diluted net
loss per  common  share is the same as basic  net loss per share for each of the
three and six month  periods  ended June 30, 2005 and the six month period ended
June 30, 2006, because the inclusion of common stock equivalents,  which consist
of nonvested  shares,  warrants and options to purchase  shares of the Company's
common stock, would be antidilutive due to the Company's losses.

OTHER COMPREHENSIVE INCOME OR LOSS

     Other  comprehensive  income  consisted of net  unrealized  holding gain on
marketable securities.  For the three months ended June 30, 2006, the unrealized
holding  loss  for  these   securities  was  $55,000  and,  as  a  result,   the
comprehensive  income for the three months  ended June 30, 2006 was  $7,151,000.
For the six months  ended June 30,  2006,  the  unrealized  holding  gain of the
securities  was  $41,000  and as a result,  the  comprehensive  loss for the six
months  ended June 30, 2006 was  $419,000.  For the three  months ended June 30,
2005, the  unrealized  holding loss of those  securities  was $19,000,  and as a
result,  the  comprehensive  loss for the three  months  ended June 30, 2005 was
$7,760,000.  For the six months ended June 30, 2005, the unrealized holding gain
of the securities was $50,000 and as a result the comprehensive loss for the six
months ended June 30, 2005 was $14,284,000.


                                      -7-
<PAGE>


RECENT ACCOUNTING PRONOUNCEMENTS

Income Taxes

     In June 2006, the FASB issued FASB  Interpretation  No. 48, "Accounting for
Uncertainty  in Income Taxes" ("FIN 48").  FIN 48 is applicable for fiscal years
beginning after December 15, 2006. This Interpretation  clarifies the accounting
for  uncertainty  in  income  taxes  recognized  in  an  enterprise's  financial
statements in accordance  with FASB  Statement No. 109,  "Accounting  for Income
Taxes." This Interpretation  prescribes a recognition  threshold and measurement
attribute for the  financial  statement  recognition  and  measurement  of a tax
position taken or expected to be taken in a tax return. This Interpretation also
provides  guidance on  de-recognition,  classification,  interest and penalties,
accounting  in interim  periods,  disclosure,  and  transition.  The  Company is
currently  evaluating  the impact of the  adoption of FIN 48 upon its  financial
statements  and  related  disclosures.  The  Company  does not  expect  that the
adoption  will have a material  effect on its results of operations or financial
condition.

Sales Tax

     In March 2006, the FASB's  Emerging  Issues Task Force released Issue 06-3,
"How  Sales  Taxes   Collected  From  Customers  and  Remitted  to  Governmental
Authorities  Should Be  Presented  in the Income  Statement"  ("EITF  06-3").  A
consensus was reached that entities may adopt a policy of presenting sales taxes
in  the  income  statement  on  either  a  gross  or net  basis.  If  taxes  are
significant,  an entity should  disclose its policy of presenting  taxes and the
amount of taxes if  reflected  on a gross  basis in the  income  statement.  The
guidance is effective for periods beginning after December 15, 2006. The Company
presents sales net of sales taxes in its  consolidated  statements of operations
and does not anticipate changing its policy as a result of EITF 06-3.

Share-Based Payment

     In December 2004, the FASB issued SFAS No. 123(R),  "Share-Based  Payment,"
which  revised SFAS No. 123 ("SFAS 123") and  superseded  Accounting  Principles
Board Opinion No. 25, " Accounting  for Stock Issued to  Employees"  ("APB 25").
SFAS 123(R) requires that companies  recognize  compensation  expense associated
with share-based compensation arrangements, including employee stock options, in
the financial  statements  effective as of the first interim or annual reporting
period that begins after June 15, 2005.  SFAS 123(R)  eliminates  the  Company's
ability  to  account  for  such  transactions  using  the  intrinsic  method  of
accounting  under APB 25. SFAS 123(R) also  requires  that  companies  recognize
compensation  expense  associated  with  purchases  of shares of common stock by
employees at a discount to market value under employee stock purchase plans that
do not meet certain criteria.

     In April  2005,  the  Securities  and  Exchange  Commission  announced  the
adoption  of a new rule  allowing  companies  to  implement  SFAS  123(R) at the
beginning   of  their  next  fiscal  year  that  begins  after  June  15,  2005.
Accordingly,  the  Company  adopted  SFAS  123(R) in its fiscal  year  beginning
January 1, 2006 using the modified  prospective  transition  method.  Under this
method,  compensation expense is reflected in the financial statements beginning
January 1, 2006 with no restatement to the prior periods. As such,  compensation
expense,  which is  measured  based on the fair value of the  instrument  on the
grant date, is recognized for awards


                                      -8-
<PAGE>


that are granted, modified, repurchased or cancelled on or after January 1, 2006
as well as for the portion of awards previously  granted that have not vested as
of January 1, 2006.  The  Company  has  implemented  the  straight-line  expense
attribution  method for all  options  granted  after  January 1, 2006.  Prior to
adopting SFAS 123(R),  the Company used the  accelerated  attribution  method in
accordance with FASB  Interpretation  No. 28, "Accounting for Stock Appreciation
Rights and Other  Variable Stock Option or Award Plans" ("FIN 28"). The adoption
of SFAS 123(R) had a material impact on the Company's results of operations (see
Note 2).

Abnormal Inventory Costs

     In  November  2004,  the FASB issued SFAS No.  151,  "Inventory  Costs,  an
amendment of ARB No. 43,  Chapter 4" ("SFAS No. 151"),  to clarify that abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage)  should be  recognized  as  current  period  charges,  and that fixed
production  overheads  should be  allocated  to  inventory  based on the  normal
capacity of  production  facilities.  This  statement is effective for inventory
costs incurred during fiscal years  beginning after June 15, 2005.  Accordingly,
the Company  adopted SFAS No. 151 in its fiscal year beginning  January 1, 2006.
The adoption of this  standard did not have any impact on the Company in the six
months ended June 30, 2006.

2. SHARE-BASED COMPENSATION

     The Company has various share-based compensation plans that provide for the
issuance  of common  stock and  incentive  and  non-qualified  stock  options to
purchase the  Company's  common stock to employees,  non-employee  directors and
outside consultants.  These plans are administered by the Compensation Committee
of the Board of Directors (the "Compensation Committee").  The Company may issue
new  common  shares  or  reacquire  them on the open  market to  satisfy  option
exercises or upon satisfaction of service requirement for nonvested shares.

Cytogen Stock Options

     Currently,  the Company  has three  plans  which allow for the  issuance of
stock options and other  awards:  the 2006 Equity  Compensation  Plan (the "2006
Plan");  the  2004  Stock  Incentive  Plan  (the  "2004  Plan");  and  the  2004
Non-Employee  Director  Stock  Incentive  Plan (the "2004  Director  Plan").  An
aggregate of  1,500,000,  1,200,000 and 375,000  shares of Cytogen  common stock
have been reserved for issuance upon the exercise of options or stock awards (as
applicable) under the 2006 Plan, 2004 Plan and 2004 Director Plan, respectively.
The Company  also has certain  other option  plans,  for which there are options
outstanding but no new options can be granted under those plans.

     The  2006  Plan  provides  for  the  grant  of  incentive   stock  options,
nonqualified stock options, stock units, stock awards, stock appreciation rights
and  other  stock-based  awards  to the  Company's  employees  and  non-employee
directors.  Performance-based  awards,  which will vest upon the  achievement of
objective  performance  goals, may also be granted under the 2006 Plan.  Options
shall become  exercisable in accordance with such terms and conditions as may be
determined by the  Compensation  Committee.  As long as Cytogen  common stock is
traded on the Nasdaq  National  Market,  the  exercise  price of  Cytogen  stock
options under the 2006 Plan will be equal to the last  reported  sales price for
Cytogen  common stock on the date of grant,  unless a higher  exercise  price is
specified by the Compensation Committee. Except for certain


                                      -9-
<PAGE>


circumstances,  the options will generally  expire upon the earlier of ten years
after the date of grant or within a certain period of time after  termination of
services as determined by the  Compensation  Committee.  As of June 30, 2006, no
options or awards have been granted under the 2006 Plan.

     The  2004  Plan  provides  for  the  grant  of  incentive   stock  options,
non-qualified  stock  options or nonvested  shares (see below) to the  Company's
employees,  officers,  consultants and advisors.  Generally,  options granted to
employees  will vest 40%, 30% and 30% one year,  two years and three years after
the date of grant, respectively. Options granted to officers will generally vest
annually  one third each year over a  three-year  period from the date of grant.
Performance options, which will vest upon the achievement of certain milestones,
may also be granted  under the 2004 Plan.  The exercise  price of Cytogen  stock
options is equal to the  average  of high and low  trading  prices  for  Cytogen
common stock on the date of grant,  unless a higher  exercise price is specified
by the Compensation  Committee.  Except for certain  circumstances,  the options
will  generally  expire upon the earlier of ten years after the date of grant or
90 days after termination of employment.

     The 2004  Director  Plan  provides  for the  grant of  non-qualified  stock
options and shares of Cytogen common stock, in certain circumstances, to members
of the  Company's  Board of  Directors  who are not  employees  of the  Company.
According  to  the  2004  Director   Plan,   each   re-elected   Director  shall
automatically  receive options to purchase shares of Cytogen common stock on the
day  following  each Annual  Meeting of  Stockholders.  Each new Director who is
appointed after the date of the most recent Annual Meeting of Stockholders  will
receive  a  certain  number  of  options,  pro-rated  for the  number  of months
remaining  until the next Annual Meeting.  All options will become  excisable on
the first  anniversary  of the date of grant,  unless  options  are granted to a
Director who has served on the  Company's  Board of Directors for at least three
years and retires or resigns after  reaching 55 years of age. In such case,  the
options may be exercised in full  regardless of the time lapse since the date of
grant.  The exercise  price of Cytogen  stock options is equal to the average of
high and low  trading  prices  for  Cytogen  common  stock on the date of grant.
Except for certain  circumstances,  the options will  generally  expire upon the
earlier of ten years after the date of grant or 90 days after termination date.


                                      -10-
<PAGE>


     A summary of option activities  related to Cytogen stock options other than
performance options, for the six months ended June 30, 2006 is as follows:

<TABLE>
<CAPTION>
                                                  NUMBER       WEIGHTED-          WEIGHTED-
                                                   OF           AVERAGE            AVERAGE
                                                 CYTOGEN       EXERCISE           REMAINING       AGGREGATE
                                                  STOCK        PRICE PER         CONTRACTUAL      INTRINSIC
    Cytogen Options Other Than                   OPTIONS        SHARE               LIFE           VALUE
    Performance Options                         ----------    ---------          -----------      ---------
    ----------------------------------------
<S>                                             <C>           <C>                  <C>             <C>
    Balance at December 31, 2005............      980,796     $  10.04
       Granted..............................      551,600         3.43
       Exercised............................           --           --
       Forfeited............................      (90,780)        5.27
       Expired..............................      (29,800)       19.55
                                                ---------     --------            ---------       ---------
    Balance at June 30, 2006................    1,411,816     $   7.56               8.37              --

    Exercisable and expected to vest at
       June 30, 2006........................    1,255,854     $   7.91               8.41              --

    Exercisable at June 30, 2006............      634,584     $  11.19               7.08              --
</TABLE>



     At June 30,  2006,  the  weighted-average  exercise  price of  outstanding,
exercisable and expected to vest, and  exercisable  options each was higher than
the market price of the Company's  underlying common share, and as a result, the
aggregate intrinsic value was zero.

     A summary of option activities  related to performance  options for the six
months ended June 30, 2006 is as follows:

<TABLE>
<CAPTION>
                                                  NUMBER      WEIGHTED-         WEIGHTED-
                                                    OF        AVERAGE           AVERAGE
                                                  CYTOGEN     EXERCISE         REMAINING       AGGREGATE
                                                   STOCK      PRICE PER       CONTRACTUAL      INTRINSIC
    Performance Options                           OPTIONS      SHARE             LIFE            VALUE
    ----------------------------------------     ---------   ----------       -----------      ---------
    <S>                                           <C>         <C>               <C>             <C>
    Balance at December 31, 2005............      150,000     $   3.54
       Granted..............................           --           --
       Exercised............................           --           --
       Forfeited and Expired................           --           --
                                                  -------     --------         ---------       ---------
    Balance at June 30, 2006................      150,000     $   3.54            6.47             --

    Exercisable and expected to vest at
       June 30, 2006........................       50,000     $   3.54            6.47             --

    Exercisable at June 30, 2006............       50,000     $   3.54            6.47             --
</TABLE>


                                      -11-
<PAGE>


     In 2002,  options to purchase  150,000  shares of Cytogen common stock were
granted to a key employee.  These options have three separate and equal tranches
for  which  vesting  are  based  upon  the  achievement  of  certain  milestones
established  by the  Company's  Board of Directors.  In June 2006,  the Board of
Directors determined that one of the performance milestones had been met, and as
a result,  approved the vesting of 50,000 performance options.  During the three
months ended June 30, 2006, the Company  recorded  $152,000 in selling,  general
and administrative expenses which represent the fair value of the vested options
based  on  the  Black-Scholes   option  pricing  model.  The  remaining  100,000
performance options are not deemed probable of becoming  exercisable at June 30,
2006.

     At June 30,  2006,  the  weighted-average  exercise  price of  outstanding,
exercisable and expected to vest, and  exercisable  options each was higher than
the market price of the Company's  underlying common share, and as a result, the
aggregate intrinsic value was zero.

Nonvested Shares

     Under the 2004 Plan, the Company may issue  nonvested  shares to employees,
officers,  consultants and advisors. The maximum number of shares authorized for
grant under the 2004 Incentive Plan is 200,000.  Generally, the nonvested shares
will vest in installments  over three to six year periods.  The Company may also
issue stock awards to its employees and  non-employee  directors  under the 2006
Plan. As of June 30, 2006, no awards have been granted under this plan.

     A summary of the Cytogen's  nonvested  share  activities for the six months
ended June 30, 2006 is as follows:

<TABLE>
<CAPTION>
                                                                                 WEIGHTED-
                                                NUMBER         WEIGHTED-          AVERAGE
                                                  OF            AVERAGE          REMAINING     AGGREGATE
                                               NONVESTED       GRANT DATE         VESTING      INTRINSIC
    Nonvested Shares                            SHARES         FAIR VALUE          TERM          VALUE
    ----------------------------------------   ----------     ------------       ----------   -----------
<S>                                            <C>            <C>                 <C>         <C>
    Balance at December 31, 2005............     136,200      $     5.15
       Granted..............................      71,800            3.56
       Vested...............................          --              --
       Forfeited............................     (28,900)           4.70
                                               ---------      ----------         ----------   -----------

    Balance at June 30, 2006................     179,100      $     4.58            2.88      $ 448,000

    Vested and expected to vest at
       June 30, 2006........................     134,860      $     4.50            2.78      $ 337,000

    Vested at June 30, 2006.................          --              --              --             --
</TABLE>


Employee Stock Purchase Plan

     In September  2005, the Board of Directors of the Company  adopted the 2005
Employee  Stock  Purchase  Plan (the  "2005  ESPP").  The 2005  ESPP,  which was
approved by the Company's stockholders on June 13, 2006, is effective October 1,
2005, and replaces the


                                      -12-
<PAGE>


Company's  existing  employee stock purchase plan which had no remaining  shares
available for future issuance. Under the 2005 ESPP, eligible employees may elect
to purchase  shares of Cytogen  common  stock at 85% of the lower of fair market
value as of the first or last trading day of each  participation  period.  Under
the 2005 ESPP, officers of the Company who purchase shares may not transfer such
shares for a period of 12 months after the purchase date.  The initial  offering
period was a nine-month  period  beginning on October 1, 2005 and ending on June
30, 2006.  Subsequent  purchase periods will be three-month periods beginning on
the first day in July,  October,  January and April.  The  Company has  reserved
500,000 shares of common stock for future issuance under the 2005 ESPP. The 2005
ESPP plan will be compensatory  under SFAS 123(R).  In the six months ended June
30,  2006,  employees  purchased  23,127  shares of common  stock for  aggregate
proceeds to the Company of $49,000.  At June 30,  2006,  476,873  shares  remain
available for purchase under the 2005 ESPP.

Warrants and Options Issued to Non-Employees

     From time to time,  the Company may issue  warrants and options to purchase
Cytogen  common stock to  non-employees,  excluding  directors,  in exchange for
goods or  services.  Warrants are issued  outside of any  approved  compensation
plans.  Terms of warrants  and options  vary among  various  arrangements,  with
vesting  period  generally up to one year or become  automatically  exercised if
certain conditions are met. Contractual term ranges up to ten years.

     A summary of the Cytogen warrants and options issued to  non-employees  for
the six months ended June 30, 2006 is as follows:

<TABLE>
<CAPTION>
                                                 NUMBER
                                                   OF         WEIGHTED-         WEIGHTED-
                                                CYTOGEN        AVERAGE           AVERAGE
                                                WARRANTS      EXERCISE          REMAINING        AGGREGATE
    Warrants and Options to                       AND         PRICE PER        CONTRACTUAL      INSTRINSIC
    Non-Employees                               OPTIONS         SHARE             LIFE            VALUE
    ----------------------------------------   ---------    -----------        -----------      ----------
    <S>                                        <C>           <C>                 <C>            <C>
    Balance at December 31, 2005............    359,978      $   6.96
       Granted..............................         --            --
       Exercised............................         --            --
       Forfeited............................         --            --
       Expired..............................    (70,000)     $   5.65
                                                -------      --------          -----------      ----------
    Balance at June 30, 2006................    289,978      $   7.27               3.59             --

    Exercisable and expected to vest at
       June 30, 2006........................    289,978      $   7.27               3.59             --

    Exercisable at June 30, 2006............    289,978      $   7.27               3.59             --
</TABLE>


                                      -13-
<PAGE>


     At June 30,  2006,  the  weighted-average  exercise  price of  outstanding,
exercisable  and expected to vest, and exercisable warrants each was higher than
the market price of the Company's  underlying common share, and as a result, the
aggregate intrinsic value was zero.

AxCell BioSciences Stock Options

     AxCell BioSciences,  a subsidiary of Cytogen Corporation,  also has a stock
option plan that provides for the issuance of incentive and non-qualified  stock
options to purchase  AxCell common stock ("AxCell Stock  Options") to employees,
for which  2,000,000  shares of AxCell common stock have been  reserved.  AxCell
Stock  Options  are  granted  with a  term  of 10  years  and  generally  become
exercisable in installments over periods of up to 5 years.

     A summary of AxCell stock option  activities  for the six months ended June
30, 2006 is as follows:

<TABLE>
<CAPTION>
                                                                                      WEIGHTED-
                                                       NUMBER        WEIGHTED-         AVERAGE
                                                     OF AXCELL        AVERAGE         REMAINING
                                                       STOCK         EXERCISE        CONTRACTUAL
         AxCell Stock Options                         OPTIONS          PRICE            TERM
         ----------------------------------------   ----------      ----------       -----------
         <S>                                          <C>           <C>                 <C>
         Balance at December 31, 2005............      69,405       $   4.34            6.10
            Granted..............................          --             --
            Exercised............................          --             --
            Forfeited............................          --             --
            Expired..............................     (19,405)          3.60
                                                      -------       --------         -----------

         Balance at June 30, 2006................      50,000       $   4.63            5.83

         Exercisable and expected to vest at
            June 30, 2006........................      50,000       $   4.63            5.83

         Exercisable at June 30, 2006............      50,000       $   4.63            5.83
</TABLE>

     Effective  January 1, 2006,  the  Company  adopted  SFAS No.  123(R)  which
requires  companies  to  measure  and  recognize  compensation  expense  for all
share-based  payments at fair value.  Prior to the adoption of SFAS 123(R),  the
Company accounted for its stock-based  employee  compensation  expense under the
recognition and measurement  principles of APB 25, and related  interpretations.
Under APB 25,  compensation costs related to stock options granted with exercise
prices equal to or greater than the fair value of the  underlying  shares at the
date of  grant  under  those  plans  were  not  recognized  in the  consolidated
statements of  operations.  Compensation  costs related to nonvested  shares and
stock options  granted with exercise  prices below fair value of the  underlying
shares at the date of grant were  recognized in the  consolidated  statements of
operations over the requisite  service period,  generally the vesting periods of
the awards. Compensation costs associated with those awards granted prior to the
adoption of SFAS 123(R) were recognized using the accelerated attribution method
in accordance  with FIN 28 and forfeitures  recorded as incurred.  The following
table  illustrates  the  effect on net income  (loss) and net income  (loss) per
share as if the fair value method of SFAS 123 had been applied for the three and
six months  ended June 30,  2005 (all  amounts  in  thousands,  except per share
data):


                                      -14-
<PAGE>


<TABLE>
<CAPTION>
                                                                THREE MONTHS         SIX MONTHS
                                                                   ENDED               ENDED
                                                                JUNE 30, 2005       JUNE 30, 2005
                                                                -------------     ----------------
<S>                                                               <C>               <C>
     Net loss, as reported..................................      $ (7,741)         $   (14,334)

       Add: Stock-based employee compensation expense
        included in reported net loss.......................            13                   13
       Deduct: Total stock-based employee compensation
        expense determined under fair value-based method
        for all awards......................................          (565)              (1,128)
                                                                  --------          -----------

     Pro forma net loss.....................................      $ (8,293)         $   (15,449)
                                                                  ========          ===========



     Basic and diluted net loss per share, as reported......      $  (0.50)         $     (0.92)
                                                                  ========          ===========
     Pro forma basic and diluted net loss per
         share..............................................      $  (0.53)         $     (1.00)
                                                                  ========          ===========
</TABLE>


     The  Company  adopted  SFAS  No.  123(R)  using  the  modified  prospective
transition method, which requires that share-based compensation cost be based on
the grant-date  fair value  estimated in accordance  with the provisions of SFAS
123(R) and is recognized for all awards  granted,  modified or settled after the
effective  date as well as awards  granted to employees  prior to the  effective
date that remain  unvested as of the effective  date. For the three months ended
June 30,  2006,  the  Company  recorded  $309,000  of  stock-based  compensation
expense,  of which $316,000 was included in selling,  general and administrative
expenses and $7,000 of expense reversal was recorded in research and development
expenses to reflect actual forfeitures.  For the six months ended June 30, 2006,
the Company  recorded  $772,000 of stock-based  compensation  expense,  of which
$720,000  was  included in  selling,  general and  administrative  expenses  and
$52,000 in research and development expenses. For the three and six months ended
June 30,  2005,  the  Company  recorded  a charge  of  $13,000  for  share-based
compensation.  During  the  six  months  ended  June  30,  2006,  there  were no
modification to the share-based  awards and no compensation cost was capitalized
into assets.

     The  adoption of SFAS 123(R)  resulted in lower income for the three months
ended June 30,  2006 of  $254,000,  or $0.01 per basic and  diluted  share,  and
higher  loss for the six months  ended June 30, 2006 of  $683,000,  or $0.03 per
basic and diluted  share,  than if the Company had  continued to account for the
share-based   compensation  under  APB  25.  At  June  30,  2006,   unrecognized
compensation  expense,  which  includes  the  impact of  estimated  forfeitures,
related to unvested awards granted under the Company's share-based  compensation
plans is approximately $2.5 million and remains to be recognized over a weighted
average period of 1.2 years. The Company recognizes share-based  compensation on
a straight-line  basis over the requisite  service period for grants on or after
January 1, 2006. Unrecognized  compensation expense related to grants made prior
to adoption of SFAS 123(R) are  recognized  using the  accelerated  amortization
method.  Prior  periods  were not restated to reflect the impact of adopting the
new standard.  No cumulative  effect  adjustment was recorded for the accounting
change  related to  recording  actual  forfeitures  as incurred  under APB 25 to
estimating  forfeitures  in  accordance  with SFAS  123(R) as the  amount was de
minimus.


                                      -15-
<PAGE>


     The Company's  share-based  compensation  costs are generally  based on the
fair value of the option awards calculated using a Black-Scholes  option pricing
model on the date of grant. The weighted-average grant date fair value per share
of the options granted under the Cytogen stock option plans during the three and
six  months  ended  June 30,  2006 is  estimated  at $2.79 and $2.77 per  share,
respectively,  as compared to $3.59 and $3.69, respectively, in the same periods
of 2005,  using  the  Black-Scholes  option  pricing  model  with the  following
weighted average assumptions:

                                                THREE MONTHS       SIX MONTHS
                                                   ENDED             ENDED
                                               JUNE 30, 2006     JUNE 30, 2006
                                               -------------     -------------

   Expected life (years)....................        6.53             6.51
   Expected volatility......................         97%              97%
   Dividend yield...........................          0%               0%
   Risk-free interest rate..................       4.95%            4.94%


                                                THREE MONTHS       SIX MONTHS
                                                   ENDED             ENDED
                                               JUNE 30, 2005     JUNE 30, 2005
                                               -------------     -------------

   Expected life (years)....................        4.48             4.48
   Expected volatility......................         96%              96%
   Dividend yield...........................          0%               0%
   Risk-free interest rate..................       3.94%            3.94%

     The  compensation  costs for  nonvested  share awards are based on the fair
value of Cytogen common stock on the date of grant. The  weighted-average  grant
date fair value per share of nonvested share awards granted during the three and
six month  periods  ended June 30,  2006 was $3.58 and $3.56,  respectively,  as
compared to $5.15 in each of the same periods in 2005.

     The weighted-average  fair value per share ascribed to the shares purchased
under the employee  stock  purchase plan during each of the three and six months
ended  June 30,  2006 is  estimated  at $0.54  per  share on the date of  grant,
respectively,  as compared to $2.16 and $3.58,  respectively in the same periods
in 2005  using  the  Black-Scholes  option  pricing  model  with  the  following
weighted-average assumptions:

                                                THREE MONTHS       SIX MONTHS
                                                   ENDED             ENDED
                                               JUNE 30, 2006     JUNE 30, 2006
                                               -------------     -------------

   Expected life (months)...................         0.5               0.5
   Expected volatility......................         41%               41%
   Dividend yield...........................          0%                0%
   Risk-free interest rate..................       4.90%             4.90%


                                      -16-
<PAGE>


                                                THREE MONTHS       SIX MONTHS
                                                   ENDED             ENDED
                                               JUNE 30, 2005     JUNE 30, 2005
                                               -------------     -------------

   Expected life (months)...................          3                  3
   Expected volatility......................        156%              119%
   Dividend yield...........................          0%                0%
   Risk-free interest rate..................       2.79%             2.63%

     No warrants were granted to  non-employees  in exchange for services during
the three and six months ended June 30, 2006 and 2005.

     The Company  calculates  the expected life using the  simplified  method as
described in the SEC's Staff Accounting  Bulletin No. 107 ("SAB 107") for "plain
vanilla" options meeting certain criteria. The simplified method is based on the
vesting period and the contractual  term for each grant or each  vesting-tranche
of awards with graded  vesting.  The mid-point  between the vesting date and the
expiration  date is used as the  expected  term under this  method.  The Company
calculates   expected   volatility  for  stock-based   awards  using  historical
volatility,  measured  over a period  equal to the  expected  term of the award,
which it believes is a  reasonable  estimate  of future  volatility.  As options
granted  to the Board of  Director  members do not meet the  criteria  of "plain
vanilla" options,  the Company determines the expected term for these options by
analyzing  the  historical  exercise  experience  and  post-vesting  termination
behaviors.  The  Company  believes  the result is a  reasonable  estimate of the
length of time that the options are expected to be outstanding.

     In  addition,  under SFAS  123(R),  the  Company is  required  to  estimate
expected  forfeitures  of options and stock  grants over the  requisite  service
period  and  adjust  shared-based  compensation  accordingly.  The  estimate  of
forfeitures  will be adjusted  over the requisite  service  period to the extent
that actual forfeitures  differ, or are expected to differ, from such estimates.
The cumulative effect of changes in estimated  forfeitures will be recognized in
the  period of change  and will also  impact  the  amount of stock  compensation
expense to be recognized in future periods. Under the provisions of SFAS 123(R),
the Company  will record  additional  expense if the actual  forfeiture  rate is
lower than what had been  estimated  and the  Company  will record a recovery of
prior  expense  if the  actual  forfeiture  rate is  higher  than  what had been
estimated.

     During the three and six months  ended June 30,  2006,  total fair value on
the date of  vesting of stock  options  that  became  vested  was  $658,000  and
$678,000,  respectively, as compared to $976,000 and $1.0 million, respectively,
for the same periods in 2005.  There was no vesting of nonvested  shares  during
the three and six  months  ended  June 30,  2006 and 2005.  There were no option
exercises  during the three and six months  ended June 30,  2006 as  compared to
total  intrinsic value of $1,300 for options  exercised  during each of the same
periods in 2005. Cash received from the option  exercises was $2,500 for each of
the three and six month periods ended June 30, 2005.


                                      -17-
<PAGE>


3. JOINT VENTURE - THE PSMA DEVELOPMENT COMPANY LLC

     In June 1999,  Cytogen  entered into a joint venture with Progenics to form
the PSMA  Development  Company LLC (the "Joint  Venture"),  a development  stage
enterprise.   The  Joint  Venture  is  developing   antibody-based  and  vaccine
immunotherapeutic  products utilizing Cytogen's proprietary PSMA technology. The
Joint Venture was owned  equally by Cytogen and  Progenics  until April 20, 2006
(see below).  Cytogen accounted for the Joint Venture using the equity method of
accounting.  Cytogen had recognized 50% of the Joint Venture's operating results
in its  consolidated  statements  of operations  until April 20, 2006,  when the
Company entered into a Membership  Interest Purchase Agreement with Progenics to
sell the Company's 50% ownership interest in the Joint Venture. In addition, the
Company entered into an Amended and Restated  PSMA/PSMP  License  Agreement with
Progenics and the Joint Venture pursuant to which the Company licensed the Joint
Venture certain rights in PSMA  technology.  Under the terms of such agreements,
the Company  sold its 50%  interest in the Joint  Venture for a cash  payment of
$13.2 million,  potential future milestone  payments  totaling up to $52 million
payable upon  regulatory  approval and  commercialization  of the Joint  Venture
products, and royalties on future product sales of the Joint Venture, if any. As
a result, for the three and six months ended June 30, 2006, the Company recorded
$12.9  million in gain on sale of equity  interest in the Joint  Venture,  which
represents the net proceeds after  transaction  costs less the carrying value of
the Company's investment in the Joint Venture at the time of sale.

     For the three and six  months  ended June 30,  2006,  Cytogen  recorded  an
expense  reversal of $13,000 and an expense of  $120,000,  respectively,  of the
Joint  Venture's  net losses  compared to $1.7  million and $2.2  million of the
Joint  Venture's  losses in the same periods of 2005. At December 31, 2005,  the
carrying  value of the  Company's  investment in the Joint Venture was $379,000,
which represented Cytogen's investment in the Joint Venture, less its cumulative
share of losses,  which net  investment  was recorded in other assets.  Selected
financial statement  information of the Joint Venture is as follows (all amounts
in thousands):

BALANCE SHEET DATA:
<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                                      2005
                                                                                ---------------
                                   ASSETS:
<S>                                                                              <C>
Cash......................................................................       $      873
Prepaid expenses..........................................................                9
Accounts receivable from Progenics Pharmaceuticals, Inc.,
    a related party.......................................................              194
                                                                                 ----------
                                                                                 $    1,076
                                                                                 ==========
                      LIABILITIES AND MEMBERS' EQUITY:
Accounts payable to Cytogen Corporation, a related party..................       $        3
Accounts payable and accrued expenses.....................................              332
                                                                                 ----------
         Total liabilities................................................              335
                                                                                 ----------
Capital contributions.....................................................           31,198
Deficit accumulated during the development stage..........................          (30,457)
                                                                                 ----------
         Total members' equity............................................              741
                                                                                 ----------
         Total liabilities and members' equity............................       $    1,076
                                                                                 ==========
</TABLE>


                                      -18-
<PAGE>


INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
                                                       THREE          FROM                          FOR THE PERIOD
                                     FROM             MONTHS       JANUARY 1,     SIX MONTHS        FROM JUNE 15,
                                  APRIL 1 TO           ENDED         2006 TO        ENDED               1999
                                   APRIL 20,         JUNE 30,       APRIL 20,      JUNE 30,        (INCEPTION) TO
                                     2006              2005           2006           2005          APRIL 20, 2006
                                 -----------      -----------     -----------    -----------       --------------
<S>                              <C>              <C>             <C>            <C>               <C>
Interest income................  $        --      $         2     $         6    $         3       $         256
Total operating (income)
    expenses...................          (26)           3,409             246          4,406              30,953
                                 -----------      -----------     -----------    -----------       -------------

Net income (loss)..............  $        26      $    (3,407)    $      (240)   $    (4,403)      $     (30,697)
                                 ===========      ===========     ===========    ===========       =============
</TABLE>


     During the three and six months ended June 30, 2005, the Company recognized
$78,000 and $119,000,  respectively,  of contract  revenues for limited research
and  development  services  provided  by  the  Company  to  the  Joint  Venture,
respectively.  The Company did not  provide any  research  services to the Joint
Venture in 2006.

4. BRISTOL-MYERS SQUIBB MEDICAL IMAGING, INC.

     Effective January 1, 2004, the Company entered into a new manufacturing and
supply  agreement with  Bristol-Myers  Squibb Medical Imaging,  Inc.  ("BMSMI"),
whereby BMSMI will  manufacture,  distribute  and provide order  processing  and
customer  service for  Cytogen  relating  to  QUADRAMET.  Under the terms of the
agreement,  Cytogen is obligated to pay at least $4.7 million annually,  subject
to future annual price  adjustment,  through 2008, unless terminated by BMSMI or
Cytogen on two years prior written  notice.  This agreement  will  automatically
renew for five successive one-year periods unless terminated by BMSMI or Cytogen
on two years prior written  notice.  During the three months ended June 30, 2006
and 2005,  Cytogen  incurred  $1.2 million and $1.0  million,  respectively,  of
manufacturing  costs for QUADRAMET,  all of which is included in cost of product
revenue.  During the six month  periods  ended June 30,  2006 and 2005,  Cytogen
incurred $2.3 million and $2.1 million, respectively, of manufacturing costs for
QUADRAMET, all of which is included in cost of product revenue. The Company also
pays BMSMI a variable  amount per month for each QUADRAMET order placed to cover
the  costs of  customer  service  which is  included  in  selling,  general  and
administrative expenses.

     The two primary  components of  QUADRAMET,  particularly  Samarium-153  and
EDTMP, are provided to BMSMI by outside  suppliers.  BMSMI obtains its supply of
Samarium-153  from a sole  supplier,  and  EDTMP  from  another  sole  supplier.
Alternative  sources for these components may not be readily available,  and any
alternate  suppliers  would have to be identified and qualified,  subject to all
applicable regulatory  guidelines.  If BMSMI cannot obtain sufficient quantities
of these components on commercially  reasonable terms, or in a timely manner, it
would be unable to manufacture QUADRAMET on a timely and cost-effective basis.

5. LAUREATE PHARMA, L.P.

     In September 2004, the Company  entered into a non-exclusive  manufacturing
agreement  with  Laureate  Pharma,   L.P.   pursuant  to  which  Laureate  shall
manufacture  PROSTASCINT and its primary raw materials for Cytogen in Laureate's
Princeton, New Jersey facility. Laureate is


                                      -19-
<PAGE>


the sole  manufacturer  of PROSTASCINT  and its  antibodies.  The agreement will
terminate,  unless  terminated  earlier  pursuant to its terms,  upon Laureate's
completion of the specified  production campaign for PROSTASCINT and shipment of
the  resulting  products  from  Laureate's  facility.  Under  the  terms  of the
agreement,  the Company  anticipates  it will pay at least an  aggregate of $5.1
million through the end of the term of contract.  Approximately $4.1 million has
been incurred  under this  agreement  through June 30, 2006, and was recorded as
inventory when purchased.  No amount was recorded during the three and six month
periods  ended  June  30,  2006  compared  to $1.1  million  and  $1.8  million,
respectively, in the same periods of 2005.

6. WARRANT LIABILITY

     In July and August 2005, the Company sold 3,104,380  shares of common stock
and 776,096  warrants to purchase  shares of its common stock having an exercise
price of $6.00 per share.  These warrants are  exercisable  beginning six months
and ending ten years after their issuance. The shares of common stock underlying
the warrants were  registered  under the Company's  existing shelf  registration
statement.  The  Company  is  required  to  maintain  the  effectiveness  of the
registration statement as long as any warrants are outstanding.

     Under EITF No.  00-19  "Accounting  for  Derivative  Financial  Instruments
Indexed to, and  Potentially  Settled in, a Company's Own Stock" ("EITF 00-19"),
to qualify as permanent equity,  the equity derivative must permit the issuer to
settle in unregistered  shares. The Company does not have that ability under the
securities  purchase  agreement for the warrants  issued in July and August 2005
and,  as EITF  00-19  considers  the  ability to keep a  registration  statement
effective as beyond the Company's control,  the warrants cannot be classified as
permanent  equity and are instead  classified as a liability in the accompanying
consolidated  balance sheet. At June 30, 2006 and December 31, 2005, the Company
recorded  the  warrant  liability  at its fair  value of $1.7  million  and $1.9
million,  respectively,  using a  Black-Scholes  option-pricing  model  with the
following assumptions:

                                                        JUNE 30,    DECEMBER 31,
                                                          2006          2005
                                                    -------------- -------------
   Dividend yield.................................        0%            0%
   Expected volatility............................       107%          106%
   Expected life..................................     9.1 years     9.6 years
   Risk-free interest rate........................       5.22%         4.40%
   Cytogen common stock price.....................      $2.50          $2.74

     Equity  derivatives  not  qualifying  for permanent  equity  accounting are
recorded  at fair  value and are  remeasured  at each  reporting  date until the
warrants  are  exercised  or expired.  Changes in the fair value of the warrants
will be reported in the  consolidated  statements of operations as non-operating
income or expense.  At June 30,  2006,  the fair value of the  warrants was $1.7
million,  resulting  in a gain of $813,000  and  $182,000  for the three and six
months ended June 30, 2006, respectively.

7. SAVIENT PHARMACEUTICALS, INC.

     On April 21,  2006,  the Company and Savient  entered  into a  distribution
agreement  granting the Company  exclusive  marketing rights for SOLTAMOX in the
United States.


                                      -20-
<PAGE>


SOLTAMOX,  a cytostatic estrogen receptor  antagonist,  is the first oral liquid
hormonal  therapy  approved in the U.S. It is  indicated  for the  treatment  of
breast  cancer in adjuvant  and  metastatic  settings  and to reduce the risk of
breast cancer in women with ductal carcinoma in situ (DCIS) or with high risk of
breast cancer.  The Company  expects to launch SOLTAMOX during the third quarter
of 2006.

     In addition,  the Company entered into a supply agreement with Rosemont for
the  manufacture  and  supply  of  SOLTAMOX.   Under  the  terms  of  the  final
transaction,  the Company paid Savient an upfront  licensing fee of $2.0 million
and may pay additional contingent  sales-based payments of up to a total of $4.0
million to Savient and Rosemont. The Company is also required to pay Savient and
Rosemont  royalties  on net sales of  SOLTAMOX.  Beginning  in 2007,  Cytogen is
obligated to pay Savient and Rosemont  quarterly  minimum  royalties based on an
agreed upon  percentage of total tamoxifen  prescriptions  in the United States.
Unless  terminated  earlier,  the  distribution  agreement  with Savient and the
supply  agreement  with Rosemont will each  terminate upon the expiration of the
last to expire patent covering SOLTAMOX in the United States, which is currently
June 2018. In the event the tamoxifen prescriptions for an agreed upon period of
time are less than the pre-established minimum,  the agreement may be terminated
if the  parties  are  unable  to reach an  agreement  to amend  the terms of the
contract to account for such impact.

     The up-front  license  payment of $2.0 million was  capitalized as SOLTAMOX
license  fee  in the  accompanying  consolidated  balance  sheet  and  is  being
amortized on a straight-line basis over approximately  twelve years which is the
estimated  performance  period of the  agreement.  The  amortization  expense is
recorded as cost of product revenue.

8. BERLEX, INC.

     On May 8, 2006, the Company  entered into a royalty  buyout  agreement with
Berlex, Inc. for QUADRAMET which was to close within 90 days, subject to certain
closing  conditions.  Under the terms of the  agreement,  Cytogen  would have no
longer paid Berlex a royalty on QUADRAMET  sales in exchange for a one-time cash
payment and a certain number of shares of Cytogen  common stock.  The closing of
the  transaction  did not  occur  and  the  parties  are  discussing  a  revised
transaction to complete the royalty buyout. Until a royalty buyout is completed,
if at all,  Cytogen  will  continue  to pay  Berlex  royalties  on net  sales of
QUADRAMET.

9. ONCOLOGY THERAPEUTICS NETWORK, J.V.

     On June 20, 2006, the Company entered into a purchase and supply  agreement
with Oncology Therapeutics Network, J.V. ("OTN") appointing OTN as the exclusive
distributor of SOLTAMOX in the United States.  Under the terms of the agreement,
OTN will  purchase  SOLTAMOX  from the  Company and  distribute  SOLTAMOX in the
United States through its warehousing and distribution  facilities.  The Company
is  obligated to pay OTN a minimal set up fee upon  execution  of the  agreement
which was recorded as selling,  general and  administrative  expense  during the
three  months  ended  June 30,  2006.  In  addition,  the  Company  will pay OTN
management fees based upon a percentage of SOLTAMOX sales,  subject to a minimum
annual amount. This agreement has a three-year term and will automatically renew
for successive one-year periods unless terminated by OTN or Cytogen on a 90 days
written notice prior to the end of


                                      -21-
<PAGE>


the  applicable  term.  Either party also may terminate the  agreement,  without
cause, on 180 days written notice.

10. LITIGATION

     In December 2005, Trapeziod Healthcare Communications LLC filed a complaint
against the Company in the Superior  Court of New Jersey,  Law Division,  Mercer
County,  seeking  approximately  $426,000 in damages  arising from the Company's
alleged failure to pay Trapezoid for marketing  services  allegedly  provided to
the Company.  On May 22,  2006,  the Company  settled this matter for  $365,000,
without  any  admission  of fault  or  liability.  The  Company  had  previously
established a reserve for the full amount of this claim.

     In January 2006, the Company filed a complaint  against Advanced  Magnetics
in the  Massachusetts  Superior  Court for  breach of  contract,  fraud,  unjust
enrichment, and breach of the implied covenant of good faith and fair dealing in
connection with the parties' 2000 license agreement. The complaint seeks damages
along with a request for specific  performance  requiring  Advanced Magnetics to
take all reasonable  steps to secure FDA approval of COMBIDEX in compliance with
the terms of the licensing agreement. In February 2006, Advanced Magnetics filed
an  answer  to the  Company's  complaint  and  asserted  various  counterclaims,
including  tortuous  interference,  defamation,  consumer  fraud  and  abuse  of
process.  The Company  believes these  counterclaims  have no merit and plans to
conduct a vigorous defense of such counterclaims.  Legal proceedings are subject
to uncertainties,  and the outcomes are difficult to predict.  Consequently, the
Company is unable to estimate  the  ultimate  financial  impact,  if any, to its
results of operations and financial condition.

     In addition, the Company is, from time to time, subject to claims and suits
arising in the ordinary  course of business.  In the opinion of management,  the
ultimate resolution of any such current matters would not have a material effect
on the Company's financial condition, results of operations or liquidity.

11. 2006 EQUITY COMPENSATION PLAN

     On  June  13,  2006,  the  Company's   stockholders  approved  the  Cytogen
Corporation  2006  Equity  Compensation  Plan  at the  2006  Annual  Meeting  of
Stockholders.  The 2006 Plan provides for grants in any of the following  forms:
(i) incentive stock options, (ii) nonqualified stock options, (iii) stock units,
(iv) stock awards,  (v) stock  appreciation  rights,  and (vi) other stock-based
awards.  The Company has reserved  1,500,000  shares of Cytogen common stock for
future issuance under the 2006 Plan.


                                      -22-
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This  Quarterly  Report on Form 10-Q  contains  forward-looking  statements
within the meaning of the Private  Securities  Litigation Reform Act of 1995 and
Section  21E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  These
forward-looking  statements  regarding  future events and our future results are
based on current  expectations,  estimates,  forecasts,  and projections and the
beliefs and assumptions of our management  including,  without  limitation,  our
expectations   regarding   results   of   operations,   selling,   general   and
administrative  expenses,  research and development expenses and the sufficiency
of our cash for future operations.  Forward-looking statements may be identified
by the use of  forward-looking  terminology  such as  "may,"  "will,"  "expect,"
"estimate," "anticipate," "continue," or similar terms, variations of such terms
or the  negative  of  those  terms.  These  forward-looking  statements  include
statements  regarding the timing of the product launch for SOLTAMOX,  growth and
market  penetration for QUADRAMET and PROSTASCINT,  increased expenses resulting
from our sales force and  marketing  expansion,  including  sales and  marketing
expenses for PROSTASCINT and QUADRAMET, the sufficiency of our capital resources
and supply of products for sale, the continued  cooperation  of our  contractual
and collaborative partners, our need for additional capital and other statements
included in this Quarterly  Report on Form 10-Q that are not  historical  facts.
Such forward-looking  statements involve a number of risks and uncertainties and
investors  are cautioned  not to put any undue  reliance on any  forward-looking
statement.  We  cannot  guarantee  that  we will  actually  achieve  the  plans,
intentions or  expectations  disclosed in any such  forward-looking  statements.
Factors  that could cause  actual  results to differ  materially,  include,  our
ability to launch a new product,  market acceptance of our products, the results
of our clinical trials,  our ability to hire and retain employees,  economic and
market conditions  generally,  our receipt of requisite regulatory approvals for
our products and product candidates,  the continued cooperation of our marketing
and other  collaborative  and  strategic  partners,  our  ability to protect our
intellectual  property,  and the  other  risks  identified  under  Item 1A "Risk
Factors" in this Quarterly Report on Form 10-Q and Item 1A "Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2005, and those under
the caption "Risk  Factors," as included in certain of our other  filings,  from
time to time, with the Securities and Exchange Commission.

     Any  forward-looking  statements  made by us do not reflect  the  potential
impact of any future  acquisitions,  mergers,  dispositions,  joint  ventures or
investments  we may make.  We do not  assume,  and  specifically  disclaim,  any
obligation  to update  any  forward-looking  statements,  and  these  statements
represent our current outlook only as of the date given.

     The following  discussion and analysis  should be read in conjunction  with
the  consolidated  financial  statements  and related  notes  thereto  contained
elsewhere  herein,  as well as in our  Annual  Report  on Form 10-K for the year
ended  December  31, 2005,  and from time to time in our other  filings with the
Securities and Exchange Commission.

OVERVIEW

     Founded  in 1980,  Cytogen  Corporation  of  Princeton,  New  Jersey,  is a
biopharmaceutical  company  dedicated  to improving  the lives of patients  with
cancer by acquiring, developing and


                                      -23-
<PAGE>


commercializing  innovative  molecules  targeting the sites and stages of cancer
progression. Our marketed products include QUADRAMET (samarium Sm-153 lexidronam
injection),  PROSTASCINT  (capromab pendetide) kit for the preparation of Indium
In-111  capromab  pendetide,  and SOLTAMOX  (tamoxifen  citrate,  oral  solution
10mg/5mL)  which the Company  expects to launch in the United  States during the
third  quarter  of  2006.  Our  development  pipeline  consists  of  CYT-500,  a
therapeutic radiolabeled antibody targeting  prostate-specific  membrane antigen
(PSMA),  a protein highly  expressed on the surface of prostate cancer cells and
the  neovasculature  of solid  tumors.  We also  have  exclusive  United  States
marketing  rights to COMBIDEX  (ferumoxtran-10)  for all  applications,  and the
exclusive  right to  market  and sell  ferumoxytol  (previously  Code  7228) for
oncology applications in the United States.

SIGNIFICANT EVENTS IN 2006

Cytogen Announces that FDA Clears IND for CYT-500, a Monoclonal Antibody for the
Treatment of Metastatic Hormone-Refractory Prostate Cancer

     On May 8, 2006,  we announced  that the U.S.  Food and Drug  Administration
cleared  an  Investigational   New  Drug  application  for  CYT-500,   our  lead
therapeutic  candidate targeting PSMA. We expect to begin the first U.S. Phase I
clinical trial of CYT-500 in patients with hormone-  refractory prostate cancer,
subject to  Institutional  Review Board (IRB)  approval at the planned  clinical
site. CYT-500 uses the same monoclonal  antibody from our PROSTASCINT  molecular
imaging agent,  but is linked through a higher  affinity linker than is used for
PROSTASCINT to a therapeutic as opposed to an imaging  radionuclide.  This novel
product  candidate is designed to enable targeted  delivery of a cytotoxic agent
to  PSMA-expressing  cells. We retain full and exclusive  development  rights to
CYT-500.

Cytogen Sells Ownership in PSMA Development Joint Venture to Progenics

     On April 20, 2006, we entered into a Membership Interest Purchase Agreement
with Progenics  Pharmaceuticals,  Inc.  ("Progenics")  providing for the sale to
Progenics of our 50% ownership interest in PSMA Development Company LLC ("PDC"),
our  joint  venture  with  Progenics  for  the  development  of in  vivo  cancer
immunotherapies  based on PSMA.  In  addition,  we entered  into an Amended  and
Restated PSMA/PSMP License Agreement with Progenics and PDC pursuant to which we
licensed  PDC  certain  rights  in PSMA  technology.  Under  the  terms  of such
agreements, we sold our 50% interest in PDC for a cash payment of $13.2 million,
potential  future milestone  payments  totaling up to $52.0 million payable upon
regulatory  approval and  commercialization  of PDC  products,  and royalties on
future PDC product sales,  if any. We will no longer be responsible  for funding
PDC.

Cytogen and Savient Execute Marketing Agreement for SOLTAMOX(TM)

     On April 21, 2006,  we and Savient  entered into a  distribution  agreement
granting us exclusive  marketing rights for SOLTAMOX(TM)  (tamoxifen citrate) in
the United States.  SOLTAMOX, a cytostatic estrogen receptor antagonist,  is the
first oral liquid hormonal  therapy approved in the U.S. It is indicated for the
treatment of breast cancer in adjuvant and metastatic settings and to reduce the
risk of breast cancer in women with ductal carcinoma in situ (DCIS) or with high
risk of breast  cancer.  In addition,  we entered into a supply  agreement  with
Rosemont


                                      -24-
<PAGE>


Pharmaceuticals  Limited,   previously  a  wholly-owned  subsidiary  of  Savient
("Rosemont"), for the manufacture and supply of SOLTAMOX. Under the terms of the
final transaction,  we paid Savient an upfront licensing fee of $2.0 million and
may pay  additional  contingent  sales-based  payments  of up to a total of $4.0
million to  Savient  and  Rosemont.  We are also  required  to pay  Savient  and
Rosemont royalties on net sales of SOLTAMOX. We expect to launch SOLTAMOX during
the third quarter of 2006.

Cytogen Enters into QUADRAMET Royalty Buyout Agreement with Berlex

     On May 8, 2006,  we entered into a royalty  buyout  agreement  with Berlex,
Inc.  for  QUADRAMET,  which was to close  within 90 days,  subject  to  certain
closing  conditions.  Under the terms of the agreement,  we would have no longer
paid Berlex a royalty on QUADRAMET sales in exchange for a one-time cash payment
and a  certain  number  of  shares  of our  common  stock.  The  closing  of the
transaction  did not occur and the parties are discussing a revised  transaction
to complete the royalty buyout. Until a royalty buyout is completed,  if at all,
we will continue to pay Berlex royalties on net sales of QUADRAMET.

Cytogen  Enters into Purchase and Supply  Agreement  with Oncology  Therapeutics
Network

     On June 20,  2006,  we entered into a purchase  and supply  agreement  with
Oncology  Therapeutics  Network,  J.V.  ("OTN")  appointing OTN as the exclusive
distributor of SOLTAMOX in the United States.  Under the terms of the agreement,
OTN will purchase SOLTAMOX from us and distribute  SOLTAMOX in the United States
through its warehousing and distribution facilities.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2006 AND 2005

REVENUES

<TABLE>
<CAPTION>
                                                                             INCREASE/(DECREASE)
                                                                          ------------------------
                                           2006            2005               $              %
                                           ----            ----           ---------      ---------
                                             (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                                     <C>           <C>                 <C>               <C>
QUADRAMET..........................     $  1,988      $   2,153           $   (165)         (8)%
PROSTASCINT........................        2,180          1,924                256           13%
License and Contract...............            4             79                (75)        (95)%
                                        --------      ---------           --------
                                        $  4,172      $   4,156           $     16            0%
                                        ========      =========           ========
</TABLE>

     Total  revenues for each of the second  quarters of 2006 and 2005 were $4.2
million.  Product revenues  accounted for 100% and 98% of total revenues for the
second quarters of 2006 and 2005,  respectively.  License and contract  revenues
accounted for the remainder of revenues.

     QUADRAMET.  QUADRAMET  sales were $2.0  million  for the second  quarter of
2006,  compared to $2.2 million in the second quarter of 2005.  QUADRAMET  sales
accounted  for 48% and 53% of product  revenues for the second  quarters of 2006
and 2005, respectively. The decrease from the prior year period was due to lower
unit sales offset, in part, by the effect


                                      -25-
<PAGE>


of a 5% price increase implemented in June 2005. Currently,  we market QUADRAMET
only in the United States and have no rights to market  QUADRAMET in Europe.  We
believe that we have made significant progress in key areas designed to position
QUADRAMET for future growth and market  penetration by: (i)  distinguishing  the
physical properties of QUADRAMET from first-generation  agents within its class;
(ii) empowering and marketing to key  prescribing  audiences;  (iii)  broadening
palliative use within label beyond prostate  cancer to include breast,  lung and
multiple  myeloma;  (iv)  evaluating the role of QUADRAMET in  combination  with
other commonly used oncology agents; and (v) expanding  clinical  development to
evaluate the potential tumoricidal versus palliative attributes of QUADRAMET. We
cannot assure you that we will be able to successfully  market QUADRAMET or that
QUADRAMET will achieve greater market penetration on a timely basis or result in
significant revenues for us.

     PROSTASCINT.  PROSTASCINT sales were $2.2 million for the second quarter of
2006, compared to $1.9 million in the second quarter of 2005.  PROSTASCINT sales
accounted  for 52% and 47% of product  revenues for the second  quarters of 2006
and 2005,  respectively.  The increase from the prior year period was due to the
implementation  of a price  increase  for  PROSTASCINT  in June 2005,  increased
demand  associated  with  our  focused  marketing  programs  and  our  continued
identification  of new  distribution  channels  to better  accommodate  customer
needs. We believe that we have made  significant  progress in key areas designed
to  position  PROSTASCINT  for  future  growth and  market  penetration  by: (i)
improving image quality through fusion  technology;  (ii) validating the antigen
targeted  by  PROSTASCINT  as  an  independent   prognostic  factor;  (iii)  the
publication and  presentation of outcomes data; (iv) development of image-guided
applications  including  brachytherapy,  intensity  modulated radiation therapy,
surgery, and cryotherapy; and (v) expanding clinical development to evaluate the
potential for PROSTASCINT to monitor  response to cytotoxic  therapies and image
other cancers.  We cannot assure you that we will be able to successfully market
PROSTASCINT,  or that PROSTASCINT  will achieve greater market  penetration on a
timely basis or result in significant revenues for us.

     LICENSE AND CONTRACT  REVENUES.  License and contract  revenues were $4,000
and $79,000 for the second quarters of 2006 and 2005,  respectively.  During the
second quarter of 2005, we recognized  $78,000 of contract  revenues for limited
research and development services provided by us to the PSMA Development Company
LLC, our joint venture with Progenics.  We did not provide any research services
to the joint venture in 2006.

OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                                                       INCREASE/(DECREASE)
                                                                                      ---------------------
                                                         2006         2005               $             %
                                                         ----         ----            -------        ------
                                                       (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                                                    <C>          <C>               <C>              <C>
    Cost of product revenue..........................  $ 2,594      $  2,251          $  343           15%
    Selling, general and administrative..............    6,994         6,692             302            5%
    Research and development.........................    1,463         1,362             101            7%
    Equity in (income) loss of joint venture.........      (13)        1,704          (1,717)       (101)%
                                                       -------      --------          ------
                                                       $11,038      $ 12,009          $ (971)         (8)%
                                                       =======      ========          ======
</TABLE>

     Total operating  expenses for the second quarter of 2006 were $11.0 million
compared to $12.0 million in the same quarter of 2005.


                                      -26-
<PAGE>


     COST OF PRODUCT REVENUE. Cost of product revenue for the second quarters of
2006 and 2005 were $2.6 million and $2.3  million,  respectively,  and primarily
reflects  manufacturing  costs for PROSTASCINT  and QUADRAMET,  royalties on our
sales of  products  and  amortization  of the  up-front  payments to acquire the
marketing  rights to QUADRAMET in 2003 and SOLTAMOX in April 2006.  The increase
in cost of product revenue is attributable to a higher product revenue in 2006.

     SELLING,  GENERAL AND ADMINISTRATIVE.  Selling,  general and administrative
expenses  for the second  quarter  of 2006 were $7.0  million  compared  to $6.7
million in the same period of 2005.  The increase  from the prior year period is
primarily driven by $284,000 of pre-launch costs associated with SOLTAMOX, which
we  expect  to  launch in the third  quarter  2006,  and by the  recognition  of
$316,000 of share-based  compensation  in 2006 for options and nonvested  shares
granted  to  employees,  partially  offset by the  expanded  investment  for the
commercial support of both QUADRAMET and PROSTASCINT in 2005. Any future changes
to our  share-based  compensation  strategy or programs  would likely affect the
amount of compensation expense recognized under SFAS 123(R).

     RESEARCH AND DEVELOPMENT.  Research and development expenses for the second
quarter of 2006 were $1.5 million compared to $1.4 million in the same period of
2005.  The  increase  from the  prior  year  period is  primarily  driven by new
clinical  development  initiatives  for both QUADRAMET and  PROSTASCINT  and the
preclinical  development  costs  associated  with our  radiolabeled  therapeutic
program to attach the therapeutic radionuclide  lutetium-177 as a payload to the
7E11 monoclonal antibody utilized in PROSTASCINT, partially offset by a $500,000
charge  in the  second  quarter  of 2005  for a  non-cash  milestone  obligation
incurred related to the progress of the PSMA development programs.

     EQUITY  (INCOME) IN LOSS OF JOINT  VENTURE.  During the second  quarters of
2006 and 2005, we recorded an expense reversal of $13,000 and an expense of $1.7
million,  respectively,  with respect to our share of the loss in PDC, our joint
venture with Progenics.  Such amounts represented 50% of the joint venture's net
losses.  We  equally  shared  ownership  and  costs of the  joint  venture  with
Progenics  and  accounted  for the  joint  venture  using the  equity  method of
accounting until April 20, 2006 when we sold to Progenics our ownership interest
in PDC. We will no longer be responsible for funding PDC.

     INTEREST INCOME/EXPENSE. Interest income for the second quarter of 2006 was
$392,000  compared to $154,000 in the same period of 2005.  The increase in 2006
from the prior year period was due to a higher  average yield on higher  average
cash  balances  in 2006.  Interest  expense  for the second  quarter of 2006 was
$6,000 compared to $42,000 in the same period in 2005. Interest expense includes
interest  on  outstanding  debt,  which was repaid in August  2005,  and finance
charges  related to various  equipment  leases that are accounted for as capital
leases.

     GAIN ON SALE OF EQUITY  INTEREST IN JOINT  VENTURE.  On April 20, 2006,  we
entered into a Membership  Interest Purchase Agreement with Progenics  providing
for the sale to  Progenics  of our 50%  ownership  interest  in PDC,  our  joint
venture with  Progenics for the  development  of in vivo cancer  immunotherapies
based on PSMA.  In addition,  we entered into an Amended and Restated  PSMA/PSMP
License  Agreement  with  Progenics  and PDC  pursuant to which we licensed  PDC
certain rights in PSMA technology.  Under the terms of such agreements,  we sold


                                      -27-
<PAGE>


our 50% interest in PDC for a cash payment of $13.2  million,  potential  future
milestone payments totaling up to $52.0 million payable upon regulatory approval
and  commercialization  of PDC  products,  and  royalties  on future PDC product
sales, if any. As a result of the  transaction,  for the three months ended June
30, 2006, we recorded  $12.9  million in gain on sale of equity  interest in the
joint venture,  which represents the net proceeds after  transaction  costs less
the carrying value of our investment in the joint venture at the time of sale.

     DECREASE IN WARRANT  LIABILITY.  In connection  with the sale of our common
stock and  warrants  in July and August  2005,  we  recorded  the  warrants as a
liability  at their fair value using a  Black-Scholes  option-pricing  model and
will remeasure them at each reporting date until  exercised or expired.  Changes
in the fair value of the warrants are reported in the  statements  of operations
as non-operating income or expense. For the three months ended June 30, 2006, we
reported  a gain of  $813,000  related  to the  decrease  in fair value of these
warrants  since March 31,  2006.  The market price for our common stock has been
and may continue to be volatile. Consequently,  future fluctuations in the price
of our common  stock may cause  significant  increases  or decreases in the fair
value of these warrants.

     NET INCOME (LOSS). We had net income of $7.2 million or $0.32 per basic and
diluted  share for the second  quarter of 2006,  compared  to a net loss of $7.7
million or $0.50 per basic and diluted  share in the same  quarter of 2005.  The
significant fluctuation in results was due to the gain on the sale of our equity
interest in the joint venture.

SIX MONTHS ENDED JUNE 30, 2006 AND 2005

REVENUES

<TABLE>
<CAPTION>
                                                                                       INCREASE/(DECREASE)
                                                                                     -----------------------
                                                     2006            2005               $                %
                                                     ----            ----            -------          ------
                                                     (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                                                <C>            <C>                <C>                 <C>
QUADRAMET....................................      $ 4,244        $  4,207           $   37              1%
PROSTASCINT..................................        4,364           3,823              541             14%
License and Contract.........................            6             120             (114)          (95)%
                                                   -------        --------           ------
                                                   $ 8,614        $  8,150           $  464              6%
                                                   =======        ========           ======
</TABLE>


     Total  revenues  for the first half of 2006 were $8.6  million  compared to
$8.2 million for the same period in 2005.  Product  revenues  accounted for 100%
and 99% of  total  revenues  for the  first  half  of  each  of 2006  and  2005,
respectively.  License and  contract  revenues  accounted  for the  remainder of
revenues.

     QUADRAMET.  QUADRAMET sales were $4.2 million for each of the first half of
2006 and 2005. QUADRAMET sales accounted for 49% and 52% of product revenues for
the first half of 2006 and 2005,  respectively.  Currently,  we market QUADRAMET
only in the United States and have no rights to market  QUADRAMET in Europe.  We
believe that we have made significant progress in key areas designed to position
QUADRAMET for future growth and market  penetration by: (i)  distinguishing  the
physical properties of QUADRAMET from first-generation  agents within its class;
(ii) empowering and marketing to key prescribing


                                      -28-
<PAGE>


audiences;  (iii) broadening  palliative use within label beyond prostate cancer
to include  breast,  lung and  multiple  myeloma;  (iv)  evaluating  the role of
QUADRAMET in  combination  with other  commonly  used oncology  agents;  and (v)
expanding  clinical  development  to evaluate the potential  tumoricidal  versus
palliative attributes of QUADRAMET. We cannot assure you that we will be able to
successfully  market  QUADRAMET or that  QUADRAMET  will achieve  greater market
penetration on a timely basis or result in significant revenues for us.

     PROSTASCINT.  PROSTASCINT  sales  were $4.4  million  for the first half of
2006, an increase of $541,000 from $3.8 million in the first half of 2005. Sales
of PROSTASCINT  accounted for 51% and 48% of product revenues for the first half
of 2006 and 2005, respectively.  The increase from the prior year period was due
to the  implementation  of a  price  increase  for  PROSTASCINT  in  June  2005,
increased  demand  associated  with  our  focused  marketing  programs  and  our
continued  identification  of new  distribution  channels to better  accommodate
customer needs. We believe that we have made  significant  progress in key areas
designed to position  PROSTASCINT  for future growth and market  penetration by:
(i) improving  image quality  through  fusion  technology;  (ii)  validating the
antigen targeted by PROSTASCINT as an independent  prognostic factor;  (iii) the
publication and  presentation of outcomes data; (iv) development of image-guided
applications  including  brachytherapy,  intensity  modulated radiation therapy,
surgery, and cryotherapy; and (v) expanding clinical development to evaluate the
potential for PROSTASCINT to monitor  response to cytotoxic  therapies and image
other cancers.  We cannot assure you that we will be able to successfully market
PROSTASCINT,  or that PROSTASCINT  will achieve greater market  penetration on a
timely basis or result in significant revenues for us.

     LICENSE AND CONTRACT  REVENUES.  License and contract  revenues were $6,000
and $120,000 for the first half of 2006 and 2005, respectively. During the first
half of 2005, we recognized  $119,000 of contract  revenues for limited research
and development services provided by us to the PSMA Development Company LLC, our
joint venture with  Progenics.  We did not provide any research  services to the
joint venture in 2006.

OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                                                             INCREASE/(DECREASE)
                                                                                        ---------------------------
                                                       2006              2005                $                %
                                                       ----              ----           -----------      ----------
                                                          (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                                                 <C>                <C>             <C>                    <C>
    Cost of product revenues.....................   $    5,010         $    4,678      $      332             7%
    Selling, general and administrative..........       13,231             13,716            (485)          (4)%
    Research and development.....................        4,445              2,101           2,344           112%
    Equity in loss of joint venture..............          120              2,202          (2,082)         (95)%
                                                    ----------         ----------      ----------
                                                    $   22,806         $   22,697      $      109             0%
                                                    ==========         ==========      ==========
</TABLE>

     Total  operating  expenses  for the first half of 2006 were  $22.8  million
compared to $22.7 million in the same period of 2005.

     COST OF PRODUCT  REVENUES.  Cost of product  revenues for the first half of
2006 were $5.0  million  compared to $4.7 million in the same period of 2005 and
primarily reflects


                                      -29-
<PAGE>


manufacturing  costs for  PROSTASCINT  and QUADRAMET,  royalties on our sales of
products  and  amortization  of the up-front  payments to acquire the  marketing
rights to QUADRAMET in 2003 and SOLTAMOX in April 2006.  The increase in cost of
product  revenues  from the prior  year  period is  attributable  to the  higher
product revenues in 2006.

     SELLING,  GENERAL AND ADMINISTRATIVE.  Selling,  general and administrative
expenses for the first half of 2006 were $13.2 million compared to $13.7 million
in the same period of 2005. The decrease from the prior year period is primarily
driven by $724,000 of pre-launch  costs in 2005 associated with COMBIDEX,  which
is currently awaiting approval from the FDA, and the expanded investment for the
commercial  support of both QUADRAMET and PROSTASCINT in 2005,  partially offset
by $452,000 of costs  associated with pre-launch  activities for SOLTAMOX and by
the recognition of $720,000 of share-based  compensation in 2006 for options and
nonvested  shares granted to employees.  Any future  changes to our  share-based
compensation strategy or programs would likely affect the amount of compensation
expense recognized under SFAS 123(R).

     RESEARCH AND DEVELOPMENT.  Research and development  expenses for the first
half of 2006 were $4.4  million  compared to $2.1  million in the same period of
2005.  The  increase  from the  prior  year  period is  primarily  driven by new
clinical  development  initiatives  for both QUADRAMET and  PROSTASCINT  and the
preclinical  development  costs  associated  with our  radiolabeled  therapeutic
program to attach the therapeutic radionuclide  lutetium-177 as a payload to the
7E11 monoclonal antibody utilized in PROSTASCINT, partially offset by a $500,000
charge  in the  second  quarter  of 2005  for a  non-cash  milestone  obligation
incurred related to the progress of the PSMA development programs.

     EQUITY  IN LOSS  OF  JOINT  VENTURE.  Our  share  of the  loss of the  PSMA
Development  Company LLC, our joint venture with Progenics,  was $120,000 during
the first half of 2006 compared to $2.2 million in the same period of 2005. Such
amounts  represented  50% of the joint  venture's net losses.  We equally shared
ownership  and costs of the joint  venture with  Progenics and accounted for the
joint venture using the equity method of accounting until April 20, 2006 when we
sold to  Progenics  of our  ownership  interest  in PDC.  We will no  longer  be
responsible for funding PDC.

     INTEREST  INCOME/EXPENSE.  Interest  income  for the first half of 2006 was
$689,000  compared to $297,000 in the same period of 2005.  The increase in 2006
from the prior year period was due to a higher  average yield on higher  average
cash  balances in 2006.  Interest  expense was $12,000 and $84,000 for the first
half of 2006 and 2005,  respectively.  Interest  expense  includes  interest  on
outstanding  debt,  which was repaid in August 2005, and finance charges related
to various equipment leases that are accounted for as capital leases.

     GAIN ON SALE OF EQUITY  INTEREST IN JOINT  VENTURE.  On April 20, 2006,  we
entered into a Membership  Interest Purchase Agreement with Progenics  providing
for the sale to  Progenics  of our 50%  ownership  interest  in PDC,  our  joint
venture with  Progenics for the  development  of in vivo cancer  immunotherapies
based on PSMA.  In addition,  we entered into an Amended and Restated  PSMA/PSMP
License  Agreement  with  Progenics  and PDC  pursuant to which we licensed  PDC
certain rights in PSMA technology.  Under the terms of such agreements,  we sold
our 50% interest in PDC for a cash payment of $13.2  million,  potential  future
milestone payments totaling up to $52.0 million payable upon regulatory approval
and commercialization


                                      -30-
<PAGE>


of PDC products,  and royalties on future PDC product sales, if any. As a result
of the  transaction,  for the six months ended June 30, 2006, we recorded  $12.9
million  in  gain on  sale  of  equity  interest  in the  joint  venture,  which
represents the net proceeds after  transaction  costs less the carrying value of
our investment in the joint venture at the time of sale.

     DECREASE IN WARRANT  LIABILITY.  In connection  with the sale of our common
stock and  warrants  in July and August  2005,  we  recorded  the  warrants as a
liability  at their fair value using a  Black-Scholes  option-pricing  model and
will remeasure them at each reporting date until  exercised or expired.  Changes
in the fair value of the warrants are reported in the  statements  of operations
as non-operating  income or expense.  For the six months ended June 30, 2006, we
reported  a gain of  $182,000  related  to the  decrease  in fair value of these
warrants since December 31, 2005. The market price for our common stock has been
and may continue to be volatile. Consequently,  future fluctuations in the price
of our common  stock may cause  significant  increases  or decreases in the fair
value of these warrants.

     NET INCOME  (LOSS).  We had net loss of  $460,000 in the first half of 2006
compared  to $14.3  million  reported  in the first half of 2005.  The basic and
diluted  net loss per share for the first  half of 2006 was $0.02  based on 22.5
million  weighted  average  common shares  outstanding,  compared to a basic and
diluted  net loss per  share of $0.92  based on 15.5  million  weighted  average
common  shares  outstanding  for  the  same  period  in  2005.  The  significant
fluctuation in results was due to the gain on the sale of our equity interest in
the joint venture.

COMMITMENTS

     We have entered into various  contractual and commercial  commitments.  The
following table summarizes our obligations with respect to theses commitments as
of June 30, 2006:

<TABLE>
<CAPTION>
                                                       LESS
                                                       THAN       1 TO 3        4 TO 5     MORE THAN
                                                      1 YEAR      YEARS          YEARS       5 YEARS        TOTAL
                                                     -------     -------       --------    ----------    -----------
                                                                        (ALL AMOUNTS IN THOUSANDS)
<S>                                                  <C>         <C>           <C>         <C>           <C>
Capital lease obligations  ........................  $    59     $    92       $     --    $       --    $       151
Facility leases....................................      338         113             --            --            451
Research and development and
   other obligations...............................      306         153            150           513          1,122
Manufacturing contracts((1)) ......................    4,689       4,689             --            --          9,378
Minimum royalty payments((2))......................    1,000       2,000          2,000         2,333          7,333
                                                     -------     -------       --------    ----------    -----------

      Total........................................  $ 6,392     $ 7,047       $  2,150    $    2,846    $    18,435
                                                     =======     =======       ========    ==========    ===========
</TABLE>

(1)  Effective  January 1, 2004, we entered into a new  manufacturing and supply
     agreement   with  BMS-MI  for  QUADRAMET   whereby   BMS-MI   manufactures,
     distributes  and provides  order  processing  and customer  services for us
     relating to QUADRAMET.  Under the terms of our agreement,  we are obligated
     to pay at least  $4.7  million  annually,  subject to future  annual  price
     adjustment,  through 2008,  unless terminated by BMS-MI or us on a two year
     prior written  notice.  This  agreement will  automatically  renew for five


                                      -31-
<PAGE>


     successive one-year periods unless terminated by BMS-MI or us on a two-year
     prior written notice.  Accordingly, we have not included commitments beyond
     June 30, 2008.

(2)  We  acquired  an  exclusive  license  from  The Dow  Chemical  Company  for
     QUADRAMET  for the  treatment of  osteoblastic  bone  metastases in certain
     territories.  The  agreement  requires us to pay Dow  royalties  based on a
     percentage of net sales of QUADRAMET,  or a guaranteed  contractual minimum
     payment,  whichever is greater,  and future  payments upon  achievement  of
     certain  milestones.  Future annual  minimum  royalties due to Dow are $1.0
     million per year in 2006 through 2012 and $833,000 in 2013.

     In addition to the above, we are obligated to make certain royalty payments
based on sales of the  related  product and  certain  milestone  payments if our
collaborative  partners  achieve specific  development  milestones or commercial
milestones.

LIQUIDITY AND CAPITAL RESOURCES

CONDENSED STATEMENT OF CASH FLOWS:

                                                            SIX MONTHS ENDED
                                                             JUNE 30, 2006
                                                      --------------------------
                                                      (ALL AMOUNTS IN THOUSANDS)

   Net loss................................................    $  (460)
   Adjustments to reconcile net loss to net cash
     used in operating activities..........................     (9,542)
                                                               -------
   Net cash used in operating activities...................    (10,002)
   Net cash provided by investing activities...............     11,046
   Net cash provided by financing activities...............         19
                                                               -------
   Net increase in cash and cash equivalents...............    $ 1,063
                                                               =======

OVERVIEW

     Our cash and cash  equivalents  were  $31.4  million  as of June 30,  2006,
compared to $30.3  million as of December 31, 2005.  During the six months ended
June 30, 2006 and 2005, net cash used in operating  activities was $10.0 million
and $15.3 million,  respectively. The decrease in cash usage from the prior year
period was primarily due to the prior year's build-up of PROSTASCINT  inventory,
pre-launch costs associated with COMBIDEX in 2005 and a reduction in 2006 of our
investment in the PDC joint venture,  partially  offset by costs associated with
pre-launch   activities  for  SOLTAMOX  and  increased  investment  in  clinical
programs.  On April 20, 2006, we sold our 50% interest in PDC for a cash payment
of $13.2 million.  Effective after that date, we are no longer funding the PDC's
operations.  We expect our operating  expenditures in the second half of 2006 to
increase compared to the first half of 2006 as we prepare to launch SOLTAMOX.

     Historically,  our  primary  sources  of cash have been  proceeds  from the
issuance and sale of our stock through public offerings and private  placements,
product related revenues,  revenues from contract research  services,  fees paid
under license agreements and interest earned on cash and short-term investments.


                                      -32-
<PAGE>


     Our long-term  financial  objectives  are to meet our capital and operating
requirements through revenues from existing products and licensing arrangements.
To  achieve  these  objectives,  we 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 us in either cash
or stock in addition to the costs  associated  with  developing  and marketing a
product or technology.  However, we believe that, if successful, such strategies
may increase  long-term  revenues.  We cannot  assure you of 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,  if ever. To
fund these strategic and operating activities, we may sell equity, debt or other
securities as market conditions permit or enter into credit facilities.

     We have incurred  negative cash flows from operations  since our inception,
and have expended,  and expect to continue to expend in the future,  substantial
funds  to  implement  our  planned  product   development   efforts,   including
acquisition   of  products   and   complementary   technologies,   research  and
development,  clinical  studies and  regulatory  activities,  and to further our
marketing  and sales  programs.  We expect that our existing  capital  resources
should be adequate to fund our operations and commitments at least into 2007. We
cannot  assure you that our business or  operations  will not change in a manner
that would consume available resources more rapidly than anticipated.  We expect
that  we  will  have  additional   requirements  for  debt  or  equity  capital,
irrespective  of whether and when we reach  profitability,  for further  product
development  costs,  product  and  technology  acquisition  costs,  and  working
capital.

     Our future capital  requirements  and the adequacy of available  funds will
depend on numerous factors,  including: (i) the successful  commercialization of
our products;  (ii) the costs  associated with the acquisition of  complementary
products and technologies; (iii) progress in our product development efforts and
the magnitude and scope of such efforts; (iv) progress with clinical trials; (v)
progress  with  regulatory  affairs   activities;   (vi)  the  cost  of  filing,
prosecuting,  defending  and  enforcing  patent  claims  and other  intellectual
property rights;  (vii) competing  technological  and market  developments;  and
(viii)  the  expansion  of  strategic   alliances  for  the  sales,   marketing,
manufacturing and distribution of our products. To the extent that the currently
available  funds and  revenues  are  insufficient  to meet  current  or  planned
operating  requirements,  we will be required to obtain additional funds through
equity or debt  financing,  strategic  alliances  with  corporate  partners  and
others,  or through  other  sources.  We cannot  assure  you that the  financial
sources  described above will be available when needed or at terms  commercially
acceptable  to us. If adequate  funds are not  available,  we may be required to
delay,  further  scale back or eliminate  certain  aspects of our  operations or
attempt to obtain funds  through  arrangements  with  collaborative  partners or
others that may require us to relinquish  rights to certain of our technologies,
product  candidates,  products or potential  markets.  If adequate funds are not
available,  our business,  financial condition and results of operations will be
materially and adversely affected.

OTHER LIQUIDITY EVENTS

     On April 20, 2006, we entered into a Membership Interest Purchase Agreement
with Progenics providing for the sale to Progenics of our 50% ownership interest
in PDC. In addition,  we entered into an Amended and Restated  PSMA/PSMP License
Agreement  with  Progenics  and PDC  pursuant to which we  licensed  PDC certain
rights in PSMA technology. Under the terms of


                                      -33-
<PAGE>


such  agreements,  we sold our 50%  interest in PDC for a cash  payment of $13.2
million,  potential  future  milestone  payments  totaling  up to $52.0  million
payable upon  regulatory  approval and  commercialization  of PDC products,  and
royalties on future PDC product sales, if any.  Effective after the sale, we are
no longer funding the PDC's operations.

     On April 21, 2006,  we and Savient  entered into a  distribution  agreement
granting us exclusive  marketing rights for SOLTAMOX(TM)  (tamoxifen citrate) in
the United States.  SOLTAMOX, a cytostatic estrogen receptor antagonist,  is the
first oral liquid hormonal  therapy approved in the U.S. It is indicated for the
treatment of breast cancer in adjuvant and metastatic settings and to reduce the
risk of breast cancer in women with ductal carcinoma in situ (DCIS) or with high
risk of breast  cancer.  In addition,  we entered into a supply  agreement  with
Rosemont  for the  manufacture  and supply of  SOLTAMOX.  Under the terms of the
final transaction,  we paid Savient an upfront licensing fee of $2.0 million and
may pay  additional  contingent  sales-based  payments  of up to a total of $4.0
million to Savient and Rosemont.  We expect to launch  SOLTAMOX during the third
quarter of 2006. We are also  required to pay Savient and Rosemont  royalties on
net sales of SOLTAMOX.  Beginning  in 2007,  Cytogen is obligated to pay Savient
and Rosemont  quarterly  minimum royalties based on an agreed upon percentage of
total tamoxifen  prescriptions in the United States.  Unless terminated earlier,
each of the  distribution  agreement with Savient and the supply  agreement with
Rosemont  will  terminate  upon  the  expiration  of the last to  expire  patent
covering  SOLTAMOX in the United  States,  which is currently  June 2018. In the
event the  tamoxifen  prescriptions  for an agreed  upon period of time are less
than the pre-established minimum, the agreement may be terminated if the parties
are unable to reach an  agreement  to amend the terms of the contract to account
for such impact.

     On June 20,  2006,  we entered into a purchase  and supply  agreement  with
Oncology  Therapeutics  Network,  J.V.  ("OTN")  appointing OTN as the exclusive
distributor of SOLTAMOX in the United States.  Under the terms of the agreement,
OTN will purchase SOLTAMOX from us and distribute  SOLTAMOX in the United States
through its warehousing and distribution facilities.  We will pay OTN management
fees based upon a  percentage  of SOLTAMOX  sales,  subject to a minimum  annual
amount.  This agreement has a three-year term and will  automatically  renew for
successive  one-year periods unless terminated by OTN or us on a 90 days written
notice prior to the end of the applicable term.  Either party also may terminate
the agreement, without cause, on 180 days written notice.

     In September 2004, we entered into a non-exclusive  manufacturing agreement
with  Laureate  Pharma,   L.P.  pursuant  to  which  Laureate  is  manufacturing
PROSTASCINT  and its primary raw materials for us in its  Princeton,  New Jersey
facility.  Our agreement will terminate,  unless terminated  earlier pursuant to
its terms, upon Laureate's completion of the production campaign and shipment of
the  resulting  products  from  Laureate's  facility.  Under  the  terms  of the
agreement,  we anticipate  paying at least an aggregate of $5.1 million  through
the end of the contract term. Approximately $4.1 million has been incurred under
this  agreement  through  June 30,  2006,  and is  recorded  as  inventory  when
purchased.  No payment was made during the first half of 2006.  In October 2004,
Laureate was acquired by Safeguard  Scientifics,  Inc. Laureate has continued to
operate as a full service  contract  manufacturing  organization and we have not
experienced  any  disruption in Laureate's  performance  of its  obligations  to
produce PROSTASCINT.


                                      -34-
<PAGE>


     Effective  January 1, 2004, we entered into a new  manufacturing and supply
agreement with  Bristol-Myers  Squibb Medical Imaging,  Inc.  ("BMS-MI") whereby
BMS-MI  manufactures,  distributes  and provides  order  processing and customer
services for us relating to QUADRAMET.  Under the terms of the new agreement, we
are  obligated to pay at least $4.7 million  annually,  subject to future annual
price  adjustment,  through 2008, unless terminated by BMS-MI or us on two years
prior  written  notice.  During the six months ended June 30, 2006,  we incurred
$2.3  million  of  manufacturing  costs  for  QUADRAMET.   This  agreement  will
automatically  renew for five successive  one-year periods unless  terminated by
BMS-MI or us on a two year prior written  notice.  We also pay BMS-MI a variable
amount per month for each QUADRAMET  order placed to cover the costs of customer
service.

     We  acquired  an  exclusive  license  from  The Dow  Chemical  Company  for
QUADRAMET  for  the  treatment  of  osteoblastic   bone  metastases  in  certain
territories.  The  agreement  requires  us  to  pay  Dow  royalties  based  on a
percentage  of net  sales of  QUADRAMET,  or a  guaranteed  contractual  minimum
payment,  whichever is greater,  and future payments upon achievement of certain
milestones. Future annual minimum royalties due to Dow are $1.0 million per year
in 2006 through 2012 and $833,000 in 2013.

     On May 6, 2005, we entered into a license  agreement  with The Dow Chemical
Company to create a targeted  oncology  product  designed to treat  prostate and
other cancers. The agreement applies proprietary  MeO-DOTA  bifunctional chelant
technology  from  Dow  to  radiolabel  our  PSMA  antibody  with  a  therapeutic
radionuclide.  Under the agreement,  proprietary  chelation technology and other
capabilities, provided through ChelaMedSM radiopharmaceutical services from Dow,
will be used to attach a  therapeutic  radioisotope  to the  7E11-C5  monoclonal
antibody utilized in our PROSTASCINT molecular imaging agent. As a result of the
agreement,  we are obligated to pay a minimal  license fee and aggregate  future
milestone payments of $1.9 million for each licensed product and royalties based
on sales  of  related  products,  if any.  Unless  terminated  earlier,  the Dow
agreement  terminates at the later of (a) the tenth  anniversary  of the date of
first  commercial  sale for each licensed  product or (b) the  expiration of the
last to expire  valid claim that would be  infringed by the sale of the licensed
product.  We may  terminate  the license  agreement  with Dow on 90 days written
notice.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Financial  Reporting  Release No. 60 requires  all  companies  to include a
discussion of critical accounting policies or methods used in the preparation of
financial  statements.  Note 1 to our Consolidated  Financial  Statements in our
Annual  Report on Form 10-K for the year ended  December 31,  2005,  as amended,
includes a summary of our  significant  accounting  policies and methods used in
the preparation of our  Consolidated  Financial  Statements.  The following is a
brief discussion of the more significant accounting policies and methods used by
us. The preparation of our Consolidated Financial Statements requires us 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.  Our actual results could differ  materially  from
those estimates.


                                      -35-
<PAGE>


REVENUE RECOGNITION

     Product  revenues  include  product sales by us to our  customers.  Product
sales are  recognized  when the  customer  takes  ownership  of the products and
assumes  risk of  loss,  collection  of the  relevant  receivable  is  probable,
persuasive  evidence  of an  agreement  exists  and the sales  price is fixed or
determinable.  Product returns are accepted under limited  circumstances  and an
allowance for returned  products is estimated based upon historical  experience.
We may provide rebates and volume  discounts to our customers from time to time.
Such rebates and  discounts  are  recorded as a reduction of product  sales when
earned by the customer.

     License and contract  revenues  include  milestone  payments and fees under
collaborative  agreements with third parties,  revenues from research  services,
and revenues from other miscellaneous sources. We defer non-refundable  up-front
license fees and  recognize  them over the estimated  performance  period of the
related agreement,  when we have continuing  involvement.  Since the term of the
performance periods is subject to management's estimates,  future revenues to be
recognized could be affected by changes in such estimates.

ACCOUNTS RECEIVABLE

     Our accounts  receivable  balances are net of an  estimated  allowance  for
uncollectible  accounts.  We continuously  monitor collections and payments from
our customers and maintain an allowance for  uncollectible  accounts  based upon
our historical  experience and any specific  customer  collection issues that we
have identified. While we believe our reserve estimate to be appropriate, we may
find it  necessary to adjust our  allowance  for  uncollectible  accounts if the
future  bad debt  expense  exceeds  our  estimated  reserve.  We are  subject to
concentration  risks as a limited number of our customers provide a high percent
of total revenues, and corresponding receivables.

INVENTORIES

     Inventories are stated at the lower of cost or market,  as determined using
the first-in, first-out method, which most closely reflects the physical flow of
our  inventories.  Our  products  and raw  materials  are subject to  expiration
dating.  We  regularly  review  quantities  on hand to  determine  the  need for
reserves for excess and obsolete  inventories  based  primarily on our estimated
forecast of product sales. Our estimate of future product demand may prove to be
inaccurate,  in which case we may have understated or overstated our reserve for
excess and obsolete inventories.

CARRYING VALUE OF FIXED AND INTANGIBLE ASSETS

     Our fixed assets and certain of our acquired  rights to market our products
have been recorded at cost and are being amortized on a straight-line basis over
the estimated useful life of those assets. If indicators of impairment exist, we
assess the  recoverability  of the  affected  long-lived  assets by  determining
whether the carrying value of such assets can be recovered through  undiscounted
future  operating cash flows. If impairment is indicated,  we measure the amount
of such  impairment by comparing the carrying value of the assets to the present
value of the


                                      -36-
<PAGE>


expected future cash flows associated with the use of the asset. Adverse changes
regarding future cash flows to be received from long-lived assets could indicate
that an  impairment  exists,  and would  require the write down of the  carrying
value of the impaired asset at that time.

WARRANT LIABILITY

     We follow  Emerging  Issues Task Force (EITF) No.  00-19,  "Accounting  for
Derivative  Financial  Instruments  Indexed  to, and  Potentially  Settled in, a
Company's  Own  Stock"  which  provides  guidance  for  distinguishing   between
permanent equity, temporary equity and assets and liabilities. Under EITF 00-19,
to qualify as permanent  equity,  the equity derivative must permit us to settle
in  unregistered  shares.  We do not have  that  ability  under  the  securities
purchase  agreement for the warrants issued in July and August 2005 and, as EITF
00-19 considers the ability to keep a registration statement effective as beyond
our  control,  the warrants  cannot be  classified  as permanent  equity and are
instead  classified  as a liability  in the  accompanying  consolidated  balance
sheet.

     We record the warrant  liability  at its fair value  using a  Black-Scholes
option-pricing  model and remeasure it at each reporting date until the warrants
are exercised or expired. Changes in the fair value of the warrants are reported
in the consolidated statements of operations as non-operating income or expense.
The fair value of the warrants is subject to  significant  fluctuation  based on
changes in our stock price,  expected  volatility,  expected life, the risk-free
interest rate and dividend yield. The market price for our common stock has been
and may continue to be volatile. Consequently,  future fluctuations in the price
of our common  stock may cause  significant  increases  or decreases in the fair
value of the warrants issued in July and August 2005.

SHARE-BASED COMPENSATION

     We account for share-based compensation in accordance with SFAS No. 123(R),
"Share-Based  Payment."  Under  the fair  value  recognition  provision  of this
statement,  the share-based  compensation,  which is generally based on the fair
value of the awards calculated using the  Black-Scholes  option pricing model on
the date of grant,  is  recognized on a  straight-line  basis over the requisite
service period,  generally the vesting period, for grants on or after January 1,
2006. For nonvested shares, we use the fair value of the underlying common stock
on the date of grant.  Determining  the fair value of share-based  awards at the
grant date requires  judgment,  including  estimating  expected  dividend yield,
expected forfeiture rates,  expected volatility,  the expected term and expected
risk-free  interest rates. If we were to use different  estimates or a different
valuation  model,  our  share-based  compensation  expense  and our  results  of
operations could be materially impacted.

RECENT ACCOUNTING PRONOUNCEMENTS

Income Taxes

     In June 2006, the FASB issued FASB  Interpretation  No. 48, "Accounting for
Uncertainty  in Income Taxes" ("FIN 48").  FIN 48 is applicable for fiscal years
beginning after December 15, 2006. This Interpretation  clarifies the accounting
for uncertainty in income taxes recognized in


                                      -37-
<PAGE>


an enterprise's  financial statements in accordance with FASB Statement No. 109,
"Accounting  for Income  Taxes." This  Interpretation  prescribes a  recognition
threshold and measurement  attribute for the financial statement recognition and
measurement  of a tax  position  taken or  expected to be taken in a tax return.
This  Interpretation  also provides guidance on de-recognition,  classification,
interest  and  penalties,   accounting  in  interim  periods,   disclosure,  and
transition.  We are  currently  evaluating  the impact of the adoption of FIN 48
upon our financial statements and related disclosures. We do not expect that the
adoption  will have a material  effect on our results of operations or financial
condition.

Sales Tax

     In March 2006, the FASB's  Emerging  Issues Task Force released Issue 06-3,
"How  Sales  Taxes   Collected  From  Customers  and  Remitted  to  Governmental
Authorities  Should Be Presented in the Income  Statement" or ("EITF  06-3").  A
consensus was reached that entities may adopt a policy of presenting sales taxes
in  the  income  statement  on  either  a  gross  or net  basis.  If  taxes  are
significant,  an entity should  disclose its policy of presenting  taxes and the
amount of taxes if  reflected  on a gross  basis in the  income  statement.  The
guidance is effective for periods  beginning after December 15, 2006. We present
sales net of sales taxes in our consolidated statements of operations and do not
anticipate changing our policy as a result of EITF 06-3.

Share-Based Payment

     In December 2004, the FASB issued SFAS No. 123(R),  "Share-Based  Payment,"
which  revised SFAS No. 123 ("SFAS 123") and  superseded  Accounting  Principles
Board Opinion No. 25, " Accounting  for Stock Issued to  Employees"  ("APB 25").
SFAS 123(R) requires that companies  recognize  compensation  expense associated
with share-based compensation arrangements, including employee stock options, in
the financial  statements  effective as of the first interim or annual reporting
period that begins after June 15, 2005.  SFAS 123(R)  eliminates  the  Company's
ability  to  account  for  such  transactions  using  the  intrinsic  method  of
accounting  under APB 25. SFAS 123(R) also  requires  that  companies  recognize
compensation  expense  associated  with  purchases  of shares of common stock by
employees at a discount to market value under employee stock purchase plans that
do not meet certain criteria.

     In April  2005,  the  Securities  and  Exchange  Commission  announced  the
adoption  of a new rule  allowing  companies  to  implement  SFAS  123(R) at the
beginning   of  their  next  fiscal  year  that  begins  after  June  15,  2005.
Accordingly, we adopted SFAS 123(R) in its fiscal year beginning January 1, 2006
using  the  modified   prospective   transition   method.   Under  this  method,
compensation  expense is reflected in the financial statements beginning January
1, 2006 with no restatement to the prior periods. As such, compensation expense,
which is measured  based on the fair value of the  instrument on the grant date,
is recognized for awards that are granted, modified, repurchased or cancelled on
or after January 1, 2006 as well as for the portion of awards previously granted
that  have  not  vested  as  of  January  1,  2006.  We  have   implemented  the
straight-line  expense  attribution method for all options granted after January
1, 2006.  Prior to adopting  SFAS 123(R),  we used the  accelerated  attribution
method in accordance  with FASB  Interpretation  No. 28,  "Accounting  for Stock
Appreciation  Rights and Other Variable Stock


                                      -38-
<PAGE>


Option or Award  Plans"  ("FIN 28").  The adoption of SFAS 123(R) had a material
impact on our results of operations.

Abnormal Inventory Costs

     In  November  2004,  the FASB issued SFAS No.  151,  "Inventory  Costs,  an
amendment of ARB No. 43,  Chapter 4" ("SFAS No. 151"),  to clarify that abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage)  should be  recognized  as  current  period  charges,  and that fixed
production  overheads  should be  allocated  to  inventory  based on the  normal
capacity of  production  facilities.  This  statement is effective for inventory
costs incurred during fiscal years  beginning after June 15, 2005.  Accordingly,
we adopted  SFAS No.  151 in its  fiscal  year  beginning  January 1, 2006.  The
adoption  of this  standard  did not have any  impact on the  Company in the six
months ended June 30, 2006.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We  do  not  have   operations   subject  to  risks  of  foreign   currency
fluctuations,  nor do we use derivative financial instruments in our operations.
Our  exposure  to  market  risk  is   principally   confined  to  interest  rate
sensitivity. Our cash equivalents and short-term investments are conservative in
nature, with a focus on preservation of capital. Due to the short-term nature of
our investments and our investment  policies and procedures,  we have determined
that the risks  associated  with  interest  rate  fluctuations  related to these
financial instruments are not material to our business.

     We are exposed to certain  risks  arising  from changes in the price of our
common stock,  primarily due to potential effect of changes in fair value of the
warrant  liability  related to the warrants  issued in July and August 2005. The
warrant liability is measured at fair value using a Black-Scholes option-pricing
model  at each  reporting  date  and is  subject  to  significant  increases  or
decreases  in  value  and a  corresponding  loss  or gain  in the  statement  of
operations  due to the effects of changes in the price of common stock at period
end and the related calculation of volatility.

ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

     Our management,  with the  participation of our chief executive officer and
vice president,  finance, evaluated the effectiveness of our disclosure controls
and  procedures  as  of  June  30,  2006.  The  term  "disclosure  controls  and
procedures,"  as defined in Rules  13a-15(e) and 15d-15(e)  under the Securities
Exchange Act of 1934,  means controls and other procedures of a company that are
designed to ensure that  information  required to be disclosed by the Company in
the reports that it files or submits under the  Securities  Exchange Act of 1934
is  recorded,  processed,  summarized  and  reported,  within  the time  periods
specified  in the SEC's  rules and forms.  Disclosure  controls  and  procedures
include,  without  limitation,  controls and procedures  designed to ensure that
information  required to be  disclosed by a company in the reports that it files
or  submits  under  the  Securities  Exchange  Act of  1934 is  accumulated  and
communicated to the company's management,  including its principal executive and
principal financial officers, as appropriate to allow timely decisions regarding
required disclosure.  Management recognized


                                      -39-
<PAGE>


that any controls and procedures,  no matter how well designed and operated, can
provide only reasonable  assurance of achieving their  objectives and management
necessarily applied its judgment in evaluating the cost-benefit  relationship of
possible controls and procedures.  Based on this evaluation, our chief executive
officer and vice  president,  finance  concluded  that, as of June 30, 2006, our
disclosure controls and procedures were effective.

(2) Changes in Internal Control Over Financial Reporting

     No change in our internal  control over financial  reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal
quarter ended as of June 30, 2006 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.












                                      -40-
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     In December 2005, Trapezoid Healthcare Communications LLC filed a complaint
against us in the Superior  Court of New Jersey,  Law Division,  Mercer  County,
seeking approximately  $426,000 in damages arising our of our alleged failure to
pay Trapezoid for marketing  services allegedly provided to us. On May 22, 2006,
we  settled  this  matter  for  $365,000,  without  any  admission  of  fault or
liability.  We had previously  established a reserve for the full amount of this
claim.

     In January 2006,  we filed a complaint  against  Advanced  Magnetics in the
Massachusetts  Superior Court for breach of contract,  fraud, unjust enrichment,
and breach of the implied  covenant of good faith and fair dealing in connection
with the parties' 2000 license agreement. The complaint seeks damages along with
a request for  specific  performance  requiring  Advanced  Magnetics to take all
reasonable steps to secure FDA approval of COMBIDEX in compliance with the terms
of the licensing agreement. In February 2006, Advanced Magnetics filed an answer
to  our  complaint  and  asserted  various  counterclaims,   including  tortuous
interference,  defamation, consumer fraud and abuse of process. We believe these
counterclaims  have no merit and we plan to conduct a  vigorous  defense of such
counterclaims.

ITEM 1A. RISK FACTORS

     This section sets forth changes in the risks factors  previously  disclosed
in our Annual Report on Form 10-K due to our activities during the quarter ended
June 30, 2006.

     Investing  in our common stock  involves a high degree of risk.  You should
carefully consider the risks and uncertainties described below together with the
other  risks  described  in our Annual  Report on Form 10-K and the  information
included or incorporated by reference in this Quarterly  Report on Form 10-Q and
our Annual  Report on Form 10-K in your  decision as to whether or not to invest
in our common stock. If any of the risks or uncertainties  described below or in
our Annual Report on Form 10-K actually occur, our business, financial condition
or results of operations would likely suffer. In that case, the trading price of
our common stock could fall,  and you may lose all or part of the money you paid
to buy our common stock.

We have a history of operating  losses and an accumulated  deficit and expect to
incur losses in the future.

     Given the high level of  expenditures  associated with our business and our
inability to generate revenues  sufficient to cover such  expenditures,  we have
had a history of  operating  losses  since our  inception.  For the three months
ended June 30, 2006, we reported net income of $7.2 million.  Such net income is
primarily  due to the sale to  Progenics,  in April 2006,  of our 50%  ownership
interest in PDC, our joint venture with Progenics for the development of in vivo
cancer  immunotherapies  based on PSMA,  in which we received a cash  payment of
$13.2  million.  We had a net loss of $460,000 for the six months ended June 30,
2006. We had an accumulated deficit of $413 million as of June 30, 2006.


                                      -41-
<PAGE>


     In order to develop and commercialize  our  technologies,  particularly our
prostate-specific  membrane  antigen  technology,  and expand our  products,  we
expect to incur  significant  increases  in our  expenses  over the next several
years. As a result, we will need to generate  significant  additional revenue to
become profitable.

     To date, we have taken  affirmative steps to address our trend of operating
losses. Such steps include, among other things:

     o    undergoing   steps  to   realign   and   implement   our  focus  as  a
          product-driven biopharmaceutical company;

     o    establishing and maintaining our in-house specialty sales force;

     o    reacquiring  North  American and Latin  American  marketing  rights to
          QUADRAMET from Berlex Laboratories in August 2003; and

     o    enhancing our marketed product portfolio  through marketing  alliances
          and strategic arrangements.

     Although we have taken  these  affirmative  steps,  we may never be able to
successfully implement them, and our ability to generate and sustain significant
additional  revenues or achieve  profitability will depend upon the risk factors
discussed  elsewhere in this section  entitled,  "Risk Factors" or in our Annual
Report on Form 10-K for the year ended  December 31, 2005.  As a result,  we may
never be able to generate or sustain  significant  additional revenue or achieve
profitability.

We depend on sales of QUADRAMET and  PROSTASCINT  for  substantially  all of our
near-term revenues.

     We expect QUADRAMET and PROSTASCINT to account for substantially all of our
product  revenues  in the near  future.  For the  quarter  ended June 30,  2006,
revenues from QUADRAMET and PROSTASCINT accounted for approximately 48% and 52%,
respectively,  of our product revenues.  For the six months ended June 30, 2006,
revenues from QUADRAMET and PROSTASCINT accounted for approximately 49% and 51%,
respectively,  of our product  revenues.  If QUADRAMET or  PROSTASCINT  does not
achieve broader market acceptance,  either because we fail to effectively market
such products or our competitors  introduce  competing  products,  we may not be
able to generate sufficient revenue to become profitable.

     On April 21, 2006,  we and Savient  entered into a  distribution  agreement
granting us exclusive  marketing rights for SOLTAMOX(TM)  (tamoxifen citrate) in
the United  States.  We expect to launch  SOLTAMOX  during the third  quarter of
2006. We have not yet made any sales of SOLTAMOX.


                                      -42-
<PAGE>


A Small Number of Customers  Account for the Majority of Our Sales, and the Loss
of One of Them, or Changes in Their Purchasing Patterns, Could Result in Reduced
Sales, Thereby Adversely Affecting Our Operating Results.

     We sell our products to a small number of  radiopharmacy  networks.  During
the six months ended June 30, 2006,  we received 62% of our total  revenues from
three  customers,   as  follows:  39%  from  Cardinal  Health  (formerly  Syncor
International  Corporation);   14%  from  Mallinckrodt  Inc.;  and  9%  from  GE
Healthcare (formerly Amersham Health).  During the year ended December 31, 2005,
we received 67% of our total revenues from three customers, as follows: 47% from
Cardinal  Health  (formerly   Syncor   International   Corporation);   11%  from
Mallinckrodt Inc.; and 9% from GE Healthcare (formerly Amersham Health).  During
the year ended  December 31, 2004,  we received 68% of our total  revenues  from
three  customers,   as  follows:  46%  from  Cardinal  Health  (formerly  Syncor
International  Corporation);  12%  from  Mallinckrodt  Inc.;  and  10%  from  GE
Healthcare (formerly Amersham Health).

     The small  number of  radiopharmacies,  consolidation  in this  industry or
financial  difficulties of these radiopharmacies could result in the combination
or elimination of customers for our products.  We anticipate that our results of
operations in any given period will  continue to depend to a significant  extent
upon  sales  to a small  number  of  customers.  As a  result  of this  customer
concentration,  our  revenues  from quarter to quarter and  business,  financial
condition   and   results  of   operations   may  be   subject  to   substantial
period-to-period  fluctuations.  In addition, our business,  financial condition
and results of operations could be materially  adversely affected by the failure
of customer orders to materialize as and when anticipated. None of our customers
have entered into an agreement  requiring on-going minimum purchases from us. We
cannot  assure  you that our  principal  customers  will  continue  to  purchase
products  from us at current  levels,  if at all.  The loss of one or more major
customers  could  have a  material  adverse  effect on our  business,  financial
condition and results of operations.

We rely heavily on our collaborative partners.

     Our success depends largely upon the success and financial stability of our
collaborative  partners.  We have entered into the following  agreements for the
development,  sale,  marketing,  distribution  and  manufacture of our products,
product candidates and technologies:

     o    a license  agreement  with The Dow  Chemical  Company  relating to the
          QUADRAMET technology;

     o    a manufacturing  and supply agreement for the manufacture of QUADRAMET
          with Bristol-Myers Squibb Medical Imaging, Inc.;

     o    a  manufacturing  agreement for the  manufacture of  PROSTASCINT  with
          Laureate Pharma, L.P.;

     o    marketing, license and supply agreements with Advanced Magnetics, Inc.
          related to COMBIDEX and ferumoxytol (formerly Code 7228);

     o    a  distribution  services  agreement  with  Cardinal  Health 105, Inc.
          (formerly CORD


                                      -43-
<PAGE>


          Logistics, Inc.) for PROSTASCINT;

     o    a license  agreement with The Dow Chemical  Company  relating to Dow's
          proprietary MeO-DOTA  bifunctional chelant technology for use with our
          Therapeutic  7E11-C5 Monoclonal  Antibody program; o a development and
          manufacturing  agreement with Laureate  Pharma,  L.P. for the scale-up
          for the cGMP  manufacturing  of a MeO-DOTA  chelator  conjugate of the
          7E11-C5 monoclonal antibody;

     o    a  distribution  agreement  with Savient  Pharmaceuticals,  Inc. and a
          manufacture   and  supply   agreement   with   Savient  and   Rosemont
          Pharmaceuticals  Limited  related  to  the  supply  and  marketing  of
          SOLTAMOX; and

     o    a  purchase  and supply  agreement  with OTN for the  distribution  of
          SOLTAMOX.

     Because   our   collaborative   partners   are   responsible   for  certain
manufacturing and distribution  activities,  among others,  these activities are
outside  our  direct  control  and we  rely on our  partners  to  perform  their
obligations.  In the event that our collaborative partners are entitled to enter
into third party  arrangements that may economically  disadvantage us, or do not
perform their obligations as expected under our agreements, our products may not
be  commercially  successful.  As a result,  any  success may be delayed and new
product  development  could be  inhibited  with the  result  that our  business,
financial  condition  and  results  of  operation  could  be  significantly  and
adversely affected.

     In January 2006,  we filed a complaint  against  Advanced  Magnetics in the
Massachusetts  Superior Court for breach of contract,  fraud, unjust enrichment,
and breach of the implied  covenant of good faith and fair dealing in connection
with the parties' 2000 license agreement. The complaint seeks damages along with
a request for  specific  performance  requiring  Advanced  Magnetics to take all
reasonable steps to secure FDA approval of COMBIDEX in compliance with the terms
of the licensing agreement. In February 2006, Advanced Magnetics filed an answer
to  our  complaint  and  asserted  various  counterclaims,   including  tortuous
interference,  defamation, consumer fraud and abuse of process. We believe these
counterclaims  have no merit and we plan to conduct a vigorous  defense of these
claims.

Our  products,   generally,   are  in  the  early  stages  of  development   and
commercialization  and we may never  achieve the revenue  goals set forth in our
business plan.

     We began  operations  in 1980 and have  since  been  engaged  primarily  in
research  directed toward the  development,  commercialization  and marketing of
products to improve the diagnosis and treatment of cancer and other diseases. In
October 1996, we introduced for commercial use our PROSTASCINT imaging agent. In
March 1997, we introduced for commercial use our QUADRAMET therapeutic product.

     In April 2006, we executed a distribution  agreement with Savient  granting
us exclusive  marketing  rights for SOLTAMOX  (tamoxifen  citrate) in the United
States. SOLTAMOX, an


                                      -44-
<PAGE>


oral liquid hormonal therapy, is approved for marketing in the United States. We
expect to launch SOLTAMOX in the third quarter of 2006.

     In  May  2006,   the  U.S.   Food  and  Drug   Administration   cleared  an
Investigational New Drug application for CYT-500, our lead therapeutic candidate
targeting  PSMA.  We expect to begin the first U.S.  Phase I  clinical  trial of
CYT-500  in  patients  with  hormone-  refractory  prostate  cancer,  subject to
Institutional  Review Board (IRB) approval at the planned clinical site. CYT-500
uses the same monoclonal antibody from our PROSTASCINT  molecular imaging agent,
but is linked through a higher affinity linker than is used for PROSTASCINT to a
therapeutic as opposed to an imaging radionuclide. This PSMA technology is still
in the early stages of development.

     In August 2000,  we entered  into a license and  marketing  agreement  with
Advanced Magnetics for COMBIDEX, for all applications, and ferumoxytol (formerly
Code 7228) for oncology  applications  only.  We have  exclusive  United  States
marketing  rights to  COMBIDEX.  On March 3,  2005,  the FDA's  Oncologic  Drugs
Advisory  Committee  (ODAC)  voted  15 to 4 to  not  recommend  approval  of the
proposed broad  indication for COMBIDEX being sought by Advanced  Magnetics.  On
March 24, 2005,  Advanced  Magnetics,  Inc. informed us that Advanced  Magnetics
received  an  approvable  letter from the FDA for  COMBIDEX,  subject to certain
conditions.

     We cannot assure you, however, that Advanced Magnetics will obtain approval
from the FDA for COMBIDEX on a timely  basis,  if at all. If Advanced  Magnetics
does not secure  regulatory  approval for COMBIDEX,  we will not be permitted to
sell and market  COMBIDEX  as we have  anticipated  and we will not  realize any
return on the  significant  amount of time and  resources  we have  allocated to
COMBIDEX.  Ferumoxytol  is being  developed by Advanced  Magnetics for use as an
iron  replacement  therapeutic in chronic  kidney disease  patients and Advanced
Magnetics  has stated that no clinical  applications  are  currently  planned or
contemplated  for oncology  applications.  We cannot assure you that ferumoxytol
will be developed for oncology applications.

     In July 2004,  as part of our  continuing  efforts to reduce  non-strategic
expenses,  we  initiated  the closure of  facilities  at our AxCell  Biosciences
subsidiary.  Research  projects  through  academic,  governmental  and corporate
collaborators will continue to be supported and additional  applications for the
intellectual  property and  technology  at AxCell are being  pursued.  We may be
unable  to  further  develop  or   commercialize   any  of  these  products  and
technologies in the future.

     Our business is therefore  subject to the risks  inherent in an early-stage
biopharmaceutical business enterprise, such as the need:

     o    to obtain sufficient capital to support the expenses of developing our
          technology and commercializing our products;

     o    to ensure that our products are safe and effective;

     o    to obtain regulatory approval for the use and sale of our products;


                                      -45-
<PAGE>


     o    to  manufacture  our  products  in  sufficient  quantities  and  at  a
          reasonable cost;

     o    to develop a sufficient market for our products; and

     o    to attract  and retain  qualified  management,  sales,  technical  and
          scientific staff.

     The problems frequently encountered using new technologies and operating in
a competitive environment also may affect our business,  financial condition and
results of operations. If we fail to properly address these risks and attain our
business objectives, our business could be significantly and adversely affected.

We depend on attracting and retaining key personnel.

     We are highly  dependent on the  principal  members of our  management  and
scientific  staff.  The  loss of their  services  might  significantly  delay or
prevent the  achievement  of development  or strategic  objectives.  Our success
depends  on our  ability  to retain  key  employees  and to  attract  additional
qualified employees.  Competition for personnel is intense, and therefore we may
not be able to retain existing personnel or attract and retain additional highly
qualified employees in the future.

     On June 20, 2006,  Christopher  P.  Schnittker  resigned as our Senior Vice
President and Chief Financial Officer to pursue other career  opportunities.  We
have initiated a search for Mr. Schnittker's successor.

     We do not carry key person life insurance  policies and we do not typically
enter into long-term  arrangements  with our key personnel.  If we are unable to
hire and retain personnel in key positions,  our business,  financial  condition
and results of operations could be significantly  and adversely  affected unless
qualified replacements can be found.

We may need to raise additional capital, which may not be available.

     Our cash, cash equivalents and short-term investments were $31.4 million at
June 30, 2006. We expect that our existing capital  resources should be adequate
to fund our operations and commitments into 2007.

     We have incurred  negative cash flows from  operations  since our inception
and have expended,  and expect to continue to expend in the future,  substantial
funds based upon the:

     o    success of our product commercialization efforts;

     o    success of any  future  acquisitions  of  complementary  products  and
          technologies we may make;

     o    magnitude,  scope and results of our product  development and research
          and development efforts;


                                      -46-
<PAGE>


     o    progress of preclinical studies and clinical trials;

     o    progress toward regulatory approval for our products;

     o    costs of filing,  prosecuting,  defending and enforcing  patent claims
          and other intellectual property rights;

     o    competing technological and market developments; and

     o    expansion  of  strategic   alliances  for  the  sale,   marketing  and
          distribution of our products.

     Our  business  or  operations  may change in a manner  that  would  consume
available  resources more rapidly than anticipated.  We expect that we will have
additional requirements for debt or equity capital,  irrespective of whether and
when we reach profitability,  for further product development costs, product and
technology  acquisition  costs  and  working  capital.  To the  extent  that our
currently  available  funds and  revenues  are  insufficient  to meet current or
planned operating  requirements,  we will be required to obtain additional funds
through equity or debt financing,  strategic  alliances with corporate  partners
and  others,  or through  other  sources.  These  financial  sources  may not be
available when we need them or they may be available,  but on terms that are not
commercially  acceptable to us. If adequate funds are not  available,  we may be
required  to delay  further  scale  back or  eliminate  certain  aspects  of our
operations or attempt to obtain funds through  arrangements  with  collaborative
partners or others that may  require us to  relinquish  rights to certain of our
technologies,  product  candidates,  products or potential markets.  If adequate
funds are not  available,  our  business,  financial  condition  and  results of
operations will be materially and adversely affected.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On June 13, 2006, we held our annual meeting of stockholders  to: (i) elect
nine directors;  (ii) consider and vote upon a proposal to approve the Company's
2005 Employee Stock  Purchase  Plan;  (iii) consider and vote upon a proposal to
approve the  Company's  2006 Equity  Compensation  Plan;  and (iv) transact such
other business as may come before the meeting.

     There were represented at our annual meeting, either in person or by proxy,
19,982,535 shares of our common stock out of a total number of 22,473,762 shares
of common stock issued and outstanding and entitled to vote at the meeting.

     The following  tables set forth  information  regarding the number of votes
cast for,  withheld,  abstentions  and broker  non-votes,  with  respect to each
matter presented at the meeting.


                                      -47-
<PAGE>


     (i)    Election of Directors:

                                                                    BROKER NON-
     NOMINEES               FOR        WITHHELD      ABSTENTIONS      VOTES
-----------------------  ----------  -------------  -------------  ------------
John E. Bagalay, Jr.     20,270,063    693,577          N/A             N/A
Michael D. Becker        20,522,202    440,438          N/A             N/A
Allen Bloom              20,435,287    527,353          N/A             N/A
Stephen K. Carter        20,540,261    422,379          N/A             N/A
James A. Grigsby         20,488,087    474,553          N/A             N/A
Dennis H. Langer         20,430,265    532,375          N/A             N/A
Robert F. Hendrickson    20,434,295    528,345          N/A             N/A
Kevin G. Lokay           20,435,200    527,440          N/A             N/A
Joseph A. Mollica        20,530,661    431,979          N/A             N/A


     (ii)   Proposal to approve the Company's 2005 Employee Stock Purchase Plan:


                                                                  BROKER NON-
                  FOR           AGAINST        ABSTENTIONS           VOTES
            -------------   -------------  ------------------   ----------------
              6,131,106         549,759          42,213           14,239,562


     (iii)  Proposal to approve the Company's 2006 Equity Compensation Plan:


                                                                  BROKER NON-
                  FOR           AGAINST        ABSTENTIONS           VOTES
            -------------   -------------  ------------------   ----------------
              5,655,404       1,011,666          56,007           14,239,563


ITEM 5.  OTHER INFORMATION.

     On June 20, 2006, we announced that that Christopher P. Schnittker,  Senior
Vice President and Chief Financial Officer of the Company, has resigned from the
Company effective June 20, 2006 to pursue other career opportunities.

ITEM 6.  EXHIBITS.

        Exhibit No.          Description
        -----------          -----------

           10.1              Cytogen Corporation 2006 Equity Compensation  Plan.
                             Filed  as  an  exhibit  to the Company's  Quarterly
                             Report on Form 10-Q for the quarter ended March 31,
                             2006, filed  with the  Commission on  May 10, 2006,
                             and incorporated herein by reference.

           10.2              Membership Interest Purchase  Agreement dated as of
                             April 20, 2006 between  the  Company  and Progenics
                             Pharmaceutical, Inc.  Filed  as  an exhibit  to the
                             Company's Quarterly Report on Form


                                      -48-
<PAGE>


                             10-Q for the quarter  ended  March  31, 2006, filed
                             with  the  Commission   on   May  10,  2006,    and
                             incorporated herein by reference.

           10.3              Amended  and Restated  PSMA/PSMP License  Agreement
                             dated  April 20, 2006 among the  Company, Progenics
                             Pharmaceuticals, Inc.  and PSMA Development Company
                             LLC.*  Filed  as  an  exhibit   to  the   Company's
                             Quarterly Report on Form 10-Q for the quarter ended
                             March 31, 2006,  filed with  the  Commission on May
                             10, 2006, and incorporated herein by reference.

           10.4              Exclusive Distribution Agreement dated as  of April
                             21,  2006   between  the   Company   and    Savient
                             Pharmaceuticals, Inc.* Filed as  an exhibit  to the
                             Company's  Quarterly  Report on  Form 10-Q  for the
                             quarter  ended  March  31,  2006,  filed  with  the
                             Commission on May 10, 2006, and incorporated herein
                             by reference.

           10.5              Manufacture  and  Supply Agreement  dated April 21,
                             2006 between the Company,  Savient Pharmaceuticals,
                             Inc. and  Rosemont Pharmaceuticals  Limited.* Filed
                             as an exhibit to the Company's Quarterly  Report on
                             Form 10-Q  for the  quarter ended  March  31, 2006,
                             filed  with  the  Commission  on May 10, 2006,  and
                             incorporated herein by reference.

           10.6              Product  Purchase and Supply  Agreement dated as of
                             June  20,  2006 between  the Company  and  Oncology
                             Therapeutics Network, J.V. * Filed herewith.

           31.1              Certification  of  President  and  Chief  Executive
                             Officer pursuant to Rule 13a-14(a)  or 15d-14(a) of
                             the  Securities  Exchange Act of 1934,  as  adopted
                             pursuant  to Section 302 of the  Sarbanes-Oxley Act
                             of 2002.  Filed herewith.

           31.2              Certification of Vice President, Finance,  pursuant
                             to Rule  13a-14(a) or 15d-14(a)  of the  Securities
                             Exchange  Act  of  1934,  as  adopted  pursuant  to
                             Section 302  of  the  Sarbanes-Oxley Act  of  2002.
                             Filed herewith.

           32.1              Certification  of  President  and  Chief  Executive
                             Officer  pursuant  to 18 U.S.C.  Section  1350,  as
                             adopted  pursuant  to Section  906 of the Sarbanes-
                             Oxley Act of 2002. Furnished herewith.

           32.2              Certification of Vice President,  Finance, pursuant
                             to 18 U.S.C.  Section 1350, as  adopted pursuant to
                             Section 906  of the  Sarbanes-Oxley  Act  of  2002.
                             Furnished herewith.


                                      -49-
<PAGE>


* The Company has submitted an application for  confidential  treatment with the
Securities and Exchange Commission with respect to certain provisions  contained
in this exhibit.  The copy filed as an exhibit omits the information  subject to
the confidentiality application.













                                      -50-
<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                 CYTOGEN CORPORATION





Date: August 9, 2006             By:/s/ Michael D. Becker
                                    --------------------------------------------
                                    Michael D. Becker
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)



Date: August 9, 2006             By:/s/ Thu A. Dang
                                    --------------------------------------------
                                    Thu A. Dang
                                    Vice President, Finance
                                    (Principal Financial and Accounting Officer)












                                      -51-