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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 SEPTEMBER 30,
               2005

        |_|    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 an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|

     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 November 10, 2005:
                                              18,741,488

================================================================================
<PAGE>


                               CYTOGEN CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                               SEPTEMBER 30, 2005

                                TABLE OF CONTENTS
                                -----------------


                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION............................................   1

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

              Consolidated Balance Sheets as of September 30, 2005
                and December 31, 2004.....................................   2

              Consolidated Statements of Operations for the Three
                Months and Nine Months Ended September 30, 2005 and
                2004......................................................   3

              Consolidated Statements of Cash Flows for the Nine Months
                Ended September 30, 2005 and 2004 ........................   4

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

     Item 2.  Management's Discussion and Analysis of Financial Condition
                and Results of Operations.................................   16

     Item 3.  Quantitative and Qualitative Disclosures About Market
                Risk......................................................   32

     Item 4.  Controls and Procedures.....................................   33

PART II. OTHER INFORMATION................................................   35

     Item 2.  Unregistered Sales of Equity Securities and Use of
                Proceeds..................................................   35

     Item 5.  Other Information...........................................   35

     Item 6.  Exhibits....................................................   35

SIGNATURES................................................................   37


     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>

                                                                           SEPTEMBER 30, 2005            DECEMBER 31,
                                                                                                             2004
                                                                           ------------------         -----------------
<S>                                                                         <C>                        <C>
ASSETS:
Current assets:
     Cash and cash equivalents.......................................       $      23,467              $      13,046
     Short-term investments..........................................                  --                     22,779
     Accounts receivable, net........................................               1,606                      1,406
     Inventories.....................................................               4,542                      3,623
     Prepaid expenses................................................               1,312                      1,242
     Other current assets............................................                 111                        258
                                                                            -------------              -------------
       Total current assets..........................................              31,038                     42,354

Property and equipment, less accumulated depreciation
     and amortization of $887 and $656 at September 30, 2005 and
     December 31, 2004, respectively.................................                 847                        787
QUADRAMET license fee, less accumulated amortization
     of $1,499 and $976 at September 30, 2005 and December 31, 2004,
     respectively....................................................               6,501                      7,024
Other assets.........................................................                 470                        248
                                                                            -------------              -------------
                                                                            $      38,856              $      50,413
                                                                            =============              =============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
     Current portion of long-term liabilities........................       $          18              $       2,296
     Liability related to joint venture..............................                  --                        396
     Accounts payable and accrued liabilities........................               6,163                      7,644
                                                                            -------------              -------------
       Total current liabilities.....................................               6,181                     10,336

Warrant liability....................................................               2,832                         --
Other long-term liabilities..........................................                  33                         47
                                                                            -------------              -------------
      Total liabilities..............................................               9,046                     10,383
                                                                            -------------              -------------
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, 18,741,488 and 15,489,116 shares issued
       and outstanding at September 30, 2005 and December 31,
       2004, respectively............................................                 188                        155
     Additional paid-in capital......................................             438,082                    426,153
     Unearned compensation...........................................                (774)                        --
     Accumulated other comprehensive income..........................                  47                         --
     Accumulated deficit.............................................            (407,733)                  (386,278)
                                                                            -------------              -------------
       Total stockholders' equity....................................              29,810                     40,030
                                                                            -------------              -------------
                                                                            $      38,856              $      50,413
                                                                            =============              =============
</TABLE>

          The accompany 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                     NINE MONTHS
                                                                            ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                                   ---------------------------------  ------------------------------
                                                                        2005              2004            2005             2004
                                                                    -----------      -------------     -----------     -----------


<S>                                                                <C>              <C>               <C>              <C>
REVENUES:
   Product revenue:
     QUADRAMET.............................................        $     1,991      $       1,924     $     6,198      $      5,394
     PROSTASCINT...........................................              1,525              1,308           5,348             5,347
     Other.................................................                 --                 --              --                 1
                                                                   -----------      -------------     -----------      ------------
        Total product revenue..............................              3,516              3,232          11,546            10,742

   License and contract revenue............................                 35                 29             155                72
                                                                   -----------      -------------     -----------      ------------

        Total revenues.....................................              3,551              3,261          11,701            10,814
                                                                   -----------      -------------     -----------      ------------

OPERATING EXPENSES:
   Cost of product revenue.................................              2,386              2,188           7,064             6,983
   Selling, general and administrative.....................              6,740              5,343          20,456            14,148
   Research and development................................              1,746                608           3,847             1,953
   Equity in loss of joint venture.........................                677                805           2,879             2,156
                                                                   -----------      -------------     -----------      ------------

        Total operating expenses...........................             11,549              8,944          34,246            25,240
                                                                   -----------      -------------     -----------      ------------

        Operating loss.....................................             (7,998)            (5,683)        (22,545)          (14,426)

INTEREST INCOME............................................                195                133             492               303
INTEREST EXPENSE...........................................                (21)               (46)           (105)             (139)
DECREASE IN VALUE OF WARRANT LIABILITY.....................                703                 --             703                --
                                                                   -----------      -------------     -----------      ------------

NET LOSS                                                           $    (7,121)     $      (5,596)    $   (21,455)     $    (14,262)
                                                                   ===========      =============     ===========      ============

BASIC AND DILUTED NET LOSS PER SHARE.......................        $     (0.40)     $       (0.36)    $     (1.31)     $      (0.99)
                                                                   ===========      =============     ===========      ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING.................             17,857             15,435          16,326            14,386
                                                                   ===========      =============     ===========      ============
</TABLE>


          The accompany 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>

                                                                            NINE MONTHS ENDED SEPTEMBER 30,
                                                                        ---------------------------------------
                                                                               2005                  2004
                                                                        -----------------    ------------------
<S>                                                                       <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                  $     (21,455)      $    (14,262)
Adjustments to reconcile net loss to net cash used in
     operating activities:
       Depreciation and amortization.................................               753                760
       Stock-based compensation expenses.............................                78                 15
       Decrease in value of warrant liability........................              (703)                --
       Stock-based milestone payment.................................               500                 --
       Decrease in provision for doubtful accounts...................               (13)                --
       Amortization of premiums/discounts on investments, net........                52                 44
       Deferred rent.................................................                16                 19
       Write down of property and equipment..........................                --                100
       Loss on disposition of assets.................................                --                  3
       Changes in assets and liabilities:
         Receivables.................................................              (187)                61
         Inventories.................................................              (914)              (142)
         Other assets................................................               (98)              (100)
         Liability related to joint venture..........................              (396)                --
         Accounts payable and accrued liabilities....................            (1,497)               437
                                                                          -------------       ------------

       Net cash used in operating activities.........................           (23,864)           (13,065)
                                                                          -------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of short-term investments.................................            22,727             12,500
Purchases of short-term investments..................................                --            (23,017)
Purchases of property and equipment..................................              (295)              (463)
                                                                          -------------       ------------

       Net cash provided by (used in) investing activities...........            22,432            (10,980)
                                                                          -------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock...............................            10,610             23,999
Proceeds from issuance of warrants...................................             3,535                 --
Payment of long-term liabilities.....................................            (2,292)              (124)
                                                                          -------------       ------------

       Net cash provided by financing activities.....................            11,853             23,875
                                                                          -------------       ------------

Net increase (decrease) in cash and cash equivalents.................            10,421               (170)

Cash and cash equivalents, beginning of period.......................            13,046             13,630
                                                                          -------------       ------------

Cash and cash equivalents, end of period.............................     $      23,467       $     13,460
                                                                          =============       ============

Supplemental disclosure of non-cash information:
Capital lease of equipment...........................................     $          --       $         70
                                                                          =============       ============

Unrealized holding gain on marketable securities.....................     $          47       $         --
                                                                          =============       ============

Supplemental disclosure of cash information:
Cash paid for interest...............................................     $         386       $         99
                                                                          =============       ============
</TABLE>

          The accompany 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  that  acquires,  develops  and
commercializes  innovative  molecules  targeting  the sites and stages of cancer
progression.  The Company's  marketed  products include  QUADRAMET(R)  (samarium
Sm-153 lexidronam injection) and PROSTASCINT(R) (capromab pendetide) kit for the
preparation of Indium In-111 capromab pendetide in the United States.

     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 ferumoxtol (formerly Code 7228) for oncology applications in the
United States.  On March 3, 2005, the U.S. Food and Drug  Administration's  (the
"FDA") Oncologic Drugs Advisory Committee (ODAC) voted to not recommend approval
of the proposed  broad  indication  for  COMBIDEX.  On March 24, 2005,  Advanced
Magnetics,  Inc. informed Cytogen that Advanced Magnetics received an approvable
letter from the FDA for COMBIDEX, subject to certain conditions.

     The Company is also  developing  therapeutics  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 has had 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 credit  concentration
risks as a limited  number of its customers  provide a high  percentage of total
revenues and corresponding receivables.

     The Company has also 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 that it will have
additional


                                      -5-
<PAGE>


requirements  for debt or equity  capital,  irrespective  of  whether or when it
reaches  profitability,  for  further  product  development  costs,  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, as amended, filed with the
Securities and Exchange  Commission,  which includes financial  statements as of
and for  the  year  ended  December  31,  2004.  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.

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.

SHORT-TERM INVESTMENTS

     The Company had no short-term investments at September 30, 2005 compared to
$22.8  million at December 31, 2004,  which  consisted  of  investments  in U.S.
government  agency  notes.  The Company had the ability and intent to hold these
investments  until  maturity and therefore had  classified  the  investments  as
held-to-maturity.  Held-to-maturity investments were recorded at amortized cost,
adjusted for the accretion of discounts or premiums.  Discounts or premiums were
accreted into interest income over the life of the related  investment using the
straight-line


                                      -6-
<PAGE>


method,  which  approximated  the effective yield method.  Dividend and interest
income were recognized when earned.

INVENTORIES

     The Company's inventories are primarily 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):

                                          SEPTEMBER 30, 2005   DECEMBER 31, 2004
                                          ------------------   -----------------

   Raw materials.......................       $     291           $      427
   Work-in-process.....................           3,262                2,345
   Finished goods......................             989                  851
                                              ---------           ----------
                                              $   4,542           $    3,623
                                              =========           ==========

NET LOSS PER SHARE

     Basic net loss per common share is calculated by dividing the Company's net
loss by the  weighted-average  common  shares  outstanding  during each  period.
Diluted  net loss per  common  share is the same as basic net loss per share for
each of the three and nine  month  periods  ended  September  30,  2005 and 2004
because the inclusion of common stock equivalents, which consist of warrants and
options to purchase shares of the Company's common stock,  would be antidilutive
due to the Company's losses.

VARIABLE INTEREST ENTITIES

     The Company  follows  the  revised  Financial  Accounting  Standards  Board
("FASB") Interpretation No. 46 ("FIN 46R"),  "Consolidation of Variable Interest
Entities",  which addresses how a business enterprise should evaluate whether it
has a  controlling  financial  interest  in an entity  through  means other than
voting rights and accordingly should consolidate the entity.

     In  June  1999,  Cytogen  entered  into  a  joint  venture  with  Progenics
Pharmaceuticals,   Inc.   ("Progenics,"  and  collectively  with  Cytogen,   the
"Members") to form the PSMA Development  Company LLC (the "Joint Venture").  The
Joint   Venture   is   currently    developing    antibody-based   and   vaccine
immunotherapeutic    products   utilizing   Cytogen's    exclusively    licensed
prostate-specific  membrane  antigen ("PSMA")  technology.  The Joint Venture is
owned  equally  by the  Members  (see Note 2).  Cytogen  accounts  for the Joint
Venture  using the equity method of  accounting.  The Company is not required to
consolidate the Joint Venture under the requirements of FIN 46R.

STOCK-BASED COMPENSATION

     The  Company   follows  the  intrinsic   value  method  of  accounting  for
stock-based employee compensation in accordance with Accounting Principles Board
("APB") Opinion No. 25,  "Accounting for Stock Issued to Employees," and related
interpretations.  The Company records


                                      -7-
<PAGE>


unearned  compensation for option grants to employees for the amount, if any, by
which the market  price per share  exceeds the  exercise  price per share at the
measurement date, which is generally the grant date.

     The Company  follows the  disclosure  provisions  of Statement of Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation,"  as  amended  by  SFAS  No.  148,   "Accounting  for  Stock-Based
Compensation - Transition and  Disclosure."  Had  compensation  cost for options
been  recognized in the  consolidated  statements  of operations  using the fair
value method of accounting,  the Company's net loss and net loss per share would
have been as follows (all amounts in thousands, except per share data):

<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                             SEPTEMBER 30,                 SEPTEMBER 30,
                                                                    -----------------------------    ---------------------------
                                                                       2005             2004             2005           2004
                                                                       ----             ----             ----           ----
<S>                                                                 <C>              <C>             <C>             <C>
   Net loss, as reported...................................         $(7,121)         $(5,596)        $(21,455)       $(14,262)
      Add: Stock-based employee compensation
        expense included in reported net loss .............              65                4               78              15
      Deduct: Total stock-based employee
        compensation expense determined under
        fair value-based method for all awards.............            (525)          (1,088)          (1,653)         (1,662)
                                                                    -------          -------         --------
   Pro forma net loss......................................         $(7,581)         $(6,680)        $(23,030)       $(15,909)
                                                                    =======          =======         ========        ========
   Basic and diluted net loss per
      share, as reported...................................         $ (0.40)         $ (0.36)        $  (1.31)       $  (0.99)
                                                                    =======          =======         ========        ========
   Pro forma basic and diluted net
      loss per share.......................................         $ (0.42)         $ (0.43)        $  (1.41)       $  (1.11)
                                                                    =======          =======         ========        ========
</TABLE>


     On June 14, 2005,  the Company  awarded an  aggregate of 168,600  shares of
restricted common stock,  $0.01 par value per share, to employees of the Company
pursuant to the terms of the Company's 2004 Stock  Incentive  Plan, as long term
incentive  compensation.  Such  restricted  shares are subject to future vesting
over a period of six years,  and will be issued  upon the  satisfaction  of such
vesting provisions and other terms and conditions  related thereto.  The Company
recorded  $868,000 of unearned  compensation upon the granting of the restricted
stock,  which represented the fair market value of Cytogen's common stock on the
date of grant.  The unearned  compensation  is being amortized over the six year
vesting  period.  For the three and nine months ended  September  30, 2005,  the
Company  recorded  a  charge  of  $50,000  and  $58,000,  respectively,  in  the
accompanying   statements  of  operations  for  the   amortization  of  unearned
compensation.  The Company reversed $36,000 of unearned  compensation related to
unvested restricted stock upon the termination of certain employees in 2005.

OTHER COMPREHENSIVE INCOME OR LOSS

     Other comprehensive  income consisted of an unrealized holding gain or loss
on marketable  securities.  For the three months ended  September 30, 2005,  the
unrealized  holding loss on those  securities  was $3,000 and, as a result,  the
comprehensive loss for the three months ended September 30, 2005 was $7,124,000.
For the nine months ended September 30, 2005, the


                                      -8-
<PAGE>


unrealized  holding gain on the  securities  was $47,000  and, as a result,  the
comprehensive loss for the nine months ended September 30, 2005 was $21,408,000.
There was no other  comprehensive  income  or loss in the three and nine  months
ended September 30, 2004.

RECENT ACCOUNTING PRONOUNCEMENTS

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  will adopt SFAS No. 151 in its fiscal  year  beginning  January 1,
2006. The Company is currently evaluating the impact of adopting this statement.

Share-Based Payment

     In December 2004, the FASB issued SFAS No. 123(R),  "Share-Based  Payment,"
which  revised SFAS No. 123 and  superseded  APB Opinion No. 25. SFAS No. 123(R)
requires that companies recognize compensation expense associated with grants of
stock  options  and other  equity  instruments  to  employees  in the  financial
statements  effective as of the first  interim or annual  reporting  period that
begins  after  June 15,  2005.  In  April  2005,  the  Securities  and  Exchange
Commission  announced the adoption of a new rule allowing companies to implement
SFAS No.  123(R) at the  beginning  of their next fiscal year that begins  after
June 15, 2005. Accordingly, the Company will adopt SFAS No. 123(R) in its fiscal
year beginning January 1, 2006. Under this new standard,  compensation cost will
be measured based on the fair value of the instrument on the grant date and will
be recognized over the vesting period. This pronouncement  applies to all grants
after  the  effective  date  and  to  the  unvested  portion  of  stock  options
outstanding as of the effective date.  SFAS No. 123(R)  eliminates the Company's
ability to account for such  transactions  using the intrinsic  method currently
used by the Company.  SFAS No.  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.  Although  management  has not yet determined the
impact of the  adoption  of this  standard,  it is  expected  to have a material
effect on the Company's consolidated financial statements.

RECLASSIFICATION

     Certain amounts in prior years' consolidated financial statements have been
reclassified to conform to the current year presentation.


                                      -9-
<PAGE>


2.   EQUITY LOSS IN 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 currently developing antibody-based and vaccine
immunotherapeutic  products utilizing Cytogen's proprietary PSMA technology. The
Joint Venture is owned equally by Cytogen and Progenics.

     Cytogen  accounts  for  the  Joint  Venture  using  the  equity  method  of
accounting.  Cytogen has recognized 50% of the Joint Venture's operating results
in its consolidated statements of operations for the three and nine months ended
September 30, 2005 and 2004.  For the three and nine months ended  September 30,
2005, Cytogen recognized $677,000 and $2.9 million,  respectively,  of the Joint
Venture's  losses,  compared to $805,000 and $2.2 million of the Joint Venture's
losses in the same periods of 2004.

     On June 6, 2005,  Cytogen  and  Progenics  agreed on a work plan and annual
budget for the Joint  Venture  for 2005.  In 2005,  the  Members  each expect to
provide  up to  $5.7  million  in  funding  for  the  development  of  the  PSMA
technologies  through the Joint Venture.  Each Member has contributed capital of
$3.5 million to the Joint Venture for the nine months ended  September 30, 2005.
The report of the independent  auditors on the financial statements of the Joint
Venture  included in the Company's  Annual Report on Form 10-K, as amended,  for
the year  ended  December  31,  2004  filed  with the  Securities  and  Exchange
Commission,  contained  an  explanatory  paragraph  which  states that the Joint
Venture has  suffered  recurring  losses from  operations  and has a net capital
deficiency  that  raises  substantial  doubt  about its ability to continue as a
going concern,  and that its financial statements do not include any adjustments
that might  result from the outcome of that  uncertainty.  The Members  have not
committed  to fund the Joint  Venture  beyond  December  31,  2005 at this time,
except for obligations under existing  contractual  commitments as of that date.
The Joint Venture may incur losses in future years provided an agreement between
the Members is reached on research  program  goals and budgets for periods after
2005 and the Joint Venture's operations are funded.

     As of September 30, 2005, the carrying value of the Company's investment in
the Joint Venture was $175,000, which represents the Company's investment in the
Joint  Venture,  less its cumulative  share of losses,  and is recorded in other
assets in the  accompanying  consolidated  balance sheet.  At December 31, 2004,
Cytogen's  cumulative  share of  losses  exceeded  its  investment  in the Joint
Venture  resulting in a liability to the Joint Venture of $396,000,  as recorded
in the  Liability  Related  to Joint  Venture in the  accompanying  consolidated
balance sheet.  Selected financial statement information of the Joint Venture is
as follows (all amounts in thousands):


                                      -10-
<PAGE>


BALANCE SHEET DATA:
<TABLE>
<CAPTION>

                                                                                SEPTEMBER 30,         DECEMBER 31,
                                                                                    2005                  2004
                                                                            ------------------     -------------------
                                 ASSETS:
<S>                                                                         <C>                    <C>
Cash.....................................................................   $      1,103           $           --
Receivable from Progenics Pharmaceuticals, a related
   party.................................................................             48                       --
Prepaid expenses.........................................................             19                       12
                                                                            ------------------     ------------------
                                                                            $      1,170           $           12
                                                                            ==================     ==================

LIABILITIES AND MEMBERS' EQUITY (DEFICIT):
Accounts payable to Cytogen Corporation, a related party.................   $         65           $            4
Accounts payable to Progenics Pharmaceuticals, Inc.,
     a related party.....................................................             --                      189
Accounts payable and accrued expenses....................................            773                      629
                                                                            ------------------     ------------------
         Total liabilities...............................................            838                      822
                                                                            ------------------     ------------------
Capital contributions....................................................         30,198                   23,298
Deficit accumulated during the development stage.........................        (29,866)                 (24,108)
                                                                            ------------------     ------------------
         Total members' equity (deficit).................................            332                     (810)
                                                                            ------------------     ------------------
         Total liabilities and members' equity (deficit).................   $      1,170           $           12
                                                                            ==================     ==================
</TABLE>

INCOME STATEMENT DATA:
<TABLE>
<CAPTION>

                                               THREE                          NINE
                                           MONTHS ENDED                   MONTHS ENDED               FOR THE PERIOD
                                           SEPTEMBER 30,                  SEPTEMBER 30,            FROM JUNE 15, 1999
                                  -----------------------------   -----------------------------      (INCEPTION) TO
                                        2005           2004            2005           2004         SEPTEMBER 30, 2005
                                        ----           ----            ----           ----         ------------------
<S>                               <C>             <C>             <C>             <C>              <C>
Interest income...................$          3    $          1    $          6    $          6     $            247
Total expenses....................       1,358           1,611           5,764           4,318               30,113
                                  ------------    ------------    ------------     -----------     ----------------
Net loss..........................$     (1,355)   $     (1,610)   $     (5,758)   $     (4,312)    $        (29,866)
                                  ============    ============    ============    ============     ================
</TABLE>

     In June 2005, the Joint Venture entered into a collaboration agreement (the
"SGI Agreement") with Seattle Genetics,  Inc. ("SGI").  Under the SGI Agreement,
SGI provided an exclusive  worldwide  license to its  proprietary  antibody-drug
conjugate  technology  (the "ADC  Technology")  to the Joint Venture.  Under the
license,  the  Joint  Venture  has the right to use the ADC  Technology  to link
cell-killing  drugs to the Joint  Venture's  monoclonal  antibodies  that target
prostate-specific  membrane antigen. During the initial research term of the SGI
Agreement,  SGI will also provide  technical  information  to the Joint  Venture
related  to  implementation  of the  licensed  technology,  which  period may be
extended for an additional  period upon payment of an additional  fee. The Joint
Venture may replace PSMA with another antigen,  subject to certain restrictions,
upon payment of an antigen  replacement  fee. The ADC  Technology  is based,  in
part, on technology  licensed by SGI from third parties (the  "Licensors").  The
Joint Venture is responsible for research,  product  development,  manufacturing
and commercialization of all products under the SGI Agreement. The Joint Venture
may sub-license the ADC Technology to a third-party to manufacture the ADC's for
both research and commercial use.  The Joint Venture made a $2.0


                                      -11-
<PAGE>


million  technology  access  payment in the  second  quarter of 2005 to SGI upon
execution of the SGI Agreement  and will make  additional  maintenance  payments
during the term of the SGI Agreement.  In addition,  the Joint Venture will make
payments  aggregating  $15.0 million,  upon the  achievement of certain  defined
milestones, and will pay royalties to SGI and its Licensors, as applicable, on a
percentage of net sales, as defined. In the event that SGI provides materials or
services to the Joint Venture under the SGI  Agreement,  SGI will receive supply
and/or labor cost  payments  from the Joint Venture at  agreed-upon  rates.  The
Joint Venture's  monoclonal  antibody  project is currently in the  pre-clinical
phase of research and development. All costs incurred by the Joint Venture under
the SGI Agreement during the research and development  phase of the project will
be expensed in the period incurred. The SGI Agreement terminates at the later of
(a) the tenth  anniversary of the first commercial sale of each licensed product
in each country or (b) the latest date of expiration of patents  underlying  the
licensed  products.  The Joint  Venture may  terminate  the SGI  Agreement  upon
advance  written notice to SGI. SGI may terminate the SGI Agreement if the Joint
Venture  breaches an SGI  in-license  that is not cured within a specified  time
period after  written  notice.  In addition,  either party may terminate the SGI
Agreement,  upon breach by the other party that is not cured  within a specified
time period,  after  written  notice or in the event of  bankruptcy of the other
party.  The  ability of the Joint  Venture  to comply  with the terms of the SGI
Agreement  will  depend on  agreement  by the Members  regarding  work plans and
budgets of the Joint Venture in future years.

3.   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 $4.2 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 each of the three month periods ended
September  30, 2005 and 2004,  Cytogen  incurred  $1.1 million of  manufacturing
costs for QUADRAMET, all of which is included in Cost of Product Revenue. During
each of the nine  month  periods  ended  September  30,  2005 and 2004,  Cytogen
incurred $3.2 million of  manufacturing  costs for  QUADRAMET.  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.


                                      -12-
<PAGE>


4.   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 the sole manufacturer of PROSTASCINT
and its underlying 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 is obligated
to pay at least an aggregate of $5.1 million  through 2006.  Approximately  $4.1
million has been incurred under this agreement  through  September 30, 2005, and
is recorded as inventory in the  accompanying  consolidated  balance sheet as of
September 30, 2005. Of this amount,  approximately $12,000 and $1.8 million were
recorded during the three and nine month periods ended September 30, 2005.

5.   THE DOW CHEMICAL COMPANY

     On May 6, 2005, the Company  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  Cytogen's 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 same  murine  monoclonal  antibody  utilized  in  Cytogen's
PROSTASCINT molecular imaging agent which is called 7E11-C5.3 ("7E11"). The 7E11
antibody was excluded from the PSMA technology licensed to the Joint Venture. As
a result of the agreement, Cytogen is 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.  The Company may terminate the license  agreement with
Dow on 90 days written notice.

6.   INCREASE IN AUTHORIZED COMMON STOCK

     On June 14, 2005, the Company's  stockholders  approved an amendment to the
Company's  Certificate of Incorporation to increase the total authorized  shares
of common stock of the Company from 25,000,000 to 50,000,000 shares.

7.   SALE OF COMMON STOCK AND WARRANTS

     On July 19, 2005,  the Company  announced that it entered into a Securities
Purchase  Agreement  with  certain  institutional  investors  for  the  sale  of
3,104,380  shares of its common stock and 776,096 warrants to purchase shares of
its  common  stock  having  an  exercise  price of $6.00  per  share,  through a
registered direct offering.  In exchange for $4.50, the purchasers  received one
share of common stock and warrants to purchase .25 shares of common stock. These
warrants  are  exercisable  for ten  years,  beginning  six months  after  their
issuance. The

                                      -13-
<PAGE>


transaction provided net proceeds of approximately $13.9 million to Cytogen. The
transaction closed on July 20, 2005 and August 2, 2005.

     The shares of common  stock and the shares of common stock  underlying  the
warrants  offered by the Company in this  transaction  will be  registered  upon
issuance under the Company's existing shelf registration statement.  The Company
is not  listing the  warrants on an exchange or any trading  system and does not
expect  that a trading  market for the  warrants  will  develop.  The Company is
required to maintain the effectiveness of the registration  statement so long as
any warrants are outstanding.

     Emerging  Issues Task Force (EITF) No.  00-19,  Accounting  for  Derivative
Financial  Instruments  Indexed to, and Potentially  Settled in, a Company's Own
Stock,  addresses the accounting for equity derivative contracts indexed to, and
potentially  settled  in a  company's  own  stock,  or  equity  derivatives,  by
providing 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 the issuer to settle in unregistered  shares.
The Company does not have that ability under the Securities  Purchase  Agreement
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.  Upon  issuance of the warrants in July and August
2005,  the Company  recorded the warrant  liability at its initial fair value of
$3.5  million  using a  Black-Scholes  option-pricing  model with the  following
assumptions:

<TABLE>
<CAPTION>
                                                    July 20, 2005        August 2, 2005     September 30, 2005
                                                    -------------        --------------     ------------------

<S>                                                     <C>                   <C>                     <C>
Dividend yield..............................              0%                   0%                      0%
Expected volatility.........................           105.27%               105.03%                 105.38%
Expected life...............................          10.0 years           10.0 years               9.8 years
Risk-free interest rate.....................            4.25%                 4.41%                   4.40%
</TABLE>

     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  September  30,  2005,  the fair  value of the  warrants
decreased to $2.8 million resulting in a gain of $703,000 for the three and nine
months ended September 30, 2005. There was no warrant  liability at December 31,
2004.

8.   PROSTAGEN MILESTONE PAYMENT

     Pursuant to a Stock Exchange Agreement (the "Prostagen  Agreement") related
to the Company's 1999 acquisition of Prostagen Inc. ("Prostagen"), as amended in
May 2002,  August 2002,  and November 2004, the Company agreed to issue up to an
additional  $1.5 million worth of Cytogen common stock to the  shareholders  and
debtholders of Prostagen (the "Prostagen  Partners"),  if certain milestones are
achieved in the PSMA  development  programs.  During the second quarter of 2005,
the Company recorded a $500,000 charge to Research and Development  Expense upon
the achievement of a certain milestone related to the PSMA development  programs
as specified in the Prostagen Agreement. The Company issued 92,799 shares of its


                                      -14-
<PAGE>


common  stock in the  third  quarter  of 2005  related  to this  milestone.  The
remaining  $1.0 million of future  milestone  payments,  if any, will be paid in
Cytogen  common stock upon the  achievement  of a certain  milestone in the PSMA
development programs.

9.   PAYMENT OF ELAN CONVERTIBLE PROMISSORY NOTE

     In August 1998,  the Company  received $2.0 million from Elan  Corporation,
plc in exchange for a convertible promissory note. The note bore annual interest
of 7%,  however,  such  interest  was not payable in cash,  but was added to the
principal of the note through August 2000; thereafter interest was paid in cash.
In August  2005,  the  Company  made a payment of $2.3  million  to satisfy  its
obligations on the promissory note and unpaid accrued interest.

10.  2005 EMPLOYEE STOCK PURCHASE PLAN

     On September  23, 2005,  the Board of Directors of the Company  adopted the
2005 Employee  Stock  Purchase Plan (the "2005 ESPP").  The 2005 ESPP,  which is
effective  October 1, 2005, will replace the Company's  existing  Employee Stock
Purchase  Plan.  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 Company has reserved  500,000
shares of common  stock for future  issuance  under the 2005 ESPP.  The  Company
intends to submit the 2005 ESPP for  consideration  by the  stockholders  of the
Company at the Company's  Annual  Meeting of  Stockholders  in 2006. The Company
will not sell any shares of common  stock  pursuant to the 2005 ESPP unless such
plan is approved by the stockholders of the Company.


                                      -15-
<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 the
impact  of SFAS No.  123(R),  additional  funding  and  development  of the PSMA
technologies,  growth and market  penetration  for  QUADRAMET  and  PROSTASCINT,
revenues, if any, from our joint venture with Progenics  Pharmaceuticals,  Inc.,
increased  expenses  resulting  from our sales  force and  marketing  expansion,
including  sales and  marketing  expenses for  QUADRAMET  and  PROSTASCINT,  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,  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  the  caption
"Additional Factors That May Affect Future Results" in our Annual Report on Form
10-K for the year ended  December  31,  2004,  as  amended,  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, 2004, as amended,  and from time to time in our other filings
with the Securities and Exchange Commission.


                                      -16-
<PAGE>


OVERVIEW

     Founded   in   1980,   Cytogen   Corporation   of   Princeton,   NJ   is  a
biopharmaceutical company that acquires,  develops and commercializes innovative
molecules  targeting  the sites and stages of cancer  progression.  Our marketed
products  include   QUADRAMET   (samarium  Sm-153   lexidronam   injection)  and
PROSTASCINT  (capromab  pendetide)  kit for the  preparation  of  Indium  In-111
capromab  pendetide in the United States.  We also have exclusive  United States
marketing  rights to COMBIDEX  (ferumoxtran-10)  for all  applications,  and the
exclusive right to market and sell ferumoxytol (formerly Code 7228) for oncology
applications in the United States. We are also developing therapeutics targeting
prostate-specific  membrane antigen ("PSMA"),  a protein highly expressed on the
surface of prostate cancer cells and the  neovasculature  of solid tumors.  Full
prescribing  information  for  our  products  including  warnings,  precautions,
adverse events and other safety  information is available at  www.cytogen.com or
by calling 800-833-3533.

SIGNIFICANT EVENTS IN 2005

FDA Committee Votes Not to Recommend  Approval of Proposed Broad  Indication for
Combidex

     On March 3, 2005, the FDA's Oncologic Drugs Advisory Committee voted to not
recommend approval of the proposed broad indication for COMBIDEX.

Advanced Magnetics Receives Approvable Letter for Combidex

     On March  24,  2005,  we  announced  that  Advanced  Magnetics,  Inc.,  the
developer of COMBIDEX, which is exclusively licensed to Cytogen for marketing in
the United  States,  had informed  Cytogen that Advanced  Magnetics  received an
approvable letter from the FDA for COMBIDEX, subject to certain conditions.

Collaboration  with The Dow  Chemical  Company  to  Develop  PSMA  Antibody  for
Treatment of Cancer

     On May 6, 2005, we announced that we had entered into a collaboration  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.  PSMA is a protein highly expressed on the surface of
prostate  cancer cells and the  neovasculature  of many solid tumors.  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 same murine  monoclonal  antibody utilized in
our PROSTASCINT  (capromab  pendetide)  molecular  imaging agent. This antibody,
called 7E11-C5.3 ("7E11"), is directed against an intracellular epitope of PSMA.
Dow's MeO-DOTA bifunctional chelant will be utilized to attach the beta emitting
radionuclide  lutetium-177 as a payload to the 7E11 antibody,  enabling targeted
delivery of this cytotoxic  agent.  The 7E11 antibody was excluded from the PSMA
technology  licensed  to our PSMA  joint  venture.  We  intend  to  develop  the
resulting  innovative  molecule  for  the  treatment  of  various  cancers,  but
initially in prostate, that express the PSMA marker.


                                      -17-
<PAGE>


Cytogen and Progenics Approve 2005 Work Plan and Budget for Joint Venture

     On June 6, 2005, we and Progenics  Pharmaceuticals,  Inc.  agreed on a work
plan and annual budget for 2005 for our PSMA joint venture.

Sale of Common Stock and Warrants

     On July 19, 2005, we announced  that we entered into a securities  purchase
agreement with certain institutional  investors for the sale of 3,104,380 shares
of our common stock and 776,096  warrants to purchase shares of our common stock
having  an  exercise  price of $6.00 per  share,  through  a  registered  direct
offering.  In exchange for $4.50,  the  purchasers  received one share of common
stock and warrants to purchase .25 shares of common  stock.  These  warrants are
exercisable  for ten years,  beginning  six months  after  their  issuance.  The
transaction  provided net  proceeds of  approximately  $13.9  million to us. The
transaction  closed on July 20, 2005 and August 2, 2005.  There was no placement
agent in this transaction.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

REVENUES

<TABLE>
<CAPTION>

                                                                         INCREASE/(DECREASE)
                                                                         -------------------
                                               2005        2004            $           %
                                               ----        ----          ------     ------
                                          (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                                          <C>          <C>            <C>          <C>
QUADRAMET..................................  $ 1,991      $  1,924       $   67       3%
PROSTASCINT................................    1,525         1,308          217      17%
License and Contract.......................       35            29            6      21%
                                             -------      --------       ------
                                             $ 3,551      $  3,261       $  290       9%
                                             =======      ========       ======
</TABLE>


     Total revenues for the third quarter of 2005 were $3.6 million  compared to
$3.3 million for the same period in 2004.  Product revenues accounted for 99% of
total  revenues  for each of the third  quarters  of 2005 and 2004.  License and
contract revenues accounted for the remainder of revenues.

     QUADRAMET. QUADRAMET sales were $2.0 million for the third quarter of 2005,
compared to $1.9 million in the third quarter of 2004. QUADRAMET sales accounted
for 57% and 60% of product  revenues  for the third  quarters  of 2005 and 2004,
respectively.  We have the right to market  QUADRAMET in North America and Latin
America.  Currently,  we market QUADRAMET only in the United States.  We believe
that the future growth and market  penetration  of QUADRAMET is dependent  upon,
among other things: (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 demonstrate the potential  tumoricidal
versus palliative


                                      -18-
<PAGE>


attributes of QUADRAMET. We cannot provide any assurance 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 $1.5 million for the third quarter of
2005,  compared to $1.3 million in the third quarter of 2004.  PROSTASCINT sales
accounted for 43% and 40% of product revenues for the third quarters of 2005 and
2004,  respectively.  We believe that future  growth and market  penetration  of
PROSTASCINT is dependent upon,  among other things:  (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  demonstrate  the  potential  for
PROSTASCINT to monitor response to cytotoxic  therapies and image other cancers.
We cannot  provide any  assurance  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 $35,000
and $29,000 for the third quarters of 2005 and 2004, respectively, and primarily
reflects  contract  revenues  for  limited  research  and  development  services
provided by us to the PSMA  Development  Company  LLC,  our joint  venture  with
Progenics.  The level of future  revenues for the remainder of 2005, if any, for
contract  services  provided to the joint  venture may vary and will depend upon
the extent of research and development services required by the joint venture.

OPERATING EXPENSES

<TABLE>
<CAPTION>

                                                                                            INCREASE/(DECREASE)
                                                                                          -----------------------
                                                       2005              2004                  $             %
                                                       ----              ----             --------        -------
                                                          (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
    <S>                                             <C>               <C>                 <C>                 <C>
    Cost of product revenue......................   $  2,386          $  2,188            $    198            9%
    Selling, general and administrative..........      6,740             5,343               1,397           26%
    Research and development.....................      1,746               608               1,138          187%
    Equity in loss of joint venture..............        677               805                (128)        (16)%
                                                    --------          --------            --------
                                                    $ 11,549          $  8,944            $  2,605           29%
                                                    ========          ========            ========
</TABLE>

     Total  operating  expenses for the third quarter of 2005 were $11.5 million
compared to $8.9 million in the same quarter of 2004.

     COST OF PRODUCT REVENUE.  Cost of product revenue for the third quarters of
2005 and 2004 were $2.4 million and $2.2  million,  respectively,  and primarily
reflects  manufacturing  costs for PROSTASCINT  and QUADRAMET,  royalties on our
sales  of  products  and   amortization  of  the  up-front   payment  to  Berlex
Laboratories to reacquire the marketing rights to QUADRAMET in 2003.

     SELLING,  GENERAL AND ADMINISTRATIVE.  Selling,  general and administrative
expenses  for the  third  quarter  of 2005 were $6.7  million  compared  to $5.3
million in the same period of 2004.  The increase  from the prior year period is
primarily driven by the expanded  investment for the commercial  support of both
QUADRAMET and PROSTASCINT, including the implementation


                                      -19-
<PAGE>


of new  marketing  initiatives  and  expansion  of our  sales  force  which  was
substantially completed in January 2005.

     RESEARCH AND DEVELOPMENT.  Research and development  expenses for the third
quarter of 2005 were $1.7  million  compared  to  $608,000 in the same period of
2004.  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.  The increase is partially
offset by savings  from the  closure of our AxCell  Biosciences  facility in the
fourth quarter of 2004. During the third quarter of 2005, we incurred $25,000 in
expenses relating to AxCell's operations compared to $113,000 in the same period
of  2004.  Research  projects  through  academic,   governmental  and  corporate
collaborators  to be supported and additional  applications for the intellectual
property and technology at AxCell are being pursued.

     EQUITY  IN LOSS  OF  JOINT  VENTURE.  Our  share  of the  loss of the  PSMA
Development  Company LLC, our joint  venture  with  Progenics,  was $677,000 and
$805,000 during the third quarters of 2005 and 2004, respectively.  Such amounts
represented  50% of the joint  venture's  operating  losses.  We  equally  share
ownership  and costs of the joint  venture  with  Progenics  and account for the
joint  venture using the equity  method of  accounting.  On June 6, 2005, we and
Progenics  agreed on a work plan and  annual  budget for the joint  venture  for
2005.  In 2005,  we and  Progenics  each expect to provide up to $5.7 million in
funding for the development of the PSMA technologies  through the joint venture.
Each member of the joint venture has contributed capital of $3.5 million for the
nine months ended  September 30, 2005.  We and  Progenics  have not committed to
fund the joint  venture  beyond  December  31,  2005 at this  time,  except  for
obligations under existing contractual commitments as of that date. We may incur
significant  and  increasing  costs  in the  future  to fund  our  share  of the
development costs of the joint venture, although we cannot provide any assurance
that any further  agreements  between us and Progenics will be reached regarding
the joint venture.

     INTEREST INCOME/EXPENSE.  Interest income for the third quarter of 2005 was
$195,000  compared to $133,000 in the same period of 2004.  The increase in 2005
from the prior year period was due  primarily to a higher  average yield on cash
balances in 2005.  Interest  expense  for the third  quarter of 2005 was $21,000
compared  to  $46,000  in the same  period in 2004.  Interest  expense  includes
interest  on  outstanding  debt  which was paid off in August  2005 and  finance
charges  related to various  equipment  leases that are accounted for as capital
leases.

     DECREASE IN WARRANT  LIABILITY.  In connection  with the sale of our common
stock and warrants  that  provided us with net proceeds of  approximately  $13.9
million 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 September 30, 2005,
we  reported a gain of $703,000  related to the  decrease in fair value of these
warrants from issuance dates.

     NET LOSS. Net loss for the third quarter of 2005 was $7.1 million  compared
to $5.6 million reported in the third quarter of 2004. The basic and diluted net
loss per share for the third  quarter  of 2005 was $0.40  based on 17.9  million
weighted average common shares outstanding,


                                      -20-
<PAGE>


compared  to a basic  and  diluted  net  loss per  share of $0.36  based on 15.4
million weighted average common shares outstanding for the same period in 2004.


NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

REVENUES

<TABLE>
<CAPTION>

                                                                                               INCREASE/(DECREASE)
                                                                                               -------------------
                                                             2005            2004                $              %
                                                             ----            ----             -------         -----
                                                               (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)

<S>                                                        <C>             <C>                <C>               <C>
QUADRAMET............................................      $ 6,198         $  5,394           $ 804             15%
PROSTASCINT..........................................        5,348            5,347               1             --%
NMP22 BLADDERCHEK....................................           --                1              (1)         (100)%
License and Contract.................................          155               72              83            115%
                                                           -------         --------           -----
                                                           $11,701         $ 10,814           $ 887              8%
                                                           =======         ========           =====
</TABLE>


     Total  revenues  for the  first  nine  months of 2005  were  $11.7  million
compared  to  $10.8  million  for the same  period  in  2004.  Product  revenues
accounted  for 99% of total  revenues  for the first nine months of each of 2005
and 2004. License and contract revenues accounted for the remainder of revenues.

     QUADRAMET.  Cytogen recorded  QUADRAMET sales of $6.2 million for the first
nine months of 2005 compared to $5.4 million of QUADRAMET sales during the first
nine  months  of 2004.  QUADRAMET  sales  accounted  for 54% and 50% of  product
revenues for such periods,  respectively.  We have the right to market QUADRAMET
in North America and Latin America.  Currently,  we market QUADRAMET only in the
United  States.  We believe  that the future  growth and market  penetration  of
QUADRAMET is dependent upon, among other things: (i) distinguishing the physical
properties of QUADRAMET from earlier  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
demonstrate the potential tumoricidal versus palliative attributes of QUADRAMET.
We cannot  provide any  assurance  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 for each of the first nine  months of 2005
and 2004 were $5.3 million.  Sales of  PROSTASCINT  accounted for 46% and 50% of
product revenues for such periods,  respectively.  We believe that future growth
and market penetration of PROSTASCINT is dependent upon, among other things, (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 demonstrate
the potential for  PROSTASCINT  to monitor  response to cytotoxic  therapies and
image other  cancers.  We


                                      -21-
<PAGE>


cannot  provide  any  assurance  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.

     NMP22  BLADDERCHEK.  There  were no sales of NMP22  BLADDERCHEK  during the
first  nine  months  of 2005  compared  to  $1,000  in the same  period in 2004.
Effective December 31, 2004, we stopped selling NMP22 BLADDERCHEK.

     LICENSE AND CONTRACT REVENUES.  License and contract revenues were $155,000
and $72,000 for the first nine months of 2005 and 2004, respectively. During the
first nine months of 2005, we recognized  $152,000 of contract revenues compared
to $47,000 in the first nine months of 2004 for limited research and development
services  provided by us to the PSMA Development  Company LLC, our joint venture
with Progenics. We expect that the level of future revenues for the remainder of
2005, if any, for contract  services  provided to the joint venture may vary and
will depend upon the extent of research and development services required by the
joint venture.

OPERATING EXPENSES

<TABLE>
<CAPTION>

                                                                                             INCREASE/(DECREASE)
                                                                                           ----------------------
                                                        2005               2004               $               %
                                                        ----               ----            -------         ------
                                                             (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)

<S>                                                   <C>                <C>               <C>                <C>
    Cost of product revenues.....................     $ 7,064            $ 6,983           $    81            1%
    Selling, general and administrative..........      20,456             14,148             6,308           45%
    Research and development.....................       3,847              1,953             1,894           97%
    Equity in loss of joint venture..............       2,879              2,156               723           34%
                                                      -------            -------           -------
                                                      $34,246            $25,240           $ 9,006           36%
                                                      =======            =======           =======
</TABLE>

     Total  operating  expenses  for the first  nine  months of 2005 were  $34.2
million compared to $25.2 million in the same period of 2004.

     COST OF  PRODUCT  REVENUES.  Cost of  product  revenues  for the first nine
months of 2005 were $7.1 million  compared to $7.0 million in the same period of
2004 and primarily reflects  manufacturing  costs for PROSTASCINT and QUADRAMET,
royalties on our sales of products and  amortization of the up-front  payment to
Berlex Laboratories to reacquire the marketing rights to QUADRAMET in 2003.

     SELLING,  GENERAL AND ADMINISTRATIVE.  Selling,  general and administrative
expenses for the first nine months of 2005 were $20.5 million  compared to $14.1
million in the same period of 2004.  The increase  from the prior year period is
primarily driven by the expanded  investment for the commercial  support of both
QUADRAMET  and  PROSTASCINT,  including  the  implementation  of  new  marketing
initiatives and expansion of our sales force which was  substantially  completed
in January 2005.

     RESEARCH AND DEVELOPMENT.  Research and development  expenses for the first
nine  months of 2005 were $3.8  million  compared  to $2.0  million  in the same
period of 2004.  The


                                      -22-
<PAGE>

increase  from the  prior  year  period  is  primarily  driven  by new  clinical
development initiatives for both QUADRAMET and PROSTASCINT, a $500,000 charge in
the  second  quarter  of 2005 for a non-cash  milestone  payment  related to the
progress of PSMA  development  programs 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.  The increase is partially offset by savings from the closure of
our AxCell Biosciences  facility in the fourth quarter of 2004. During the first
nine months of 2005 and 2004, we incurred $37,000 and $631,000, respectively, in
expenses relating to AxCell's operations.

     EQUITY  IN LOSS  OF  JOINT  VENTURE.  Our  share  of the  loss of the  PSMA
Development  Company LLC, our joint  venture  with  Progenics,  was $2.9 million
during the first nine months of 2005 compared to $2.2 million in the same period
of 2004 and represented 50% of the joint venture's  operating losses. We equally
share  ownership and costs of the joint  venture with  Progenics and account for
the joint venture using the equity method of  accounting.  The increase over the
prior year period is primarily due to our share of the $2.0 million  upfront fee
incurred  by the  joint  venture  in the  second  quarter  of  2005  to  license
proprietary  antibody-drug  conjugate technology from Seattle Genetics, Inc. for
use with the joint venture's  antibodies  targeting PSMA (described  below).  On
June 6, 2005, we and  Progenics  agreed on a work plan and annual budget for the
joint venture for 2005.  In 2005, we and Progenics  each expect to provide up to
$5.7 million in funding for the development of the PSMA technologies through the
joint venture.  Each member of the joint venture has contributed capital of $3.5
million for the nine months ended  September 30, 2005. We and Progenics have not
committed  to fund the joint  venture  beyond  December  31,  2005 at this time,
except for obligations under existing  contractual  commitments as of that date.
We may incur significant and increasing costs in the future to fund our share of
the  development  costs of the joint  venture,  although  we cannot  provide any
assurance that any further  agreements  between us and Progenics will be reached
regarding the joint venture.

     The joint  venture's  work plan and budget for 2005 includes  funding to be
made by the joint  venture in accordance  with a  collaboration  agreement  with
Seattle  Genetics,  Inc.  ("SGI"),  commencing  in  June  2005.  Under  the  SGI
agreement,  SGI  provided  an  exclusive  worldwide  license to its  proprietary
antibody-drug  conjugate technology (the "ADC Technology") to the joint venture.
Under the license,  the joint venture has the right to use the ADC Technology to
link  cell-killing  drugs to the  joint  venture's  monoclonal  antibodies  that
targets prostate-specific  membrane antigen. During the initial research term of
the agreement,  SGI will also provide technical information to the joint venture
related  to  implementation  of the  licensed  technology,  which  period may be
extended for an additional  period upon payment of an additional  fee. The joint
venture may replace PSMA with another antigen,  subject to certain restrictions,
upon payment of an antigen  replacement  fee. The ADC  Technology  is based,  in
part, on  technology  licensed by SGI from third  parties.  The joint venture is
responsible   for   research,    product    development,    manufacturing    and
commercialization of all products under the SGI agreement. The joint venture may
sub-license  the ADC Technology to a third-party  to  manufacture  the ADC's for
both  research  and  commercial  use.  The  joint  venture  made a $2.0  million
technology  access  payment to SGI, upon  execution of the SGI agreement in June
2005,  following  a  capital  contribution  by the  members.  The SGI  agreement
requires the joint venture to make  maintenance  payments during the term of the
SGI  agreement,  aggregate  payments of $15.0  million upon the  achievement  of
certain  defined  milestones,  and royalties,  on a percentage of net sales,  as
defined,


                                      -23-
<PAGE>

to SGI and its third party licensors.  In the event that SGI provides  materials
or services  to the joint  venture  under the SGI  agreement,  SGI will  receive
supply  and/or labor cost  payments from the joint venture at agreed upon rates.
Unless terminated earlier,  the SGI agreement terminates at the later of (a) the
tenth  anniversary of the first commercial sale of each licensed product in each
country or (b) the latest date of expiration of patents  underlying the licensed
products.  The ability of the joint  venture to comply with the terms of the SGI
agreement  will  depend on  agreement  by the members  regarding  work plans and
budgets of the joint venture in future years.

     INTEREST INCOME/EXPENSE.  Interest income for the first nine months of 2005
was  $492,000  compared to $303,000 in the same period of 2004.  The increase in
2005  from the  prior  year  period  was due to a higher  average  yield on cash
balances in 2005.  Interest expense was $105,000 and $139,000 for the first nine
months of 2005 and 2004,  respectively.  Interest expense  includes  interest on
outstanding  debt which was paid off in August 2005 and finance  charges related
to various equipment leases that are accounted for as capital leases.

     DECREASE IN WARRANT  LIABILITY.  In connection  with the sale of our common
stock and warrants  that  provided us with net proceeds of  approximately  $13.9
million 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 nine months ended September 30, 2005,
we  reported a gain of $703,000  related to the  decrease in fair value of these
warrants from issuance dates.

     NET LOSS.  Net loss for the  first  nine  months of 2005 was $21.5  million
compared to $14.3 million  reported in the first nine months of 2004.  The basic
and diluted net loss per share for the first nine months of 2005 was $1.31 based
on 16.3 million weighted average common shares outstanding,  compared to a basic
and diluted net loss per share of $0.99 based on 14.4 million  weighted  average
common shares outstanding for the same period in 2004.


                                      -24-


<PAGE>


COMMITMENTS

     We have entered into various  contractual and commercial  commitments.  The
following table summarizes our obligations with respect to these  commitments as
of September 30, 2005.

<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..........................  $    18      $    33     $    --      $     --       $     51
Facility leases....................................      338          366          --            --            704
Research and development and
   other obligations...............................      625          215         151           569          1,560
Manufacturing contracts(1).........................    5,399        4,401          --            --          9,800
Capital contribution to joint venture(2)...........    2,200           --          --            --          2,200
Minimum royalty payments(3)........................    1,131        2,000       2,000         3,083          8,214
                                                     -------      -------     -------      --------       --------

      Total........................................  $ 9,711      $ 7,015     $ 2,151      $  3,652       $ 22,529
                                                     =======      =======     =======      ========       ========
</TABLE>


     (1)  Effective  January 1, 2004,  we entered into a new  manufacturing  and
          supply agreement with BMSMI for QUADRAMET whereby BMSMI  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 $4.2  million  annually,  subject to future
          annual price  adjustment,  through 2008, unless terminated by BMSMI or
          us  on  a  two  year  prior  written   notice.   This  agreement  will
          automatically  renew  for  five  successive  one-year  periods  unless
          terminated  by  BMSMI  or  us  on a  two-year  prior  written  notice.
          Accordingly,  we have not included  commitments  beyond  September 30,
          2007.

          Additionally,  in  September  2004,  we entered  into a  non-exclusive
          manufacturing  agreement with Laureate Pharma,  L.P. pursuant to which
          Laureate shall  manufacture  PROSTASCINT for us in its Princeton,  New
          Jersey  facility.   The  agreement  will  terminate,   unless  earlier
          terminated  pursuant to its terms,  upon Laureate's  completion of the
          production  campaign for  PROSTASCINT  and  shipment of the  resulting
          products from Laureate's  facility.  Under the terms of the agreement,
          we are obligated to pay at least an aggregate of $5.1 million  through
          2006,  of  which  approximately  $4.1  million  was  incurred  through
          September 30, 2005. We expect that the agreement  will provide us with
          a  sufficient   supply  of   PROSTASCINT  to  satisfy  our  commercial
          requirements for approximately the next four years, based upon current
          sales  levels.  In  addition,  we believe the  agreement  will provide
          sufficient supply of 7E11 required for initial clinical development of
          our therapeutic program.

     (2)  On June 6,  2005,  we and  Progenics  agreed on a work plan and annual
          budget for the joint  venture for 2005.  In 2005,  we have each funded
          $3.5 million for the nine months  ended  September  30,  2005.  We may
          incur significant and increasing costs in the future to fund our share
          of the development costs from the joint venture, although we cannot be
          sure that any  further  agreements  between us and  Progenics  will be
          reached regarding the joint venture. The joint venture's work plan and
          budget for 2005  includes  funding to be made by the joint  venture in
          accordance  with the agreement with SGI,  commencing in June 2005. The
          joint venture made a $2.0 million  technology  access  payment to SGI,
          upon  execution  of the SGI  agreement  during June 2005,  following a
          capital  contribution by the members.  The SGI agreement  requires the
          joint venture to make maintenance  payments during the term of the SGI
          agreement, aggregate payments of $15.0 million upon the achievement of
          certain  defined  milestones,  and  royalties,  on a percentage of net
          sales,  as defined,  to SGI and its  licensors.  In the event that SGI
          provides  materials  or  services to the joint  venture  under the SGI
          agreement, SGI will receive supply and/or labor cost payments from the
          joint  venture at agreed upon rates.  The ability of the joint venture
          to comply with the terms of the SGI agreement will depend on agreement
          by the members  regarding  work plans and budgets of the joint venture
          in future years.


                                      -25-
<PAGE>


     (3)  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 2005 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:
                                                          SEPTEMBER 30, 2005
                                                      --------------------------
                                                      (ALL AMOUNTS IN THOUSANDS)
     Net loss.........................................       $ (21,455)
     Adjustments to reconcile net loss to net
       cash used in operating activities..............          (2,409)
                                                             ---------
     Net cash used in operating activities............         (23,864)
     Net cash provided by investing activities........          22,432
     Net cash provided by financing activities........          11,853
                                                             ---------
     Net increase in cash and cash equivalents........       $  10,421
                                                             =========

OVERVIEW

     Our cash and cash  equivalents were $23.5 million as of September 30, 2005,
compared to $13.0 million as of December 31, 2004. As of September 30, 2005, our
total cash,  cash  equivalents  and  short-term  investments  was $23.5  million
compared to $35.8  million as of December 31, 2004.  The decrease in cash,  cash
equivalents  and short term  investments  from the December 31, 2004 balance was
primarily due to the payment of $2.3 million to Elan Corporation, plc to satisfy
our  obligations for a promissory note that matured in August 2005, the build-up
of  PROSTASCINT  inventory  and to  increased  operating  expenditures  in 2005,
including  costs to promote and support our oncology  products and to expand our
internal sales force,  new clinical  development  initiatives for both QUADRAMET
and  PROSTASCINT,  pre-clinical  development  programs  associated with the 7E11
antibody and funding for the PSMA Development  Company joint venture,  partially
offset by the net  proceeds  of $13.9  million we  received  in the  offering of
common  stock and warrants to purchase  common stock in August 2005.  During the
first nine months of 2005 and 2004,  net cash used for operating  activities was
$23.9 million and $13.1 million, respectively.

     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 earned
under  license   agreements,   and  interest   earned  on  cash  and  short-term
investments.

     On July 19, 2005, we announced  that we entered into a securities  purchase
agreement with certain institutional  investors for the sale of 3,104,380 shares
of its common stock and 776,096  warrants to purchase shares of its common stock
having  an  exercise  price of $6.00 per


                                      -26-
<PAGE>


share,  through a  registered  direct  offering.  In  exchange  for  $4.50,  the
purchasers  received  one share of common  stock and  warrants to  purchase  .25
shares of common stock. These warrants are exercisable for ten years,  beginning
six months  after their  issuance.  The  transaction  provided  net  proceeds of
approximately  $13.9 million to us. The transaction  closed on July 20, 2005 and
August 2, 2005. There was no placement agent in this transaction.  The shares of
common stock and the shares of common stock  underlying the warrants  offered by
us in this transaction will be registered upon issuance under our existing shelf
registration  statement  (referred  to below).  We are  required to maintain the
effectiveness  of  the  registration  statement  as  long  as the  warrants  are
outstanding.  As a result,  we classified these 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.  At September 30, 2005, the fair
value of the  warrants was $2.8  million.  We are not listing the warrants on an
exchange or any trading  system and do not expect that a trading  market for the
warrants will develop.  On November 5, 2004, we filed a  registration  statement
(File No.  333-120262) on Form S-3 with the  Securities and Exchange  Commission
relating to the public offering pursuant to Rule 415 under the Securities Act of
1933,  of up to an aggregate of $70 million of debt  securities,  common  stock,
preferred  stock,  warrants  and units of the  Company.  The SEC  declared  such
registration statement effective on November 14, 2004.

     Our primary  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.  There can be no assurance as to the success of
such  strategies  or that  resulting  funds  will  be  sufficient  to meet  cash
requirements until product revenues are sufficient to cover operating  expenses,
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.

OTHER LIQUIDITY EVENTS

     In September 2004, we entered into a non-exclusive  manufacturing agreement
with  Laureate  Pharma,   L.P.  pursuant  to  which  Laureate  is  manufacturing
PROSTASCINT  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 are obligated to
pay at least an aggregate  of $5.1  million  through  2006.  Approximately  $4.1
million has been incurred under this agreement  through  September 30, 2005, and
is recorded as inventory in the  accompanying  balance sheet as of September 30,
2005. Of this amount,  approximately  $1.8 million was recorded during the first
nine  months of 2005.  We  expect  that the  agreement  will  provide  us with a
sufficient  supply of  PROSTASCINT to satisfy our  commercial  requirements  for
approximately the next four years, based upon current sales levels. In addition,
we believe the  agreement  will provide  sufficient  supply of 7E11 required for
initial  clinical  development  of our  therapeutic  program.  In October  2004,
Laureate was acquired by Safeguard  Scientifics,  Inc. Laureate has continued to
operate as a full service  contract  manufacturing  organization and we


                                      -27-
<PAGE>


have not experienced any disruption in Laureate's performance of its obligations
to produce PROSTASCINT.

     Effective  January 1, 2004, we entered into a new  manufacturing and supply
agreement with BMSMI whereby BMSMI manufactures,  distributes and provides order
processing and customer  services for us relating to QUADRAMET.  Under the terms
of the  agreement,  we are  obligated  to pay at least  $4.2  million  annually,
subject to future annual price  adjustment,  through 2008,  unless terminated by
BMSMI or us on two years prior written  notice.  During the first nine months of
2005,  we incurred  $3.2  million of  manufacturing  costs for  QUADRAMET.  This
agreement will automatically  renew for five successive  one-year periods unless
terminated by BMSMI or us on a two year prior written notice.  We also pay BMSMI
a variable  amount per month for each QUADRAMET  order placed to cover the costs
of customer  service.  In addition,  we expect our QUADRAMET sales and marketing
expenses to increase in 2005.

     Beginning  in  December  2001,  we began to equally  share the costs of the
joint venture with Progenics. On June 6, 2005, we and Progenics agreed on a work
plan and annual budget for the Joint Venture for 2005. In 2005, we and Progenics
each expect to provide up to $5.7 million in funding for the  development of the
PSMA  technologies  through the Joint Venture.  Each member of the joint venture
has contributed  capital of $3.5 million for the nine months ended September 30,
2005. The joint  venture's work plan and budget for 2005 includes  funding to be
made by the joint venture in accordance with the agreement with SGI,  commencing
in June 2005. The joint venture made a $2.0 million technology access payment to
SGI, upon execution of the SGI agreement  during June 2005,  following a capital
contribution  by the members.  The SGI  agreement  requires the joint venture to
make  maintenance  payments  during  the  term of the SGI  agreement,  aggregate
payments of $15.0 million upon the  achievement of certain  defined  milestones,
and  royalties,  on a  percentage  of net  sales,  as  defined,  to SGI  and its
licensors.  In the event that SGI  provides  materials  or services to the joint
venture  under the SGI  agreement,  SGI will  receive  supply  and/or labor cost
payments from the joint  venture at agreed upon rates.  The ability of the joint
venture to comply with the terms of the SGI  agreement  will depend on agreement
by the members  regarding  work plans and budgets of the joint venture in future
years.  We and Progenics  have not  committed to fund the Joint  Venture  beyond
December  31,  2005  at  this  time,   except  for  obligations  under  existing
contractual commitments as of that date. We may incur significant and increasing
costs in the  future to fund our share of the  development  costs from the joint
venture  although we cannot  provide any assurance  that any further  agreements
between  us and  Progenics  will be reached  regarding  the joint  venture.  Any
funding  amount in  subsequent  periods  may vary  dependent  upon,  among other
things,  the  results  of the  clinical  trials  and  research  and  development
activities,    competitive   and   technological   developments,    and   market
opportunities.  If no  agreement  is reached  with  Progenics,  we also may have
commitments  for certain wind down costs under third party  agreements  with the
joint venture.

     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 2005 through 2012 and $833,000 in 2013.


                                      -28-
<PAGE>


     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  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.

     In August 1998,  we received  $2.0 million  from Elan  Corporation,  plc in
exchange for a convertible promissory note. The note bore annual interest of 7%,
however,  such interest was not payable in cash,  but was added to the principal
of the note through August 2000; thereafter interest was paid in cash. In August
2005,  we made a payment  of $2.3  million  to satisfy  its  obligations  on the
promissory note and unpaid accrued interest.

     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
mid-2006.  We cannot assure you that our business or operations  will not change
in a manner that would  consume  available  resources  more or less 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.  There can be no assurance 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


                                      -29-
<PAGE>


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.

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,  2004,  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.

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  arrangement  exists and the sales price is fixed or
determinable.  Product returns are accepted under limited  circumstances and are
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.

     In 2003, Staff Accounting  Bulletin No. 104,  "Revenue  Recognition"  ("SAB
104")  replaced  Staff  Accounting  Bulletin No. 101,  "Revenue  Recognition  In
Financial  Statements"  ("SAB  101"),  which the  Company  adopted in 2000.  The
provisions  related to  non-refundable,  up-front license fees were unchanged in
SAB 104 compared to SAB 101.  Accordingly,  we defer  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.


                                      -30-
<PAGE>


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 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

     Emerging  Issues Task Force (EITF) No.  00-19,  Accounting  for  Derivative
Financial  Instruments  Indexed to, and Potentially  Settled in, a Company's Own
Stock  addresses  accounting  for equity  derivative  contracts  indexed to, and
potentially  settled  in a  company's  own  stock,  or  equity  derivatives,  by
providing 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 the issuer to settle in unregistered  shares.
EITF 00-19 considers the ability to keep a registration  statement  effective as
beyond the Company's control and warrants that cannot be classified as permanent
equity are instead  classified as a liability in the  accompanying  consolidated
balance sheet.


                                      -31-
<PAGE>


     Equity  derivatives  not  qualifying  for permanent  equity  accounting are
recorded at their fair value using a Black-Scholes  option-pricing model 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.  The fair value of
the warrants as calculated using a Black-Scholes option-pricing model is subject
to  significant  fluctuation  based on changes  in the  Company's  stock  price,
expected  volatility,  expected life,  the risk-free  interest rate and dividend
yield.

RECENT ACCOUNTING PRONOUNCEMENTS

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 will adopt SFAS No. 151 in our fiscal year beginning  January 1, 2006. We are
currently evaluating the impact of adopting this statement.

Share-Based Payment

     In December 2004, the FASB issued SFAS No. 123(R),  "Share-Based  Payment,"
which  revised SFAS No. 123 and  superseded  APB Opinion No. 25. SFAS No. 123(R)
requires that companies recognize compensation expense associated with grants of
stock  options  and other  equity  instruments  to  employees  in the  financial
statements  effective as of the first  interim or annual  reporting  period that
begins  after  June 15,  2005.  In  April  2005,  the  Securities  and  Exchange
Commission  announced the adoption of a new rule allowing companies to implement
SFAS No.  123(R) at the  beginning  of their next fiscal year that begins  after
June 15,  2005.  Accordingly,  we will adopt SFAS No.  123(R) in our fiscal year
beginning  January 1, 2006.  Under the new standard,  compensation  cost will be
measured based on the fair value of the instrument on the grant date and will be
recognized over the vesting  period.  This  pronouncement  applies to all grants
after  the  effective  date  and  to  the  unvested  portion  of  stock  options
outstanding as of the effective date. SFAS No. 123(R)  eliminates our ability to
account for such  transactions  using the intrinsic method currently used by us.
SFAS No. 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.  Although management has not yet determined the impact of the adoption
of this standard,  it is expected to have a material effect on our  consolidated
financial statements.

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


                                      -32-
<PAGE>

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

DISCLOSURE CONTROLS AND PROCEDURES

     Our management,  with the  participation of our chief executive officer and
chief financial officer,  evaluated the effectiveness of our disclosure controls
and  procedures  as of September  30, 2005.  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 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.

     In connection with the preparation of our consolidated financial statements
for  the  quarter  ended  September  30,  2005,  we  determined  that we did not
recognize  a  warrant  liability  and a  decrease  in the  value of the  warrant
liability related to warrants issued by us in connection with our sale of common
stock in July and August 2005. We also have determined that an internal  control
deficiency existed.

     Management  has  determined  that  the  internal  control  deficiency  that
resulted  in the  aforementioned  accounting  error is a material  weakness,  as
defined by the Public Company Accounting Oversight Board's Auditing Standard No.
2. We have determined that the material weakness was that insufficient technical
accounting   expertise  existed  within  our  accounting   function  to  resolve
non-routine or complex  accounting  matters that occurred in connection with the
determination  of the proper  accounting  treatment of the financial  instrument
relating  to the  warrants  issued by the Company in July and August  2005.  The
Public Company Accounting


                                      -33-
<PAGE>


Oversight Board has defined a material weakness as "a significant deficiency, or
combination  of  significant  deficiencies,  that  results in more than a remote
likelihood  that a material  misstatement  of the  annual or  interim  financial
statements  will not be  prevented  or  detected."  Management  has reviewed the
internal control deficiency with our Audit and Finance Committee,  has discussed
it with our independent  registered  public  accounting  firm, KPMG LLP, and has
advised  our Audit and  Finance  Committee  that the  deficiency  is a  material
weakness in our internal control over financial reporting.

     Based on this evaluation,  our chief executive  officer and chief financial
officer  concluded  that, as of September 30, 2005, our disclosure  controls and
procedures were not effective because of the deficiency discussed above.

     However, we are actively seeking to remedy this deficiency. This process is
ongoing, and includes the following:

     We are actively reinforcing the technical training of certain staff members
     of our finance  organization.  We also engaged a consulting firm in October
     2005 with the  requisite  experience  and knowledge to advise the Company's
     management,  and  will  use  the  services  of  that  firm  extensively  in
     connection with complex accounting  matters.  To date, we have not expended
     any  material  costs,  nor do we estimate  that we will expend any material
     costs  associated with  implementing  our remediation plan and engaging the
     accounting  consultancy  firm  we  hired  to  assist  us in  our  technical
     accounting requirements.  The accounting consultancy firm does not have any
     relationship with our current independent auditors.

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  September  30, 2005 that has  materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.


                                      -34-
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

     On July 19, 2005, we announced  that we entered into a Securities  Purchase
Agreement with certain institutional  investors for the sale of 3,104,380 shares
of our common stock and 776,096  warrants to purchase shares of our common stock
having  an  exercise  price of $6.00 per  share,  through  a  registered  direct
offering.  In exchange for $4.50,  the  purchasers  received one share of common
stock and warrants to purchase .25 shares of common  stock.  These  warrants are
exercisable  for ten years,  beginning  six months  after  their  issuance.  The
transaction  provided net  proceeds of  approximately  $13.9  million to us. The
transaction  closed on July 20, 2005 and August 2, 2005.  Although the shares of
common  stock and the  shares of  common  stock  underlying  the  warrants  were
registered  under  our  existing  shelf  registration  statement,  the  warrants
themselves were not registered. We are required to maintain the effectiveness of
the registration  statement so long as any warrants are  outstanding. We did not
employ  an  underwriter  in  connection  with  the  issuance  of the  securities
described  above.  We believe that the issuance of the  foregoing  warrants were
exempt from registration under Section 4(2) of the Securities Act of 1933.

ITEM 5.  OTHER INFORMATION.

     On  September  26, 2005,  we announced  that Thomas S. Lytle has decided to
retire from his  position as Senior Vice  President  of Sales and  Marketing  of
Cytogen  effective  October 31,  2005.  Mr.  Lytle will become a  consultant  to
Cytogen,  focusing  on  expanding  our  relationships  with key  physicians  and
customers and  developing  new models to improve  patient access to our oncology
products.

ITEM 6.  EXHIBITS.

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

            10.1            Form of  Securities Purchase Agreement by and  among
                            the Company and  the Purchasers dated July 19, 2005.
                            Filed  as   an  exhibit  to  the  Company's  Current
                            Report on Form 8-K,  filed  with the  Commission  on
                            July 20, 2005, and incorporated herein by reference.

            10.2            Form of Common  Stock Purchase Warrant issued by the
                            Company  in favor  of each  Purchaser dated July 19,
                            2005.  Filed as an exhibit to the Company's  Current
                            Report on Form 8-K,  filed  with the  Commission  on
                            July 20, 2005, and incorporated herein by reference.

            10.3            Cytogen  Corporation  2005  Employee Stock  Purchase
                            Plan. Filed as an exhibit  to the Company's  Current
                            Report on Form 8-K, filed  with  the  Commission  on
                            September  27,  2005,  and  incorporated  herein  by
                            reference.


                                      -35-
<PAGE>


            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 Senior  Vice President  and  Chief
                            Financial  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.

            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. Filed herewith.

            32.2            Certification of  Senior  Vice  President and  Chief
                            Financial  Officer  pursuant  to  18  U.S.C. Section
                            1350,  as adopted  pursuant to  Section 906  of  the
                            Sarbanes-Oxley Act of 2002. Filed herewith.


                                      -36-
<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: November 14, 2005          By:/s/ Michael D. Becker
                                    --------------------------------------------
                                    Michael D. Becker
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)



Date: November 14, 2005          By:/s/ Christopher P. Schnittker
                                    --------------------------------------------
                                    Christopher P. Schnittker
                                    Senior Vice President and
                                       Chief Financial Officer
                                    (Principal Financial and Accounting Officer)



                                      -37-