<PAGE>
 
                                                                EXHIBIT NO. 10.2


                            NOTE PURCHASE AGREEMENT

          NOTE PURCHASE AGREEMENT dated as of July 21, 1997, between Cytogen
Corporation, a Delaware corporation (the "Company"), and Elan International
Services, Ltd., a Bermuda corporation (the "Purchaser").


                                R E C I T A L S:
                                ----------------

               The Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase from the Company a Promissory Note, dated as of
the date hereof, in the principal amount of U.S.$10 million in the form attached
hereto as Exhibit A (the "Note").
          ---------              


                               A G R E E M E N T:
                               ----------------- 

          The parties agree as follows:
 
          SECTION 1.  Closings.
                      ---------

          (a)  The closing of the transactions contemplated hereby (the
"Closing") shall occur on the date hereof (the "Closing Date"), at the offices
of Brock Fensterstock Silverstein McAuliffe & Wade LLC, 153 East 53rd Street,
New York, New York 10122, or such other place as the parties may agree.

          (b)  At the Closing, the Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company the Note, upon the
terms and subject to the conditions set forth herein, for an aggregate purchase
price of U.S.$10 million.

          (c)  At the Closing, the parties hereto shall execute and deliver to
each other, as applicable:

               (i)  the Note, which shall be executed and delivered by the
     Company to the Purchaser; and
     
               (ii)  certificates as to the incumbency of the officers executing
     this Agreement and the Note and such other matters as shall be customary
     for transactions of this type and as may be reasonably requested by each of
     the parties hereto of the other.
     
          In addition, at the Closing, the Company shall cause to be delivered
to the Purchaser an opinion of counsel (who may be internal counsel) in form
reasonably satisfactory to the Purchaser, covering customary matters.
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          SECTION 2.  Representations and Warranties of the Company.
                      ----------------------------------------------

               2.1 Organization.
                   -------------

          The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to consummate the
transactions contemplated hereby. The Company is qualified and in good standing
to do business in the State of New Jersey and each other jurisdiction in which
the nature of the business conducted or the property owned by it requires such
qualification, except where the failure to so qualify would not reasonably be
expected to have a material adverse effect on the business or condition
(financial or otherwise) of the Company (a "Material Adverse Effect").

               2.2 Authorization of Agreement.
                   ---------------------------

          The execution, delivery and performance by the Company of this
Agreement and the Note (including the issuance and sale thereof) have been
authorized by all requisite corporate actions by the Company; and this Agreement
and the Note (including the issuance and sale thereof) have been duly executed
and delivered by the Company and are the valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms.

               2.3 No Conflicts.
                   -------------

          The execution, delivery and performance by the Company of this
Agreement and the Note (including the issuance and sale thereof), and compliance
with the provisions hereof by the Company, will not (a) violate any provision of
applicable law, statute, rule or regulation applicable to the Company or any
ruling, writ, injunction, order, judgment or decree of any court, arbitrator,
administrative agency or other governmental body applicable to the Company or
any of its properties or assets or (b) conflict with or result in a breach of
any of the terms, conditions or provisions of, or constitute (with notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of, any
Encumbrance (as defined below) upon any of the properties or assets of the
Company under its Certificate of Incorporation, as amended, its Certificate of
Designations or By-laws, or any material contract to which the Company is a
party, except where such violation, conflict or breach would not, individually
or in the aggregate, have a Material Adverse Effect. As used herein,
"Encumbrance" shall mean any liens, charges, encumbrances, equities, claims,
options, proxies, pledges, security interests, or other similar rights of any
nature, except for such conflicts, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect.

                                       2
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               2.4 Approvals.
                   ----------

          Except for the filing of any notice subsequent to the Closing that may
be required under applicable federal or state law (which, if required, shall be
filed on a timely basis), no permit, authorization, consent or approval of or
by, or any notification of or filing with, any person or entity (governmental or
otherwise) is required in connection with the execution, delivery or performance
of this Agreement or the Note (including the issuance and sale thereof) by the
Company. There is no approval of the Company's stockholders required under
applicable laws, regulations or stock exchange or listing authority rules or
regulations in connection with the execution and delivery this Agreement or the
Note or the consummation of the transactions contemplated thereby, including the
issuance of the Note.

               2.5 Filings.
                   --------

          The Company has filed its annual report on Form 10-K for the year
ended December 31, 1996 and its quarterly report on Form 10-Q for the quarter
ended March 31, 1997 (collectively, including all exhibits and schedules
required to be filed in connection therewith, the "SEC Filings") with the U.S.
Securities and Exchange Commission (the "SEC") and the Nasdaq Stock Market in a
timely manner and as otherwise required by applicable laws and regulations,
including the federal securities acts. The audited financial statements of the
Company for the fiscal year ended December 31, 1996 included in the SEC Filings
(the "Audited Financial Statements"), and the Company's unaudited balance sheet
for the period ending March 31, 1997, together with the accompanying statements
of operations and cash flows including the notes thereto (the "March Financial
Statements"; collectively, with the Audited Financial Statements, the "Financial
Statements") fairly present the financial condition of the Company at the dates
thereof and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the period indicated (except
as may be otherwise indicated in such financial statements or the notes
thereto), subject, in the case of the March Financial Statements, to normal 
year-end audit adjustments (which shall not be material in the aggregate) and
the absence of footnote disclosure.

               2.6 Absence of Changes.
                   -------------------

          Except as set forth on Schedule 2.6, since March 31, 1997, there has 
                                 ------------  
been no change in the assets, liabilities, financial condition or operating
results of the Company from that reflected on the Form 10-Q filed with the SEC
in respect of such quarter, except changes in the ordinary course of business
that have not, individually or in the aggregate, had a Material Adverse Effect.

               2.7 Disclosure.
                   -----------

          This Agreement and the Note do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained herein and

                                       3
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therein not misleading.  The Company is not aware of any material contingency,
event or circumstance relating to its business or prospects, which could have a
Material Adverse Effect thereon, which should be but is not disclosed in the SEC
Filings in order for the disclosure therein relating to the Company not to be
misleading in any material respect.

               2.8 Brokers or Finders.
                   -------------------

          The Company has not retained any investment banker, broker or finder
in connection with the transactions contemplated by this Agreement and the Note.
The Company agrees to indemnify and hold the Purchaser harmless against any
liability, settlement or expense arising out of, or in connection with, any such
claim (without regard to the limitations described in Section 7 below).

          SECTION 3.  Representation and Warranties of the Purchaser.
                      -----------------------------------------------

          The Purchaser hereby represents and warrants to the Company as
follows:

               3.1 Organization.
                   -------------

          The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Bermuda and has all requisite corporate power
and authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to consummate the
transactions contemplated hereby. The Purchaser is qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted or the property owned by it requires such qualification, except where
the failure to so qualify would not reasonably be expected to have a material
adverse effect on the business or condition (financial or otherwise) of the
Purchaser.

               3.2 Authorization of Agreement.
                   ---------------------------

          The Purchaser has full legal right, power and authority to enter into
this Agreement and purchase and accept the Note, and perform its obligation
hereunder, which have been duly authorized by all requisite corporate action.
This Agreement and the funding of the Note are the valid and binding obligations
of the Purchaser, enforceable against it in accordance with their terms.

               3.3 No Conflicts.
                   -------------

          The execution, delivery and performance by the Purchaser of this
Agreement, the purchase and acceptance of the Note and compliance with
provisions hereof by the Purchaser, will not (a) violate any provisions of
applicable law, statute, rule or regulation applicable to the Purchaser or any
ruling, written, injunction, order, judgement or decree of any court,
arbitration, administrative agency of other governmental body applicable to the
Purchaser of any of its

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properties or assets or (b) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute (with notice or lapse of time
to both) a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Purchaser under the Certificate of Incorporation
or By-laws of the Purchaser or any material contract to which the Purchaser is
party, except where such violation conflict or breach would not, individually or
in the aggregate, have a material adverse effect on the Purchaser.

               3.4 Approvals.
                   ----------

          No permit, authorization, consents or approval of or by, or any
notification of or filing with, any person or entity (governmental or otherwise)
is required in connection with the execution, delivery or performance of this
Agreement or the Note (including the funding and acceptance thereof) by the
Purchaser.

               3.5 Investment Representations.
                   ---------------------------

          (a) The Purchaser is capable of evaluating the merits and risks of the
transactions described herein and has the capacity to protect its own interests.
The Purchaser has not been formed solely for the purpose of entering into the
transactions described herein and is acquiring the Note for investment for its
owns account, not as a nominee or agent, and not with the view to, or for sale
in connection with, any distribution of any part thereof.

          (b) Nothing contained in this Section 3.5 shall limit any of the
Company's representations or warranties or limit the Purchaser's recourse in
respect thereof.

               3.6 Brokers or Finder.
                   ------------------

          Except as previously disclosed to the Company, the Purchaser has not
retained any investment banker, broker or finder in connection with the purchase
of the Note.

          SECTION 4.  Covenants of the Company.
                      -------------------------

               (a) From and after the date hereof, the Company shall not
disclose to any person or entity (other than its directors, officers and agents
who need to know such information in connection with the transactions described
herein (each of whom shall be informed of this confidentiality provision and in
respect of whose breaches the Company shall be responsible)) this Agreement or
the Note or the substance of the transactions described herein, without the
prior written consent of the Purchaser, except to the extent required by
applicable laws or administrative or judicial process.

               (b) From and after the date hereof, the Company agrees to do or
cause to be done such further acts and things and deliver or cause to be
delivered to the Purchaser such

                                       5
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additional assignments, agreements, powers and instruments, as the Purchaser may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement and the Note or to better to assure and confirm unto the Purchaser its
rights, powers and remedies hereunder and thereunder.

          SECTION 5.  Parties in Interest; Etc.
                      -------------------------

          This Agreement shall not be assigned, transferred or delegated by
either party hereto (other than in the case of the Purchaser to one or more of
its affiliates) without the prior written consent of the other party. Subject to
the preceding sentence, this Agreement shall bind and inure to the benefit of
the Company, the Purchaser and their respective successors and assigns.

          SECTION 6.  Entire Agreement.
                      -----------------

          This Agreement and the Note contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.

          SECTION 7.  Indemnification.
                      ----------------

          (a) In addition to all rights and remedies available to the parties
hereunder at law or in equity, each party (in such capacity, an "Indemnifying
Party") shall indemnify the other party, and their respective affiliates and
their respective stockholders, officers, directors, employees, agents,
representatives, successors and permanent assigns (collectively, the
"Indemnified Person") and save and hold each of them harmless against and pay on
behalf of or reimburse such party as and when incurred for any loss, liability,
demand, claim, action, cause of action, cost, damage, deficiency, tax, penalty,
fine or expense, whether or not arising out of any claims by or on behalf of the
Indemnified Person or any third party, including interest, penalties, reasonable
attorneys' fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing (collectively, "Losses") that any such
Indemnified Person may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of:

               (i)  any misrepresentation or breach of warranty on the part of
     the Indemnifying Party under Section 2 or 3 of this Agreement, as
     applicable; or

               (ii) any nonfulfillment or breach of any covenant or agreement on
     the part of the Indemnifying Party under Section 4 of this Agreement.

          (b) The maximum recovery of the Purchaser under this Section 7 shall
not exceed $10 million; the maximum recovery of the Company under this Section 7
shall not exceed actual costs and expenses of the Company in negotiating,
executing and delivering this Agreement and

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out-of-pocket expenses incurred in connection with the successful assertion of
any claim hereunder.  Neither Indemnified Party shall assert any such claim
unless Losses in respect thereof, when aggregated with all previous Losses
hereunder, equal or exceed $50,000, but at such time that an Indemnified Party
is so permitted to assert a claim shall include all Losses covered by this
indemnification.

          (c) Notwithstanding the foregoing, and subject to the following
sentence, upon judicial determination which is final and no longer appealable,
that the act or omission giving rise to the indemnification set forth above
resulted primarily out of or was based primarily upon the Indemnified Person's
gross negligence, fraud or willful misconduct (unless such action was based upon
the Indemnified Persons reliance in good faith upon any of the representations,
warranties, covenants or promises made by the Indemnifying Party herein) the
Indemnifying Party shall not be responsible for any Losses sought to be
indemnified in connection therewith, and the Indemnifying Party shall be
entitled to recover from the Indemnified Persons all amounts previously paid in
full or partial satisfaction of such indemnity, together with all costs and
expenses of the Indemnifying Party reasonably incurred in effecting such
recovery, if any.

          (d) All indemnification rights hereunder shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby to the extent provided in Section 7(b) above, irrespective
of any investigation, inquiry or examination made for or on behalf of, or any
knowledge of the Indemnified Persons or the acceptance of any certificate or
opinion. All indemnification rights hereunder shall terminate 18 months after
the Closing Date, except for claims made in writing prior to such time.

          (e) If for any reason the indemnity provided for the this Section 7 is
unavailable to any Indemnified Person or is insufficient to hold each such
Indemnified Person harmless from such Losses arising with respect to the
transactions contemplated by this Agreement, then the Indemnifying Party and the
Indemnified Person shall each contribute to the amount paid or payable for such
Loss in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Person on the other, but also the relative fault of the Indemnifying Party and
be in addition to any liability that the Indemnifying Party may otherwise have.
The indemnity, contribution and expense reimbursement obligations that the
Indemnifying Party has under this Section 7 shall survive the expiration of this
Agreement. The parties hereto further agree that the indemnification and
reimbursement commitments set forth in this Agreement shall apply whether or not
the Indemnified Person is a formal part to any such lawsuit, claims or other
proceedings.

          SECTION 8.  Notices.
                      --------

          (a) All notices, demands and requests of any kind to be delivered to
any party in connection with this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or if sent by nationally-
recognized overnight courier or by registered or certified airmail, return
receipt requested and postage prepaid, or by facsimile transmission, addressed
as follows:

                                       7
<PAGE>
 
               (i) if to the Company, to:                                  
                                                                           
               Cytogen Corporation                                         
               600 College Road East                                       
               CN 5308                                                     
               Princeton, New Jersey 08540-55308                           
               Telecopy: (609) 951-9298                                    
               Attention: General Counsel                                  
               ----------                                                  
                                                                           
               (ii) if to the Purchaser, to:                               
                                                                           
               Elan International Services, Ltd.                           
               102 St. James Court                                         
               Flatts Smiths                                               
               SL04                                                        
               Bermuda                                                     
               Telecopy: (441) 292-2224                                    
               Attention: President;                                       
               ----------                                                  
                                                                           
               with a copy to:                                             
                                                                           
               Brock Fensterstock Silverstein McAuliffe & Wade LLC         
               153 East 53rd Street                                        
               New York, New York 10022                                    
               Telecopy: (212) 371-5500                                    
               Attention: David Robbins                                    
               ---------                                                    

or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance with provisions of
this Section 8.  Any such notice or communication shall be deemed to have been
received (i) in the case of personal delivery or facsimile transmission, on the
date of such delivery, (ii) in the case of nationally-recognized overnight
courier, on the next business day after the date when sent and (iii) in the case
of mailing, on the third business day following that day on which the piece of
mail containing such communication is posted.

          (b) Notice hereunder may be given on behalf of the parties by their
respective attorneys.

          SECTION 9.  Amendments.
                      -----------

          This Agreement may not be modified or amended, or any of the
provisions hereof waived, except by written agreement of the Company and the
Purchaser.

                                       8
<PAGE>
 
          SECTION 10.  Counterparts and Facsimile.
                       ---------------------------

          The Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute one agreement. This Agreement may be
signed and delivered to the other party by facsimile transmission; such
transmission shall be deemed a valid signature.

          SECTION 11.  Headings.
                       ---------

          The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Agreement.

          SECTION 12.  Governing Law.
                       --------------

          This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey (without giving effect to principles of
conflicts of laws).

          SECTION 13.  Expenses.
                       ---------

          Each party shall bear and be responsible for its own costs and
expenses incurred in connection with this Agreement and the Note and the
transactions contemplated hereby.

          SECTION 14.  Public Releases.
                       ----------------

          The parties shall reasonably agree upon the contents of a press
release or releases and other public disclosure in respect of the transaction
contemplated hereby, except as may otherwise be required by applicable law; each
party covenants not to issue such release or make such disclosure absent such
agreement.



                           [Signature page to follow]

                                       9
<PAGE>
 
          IN WITNESS WHEREOF, each of the undersigned has duly executed this
Note Purchase Agreement as of the date first written above.


                                        CYTOGEN CORPORATION                
                                                                           
                                                                           
                                        By: /s/ T. Jerome Madison  
                                           ------------------------     
                                         Name: T. Jerome Madison           
                                         Title: Chief Financial Officer      
                                                                           
                                                                           
                                        ELAN INTERNATIONAL SERVICES, LTD.  
                                                                           
                                                                           
                                        By: /s/ Kevin Insley              
                                           -------------------------------
                                         Name: Kevin Insley               
                                         Title: President and CFO