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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 MARCH 31,
               2006

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

                        COMMISSION FILE NUMBER: 000-14879

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

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


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

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

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

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

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

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

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

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Class: Common Stock, $.01 par value       Outstanding at May 8, 2006: 22,473,762

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


<PAGE>


                               CYTOGEN CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                                 MARCH 31, 2006

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

<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----

<S>                                                                                                 <C>
PART I.    FINANCIAL INFORMATION..............................................................      1

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

                Consolidated Balance Sheets as of March 31, 2006 and
                   December 31, 2005..........................................................      2
                Consolidated Statements of Operations for the Three Months
                   Ended March 31, 2006 and 2005..............................................      3

                Consolidated Statements of Cash Flows for the Three Months
                   Ended March 31, 2006 and 2005 .............................................      4

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

     Item 2.    Management's Discussion and Analysis of Financial Condition
                   and Results of Operations..................................................      20

     Item 3.    Quantitative and Qualitative Disclosures About Market Risk....................      33

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

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

     Item 1.    Legal Proceedings.............................................................      35

     Item 1A.   Risk Factors..................................................................      35

     Item 6.    Exhibits......................................................................      41

SIGNATURES....................................................................................      42
</TABLE>


     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>
                                                                              MARCH 31,                  DECEMBER 31,
                                                                                2006                         2005
                                                                           ----------------          -------------------
<S>                                                                         <C>                       <C>
ASSETS:
Current assets:
     Cash and cash equivalents.........................................     $      26,112             $     30,337
     Accounts receivable, net..........................................             1,944                    1,743
     Inventories.......................................................             2,089                    3,582
     Prepaid expenses..................................................               749                      906
     Other current assets..............................................                51                      354
                                                                            -------------             ------------

       Total current assets............................................            30,945                   36,922

     Property and equipment, less accumulated depreciation and amortization
        of $1,060 and $981 at March 31, 2006 and December 31, 2005,
        respectively...................................................               916                      886
     QUADRAMET license fee, less accumulated amortization of $1,847 and
        $1,673 at March 31, 2006 and December 31, 2005, respectively.
                                                                                    6,153                    6,327
     Other assets......................................................               822                      655
                                                                            -------------             ------------

                                                                            $      38,836             $     44,790
                                                                            =============             ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
     Current portion of long-term liabilities..........................                52                       26
     Accounts payable and accrued liabilities..........................             5,716                    5,271
                                                                            -------------             ------------

       Total current liabilities.......................................             5,768                    5,297

Warrant liability......................................................             2,500                    1,869
Other long-term liabilities............................................                98                       46
                                                                            -------------             ------------
         Total liabilities.............................................             8,366                    7,212
                                                                            -------------             ------------

Commitments and contingencies

Stockholders' equity:
     Preferred stock, $.01 par value, 5,400,000 shares authorized-Series C
       Junior Participating Preferred Stock, $.01 par value, 200,000 shares
       authorized, none issued and outstanding.........................                --                       --
     Common stock, $.01 par value, 50,000,000 shares authorized,
       22,473,762 shares issued and outstanding at March 31, 2006
       and December 31, 2005...........................................               225                      225
     Additional paid-in capital........................................           450,354                  450,502
     Unearned compensation.............................................                --                     (610)
     Accumulated other comprehensive income............................               124                       28
     Accumulated deficit...............................................          (420,233)                (412,567)
                                                                            -------------             ------------

       Total stockholders' equity......................................            30,470                   37,578
                                                                            -------------             ------------

                                                                            $      38,836             $     44,790
                                                                            =============             ============
</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 ENDED MARCH 31,
                                                                           ---------------------------------------------
                                                                                2006                         2005
                                                                           ----------------            -----------------
<S>                                                                         <C>                         <C>
REVENUES:
     Product revenue:
       PROSTASCINT...................................................       $       2,184               $     1,899
       QUADRAMET.....................................................               2,256                     2,054
                                                                            -------------               -----------
           Total product revenue.....................................               4,440                     3,953

     License and contract revenue....................................                   2                        41
                                                                            -------------               -----------

           Total revenues............................................               4,442                     3,994
                                                                            -------------               -----------

OPERATING EXPENSES:
     Cost of product revenue.........................................               2,416                     2,427
     Selling, general and administrative.............................               6,237                     7,024
     Research and development........................................               2,982                       739
     Equity in loss of joint venture.................................                 133                       498
                                                                            -------------               -----------

           Total operating expenses..................................              11,768                    10,688
                                                                            -------------               -----------

           Operating loss............................................              (7,326)                   (6,694)

INTEREST INCOME......................................................                 297                       143
INTEREST EXPENSE.....................................................                  (6)                      (42)
INCREASE IN VALUE OF WARRANT LIABILITY...............................                (631)                       --
                                                                            -------------               -----------

NET LOSS                                                                    $      (7,666)              $    (6,593)
                                                                            =============               ===========

BASIC AND DILUTED NET LOSS PER SHARE.................................       $       (0.34)              $     (0.43)
                                                                            =============               ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING...........................              22,474                    15,513
                                                                            =============               ===========
</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>
                                                                               THREE MONTHS ENDED MARCH 31,
                                                                        ------------------------------------------
                                                                               2006                     2005
                                                                        -----------------       ------------------
<S>                                                                      <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................................................    $       (7,666)         $      (6,593)
Adjustments to reconcile net loss to net cash used in
     operating activities:
       Depreciation and amortization.................................               285                    243
       Increase in value of warrant liability........................               631                     --
       Share-based compensation expense..............................               462                     --
       Increase (decrease) in provision for doubtful accounts........                 9                    (62)
       Amortization of premiums on investments.......................                --                     43
       Deferred rent.................................................                (5)                    26
       Changes in assets and liabilities:
         Receivables.................................................              (210)                  (333)
         Inventories.................................................             1,493                   (629)
         Other assets................................................               389                    343
         Liability related to joint venture..........................                --                     (2)
         Accounts payable and accrued liabilities....................               450                 (2,511)
                                                                         --------------          -------------

       Net cash used in operating activities.........................            (4,162)                (9,475)
                                                                         --------------          -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment..................................               (57)                  (136)
Maturities of short-term investments.................................                --                 13,035
                                                                         --------------          -------------

       Net cash provided by (used in) investing activities...........               (57)                12,899
                                                                         --------------          -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock...............................                --                    188
Payment of long-term liabilities.....................................                (6)                    (5)
                                                                         --------------          -------------

       Net cash provided by (used in) financing activities...........                (6)                   183
                                                                         --------------          -------------

Net increase (decrease) in cash and cash equivalents.................            (4,225)                 3,607

Cash and cash equivalents, beginning of period.......................            30,337                 13,046
                                                                         --------------          -------------

Cash and cash equivalents, end of period.............................    $       26,112          $      16,653
                                                                         ==============          =============

Supplemental disclosure of non-cash information:
Capital lease of equipment...........................................    $           84          $          --
                                                                         ==============          =============
Unrealized holding gain on marketable securities.....................    $           96          $          69
                                                                         ==============          =============

Supplemental disclosure of cash information:
Cash paid for interest...............................................    $            5          $           2
                                                                         ==============          =============
</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 dedicated to improving the lives of
patients with cancer by acquiring,  developing  and  commercializing  innovative
molecules  targeting the sites and stages of cancer  progression.  The Company's
marketed products include QUADRAMET  (samarium Sm-153 lexidronam  injection) and
PROSTASCINT  (capromab  pendetide)  kit for the  preparation  of  Indium  In-111
capromab pendetide in the United States. The Company has 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.  On March 3, 2005, the FDA's Oncologic Drugs
Advisory  Committee (ODAC) voted to not recommend approval of the proposed broad
indication for COMBIDEX being sought by Advanced  Magnetics.  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.

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

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


                                      -5-
<PAGE>


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

BASIS OF CONSOLIDATION

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

BASIS OF PRESENTATION

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

Cash and Cash Equivalents

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


                                      -6-
<PAGE>


Inventories

     The Company's inventories 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):

                                       MARCH 31, 2006        DECEMBER 31, 2005
                                     ------------------    ---------------------

   Raw materials.....................    $     291              $      291
   Work-in-process...................        1,459                   2,625
   Finished goods....................          339                     666
                                         ---------              ----------
                                         $   2,089              $    3,582
                                         =========              ==========

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  month  periods  ended  March 31,  2006 and 2005  because  the
inclusion  of common  stock  equivalents,  which  consist of  nonvested  shares,
warrants and options to purchase shares of the Company's common stock,  would be
antidilutive due to the Company's losses.

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  developing   antibody-based  and  vaccine  immunotherapeutic
products utilizing Cytogen's  exclusively  licensed  prostate-specific  membrane
antigen ("PSMA") technology.  The Joint Venture was owned equally by the Members
until  April 20,  2006,  when the  Company  sold its 50%  interest  in the Joint
Venture to Progenics (see Note 3). Cytogen accounted for the Joint Venture using
the equity method of accounting. The Company was not required to consolidate the
Joint Venture under the requirements of FIN 46R.

OTHER COMPREHENSIVE INCOME OR LOSS

     Other  comprehensive  income  consisted  of  unrealized  holding  gains  on
marketable securities. For the three months ended March 31, 2006, the unrealized
holding  gain  for  these   securities  was  $96,000  and,  as  a  result,   the
comprehensive loss for the three months ended March 31, 2006 was $7,570,000. For
the three  months  ended March 31, 2005,  the  unrealized  holding gain on these
securities was $69,000 and, as a result,  the  comprehensive  loss for the three
months ended March 31, 2005 was $6,524,000.


                                      -7-
<PAGE>


RECENT ACCOUNTING PRONOUNCEMENTS

Share-Based Payment

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

     In April  2005,  the  Securities  and  Exchange  Commission  announced  the
adoption  of a new rule  allowing  companies  to  implement  SFAS  123(R) at the
beginning   of  their  next  fiscal  year  that  begins  after  June  15,  2005.
Accordingly,  the  Company  adopted  SFAS  123(R) in its fiscal  year  beginning
January 1, 2006 using the modified  prospective  transition  method.  Under this
method,  compensation expense is reflected in the financial statements beginning
January 1, 2006 with no restatement to the prior periods. As such,  compensation
expense,  which is  measured  based on the fair value of the  instrument  on the
grant date, is recognized for awards that are granted, modified,  repurchased or
cancelled  on or after  January  1,  2006 as well as for the  portion  of awards
previously  granted that have not vested as of January 1, 2006.  The Company has
implemented the straight-line expense attribution method for all options granted
after  January 1, 2006.  Prior to adopting  SFAS  123(R),  the Company  used the
accelerated  attribution  method in accordance with FASB  Interpretation No. 28,
"Accounting  for Stock  Appreciation  Rights and Other  Variable Stock Option or
Award  Plans" ("FIN 28").  The adoption of SFAS 123(R) has a material  impact on
the Company's results of operations (see Note 2).

Abnormal Inventory Costs

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

2.   SHARE-BASED COMPENSATION

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


                                      -8-
<PAGE>


Cytogen Stock Options

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

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

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


                                      -9-
<PAGE>


     A summary of option activities  related to Cytogen stock options other than
performance options, for the three months ended March 31, 2006 is as follows:

<TABLE>
<CAPTION>
                                              NUMBER    WEIGHTED-    WEIGHTED-
                                               OF        AVERAGE      AVERAGE
                                             CYTOGEN    EXERCISE     REMAINING      AGGREGATE
                                              STOCK     PRICE PER   CONTRACTUAL     INTRINSIC
    Cytogen Options Other Than               OPTIONS      SHARE        LIFE           VALUE
    Performance Options                  ------------- ----------- ------------  -------------
    -----------------------------------
    <S>                                      <C>        <C>             <C>        <C>
    Balance at December 31, 2005.......      980,796    $  10.04
       Granted.........................       19,200        2.98
       Exercised.......................           --          --
       Forfeited.......................      (29,460)       5.56
       Expired.........................      (21,996)      12.05
                                         ------------- ----------- ------------  -------------

    Balance at March 31, 2006..........      948,540    $   9.99        8.00       $  25,000

    Exercisable and expected to
       vest at March 31, 2006..........      896,343    $  10.19        7.98       $  22,000

    Exercisable at March 31, 2006......      419,220    $  14.33        6.77       $   7,000
</TABLE>



         A summary of option activities related to performance options for the
three months ended March 31, 2006 is as follows:

<TABLE>
<CAPTION>
                                            NUMBER     WEIGHTED-     WEIGHTED-
                                               OF       AVERAGE       AVERAGE
                                            CYTOGEN    EXERCISE      REMAINING     AGGREGATE
                                             STOCK     PRICE PER    CONTRACTUAL    INTRINSIC
                                            OPTIONS      SHARE         LIFE          VALUE
    Performance Options                  ------------- ----------- ------------  -------------
    -----------------------------------
    <S>                                     <C>        <C>              <C>        <C>
    Balance at December 31, 2005.......     150,000    $    3.54
       Granted.........................          --           --
       Exercised.......................          --           --
       Forfeited and Expired...........          --           --
                                         ------------- ----------- ------------  -------------
    Balance at March 31, 2006..........      150,000    $   3.54        6.72      $   12,000

    Exercisable and expected to
       vest at March 31, 2006..........           --          --          --              --

    Exercisable at March 31, 2006......           --          --          --              --
</TABLE>


These  performance  options are not deemed  probable of becoming  exercisable at
March 31, 2006.

Nonvested Shares

     Under the 2004 Plan, the Company may issue  nonvested  shares to employees,
officers,  consultants and advisors. The maximum number of shares authorized for
grant under the 2004


                                      -10-
<PAGE>


Incentive  Plan is 200,000.  Generally,  the nonvested  shares will vest in four
equal  annual  installments  beginning on the third  anniversary  of the date of
grant.

     A summary of the Cytogen's  nonvested share activities for the three months
ended March 31, 2006 is as follows:

<TABLE>
<CAPTION>
                                                                    WEIGHTED-
                                             NUMBER     WEIGHTED-   AVERAGE
                                               OF       AVERAGE    REMAINING      AGGREGATE
                                            NONVESTED  GRANT DATE    VESTING      INTRINSIC
                                             SHARES    FAIR VALUE     TERM          VALUE
    Nonvested Shares                     ------------- ---------- -------------  ------------
    -----------------------------------
    <S>                                      <C>       <C>            <C>          <C>
    Balance at December 31, 2005.......      136,200   $   5.15
       Granted.........................        2,000       2.86
       Vested..........................           --         --
       Forfeited.......................       (7,800)      5.15
                                         ------------- ---------- -------------  ------------
    Balance at March 31, 2006..........      130,400   $   5.11       3.72        $ 472,000

    Vested and expected to vest at
       March 31, 2006..................      102,322   $   5.12       2.92        $ 370,000

    Vested at March 31, 2006...........           --         --         --               --
</TABLE>


Employee Stock Purchase Plan

     In September  2005, the Board of Directors of the Company  adopted the 2005
Employee Stock Purchase Plan (the "2005 ESPP").  The 2005 ESPP, which is subject
to stockholder approval, will be effective October 1, 2005, and will replace the
Company's  existing  employee stock purchase plan which had no remaining  shares
available for future issuance. Under the 2005 ESPP, eligible employees may elect
to purchase  shares of Cytogen  common  stock at 85% of the lower of fair market
value as of the first or last trading day of each  participation  period.  Under
the 2005 ESPP, officers of the Company who purchase shares may not transfer such
shares for a period of 12 months after the purchase date.  The initial  offering
period will be a  nine-month  period  beginning on October 1, 2005 and ending on
June 30, 2006. Subsequent purchase periods will be three-month periods beginning
on the first day in July,  October,  January and April. The Company has reserved
500,000  shares of common  stock for future  issuance  under the 2005 ESPP.  The
Company intends to submit the 2005 ESPP for consideration by the stockholders of
the Company at the Company's  Annual Meeting of  Stockholders  on June 13, 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.  The 2005 ESPP
plan will be compensatory under SFAS 123(R).

Warrants and Options Issued to Non-Employees

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


                                      -11-
<PAGE>


     A summary of the Cytogen warrants and options issued to  non-employees  for
the three months ended March 31, 2006 is as follows:

<TABLE>
<CAPTION>
                                                  NUMBER
                                                    OF         WEIGHTED-     WEIGHTED-
                                                 CYTOGEN        AVERAGE       AVERAGE
                                                 WARRANTS      EXERCISE      REMAINING       AGGREGATE
                                                   AND         PRICE PER     CONTRACTUAL     INTRINSIC
    Warrants and Options to Non-Employees        OPTIONS        SHARE          LIFE            VALUE
    ----------------------------------------  -------------  -------------  ------------   ------------

<S>                                               <C>         <C>                <C>            <C>
    Balance at December 31, 2005............      359,978     $   6.96
       Granted..............................           --           --
       Exercised............................           --           --
       Forfeited and Expired................           --           --
                                               ------------  -------------  ------------   ------------
    Balance at March 31, 2006...............      359,978     $   6.96           3.13           --

    Exercisable and expected to
       vest at March 31, 2006...............      359,978     $   6.96           3.13           --

    Exercisable at March 31, 2006...........      173,500     $   9.87           1.44           --
</TABLE>


AxCell Stock Options

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

         A summary of AxCell stock option activities for the three months ended
March 31, 2006 is as follows:

                                                                       WEIGHTED
                                              NUMBER      WEIGHTED-    AVERAGE
                                            OF AXCELL      AVERAGE    REMAINING
                                              STOCK       EXERCISE   CONTRACTUAL
    AxCell Stock Options                     OPTIONS        PRICE       TERM
    ------------------------------------- -----------  ------------ -----------

    Balance at December 31, 2005.........     69,405    $    4.34         6.10
       Granted...........................         --           --
       Exercised.........................         --           --
       Forfeited and Expired.............         --           --
                                          -----------   ------------ -----------

    Balance at March 31, 2006............     69,405    $    4.34         4.42

    Exercisable and expected to
       vest at March 31, 2006............     69,405    $    4.34         4.42

    Exercisable at March 31, 2006........     69,405    $    4.34         4.42


                                      -12-
<PAGE>


     Effective  January 1, 2006,  the  Company  adopted  SFAS No.  123(R)  which
requires  companies  to  measure  and  recognize  compensation  expense  for all
share-based  payments at fair value.  Prior to the adoption of SFAS 123(R),  the
Company accounted for its stock-based  employee  compensation  expense under the
recognition and measurement  principles of APB 25, and related  interpretations.
Under APB 25,  compensation costs related to stock options granted with exercise
prices equal to or greater than the fair value of the  underlying  shares at the
date of  grant  under  those  plans  were  not  recognized  in the  consolidated
statements of  operations.  Compensation  costs related to nonvested  shares and
stock options  granted with exercise  prices below fair value of the  underlying
shares at the date of grant were  recognized in the  consolidated  statements of
operations over the requisite  service period,  generally the vesting periods of
the awards. Compensation costs associated with those awards granted prior to the
adoption of SFAS 123(R) were recognized using the accelerated attribution method
in accordance  with FIN 28 and forfeitures  recorded as incurred.  The following
table  illustrates  the effect on net loss and net loss per share as if the fair
value  method of SFAS 123 had been  applied for the three months ended March 31,
2005 (all amounts in thousands, except per share data):


  Net loss, as reported...........................................  $    (6,593)
  Add:  Share-based employee compensation expense as
    reported in net loss..........................................           --
  Deduct:  Total stock-based employee compensation expense
    determined under fair-value-based method for all awards.......         (563)
                                                                    ------------
  Pro forma net loss..............................................  $    (7,156)
                                                                    ============

  Basic and diluted net loss per share, as reported...............  $     (0.43)
                                                                    ============
  Pro forma basic and diluted net loss per share..................  $     (0.46)
                                                                    ============

     The  Company  adopted  SFAS  No.  123(R)  using  the  modified  prospective
transition method, which requires that share-based compensation cost be based on
the grant-date  fair value  estimated in accordance  with the provisions of SFAS
123(R) and is recognized for all awards  granted,  modified or settled after the
effective  date as well as awards  granted to employees  prior to the  effective
date that remain  unvested as of the effective  date. For the three months ended
March 31,  2006,  the  Company  recorded  $462,000 of  stock-based  compensation
expense,  of which $403,000 was included in selling,  general and administrative
expenses  and $59,000 in  research  and  development  expenses.  No  stock-based
compensation cost was recorded for the three months ended March 31, 2005. During
the  three  months  ended  March 31,  2006,  there  was no  modification  to the
share-based awards. No compensation cost was capitalized into assets as of March
31, 2006.

     The adoption of SFAS 123(R)  resulted in a higher loss of $429,000 or $0.02
per share to the  Company's  net loss and net loss per basic and diluted  share,
respectively, for the three months ended March 31, 2006, than if the Company had
continued to account for the share-based compensation under APB 25. At March 31,
2006, unrecognized  compensation expense, which includes the impact of estimated
forfeitures,  related to unvested awards granted under the Company's share-based
compensation  plans is  approximately  $1.6 million and remains to be recognized
over a weighted average period of 1.2 years. The Company recognizes  share-based
compensation  on a  straight-line  basis over the requisite  service  period for
grants on or after January 1, 2006. Unrecognized compensation expense related to
grants  made  prior  to  adoption


                                      -13-
<PAGE>


of SFAS 123(R) are recognized using the accelerated  amortization  method. Prior
periods were not restated to reflect the impact of adopting the new standard. No
cumulative  effect  adjustment was recorded for the accounting change related to
recording actual forfeitures as incurred under APB 25 to estimating  forfeitures
in accordance with SFAS 123(R) as the amount was de minimus.

     The Company's  share-based  compensation  costs are generally  based on the
fair value of the option awards calculated using a Black-Scholes  option pricing
model on the date of grant.  The  compensation  costs for nonvested share awards
are based on the fair value of Cytogen  common  stock on the date of grant.  The
weighted-average  grant date fair value per share of the options  granted  under
the Cytogen  stock option plans during the three months ended March 31, 2006 and
2005 is estimated  at $2.40 and $7.25 per share,  respectively  using the Black-
Scholes option pricing model with the following weighted average assumptions for
the three months ended:

                                                        MARCH            MARCH
                                                       31, 2006         31, 2005
                                                       --------         --------

     Expected life (years).........................      5.95            4.10
     Expected volatility...........................       99%             91%
     Dividend yield................................        0%              0%
     Risk-free interest rate.......................     4.63%           3.60%

     The Company  calculates  the expected life using the  simplified  method as
described  in the SEC's Staff  Accounting  Bulletin No. 107 (SAB 107) for "plain
vanilla" options meeting certain criteria. The simplified method is based on the
vesting period and the contractual  term for each grant or each  vesting-tranche
of awards with graded  vesting.  The mid-point  between the vesting date and the
expiration  date is used as the  expected  term under this  method.  The Company
calculates   expected   volatility  for  stock-based   awards  using  historical
volatility, measured over a period equal to the expected term of the award which
it believes is a reasonable estimate of future volatility.

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

     During the three months ended March 31, 2006 and 2005,  total fair value on
date of vesting of stock  options  that became  vested was $41,000 and  $16,000,
respectively.  There was no vesting of nonvested  shares during the three months
ended March 31,  2006.  There were no option  exercises  during the three months
ended March 31, 2006 and 2005.


                                      -14-
<PAGE>


3.   JOINT VENTURE - THE PSMA DEVELOPMENT COMPANY LLC

     In June 1999,  Cytogen  entered into a joint venture with Progenics to form
the PSMA  Development  Company LLC (the "Joint  Venture"),  a development  stage
enterprise.   The  Joint  Venture  is  developing   antibody-based  and  vaccine
immunotherapeutic  products utilizing Cytogen's proprietary PSMA technology. The
Joint Venture was owned  equally by Cytogen and  Progenics  until April 20, 2006
(see below).  Cytogen accounted for the Joint Venture using the equity method of
accounting.  Cytogen had recognized 50% of the Joint Venture's operating results
in its  consolidated  statements of operations  for the three months ended March
31, 2006 and 2005.

     On April 20, 2006, the Company entered into a Membership  Interest Purchase
Agreement  with  Progenics  providing for the sale to Progenics of the Company's
50% ownership  interest in the Joint Venture.  In addition,  the Company entered
into an Amended and Restated  PSMA/PSMP License Agreement with Progenics and the
Joint Venture  pursuant to which the Company  licensed the Joint Venture certain
rights in PSMA technology.  Under the terms of such agreements, the Company sold
its 50%  interest  in the Joint  Venture  for an upfront  cash  payment of $13.2
million,  potential future milestone payments totaling up to $52 million payable
upon regulatory  approval and  commercialization  of the Joint Venture products,
and royalties on future product sales of the Joint Venture, if any.

     For the three  months  ended  March 31,  2006 and  2005,  Cytogen  recorded
$133,000 and $498,000,  respectively,  of the Joint Venture's net losses.  As of
March 31, 2006 and  December  31,  2005,  the  carrying  value of the  Company's
investment in the Joint Venture was $246,000 and $379,000,  respectively,  which
represents Cytogen's investment in the Joint Venture,  less its cumulative share
of losses, which net investment is recorded in other assets.  Selected financial
statement  information  of the Joint  Venture  is as  follows  (all  amounts  in
thousands):

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
                                                                                   MARCH 31,           DECEMBER 31,
                                                                                     2006                  2005
                                                                               ----------------     ------------------
                                   ASSETS:

<S>                                                                             <C>                  <C>
Cash......................................................................      $        661         $        873
Prepaid expenses..........................................................                --                    9
Accounts receivable from Progenics Pharmaceuticals, Inc.,
    a related party.......................................................               268                  194
                                                                               ----------------     ------------------
                                                                                $        929         $      1,076
                                                                               ================     ==================

                      LIABILITIES AND MEMBERS' EQUITY:

Accounts payable to Cytogen Corporation, a related party.....................   $         --         $         3
Accounts payable and accrued expenses........................................            454                 332
                                                                               ----------------     ------------------
         Total liabilities...................................................            454                 335
                                                                               ----------------     ------------------
Capital contributions........................................................         31,198              31,198
Deficit accumulated during the development stage.............................        (30,723)            (30,457)
                                                                               ----------------     ------------------
         Total members' equity...............................................            475                 741
                                                                               ----------------     ------------------
         Total liabilities and members' equity...............................   $        929         $     1,076
                                                                               ================     ==================
</TABLE>


                                      -15-
<PAGE>


INCOME STATEMENT DATA:


                                          THREE
                                       MONTHS ENDED             FOR THE PERIOD
                                         MARCH  31,           FROM JUNE 15, 1999
                               ----------------------------    (INCEPTION) TO
                                   2006             2005       MARCH 31, 2006
                               -----------     ------------   ----------------

Interest income..............    $     6         $      1       $       256
Total expenses...............        272              997            30,979
                                 -------         --------       -----------

Net loss.....................    $  (266)        $   (996)      $   (30,723)
                                 ========        =========      ============

     During  the first  quarter  of 2005,  the  Company  recognized  $41,000  of
contract revenues for limited research and development  services provided by the
Company to the Joint Venture.  The Company did not provide any research services
to the Joint Venture in 2006.

4.   BRISTOL-MYERS SQUIBB MEDICAL IMAGING, INC.

     Effective January 1, 2004, the Company entered into a new manufacturing and
supply  agreement with  Bristol-Myers  Squibb Medical Imaging,  Inc.  ("BMSMI"),
whereby BMSMI will  manufacture,  distribute  and provide order  processing  and
customer  service for  Cytogen  relating  to  QUADRAMET.  Under the terms of the
agreement,  Cytogen is obligated to pay at least $4.7 million annually,  subject
to future annual price  adjustment,  through 2008, unless terminated by BMSMI or
Cytogen on two years prior written  notice.  This agreement  will  automatically
renew for five successive one-year periods unless terminated by BMSMI or Cytogen
on two years prior written  notice.  During each of the three months ended March
31, 2006 and 2005,  Cytogen  incurred  $1.1 million of  manufacturing  costs for
QUADRAMET, all of which is included in cost of product revenue. The Company also
pays BMSMI a variable  amount per month for each QUADRAMET order placed to cover
the  costs of  customer  service  which is  included  in  selling,  general  and
administrative expenses.

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

5.   LAUREATE PHARMA, L.P.

     In September 2004, the Company  entered into a non-exclusive  manufacturing
agreement  with  Laureate  Pharma,   L.P.   pursuant  to  which  Laureate  shall
manufacture  PROSTASCINT and its primary raw materials for Cytogen in Laureate's
Princeton, New Jersey facility. Laureate is the sole manufacturer of PROSTASCINT
and its antibodies.  The agreement will  terminate,  unless  terminated  earlier
pursuant to its terms,  upon Laureate's  completion of the specified  production
campaign for PROSTASCINT and shipment of the resulting  products from Laureate's
facility.  Under the terms of the agreement, the Company anticipates it will pay
at least an aggregate  of $5.1 million  through the end of the term of contract.
Approximately $4.1 million


                                      -16-
<PAGE>


has been incurred under this agreement  through March 31, 2006, and was recorded
as inventory when purchased.  No amount was recorded during the first quarter of
2006.

6.   WARRANT LIABILITY

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

     Under EITF 00-19,  to qualify as permanent  equity,  the equity  derivative
must permit the issuer to settle in  unregistered  shares.  The Company does not
have that  ability  under the  securities  purchase  agreement  for the warrants
issued in July and August 2005 and, as EITF 00-19  considers the ability to keep
a registration statement effective as beyond the Company's control, the warrants
cannot be  classified  as  permanent  equity  and are  instead  classified  as a
liability in the accompanying  consolidated balance sheet. At March 31, 2006 and
December 31, 2005, the Company recorded the warrant  liability at its fair value
of  $2.5  million  and  $1.9  million,   respectively,   using  a  Black-Scholes
option-pricing model with the following assumptions:

                                                   MARCH 31,        DECEMBER 31,
                                                     2006               2005
                                                  -----------      -------------

     Dividend yield..............................     0%                 0%
     Expected volatility.........................    106%              106%
     Expected life...............................  9.3 years         9.6 years
     Risk-free interest rate.....................    4.40%             4.40%
     Company Common Stock Price..................   $3.62              $2.74

     Equity  derivatives  not  qualifying  for permanent  equity  accounting are
recorded  at fair  value and are  remeasured  at each  reporting  date until the
warrants  are  exercised  or expired.  Changes in the fair value of the warrants
will be reported in the  consolidated  statements of operations as non-operating
income or expense.  At March 31, 2006, the fair value of the warrants  increased
to $2.5  million,  resulting  in a charge of $631,000 for the three months ended
March 31, 2006.

7.   SAVIENT PHARMACEUTICALS, INC.

     In February 2006, the Company and Savient Pharmaceuticals, Inc. ("Savient")
executed a binding letter of intent to negotiate a definitive agreement granting
Cytogen  exclusive  marketing  rights for  SOLTAMOX  (tamoxifen  citrate) in the
United States. SOLTAMOX, a cytostatic estrogen receptor antagonist, is the first
oral  liquid  hormonal  therapy  approved in the U.S.  It is  indicated  for the
treatment of breast cancer in adjuvant and metastatic settings and to reduce the
risk of breast cancer in women with ductal carcinoma in situ (DCIS) or with high
risk of breast cancer.

     In  April  2006,  the  Company  and  Savient  entered  into a  distribution
agreement  granting the Company  exclusive  marketing  rights for  SOLTAMOX.  In
addition,   the  Company   entered  into  a  supply   agreement   with  Rosemont
Pharmaceuticals Ltd. ("Rosemont"), a wholly owned subsidiary of Savient, for the
manufacture and supply of SOLTAMOX. See Note 9.


                                      -17-
<PAGE>


8.   LITIGATION

     In December 2005, Trapeziod Healthcare Communications LLC filed a complaint
against the Company in the Superior  Court of New Jersey,  Law Division,  Mercer
County,  seeking  approximately  $426,000 in damages  arising from the Company's
alleged failure to pay Trapezoid for marketing  services  allegedly  provided to
the Company.  The Company  cannot  predict the outcome of such  litigation  with
certainty.  The Company  plans to conduct a vigorous  defense of such claim.  At
March 31, 2006 and December 31, 2005, the Company has  established a reserve for
the full amount of this claim.

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

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

9.   SUBSEQUENT EVENTS

     On April 19,  2006,  the Board of  Directors  of the  Company  adopted  the
Cytogen Corporation 2006 Equity Compensation Plan (the "2006 Plan"),  subject to
stockholder  approval.  The Board of Directors of the Company has directed  that
the proposal to approve the 2006 Plan be submitted to the Company's stockholders
for their  approval at the 2006 Annual Meeting of  Stockholders  scheduled to be
held on June 13, 2006.  Under the 2006 Plan,  eligible  participants may receive
grants  in any  of the  following  forms:  (i)  incentive  stock  options,  (ii)
nonqualified  stock  options,  (iii) stock units,  (iv) stock awards,  (v) stock
appreciation rights, and (vi) other stock-based awards. The Company has reserved
1,500,000  shares of Cytogen  common  stock for future  issuance  under the 2006
Plan.

     On April 20, 2006, the Company entered into a Membership  Interest Purchase
Agreement  with  Progenics  providing for the sale to Progenics of the Company's
50% ownership  interest in the Joint Venture.  In addition,  the Company entered
into an Amended and Restated  PSMA/PSMP License Agreement with Progenics and the
Joint Venture  pursuant to which the Company  licensed the Joint Venture certain
rights in PSMA technology.  Under the terms of such agreements, the Company sold
its 50%  interest  in the Joint  Venture  for an upfront  cash  payment of $13.2
million,  potential future milestone payments totaling up to $52 million payable
upon regulatory  approval and  commercialization  of the Joint Venture products,
and royalties on future product sales of the Joint Venture, if any.


                                      -18-
<PAGE>


     On April 21,  2006,  the Company and Savient  entered  into a  distribution
agreement  granting  the Company  exclusive  marketing  rights for  SOLTAMOX(TM)
(tamoxifen citrate) in the United States. In addition,  the Company entered into
a supply  agreement  with Rosemont for the  manufacture  and supply of SOLTAMOX.
Under the terms of the final  transaction,  the Company  paid Savient an upfront
licensing  fee of $2  million  and may  pay  additional  contingent  sales-based
milestone  payments  of up to a total of $4  million  to  Savient  and  Rosemont
Pharmaceuticals.  The Company is required to pay Savient and Rosemont  royalties
on net sales of SOLTAMOX.

     On May 8, 2006, the Company  entered into a royalty  buyout  agreement with
Berlex,  Inc. for QUADRAMET.  Under the terms of the agreement,  Cytogen will no
longer pay Berlex a royalty on QUADRAMET  sales in exchange for a one-time  cash
payment of $6 million and the issuance of 623,441 shares of Cytogen common stock
to Berlex. The closing of the transaction is expected within 90 days, subject to
certain closing conditions. As additional  consideration,  Cytogen will also pay
Berlex one-time, sales-based milestone payments of $3.3 million and $5.0 million
the first time net sales of  QUADRAMET in the U.S.  territory  reach $20 million
and $30 million,  respectively,  in any  consecutive  12-month  period.  The two
sales-based   milestone   payments   will  be  made  in  four  equal   quarterly
installments.


                                      -19-
<PAGE>


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

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

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

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

OVERVIEW

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


                                      -20-
<PAGE>


commercializing  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. On April 21, 2006, we and
Savient Pharmaceuticals,  Inc. ("Savient") entered into a distribution agreement
granting us exclusive  marketing rights for SOLTAMOX(TM)  (tamoxifen citrate) in
the United States.  SOLTAMOX, a cytostatic estrogen receptor antagonist,  is the
first oral liquid hormonal  therapy approved in the U.S. It is indicated for the
treatment of breast cancer in adjuvant and metastatic settings and to reduce the
risk of breast cancer in women with ductal carcinoma in situ (DCIS) or with high
risk of breast cancer.  We expect to launch SOLTAMOX during the third quarter of
2006. 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.   Our   development   pipeline   consists  of   therapeutics   targeting
prostate-specific  membrane antigen ("PSMA"),  a protein highly expressed on the
surface of prostate cancer cells and the neovasculature of solid tumors.

SIGNIFICANT EVENTS IN 2006

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

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

Cytogen Sells Ownership in PSMA Development Joint Venture to Progenics

     On April 20, 2006, we entered into a Membership Interest Purchase Agreement
with Progenics  Pharmaceuticals,  Inc.  ("Progenics")  providing for the sale to
Progenics of our 50% ownership interest in PSMA Development Company LLC ("PDC"),
our  joint  venture  with  Progenics  for  the  development  of in  vivo  cancer
immunotherapies  based on PSMA.  In  addition,  we entered  into an Amended  and
Restated PSMA/PSMP License Agreement with Progenics and PDC pursuant to which we
licensed  PDC  certain  rights  in PSMA  technology.  Under  the  terms  of such
agreements, we sold our 50% interest in PDC for an upfront cash payment of $13.2
million,  potential future milestone payments totaling up to $52 million payable
upon regulatory approval and commercialization of PDC products, and royalties on
future PDC product sales,  if any. We will no longer be responsible  for funding
PDC.


                                      -21-
<PAGE>


Cytogen and Savient Execute Marketing Agreement for SOLTAMOX(TM)

     On April 21, 2006,  we and Savient  entered into a  distribution  agreement
granting us exclusive  marketing rights for SOLTAMOX(TM)  (tamoxifen citrate) in
the United States.  SOLTAMOX, a cytostatic estrogen receptor antagonist,  is the
first oral liquid hormonal  therapy approved in the U.S. It is indicated for the
treatment of breast cancer in adjuvant and metastatic settings and to reduce the
risk of breast cancer in women with ductal carcinoma in situ (DCIS) or with high
risk of breast  cancer.  In addition,  we entered into a supply  agreement  with
Rosemont   Pharmaceuticals   Limited,  a  wholly-owned   subsidiary  of  Savient
("Rosemont"), for the manufacture and supply of SOLTAMOX. Under the terms of the
final  transaction,  we paid Savient an upfront  licensing fee of $2 million and
may pay additional contingent sales-based milestone payments of up to a total of
$4 million to Savient  and  Rosemont  Pharmaceuticals.  We are  required  to pay
Savient and Rosemont  royalties  on net sales of  SOLTAMOX.  We expect to launch
SOLTAMOX during the third quarter of 2006.

Cytogen Enters into QUADRAMET Royalty Buyout Agreement with Berlex

     On May 8, 2006,  we entered into a royalty  buyout  agreement  with Berlex,
Inc.  for  QUADRAMET.  Under the terms of the  agreement,  we will no longer pay
Berlex a royalty on QUADRAMET  sales in exchange for a one-time  cash payment of
$6 million and the issuance of 623,441 shares of our common stock to Berlex. The
closing  of the  transaction  is  expected  within 90 days,  subject  to certain
closing  conditions.  As  additional  consideration,  we will  also  pay  Berlex
one-time,  sales-based  milestone  payments of $3.3 million and $5.0 million the
first time net sales of  QUADRAMET in the U.S.  territory  reach $20 million and
$30  million,   respectively,  in  any  consecutive  12-month  period.  The  two
sales-based   milestone   payments   will  be  made  in  four  equal   quarterly
installments.


RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2006 AND 2005

REVENUES

                                                       INCREASE/(DECREASE)
                                                      ---------------------
                                 2006         2005            $            %
                                 ----         ----        ---------     -------
                              (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)

QUADRAMET.................... $  2,256     $  2,054       $    202        10%
PROSTASCINT..................    2,184        1,899            285        15%
License and Contract.........        2           41            (39)     (95)%
                              --------     --------       --------
                              $  4,442     $  3,994       $    448        11%
                              ========     ========       ========

     Total revenues for the first quarter of 2006 were $4.4 million  compared to
$4.0 million for the same period in 2005.  Product  revenues  accounted for 100%
and 99% of total revenues for the first quarters of 2006 and 2005, respectively.
License and contract revenues accounted for the remainder of revenues.


                                      -22-
<PAGE>


     QUADRAMET. QUADRAMET sales were $2.3 million for the first quarter of 2006,
compared to $2.1 million in the first quarter of 2005. QUADRAMET sales accounted
for 51% and 52% of product  revenues  for the first  quarters  of 2006 and 2005,
respectively.  The increase  from the prior year period was due, in part, to the
effect of a 5% price  increase  implemented in June 2005.  Currently,  we market
QUADRAMET  only in the United  States and have no rights to market  QUADRAMET in
Europe. We believe that 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  attributes of  QUADRAMET.  We cannot
assure  you  that  we will be able  to  successfully  market  QUADRAMET  or that
QUADRAMET will achieve greater market penetration on a timely basis or result in
significant revenues for us.

     PROSTASCINT.  PROSTASCINT  sales were $2.2 million for the first quarter of
2006,  compared to $1.9 million in the first quarter of 2005.  PROSTASCINT sales
accounted for 49% and 48% of product revenues for the first quarters of 2006 and
2005,  respectively.  The  increase  from the prior  year  period was due to the
implementation  of a price  increase  for  PROSTASCINT  in June 2005,  increased
demand  associated  with  our  focused  marketing  programs  and  our  continued
identification  of new  distribution  channels  to better  accommodate  customer
needs.  We believe that 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 assure you that we will be able to successfully market PROSTASCINT, or
that  PROSTASCINT  will achieve greater market  penetration on a timely basis or
result in significant revenues for us.

     LICENSE AND CONTRACT  REVENUES.  License and contract  revenues were $2,000
and $41,000 for the first  quarters of 2006 and 2005,  respectively.  During the
first quarter of 2005, we  recognized  $41,000 of contract  revenues for limited
research and development services provided by us to the PSMA Development Company
LLC, our joint venture with Progenics.  We did not provide any research services
to the joint venture in 2006.


                                      -23-
<PAGE>


OPERATING EXPENSES

<TABLE>
<CAPTION>
                                                                                          INCREASE/(DECREASE)
                                                          2006            2005             $               %
                                                          ----            ----         --------        --------
                                                        (ALL AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S>                                                    <C>             <C>             <C>              <C>
     Cost of product revenue......................     $  2,416        $  2,427        $   (11)            --
     Selling, general and administrative..........        6,237           7,024           (787)         (11)%
     Research and development.....................        2,982             739           2,243          304%
     Equity in loss of joint venture..............          133             498           (365)         (73)%
                                                       --------        --------        -------
                                                       $ 11,768        $ 10,688        $ 1,080            10%
                                                       ========        ========        =======
</TABLE>

     Total  operating  expenses for the first quarter of 2006 were $11.8 million
compared to $10.7 million in the same quarter of 2005.

     COST OF  PRODUCT  REVENUE.  Cost of product  revenue  for each of the first
quarters of 2006 and 2005 was $2.4 million 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  quarter  of 2006 were $6.2  million  compared  to $7.0
million in the same period of 2005.  The decrease  from the prior year period is
primarily  driven  by  $706,000  of  pre-launch  costs in 2005  associated  with
COMBIDEX,  which is currently  awaiting  approval from the FDA, and the expanded
investment for the commercial support of both QUADRAMET and PROSTASCINT in 2005,
partially  offset by the recognition of $403,000 of share-based  compensation in
2006 for options and nonvested  shares granted to employees.  Any future changes
to our  share-based  compensation  strategy or programs  would likely affect the
amount of compensation expense recognized under SFAS 123(R).

     RESEARCH AND DEVELOPMENT.  Research and development  expenses for the first
quarter of 2006 were $3.0  million  compared  to  $739,000 in the same period of
2005.  The  increase  from the  prior  year  period is  primarily  driven by new
clinical  development  initiatives  for both QUADRAMET and  PROSTASCINT  and the
preclinical  development  costs  associated  with our  radiolabeled  therapeutic
program to attach the therapeutic radionuclide  lutetium-177 as a payload to the
7E11 monoclonal antibody utilized in PROSTASCINT.

     EQUITY IN LOSS OF JOINT  VENTURE.  Our share of the loss of PDC,  our joint
venture with  Progenics,  was $133,000 and $498,000 during the first quarters of
2006 and 2005, respectively. Such amounts represented 50% of the joint venture's
net losses.  We equally  shared  ownership  and costs of the joint  venture with
Progenics  and  accounted  for the  joint  venture  using the  equity  method of
accounting.  On April 20, 2006, we entered into a Membership  Interest  Purchase
Agreement  with  Progenics  providing  for  the  sale  to  Progenics  of our 50%
ownership interest in PDC. In addition,  we entered into an Amended and Restated
PSMA/PSMP License Agreement with Progenics and PDC pursuant to which we licensed
PDC certain rights in PSMA technology.  Under the terms of such  agreements,  we
sold our 50%  interest  in PDC for an upfront  cash  payment  of $13.2  million,
potential  future  milestone  payments  totaling up to $52 million  payable upon
regulatory  approval and  commercialization  of PDC  products,  and royalties on
future PDC product sales,  if any. We will no longer be responsible  for funding
PDC.


                                      -24-
<PAGE>


     INTEREST INCOME/EXPENSE.  Interest income for the first quarter of 2006 was
$297,000  compared to $143,000 in the same period of 2005.  The increase in 2006
from the prior year period was due to a higher  average yield on higher  average
cash balances in 2006. Interest expense for the first quarter of 2006 was $6,000
compared  to  $42,000  in the same  period in 2005.  Interest  expense  includes
interest on  outstanding  debt,  which was paid off in August 2005,  and finance
charges  related to various  equipment  leases that are accounted for as capital
leases.

     INCREASE IN WARRANT  LIABILITY.  In connection  with the sale of our common
stock and  warrants  in July and August  2005,  we  recorded  the  warrants as a
liability  at their fair value using a  Black-Scholes  option-pricing  model and
will remeasure them at each reporting date until  exercised or expired.  Changes
in the fair value of the warrants are reported in the  statements  of operations
as non-operating  income or expense.  For the three months ended March 31, 2006,
we reported a charge of $631,000  related to the increase in fair value of these
warrants since December 31, 2005. The market price for our common stock has been
and may continue to be volatile. Consequently,  future fluctuations in the price
of our common  stock may cause  significant  increases  or decreases in the fair
value of these warrants since December 31, 2005. The market price for our common
stock  has  been  and  may  continue  to  be  volatile.   Consequently,   future
fluctuations in the price of our common stock may cause significant increases or
decreases in the fair value of these warrants.

     NET LOSS. Net loss for the first quarter of 2006 was $7.7 million  compared
to $6.6 million reported in the first quarter of 2005. The basic and diluted net
loss per share for the first  quarter  of 2006 was $0.34  based on 22.5  million
weighted average common shares outstanding,  compared to a basic and diluted net
loss per share of $0.43 based on 15.5 million  weighted  average  common  shares
outstanding for the same period in 2005.


                                      -25-
<PAGE>


COMMITMENTS

      We have entered into various contractual and commercial commitments. The
following table summarizes our obligations with respect to theses commitments as
of March 31, 2006:

<TABLE>
<CAPTION>
                                                       LESS
                                                       THAN     1 TO 3       4 TO 5     MORE THAN
                                                      1 YEAR     YEARS        YEARS      5 YEARS        TOTAL
                                                    ---------  ---------    ---------   ----------  -----------
                                                                      (ALL AMOUNTS IN THOUSANDS)
<S>                                                  <C>        <C>          <C>         <C>         <C>
Capital lease obligations  ........................  $    52    $    98      $    --     $     --    $     150
Facility leases....................................      338        197           --           --          535
Research and development and
   other obligations...............................      432        155          150          531        1,268
Manufacturing contracts((1)) ......................    4,689      4,689           --           --        9,378
Minimum royalty payments((2))......................    1,000      2,000        2,000        2,583        7,583
                                                     -------    -------      -------     --------    ---------

      Total........................................  $ 6,511    $ 7,139      $ 2,150     $  3,114    $  18,914
                                                     =======    =======      =======     ========    =========
</TABLE>

(1)  Effective  January 1, 2004, we entered into a new  manufacturing and supply
     agreement   with  BMS-MI  for  QUADRAMET   whereby   BMS-MI   manufactures,
     distributes  and provides  order  processing  and customer  services for us
     relating to QUADRAMET.  Under the terms of our agreement,  we are obligated
     to pay at least  $4.7  million  annually,  subject to future  annual  price
     adjustment,  through 2008,  unless terminated by BMS-MI or us on a two year
     prior written  notice.  This  agreement will  automatically  renew for five
     successive one-year periods unless terminated by BMS-MI or us on a two-year
     prior written notice.  Accordingly, we have not included commitments beyond
     March 31, 2008.

     Additionally,   in  September   2004,  we  entered  into  a   non-exclusive
     manufacturing  agreement  with Laureate  Pharma,  L.P. under which Laureate
     manufactures  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 anticipate paying at least an aggregate of $5.1
     million through the end of the term of the contract, of which approximately
     $4.1 million was incurred through March 31, 2006.

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

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


                                      -26-
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

CONDENSED STATEMENT OF CASH FLOWS:

                                                             MARCH 31, 2006
                                                      --------------------------
                                                      (ALL AMOUNTS IN THOUSANDS)
   Net loss.............................................      $ (7,666)
   Adjustments to reconcile net loss to net cash
      used in operating activities......................         3,504
                                                              --------
   Net cash used in operating activities................        (4,162)
   Net cash used in investing activities................           (57)
   Net cash used in financing activities................            (6)
                                                              --------
   Net decrease in cash and cash equivalents............      $ (4,225)
                                                              ========

OVERVIEW

     Our cash and cash  equivalents  were $26.1  million  as of March 31,  2006,
compared to $30.3 million as of December 31, 2005. During the three months ended
March 31, 2006 and 2005, net cash used in operating  activities was $4.2 million
and $9.5 million,  respectively.  The decrease in cash usage from the prior year
period was primarily due to the prior year's build-up of PROSTASCINT  inventory,
pre-launch costs associated with COMBIDEX in 2005 and a reduction in 2006 of our
investment in the joint venture.  On April 20, 2006, we sold our 50% interest in
PDC for an upfront cash payment of $13.2 million.  Effective after that date, we
are no  longer  funding  the PDC's  operations.  In 2006,  we  expect  operating
expenditures to continue at approximately the same levels as 2005.

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

     Our long-term  financial  objectives  are to meet our capital and operating
requirements through revenues from existing products and licensing arrangements.
To  achieve  these  objectives,  we may  enter  into  research  and  development
partnerships and acquire, in-license and develop other technologies, products or
services.  Certain of these strategies may require payments by us in either cash
or stock in addition to the costs  associated  with  developing  and marketing a
product or technology.  However, we believe that, if successful, such strategies
may increase  long-term  revenues.  We cannot  assure you of the success of such
strategies or that resulting funds will be sufficient to meet cash  requirements
until product revenues are sufficient to cover operating  expenses,  if ever. To
fund these strategic and operating activities, we may sell equity, debt or other
securities as market conditions permit or enter into credit facilities.

OTHER LIQUIDITY EVENTS

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


                                      -27-
<PAGE>


such agreements,  we sold our 50% interest in PDC for an upfront cash payment of
$13.2 million,  potential future milestone  payments  totaling up to $52 million
payable upon  regulatory  approval and  commercialization  of PDC products,  and
royalties on future PDC product sales, if any.  Effective after the sale, we are
no longer funding the PDC's operations.

     On April 21, 2006,  we and Savient  entered into a  distribution  agreement
granting us exclusive  marketing rights for SOLTAMOX(TM)  (tamoxifen citrate) in
the United States.  SOLTAMOX, a cytostatic estrogen receptor antagonist,  is the
first oral liquid hormonal  therapy approved in the U.S. It is indicated for the
treatment of breast cancer in adjuvant and metastatic settings and to reduce the
risk of breast cancer in women with ductal carcinoma in situ (DCIS) or with high
risk of breast  cancer.  In addition,  we entered into a supply  agreement  with
Rosemont  for the  manufacture  and supply of  SOLTAMOX.  Under the terms of the
final  transaction,  we paid Savient an upfront  licensing fee of $2 million and
may pay additional contingent sales-based milestone payments of up to a total of
$4 million to Savient  and  Rosemont  Pharmaceuticals.  We are  required  to pay
Savient and Rosemont  royalties  on net sales of  SOLTAMOX.  We expect to launch
SOLTAMOX during the third quarter of 2006.

     On May 8, 2006,  we entered into a royalty  buyout  agreement  with Berlex,
Inc.  for  QUADRAMET.  Under the terms of the  agreement,  we will no longer pay
Berlex a royalty on QUADRAMET  sales in exchange for a one-time  cash payment of
$6 million and the issuance of 623,441 shares of our common stock to Berlex. The
closing  of the  transaction  is  expected  within 90 days,  subject  to certain
closing  conditions.  As  additional  consideration,  we will  also  pay  Berlex
one-time,  sales-based  milestone  payments of $3.3 million and $5.0 million the
first time net sales of  QUADRAMET in the U.S.  territory  reach $20 million and
$30  million,   respectively,  in  any  consecutive  12-month  period.  The  two
sales-based   milestone   payments   will  be  made  in  four  equal   quarterly
installments.

     In September 2004, we entered into a non-exclusive  manufacturing agreement
with  Laureate  Pharma,   L.P.  pursuant  to  which  Laureate  is  manufacturing
PROSTASCINT  and its primary raw materials for us in its  Princeton,  New Jersey
facility.  Our agreement will terminate,  unless terminated  earlier pursuant to
its terms, upon Laureate's completion of the production campaign and shipment of
the  resulting  products  from  Laureate's  facility.  Under  the  terms  of the
agreement,  we anticipate  paying at least an aggregate of $5.1 million  through
the end of the contract term. Approximately $4.1 million has been incurred under
this  agreement  through  March 31,  2006,  and is  recorded as  inventory  when
purchased.  No payment  was made  during the first  quarter of 2006.  In October
2004,  Laureate  was  acquired  by  Safeguard  Scientifics,  Inc.  Laureate  has
continued to operate as a full service contract  manufacturing  organization and
we  have  not  experienced  any  disruption  in  Laureate's  performance  of its
obligations to produce PROSTASCINT.

     Effective  January 1, 2004, we entered into a new  manufacturing and supply
agreement  with BMS-MI  whereby BMS-MI  manufactures,  distributes  and provides
order processing and customer  services for us relating to QUADRAMET.  Under the
terms  of the new  agreement,  we are  obligated  to pay at least  $4.7  million
annually,  subject to future  annual  price  adjustment,  through  2008,  unless
terminated by BMS-MI or us on two years prior written  notice.  During the three
months ended March 31, 2006, we incurred $1.1 million of manufacturing costs for
QUADRAMET.  This agreement will automatically renew for five successive one-year
periods


                                      -28-
<PAGE>


unless  terminated by BMS-MI or us on a two year prior written  notice.  We also
pay BMS-MI a variable  amount per month for each QUADRAMET order placed to cover
the costs of customer  service.  In addition,  we expect our QUADRAMET sales and
marketing expenses to increase in 2006.

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

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

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

     Our future capital  requirements  and the adequacy of available  funds will
depend on numerous factors,  including: (i) the successful  commercialization of
our products;  (ii) the costs  associated with the acquisition of  complementary
products and technologies; (iii) progress in our product development efforts and
the magnitude and scope of such efforts; (iv) progress with clinical trials; (v)
progress  with  regulatory  affairs   activities;   (vi)  the  cost  of  filing,
prosecuting,  defending  and  enforcing  patent  claims  and other  intellectual
property rights;  (vii) competing  technological  and market  developments;  and
(viii)  the  expansion  of  strategic   alliances  for  the  sales,   marketing,
manufacturing and distribution of our products. To the extent that the currently
available  funds and  revenues  are  insufficient  to meet  current  or  planned
operating  requirements,  we will be required to obtain additional funds through
equity or debt financing, strategic


                                      -29-
<PAGE>


alliances  with  corporate  partners and others,  or through other  sources.  We
cannot assure you that the financial  sources  described above will be available
when needed or at terms commercially acceptable to us. If adequate funds are not
available,  we may be required to delay, further scale back or eliminate certain
aspects of our operations or attempt to obtain funds through  arrangements  with
collaborative  partners or others that may  require us to  relinquish  rights to
certain of our technologies,  product candidates, products or potential markets.
If adequate  funds are not  available,  our  business,  financial  condition and
results of operations will be materially and adversely affected.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Financial  Reporting  Release No. 60 requires  all  companies  to include a
discussion of critical accounting policies or methods used in the preparation of
financial  statements.  Note 1 to our Consolidated  Financial  Statements in our
Annual  Report on Form 10-K for the year ended  December 31,  2005,  as amended,
includes a summary of our  significant  accounting  policies and methods used in
the preparation of our  Consolidated  Financial  Statements.  The following is a
brief discussion of the more significant accounting policies and methods used by
us. The preparation of our Consolidated Financial Statements requires us to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  Our actual results could differ  materially  from
those estimates.

REVENUE RECOGNITION

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

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

ACCOUNTS RECEIVABLE

     Our accounts  receivable  balances are net of an  estimated  allowance  for
uncollectible  accounts.  We continuously  monitor collections and payments from
our customers and maintain an allowance for  uncollectible  accounts  based upon
our historical  experience and any specific  customer  collection issues that we
have identified. While we believe our reserve estimate to be appropriate, we may
find it  necessary to adjust our  allowance  for  uncollectible  accounts if the


                                      -30-
<PAGE>


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

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

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


                                      -31-
<PAGE>


SHARE-BASED COMPENSATION

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

RECENT ACCOUNTING PRONOUNCEMENTS

Share-Based Payment

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

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


                                      -32-
<PAGE>


Abnormal Inventory Costs

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

ITEM 4.  CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

     Our management,  with the  participation of our chief executive officer and
chief financial officer,  evaluated the effectiveness of our disclosure controls
and  procedures  as of  March  31,  2006.  The  term  "disclosure  controls  and
procedures,"  as defined in Rules  13a-15(e) and 15d-15(e)  under the Securities
Exchange Act of 1934,  means controls and other procedures of a company that are
designed to ensure that  information  required to be disclosed by the Company in
the reports that it files or submits under the  Securities  Exchange Act of 1934
is  recorded,  processed,  summarized  and  reported,  within  the time  periods
specified  in the SEC's  rules and forms.  Disclosure  controls  and  procedures
include,  without  limitation,  controls and procedures  designed to ensure that
information  required to be  disclosed by a company in the reports that it files
or  submits  under  the  Securities  Exchange  Act of  1934 is  accumulated  and
communicated to the company's management,  including its principal executive and
principal financial officers, as appropriate to allow timely decisions regarding
required disclosure.  Management recognized that any controls and procedures, no
matter how well designed and operated,  can provide only reasonable assurance of
achieving their  objectives and management  necessarily  applied its judgment in
evaluating the  cost-benefit  relationship of possible  controls and procedures.
Based


                                      -33-
<PAGE>


on this  evaluation,  our chief executive  officer and chief  financial  officer
concluded  that, as of March 31, 2006,  our  disclosure  controls and procedures
were effective.

(2) Changes in Internal Control Over Financial Reporting

     No change in our internal  control over financial  reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal
quarter  ended  as of  March  31,  2006  that  has  materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.


                                      -34-
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     In December 2005, Trapezoid Healthcare Communications LLC filed a complaint
against us in the Superior  Court of New Jersey,  Law Division,  Mercer  County,
seeking approximately  $426,000 in damages arising our of our alleged failure to
pay  Trapezoid  for  marketing  services  allegedly  provided  to us. We plan to
conduct a vigorous  defense of such claim.  At March 31,  2006,  the Company has
established a reserve for the full amount of this claim.

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

ITEM 1A. RISK FACTORS

     This section sets forth changes in the risks factors  previously  disclosed
in our Annual Report on Form 10-K due to our activities during the quarter ended
March 31, 2006.

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

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

     Given the high level of  expenditures  associated with our business and our
inability to generate revenues  sufficient to cover such  expenditures,  we have
had a history of operating losses since our inception. We had net losses of $7.7
million  and $6.6  million  for the  quarters  ended  March  31,  2006 and 2005,
respectively.  We had an  accumulated  deficit  of $420  million as of March 31,
2006.

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


                                      -35-
<PAGE>


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

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

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

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

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

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

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

     We expect QUADRAMET and PROSTASCINT to account for substantially all of our
product  revenues  in the near  future.  For the quarter  ended March 31,  2006,
revenues from QUADRAMET and PROSTASCINT accounted for approximately 51% and 49%,
respectively,  of our product  revenues.  For the quarter  ended March 31, 2005,
revenues from QUADRAMET and PROSTASCINT accounted for approximately 52% and 48%,
respectively,  of our product  revenues.  If QUADRAMET or  PROSTASCINT  does not
achieve broader market acceptance,  either because we fail to effectively market
such products or our competitors  introduce  competing  products,  we may not be
able to generate sufficient revenue to become profitable.

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

     We sell our products to a small number of  radiopharmacy  networks.  During
the quarter  ended March 31, 2006,  we received 65% of our total  revenues  from
three  customers,   as  follows:  43%  from  Cardinal  Health  (formerly  Syncor
International  Corporation);   13%  from  Mallinckrodt  Inc.;  and  9%  from  GE
Healthcare (formerly Amersham Health).  During the year ended December 31, 2005,
we received 67% of our total revenues from three customers, as follows: 47% from
Cardinal  Health  (formerly   Syncor   International   Corporation);   11%  from
Mallinckrodt Inc.; and 9% from GE Healthcare (formerly Amersham Health).  During
the year ended  December 31, 2004,  we received 68% of our total  revenues  from
three customers, as follows:


                                      -36-
<PAGE>


46% from Cardinal Health (formerly Syncor International  Corporation);  12% from
Mallinckrodt Inc.; and 10% from GE Healthcare (formerly Amersham Health).

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

We rely heavily on our collaborative partners.

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

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

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

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

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

     o  a  distribution  services  agreement  with  Cardinal  Health  105,  Inc.
        (formerly Cord Logistics, Inc.) for PROSTASCINT;

     o  a license  agreement with The Dow  Chemical  Company  relating  to Dow's
        proprietary  MeO-DOTA  bifunctional  chelant technology for use with our
        Therapeutic 7E11-C5 Monoclonal Antibody  program;

     o  a development  and manufacturing  agreement with Laureate  Pharma,  L.P.
        for the scale-up  for  the  cGMP  manufacturing  of a MeO-DOTA  chelator
        conjugate of the 7E11-C5 monoclonal antibody; and


                                      -37-
<PAGE>


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

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

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

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

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

     In April 2006, we executed a distribution  agreement with Savient  granting
us exclusive  marketing  rights for SOLTAMOX  (tamoxifen  citrate) in the United
States.  SOLTAMOX, an oral liquid hormonal therapy, is approved for marketing in
the United States. We expect to launch SOLTAMOX in the third quarter of 2006.

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


                                      -38-
<PAGE>


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

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

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

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

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

     o  to ensure that our products are safe and effective;

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

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

     o  to develop a sufficient market for our products; and

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

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


                                      -39-
<PAGE>


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

     Our cash, cash equivalents and short-term investments were $26.1 million at
March 31, 2006. We expect that our existing capital resources should be adequate
to fund our operations and commitments into 2007.

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

     o  success of our product commercialization efforts;

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

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

     o  progress of preclinical studies and clinical trials;

     o  progress toward regulatory approval for our products;

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

     o  competing technological and market developments; and

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

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


                                      -40-
<PAGE>


ITEM 6. EXHIBITS.

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

        10.1        Cytogen  Corporation  2006 Equity  Compensation  Plan. Filed
                    herewith.

        10.2        Membership Interest Purchase Agreement dated as of April 20,
                    2006 between the Company and Progenics Pharmaceutical,  Inc.
                    Filed herewith.

        10.3        Amended and Restated PSMA/PSMP License Agreement dated April
                    20, 2006 among the Company, Progenics Pharmaceuticals,  Inc.
                    and PSMA Development Company LLC.* Filed herewith.

        10.4        Exclusive  Distribution Agreement dated as of April 21, 2006
                    between the Company and Savient Pharmaceuticals, Inc.* Filed
                    herewith.

        10.5        Manufacture  and  Supply  Agreement  dated  April  21,  2006
                    between  the  Company,  Savient  Pharmaceuticals,  Inc.  and
                    Rosemont Pharmaceuticals Limited.* Filed herewith.

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

        31.2        Certification  of 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.  Furnished
                    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.
                    Furnished herewith.

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


                                      -41-
<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: May 10, 2006               By:/s/ Michael D. Becker
                                    --------------------------------------------
                                    Michael D. Becker
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)



Date: May 10, 2006               By:/s/ Christopher P. Schnittker
                                    --------------------------------------------
                                    Christopher P. Schnittker
                                    Senior Vice President and
                                      Chief Financial Officer
                                    (Principal Financial and Accounting Officer)






                                      -42-