SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                 --------------
                                   FORM 10-K/A
                                (Amendment No. 2)

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                   For the fiscal year ended December 31, 2002
                                             -----------------
                                       OR

[ ] 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 or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)

650 College Road East, Princeton, New Jersey                             08540
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)

Registrant's  telephone  number, including area code (609) 750-8200
                                                     ---------------------------
Securities
registered  pursuant to Section  12(b) of the Act:  None
                                                    ----------------------------

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, $0.01 par value per share
--------------------------------------------------------------------------------
                                (Title of Class)

           Preferred Stock Purchase Rights, $0.01 par value per share
--------------------------------------------------------------------------------
                                (Title of Class)

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 such
filing requirements for the past 90 days. Yes  X  No
                                              ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
           ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes X  No
                                        ---

The  aggregate  market value of the  registrant's  voting shares of Common Stock
held by  non-affiliates  of the registrant on June 28, 2002, based on $10.70 per
share,  the last reported sale price on the NASDAQ National Market on that date,
was $92,517,375.

The  number of  shares  of  Common  Stock,  $.01 par  value,  of the  registrant
outstanding as of March 1, 2003 was 8,813,832 shares.

The following  documents are incorporated by reference into the Annual Report on
Form 10-K: Portions of the registrant's  definitive Proxy Statement for its 2003
Annual Meeting of  Stockholders  are  incorporated by reference into Part III of
this Report.
<PAGE>

                                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>

                   Item                                                                                         Page
                   ----                                                                                         ----
<S>                <C>                                                                                           <C>
PART I             1.      Business....................................................................           1
                   2.      Properties..................................................................          31
                   3.      Legal Proceedings...........................................................          31
                   4.      Submission of Matters to a Vote of Security Holders.........................          32

PART II            5.      Market for the Company's Common Equity and Related Stockholder Matters......          33
                   6.      Selected Financial Data.....................................................          34
                   7.      Management's Discussion and Analysis of Financial Condition and Results of
                               Operations..............................................................          35
                   7A.     Quantitative and Qualitative Disclosures about Market Risk..................          44
                   8.      Financial Statements and Supplementary Data.................................          44
                   9.      Changes in and Disagreements with Accountants on Accounting and Financial
                               Disclosure..............................................................          44
PART III           10.     Directors and Executive Officers of the Company.............................          45
                   11.     Executive Compensation......................................................          45
                   12.     Security Ownership of Certain Beneficial Owners and Management and Related
                               Stockholder Matters.....................................................          45
                   13.     Certain Relationships and Related Transactions..............................          45
                   14.     Controls and Procedures.....................................................          45
PART IV            15.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K............          46

EXHIBIT INDEX............................................................................................        46

SIGNATURES...............................................................................................        52

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...............................................................        F-1
</TABLE>


                                EXPLANATORY NOTE
                                ----------------

This Amendment No. 2 on Form 10-K/A ("Amendment No. 2") amends the Annual Report
on Form 10-K,  as  previously  amended (the "Form 10-K") of Cytogen  Corporation
(the  "Company"  or  "Cytogen")  for its fiscal year ended  December  31,  2002.
Amendment No. 2 is being filed to: (i) amend the  Company's  disclosure in "Part
II, Item 7.  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations",  under the sub-heading "Liquidity and Capital Resources"
of the Form 10-K,  to  include  certain  additional  information  regarding  the
Company's Contract  Manufacturing  Agreement with Laureate Pharma L.P.; and (ii)
amend "Part IV, Item 15.  Exhibits,  Financial  Statements,  and Reports on Form
8-K" of the Form 10-K, to include  additional  information  that was  previously
redacted from the Contract  Manufacturing  Agreement,  filed as Exhibit 10.49 to
the Form  10-K,  in  connection  with the  Company's  request  for  confidential
treatment.


                                               -i-
<PAGE>
                                     PART I

Item 1.  Business

Overview

Cytogen   Corporation   of   Princeton,   New   Jersey   is  a   product-driven,
oncology-focused  biopharmaceutical  company. We market proprietary and licensed
oncology products through our in-house sales force: ProstaScint(R) (a monoclonal
antibody-based  imaging  agent used to image the  extent and spread of  prostate
cancer) and NMP22(R)  BladderChek(TM)  (a point-of-care  test for bladder cancer
detection).   We  have  also  developed   Quadramet(R),   a  skeletal  targeting
therapeutic  radiopharmaceutical  for the  relief of bone pain in  prostate  and
other types of cancer,  for which we receive  royalties on product sales through
Berlex Laboratories,  the United States affiliate of Schering AG Germany,  which
markets  the  product in the  United  States.  Our  pipeline  comprises  product
candidates  at various  stages of clinical  development,  including  fully human
monoclonal  antibodies  and cancer  vaccines  based on PSMA  (prostate  specific
membrane  antigen)  technology,  which we  exclusively  licensed  from  Memorial
Sloan-Kettering  Cancer  Center.  We also  conduct  research  in cell  signaling
through our AxCell Biosciences research subsidiary in Newtown, Pennsylvania.

In August 2000,  we expanded our product  pipeline by entering  into  marketing,
license and supply  agreements with Advanced  Magnetics,  Inc. for  Combidex(R),
which is an investigational magnetic resonance imaging (MRI) contrast agent that
assists in the differentiation of metastatic from non-metastatic lymph nodes. We
hold exclusive United States marketing rights to Combidex. Advanced Magnetics is
continuing its discussions with the FDA relating to outstanding issues regarding
an  approvable  letter  received  from the FDA dated June 2000,  in an effort to
bring Combidex to market.

We  are   integrating   our  expertise  in  molecular   and  cellular   biology,
biochemistry,  bioinformatics,  pharmacology and clinical  development to create
targeted  technologies for cancer therapy and diagnosis.  In this regard, we are
developing  product  candidates based on prostate specific membrane antigen,  or
PSMA, which is a cell-surface  protein that is abundantly  expressed on prostate
cancer cells at all stages of disease, including advanced or metastatic disease.

The PSMA gene was first  discovered by  scientists  at Memorial  Sloan-Kettering
Cancer  Center.  From this  technology,  we have put one  product  on the market
(ProstaScint)  and are  building a robust  pipeline  of  potential  products  in
research and development. These pipeline products are focused primarily on novel
vaccine and antibody cancer therapy,  initially in the area of prostate  cancer.
In December  2002,  the PSMA  Development  Company LLC, a joint venture  between
Cytogen and Progenics Pharmaceuticals, Inc., announced the initiation of a Phase
I clinical trial for the testing of a novel therapeutic  prostate cancer vaccine
directed against PSMA.

PSMA  is  also  present  at  high  levels  on the  newly  formed  blood  vessels
(neovasculature)  needed  for the  growth  and  survival  of many types of solid
tumors. If PSMA-targeted therapies can destroy or prevent formation of these new
blood  vessels,  we believe that such therapies may prove valuable in treating a
broad range of cancers.

Further research and development  efforts are carried out through AxCell,  which
remains  engaged in the  research  and  development  of novel  biopharmaceutical
products  using  its  collection  of  proprietary  signal  transduction  pathway
information,  despite  significant  reductions in AxCell's  workforce,  which we
implemented in September 2002.

AxCell  uses  its  proprietary   technology  as  a  tool  to  provide  academic,
governmental and commercial  collaborators  with vital  information about signal
transduction  pathways  that  can be used for drug  discovery  and  development.
AxCell provides this information rapidly and efficiently,  using the proprietary
methods  and systems  that AxCell  developed  to  identify  signal  transduction
pathways. We have successfully  leveraged our technology through  collaborations
with Mount Sinai School of Medicine,  National Cancer  Institute,  Kimmel Cancer
Center at Thomas  Jefferson  University,  University  of Muenster in Germany and
Celgene  Corporation.  These  collaborations  increase our  research  resources,
improve  our   technological   strength  and  establish   valuable   development
relationships with potential commercial opportunities.

The  Company  was  incorporated  in  Delaware  on March 3,  1980  under the name
Hybridex, Inc. and changed its name to Cytogen Corporation on April 1, 1980. Our
executive  offices are located at 650 College Road East, Suite 3100,  Princeton,
New Jersey 08540 and our telephone number is 609-750-8200.


                                       1
<PAGE>

On October 25, 2002, we received approval from our stockholders at a duly called
and held special meeting of stockholders to effect a reverse split of our common
stock. Our Board of Directors thereafter approved a one-for-ten reverse split of
our  outstanding,  issued and  authorized  shares of common stock,  which became
effective  on October 25, 2002.  All numbers set forth in this Annual  Report on
Form 10-K reflect the effect of such one-for-ten reverse stock split.

ProstaScint(R)  and  OncoScint(R)  are  registered  United States  trademarks of
Cytogen Corporation. All other trade names, trademarks or servicemarks appearing
in this Annual Report on Form 10-K are the property of their respective  owners,
and  not  the  property  of  Cytogen  Corporation  or any  of our  subsidiaries.
Quadramet(R)  is a trademark of The Dow Chemical  Company used under  license by
Cytogen.

We also  maintain a website at  http://www.cytogen.com.  We provide an  internet
link on our website to the  Securities and Exchange  Commission's  website where
you can find documents that we file with the SEC, including our Annual Report on
Form  10-K,  Quarterly  Reports on Form  10-Q,  Current  Reports on Form 8-K and
amendments  to such  reports  filed  pursuant  to Section  13(a) or 15(d) of the
Exchange Act. Such documents are posted as soon as reasonably  practicable after
we  electronically  file  such  material  with,  or  furnish  it  to,  the  SEC.
Alternatively, we will provide electronic or paper copies of our filings free of
charge upon request.

PROSTATE CANCER AND ONCOLOGY

Background

Prostate  cancer is the most common type of cancer found in American men,  other
than skin cancer. The American Cancer Society estimates that there will be about
220,900 new cases of prostate  cancer in the United States in the year 2003, and
estimates that 28,900 men will die of the disease this year.  Prostate cancer is
the second leading cause of cancer death in men, exceeded only by lung cancer.

Although men of any age may be diagnosed with prostate cancer,  it is found most
often in men over 50. It is estimated that more than 70% of all prostate cancers
are  diagnosed  in men over the age of 65.  Prostate  cancer is almost  twice as
common among  African-American  men as it is among caucasian American men. It is
also most common in North America and northwestern  Europe. It is less common in
Asia, Africa, and South America.

We find encouragement in the overall vitality of the oncology market and believe
future growth lies in  identification of new in-licensing  opportunities.  While
large  pharmaceutical  companies  tend to  concentrate  on products  with market
potential larger than that of typical anticancer drugs;  selected niche products
which  compliment  our  oncology  focus may fit well  within  Cytogen's  product
portfolio.


                                       2
<PAGE>


We currently market the following proprietary and licensed oncology products:
<TABLE>
<CAPTION>


     Product             Description            Status        2002 Sales            Future Growth Drivers
     -------             -----------            ------        or Royalty            ---------------------
                                                              Revenue ($
                                                              millions)
                                                              ----------
<S>                 <C>                    <C>                    <C>        <C>
ProstaScint(R)      Monoclonal             Developed and          $7.92      -        Fusion imaging -
(Capromab           antibody-based         marketed by                                combining ProstaScint(R)
Pendetide)          imaging agent used     Cytogen in the                             images with CT (computed
                    to image the extent    United States                              tomography) or MR
                    and spread of                                                     (magnetic resonance)
                    prostate cancer                                                   scans in a digital overlay
                                                                             -        Utilization of
                                                                                      ProstaScint scans to
                                                                                      guide therapy
                                                                                      ("image-guided therapy"),
                                                                                      to enhance therapy
                                                                                      targeting for treatments
                                                                                      such as  brachytherapy,
                                                                                      cryotherapy and external
                                                                                      beam radiation, such as
                                                                                      intensity modulated
                                                                                      radiation therapy (IMRT)

Quadramet(R)        Skeletal targeting     Developed by           $1.84      -        New clinical data
(Samarium Sm-153    therapeutic            Cytogen based                              supporting the expanded
Lexidronam          radiopharmaceutical    upon technology                            and earlier use of
Injection)          for the relief of      licensed from                              Quadramet in various
                    bone pain in           Dow Chemical,                              cancers
                    prostate and other     marketed by                       -        Novel research supporting
                    types of cancer        Berlex                                     combination uses with
                                           Laboratories,                              other therapies, such as
                                           the United                                 chemotherapy and
                                           States affiliate                           bisphophonates
                                           of Schering AG                    -        Establishing the use of
                                           Germany, in the                            Quadramet at higher doses
                                           United States                              to target and treat
                                                                                      primary bone cancers
                                                                             -        Increased marketing and
                                                                                      sales penetration to
                                                                                      radiation and medical
                                                                                      oncologists


NMP22(R)            A point-of-care in     Developed by       Not            -        Food and Drug
BladderChek(TM)     vitro diagnostic       Matritech, Inc.,   material,               Administration approval
(nuclear matrix     test for bladder       marketed to        Cytogen                 for expanded use as an
protein-22)         cancer                 urologists by      began                   aid in diagnosis
                                           Cytogen in the     introducing
                                           United States      to
                                                              physicians
                                                              in November
                                                              2002

</TABLE>

In January 2003, we provided Draximage Inc., the radiopharmaceutical  subsidiary
of Draxis Health Inc.,  with notice of  termination  for each of our License and
Distribution  Agreement  and Product  Manufacturing  and Supply  Agreement  with
respect  to both of  Draximage's  BrachySeedTM  I-125  and  BrachySeedTM  Pd-103
products. Effective January 24, 2003, we no longer accept or fill new orders for
the BrachySeed I-125 and BrachySeed Pd-103 products.


                                       3
<PAGE>
Technology

PSMA

Prostate specific membrane antigen, or PSMA, is a transmembrane protein that may
be used  as an  important  marker  associated  with  prostate  cancer.  Memorial
Sloan-Kettering  Cancer  Center  identified  PSMA  using a  monoclonal  antibody
supplied by us. A patent  entitled  "Prostate  Specific  Membrane  Antigen"  was
issued to  Sloan-Kettering  Institute  for  Cancer  Research,  an  affiliate  of
Memorial  Sloan-Kettering Cancer Center, and we acquired the exclusive worldwide
license covering this technology.  A murine monoclonal antibody directed against
PSMA is the basis of our ProstaScint  imaging product.  PSMA has also been found
to be present in the new blood vessels formed in  association  with a variety of
other major solid tumors. We believe that, due to the unique  characteristics of
this  antigen,  technologies  utilizing  PSMA can yield novel  products  for the
treatment and diagnosis of cancer.

In 1999, we entered into a joint venture with Progenics Pharmaceuticals, Inc. to
develop  in  vivo  immunotherapeutic  products  utilizing  PSMA.  These  product
candidates include a therapeutic prostate cancer vaccine utilizing the PSMA gene
and a vector delivery  system, a recombinant form of the PSMA protein as a basis
of immune stimulation,  and antibody-based  immunotherapies for prostate cancer.
We believe that these product candidates, if successfully developed,  could play
an important  role in the  treatment of prostate  cancer.  We believe  there are
significant  unmet  needs for  treatment  and  monitoring  of this  disease.  In
addition,  we  intend  to  evaluate  the  utility  of  these  therapies,  as  an
anti-angiogenesis  approach,  in  other  cancers  where  PSMA  is  expressed  in
association with tumor  neovasculative such as in breast,  colon, lung and other
cancers.

The joint venture is owned equally by Progenics Pharmaceuticals, Inc. and us. We
have  exclusively  licensed  to  the  joint  venture  certain  immunotherapeutic
applications  of our PSMA patent rights and  know-how.  Progenics has funded the
first $3 million of development costs of the program in addition to $2.0 million
in  supplemental  capital  contributions  funded at certain dates.  Beginning in
December 2001, we and Progenics began sharing costs of the program.  In 2002, we
incurred  expenses of $2.9  million  relating  to programs at the joint  venture
compared  to  $332,000  in 2001.  The joint  venture is funded by equal  capital
contributions  from each of Progenics and Cytogen in  accordance  with an annual
budget approved by the joint venture representatives from each such party. As of
March 28, 2003,  the parties are in the process of  negotiating  the 2003 annual
budget for the joint venture and have agreed that the operating  budget for 2003
will be no less than the 2002 operating expenses for the joint venture. Contract
research and  development  services  provided by Progenics to the joint  venture
during 2002 were in accordance with a services agreement between the parties. As
of March 28,  2003,  the parties  are  negotiating  the terms of a new  services
agreement and believe that if mutual agreement is not achieved,  the parties can
successfully negotiate with outside third parties for necessary services.

We have North  American  marketing  rights to  products  developed  by the joint
venture and a right of first negotiation with respect to marketing activities in
any territory  outside  North  America.  We  anticipate  initiation of marketing
efforts for any product  developed upon approval by the FDA or requisite foreign
regulatory  bodies, as applicable.  If approved,  we anticipate  marketing these
products  with our own sales force and will be  reimbursed  by the joint venture
for these costs.  We will split the net profit  equally with  Progenics  for any
products developed by the joint venture.

During 2001,  the joint  venture  entered into a worldwide  exclusive  licensing
agreement with AlphaVax Human Vaccines, Inc. to use the AlphaVax Replicon Vector
(ArV(TM)) system to create a therapeutic  prostate cancer vaccine  incorporating
the PSMA antigen.  Also in 2001, the joint venture  entered into a collaboration
with Abgenix, Inc. to use the company's XenoMouse(TM)  technology for generating
fully human  antibodies  to PSMA. As a result of such  collaboration,  the joint
venture successfully created human monoclonal antibodies that target PSMA.

In December 2002, the PSMA Development Company LLC announced the initiation of a
Phase I clinical trial for the testing of a novel  therapeutic  prostate  cancer
vaccine directed against PSMA.

We  licensed  PSMA  through  our  subsidiary,   Prostagen,  Inc.,  to  Northwest
Biotherapeutics,   Inc.,  for  development  of  ex  vivo  dendritic  cell  based
immunotherapy  of  prostate  cancer.  In  2000,  we  executed  a new  sublicense
agreement with Northwest  Biotherapeutics  Inc.  clarifying their rights to make
and use PSMA for ex vivo prostate  cancer  immunotherapy.  In December  2002, we
announced  that  we  had  regained  our  rights  to  ex  vivo  prostate   cancer
immunotherapy  using PSMA, in connection  with the  termination of our agreement
with  Northwest  Biotherapeutics,  Inc.  We are  encouraged  by  efforts to date
demonstrating  a favorable  safety and  clinical  response  in  prostate  cancer
patients  treated  using  PSMA-based  ex  vivo  immunotherapy.   Based  on  this
information, we will seek other corporate collaborations or partnerships to help
us realize the clinical and commercial potential of this approach.

                                       4
<PAGE>
Independent of our joint venture,  we obtained  exclusive,  world-wide  licenses
from  Molecular  Staging,  Inc. for technology to be used in developing in vitro
diagnostic  tests using both PSMA and PSA.  Molecular  Staging's  Rolling Circle
Amplification  Technology  (RCAT(TM)) is a novel,  patented process that creates
new  diagnostic  opportunities.  RCAT is a highly  sensitive,  quantitative  and
efficient  amplification  method that allows the user to detect the  presence of
target  molecules  in a wide array of  testing  formats.  It offers a  practical
method that allows solid phase  recognition  and  detection of target  molecules
either  directly,  on a cell or on a biochip.  We have  established the proof of
concept  of  using  the  RCAT   technology  in  a  PSA  serving  assay  and  are
investigating the optional  contribution of reagents (i.e.,  monoclonal antibody
pairs) using a similar approach for PSMA.

AxCell Biosciences

A majority of the drugs on the market today are agents that  interact  with cell
surface receptors.  Surface receptors,  however,  are generally  associated with
multiple  intracellular  signaling  pathways and, as a result,  drugs  targeting
these  receptors are less specific to the disease,  leading to reduced  efficacy
and/or unwanted side effects.  By targeting  intracellular  proteins  downstream
from the  surface  receptor,  a drug can more  precisely  initiate  the  desired
cellular  response,  leading to treatments with greater  efficacy and fewer side
effects. Many proteins along these intracellular  pathways communicate with each
other through structurally and functionally defined modules called `domains' and
their respective binding partners called `ligands'. The modular and well-defined
nature of these  domain-ligand  interactions  makes them ideal drug  targets for
developing small inhibitory molecules.

One of the  historical  challenges  to  design  small  molecule  inhibitors  for
domain-ligand interactions is the fact that domains are highly homologous within
each domain `family' making it difficult to develop a highly specific  inhibitor
for a particular  interaction.  Our subsidiary,  AxCell,  overcomes this problem
through the exact determination of specificity boundaries for each domain-ligand
interaction.   This  biochemical   approach  integrates  parallel  synthesis  of
peptides,  protein expression and high-throughput screening methodology combined
with tools of bioinformatics.

AxCell has the only high throughput  platform for the systematic  identification
and  characterization of domain-mediated  intracellular  pathways,  which can be
combined with many levels of biological  information to understand how they work
together in a systems  biology  approach.  Using its  proprietary  technologies,
AxCell has made significant  technical progress over the past several years and,
despite a  significant  reduction  in its  workforce,  which we  implemented  in
September  2002,  is  currently  applying its pathway  content and  knowledge to
accelerate the development of targeted drugs in certain  therapeutic  categories
through  both  internal  efforts  and  external  research   collaborations  with
corporate, government and academic institutions.

Marketed products

We  have  three   actively   marketed   products:   ProstaScint,   a  monoclonal
antibody-based  imaging  agent used to image the  extent and spread of  prostate
cancer;  Quadramet,  a skeletal targeting  therapeutic  radiopharmaceutical  for
relief of bone pain from  cancer  that has  spread to the bone from the  primary
tumor; and NMP22  BladderChek,  a point-of-care test which aids in the diagnosis
of bladder cancer.

ProstaScint

Prostate  cancer is the most common type of cancer found in American men,  other
than skin cancer. The American Cancer Society estimates that there will be about
220,900 new cases of prostate  cancer in the United States in the year 2003, and
that about 28,900 men will die of this  disease.  Prostate  cancer is the second
leading cause of cancer death in men, exceeded only by lung cancer. Although men
of any age may be diagnosed with prostate cancer,  it is found most often in men
over 50.  It is  estimated  that  more  than  70% of all  prostate  cancers  are
diagnosed in men over the age of 65.

ProstaScint is a diagnostic, murine-based monoclonal antibody which is linked to
the  radioisotope  Indium-111  as an imaging  agent which  localizes in the body
specifically  targeting  PSMA.  ProstaScint  utilizes our  proprietary  targeted
delivery system, employing whole monoclonal antibodies, which directs Indium-111
to malignant  prostate tumor sites. A radioisotope is an element which,  because
of nuclear  instability,  undergoes  radioactive  decay and emits radiation.  We
supply ProstaScint to hospitals, diagnostic imaging centers and radiopharmacies.

Due to the selective  expression of PSMA, the ProstaScint  imaging procedure can
aid in the  detection  of the extent and spread of prostate  cancer in the body.
ProstaScint  is approved  for  marketing  in the United  States in two  clinical
settings:  as a  diagnostic  imaging  agent in  newly  diagnosed  patients  with

                                       5
<PAGE>
biopsy-proven  prostate cancer thought to be clinically localized after standard
diagnostic  evaluation  and who are at high risk for spread of their  disease to
pelvic lymph nodes and for use in post-prostatectomy patients in whom there is a
high suspicion that the cancer has recurred.

When  deciding on an initial  course of therapy for diagnosed  prostate  cancer,
physicians  must first  determine  the extent of  disease  in the  patient.  The
accuracy of this information is vital in deciding upon an appropriate  course of
therapy.  Prior to the  availability of ProstaScint,  determining  whether newly
diagnosed disease was limited to the prostate or had spread beyond the gland was
based upon statistical inference from the biopsy appearance of the tumor and the
patient's serum level of PSA.  Conventional imaging methods such as CT (computed
tomography) or MR (magnetic  resonance) are all relatively  insensitive  because
they rely on identifying  significant  changes to normal  anatomic  structure to
indicate the presence of disease.  The ProstaScint disease images are based upon
expression of the PSMA molecule and, therefore, may identify disease not readily
detectable with conventional procedures.

During an imaging procedure,  ProstaScint is administered intravenously into the
patient.  The antibody in ProstaScint  travels through the bloodstream and binds
to specific  antigens  expressed by the tumors being studied.  The radioactivity
from the isotope that has been  attached to the  antibody  can be detected  from
outside the body by a gamma camera.  Gamma cameras are found in nuclear medicine
departments.  The image captured by the camera assists in the  identification of
the location of the  radiolabeled  pharmaceutical  thus identifying the sites of
tumors.  Clinical studies conducted to date by physicians on our behalf indicate
that ProstaScint may provide new and useful information not available from other
conventional diagnostic modalities regarding the existence,  location and extent
of a specific disease throughout the body.

In the United States,  following  initial therapy,  prostate cancer patients are
monitored to  ascertain  changes in the level of serum PSA. In this  setting,  a
rise  in  PSA is  evidence  of  recurrence  of the  patient's  prostate  cancer.
Knowledge  of the extent and  location of disease  recurrence  is  important  in
choosing the most  appropriate  form of  treatment.  The National  Comprehensive
Cancer  Network  (NCCN),  a consortium  of leading  cancer  hospitals,  included
ProstaScint  imaging as a tool in its Practice Guidelines for recurrent prostate
cancer in both its 2001 and 2002 edition. Guidelines such as these are published
to serve as the practice standard for the oncology community.

We believe that future growth and market  penetration  of ProstaScint is largely
dependent upon, among other things, the implementation and continued research of
new product  applications,  such as: (i) combining or fusing ProstaScint with CT
or MR scans in a digital overlay ("fusion imaging");  and (ii) using ProstaScint
scans to guide therapy  ("image-guided  therapy") to enhance therapy  targeting,
including  brachytherapy,  cryotherapy,  and external  beam  radiation,  such as
intensity modulated radiation therapy (IMRT), an advanced and more powerful form
of therapy that uses computers to focus radiation more precisely on the target.

NMP22 BladderChek

In October 2002, we entered into a five-year agreement with Matritech Inc. to be
the sole distributor for Matritech's NMP22 BladderChek  device to urologists and
oncologists in the United States.  Retention of exclusivity  rights depends upon
meeting certain minimum annual  purchases.  NMP22 BladderChek is a point-of-care
antibody-based diagnostic test for bladder cancer that requires only a few drops
of a patient's urine.  NMP22  BladderChek  returns results in thirty minutes and
provides  urologists  with an  adjunct  technology  to  cystoscopy,  a  clinical
procedure  for  the  visual  identification  of  tumors  in the  bladder.  NMP22
BladderChek is approved for sale in the United States.  During November 2002, we
began promoting  NMP22  BladderChek to urologists in the United States using our
in-house sales force.

OncoScint CR/OV

We discontinued  marketing,  selling and producing OncoScint CR/OV, a monoclonal
antibody  diagnostic  imaging agent for spread of colorectal and ovarian cancer,
at the end of 2002.  The  market  for  OncoScint  CR/OV  for  colorectal  cancer
diagnosis  has been  negatively  affected by positron  emission  tomography,  or
"PET",  scans.  The  sensitivity  of the PET scan in colon cancer  appears to be
similar or higher than the OncoScint CR/OV scan.

Quadramet

Quadramet is a cancer  therapeutic agent for the relief of pain in patients with
metastatic  bone  lesions  that image on  conventional  bone scan,  a  routinely
performed  nuclear  medicine  procedure.  Quadramet  consists  of a  radioactive
isotope, Samarium-153, which emits beta radiation, and a chelating agent, EDTMP,
which targets the drug to sites of new bone formation.

                                       6
<PAGE>
Once tumors have  metastasized to the skeleton,  they continue to grow and cause
destruction  of the  adjacent  bone.  This erosion of bone  stimulates  new bone
formation which encircles the metastatic tumor. By targeting these areas of bone
formation,  Quadramet  delivers  site-specific  radiation,  which may  result in
significant  pain  reduction.  According to American Cancer Society and National
Cancer  Institute  statistics,  about half of all people with cancer (other than
skin  cancer)  will have bone  metastasis  at some  point in the course of their
disease.  Bone  metastasis is one of the most frequent  causes of cancer related
pain.

Quadramet has many  characteristics  which we believe are  advantageous  for the
treatment of cancer bone pain, including early onset of pain relief,  lasting up
to four months with a single  injection;  predictability  of recovery  from bone
marrow toxicity; ease of administration; and length of pain relief. In addition,
due to its  pharmacokinetic  properties,  the  radioactive  plasma  half-life is
approximately  five  to  six  hours.  Quadramet  is  administered  as  a  single
intravenous  injection on an outpatient  basis and directly targets sites of new
bone formation  which include those areas in the skeleton that have been invaded
by metastatic tumors. Quadramet exhibits selective uptake in bone with little or
no detectable accumulation in soft tissue.

We believe that the future growth and market penetration of Quadramet is largely
dependent  upon,  among other  things:  (i) new  clinical  data  supporting  the
expanded and earlier use of Quadramet in various cancers and in combination with
other therapies, such as chemotherapy and bisphophonates;  (ii) establishing the
use of Quadramet at higher doses to target and treat primary bone  cancers;  and
(iii)  increased  marketing  and sales  penetration  to  radiation  and  medical
oncologists.

Current  competitive  treatments  for severe bone cancer pain  include  narcotic
analgesics,  external beam  radiation  therapy,  bisphosphonates,  Metastron and
Novantrone.

BrachySeed

In December 2000, we entered into a 10-year  agreement with Draximage  Inc., the
radiopharmaceutical  subsidiary of Draxis Health,  Inc. to market and distribute
Draximage's  BrachySeed  implants in the United States.  On January 24, 2003, we
provided  Draximage  with  notice of  termination  for each of our  License  and
Distribution  Agreement  and Product  Manufacturing  and Supply  Agreement  with
respect to both of Draximage's  BrachySeed I-125 and BrachySeed Pd-103 products.
Effective  January  24,  2003,  we no longer  accept or fill new  orders for the
BrachySeed I-125 and BrachySeed Pd-103 products.

Oncology Product Sales, Marketing and Distribution

ProstaScint  is a  technique-dependent  product  that  requires a high degree of
proficiency  in  nuclear  imaging  technology  in order to  correctly  image and
interpret the scan. We have established a network of accredited nuclear medicine
imaging  centers  through our PIE, or Partners In Excellence  Program.  Each PIE
site receives rigorous training and proficiency evaluations.  As of December 31,
2002,  there  were 396 such sites  qualified  to  perform  ProstaScint  imaging,
including  National Cancer  Institute-designated  Comprehensive  Cancer Centers.
ProstaScint may only be used at qualified PIE sites. We plan to add PIE sites on
a selective  basis in order to ensure that new and existing sites are adequately
qualified  maintaining a high level of competence.  At the present time, we bear
partial expense of the qualification of new sites.

The primary objective of our dedicated sales force is to promote our products to
urologists,  radiation oncologists and nuclear medicine physicians.  Within this
field  force are  technical  specialists  who assist in the  training of nuclear
medicine   technologists   and  nuclear   medicine   physicians   including  the
qualification  process  for  nuclear  imaging  centers  to  perform  ProstaScint
imaging.  We  depend  on our own  sales  force  for the  sale and  marketing  of
ProstaScint  and NMP22  BladderChek.  The  distribution of ProstaScint and NMP22
BladderChek  is handled by outside  contractors.  We also rely on Berlex for the
sale, marketing and distribution of Quadramet in the United States.

During 2000, we terminated our co-marketing arrangement with the Bard Urological
Division of CR Bard Company,  Inc with respect to the marketing of  ProstaScint.
In 1999,  we  reached  an  agreement  with  Bard to phase  out the  co-marketing
agreement so that we could undertake  direct  marketing  responsibility  for the
product.  We took  this  step  because  of our view  that a  highly-trained  and
dedicated  internal  sales  force  would be able to market  our high  technology
products most  effectively,  and to build an internal  marketing  capability for
possible future products. The transition was completed by mid-year 2000.

In  October   1998,  we  entered  into  an  exclusive   agreement   with  Berlex
Laboratories,  Inc.  for the  marketing  of  Quadramet,  after  terminating  our
previous marketing relationship with the radiopharmaceutical  division of DuPont

                                       7
<PAGE>
Merck.  Berlex re-launched  Quadramet in March 1999, and maintains a sales force
that targets its sales  efforts on the  oncological  community.  Pursuant to our
agreement with Berlex, we are entitled to royalty payments based on net sales of
the Quadramet  product and milestone  payments based upon sales levels achieved.
We are  also  required  to  pay  royalties  or  guaranteed  contractual  minimum
payments,  whichever is greater,  and future  payments upon the  achievement  of
certain  milestones,  to The Dow Chemical  Company,  the owner of the technology
upon which we developed Quadramet.

Corporate Partners, Strategic Alliances and License Agreements

Our strategy is to use alliances with other  companies to increase our financial
resources,  reduce risk and retain an appropriate level of ownership of products
currently  in   development.   In  addition,   through   alliances   with  other
pharmaceutical  and  biotechnology  companies,  we may  obtain  funding,  expand
existing programs,  learn of new technologies,  and gain additional expertise in
developing and marketing products.

Abgenix, Inc.

During 2001, the PSMA  Development  Company LLC, a joint venture between Cytogen
and Progenics  Pharmaceuticals,  Inc.,  entered into an agreement  with Abgenix,
Inc. regarding the development of fully human antibodies to PSMA using Abgenix's
XenoMouse technology.

Advanced Magnetics, Inc.

In August  2000,  Cytogen and Advanced  Magnetics,  Inc.  mutually  terminated a
previously  negotiated  agreement  pursuant  to  which  Cytogen  was to  acquire
Advanced Magnetics. Instead, the two companies entered into marketing, licensing
and supply  agreements.  Under such  agreements,  we acquired  exclusive  United
States rights to two product  candidates,  Combidex (for all  applications)  and
imaging  agent  Code 7228 (for  oncology  applications  only).  Combidex,  a MRI
contrast  agent  for  the  detection  of  lymph  node  metastases,  received  an
approvable  letter in June 2000 from the FDA,  subject  to  certain  conditions,
following a priority  review.  Advanced  Magnetics is continuing its discussions
with the FDA relating to outstanding  issues regarding such approvable letter in
an effort to bring Combidex to market. At this time, Advanced Magnetics does not
intend to develop Code 7228 for oncology imaging.

Under the terms of our License and Marketing  Agreement with Advanced Magnetics,
we issued 200,000 shares of common stock to Advanced Magnetics.  Of such 200,000
shares,  25,000  are being held in escrow  pending  the  achievement  of certain
milestones  relating to Combidex and 25,000 are being held in escrow pending the
achievement of certain  milestones  relating to Code 7228. The remaining 150,000
shares were transferred to Advanced Magnetics,  subject to certain restrictions,
such restrictions having subsequently expired.

Our License and Marketing  Agreement with Advanced Magnetics will continue until
August 25, 2010, and shall  thereafter  automatically  renew for successive five
year periods,  unless notice of  non-renewal  or  termination  is given by us or
Advanced Magnetics, 90 days prior to the commencement of any renewal period.

There can be no assurance  that Advanced  Magnetics will receive FDA approval to
market products licensed by Cytogen.

AlphaVax

In 2001,  the PSMA  Development  Company LLC, our joint  venture with  Progenics
Pharmaceuticals,  Inc.,  entered into a development  and license  agreement with
AlphaVax to utilize  their  proprietary  viral vector  technology to deliver the
PSMA gene systemically.  This agreement contains certain up-front,  maintenance,
milestone and royalty payments. We believe that this technology, if successfully
deployed, may have important advantages in targeting immune stimulating cells in
vivo which impact on the progression of cancer.


                                       8
<PAGE>
Berlex Laboratories, Inc.

In October 1998, we entered into a license  agreement with Berlex  Laboratories,
Inc.   regarding  the  sales,   marketing  and  distribution  of  Quadramet,   a
radiopharmaceutical product used to provide pain relief from cancer spreading to
the bone. As consideration for the rights granted, Berlex Laboratories agreed to
pay us royalties based on net sales, as defined in the agreement. This agreement
will expire twenty years from the date of execution or on the date of expiration
of the last to expire licensed patent, whichever is later.

Elan Corporation, plc

In January 1996,  we entered into a license  agreement  granting Elan  worldwide
rights to a group of peptides and associated  technology for orally administered
drugs that are transported across the  gastrointestinal  epithelium,  as well as
rights to other orally delivered drugs derived from related  research  programs.
Elan is responsible for the further  development and  commercialization  of this
technology. We are entitled to royalties from sales of any product developed and
commercialized based on this technology.

Matritech

In October 2002, we entered into a five-year agreement with Matritech Inc. to be
the sole  distributor for Matritech's  NMP22  BladderChek test to urologists and
oncologists in the United States.  Retention of exclusivity  rights depends upon
meeting certain minimum annual  purchases.  NMP22 BladderChek is a point-of-care
antibody test for bladder  cancer  detection that requires only a few drops of a
patient's  urine.  NMP22  BladderChek  returns  results  in thirty  minutes  and
provides  urologists  with an  adjunct  technology  to  cystoscopy,  a  clinical
procedure  for  the  visual  identification  of  tumors  in the  bladder.  NMP22
BladderChek is approved for sale in the United States.  During November 2002, we
began promoting  NMP22  BladderChek to urologists in the United States using our
in-house sales force.

Memorial Sloan-Kettering Cancer Center

In 1993, we began a development  program with  Memorial  Sloan-Kettering  Cancer
Center involving PSMA and our proprietary monoclonal antibody. In November 1996,
we exercised an option for, and obtained, an exclusive worldwide license to this
technology.

Northwest Biotherapeutics, Inc.

We  licensed  PSMA  through  our  subsidiary,   Prostagen,  Inc.,  to  Northwest
Biotherapeutics,  Inc.,  for  development  of  in  vitro  dendritic  cell  based
immunotherapy  of  prostate  cancer.  Prostagen  also  licensed  exclusive  PSMA
manufacturing   rights  for  immunotherapy  to  Northwest   Clinicals,   LLC,  a
corporation formed and co-owned by Northwest Biotherapeutics and Prostagen. Such
manufacturing  rights  license  agreement  with  Northwest  Clinicals,  LLC  was
terminated and the manufacturing rights thereunder returned to Cytogen. In 2000,
we executed a new  sublicense  agreement  with  Northwest  Biotherapeutics  Inc.
clarifying  their  rights  to make  and use  PSMA  for ex vivo  prostate  cancer
immunotherapy. In December 2002, we announced that we had regained our rights to
ex vivo  prostate  cancer  immunotherapy  using  PSMA,  in  connection  with the
termination of our agreement with Northwest Biotherapeutics, Inc.

Progenics Pharmaceuticals, Inc.

In 1999, we entered into a joint venture with Progenics Pharmaceuticals, Inc. to
develop  products  utilizing our PSMA technology.  The products  currently under
development  include,  among  others,  a  therapeutic  prostate  cancer  vaccine
utilizing a PSMA protein/adjuvant  approach. In December 2002, the joint venture
announced the  initiation of a Phase I clinical trial for the testing of a novel
therapeutic   prostate  cancer  vaccine  directed  against  PSMA.  We  are  also
developing  through  this  joint  venture,  antibody-based  immunotherapies  for
prostate cancer. We believe that these drugs, if successfully  developed,  could
play an important  role in the treatment of advanced  prostate  cancer and other
cancers  where  PSMA is  expressed,  such as in  breast,  colon  lung and  other
cancers.


                                       9
<PAGE>
The Dow Chemical Company

In March 1993, we obtained an exclusive license from The Dow Chemical Company to
North American rights to use Quadramet as a therapeutic  radiopharmaceutical for
metabolic  bone disease or tumor  regression  for cancer caused by metastatic or
primary cancer in bone in humans, and for the treatment of disease characterized
by  osteoblastic  response in humans.  In November  1998,  Dow also extended our
exclusive rights for use of Quadramet in treating advanced rheumatoid  arthritis
to Europe, Japan and other countries in addition to North America.

Draxis Health, Inc.

In December 2000, we entered into a 10-year  agreement with Draximage  Inc., the
radiopharmaceutical  subsidiary of Draxis Health,  Inc. to market and distribute
Draximage's  BrachySeed  implants in the United States.  On January 24, 2003, we
provided  Draximage  with  notice of  termination  for each of our  License  and
Distribution  Agreement  and Product  Manufacturing  and Supply  Agreement  with
respect to both of Draximage's  BrachySeed I-125 and BrachySeed Pd-103 products.
Effective  January  24,  2003,  we no longer  accept or fill new  orders for the
BrachySeed I-125 and BrachySeed Pd-103 products.

PRODUCT CONTRIBUTION TO REVENUES

ProstaScint  and  Quadramet  account  for, and prior to its  discontinuation  in
January 2003,  BrachySeed  accounted for, a significant  percentage of our total
revenues. For the years ended December 31, 2002, 2001 and 2000, revenues related
to ProstaScint  accounted for approximately 61%, 65% and 66%,  respectively,  of
our total revenues;  revenues related to Quadramet  accounted for  approximately
14%, 18% and 19%,  respectively,  of our total revenues; and revenues related to
BrachySeed accounted for approximately 19% of our total revenues during the year
ended  December  31,  2002 and 7% of our total  revenues  during  the year ended
December 31, 2001.

On January 24, 2003, we provided  Draximage with notice of termination  for each
of our License and Distribution  Agreement and Product  Manufacturing and Supply
Agreement  with respect to both of Draximage's  BrachySeed  I-125 and BrachySeed
Pd-103 products.

RESEARCH AND DEVELOPMENT

Our  research  and  development  expenditures  include  our  share of the  costs
incurred  to  develop   PSMA   through   our  joint   venture   with   Progenics
Pharmaceuticals,  payments  we made to  customer  sponsored  research  programs,
payments to DSM Biologics for the development of a new manufacturing process for
ProstaScint  and the cost to develop the signal  transduction  pathway  research
program at AxCell. Our expenses for research and development activities were:

     -        2002 -- $ 10.5 million

     -        2001 -- $ 10.4 million

     -        2000 -- $  7.0 million

We  intend to pursue  research  and  development  activities  having  commercial
potential and to review all of our programs to determine whether possible market
opportunities,  near and longer term,  provide an adequate return to justify the
commitment of human and economic  resources to their initiation or continuation.
During 2002, we incurred  $551,000 of expenses for the DSM development  program,
$3.6  million  for the  signal  transduction  pathway  program  at AxCell  and a
stock-based  milestone  payment of $2.0  million  related to the progress of the
dendritic cell prostate cancer clinical trials at Northwest.  In addition to the
$7.6 million of research  and  development  expense  incurred  during  2002,  we
recognized $2.9 million of expenses  related to our share of the losses from our
joint  venture  with  Progenics.  The joint  venture is funded by equal  capital
contributions  from each of Progenics and Cytogen in  accordance  with an annual
budget approved by the joint venture representatives from each such party. As of
March 28, 2003,  the parties are in the process of  negotiating  the 2003 annual
budget for the joint venture and have agreed that the operating  budget for 2003
will be no less than the 2002 operating expenses for the joint venture. Contract
research and  development  services  provided by Progenics to the joint  venture
during 2002 were in accordance with a services agreement between the parties. As
of March 28,  2003,  the parties  are  negotiating  the terms of a new  services
agreement and believe that if mutual agreement is not achieved,  the parties can
successfully negotiate with outside third parties for necessary services.

                                       10
<PAGE>
COMPETITION

The  biotechnology  and   pharmaceutical   industries  are  subject  to  intense
competition,   including   competition  from  large  pharmaceutical   companies,
biotechnology   companies  and  other   companies,   universities  and  research
institutions.  Our existing  therapeutic products compete with the products of a
wide variety of other firms,  including firms that provide products used in more
traditional   treatments  or  therapies,   such  as  external  beam   radiation,
chemotherapy  agents and  narcotic  analgesics.  In  addition,  our existing and
potential  competitors may be able to develop technologies that are as effective
as, or more  effective than those offered by us, which would render our products
noncompetitive  or  obsolete.  Moreover,  many  of our  existing  and  potential
competitors   have   substantially   greater   financial,    marketing,   sales,
manufacturing, distribution and technological resources than we do. Our existing
and  potential  competitors  may be in the  process  of  seeking  FDA or foreign
regulatory  approval for their respective products or may also enjoy substantial
advantages over us in terms of research and development expertise, experience in
conducting  clinical  trials,  experience in regulatory  matters,  manufacturing
efficiency,  name  recognition,  sales and marketing  expertise and distribution
channels.  We believe  that  competition  for our products is based upon several
factors,  including product efficacy, safety,  cost-effectiveness,  ease of use,
availability, price, patent position and effective product promotion.

We expect  competition  to intensify in the fields in which we are involved,  as
technical  advances in such fields are made and become  more  widely  known.  We
cannot assure you, however,  that we or our collaborative  partners will be able
to develop our products  successfully  or that we will obtain patents to provide
protection  against  competitors.  Moreover,  we  cannot  assure  you  that  our
competitors will not succeed in developing  therapeutic products that circumvent
our  products  or  that  these   competitors  will  not  succeed  in  developing
technologies  or products that are more effective than those developed by us. In
addition,  many of these  companies  may have more  experience  in  establishing
third-party reimbursement for their products.  Accordingly, we cannot assure you
that we  will be able to  compete  effectively  against  existing  or  potential
competitors or that  competition  will not have a material adverse effect on our
business, financial condition and results of operations.

The market for  therapeutic  and diagnostic  products that address  prostate and
bladder  cancer  is  large.   Our  most   significant   competitors   are  major
pharmaceutical  companies,  radiopharmaceutical  distributors and  biotechnology
companies.  There is one marketed  product that  competes  with our  ProstaScint
product,  which  is  18-F  fluorodeoxyglucose-PET  (FDG),  a  Positron  Emission
Tomography  (PET)  imaging  agent which is produced and  distributed  by various
radiopharmaceutical   suppliers,   such  as  PETnet  and  Syncor   International
Corporation  (now  Cardinal  Health  Nuclear  Pharmacy  Services).  We also face
competition  in the  diagnostic  bladder  cancer  market  from  Polymedco  which
produces BTAstat(R),  a competitive product to NMP22 BladderChek,  which we have
licensed from Matritech.  Matritech has retained rights to market and may market
the  point-of-care  NMP22  BladderChek  test directly to  physicians  other than
urologists and oncologists, such as primary care physicians.

Additionally,  we face competition in the development of PSMA-related technology
and products primarily from Millenium Pharmaceuticals, Inc. and Medarex, Inc.

These competitors, many of which have substantially greater resources than ours,
operate large,  well-funded cancer research and development  programs,  and have
significant  expertise  in  manufacturing,   testing,   regulatory  matters  and
marketing.

MANUFACTURING

Our products must be manufactured in compliance with regulatory requirements and
at commercially acceptable costs. ProstaScint was manufactured at a current good
manufacturing practices, or cGMP, compliant manufacturing facility in Princeton,
New Jersey which is operated by Laureate  Pharma L.P.  (formerly  Bard BioPharma
L.P.). An Establishment License Application for the facility was approved by the
FDA for the  manufacture  of  ProstaScint  in October  1996.  Our  manufacturing
agreement with Laureate expired in January 2002. In July 2000, we entered into a
Development  and  Manufacturing  Agreement  with  DSM  Biologics  Company  B.V.,
pursuant to which DSM conducted certain  development  activities with respect to
ProstaScint  for testing and  evaluation  purposes.  Our  intention was that DSM
would replace the arrangement with Laureate,  with respect to the manufacture of
ProstaScint.

In  January  2003,  we  entered  into a new  Contract  Manufacturing  and Supply
Agreement   with  Laureate   Pharma  L.P.,   pursuant  to  which  Laureate  will
manufacture,  and  supply  us with,  ProstaScint,  through  December  31,  2003.
Notwithstanding  the terms of such contract,  we cannot be certain that Laureate
will satisfactorily  perform its obligations thereunder or that Laureate will be
able to supply ProstaScint to us on commercially  satisfactory terms, if at all.
Our failure to procure a sufficient  supply of ProstaScint  will have a material

                                       11
<PAGE>
adverse effect on our business,  financial  condition and results of operations.
As of December 31, 2002 we had a sufficient  level of ProstaScint,  inventory on
hand for ten months.

Our  manufacturing  arrangement  with Laureate is subject to FDA oversight.  Any
failure of Laureate to comply with FDA requirements will have a material adverse
effect on our business, financial condition and results of operations.

Quadramet is  manufactured  by  Bristol-Myers  Squibb (BMS)  (formerly  DuPont),
pursuant to an agreement with both Berlex and Cytogen.

Raw materials and suppliers

The active raw materials  used for the  manufacture of our  ProstaScint  product
include antibodies.  We intend that the raw materials needed for our ProstaScint
product will be supplied by Laureate Pharma L.P., the same contract manufacturer
that we intend will make ProstaScint.

With respect to some  components  of  Quadramet,  particularly  Samarium153  and
EDTMP, such raw materials are provided to BMS by outside suppliers.  BMS obtains
its  requirements  for Samarium153  from one supplier.  Alternative  sources for
these components may not be readily  available.  If BMS 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,  which  could  have  a  material  adverse  effect  on our
business, financial condition and results of operations.

On January 24, 2003, we provided  Draximage with notice of termination  for each
of our License and Distribution  Agreement and Product  Manufacturing and Supply
Agreement  with respect to both of Draximage's  BrachySeed  I-125 and BrachySeed
Pd-103 products.

Pursuant to the terms of our distribution  agreement with Matritech,  we rely on
Matritech as the sole supplier of NMP22 BladderChek.  Matritech uses independent
contractors to manufacture  the product.  If Matritech fails to, or is unable to
provide  the  product,  we could  experience  a material  adverse  effect on our
business, financial condition and results of operations.

PATENTS AND PROPRIETARY RIGHTS

We  believe  that our  success  depends in part on our  ability  to protect  our
products and  technology  through  patents and trade secrets.  Accordingly,  our
policy is to pursue a vigorous  program of securing and  maintaining  patent and
trade  secret  protection  to  preserve  our right to exploit the results of our
research and  development  activities  and, to the extent it may be necessary or
advisable, to exclude others from appropriating our proprietary technology.

We aggressively protect our proprietary technology by selectively seeking patent
protection in a worldwide  program.  In addition to the United  States,  we file
patent applications in Canada,  major European  countries,  Japan and additional
foreign  countries on a selective basis to protect  inventions  important to the
development  of our  business.  We believe  that the  countries in which we have
obtained  and  are  seeking  patent  coverage  for  our  proprietary  technology
represent the major focus of the pharmaceutical industry in which we and certain
of our  licensees  will market our  respective  products.  We also rely on trade
secrets,   know-how,   continuing   technological  innovation  and  in-licensing
opportunities to develop and maintain our proprietary position.

As of December 31, 2002, we owned or licensed over 40 United States  patents and
additional pending United States patent applications,  and over 45 corresponding
issued  foreign  patents and  additional  corresponding  pending  foreign patent
applications.

The issued patents owned or exclusively  licensed by us cover various aspects of
our technology and therapeutic products and the methods for their production and
use, including various aspects of ProstaScint, Quadramet, and NMP22 BladderChek.
We have obtained a patent term extension on U.S. 5,162,504,  the patent directed
to  ProstaScint  to  October  28,  2010.  In  addition,  there is a patent  term
extension on U.S. 4,898,724, the patent directed to Quadramet to March 28, 2011.

We have entered into several license  agreements  under which we are exclusively
licensed to certain patents and patent applications.  In particular, we acquired
an exclusive license from Memorial Sloan-Kettering Institute for certain patents
and patent  applications  covering  PSMA. We are also the exclusive  licensee of
certain United States patents and applications owned by DOW covering Quadramet.

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We both co-own with and are the  exclusive  licensee of the  University of North
Carolina at Chapel Hill of certain  patents and pending  applications,  covering
aspects of proteomics technology, including our phage display.

We also  currently  own or are  licensed  under  the  following  trademarks  and
servicemarks:   ProstaScint(R);   Quadramet(R);  NMP22(R)  BladderChek(TM);  and
Combidex(R).

We also  rely  upon,  and  intend  to  continue  to rely  upon,  trade  secrets,
unpatented  proprietary  know-how and  continuing  technological  innovation  to
develop and maintain our competitive  position.  It is our policy to require our
employees, consultants,  licensees, outside scientific collaborators,  sponsored
researchers  and other advisors to execute  confidentiality  agreements upon the
commencement of employment or consulting relationships with us. These agreements
provide  that  all  confidential  information  developed  or made  known  to the
individual  during the course of the individual's  relationship with us is to be
kept  confidential  and not  disclosed  to  third  parties  except  in  specific
circumstances.  In the  case of  employees,  the  agreements  provide  that  all
inventions  conceived by the individual shall be our exclusive  property.  There
can be no assurance,  however,  that these  agreements  will provide  meaningful
protection  or  adequate  remedies  for the our  trade  secrets  in the event of
unauthorized use or disclosure of such information.

We believe that our valuable proprietary information is protected to the fullest
extent practicable; however, we cannot assure you that:

     -    additional  patents  will be  issued  to us in any or all  appropriate
          jurisdictions;

     -    litigation  will not be  commenced  seeking  to  challenge  our patent
          protection or that challenges will not be successful;

     -    our processes or products do not or will not infringe upon the patents
          of third parties; or

     -    the scope of patents  issued will  successfully  prevent third parties
          from developing similar and competitive products.

The technology  applicable to our products is developing  rapidly. A substantial
number  of  patents  have  been  issued  to other  biotechnology  companies.  In
addition,  competitors have filed applications for, or have been issued, patents
and may obtain additional patents and proprietary rights relating to products or
processes  that are  competitive  with ours. In addition,  others may have filed
patent  applications  and may  have  been  issued  patents  to  products  and to
technologies potentially useful to us or necessary to commercialize our products
or to achieve our business  goals.  We cannot assure you that we will be able to
obtain licenses of patents on acceptable terms.

We cannot predict how any patent  litigation will affect our efforts to develop,
manufacture or market our products.

We are  defendants in litigation  filed against us in the United States  Federal
Court for the District of New Jersey with respect to claims that our ProstaScint
product infringes a third-party patent and we have disclosed certain information
regarding such lawsuit under the caption "Legal Proceedings", herein.

GOVERNMENT REGULATION AND PRODUCT TESTING

The  development,  manufacture  and  sale  of  medical  products  utilizing  our
technology  are governed by a variety of federal,  state and local  statutes and
regulations in the United States and by comparable  laws and agency  regulations
in most foreign  countries.  Our three actively  marketed  products consist of a
biologic (ProstaScint),  a drug (Quadramet,  a therapeutic  radiopharmaceutical)
and a Premarket  Approval  ("PMA")  device  (NMP22(R)  BladderChek(TM)).  Future
applications  for these may include  expanded  indications  and could  result in
additional drugs,  biologics,  PMA devices or combination products.  Our product
development pipeline contains various other products, the majority of which will
likely be classified as new drugs or biologics.

In the United  States,  medical  products that we currently  market or intend to
develop are  regulated by the Federal Food,  Drug,  and Cosmetic Act ("FDC Act")
and the Public Health Service Act, and by the Food and Drug  Administration (the
"FDA") rules and regulations promulgated thereunder.  These laws and regulations
require,  among other things,  carefully controlled research and preclinical and
clinical testing of products,  government  notification,  review and/or approval
prior to investigating or marketing the product,  inspection and/or licensing of
manufacturing and production facilities, adherence to current Good Manufacturing

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<PAGE>
Practices  ("cGMP"),  and compliance  with products  specifications,  reporting,
advertising,   promotion,  export,  packaging,  labeling  and  other  applicable
regulations.

The FDC Act  requires  that  our  products  be  manufactured  in FDA  registered
facilities  subject to inspection.  The manufacturer  must be in compliance with
cGMP which imposes certain procedural and documentation requirements upon us and
our  manufacturing  partners with respect to  manufacturing  and quality control
activities.  To  ensure  full  technical  compliance  with such  regulations,  a
manufacturer  must spend funds,  time and effort in the areas of production  and
quality  control.  Noncompliance  with cGMP can result in,  among other  things,
fines, injunctions,  civil penalties,  recalls or seizures of products, total or
partial  suspension of  production,  failure of the government to grant approval
for marketing,  withdrawal,  suspension or revocation of marketing approvals and
criminal prosecution.  Any failure by us or our manufacturing partners to comply
with the  requirements  of cGMP  could  have a  material  adverse  effect on our
business, financial condition and results of operations.

FDA approval of our proposed  products,  including a review of the manufacturing
processes and facilities used to produce such products,  will be required before
such products may be marketed in the United States.  The process required by the
FDA before drug, biological or PMA device products may be approved for marketing
in the United States  generally  involves (i) preclinical  laboratory and animal
tests under the FDA's good laboratory practice  regulations,  (ii) submission to
the  FDA of an  Investigational  New  Drug  Application  ("IND")  (for a drug or
biologic) or Investigational Device Exemption ("IDE") (for a device), which must
become effective before clinical trials may begin, (iii) human clinical trial(s)
to establish the safety and efficacy of the product for its intended indication,
(iv)  submission  to the FDA of a marketing  application  (New Drug  Application
("NDA") for drug, Biologics License Application ("BLA") for biologic and PMA for
device) and (v) FDA review of the marketing  application  in order to determine,
among other things,  whether,  for a new drug or device, the product is safe and
effective  for its intended  uses,  or whether,  for a biological  product,  the
product is safe,  pure and potent and the facility in which it is  manufactured,
processed,  packed or held meets  standards  designed  to assure  the  product's
continued safety, purity, and potency.  Radiopharmaceutical  drugs and biologics
are subject to additional requirements pertaining to the description and support
of their  indications for use, and the evaluation of product  effectiveness  and
safety, including radiation safety. There is no assurance that the FDA review of
marketing  applications will result in product approval on a timely basis, or at
all.

Clinical trials for drugs and biologics  typically are performed in three phases
to evaluate  the safety and  efficacy of the  product.  In Phase I, a product is
tested  in a small  number  of  patients  primarily  for  safety  at one or more
dosages. Phase II evaluates,  in addition to safety, the efficacy of the product
against  particular  diseases in a patient population that is generally somewhat
larger  than  Phase  I.  Clinical  trials  of  certain   diagnostic  and  cancer
therapeutic  agents may  combine  Phase I and Phase II into a single  Phase I/II
study.  In Phase III, the product is evaluated  in a larger  patient  population
sufficient to generate data to support a claim of safety and efficacy within the
meaning of the FDC Act.  Permission by the FDA must be obtained  before clinical
testing can be initiated  within the United States.  This permission is obtained
by  submission  of an IND  application  which  typically  includes,  among other
things, the results of in vitro and non-clinical  testing and any previous human
testing done elsewhere.  The FDA has 30 days to review the information submitted
and makes a final decision  whether to permit clinical  testing with the drug or
biologic.  However,  this process can take longer if the FDA raises questions or
asks  for  additional   information   regarding  the  Investigational  New  Drug
application.

There can be no assurance  that  submission  of an IND or IDE will result in the
ability to commence clinical trials. In addition, FDA may place a clinical trial
on hold or terminate  it if, among other  reasons,  it concludes  that  clinical
subjects are being exposed to an unacceptable  health risk.  After completion of
in vitro,  non-clinical  and clinical  testing,  authorization to market a drug,
biologic or device must be granted by FDA. The FDA grants  permission  to market
through the review and approval of either an NDA, BLA or PMA.

An  NDA  is an  application  to  the  FDA  to  market  a new  drug.  A BLA is an
application to the FDA to market a biological  product. An NDA or BLA, depending
on the submission,  must contain, among other things,  information on chemistry,
manufacturing  controls  and potency and purity;  nonclinical  pharmacology  and
toxicology;  human  pharmacokinetics  and bioavailability and clinical data. The
new drug or biologic may not be marketed in the United  States until the FDA has
approved the NDA or BLA. In addition,  for both NDAs and BLAs,  the  application
will not be  approved  until the FDA  conducts a  manufacturing  inspection  and
approves the applicable manufacturing process for the drug or biologic. A PMA is
an  application  to the FDA to market  certain  medical  devices,  which must be
approved in order for the product to be marketed.  It must be supported by valid
scientific   evidence,   which  typically  includes  extensive  data,  including
pre-clinical data and clinical data from well-controlled or partially controlled
clinical  trials,  to demonstrate  the safety and  effectiveness  of the device.
Product and manufacturing  and controls  specification and information must also
be provided.

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<PAGE>
Both the studies and the preparation  and  prosecution of these  applications in
front of the FDA are  expensive  and time  consuming,  and each may take several
years to complete.  Difficulties or unanticipated costs may be encountered by us
or our licensees in their respective  efforts to secure  necessary  governmental
approval or  licenses,  which could delay or preclude us or our  licensees  from
marketing  their  products.  There can be no  assurance  that  approvals  of our
proposed products, processes or facilities will be granted on a timely basis, or
at all. Limited  indications for use or other conditions could also be placed on
any approvals that could restrict the commercial  applications of products. With
respect to patented  products or technologies,  delays imposed by the government
approval process may materially  reduce the period during which we will have the
exclusive  right to exploit them,  because  patent  protection  lasts only for a
limited  time,  beginning on the date the patent is first granted in the case of
United  States  patent  applications  filed prior to June 6, 1995,  and when the
patent  application is first filed in the case of patent  applications  filed in
the United  States after June 6, 1995,  and  applications  filed in the European
Economic Community. We intend to seek to maximize the useful life of our patents
under the Patent  Term  Restoration  Act of 1984 in the United  States and under
similar laws if available in other countries.

Certain of our future products may be regulated by FDA as combination  products.
Combination  products are products  comprised  of a  combination  of two or more
different   types   of   components,    e.g.,   drug/device,    device/biologic,
drug/device/biologic,  or are comprised of two or more separate  different types
of  products  packaged  together  for  use,  or two or more  different  types of
products  packaged  separately  but  labeled  for use in  combination  with  one
another.  The regulation of a combination product is determined by the product's
primary  mode of action;  for  example,  a  combination  drug/device  that has a
primary  mode of action as a drug  would be  regulated  by the  Center for Drugs
under a new drug  application.  In some  cases,  however,  consultative  reviews
and/or  separate  approvals  by each  agency  Center  with  jurisdiction  over a
component  may be  required.  The product  designation,  approval  pathway,  and
submission  requirements for a combination  product may be difficult to predict,
and  the  approval  process  may  be  fraught  with  unanticipated   delays  and
difficulties. In addition, post-approval requirements may be more extensive than
for single entity  products.  Even if products such as  ProstaScint or Quadramet
that we intend to develop for use with other separately  regulated  products are
not  regulated  as  combination  products,   they  may  be  subject  to  similar
multi-Center consultative reviews and additional post-market requirements.

Once a product is  approved by the FDA,  we are  required  to maintain  approval
status  of  the  product  by  providing  certain  updated  safety  and  efficacy
information at specified  intervals.  Product changes as well as any change in a
manufacturing process or equipment that has a substantial potential to adversely
affect the safety or  effectiveness  of the product for a drug or biologic,  or,
for a device,  the use of a  different  facility  for  manufacturing  where such
change affects safety and effectiveness, would necessitate additional FDA review
and  approval.  Post  approval  changes in labeling,  packaging  or  promotional
materials may also necessitate further FDA review and approval. Additionally, we
are required to meet other  requirements  specified by the FDA Act including but
not limited to cGMPs, enforced by periodic inspections, adverse event reporting,
requirements governing labeling and promotional  materials,  and the maintenance
of  records.  Failure to comply with these  requirements  or the  occurrence  of
unanticipated  safety  effects from the products  during  commercial  marketing,
could lead to the need for product marketing restriction,  product withdrawal or
recall,  or other voluntary or FDA-initiated  action,  which could delay further
marketing  until the  products  are brought  into  compliance.  Similar laws and
regulations  apply  in  most  foreign  countries  where  these  products  may be
marketed.

Violations of the FDC Act, Public Health Service Act, or regulatory requirements
at any time during the product development  process,  approval process, or after
approval  may  result in agency  enforcement  actions,  including  voluntary  or
mandatory  recall,   license   suspension  or  revocation,   premarket  approval
withdrawal,  seizure of  products,  fines,  injunction  and/or civil or criminal
penalties. Any agency enforcement action could have a material adverse effect on
us.

Orphan Drug Act

The Orphan  Drug Act is  intended  to provide  incentives  to  manufacturers  to
develop and market drugs and biologics for rare diseases or conditions affecting
fewer than 200,000  persons in the United States at the time of application  for
orphan drug designation. A drug that receives orphan drug designation and is the
first product to receive FDA marketing  approval for a particular  indication is
entitled to orphan drug status,  which confers a seven-year  exclusive marketing
period in the United States for that indication.  Clinical testing  requirements
for  orphan  drugs are the same as those  for  products  that have not  received
orphan drug designation but  manufacturers may receive grants or tax credits for
research,  as well as protocol  assistance.  Under the Orphan Drug Act,  the FDA
cannot approve any  application by another party to market an identical  product
for treatment of an identical  indication unless the holder consents,  the party
has a license  from the holder of orphan  drug  status,  or the holder of orphan
drug status is unable to assure an adequate supply of the drug.  However, a drug
that is considered by FDA to be different  from a particular  orphan drug is not

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<PAGE>
barred from sale in the United States during the seven-year  exclusive marketing
period even if it receives  marketing  approval for the same product  claim.  In
addition,  holders of orphan  drug  status  must  notify FDA of any  decision to
discontinue  active pursuit of drug approval or biologics  license,  or, if such
approval  or  license  is in  effect,  notify FDA at least one year prior to any
discontinuance of product production.

Fraud and Abuse

We are subject to various federal and state laws pertaining to health care fraud
and  abuse,  including  anti-kickback  laws and  physician  self-referral  laws.
Violations  of these laws are  punishable  by criminal  and/or civil  sanctions,
including,  in some instances,  imprisonment and exclusion from participation in
federal and state  health care  programs,  including  Medicare,  Medicaid and VA
health programs.  Because of the far-reaching nature of these laws, there can be
no assurance that the  occurrence of one or more  violations of these laws would
not result in a material  adverse effect on our financial  condition and results
of operations.

Anti-Kickback   Laws.   Our   operations   are  subject  to  federal  and  state
anti-kickback  laws.  Certain  provisions  of the Social  Security Act, that are
commonly known  collectively  as the Medicare Fraud and Abuse Statute,  prohibit
entities, such as us, from knowingly and willingly offering,  paying, soliciting
or  receiving  any form of  remuneration  in return for the referral of items or
services  reimbursable by any federal health care program,  or in return for the
recommendation,  arrangement, purchase, lease or order of items or services that
are covered by federal health care programs. Violation of the Medicare Fraud and
Abuse  Statute is a felony,  punishable by fines up to $25,000 per violation and
imprisonment for up to five years or both. In addition, the Department of Health
and Human Services may impose civil penalties of up to $50,000 per act and up to
three times the remuneration offered and exclude violators from participation in
Medicare or state health programs. Many states have adopted similar prohibitions
against payments  intended to induce referrals to Medicaid and other third party
payor patients.

Physician Self-Referral Laws. We are also subject to federal and state physician
self-referral  laws. Federal physician  self-referral  legislation (known as the
Stark law) prohibits,  subject to certain exceptions, a physician from referring
Medicare or Medicaid patients to an entity providing "designated health services
including, among other things, certain radiology and radiation therapy services,
and  clinical  laboratory  services"  in which the  physician or a member of his
immediate  family has an ownership  or  investment  interest,  or with which the
physician  has  entered  into a  compensation  arrangement.  The  Stark law also
prohibits  the entity  receiving  the referral  from billing any good or service
furnished pursuant to an unlawful referral. The penalties for violations include
a prohibition on payment by these government  programs and civil penalties of as
much as $15,000 for each violative  referral and $100,000 for participation in a
circumvention  scheme."  Various state laws also contain similar  provisions and
penalties.

False Claims Laws.  Under  separate  statutes,  submission of claims for payment
that are false or fraudulent may lead to civil money  penalties,  criminal fines
and imprisonment,  and/or exclusion from participation in Medicare, Medicaid and
other  federally  funded state  health  programs.  These false  claims  statutes
include the Federal  False  Claims  Act,  which  allows any person to bring suit
alleging false or fraudulent  Medicare or Medicaid claims or other violations of
the statute and to share in any amounts paid by the entity to the  government in
fines or  settlement.  Such  suits,  known as qui tam  actions,  have  increased
significantly  in recent years causing  greater numbers of health care companies
to have to  defend a false  claim  action,  pay  fines or be  excluded  from the
Medicare, Medicaid or other federal or state health care programs as a result of
any investigation arising out of such action.

Other regulations

In  addition  to  regulations  enforced  by FDA,  and  federal  and  state  laws
pertaining  to health care fraud and abuse,  we are also  subject to  regulation
under the state and local  authorities  and other federal  statutes and agencies
including the Occupational  Safety and Health Act, the Environmental  Protection
Act, the Toxic  Substances  Control Act, the Resource  Conservation and Recovery
Act and the Nuclear Regulatory Commission.

Foreign regulatory approval

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

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

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

HEALTH CARE REIMBURSEMENT

Our business,  financial condition and results of operations will continue to be
affected  by the efforts of  governments  and  third-party  payors to contain or
reduce the costs of healthcare  through  various means.  There have been, and we
expect that there will continue to be, federal and state  proposals to implement
government  control of pricing and  profitability  of therapeutic and diagnostic
imaging  agents.  The Centers for  Medicare  and  Medicaid  Services  (CMS) have
introduced  significant changes in product descriptors,  codes and reimbursement
values.  Although it is not  possible  to predict or  identify  all of the risks
relating  to such  changes,  we  believe  that such risks  include,  but are not
limited to: (i) increasing price pressures (including those imposed by rules and
practices of managed care groups and institutional and governmental purchasers);
and (ii) judicial  decisions and government laws related to Medicare,  Medicaid,
healthcare reform, radiopharmaceutical, pharmaceutical and device reimbursement,
and price in general.  In addition,  an increasing  emphasis on managed care has
and will continue to increase the pressure on pricing of these  products.  While
we cannot predict whether legislative or regulatory proposals will be adopted or
the effects  proposals  or managed care  efforts may have on our  business,  the
announcement  of proposals and the adoption of proposals or efforts could have a
material  adverse  effect on our  business,  financial  condition and results of
operations.  Further, to the extent proposals or efforts have a material adverse
effect on other  companies  that are our  prospective  corporate  partners,  our
ability  to  establish  strategic  alliances  may be  materially  and  adversely
affected.  In certain  foreign  markets,  the pricing and  profitability  of our
products generally are subject to government controls.

Sales of our products depend in part on the availability of reimbursement to the
consumer from third-party  payors,  including  Medicare,  Medicaid,  and private
health insurance  plans.  Third-party  payors are  increasingly  challenging the
reimbursement values of medical products and services.  To the extent we succeed
in bringing products to market, we cannot assure you that these products will be
considered  cost-effective and that reimbursement to consumers will be available
or  sufficient  to  allow  us to  sell  our  products  on a  competitive  basis.
Reimbursement  by a  third-party  payor  may  depend  on a  number  of  factors,
including the payor's  determination that our products are clinically useful and
cost-effective,  medically  necessary and not  experimental or  investigational.
Since reimbursement  approval is required from each payor individually,  seeking
approvals can be a time  consuming and costly  process which could require us to
provide supporting scientific,  clinical and cost-effectiveness data for the use
of our products to each payor separately.  If we or our collaborators are unable
to secure adequate third party  reimbursement  for our products,  there would be
material  adverse  effect on its  business,  financial  condition and results of
operations.

CUSTOMERS

During the year ended  December 31, 2002, we received 55% of our total  revenues
from  four  customers,  as  follows:  16%  from  Berlex  Laboratories,  18% from
Mallinckrodt   Medical,   Inc.,  12%  from   Medi-Physics  and  9%  from  Syncor
International Corporation (now Cardinal Health Nuclear Pharmacy Services).

EMPLOYEES

As of March 1, 2003, we employed 49 persons,  48 of whom are employed  full-time
and 1 of whom is employed part-time.  Of such 49 persons, 6 were employed in our
subsidiary,   AxCell,  2  in  regulatory,  5  in  clinical  activities,   12  in
administration  and management,  and 24 in marketing and sales. The employees in
marketing and sales included 6 Regional Oncology Specialists and 12 Regional and
Territory  Managers.  We  believe  that we have been  successful  in  attracting
skilled  and  experienced  employees.  None of our  employees  is  covered  by a
collective   bargaining   agreement.   All  of  our   employees   have  executed
confidentiality  agreements.  We consider  relations  with our  employees  to be
excellent.

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<PAGE>
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

Investing  in our  common  stock  involves  a high  degree of risk.  You  should
carefully  consider  the  following  risks  and  uncertainties  described  below
together with the other  information  included or  incorporated  by reference in
this Annual  Report on Form 10-K in your decision as to whether to invest in our
common stock. If any of the following risks or uncertainties actually occur, our
business,  financial  condition and operating results could be significantly and
adversely  affected.  If that  happens,  the  price of our  common  stock  could
decline, and you could lose all or part of your investment.

We Have a History of Operating  Losses and an Accumulated  Deficit and Expect To
Incur Losses in the Future.

We have a history of operating losses since our inception.  We had a net loss of
$15.7  million for the year ended  December 31, 2002 and had a net loss of $12.1
million  for the year  ended  December  31,  2001.  The loss for the year  ended
December  31,  2002  included:  (i) a $2.9  million  charge  for  our  share  of
development  costs at the PSMA  Development  Company  LLC, a joint  venture with
Progenics for the development of in vivo immunotherapies  utilizing the prostate
specific  membrane  antigen,  or PSMA; (ii) a non-cash charge of $1.7 million to
write-off the carrying value of the licensing fees  associated  with  BrachySeed
I-125 and BrachySeed Pd-103;  (iii) a non-cash milestone payment of $2.0 million
related to the  progress of ex vivo  dendritic  cell  prostate  cancer  clinical
trials at Northwest  Biotherapeutics,  Inc.;  (iv) a non-cash charge of $516,000
resulting  from  an  other  than  temporary  decline  in the  fair  value  of an
investment in Northwest Biotherapeutics,  Inc. common stock; and (v) a charge of
$869,000 related to the  restructuring of our AxCell  Biosciences  subsidiary in
September 2002.  Beginning in December 2001, we began to equally share the costs
of the PSMA  Development  Company  LLC and we  expect to incur  significant  and
increasing costs in the future to fund our share of the joint venture.  We had a
net loss of $27.3  million for the year ended  December 31, 2000 which  included
one-time,  non-cash  charges of $13.1  million  for the  acquisition  of product
candidate  rights and $4.3 million for the  cumulative  effect of an  accounting
change  following  the  adoption of  Securities  and Exchange  Commission  Staff
Accounting  Bulletin No. 101. We had an accumulated deficit of $356.4 million as
of December 31, 2002.

In order  to  develop  and  commercialize  our  technologies,  particularly  our
prostate specific membrane antigen, or PSMA, technology, and expand our oncology
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.

Our ability to generate and sustain  significant  additional revenues or achieve
profitability  will  depend  upon  the  factors  discussed   elsewhere  in  this
"Additional Factors That May Affect Future Results" Section, as well as numerous
other factors outside of our control, including:

     -    development  of  competing  products  that are more  effective or less
          costly than ours;

     -    our  ability  to  develop  and  commercialize  our  own  products  and
          technologies; and

     -    our ability to achieve  increased sales for our existing  products and
          sales for any new products.

As a result, we may never be able to generate or sustain significant  additional
revenue or achieve profitability.

We Are Heavily  Dependent On Market  Acceptance Of ProstaScint and Quadramet For
Near-Term Revenues.

We expect  ProstaScint and Quadramet to account for a significant  percentage of
our product-related revenues in the near future. For the year ended December 31,
2002, revenues from ProstaScint and Quadramet accounted for approximately 78% of
our product related  revenues.  In 2002, our  product-related  revenue  included
revenue from BrachySeed, which accounted for 20% of our product related revenue.
In January  2003, we served  notice of  termination  for each of our License and
Distribution  Agreement  and Product  Manufacturing  and Supply  Agreement  with
Draximage  with  respect  to both the  BrachySeed  I-125 and  BrachySeed  Pd-103
products.  As a result,  effective January 24, 2003, we no longer accept or fill
new orders for the BrachySeed products.

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

     -    health care providers, such as hospitals and physicians; and

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     -    third-party payors,  including Medicare,  Medicaid,  private insurance
          carriers and health maintenance organizations.

Our  customers,   including  technologists  and  physicians,  must  successfully
complete our Partners in  Excellence  Program,  or PIE  Program,  a  proprietary
training program designed to promote the correct  acquisition and interpretation
of  ProstaScint  images.  This  product is  technique  dependent  and requires a
learning  commitment on the part of users.  We cannot assure you that additional
technologists  and physicians will make this commitment or otherwise accept this
product as part of their treatment practices.

Berlex  Laboratories,  Inc.  markets  Quadramet in the United States  through an
agreement with us entered into in October 1998. We cannot assure you that Berlex
will be able to successfully market Quadramet or that this agreement will result
in significant revenues for us in the future.

We cannot  assure you that  ProstaScint  or Quadramet  will  achieve  additional
market  acceptance on a timely basis,  or at all. If ProstaScint or Quadramet do
not achieve broader market acceptance, we may not be able to generate sufficient
revenue to become profitable.

The Reduced  Workforce At AxCell May Not Be Able To Implement  AxCell's Business
Plan.

In September 2002, we implemented the  restructuring  of our subsidiary,  AxCell
Biosciences  Corporation,  in an effort to reduce expenses and position  Cytogen
for stronger long-term growth in oncology.  As a result, we reduced our staff at
AxCell by  seventy-five  percent,  suspended  certain  projects  at  AxCell  and
implemented other cost-saving measures.

The technologies under development at AxCell are complex and remain commercially
unproven.  Even if we are able to develop and  commercialize  a product  through
AxCell, there are a limited number of pharmaceutical companies and biotechnology
companies that are potential customers for such technology or product.

Although we believe that we have  retained the AxCell  personnel  who are key to
achieving  AxCell's goals and implementing its strategies,  we cannot be certain
that such reduced workforce will be able to implement  AxCell's current business
plan.  The  further  loss of any of  AxCell's  personnel  could  have a material
adverse effect on AxCell's ability to achieve its goals.

We May Need To Raise Additional Capital, Which May Not Be Available.

We have  incurred  negative  cash  flows from  operations  since  inception.  We
expended, and will need to continue to expend, substantial funds to complete our
planned product  development  efforts,  including our PSMA programs.  Our future
capital  requirements  and the  adequacy of our  available  funds depend on many
factors, including:

     -    successful commercialization of our products;

     -    acquisition of complementary products and technologies;

     -    magnitude, scope and results of our product development efforts;

     -    progress of preclinical studies and clinical trials;

     -    progress toward regulatory approval for our products;

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

     -    competing technological and market developments; and

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

We may raise additional capital through public or private equity offerings, debt
financings or additional  collaborations and licensing arrangements.  Additional
financing may not be available to us when needed,  or, if available,  we may not
be able to obtain  financing on terms favorable to our stockholders or us. If we
raise additional capital by issuing equity securities,  the issuance will result
in ownership dilution to our stockholders.  If we raise additional funds through

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<PAGE>
collaborations  and  licensing  arrangements,  we may be required to  relinquish
rights to certain of our technologies or product candidates or to grant licenses
on unfavorable  terms. If we relinquish  rights or grant licenses on unfavorable
terms,  we may not be able to develop  or market  products  in a manner  that is
profitable  to us. If adequate  funds are not  available,  we may not be able to
conduct  research  activities,  preclinical  studies,  clinical  trials or other
activities  relating to the  successful  commercialization  of our products on a
timely  basis,   if  at  all,  with  the  result  that  our  business  could  be
significantly and adversely affected.

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 been engaged primarily in research directed
toward the development,  commercialization  and marketing of products to improve
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 2001, we
launched  the  iodine  version  of  BrachySeed.  In May 2002,  we  launched  the
palladium  version of  BrachySeed.  In November 2002, we began  promoting  NMP22
BladderChek to urologists in the United States. In January 2003, we discontinued
our marketing and sale of the BrachySeed products.

Our PSMA  technologies  are still in the early  stages of  development.  We have
significantly reduced operations at our AxCell subsidiary,  which is responsible
for the development certain of our technologies.  We may be unable to develop or
commercialize these products and technologies.

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

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

     -    to ensure that our products are safe and effective;

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

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

     -    to develop a sufficient market for our products; and

     -    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.  If we fail to properly
address these risks and attain our business  objectives,  our business  could be
significantly and adversely affected.

Our PSMA  Product  Development  Program Is Novel And,  Consequently,  Inherently
Risky.

We are subject to the risks of failure  inherent in the  development  of product
candidates based on new technologies, including our PSMA technology. These risks
include the possibility that:

     -    the technologies we use will not be effective;

     -    our product candidates will be unsafe;

     -    our product  candidates will fail to receive the necessary  regulatory
          approvals;

     -    the product candidates will be hard to manufacture on a large scale or
          will be uneconomical to market; and

     -    we will not successfully overcome  technological  challenges presented
          by our potential new products.

Our other research and development  programs involve  similarly novel approaches
to human  therapeutics.  Consequently,  there is no precedent for the successful
commercialization  of therapeutic  products based on our PSMA  technologies.  We

                                       20
<PAGE>
cannot assure you that any products will be successfully developed from our PSMA
technology.  If we fail to develop such products for the reasons set forth above
or for any other  reason,  our business  could be  significantly  and  adversely
affected.

All of Our Potential  Oncology  Products Will Be Subject To The Risks Of Failure
Inherent In The  Development Of Diagnostic Or Therapeutic  Products Based On New
Technologies.

Product  development  for cancer  treatment  involves a high degree of risk.  We
cannot assure you that the product  candidates we develop,  pursue or offer will
prove to be safe and effective, will receive the necessary regulatory approvals,
will not be precluded by proprietary  rights of third parties or will ultimately
achieve market  acceptance.  These product  candidates will require  substantial
additional investment,  laboratory development,  clinical testing and regulatory
approvals  prior to their  commercialization.  We cannot assure you that we will
not  experience   difficulties  that  could  delay  or  prevent  the  successful
development, introduction and marketing of new products.

Before we obtain  regulatory  approvals  for the  commercial  sale of any of our
products under development,  we must demonstrate through preclinical studies and
clinical  trials that the product is safe and efficacious for use in each target
indication.  The results from preclinical  studies and early clinical trials may
not be predictive of results that will be obtained in  large-scale  testing.  We
cannot  assure you that our  clinical  trials  will  demonstrate  the safety and
efficacy  of any  products or will result in  marketable  products.  A number of
companies in the biotechnology  industry have suffered  significant  setbacks in
advanced  clinical  trials,  even after  promising  results  in earlier  trials.
Clinical trials or marketing of any potential diagnostic or therapeutic products
may expose us to liability claims for the use of these diagnostic or therapeutic
products.  We may  not be  able  to  maintain  product  liability  insurance  or
sufficient  coverage may not be available at a reasonable cost. In addition,  as
we develop diagnostic or therapeutic products  internally,  we will have to make
significant  investments  in  diagnostic  or  therapeutic  product  development,
marketing,  sales  and  regulatory  compliance  resources.  We will also have to
establish or contract for the  manufacture  of products,  including  supplies of
drugs used in clinical trials,  under the current Good Manufacturing  Practices,
or cGMP,  of the FDA. We also  cannot  assure you that  product  issues will not
arise following successful clinical trials and FDA approval.

The rate of  completion  of clinical  trials also depends on the rate of patient
enrollment.  Patient enrollment  depends on many factors,  including the size of
the patient population, the nature of the protocol, the proximity of patients to
clinical  sites and the  eligibility  criteria for the study.  Delays in planned
patient enrollment may result in increased costs and delays,  which could have a
harmful effect on our ability to develop the products in our pipeline. If we are
unable to develop and  commercialize  products on a timely  basis or at all, our
business could be significantly and adversely affected.

Competition In Our Field Is Intense And Likely To Increase.

We face, and will continue to face, intense  competition from one or more of the
following entities:

     -    pharmaceutical companies;

     -    biotechnology companies;

     -    bioinformatics companies;

     -    diagnostic companies;

     -    academic and research institutions; and

     -    government agencies.

All of our  lines of  business  are  subject  to  significant  competition  from
organizations  that are pursuing  technologies and products that are the same as
or similar to our technology and products.  Many of the organizations  competing
with us have greater  capital  resources,  research and  development  staffs and
facilities and marketing capabilities.

Before we recover  development  expenses for our products and technologies,  the
products  or  technologies  may  become  obsolete  as a result of  technological
developments  by others or us. Our products  could also be made  obsolete by new
technologies,  which are less expensive or more effective. We may not be able to

                                       21
<PAGE>
make the enhancements to our technology  necessary to compete  successfully with
newly  emerging  technologies  and  failure  to do so  could  significantly  and
adversely affect our business.

We Rely Heavily On Our Collaborative Partners.

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

     -    license  from  The Dow  Chemical  Company  relating  to the  Quadramet
          technology;

     -    sub-license  and marketing  agreement with Berlex  Laboratories,  Inc.
          relating to the  Quadramet  technology  which we licensed from The Dow
          Chemical Company;

     -    agreement  for  manufacture  of  Quadramet  by  Bristol  Myers  Squibb
          (formerly The DuPont Pharmaceuticals Company);

     -    joint venture with Progenics  Pharmaceuticals  for the  development of
          PSMA for in vivo immunotherapy for prostate and other cancers;

     -    licensing  agreement with Molecular  Staging for technology to be used
          in  developing  in vitro  diagnostic  tests  using  PSMA and  prostate
          specific antigen, or PSA;

     -    a Supply Agreement with Laureate Pharma L.P. for the production of our
          ProstaScint product;

     -    an agreement with Matritech to market and distribute NMP22 BladderChek
          to urologists and oncologists in the United States;

     -    marketing, license and supply agreements with Advanced Magnetics, Inc.
          related to Combidex and Code 7228;

     -    a License  Agreement  between  our  joint  venture,  PSMA  Development
          Company LLC, and AlphaVax Human Vaccines, Inc.; and

     -    a Collaboration Agreement between our joint venture and Abgenix, Inc.

Because our  collaborative  partners are  responsible  for certain of our sales,
marketing,  manufacturing  and  distribution  activities,  these  activities are
outside our direct control.  We cannot assure you that our partners will perform
their  obligations  under these agreements with us or that our partners will not
enter  into  arrangements  with third  parties  that may  negatively  impact the
economic  benefit we hope to derive from their  agreements with us. For example,
Matritech  retained the ability to market its NMP22  BladderChek to primary care
physicians  and others and has begun such marketing  efforts.  In the event that
our collaborative partners do not successfully market and sell our products, are
entitled  to  enter  into  third  party   arrangements   that  may  economically
disadvantage us, or breach their obligations under our agreements,  our products
may not be commercially  successful,  any success may be delayed and new product
development  could be  inhibited  with the  result  that our  business  could be
significantly and adversely affected.

Our Business  Could Be Harmed If Our  Collaborative  Arrangements  Expire Or Are
Terminated Early.

We cannot assure you that we will be able to maintain our existing collaborative
arrangements.  If they expire or are terminated,  we cannot assure you that they
will be renewed or that new arrangements  will be available on acceptable terms,
if at all. In January 2003, we provided Draximage Inc. with notice of our intent
to  terminate  our  Product  Manufacturing  and  Supply  Agreement  and  License
Agreement with Draximage relating to the BrachySeed products.

In  addition,  we cannot  assure you that any new  arrangements  or  renewals of
existing arrangements will be successful, that the parties to any new or renewed
agreements will perform adequately or that any former or potential collaborators
will not compete with us.

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<PAGE>
We cannot assure you that our existing or future collaborations will lead to the
development of product  candidates or technologies  with  commercial  potential,
that we will be able to obtain  proprietary  rights or licenses for  proprietary
rights for our product  candidates or technologies  developed in connection with
these  arrangements  or that we will be able to ensure  the  confidentiality  of
proprietary rights and information developed in such arrangements or prevent the
public disclosure thereof.

The  Termination  Of One Or More License  Agreements  That Are  Important In The
Manufacture  Of Our Current  Products And New Product  Research And  Development
Activities Would Harm Our Business.

We are a  party  to  license  agreements  under  which  we  have  rights  to use
technologies  owned by other companies in the manufacture of our products and in
our  proprietary  research,  development  and  testing  processes.  We  are  the
exclusive  licensee  of  certain  patents  and patent  applications  held by the
University of North Carolina at Chapel Hill covering part of the technology used
in the proteomics program and of certain patents and patent applications held by
the Memorial  Sloan-Kettering  Institute  covering PSMA. We also depend upon the
enforceability  of our license  with The Dow  Chemical  Company  with respect to
Quadramet. If the licenses were terminated,  we may not be able to find suitable
alternatives to this technology on a timely basis or on reasonable  terms, if at
all. The loss of the right to use these technologies that we have licensed would
significantly and adversely affect our business.

We Have Limited Sales, Marketing And Distribution Capabilities For Our Products.

We have  established an internal  sales force that is responsible  for marketing
and selling  ProstaScint  and NMP22  BladderChek.  However,  such internal sales
force  has  limited  sales,  marketing  and  distribution  capabilities  for our
products,  compared  to those of many of our  competitors.  We  depend on Berlex
Laboratories,  Inc. for the sale, marketing and distribution of Quadramet in the
United States. In locations outside the United States, we have not established a
selling presence.  If we are unable to establish and maintain significant sales,
marketing and distribution  efforts,  either internally or through  arrangements
with third parties, our business may be significantly and adversely affected.

There Are Risks Associated With The Manufacture And Supply Of Our Products.

If we are to be  successful,  our  products  will  have  to be  manufactured  by
contract  manufacturers in compliance with regulatory  requirements and at costs
acceptable  to us. We cannot  assure you that we will be able to arrange for the
manufacture of our products on commercially  reasonable  terms. If we are unable
to  successfully  arrange  for  the  manufacture  of our  products  and  product
candidates,  we will not be able to successfully  commercialize our products and
our business will be significantly and adversely affected.

ProstaScint was manufactured at a cGMP compliant manufacturing facility operated
by  Laureate  Pharma  L.P.  (formerly  Bard  BioPharma  L.P.).  We had access to
Purdue's facility for continued manufacturing of the product until January 2002.
We have built our inventory of ProstaScint to meet our product  requirements  in
the short term. We entered into a Development and  Manufacturing  Agreement with
DSM in July 2000,  which we intended would replace our arrangement with Laureate
with  respect to  ProstaScint.  We  entered  into a new  Contract  Manufacturing
Agreement  with Laureate  Pharma L.P. in January 2003. Our failure to maintain a
long term supply agreement on commercially reasonable terms will have a material
adverse effect on our business, financial condition and results of operations.

Quadramet is  manufactured  by  Bristol-Myers  Squibb (BMS)  (formerly  DuPont),
pursuant  to an  agreement  with both Berlex and  Cytogen.  Some  components  of
Quadramet,  particularly  Samarium153 and EDTMP,  are provided to BMS by outside
suppliers.  Due to radioactive  decay,  Samarium153 must be produced on a weekly
basis.   BMS  obtains  its  requirements  for  Samarium153  from  one  supplier.
Alternative  sources for these components may not be readily  available.  If BMS
cannot obtain sufficient quantities of the components on commercially reasonable
terms, or in a timely manner,  it would be unable to manufacture  Quadramet on a
timely and  cost-effective  basis, which could have a material adverse effect on
our business, financial condition and results of operations.

Pursuant to the terms of our distribution  agreement with Matritech,  we rely on
Matritech as the sole supplier of NMP22 BladderChek.  Matritech uses independent
contractors to manufacture  the product.  If Matritech fails to, or is unable to
provide  the  product,  we could  experience  a material  adverse  effect on our
business, financial condition and results of operations.

The Company, our contract manufacturers and testing laboratories are required to
adhere to United  States Food & Drug  Administration  regulations  setting forth
requirements for cGMP, and similar regulations in other countries, which include

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<PAGE>
extensive testing,  control and documentation  requirements.  Ongoing compliance
with cGMP,  labeling and other applicable  regulatory  requirements is monitored
through  periodic  inspections  and  market  surveillance  by state and  federal
agencies,  including  the FDA, and by  comparable  agencies in other  countries.
Failure of our  contract  vendors or us to comply  with  applicable  regulations
could result in sanctions  being imposed on us,  including  fines,  injunctions,
civil  penalties,  failure of the  government  to grant  premarket  clearance or
premarket  approval of drugs,  delays,  suspension  or  withdrawal of approvals,
seizures  or  recalls  of   products,   operating   restrictions   and  criminal
prosecutions any of which could significantly and adversely affect our business.

Failure Of Consumers To Obtain Adequate  Reimbursement  From Third-Party  Payors
Could Limit Market Acceptance And Affect Pricing Of Our Products.

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

Sales of our  products  depend in part on  reimbursement  to the  consumer  from
third-party payors,  including  Medicare,  Medicaid and private health insurance
plans.  Third-party  payors are increasingly  challenging the prices charged for
medical  products and  services.  We cannot assure you that our products will be
considered  cost-effective  and that reimbursement to consumers will continue to
be  available,  or will be  sufficient  to allow us to sell  our  products  on a
competitive  basis.  Approval of our products for reimbursement by a third-party
payor may depend on a number of factors,  including  the  payor's  determination
that our products are clinically useful and cost-effective,  medically necessary
and not  experimental or  investigational.  Reimbursement  is determined by each
payor individually and in specific cases. The reimbursement  process can be time
consuming.  If we  cannot  secure  adequate  third-party  reimbursement  for our
products, our business could be significantly and adversely affected.

If We Are Unable To Comply With Applicable Governmental Regulation We May Not Be
Able To Continue Our Operations.

Any products tested, manufactured or distributed by us or on our behalf pursuant
to FDA approvals are subject to pervasive and continuing  regulation by numerous
regulatory authorities, including primarily the FDA. We may be slow to adapt, or
we may never  adapt to changes  in  existing  requirements  or  adoption  of new
requirements  or policies.  Our failure to comply with  regulatory  requirements
could subject us to enforcement  action,  including product  seizures,  recalls,
withdrawal,   suspension,  or  revocation  of  approvals,   restrictions  on  or
injunctions  against  marketing our products based on our technology,  and civil
and  criminal  penalties.  We cannot  assure you that we will not be required to
incur  significant  costs to comply with laws and  regulations  in the future or
that  laws or  regulations  will  not  create  an  unsustainable  burden  on our
business.

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

The regulatory risks we face also include the following:

     -    any compound or agent we or our  collaborative  partners  develop must
          receive regulatory agency approval before it may be marketed as a drug
          in a particular country;

     -    the  regulatory  process,   which  includes  preclinical  testing  and
          clinical  trials of each  compound or agent in order to establish  its
          safety and  efficacy,  varies from  country to country,  can take many
          years and requires the expenditure of substantial resources;

                                       24
<PAGE>
     -    in all  circumstances,  approval of the use of  previously  unapproved
          radioisotopes in certain of our products  requires  approval of either
          the Nuclear  Regulatory  Commission  or  equivalent  state  regulatory
          agencies.  A  radioisotope  is an  unstable  form of an element  which
          undergoes  radioactive decay,  thereby emitting radiation which may be
          used, for example,  to image or destroy harmful growths or tissue.  We
          cannot  assure you that such  approvals  will be  obtained on a timely
          basis, or at all;

     -    data obtained from preclinical and clinical activities are susceptible
          to  varying  interpretations  which  could  delay,  limit  or  prevent
          regulatory agency approval; and

     -    delays  or  rejections  may  be  encountered  based  upon  changes  in
          regulatory  agency  policy  during the  period of product  development
          and/or the period of review of any application  for regulatory  agency
          approval.  These delays could  adversely  affect the  marketing of any
          products  we or our  collaborative  partners  develop,  impose  costly
          procedures upon our activities, diminish any competitive advantages we
          or our  collaborative  partners  may attain and  adversely  affect our
          ability to receive royalties.

We cannot  assure you that,  even after  this time and  expenditure,  regulatory
agency  approvals will be obtained for any compound or agent  developed by or in
collaboration  with us.  Moreover,  regulatory  agency approval for a product or
agent  may  entail  limitations  on the  indicated  uses  that  could  limit the
potential market for any such product. Furthermore, if and when such approval is
obtained, the marketing,  manufacture,  labeling, packaging, reporting, storage,
advertising  and  promotion  and record  keeping  related to our products  would
remain  subject to extensive  regulatory  requirements.  Discovery of previously
unknown  problems with a drug, its manufacture or its manufacturer may result in
restrictions on such drug, manufacture or manufacturer,  including withdrawal of
the drug from the market.  Failure to comply with regulatory  requirements could
result in fines,  injunctions,  seizures,  recalls,  suspension or withdrawal of
regulatory approvals, operating restrictions and criminal prosecution.

The United States Food, Drug and Cosmetics Act requires (i) that our products be
manufactured in FDA registered  facilities subject to inspection,  and (ii) that
we  comply  with  cGMP,  which  imposes  certain  procedural  and  documentation
requirements   upon  us  and  our   manufacturing   partners   with  respect  to
manufacturing and quality assurance  activities.  If we or our contract partners
do not  comply  with  cGMP we may be  subject  to  sanctions,  including  fines,
injunctions,  civil penalties, recalls or seizures of products, total or partial
suspension of production,  product  recalls,  failure of the government to grant
premarket  clearance or premarket  approval for drugs,  withdrawal  of marketing
approvals and criminal prosecution.

We Could Be Negatively  Impacted By Future  Interpretation  Or Implementation Of
Federal  And State  Fraud And Abuse  Laws,  Including  Anti-Kickback  Laws,  The
Federal Stark Law And Other Federal And State Anti-referral Laws.

We are subject to various federal and state laws pertaining to health care fraud
and  abuse,  including  anti-kickback  laws and  physician  self-referral  laws.
Violations  of these laws are  punishable  by criminal  and/or civil  sanctions,
including,  in some instances,  imprisonment and exclusion from participation in
federal  and state  health  care  programs,  including  Medicare,  Medicaid  and
Veterans  Administration  health  programs.  We have  not been  challenged  by a
governmental  authority  under any of these laws and believe that our operations
are in compliance with such laws. However, because of the far-reaching nature of
these laws,  we may be required to alter one or more of our  practices  to be in
compliance with these laws.  Health care fraud and abuse regulations are complex
and even minor,  inadvertent  irregularities can potentially give rise to claims
that the statute has been violated. Any violations of these laws could result in
a material  adverse effect on our business,  financial  condition and results of
operations.  If  there is a  change  in law,  regulation  or  administrative  or
judicial  interpretations,  we may have to change our business  practices or our
existing business practices could be challenged as unlawful,  which could have a
material  adverse  effect on our  business,  financial  condition and results of
operations.

We could become subject to false claims litigation under federal statutes, which
can lead to civil  money  penalties,  criminal  fines and  imprisonment,  and/or
exclusion from  participation in Medicare,  Medicaid and other federal and state
health care programs.  These false claims statutes include the False Claims Act,
which allows any person to bring suit alleging false or fraudulent  claims under
federal  programs or contracts  claims or other violations of the statute and to
share  in any  amounts  paid  by  the  entity  to the  government  in  fines  or
settlement.  Such suits, known as qui tam actions, have increased  significantly
in recent years and have increased the risk that a health care company will have
to defend a false  claim  action,  pay fines or be  excluded  from the  Medicare
program,  Medicaid programs or other federal and state health care programs as a
result of an investigation arising out of such action. We cannot assure you that
we will not become  subject to such  litigation  or, if we are not successful in

                                       25
<PAGE>
defending  against  such  actions,  that such  actions  will not have a material
adverse effect on our business, financial condition and results of operations.

We Depend On Attracting And Retaining Key Personnel.

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

During 2002, we announced  numerous changes to members of our senior management.
H. Joseph Reiser,  Ph.D. who held the position of President and Chief  Executive
Officer of the Company  from April 1998 until  December  2002,  was  replaced by
Michael D. Becker, our former Vice President of Business Development. Mr. Becker
was also unanimously elected to serve on our Board of Directors.  Dr. Reiser has
remained a member of our Board of Directors.  In addition,  Lawrence R. Hoffman,
our Vice President and Chief Financial Officer since July 2000, left the Company
to pursue  other  opportunities  as of  December  31,  2002.  Ms. Thu Dang,  our
Director of Finance, was subsequently promoted to Vice President of Finance.

Additionally,  in the first  quarter of 2003:  (i) William  Goeckeler,  our Vice
President  of  Research  and  Development,  was  promoted to Vice  President  of
Operations;  (ii) Deborah  Kaminsky,  our Vice President of Sales and Marketing,
will shift her work  focus,  and will serve as our Vice  President  of  Business
Development;  (iii) Rita Auld, our Director of Human Resources,  was promoted to
Vice President of Human Resources and  Administration  and Corporate  Secretary;
and (iv) Corey Jacklin assumed the responsibilities of Senior Director of Sales.

We have an employee  retention  agreement with our President and Chief Executive
Officer, Michael D. Becker. We do not have similar retention agreements with our
other key  personnel.  If we are  unable  to hire and  retain  personnel  in key
positions,  our business could be  significantly  and adversely  affected unless
qualified replacements can be found.

Our  Business  Exposes  Us To  Potential  Liability  Claims  That May Exceed Our
Financial  Resources,  Including  Our  Insurance  Coverage,  And May Lead To The
Curtailment Or Termination Of Our Operations.

Our  business is subject to product  liability  risks  inherent in the  testing,
manufacturing  and marketing of our products.  We cannot assure you that product
liability  claims will not be  asserted  against  us, our  collaborators  or our
licensees. While we currently maintain product liability insurance in amounts we
believe are  adequate,  we cannot assure you that such coverage will be adequate
to protect us against future product  liability claims or that product liability
insurance  will be  available  to us in the  future on  commercially  reasonable
terms,  if at all.  Furthermore,  we cannot  assure  you that we will be able to
avoid significant  product liability claims and adverse publicity.  If liability
claims  against  us exceed  our  financial  resources  we may have to curtail or
terminate our operations.

Our Business Involves Environmental Risks That May Result In Liability.

We are subject to a variety of local,  state,  federal  and  foreign  government
regulations  relating to storage,  discharge,  handling,  emission,  generation,
manufacture and disposal of toxic, infectious or other hazardous substances used
to manufacture  our products.  If we fail to comply with these  regulations,  we
could be  liable  for  damages,  penalties  or other  forms of  censure  and our
business could be significantly and adversely affected.

Our Intellectual Property Is Difficult To Protect.

Our business and competitive positions are dependent upon our ability to protect
our  proprietary  technology.  Because  of the  substantial  length  of time and
expense  associated with  development of new products,  we, like the rest of the
biopharmaceutical  industry,  place  considerable  importance  on obtaining  and
maintaining  patent and trade secret protection for new  technologies,  products
and  processes.  We  have  filed  patent  applications  for our  technology  for
diagnostic and therapeutic products and the methods for its production and use.

                                       26


<PAGE>
The patent  positions of  pharmaceutical,  biopharmaceutical  and  biotechnology
companies,  including us, are generally  uncertain and involve complex legal and
factual questions.  Our patent applications may not protect our technologies and
products because, among other things:

     -    there is no guarantee that any of our pending patent applications will
          result in issued  patents;

     -    we may  develop  additional  proprietary  technologies  that  are  not
          patentable;

     -    there is no guarantee that any patents issued to us, our collaborators
          or our  licensors  will  provide  a basis  for a  commercially  viable
          product;

     -    there  is  no  guarantee   that  any  patents  issued  to  us  or  our
          collaborators will provide us with any competitive advantage;

     -    there  is  no  guarantee   that  any  patents  issued  to  us  or  our
          collaborators  will not be challenged,  circumvented or invalidated by
          third parties; and

     -    there is no guarantee that any patents  previously issued to others or
          issued in the future will not have an adverse effect on our ability to
          do business.

In  addition,  patent  law in the  technology  fields  in  which we  operate  is
uncertain  and still  evolving,  and we cannot  assure  you as to the  degree of
protection  that will be  afforded  any  patents we are  issued or license  from
others.  Furthermore,  we cannot  assure you that others will not  independently
develop similar or alternative technologies,  duplicate any of our technologies,
or, if  patents  are  issued to us,  design  around  the  patented  technologies
developed by us. In addition,  we could incur substantial costs in litigation if
we are required to defend  ourselves  in patent suits by third  parties or if we
initiate  such suits.  We cannot  assure you that,  if  challenged  by others in
litigation, the patents we have been issued, or which have been assigned or have
been licensed from others will not be found  invalid.  We cannot assure you that
our  activities  would  not  infringe  patents  owned  by  others.  Defense  and
prosecution  of  patent  matters  can  be  expensive  and  time-consuming   and,
regardless  of  whether  the  outcome  is  favorable  to us,  can  result in the
diversion of substantial financial,  managerial and other resources.  An adverse
outcome could:

     -    subject us to significant liability to third parties;

     -    require us to cease any related  research and  development  activities
          and product sales; or

     -    require us to obtain licenses from third parties.

We cannot  assure  you that any  licenses  required  under any such  third-party
patents or proprietary rights would be made available on commercially reasonable
terms, if at all.  Moreover,  the laws of certain  countries may not protect our
proprietary  rights to the same  extent  as the laws of the  United  States.  We
cannot predict whether us or our competitors'  pending patent  applications will
result in the issuance of valid  patents which may  significantly  and adversely
affect our business.

We  Cannot  Be  Certain  That  Our  Security  Measures  Protect  Our  Unpatented
Proprietary Technology.

We also rely upon  trade  secret  protection  for some of our  confidential  and
proprietary  information that is not subject matter for which patent  protection
is available. To help protect our rights, we require all employees, consultants,
advisors and collaborators to enter into confidentiality agreements that require
disclosure,  and in most cases, assignment to us, of their ideas,  developments,
discoveries  and  inventions,  and that prohibit the disclosure of  confidential
information to anyone outside Cytogen or our subsidiaries. We cannot assure you,
however,  that these agreements will provide  adequate  protection for our trade
secrets,  know-how or other proprietary  information or prevent any unauthorized
use or disclosure.

We Are Currently Subject To Patent Litigation.

On March 17,  2000,  we were  served with a  complaint  filed  against us in the
United  States  Federal  Court  for  the  District  of New  Jersey  by M.  David
Goldenberg  ("Goldenberg") and Immunomedics,  Inc. (collectively  "Plaintiffs").
The  litigation   claims  that  our  Prostascint   product  infringes  a  patent
purportedly  owned by Goldenberg and licensed to  Immunomedics.  We believe that

                                       27

<PAGE>
ProstaScint  does not infringe  this patent,  and that the patent is invalid and
unenforceable.  The  patent  sought to be  enforced  in the  litigation  has now
expired;  as a  result,  the claim  even if  successful  would not  result in an
injunction  barring the continued sale of ProstaScint or affect any other of our
products or technology.  In addition,  we have certain rights to indemnification
against litigation and litigation  expenses from the inventor of technology used
in  ProstaScint,  which  may be  offset  against  royalty  payments  on sales of
ProstaScint.  However,  given the  uncertainty  associated with  litigation,  we
cannot give any  assurance  that the  litigation  could not result in a material
expenditure  to us. On December  17,  2001,  Cytogen  filed a motion for summary
judgment of non-infringement  of the asserted claims of the patent-in-suit.  The
Plaintiffs  opposed  that  motion and filed their own  cross-motion  for summary
judgment  of  infringement.  On July 3, 2002,  the Court  denied  both  parties'
summary  judgment  motions,  with leave to renew those motions after  presenting
expert testimony and legal argument based upon that testimony. Subsequently, the
Court  heard  expert  testimony  and  further  argument,  and  received  further
briefing,  and the parties' renewed summary  judgment  motions are pending.  The
Court has not indicated when it expects to issue a ruling.

Our Stock Price Has Been And May Continue To Be Volatile, And Your Investment In
Our Stock Could Decline In Value Or Fluctuate Significantly.

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

     -    results of clinical trials;

     -    technological innovations or new commercial products;

     -    changes in  governmental  regulation  or the status of our  regulatory
          approvals or applications;

     -    changes in earnings;

     -    changes in health care policies and practices;

     -    developments or disputes concerning proprietary rights;

     -    litigation  or  public  concern  as to  safety  of the  our  potential
          products; and

     -    changes in general market conditions.

These  fluctuations may be exaggerated if the trading volume of our common stock
is low. These  fluctuations  may or may not be based upon any of our business or
operating results. Our common stock may experience similar or even more dramatic
price and volume fluctuations which may continue indefinitely.

The following table sets forth the high and low sale prices for our common stock
for each of the  quarters  in the  period  beginning  January  1,  2000  through
December 31, 2002 as reported on the Nasdaq National Market, and as adjusted for
our one-for-ten reverse stock split effected October 25, 2002:

                                       28
<PAGE>
  Quarter Ended                        High                     Low
  -------------                        ----                     ---
March 31, 2000                       $218.13                   $26.25
June 30, 2000                        $106.25                   $38.13
September 30, 2000                   $113.75                   $55.00
December 31, 2000                     $71.88                   $20.00
March 31, 2001                        $65.63                   $23.13
June 30, 2001                         $61.00                   $21.88
September 30, 2001                    $53.90                   $19.00
December 31, 2001                     $45.50                   $20.50
March 31, 2002                        $34.70                   $21.10
June 30, 2002                         $22.40                    $9.10
September 30, 2002                    $11.50                    $3.20
December 31, 2002                      $8.44                    $2.68

We Have Adopted  Various  Anti-Takeover  Provisions  Which May Affect The Market
Price Of Our Common Stock.

Our Board of Directors has the authority,  without further action by the holders
of common stock, to issue from time to time, up to 5,400,000 shares of preferred
stock in one or more classes or series, and to fix the rights and preferences of
the  preferred  stock.  Pursuant  to these  provisions,  we have  implemented  a
stockholder  rights plan by which one preferred stock purchase right is attached
to each share of common stock, as a means to deter coercive takeover tactics and
to prevent an acquirer  from  gaining  control of us without  some  mechanism to
secure a fair price for all of our stockholders if an acquisition was completed.
These  rights  will be  exercisable  if a person  or group  acquires  beneficial
ownership  of 20% or more of our  common  stock and can be made  exercisable  by
action of our board of directors  if a person or group  commences a tender offer
which would  result in such person or group  beneficially  owning 20% or more of
our common stock.  Each right will entitle the holder to buy one  one-thousandth
of a share of a new series of our junior participating  preferred stock for $20.
If any person or group becomes the beneficial owner of 20% or more of our common
stock (with certain  limited  exceptions),  then each right not owned by the 20%
stockholder  will  entitle its holder to  purchase,  at the right's then current
exercise price, common shares having a market value of twice the exercise price.
In addition,  if after any person has become a 20% stockholder,  we are involved
in a merger or other business combination  transaction with another person, each
right will entitle its holder (other than the 20%  stockholder) to purchase,  at
the right's then current exercise price,  common shares of the acquiring company
having a value of twice the right's then current exercise price.

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

These   provisions  of  the   stockholder   rights  plan,  our   certificate  of
incorporation, and of Delaware law may have the effect of delaying, deterring or
preventing a change in control of Cytogen,  may  discourage  bids for our common
stock at a premium over market price and may adversely  affect the market price,
and the voting and other rights of the holders, of our common stock.

The Liquidity Of Our Common Stock Could Be Adversely Affected If We Are Delisted
From The Nasdaq National Market.

On August 14, 2002,  we announced  that we had  received  notification  from the
Nasdaq  Stock  Market,  Inc.  that our common stock had closed below the minimum
$1.00 per share  requirement  for the  previous 30  consecutive  trading days as
required under Marketplace Rule 4450(a)(5).  In accordance with Marketplace Rule
4450 (e)(2), we were provided with 90 calendar days, or until November 12, 2002,
to regain compliance by having the bid price for our common stock close at $1.00
or greater for a minimum period of 10 consecutive trading days.

On September  26, 2002,  we  announced  that our Board of Directors  unanimously
approved,  and recommended to our  stockholders,  a proposal that would give the
Board of  Directors  authority  to effect a reverse  stock  split of our  common
stock, at a ratio of up to one-for-ten at any time prior to December 31, 2002. A
special  meeting of our  stockholders  was held on October  25, 2002 to consider
such recommendation. Pursuant to the authority granted to our Board of Directors
at the special  meeting,  on October 25,  2002,  we  implemented  a  one-for-ten
reverse split of our outstanding and authorized shares of common stock.

                                       29

<PAGE>
We subsequently achieved compliance with Nasdaq Marketplace Rule 4450(a)(5), and
received a letter from Nasdaq  notifying us of such  compliance  on November 11,
2002.

We cannot  assure you that we will  continue  to maintain  compliance  with this
Marketplace  Rule, or any other Listing  Standards which may apply to us, and as
such, we may once again face  delisting from the Nasdaq  National  Market in the
future.  Specifically,  we cannot  assure  you that we will be able to  maintain
compliance  with the  minimum  equity  and  market  value of  listed  securities
requirements for continued listing on the Nasdaq National Market as set forth in
Marketplace Rule 4310(c)(2)(B).

In the event that we are unable  maintain  compliance  with all relevant  Nasdaq
listing  standards,  our  securities may be subject to delisting from the Nasdaq
National Market. If such delisting occurs, the market price and market liquidity
of our common stock may be adversely affected.

Alternatively,  if faced with such  delisting,  we may submit an  application to
transfer  the listing of our common  stock to the Nasdaq  SmallCap  Market.  The
Nasdaq SmallCap Market also has a $1.00 minimum bid price requirement.

If our common stock is delisted by Nasdaq, our common stock would be eligible to
trade on the OTC Bulletin Board maintained by Nasdaq,  another  over-the-counter
quotation  system,  or on the pink  sheets  where an  investor  may find it more
difficult to dispose of or obtain accurate  quotations as to the market value of
our common stock. In addition,  we would be subject to a rule promulgated by the
Securities and Exchange  Commission  that, if we fail to meet criteria set forth
in such rule,  imposes various practice  requirements on broker-dealers who sell
securities governed by the rule to persons other than established  customers and
accredited  investors.  Consequently,  such rule may deter  broker-dealers  from
recommending or selling our common stock, which may further affect the liquidity
of our common stock.

Delisting  from Nasdaq will make  trading our common  stock more  difficult  for
investors,  potentially leading to further declines in our share price. It would
also make it more difficult for us to raise additional  capital.  Further, if we
are delisted we would also incur  additional  costs under state blue sky laws in
connection with any sales of our securities.  These  requirements could severely
limit  the  market  liquidity  of  our  common  stock  and  the  ability  of our
shareholders to sell our common stock in the secondary market.

A Large Number Of Our Shares Are  Eligible  For Future Sale Which May  Adversely
Impact The Market Price Of Our Common Stock.

A large number of shares of our common stock are already  outstanding,  issuable
upon exercise of options and warrants,  or the achievement of certain milestones
under previously  completed  acquisitions and may be eligible for resale,  which
may adversely  affect the market price of our common  stock.  As of December 31,
2002 we had  8,758,235  shares  of common  stock  outstanding,  which  number of
shares:  (i) includes an aggregate of 241 shares of common stock to be issued to
prior holders of securities of CytoRad Incorporated and Cellcor,  Inc., which we
acquired in 1995, upon each such holders respective exchange of such securities;
(ii)  excludes  50,000  shares  of  common  stock  previously  issued  by us and
currently held in escrow pending release,  upon certain conditions,  to Advanced
Magnetics, who currently maintains voting control of such securities;  and (iii)
excludes 32,538 shares  previously  issued by us and currently held for issuance
by the  custodian  of our  Employee  Stock  Purchase  Plan  to the  participants
thereunder,  in the event they elect to  purchase  such  shares.  An  additional
472,106  shares of common  stock are issuable  upon the exercise of  outstanding
stock options and an additional  32,363 shares of common stock are issuable upon
the exercise of outstanding  warrants.  Substantially all of such shares subject
to outstanding  options and warrants will, when issued upon exercise thereof, be
available  for  immediate  resale  in the  public  market  pursuant  to either a
currently effective  registration statement under the Securities Act of 1933, as
amended,  or  pursuant  to  Rule  144 or Rule  701  promulgated  thereunder.  In
addition, there are 68,510 additional shares of common stock reserved for future
issuance  under our current  stock options  plans,  7,569  additional  shares of
common stock reserved for issuance  under our 401(k) Plan and 22,751  additional
shares of common stock reserved for the future issuance under our employee bonus
plan.  All such reserved  shares have been  registered  with the  Securities and
Exchange Commission pursuant to currently effective registration statements.  In
addition, there are 81,429 additional shares of common stock, subject to certain
adjustments,  reserved for future  issuance in connection with the issuance of a
convertible  promissory  note,  having  a  seven  (7)  year  maturity,  to  ELAN
Corporation, plc in August 1998.

                                       30

<PAGE>

In connection  with our  acquisition of Prostagen,  Inc. in June 1999, we issued
205,000  unregistered  shares of our common  stock to the then  stockholders  of
Prostagen, which shares may be sold from time to time pursuant to Rule 144 under
the Securities Act. Such stockholders  also have certain piggyback  registration
rights with  respect to these  shares of common  stock.  An  additional  127,699
shares  have  been  issued  in  2002  and  were  subsequently  registered  on  a
registration  statement on Form S-3. An additional $2.0 million worth of Cytogen
common stock,  which we are obligated to register  under the  Securities  Act of
1933, as amended,  may be issued if certain  milestones are achieved in the PSMA
development programs.

On October 25, 2001,  we filed with the  Securities  and  Exchange  Commission a
shelf registration statement on Form S-3 covering one million (1,000,000) shares
of our common stock.  297,066 and 416,670 of such registered  shares were issued
to the State of Wisconsin  Investment Board in private offering  transactions in
each of January 2002 and June 2002, respectively.

Availability  of a significant  number of additional  shares of our common stock
could depress the price of our common stock.

Because  We Do Not  Intend  to Pay Any Cash  Dividends  On Our  Shares of Common
Stock,  Our  Stockholders  Will Not Be Able to Receive a Return on Their  Shares
Unless They Sell Them.

We have never paid or declared  any cash  dividends on our common stock or other
securities and intend to retain any future  earnings to finance the  development
and expansion of our business. We do not anticipate paying any cash dividends on
our  common  stock in the  foreseeable  future.  Unless  we pay  dividends,  our
stockholders  will not be able to receive a return on their  shares  unless they
sell them.

Item 2.  Properties

In August  2002,  we moved our offices from 600 College Road East to 650 College
Road East in Princeton,  New Jersey. We currently sublease  approximately 11,500
square feet of administrative  space in Princeton,  New Jersey.  The sublease on
this space expires in July 2005.  We intend to remain in  Princeton,  New Jersey
for the foreseeable future.

We also lease  approximately 9,200 square feet of laboratory and office space in
Newtown,  Pennsylvania,  which is occupied by our AxCell Biosciences subsidiary,
under a lease  expiring  in 2004.  In  February  2001,  we  expanded  the AxCell
facility by amending  the lease to include  approximately  an  additional  5,700
square feet,  which  additional  lease space will expire in September  2006.  We
sublease approximately 2,400 square feet of the Axcell space to another company.
Such sublease will expire in August 2006.

We own  substantially all of the equipment used in our laboratories and offices.
We believe our facilities are adequate for our operations at present.

Item 3.  Legal Proceedings

On March 17,  2000,  we were  served with a  complaint  filed  against us in the
United  States  Federal  Court  for  the  District  of New  Jersey  by M.  David
Goldenberg  ("Goldenberg") and Immunomedics,  Inc. (collectively  "Plaintiffs").
The  litigation   claims  that  our  Prostascint   product  infringes  a  patent
purportedly  owned by Goldenberg and licensed to  Immunomedics.  We believe that
ProstaScint  does not infringe  this patent,  and that the patent is invalid and
unenforceable.  The  patent  sought to be  enforced  in the  litigation  has now
expired;  as a  result,  the claim  even if  successful  would not  result in an
injunction  barring the continued sale of ProstaScint or affect any other of our
products or technology.  In addition,  we have certain rights to indemnification
against litigation and litigation  expenses from the inventor of technology used
in  ProstaScint,  which  may be  offset  against  royalty  payments  on sales of
ProstaScint.  However,  given the  uncertainty  associated with  litigation,  we
cannot give any  assurance  that the  litigation  could not result in a material
expenditure  to us. On December  17,  2001,  Cytogen  filed a motion for summary
judgment of non-infringement  of the asserted claims of the patent-in-suit.  The
Plaintiffs  opposed  that  motion and filed their own  cross-motion  for summary
judgment  of  infringement.  On July 3, 2002,  the Court  denied  both  parties'
summary  judgment  motions,  with leave to renew those motions after  presenting
expert testimony and legal argument based upon that testimony. Subsequently, the
Court  heard  expert  testimony  and  further  argument,  and  received  further
briefing,  and the parties' renewed summary  judgment  motions are pending.  The
Court has not indicated when it expects to issue a ruling.

                                       31
<PAGE>
Item 4.  Submission of Matters to a Vote of Security Holders

On October 25, 2002, we held a special meeting of our stockholders, during which
meeting  our  stockholders  duly  approved a reverse  stock split of our issued,
authorized and outstanding  shares of common stock, up to a ratio of one-for-ten
at the discretion of our Board of Directors.  Other information  relating to the
matters  voted  upon at the  special  meeting  and the number of votes cast for,
against  and  withheld  with  respect to each such  matter is  contained  in our
Current  Report on Form 8-K which was filed with the  Commission  on October 25,
2002. There were no broker  non-votes with respect to either proposal  presented
to our stockholders at the special meeting.

                                       32

<PAGE>

                                    PART II


Item 5.  Market for the Company's Common Equity and Related Stockholder Matters

Our  common  stock is traded on the Nasdaq  National  Market  under the  trading
symbol "CYTO."

The table below sets forth the high and low bid information for our common stock
for each of the calendar quarters indicated,  as reported on the Nasdaq National
Market.  Such quotations reflect  inter-dealer  prices,  without retail mark-up,
mark-down or commission,  may not represent  actual  transactions  and have been
adjusted to reflect  the  Company's  one-for-ten  reverse  stock split  executed
October 25, 2002.

2001                                                      High          Low
----                                                      ----          ---
First Quarter..........................................  $65.31       $23.13
Second Quarter.........................................   60.90        21.88
Third Quarter..........................................   53.80        19.00
Fourth Quarter.........................................   44.60        20.50

2002
----
First Quarter..........................................  $34.40       $21.10
Second Quarter.........................................   22.00         9.10
Third Quarter..........................................   11.00         3.10
Fourth Quarter.........................................    8.40         3.30

As of March 1,  2003,  there  were  approximately  960  holders of record of our
common  stock and there  were  approximately  43,515  beneficial  holders of our
common  stock.

We have  never  paid  any  cash  dividends  on our  common  stock  and we do not
anticipate  paying any cash  dividends  on our common  stock in the  foreseeable
future.  We intend to retain any future  earnings  to fund the  development  and
growth of our business. Any future determination to pay dividends will be at the
discretion of the board of directors.

On December 17, 2002, we issued options to purchase 200,000 shares of our common
stock,  $0.01 par value per share, to Michael D. Becker, in connection with, and
upon his promotion to, President and Chief Executive Officer of the Company. The
exercise price of such options is $3.54 per share,  the fair market value of our
common stock on the date of grant. 50,000 of such options were granted under our
1995 Stock  Option Plan and vested  immediately  upon grant,  and the  remaining
150,000  options were granted  outside of any stock option plan and will vest in
three equal tranches,  based upon Mr. Becker's achievement of certain milestones
that will be established by our Board of Directors.

We  believe  that the  issuance  of the  Options to Mr.  Becker was exempt  from
registration under Section 4(2) of the Securities Act of 1933, as amended,  as a
transaction not involving any public offering.

                                       33

<PAGE>
Item 6.  Selected Financial Data

The following selected  financial  information has been derived from our audited
consolidated financial statements for each of the five years in the period ended
December 31, 2002. The selected financial data set forth below should be read in
conjunction  with the  consolidated  financial  statements,  including the notes
thereto,  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations" and other information provided elsewhere in this report.
<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                              -----------------------
                                                             2002         2001         2000         1999          1998
                                                             ----         ----         ----         ----          ----
<S>                                                       <C>          <C>          <C>          <C>          <C>
Statements of Operations Data:                                         (All amounts in thousands, except per share data)
Revenues:
  Product sales.......................................... $ 10,626     $  8,782     $  7,523     $  7,073     $  9,085
  Royalties..............................................    1,842        2,063        2,004        1,060        1,664
  License and contract...................................      463          912        1,024        3,171        9,239
                                                          --------     --------     --------     --------     --------
    Total revenues.......................................   12,931       11,757       10,551       11,304       19,988
                                                          --------     --------     --------     ---------    --------

Operating Expenses:
  Cost of product and contract
   manufacturing revenues ...............................    4,748        4,216        4,513        4,213       12,393
  Impairment of intangible assets(1).....................    1,729            -            -            -            -
  Research and development...............................    7,605       10,091        6,957        3,849        9,967
  Acquisition of marketing and technology rights (2).....        -            -       13,241        1,214            -
  Equity loss in PSMA LLC................................    2,886          332            -            -            -
  Equity loss in Targon subsidiary.......................        -            -            -            -        1,020
  Selling and marketing..................................    5,846        6,314        6,126        4,210        5,103
  General and administrative.............................    5,401        4,864        4,934        3,501        7,420
                                                          --------     --------     --------     --------     --------
    Total operating expenses.............................   28,215       25,817       35,771       16,987       35,903
                                                          --------     --------     --------     --------     --------

    Operating loss.......................................  (15,284)     (14,060)     (25,220)      (5,683)     (15,915)

Loss on investment.......................................     (516)           -            -            -            -
Gain on sale of laboratory and manufacturing facilities..        -            -            -        3,298            -
Gain on sale of Targon subsidiary........................        -            -            -            -        2,833
Other income (expense)...................................      101          857          611          412          (70)
                                                          --------     --------     --------     --------     --------

     Loss before income taxes and cumulative effect of
      accounting change..................................  (15,699)     (13,203)     (24,609)      (1,973)     (13,152)
Income tax benefit.......................................        -       (1,103)      (1,625)      (2,702)           -
                                                          --------     --------     --------     --------     --------

     Income (loss) before cumulative effect of
      accounting change .................................  (15,699)     (12,100)     (22,984)         729      (13,152)
Cumulative effect of accounting change (3)...............        -            -       (4,314)           -            -
                                                          --------     --------     --------     --------     --------

Net income (loss)........................................  (15,699)     (12,100)     (27,298)         729      (13,152)
Dividends, including deemed
 dividends on preferred stock............................        -            -            -            -         (119)
                                                          --------     --------     --------     --------     --------

Net income (loss) to common stockholders................. $(15,699)    $(12,100)    $(27,298)    $    729     $(13,271)
                                                          ========     ========     ========     ========     ========
Net income (loss) per common share:
     Basic and diluted net income (loss) before
      cumulative effect of  accounting change ........... $  (1.85)    $  (1.56)    $ ( 3.13)    $   0.11     $  (2.35)
     Cumulative effect of accounting change (3) .........        -            -        (0.59)           -            -
                                                          --------     --------     --------     --------     --------
     Basic and diluted net income (loss) ................ $  (1.85)    $  (1.56)    $ ( 3.72)    $   0.11     $  (2.35)
                                                          ========     ========     ========     ========     ========

Weighted average common shares outstanding:
     Basic...............................................    8,466        7,778        7,334        6,718        5,642
                                                          ========     ========     ========     ========     ========

     Diluted............................................     8,466        7,778        7,334        6,819        5,642
                                                          ========     ========     ========     ========     ========

Pro forma amounts assuming accounting
 change is applied retroactively:
  Net loss to common stockholders........................                           $(22,984)    $   (484)    $(16,373)
                                                                                    ========     ========     ========
  Basic and diluted net loss per common share............                           $  (3.13)    $  (0.07)    $  (2.90)
                                                                                    ========     ========     ========
</TABLE>

                                                                34
<PAGE>
<TABLE>
<CAPTION>

                                                                                December 31,
                                                      ------------------------------------------------------------
Consolidated Balance Sheet Data:                          2002         2001         2000        1999        1998
                                                      -------------------------------------------------------------
                                                                             (in thousands)
<S>                                                   <C>          <C>          <C>          <C>          <C>
Cash, short-term investments and restricted cash...   $  14,725    $  11,309    $  11,993    $  12,394    $  3,015
Total assets.......................................      19,894       21,492       20,416       18,605      10,900
Long-term liabilities..............................       2,614        2,291        2,374        2,416       2,223
Accumulated deficit................................    (356,380)    (340,681)    (328,581)    (301,283)   (302,012)
Stockholders' equity...............................      10,588       11,214        7,218       10,549         443
</TABLE>


     (1)  Reflects  a  non-cash  charge to write off the  carrying  value of the
          licensing fees associated with BrachySeed I-125 and BrachySeed Pd-103.

     (2)  In August 2000,  the Company  licensed  product  rights from  Advanced
          Magnetics, Inc. In June 1999, the Company acquired Prostagen, Inc.

     (3)  In 2000,  the Company  recorded a non-cash  charge for the  cumulative
          effect  related to the adoption of SEC Staff  Accounting  Bulletin No.
          101. See Note 1 of the Consolidated Financial Statements.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion 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.  All  statements,  other  than
statements  of  historical  facts,  included in this Annual  Report on form 10-K
regarding our strategy, future operations,  financial position, future revenues,
projected   costs,   prospects,   plans  and   objectives  of   management   are
forward-looking  statements.  The words "anticipates,"  "believes," "estimates,"
"expects,"  "intends," "may," "plans,"  "projects,"  "will," "would" and similar
expressions are intended to identify  forward-looking  statements,  although not
all   forward-looking   statements   contain  these   identifying   words.  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,  but are
not limited to those identified under the caption  "Additional  Factors That May
Affect  Future  Results",  provided  elsewhere  in this  report.  Investors  are
cautioned not to put undue reliance on any forward looking statement.

Cautionary Statement

Our  actual  results  may  differ  materially  from our  historical  results  of
operations  and those  discussed in the  forward-looking  statements for various
reasons,  including,  but not limited to, our ability to: (i) access the capital
markets  in the  near  term  and in the  future  for  continued  funding  of our
operations  including  existing  and new projects and to maintain the listing of
our  common  stock on the  Nasdaq  National  Market;  (ii)  attract  and  retain
personnel needed for business  operations and strategic  plans;  (iii) carry out
our business and financial  plans;  (iv) attract,  and the ultimate  success of,
strategic partnering arrangements,  collaborations,  and acquisition candidates;
(v) successfully  develop and commercialize  in-licensed  products such as NMP22
BladderChek,  including programs designed to facilitate the use of our products,
such  as  the  Partners  in  Excellence  or  PIE  Program;  (vi)  establish  and
successfully complete clinical trials where required for product approval; (vii)
obtain  foreign  regulatory  approvals  for products and to establish  marketing
arrangements in countries where approval is obtained;  (viii) demonstrate,  over
time, the efficacy and safety of our products;  (ix) determine and implement the
appropriate strategic initiative for our AxCell Biosciences subsidiary;  and (x)
fund  development  necessary  for  existing  products and for the pursuit of new
product  opportunities.  Additional  risks  that  we face  include,  but are not
limited to: (i) the risk of whether marketable and valuable products result from
our  development  activities;  (ii) the  possibility  that we may not be able to
adequately  protect our  intellectual  property  portfolio;  (iii) the degree of
competition we may face from existing or new products; (iv) the risks associated
with obtaining the necessary regulatory  approvals;  (v) the ability of Advanced
Magnetics to satisfy the conditions  specified by the FDA regarding  approval to
market Combidex in the United States; (vi) shifts in the regulatory  environment
affecting sale of our products such as third-party  payor  reimbursement  issues
and  dependence  on our  partners for  development  of certain  projects;  (vii)
competitive  products and  technologies;  (viii) price pressure;  and (ix) other
factors  discussed  in our press  releases  and from  time-to-time  in our other
filings  with  the  Securities  and  Exchange  Commission.  Any  forward-looking
statements  made  by us do not  reflect  the  potential  impact  of  any  future

                                       35

<PAGE>

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
Financial  Statements and related notes thereto  contained  elsewhere herein, as
well as from time to time in our other filings with the  Securities and Exchange
Commission.

Significant Events in 2002

In September  2002,  in an effort to reduce  expenses  and position  Cytogen for
stronger  long-term growth in oncology,  we restructured our AxCell  Biosciences
subsidiary.  Management intends that the plan, which included a 75% reduction of
AxCell's  workforce,  will allow continued research related to the role of novel
proteins and signal  transduction  pathways in disease  progression through both
external  collaborations  and internal  data mining.  While AxCell  continues to
pursue  opportunities  in  the  area  of  signal  transduction   research,   the
restructuring  reinforces  our corporate  objectives of developing and marketing
oncology products.

In October 2002, we entered into a five-year agreement with Matritech Inc. to be
the sole  distributor for Matritech's  NMP22  BladderChek test to urologists and
oncologists,  in the United States. Retention of exclusivity rights depends upon
meeting certain minimum annual  purchases.  NMP22 BladderChek is a point-of-care
test for bladder  cancer that  requires  only a few drops of a patient's  urine.
NMP22 BladderChek returns results in thirty minutes and provides urologists with
an  adjunct  technology  to  cystoscopy,  a  clinical  procedure  for the visual
identification  of tumors  in the  bladder,  for  improved  detection  and early
diagnosis.  During  November  2002,  we began  promoting  NMP22  BladderChek  to
urologists  in the United  States,  using our in-house  urologic  focused  sales
force.

On October 25, 2002, upon the receipt of approval of our  stockholders at a duly
called  and held  special  meeting  of  stockholders,  our  Board  of  Directors
authorized and implemented a reverse stock split of our issued,  outstanding and
authorized shares of common stock at a ratio of one-for-ten.  As a result of the
reverse split,  one new share of common stock was issued for every ten shares of
common  stock  held by  stockholders  of record as of the close of  business  on
October 25, 2002. The reverse split was intended,  in part, to help increase the
market price of our common  stock above the minimum  $1.00 per share as required
by the Nasdaq National Market's  maintenance listing standards.  On November 11,
2002,  we  announced  that we had  received  notification  from the Nasdaq Stock
Market,  Inc.  that we had  regained  compliance  with  such  listing  standards
regarding minimum bid price.

On December 17, 2002, we announced  that H. Joseph  Reiser,  Ph.D.  resigned his
position as our President and Chief  Executive  Officer,  for personal  reasons,
effective  immediately.  Dr.  Reiser had served in such  capacities  since April
1998,  and  has,  since  his  resignation,  remained  a member  of our  Board of
Directors.  Michael D. Becker, our Vice President of Business  Development,  was
unanimously  elected  by our  Board  of  Directors  to  serve  as  Dr.  Reiser's
replacement  as  President  and Chief  Executive  Officer.  Mr.  Becker was also
unanimously elected to serve as a member of our Board of Directors.

Also,  on December  17, 2002,  we  announced  that  Lawrence  Hoffman,  our Vice
President and Chief Financial  Officer resigned his position with the Company to
pursue other opportunities,  effective December 31, 2002. Mr. Hoffman had served
in such  capacity  since July 2000.  Ms. Thu Dang,  our  Director of Finance was
promoted to the  position of Vice  President  of Finance,  effective  January 1,
2003.

Other recent management changes include:

     -    William Goeckeler, our Vice President of Research and Development, was
          promoted to Vice President of Operations.  Mr. Goeckeler has been with
          the Company since April 1994;

     -    Deborah Kaminsky, our Vice President of Sales and Marketing will shift
          her focus as our Vice President of Business Development.  Ms. Kaminsky
          has been with the Company since December 2000;

     -    Rita Auld,  our  Director  of Human  Resources,  was  promoted to Vice
          President  of  Human  Resources  and   Administration   and  Corporate
          Secretary. Ms. Auld has been with the Company since October 2000; and

     -    Corey  Jacklin,  who has been with the  Company  since  January  2003,
          assumed the responsibilities of Senior Director of Sales.

                                       36

<PAGE>
In January 2003, we provided  Draximage with notice of  termination  for each of
our License and  Distribution  Agreement  and Product  Manufacturing  and Supply
Agreement  with respect to both of Draximage's  BrachySeed  I-125 and BrachySeed
Pd-103 products.  We launched BrachySeed I-125 and BrachySeed Pd-103 in February
2001 and May 2002, respectively. Effective January 24, 2003, we no longer accept
or fill new orders for the BrachySeed I-125 and BrachySeed Pd-103 products.

RESULTS OF OPERATIONS

Years ended December 31, 2002, 2001 and 2000

Revenues

Total  revenues  were  $12.9  million in 2002,  $11.8  million in 2001 and $10.6
million in 2000.  The increase in 2002 from 2001 and 2000 was  primarily  due to
higher  product  related  revenues  from  increased  sales  of  ProstaScint  and
BrachySeed,  partially offset by lower license and contract revenues. In January
2003, we served notice of termination  for each of our License and  Distribution
Agreement and Product  Manufacturing  and Supply  Agreement  with Draximage with
respect to the BrachySeed  I-125 and BrachySeed  Pd-103  products.  As a result,
effective  January  24,  2003,  we no longer  accept or fill new  orders for the
BrachySeed  products.  Product  related  revenues,  including  product sales and
royalty  revenues,  accounted for 96%, 92% and 90% of revenues in 2002, 2001 and
2000, respectively. License and contract revenues accounted for the remainder of
revenues.

Product related  revenues were $12.5 million,  $10.8 million and $9.5 million in
2002, 2001 and 2000,  respectively.  The increase in 2002 from 2001 and 2000 was
due primarily to an increase in the sale of ProstaScint and BrachySeed I-125 and
Pd-103.  Effective  January 24, 2003, we discontinued  selling and marketing the
BrachySeed products.

Sales from ProstaScint were $7.9 million, $7.6 million and $7.0 million in 2002,
2001 and 2000,  respectively,  and accounted for 64%, 70% and 74% of the product
related  revenues,  respectively.  Beginning  in  July  2000,  we  assumed  sole
responsibility  for  selling  and  marketing  ProstaScint  from Bard  Urological
Division of C.R. Bard Inc.,  our former  co-marketing  partner.  We believe that
future growth and market  penetrations of ProstaScint is dependent  upon,  among
other  things,   the  implementation  and  continued  research  of  new  product
applications,  such as: (i)  combining or fusing  ProstaScint  with CT (computed
tomography)  or MRI  (magnetic  resonance  imaging)  scans in a digital  overlay
("fusion imaging"); (ii) using ProstaScint scans to guide therapy ("image-guided
therapy"),  which is not limited to enhancing  the  placement  of  brachytherapy
seeds, but can also be applied to cryosurgery and external beam radiation,  such
as intensity  modulated  radiation therapy (IMRT), an advanced and more powerful
form of therapy that uses  computers to focus  radiation  more  precisely on the
target;  and (iii)  competitive  reimbursement by federal and private  agencies.
There can be no assurance,  however,  that such initiatives  will  significantly
increase the sale of ProstaScint.

Sales of BrachySeed were $2.5 million in 2002,  compared to $779,000 in 2001 and
accounted for 20% of product  related  revenues  during 2002,  compared to 7% of
product related  revenues during 2001. We launched  BrachySeed I-125 in February
2001 and  BrachySeed  Pd-103 in May 2002.  The  increase  in 2002 over the prior
period was due to increased  market  penetration  of  BrachySeed  products,  the
agreements  for which were  subsequently  terminated  as described  above.  As a
result,  effective  January 24, 2003, we no longer accept or fill new orders for
the BrachySeed I-125 and BrachySeed Pd-103.

Royalties  from  Quadramet  were $1.8 million,  $2.1 million and $2.0 million in
2002, 2001 and 2000, respectively, and accounted for 15%, 19% and 21% of product
related  revenues,  respectively.  We believe that the future  growth and market
penetration of Quadramet is largely dependent upon, among other things:  (i) new
clinical  data  supporting  the expanded and earlier use of Quadramet in various
cancers  and in  combination  with other  therapies,  such as  chemotherapy  and
bisphophonates; (ii) establishing the use of Quadramet at higher doses to target
and  treat  primary  bone  cancers;  and  (iii)  increased  marketing  and sales
penetration  to  radiation  and  medical  oncologists.  Quadramet  is  currently
marketed by our marketing partner,  Berlex Laboratories Inc. Although we believe
that Berlex is an advantageous marketing partner, there can be no assurance that
Quadramet will achieve greater market penetration on a timely basis or result in
significant revenues for us.

Sales from OncoScint  CR/OV were $182,000,  $363,000 and $519,000 in 2002,  2001
and  2000,  respectively.  The  market  for  OncoScint  CR/OV for  diagnosis  of
colorectal disease has been negatively  affected by positron emission tomography
or "PET" scans which have shown the same or higher  sensitivity  than  OncoScint
CR/OV.  Accordingly,  we  discontinued  selling  OncoScint at the end of 2002 in
order to focus on our other oncology products.

                                       37

<PAGE>

The initial sales of NMP22  BladderChek were $14,000 in 2002.  During the fourth
quarter of 2002, we entered into a five-year  agreement  with Matritech Inc. for
Cytogen to be the sole  distributor for Matritech's  NMP22  BladderChek  test to
urologists and oncologists in the United States. Retention of exclusivity rights
depends upon meeting  certain  minimum annual  purchases.  We began  introducing
NMP22 BladderChek to urologists during November 2002.

Effective  January 1, 2000, we adopted U.S.  Securities and Exchange  Commission
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial  Statements"
("SAB 101") which requires up-front,  non-refundable license fees to be deferred
and recognized over the performance  period.  The cumulative  effect of adopting
SAB 101  resulted in a one-time,  non-cash  charge of $4.3  million or $0.59 per
share in 2000,  which reflects the deferral of an up-front  license fee received
from Berlex,  net of  associated  costs,  related to the  licensing of Quadramet
recognized in 1998 and a license fee for certain applications of PSMA to a joint
venture formed by Cytogen and Progenics recognized in 1999.  Previously,  we had
recognized  up-front  license fees when we had no obligations to return the fees
under any  circumstances.  Under SAB 101 these payments are recorded as deferred
revenue to be recognized over the remaining term of the related  agreements.  In
2002,   2001  and  2000,   we  recognized   $410,000,   $860,000  and  $859,000,
respectively,  of license  revenue  that was included in the  cumulative  effect
adjustment as of January 1, 2000.

Revenues from contract research  services were $53,000,  $43,000 and $165,000 in
2002, 2001 and 2000,  respectively.  In 2002, we performed  limited research and
development  services for the PSMA  Development  Company LLC, our joint  venture
with Progenics Pharmaceuticals, Inc. The level of future revenues from the joint
venture will be dependent upon the extent of research and  development  services
requested  by  the  joint  venture.   In  2000,  we  discontinued  our  contract
manufacturing  services  business as a result of the sale of our  laboratory and
manufacturing facilities.  Contract revenues have fluctuated in the past and may
fluctuate in the future.

Operating Expenses

Total operating expenses were $28.2 million,  $25.8 million and $35.8 million in
2002,  2001 and  2000,  respectively.  The  increase  in 2002  from  2001 is due
primarily  to a  non-cash  charge  of  $1.7  million  for the  intangible  asset
impairment  related to the  write-off  of license fees of  BrachySeed  products,
$869,000 for the restructuring of AxCell in September 2002, a non-cash milestone
payment of $2.0 million  related to the progress of the dendritic  cell prostate
cancer clinical trials at Northwest Biotherapeutics, Inc. and increased expenses
relating to the development of the PSMA  technologies  through our joint venture
with  Progenics  Pharmaceuticals,   Inc.,  the  PSMA  Development  Company  LLC,
partially offset by a reduction in funding for research activities at our AxCell
subsidiary and the development of a new manufacturing  and purification  process
for ProstaScint.  The decrease in 2001 from 2000 was due to a charge in 2000 for
the  acquisition  of Combidex and Code 7228 from Advanced  Magnetics,  partially
offset  by  increased  development  efforts  at  AxCell  in  2001  for  AxCell's
proteomics  programs,  the  development  of  a  new  manufacturing  process  for
ProstScint and the 2001 launch of BrachySeed I-125. The 2000 operating  expenses
included a $13.2 million charge related to the  acquisition of the marketing and
technology rights to Combidex (for all applications) and Code 7228 (for oncology
applications  only), of which $13.1 million was non-cash as we issued our common
stock as  consideration.  At this time,  Advanced  Magnetics  does not intend to
develop Code 7228 for oncology imaging.

Costs of product sales were $4.7 million, $4.2 million and $4.5 million in 2002,
2001 and 2000, respectively. The increase in 2002 from 2001 was due primarily to
an increase in sales of BrachySeed  and a $169,000  charge to reserve for excess
inventory for  OncoScint and  ProstaScint,  partially  offset by lower  facility
related costs associated with the manufacturing of ProstaScint.  The decrease in
2001 compared to 2000 was due primarily to lower manufacturing costs that result
from better  manufacturing  yields for  ProstaScint,  partially  offset by costs
associated with the purchase of BrachySeeds, which became commercially available
in 2001.  Effective  January 24, 2003,  we no long accept or fill orders for the
BrachySeed products.

During  2002,  we recorded a non-cash  charge of $1.7 million to  impairment  of
intangible  assets which  represents  the write-off of the carrying value of the
upfront  licensing fees associated with BrachySeed I-125 and BrachySeed  Pd-103,
as the carrying value will not be recoverable.  In January 2003 we served notice
of termination  for each of our License and  Distribution  Agreement and Product
Manufacturing and Supply Agreement with Draximage with respect to the BrachySeed
products.  As of January 24,  2003,  we no longer  accept or fill new orders for
BrachySeed.

                                       38

<PAGE>
Research and  development  expenses were $7.6 million in 2002,  $10.1 million in
2001 and $7.0  million  in  2000.  The  decrease  in 2002  from  2001 was due to
decreased  funding  during  2002 for signal  transduction  research  programs at
AxCell  and  reduction  in  expenses   related  to  the  development  of  a  new
manufacturing  and  purification  process by DSM  Biologics  Company  B.V.  with
respect to ProstaScint,  partially offset by a stock-based  milestone payment of
$2.0  million in 2002  related to the progress of the  dendritic  cell  prostate
cancer clinical trials at Northwest  Biotherapeutics,  Inc. The increase in 2001
from  2000 was due,  in part,  to the  development  of a new  manufacturing  and
purification  process for  ProstaScint.  In 2002, 2001 and 2000 we invested $3.6
million,  $4.9  million and $3.4  million,  respectively,  in AxCell's  research
programs  and  $551,000,   $3.2  million  and  $559,000  respectively,   in  our
manufacturing  process development.  Our relationship with DSM providing for the
development of a new  manufacturing  process for ProstaScint  ceased in 2002. In
connection with the AxCell  restructuring  plan in September  2002,  cost-saving
measures  implemented  at AxCell  are  expected  to lower our  annual  operating
expenses by $2.2 million, which have begun in the fourth quarter of 2002.

Acquisition  of  marketing  and  technology  rights  of  $13.2  million  in 2000
represents a non-cash  charge of $13.1  million  related to the  acquisition  of
certain rights to product  candidates  Combidex (for all  applications) and Code
7228 (for oncology  applications  only) from Advanced  Magnetics.  At this time,
Advanced Magnetics does not intend to develop Code 7228 for oncology imaging.

Our share in the equity  loss in the PSMA  Development  Company  LLC,  our joint
venture with  Progenics,  was $2.9 million for 2002, and  represented 50% of the
joint venture's operating results.  The joint venture is equally owned by us and
Progenics.  We  account  for the  joint  venture  using  the  equity  method  of
accounting.  Progenics  was  obligated  to fund  the  initial  $3.0  million  of
development  costs  of the  joint  venture,  in  addition  to  $2.0  million  in
supplemental capital contributions funded at certain defined dates. Beginning in
December  2001,  we began to equally  share the costs of the joint  venture with
Progenics.  Our share in the equity loss in the joint  venture was  $332,000 for
2001. We expect our share of losses and funding in the joint venture to continue
at even higher  levels in  subsequent  periods.  The joint  venture is funded by
equal  capital  contributions  from each of Progenics  and Cytogen in accordance
with an annual budget  approved by the joint venture  representatives  from each
such party.  As of March 28, 2003, the parties are in the process of negotiating
the 2003 annual  budget for the joint venture and have agreed that the operating
budget for 2003 will be no less than the 2002  operating  expenses for the joint
venture. Contract research and development services provided by Progenics to the
joint venture during 2002 were in accordance with a services  agreement  between
the parties.  As of March 28, 2003, the parties are  negotiating  the terms of a
new services agreement and believe that if mutual agreement is not achieved, the
parties can  successfully  negotiate  with outside  third  parties for necessary
services.

Selling and marketing expenses were $5.8 million,  $6.3 million and $6.1 million
in 2002, 2001 and 2000, respectively.  The decrease in 2002 from 2001 was due to
costs incurred in 2001 for the launch of BrachySeed  I-125. The increase in 2001
from 2000  reflected the launch costs in 2001 for  BrachySeed  I-125,  partially
offset by costs  associated  with the  expansion of our in-house  sales force in
2000.  We  assumed  sole   responsibility  for  the  selling  and  marketing  of
ProstaScint in July 2000.

General and  administrative  expenses were $5.4  million,  $4.9 million and $4.9
million in 2002, 2001 and 2000, respectively. The increase in 2002 from 2001 and
2000 was due  primarily  to a charge of $869,000  related the  restructuring  of
AxCell in  September  2002,  and a  stock-based  compensation  charge  for a key
employee,  partially offset by decreased spending in legal and professional fees
in 2002.

Insurance Reimbursement

During 2001, we received a one-time  payment of $402,000 from an insurance claim
filed by us in 2000 to recover the loss of product resulting from the rupture of
a tube during the manufacture of a batch of ProstaScint.

Loss On Investment

We recorded a non-cash  charge of $516,000  during 2002 for an impairment in the
carrying  value of an  investment in shares of Northwest  Biotherapeutics,  Inc.
common  stock,  which the Company had  received  as part of the  acquisition  of
Prostagen in 1999. The fair value of such investment, based on the quoted market
prices,  had  significantly  decreased  from  its  original  carrying  value  of
$516,000. Based on an evaluation of the financial condition of Northwest and the
significant decline in stock price, we concluded that the decline was other than
temporary  and  that  the  carrying  amount  of  this  investment  would  not be
recoverable.

                                       39

<PAGE>
Interest Income/Expense

Interest  income was  $274,000,  $635,000 and $774,000 for 2002,  2001 and 2000,
respectively.  The declines in 2002 and 2001 from 2000 were due to lower average
yields on investments for each of the respective  periods,  partially  offset by
higher average cash and cash equivalent balances during the periods.

Interest  expense was  $173,000,  $180,000 and $163,000 in 2002,  2001 and 2000,
respectively. Interest expense includes interest on outstanding debt and finance
charges related to various equipment leases.

Income tax benefit

During 2001 and 2000, we sold New Jersey State net operating loss  carryforwards
and research and development credits,  which resulted in the recognition of $1.1
million and $1.6 million income tax benefit,  respectively.  In January 2003, we
sold additional New Jersey State net operating loss carryforwards which resulted
in $584,000 of income tax benefit,  which will be recorded in the first  quarter
of 2003. Assuming the State of New Jersey continues to fund this program,  which
is uncertain,  the actual amount of net operating  losses and tax credits we may
sell will also depend  upon the  allocation  among  qualifying  companies  of an
annual pool established by the State of New Jersey.

Net Loss

Net loss was $15.7  million,  $12.1 million and $27.3 million in 2002,  2001 and
2000,  respectively.  Net loss per share in 2002 was $1.85, compared to $1.56 in
2001 and $3.72 in 2000.  Net loss was based on weighted  average  common  shares
outstanding of 8.5 million,  7.8 million and 7.3 million,  in each of 2002, 2001
and 2000,  respectively.  The 2000 net loss included $4.3 million,  or $0.59 per
share,  for the  cumulative  effect  of  accounting  change  as a result  of the
adoption of SAB 101.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash  equivalents  were $14.7  million  as of  December  31,  2002,
compared to $11.3  million as of December  31,  2001.  The increase in 2002 from
2001 was  primarily  due to the proceeds of  approximately  $13 million from the
sale of Cytogen  common stock offset by cash used for operating  activities.  In
2002,  2001 and 2000,  the cash used for operating  activities was $8.3 million,
$13.4 million, and $9.0 million,  respectively.  The 2002 decrease from 2001 and
2000 was primarily due to improved working capital management,  which included a
build-up of  ProstaScint  inventory in 2001 and 2000  compared to a reduction in
2002.

In January 2003, we secured a new supply  arrangement for the  manufacturing  of
ProstaScint with Laureate Pharma L.P. and as a result, expect to use significant
resources  to build  ProstaScint  inventory  levels to a  two-year  requirement.
Pursuant to the terms of such Contract  Manufacturing  Agreement  with Laureate,
during 2003,  we are required to pay a facility  access and  utilization  fee of
$1,000,000. We are also required to pay Laureate an additional $157,500 relating
to  Laureate's  production  of  ProstaScint.  The  contract  would have  further
required a payment of  $136,800  to  Laureate  in the event that we  required an
optional production run for the antibody used in our ProstaScint product.

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.  In
October 2000, we entered into an equity financing facility with Acqua Wellington
North  American  Equities  Fund,  L.P.  which provided for the sale of up to $70
million of our common stock to Acqua  Wellington  at a small  discount to market
price.  Pursuant to this equity financing facility, in February 2001, we sold to
Acqua  Wellington  127,656 shares of our common stock for an aggregate  purchase
price of $6.5  million.  The equity  financing  facility was  terminated in June
2001.

In June  2001,  we entered  into a Share  Purchase  Agreement  with the State of
Wisconsin Investment Board, or SWIB, pursuant to which we sold 182,000 shares of
our common stock to SWIB for an aggregate purchase price of $8.2 million, before
transaction  costs.  In connection  with the Share Purchase  Agreement,  we were
required to  discontinue  the use of the equity  financing  facility  with Acqua
Wellington and such agreement was terminated.

In October 2001, we filed a shelf registration statement on Form S-3 to register
1,000,000 shares of our common stock. Such  registration  statement was declared
effective by the Securities and Exchange Commission in November 2001.

In January  2002,  we sold  297,067  shares of our  common  stock to SWIB for an
aggregate  purchase price of $8.0 million.  Additionally,  in June 2002, we sold
416,670  shares of our common stock to SWIB for an aggregate  purchase  price of
$5.0  million.  Such  issuances and sales of our common stock to SWIB in January
2002 and June 2002 were registered on our shelf  registration  statement on Form
S-3.

                                       40

<PAGE>
In  connection  with our stock  issuances  to SWIB,  we agreed not to enter into
equity line  arrangements in the future,  issue certain  securities at less than
fair market  value or  undertake  certain  other  securities  issuances  without
requisite  stockholder  approval.  Our stockholders  have approved,  and we have
implemented,  amendments to our By-Laws and certain of our stock option plans to
effect these restrictions.

In January 2003,  we received cash of $584,000  relating to a sale of New Jersey
State net operating  losses and research and development  credits.  Assuming the
State of New Jersey  continues to fund this  program,  which is  uncertain,  the
actual  amount of net  operating  losses  and tax  credits we may sell will also
depend  upon  the  allocation  among  qualifying  companies  of an  annual  pool
established by the State of New Jersey.

Because  the market  value of our common  stock  held by  non-affiliates  of the
Company is less than $75 million,  we are  ineligible to utilize a  registration
statement on Form S-3 for primary offerings in which our common stock is offered
for cash on our behalf.  We cannot  guarantee  you that the market  value of our
common stock held by non-affiliates will ever increase above $75 million, and as
a  result,  that we will  thereby  regain  eligibility  to  utilize  a Form  S-3
registration statement for such primary offerings.

We have relied upon revenues from sales of the BrachySeed  products to partially
fund ongoing operations.  For the years ended December 31, 2002 and December 31,
2001,  revenue  from the  sale of  BrachySeed  products  was  $2.5  million  and
$779,000,  respectively.  In December 2002, we served notice of termination  for
each of our License and  Distribution  Agreement and Product  Manufacturing  and
Supply  Agreement with  Draximage with respect to both the BrachySeed  I-125 and
BrachySeed  Pd-103  products.  As a result,  effective  January 24, 2003,  we no
longer accept or fill new orders for the BrachySeed products.

Beginning  in  December  2001,  we began to equally  share the costs of the PSMA
Development Company LLC, our joint venture with Progenics Pharmaceuticals,  Inc.
Since December 31, 2001, we have recognized 50% of the joint venture's operating
results,  of which our share was $2.9 million for 2002 and $332,000 for 2001. We
expect our share of losses and  funding in the joint  venture to  continue  at a
even higher  level in the  subsequent  periods.  The joint  venture is funded by
equal  capital  contributions  from each of Progenics  and Cytogen in accordance
with an annual budget  approved by the joint venture  representatives  from each
such party.  As of March 28, 2003, the parties are in the process of negotiating
the 2003 annual  budget for the joint venture and have agreed that the operating
budget for 2003 will be no less than the 2002  operating  expenses for the joint
venture. Contract research and development services provided by Progenics to the
joint venture during 2002 were in accordance with a services  agreement  between
the parties.  As of March 28, 2003, the parties are  negotiating  the terms of a
new services agreement and believe that if mutual agreement is not achieved, the
parties can  successfully  negotiate  with outside  third  parties for necessary
services.

Our  capital  and  operating  requirements  may change  depending  upon  various
factors, including: (i) whether we and our strategic partners achieve success in
manufacturing,  marketing and commercialization of our products; (ii) the amount
of  resources  which we devote to  clinical  evaluations  and the  expansion  of
marketing and sales capabilities;  (iii) results of clinical trials and research
and development activities; and (iv) competitive and technological developments,
in particular,  we expect to incur  significant costs for the development of our
PSMA technologies.

Our  financial  objectives  are to meet our capital and  operating  requirements
through revenues from existing products and licensing  arrangements.  To achieve
our  strategic   objectives,   we  may  enter  into  research  and   development
partnerships and acquire, in-license and develop other technologies, products or
services.  Certain of these strategies may require payments by us in either cash
or stock in addition to the costs  associated  with  developing  and marketing a
product or technology.  However, we believe that, if successful, such strategies
may increase long-term revenues.  There can be no assurance as to the success of
such  strategies  or that  resulting  funds  will  be  sufficient  to meet  cash
requirements until product revenues are sufficient to cover operating  expenses,
if ever. To fund these strategic and operating activities, we may sell equity or
debt securities as market conditions permit or enter into credit facilities.

We have incurred  negative cash flows from operations  since our inception,  and
have expended, and expect to continue to expend in the future, substantial funds
to implement our planned product development efforts,  including  acquisition of
products and  complementary  technologies,  research and  development,  clinical
studies  and  regulatory  activities,  and to further  our  marketing  and sales
programs.  We expect that our existing  capital  resources should be adequate to
fund our  operations and  commitments  into the first quarter of 2004. 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.

                                       41
<PAGE>
Our future capital  requirements and the adequacy of available funds will depend
on numerous  factors,  including:  (i) the successful  commercialization  of our
products;  (ii) the  costs  associated  with the  acquisition  of  complementary
products and technologies; (iii) progress in our product development efforts and
the magnitude and scope of such efforts; (iv) progress with clinical trials; (v)
progress  with  regulatory  affairs   activities;   (vi)  the  cost  of  filing,
prosecuting,  defending  and  enforcing  patent  claims  and other  intellectual
property rights;  (vii) competing  technological  and market  developments;  and
(viii)  the  expansion  of  strategic   alliances  for  the  sales,   marketing,
manufacturing and distribution of our products. To the extent that the currently
available  funds and  revenues  are  insufficient  to meet  current  or  planned
operating  requirements,  we will be required to obtain additional funds through
equity or debt  financing,  strategic  alliances  with  corporate  partners  and
others,  or through other sources.  There can be no assurance that the financial
sources  described above will be available when needed or at terms  commercially
acceptable  to us. If adequate  funds are not  available,  we may be required to
delay,  further  scale back or eliminate  certain  aspects of our  operations or
attempt to obtain funds  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

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 this
Annual  Report on Form 10-K  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

We  recognize  revenue from the sale of our products  upon  shipment.  We do not
grant price  protection to customers.  Quadramet  royalties are recognized  when
earned.  The  Securities  and Exchange  Commission  has issued Staff  Accounting
Bulletin (SAB) No. 101,  "Revenue  Recognition",  which provides guidance on the
recognition  of up-front,  non-refundable  license fees.  Accordingly,  we defer
up-front license fees and recognize them over the estimated  performance  period
of the related agreement, when we have continuing involvement. Since the term of
the performance periods is subject to management's estimates, future revenues to
be recognized could be affected by changes in such estimates.

Accounts Receivable

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

Inventories

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

Carrying Value of Fixed and Intangible Assets

Our fixed assets and certain of our acquired  rights to market our products have
been recorded at cost and are being amortized on a straight-line  basis over the
estimated  useful life of those assets.  If indicators of impairment  exist,  we
assess the  recoverability  of the  affected  long-lived  assets by  determining

                                       42

<PAGE>
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.

During  2002,  we recorded a non-cash  charge of $1.7 million to  impairment  of
intangible  assets,  which represents the write-off of the carrying value of the
licensing fees associated with BrachySeed  I-125 and BrachySeed  Pd-103,  as the
carrying value will not be recoverable.

In October 2002, we entered into a five-year agreement with Matritech Inc. to be
the sole distributor for Matritech's  NMP22  BladderChek  point-of-care  test to
urologists and oncologists in the United States. Retention of exclusivity rights
depends  upon  meeting  certain  minimum  annual  purchases.  We paid  Matritech
$150,000 upon the execution of the agreement, which was recorded as other assets
in the accompanying  consolidated balance sheet for the respective period and is
being  amortized  over  the  five  year  estimated  performance  period  of  the
agreement.  We  determined  that  we  did  not  have  any  impairment  regarding
Matritech's license fee at December 31, 2002.

COMMITMENTS

As  outlined  in Notes 7, 10 and 16 of the Notes to our  Consolidated  Financial
Statements,  we have entered into various contractual obligations and commercial
commitments.  The following table  summarizes our contractual  obligations as of
December 31, 2002:

<TABLE>
<CAPTION>


                                   Less than 1       1 to 3         4 to 5        After 5
Contractual Obligation                year            years          years         years          Total
------------------------------    ------------    -----------    -----------    -----------    -----------

<S>                               <C>             <C>            <C>            <C>            <C>
Long-term debt ...............    $          -    $ 2,280,000    $         -    $         -    $ 2,280,000


Capital lease obligations ....         80,000          82,000              -              -        162,000


Facility leases ..............        609,000         899,000        103,000              -      1,611,000


Other operating leases .......        228,000           8,000              -              -        236,000

Manufacturing and research and
development contracts ........      1,317,000         327,000        260,000      1,140,000      3,044,000


Minimum royalty payments .....      1,000,000       2,000,000      2,000,000      7,000,000     12,000,000
                                  -----------     -----------    -----------    -----------    -----------

Total ........................    $ 3,234,000     $ 5,596,000    $ 2,363,000    $ 8,140,000    $19,333,000
                                  ===========     ===========    ===========    ===========    ===========
</TABLE>

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 achieved specific  development  milestones or commercial
milestones  as  outlined  in  Notes  5 and 7 of the  Notes  to our  Consolidated
Financial Statements.

In subsequent  periods,  we expect to provide funding for the development of the
PSMA technologies through our joint venture with Progenics at even higher levels
than the current year. Such funding amount may vary dependent upon,  among other
things,  the  results  of the  clinical  trials  and  research  and  development
activities,    competitive   and   technological   developments,    and   market
opportunities.

Recently Enacted Accounting Pronouncements

In June 2002,  the Financial  Accounting  Standards  Board isssued  Statement of
Financial  Accounting  Standard  No.  146,  "Accounting  for  Exit  or  Disposal
Activities."  SFAS 146 addresses  significant  issues regarding the recognition,
measurement and reporting of costs associated with exit and disposal activities,
including  restructuring  activities.  SFAS 146 also  addresses  recognition  of
certain  costs related to  terminating  a contract that is not a capital  lease,
costs to  consolidate  facilities  or  relocate  employees  and  termination  of
benefits provided to employees that are involuntarily terminated under the terms
of a one-time benefit  arrangement that is not an ongoing benefit arrangement or
an individual deferred compensation contract.  SFAS 146 is effective for exit or
disposal activities that are initiated after December 31, 2002.

                                       43
<PAGE>
Item 7A.  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  or investment
portfolio.  As of  December  31,  2002,  the  Company  had $2.3  million of debt
outstanding  with a fixed interest rate of 7%. We do not have exposure to market
risks associated with changes in interest rates, as we have no variable interest
rate debt outstanding.  Changes in interest rates could expose us to market risk
associated  with a fixed  interest  rate debt.  We do not believe that this note
will have material exposure to market risks associated with interest rates.

Item 8.  Financial Statements and Supplementary Data

The  financial  statements  required by this Item 8 are  submitted as a separate
section of this Form 10-K.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

The  information  required  to be  disclosed  under this Item  regarding  former
accountants  was previously  reported by the Company on: (i) a Current Report on
Form 8-K filed with the Securities & Exchange Commission on May 20, 2002, and an
amendment  thereto  filed with the  Securities & Exchange  Commission on May 22,
2002; and (ii) a Current Report on Form 8-K filed with the Securities & Exchange
Commission on May 24 2002.

                                       44
<PAGE>


                                    PART III


Item 10.   Directors and Executive Officers of the Company

The  information  relating to our directors,  nominees for election as directors
and executive  officers under the headings  "Election of Directors",  "Executive
Officers"  and  "Compliance  with  Section  16(a)  of the  Exchange  Act" in our
definitive  proxy  statement  for the 2003  Annual  Meeting of  Stockholders  is
incorporated herein by reference to such proxy statement.

Item 11.   Executive Compensation

The  discussion  under the heading  "Executive  Compensation"  in our definitive
proxy  statement for the 2003 Annual  Meeting of  Stockholders  is  incorporated
herein by reference to such proxy statement.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters

The  discussion  under the heading  "Security  Ownership  of Certain  Beneficial
Owners and Management and Related  Stockholder  Matters" in our definitive proxy
statement for the 2003 Annual Meeting of Stockholders is incorporated  herein by
reference to such proxy statement.

Item 13.   Certain Relationships and Related Transactions

The   discussion   under  the  heading   "Certain   Relationships   and  Related
Transactions"  in our definitive  proxy statement for the 2003 Annual Meeting of
Stockholders is incorporated herein by reference to such proxy statement.

Item 14.   Controls and Procedures

     (1)  Evaluation  of  disclosure  controls  and  procedures.  Based on their
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a
date within 90 days of the filing date of this Annual  Report on Form 10-K,  the
Company's chief executive officer and principal financial officer have concluded
that the Company's  disclosure  controls and  procedures  are designed to ensure
that information  required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported  within  the  time  periods  specified  in the  Securities  &  Exchange
Commission's rules and forms and are operating in an effective manner.

     (2) Changes in internal controls.  There were no significant changes in the
Company's internal controls or in other factors that could significantly  affect
these controls subsequent to the date of their most recent evaluation.




                                       45
<PAGE>


                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

           (a)    Documents filed as a part of the Report:

           (1) and (2)   The response to this portion of Item 15 is submitted as
                         a separate section of this Form 10-K.

           (3)    Exhibits -


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

  3.1     Restated  Certificate  of  Incorporation  of Cytogen  Corporation,  as
          amended.  Filed as an  exhibit to Form 10-Q  Quarterly  Report for the
          quarter ended June 30, 1996, and incorporated herein by reference.

  3.2     Certificate of Amendment to the Restated  Certificate of Incorporation
          of Cytogen Corporation,  as amended.  Filed as an exhibit to Form 10-Q
          Quarterly Report for the quarter ended June 30, 2000, and incorporated
          herein by reference.

  3.3     Certificate of Amendment to the Restated Certificate of Incorporation,
          as  amended,  as filed  with the  Secretary  of State of the  State of
          Delaware on October  25,  2002.  Filed as an exhibit to the  Company's
          Current  Report on Form 8-K,  filed with the Commission on October 25,
          2002, and incorporated herein by reference.

  3.4     Certificate of Designations of Series C Junior Participating Preferred
          Stock of Cytogen  Corporation.  Filed as an  exhibit to the  Company's
          Registration  Statement on Form S-8 (File No.  333-59718),  filed with
          the  Commission  on  April  27,  2001,  and  incorporated   herein  by
          reference.

  3.5     By-Laws of Cytogen Corporation, as amended.  Filed  as an  exhibit  to
          the Company's  Annual Report on Form 10-K for the year ended  December
          31,  2002,   filed  with  the   Commission  on  March  31,  2003,  and
          incorporated herein by reference.

  4.1     Amended and Restated  Rights  Agreement,  dated as of October 19, 1998
          between  Cytogen  Corporation and Chase Mellon  Shareholder  Services,
          L.L.C.,  as Rights Agent.  The Amended and Restated  Rights  Agreement
          includes the Form of  Certificate of  Designations  of Series C Junior
          Participating  Preferred  Stock  as  Exhibit  A,  the  form  of  Right
          Certificate as Exhibit B and the Summary of Rights as Exhibit C. Filed
          as an exhibit to Form 10-Q  Quarterly  Report  for the  quarter  ended
          September 30, 1998, and incorporated herein by reference.

  10.1    Lease Agreement,  dated as of March 16, 1987, by and between Peregrine
          Investment Partners I, as lessor, and Cytogen Corporation,  as lessee.
          Filed as an exhibit to Form 10-K Annual  Report for Year Ended January
          2, 1988, and incorporated herein by reference.

  10.2    Amendment,  dated as of October 16, 1987, to Lease  Agreement  between
          Peregrine Investment Partners I and Cytogen  Corporation.  Filed as an
          exhibit  to  Form  S-8  Registration  Statement  (No.  33-30595),  and
          incorporated herein by reference.

  10.3    1989  Employee  Stock  Option  Plan.  Filed as an  exhibit to Form S-8
          Registration  Statement (No.  33-30595),  and  incorporated  herein by
          reference. +

  10.4.1  1988  Stock  Option  Plan  for   Non-Employee  Directors.  Filed as an
          exhibit  to  Form  S-8  Registration  Statement  (No.  33-30595),  and
          incorporated herein by reference. +

  10.4.2  Amendment  to  the  Cytogen   Corporation  1988 Stock  Option Plan for
          Non-Employee Directors dated May 22, 1996. Filed as an exhibit to Form
          10-Q  Quarterly  Report  for the  quarter  ended  June 30,  1996,  and
          incorporated herein by reference. +

                                       46

<PAGE>
  10.5    Standard  Form  of  Indemnification  Agreement  entered  into  between
          Cytogen  Corporation  and its officers,  directors,  and  consultants.
          Filed as an  exhibit  to  Amendment  No.  1 to Form  S-1  Registration
          Statement (No. 33-31280), and incorporated herein by reference. +

  10.6    1989 Stock Option Policy for Outside Consultants.  Filed as an exhibit
          to Amendment No. 1 to Form S-1 Registration  Statement (No. 33-31280),
          and incorporated herein by reference. +

  10.7.1  License  Agreement  dated  as  of  March  31,  1993   between  Cytogen
          Corporation and The Dow Chemical Company.  Filed as an exhibit to Form
          10-Q/A-1  Amendment to Quarterly  Report for the quarter ended July 3,
          1993, and incorporated herein by reference.*

  10.7.2  Amendment of the  License Agreement  between  Cytogen  Corporation and
          The Dow Chemical  Company dated September 5, 1995. Filed as an exhibit
          to Form 10-Q  Quarterly  Report for the quarter  ended March 31, 1996,
          and incorporated herein by reference.*

  10.7.3  Second   Amendment  to  the  License   Agreement   between  Cytogen
          Corporation and The Dow Chemical  Company dated May 20, 1996. Filed as
          an exhibit to Form  10-Q/A-1  Amendment  to  Quarterly  Report for the
          quarter ended June 30, 1996, and incorporated herein by reference.*

  10.8    1992 Cytogen  Corporation  Employee  Stock Option Plan II, as amended.
          Filed as an exhibit to Form S-4 Registration Statement (No. 33-88612),
          and incorporated herein by reference. +

  10.9    License Agreement,  dated March 10, 1993, between Cytogen  Corporation
          and The University of North Carolina at Chapel Hill, as amended. Filed
          as an exhibit to Form 10-K Annual  Report for the year ended  December
          31, 1994, and incorporated herein by reference.*

  10.10   Option and  License  Agreement,  dated July 1, 1993,  between  Cytogen
          Corporation and Sloan-Kettering  Institute for Cancer Research.  Filed
          as an exhibit to Form 10-K Annual  Report for the year ended  December
          31,  1994,  and  incorporated  herein  by  reference.*

  10.11   Cytogen  Corporation  Amended and  Restated  1995 Stock  Option  Plan.
          Filed as an exhibit to the  Company's  Annual  Report on Form 10-K for
          the year ended  December 31, 2002,  filed with the Commission on March
          31, 2003, and incorporated herein by reference. +

  10.12   Horosziewicz  -  Cytogen  Agreement,  dated  April 20,  1989,  between
          Cytogen  Corporation and Julius S. Horosziewicz,  M.D., DMSe. Filed as
          an exhibit to Form 10-K Annual Report for the year ended  December 31,
          1995,  and  incorporated  herein by  reference.*

  10.13   Marketing and Co-Promotion  Agreement between Cytogen  Corporation and
          C.R. Bard, Inc.  effective August 1, 1996. Filed as an exhibit to Form
          10-Q  Quarterly  Report for the quarter ended  September 30, 1996, and
          incorporated herein by reference.*

  10.14   Severance  Agreement  effective as of March 26, 1996  between  Cytogen
          Corporation  and John D.  Rodwell,  Ph.D.  Filed as an exhibit to Form
          10-K  Annual  Report  for  the  year  ended  December  31,  1996,  and
          incorporated herein by reference. +

  10.15   Cytogen  Corporation  Employee Stock Purchase Plan, as amended.  Filed
          as an exhibit to the Company's Annual Report on Form 10-K for the year
          ended December 31, 2002,  filed with the Commission on March 31, 2003,
          and incorporated herein by reference. +

  10.16   License  Agreement  between Targon  Corporation and Elan  Corporation,
          plc dated July 21,  1997.  Filed as an exhibit to Form 10-Q  Quarterly
          Report for the quarter ended June 30, 1997, and incorporated herein by
          reference.*

  10.17   Convertible  Promissory  Note  dated as of  August  12,  1998  between
          Cytogen Corporation and Elan International  Services, Ltd. Filed as an
          exhibit to Form 10-Q  Quarterly  Report for the quarter ended June 30,
          1998, and incorporated herein by reference.

                                       47
<PAGE>

  10.18   Employment  agreement  effective as of August 20, 1998 between Cytogen
          Corporation  and H.  Joseph  Reiser.  Filed as an exhibit to Form 10-Q
          Quarterly  Report  for the  quarter  ended  September  30,  1998,  and
          incorporated herein by reference. +

  10.19   License  Agreement  by  and  between  Berlex  Laboratories,  Inc.  and
          Cytogen  Corporation dated as of October 28, 1998. Filed as an exhibit
          to Form 10-Q/A-1  Amendment to Quarterly  Report for the quarter ended
          September 30, 1998, and incorporated herein by reference.

  10.20   Manufacturing  Space Agreement between Bard BioPharma L.P. and Cytogen
          Corporation  dated as of January 7, 1999.  Filed as an exhibit to Form
          S-1/A-1 Amendment to Registration Statement, filed with the Commission
          on January 27, 1999, and incorporated herein by reference.

  10.21   Employment  Agreement  effective as of June 10, 1997  between  Cytogen
          Corporation and Donald F. Crane,  Jr. Filed as an exhibit to Form 10-K
          Annual Report for the year ended December 31, 1999,  and  incorporated
          herein by reference. +

  10.22   Amended  and  Restated   1999  Stock  Option  Plan  for   Non-Employee
          Directors.  Filed as an exhibit to the Company's Annual Report on Form
          10-K for the year ended  December 31, 2002,  filed with the Commission
          on March 31, 2003, and incorporated herein by reference.

  10.23   Strategic Alliance  Agreement between AxCell  Biosciences  Corporation
          and InforMax, Inc. dated as of September 15, 1999. Filed as an exhibit
          to Form 10-K Annual Report for the year ended  December 31, 1999,  and
          incorporated herein by reference.*

  10.24   AxCell  Biosciences  Corporation  Employee Stock Option Plan. Filed as
          an exhibit to Form 10-K Annual Report for the year ended  December 31,
          1999, and incorporated herein by reference. +

  10.25   Master  Loan  and  Security   Agreement   No.   S7600  among   Cytogen
          Corporation,   AxCell  Biosciences   Corporation  and  Finova  Capital
          Corporation  dated December 30, 1999. Filed as an exhibit to Form 10-K
          Annual Report for the year ended December 31, 1999,  and  incorporated
          herein by reference.

  10.26   Amendment No. 1 to Marketing and Co-Promotion  Agreement  effective as
          of January 1, 2000 by and between  Cytogen  Corporation and C.R. Bard,
          Inc.  Filed as an exhibit to the  Company's  Quarterly  Report on Form
          10-Q for the quarter ended June 30, 2000, and  incorporated  herein by
          reference.

  10.27   License and  Marketing  Agreement by and between  Cytogen  Corporation
          and  Advanced  Magnetics,  Inc.  dated  August 25,  2000.  Filed as an
          exhibit to the Company's Quarterly Report on Form 10-Q for the quarter
          ended September 30, 2000, and incorporated herein by reference.*

  10.28   Development  and  Manufacturing   Agreement  by  and  between  Cytogen
          Corporation and DSM Biologics  Company B.V. dated July 12, 2000. Filed
          as an exhibit to the Company's  Quarterly  Report on Form 10-Q for the
          quarter  ended  September  30,  2000,  and   incorporated   herein  by
          reference.*

  10.29   Common Stock  Purchase  Agreement,  dated  September  29, 2000, by and
          between  Cytogen  Corporation  and  Acqua  Wellington  North  American
          Equities  Fund,  Ltd.  Filed as an  exhibit to the  Company's  Current
          Report on Form 8-K,  filed with the Commission on October 5, 2000, and
          incorporated herein by reference.

  10.30   Common  Stock  Purchase  Agreement,  dated  October  4,  2000,  by and
          between  Cytogen  Corporation  and  Acqua  Wellington  North  American
          Equities  Fund,  Ltd.  Filed as an  exhibit to the  Company's  Current
          Report on Form 8-K, filed with the Commission on October 12, 2000, and
          incorporated herein by reference.

                                       48

<PAGE>

  10.31   Written Compensatory  Agreement by and between Cytogen Corporation and
          H. Joseph  Reiser dated August 24, 1998,  as revised on July 11, 2000.
          Filed as an exhibit to the  Company's  Registration  Statement on Form
          S-8 (File No.  333-48454),  filed with the  Commission  on October 23,
          2000, and incorporated herein by reference. +

  10.32   Written Compensatory  Agreement by and between Cytogen Corporation and
          Lawrence  Hoffman  dated  July 10,  2000.  Filed as an  exhibit to the
          Company's  Registration  Statement  on Form S-8 (File No.  333-48454),
          filed with the Commission on October 23, 2000, and incorporated herein
          by reference. +

  10.33   Product  Manufacturing  and Supply  Agreement  by and between  Cytogen
          Corporation  and Draximage Inc.  dated  December 5, 2000.  Filed as an
          exhibit to the Company's Annual Report on Form 10-K for the year ended
          December 31, 2000, and incorporated herein by reference. *

  10.34   License and Distribution  Agreement by and between Cytogen Corporation
          and Draximage Inc. dated December 5, 2000.  Filed as an exhibit to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2000, and incorporated herein by reference. *

  10.35   Form  of  Executive  Change  of  Control  Severance  Agreement  by and
          between the Company and each of its  Executive  Officers.  Filed as an
          exhibit to the Company's Annual Report on Form 10-K for the year ended
          December 31, 2001, and incorporated herein by reference. +

  10.36.1 Lease Agreement by and between Newtown Associates,  L.P. and AxCell
          Biosciences Corporation dated as of July 23, 1999. Filed as an exhibit
          to the  Company's  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 2001, and incorporated herein by reference.

  10.36.2 First  Amendment to the Lease  Agreement by and between 826 Newtown
          Associates,  L.P. and AxCell Biosciences Corporation dated as of March
          16, 2001.  Filed as an exhibit to the  Company's  Quarterly  Report on
          Form 10-Q for the  quarter  ended  March 31,  2001,  and  incorporated
          herein by reference.

  10.37   Cytogen  Corporation  Stock Payment  Bonus Plan  Program.  Filed as an
          exhibit to the Company's  Registration Statement on Form S-8 (File No.
          333-58384),   filed  with  the   Commission  on  April  6,  2001,  and
          incorporated herein by reference. +

  10.38   MFS Fund  Distributors,  Inc.  401(K)  Profit  Sharing Plan and Trust.
          Filed as an exhibit to the  Company's  Registration  Statement on Form
          S-8 (File No. 333-59718), filed with the Commission on April 27, 2001,
          and incorporated herein by reference. +

  10.39   Adoption  Agreement for MFS Fund Distributors,  Inc.  Non-Standardized
          401(K) Profit  Sharing Plan and Trust,  with  amendments.  Filed as an
          exhibit to the Company's  Registration Statement on Form S-8 (File No.
          333-59718),   filed  with  the  Commission  on  April  27,  2001,  and
          incorporated herein by reference.

  10.40   Cytogen   Corporation   Performance  Bonus  Plan  with  Stock  Payment
          Program.  Filed as an exhibit to Company's  Registration  Statement on
          Form S-8 (File No.  333-75304),  filed with the Commission on December
          17, 2001, and incorporated herein by reference. +

  10.41   Share Purchase  Agreement by and between  Cytogen  Corporation and the
          State of Wisconsin  Investment  Board dated as of June 18, 2001. Filed
          as an exhibit to the Company's  Current Report on Form 8-K, filed with
          the Commission on June 19, 2001, and incorporated herein by reference.

  10.42   Share Purchase  Agreement by and between  Cytogen  Corporation and the
          State of  Wisconsin  Investment  Board dated as of January  18,  2002.
          Filed as an exhibit to the Company's Current Report on Form 8-K, filed
          with the  Commission on January 24, 2002, and  incorporated  herein by
          reference.

                                       49
<PAGE>

  10.43   Limited Liability  Company  Agreement of PSMA Development  Company LLC
          by and between Cytogen Corporation,  Progenics  Pharmaceuticals,  Inc.
          and the PSMA Development  Company LLC dated June 15, 1999. Filed as an
          exhibit to the  Company's  Registration  Statement on Form S-3,  filed
          with the  Commission  on July 20,  1999,  and  incorporated  herein by
          reference.

  10.44   Amendment  No.  1 to  Limited  Liability  Company  Agreement  of  PSMA
          Development Company LLC by and between Cytogen Corporation,  Progenics
          Pharmaceuticals,  Inc.  and PSMA  Development  Company LLC dated as of
          March 22, 2002. Filed as an exhibit to the Company's  Quarterly Report
          on  Form  10-Q,  filed  with  the  Commission  on May  14,  2002,  and
          incorporated herein by reference.

  10.45   Sublease  Agreement by and between  Cytogen  Corporation  and Hale and
          Dorr  LLP  dated  as of May  23,  2002.  Filed  as an  exhibit  to the
          Company's  Quarterly Report on Form 10-Q, filed with the Commission on
          August 14, 2002, and incorporated herein by reference.

  10.46   Addendum to Stock Exchange  Agreement  among Cytogen  Corporation  and
          the  Shareholders  and Debtholders of Prostagen,  Inc. dated as of May
          14, 2002,  and amended as of August 13,  2002.  Filed as an exhibit to
          the Company's Quarterly Report on Form 10-Q, filed with the Commission
          on August 14, 2002, and incorporated herein by reference.

  10.47   Distribution   Agreement  by  and  between  Cytogen   Corporation  and
          Matritech  Inc. dated  October  18,  2002.  Filed as an exhibit to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2002,  filed with the Commission on March 31, 2003,  and  incorporated
          herein by reference. **

  10.48   Written Compensatory  Agreement by and between Cytogen Corporation and
          Michael D. Becker dated December 17, 2002.  Filed as an exhibit to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2002,  filed with the Commission on March 31, 2003,  and  incorporated
          herein by reference. +

  10.49   Contract  Manufacturing  Agreement by and between Cytogen  Corporation
          and Laureate Pharma L.P. dated January 15, 2003. Filed herewith. **

  10.50   Quality  Agreement  by and between  Cytogen  Corporation  and Laureate
          Pharma  L.P.  dated  January  15,  2003.  Filed as an  exhibit  to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2002,  filed with the Commission on March 31, 2003,  and  incorporated
          herein by reference. **

  16.1    Letter  from  Arthur  Andersen  LLP to  the  Securities  and  Exchange
          Commission  dated May 20, 2002.  Filed as an exhibit to the  Company's
          Current Report on Form 8-K, filed with the Commission on May 20, 2002,
          and incorporated herein by reference.

  16.2    Letter  from  Arthur  Andersen  LLP to  the  Securities  and  Exchange
          Commission  dated May 22, 2002.  Filed as an exhibit to the  Company's
          Current  Report on Form 8-K/A,  filed with the  Commission  on May 22,
          2002, and incorporated herein by reference.

  16.3    Letter  from  Arthur  Andersen  LLP to  the  Securities  and  Exchange
          Commission  dated May 24, 2002.  Filed as an exhibit to the  Company's
          Current Report on Form 8-K, filed with the Commission on May 24, 2002,
          and incorporated herein by reference.

  21      Subsidiaries  of  Cytogen  Corporation. Filed  as  an exhibit  to  the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2002,  filed with the Commission on March 31, 2003,  and  incorporated
          herein by reference.

  23.1    Consent of KPMG LLP. Filed herewith.


                                       50
<PAGE>

  23.2    Consent of PricewaterhouseCoopers. Filed herewith.

  31.1    Certification of  President and  Chief Executive  Officer  pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

  31.2    Certification  of Vice President and  Chief Financial Officer pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

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

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

  99.1    Code of Ethics  of Cytogen Corporation  adopted by  the Company  as of
          March 2003. Filed as an exhibit to the Company's Annual Report on Form
          10-K for the year ended  December 31, 2002,  filed with the Commission
          on March 31, 2003, and incorporated herein by reference.

+ Management contract or compensatory plan or arrangement.

* We have received  confidential  treatment of certain  provisions  contained in
this  exhibit  pursuant  to an  order  issued  by the  Securities  and  Exchange
Commission.  The copy filed as an exhibit omits the  information  subject to the
confidentiality grant.

** We  have  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.

         (b) Reports on Form 8-K:

          We filed two  current  reports on Form 8-K during  the  quarter  ended
          December 31, 2002.

          On October 25,  2002,  we filed a current  report on Form 8-K with the
          Securities  and  Exchange  Commission  reporting  the  results  of our
          special meeting of stockholders  held on October 25, 2002, and that we
          filed a  Certificate  of  Amendment  to our  Restated  Certificate  of
          Incorporation, as amended, with the Secretary of State of the State of
          Delaware  to  affect  a   one-for-ten   reverse  stock  split  of  all
          outstanding,  issued and authorized shares of our common Stock,  $0.01
          par value per share.

          On December 17, 2002,  we filed a current  report on Form 8-K with the
          Securities and Exchange  Commission  reporting  certain changes to our
          senior management team.

         (c) Exhibits:

          The Exhibits filed with this Form 10-K are listed above in response to
          Item 15(a)(3).

         (d) Financial Statement Schedules:

         None.


                                       51
<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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  on the 19th day of
September 2003.

                                    Cytogen Corporation

                                    By: /s/ Michael D. Becker
                                        ----------------------------------------
                                        Michael D. Becker,
                                        President and Chief Executive Officer





                                       52
<PAGE>


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

                       Signature                                       Title                           Date
   -------------------------------------------------  -------------------------------------      --------------
<S>                                                   <C>                                        <C>
   By:     /s/ Michael D. Becker                      Chief Executive Officer and President      September 19, 2003
           -----------------------------------------  (Principal Executive Officer and
           Michael D. Becker                          Director)

   By:     /s/ Christopher P. Schnittker              Vice President, Chief Financial Officer    September 19, 2003
           -----------------------------------------  (Principal Financial and Accounting
           Christopher P. Schnittker                  Officer)

   By:     /s/ John E. Bagalay, Jr.                   Director                                   September 19, 2003
           -----------------------------------------
           John E. Bagalay, Jr.

   By:     /s/ Allen Bloom                            Director                                   September 19, 2003
           -----------------------------------------
           Allen Bloom

   By:     /s/ Stephen K. Carter                      Director                                   September 18, 2003
           -----------------------------------------
           Stephen K. Carter

   By:     /s/ James A. Grigsby                       Director and Chairman of the Board         September 19, 2003
           -----------------------------------------
           James A. Grigsby

   By:     /s/ Robert F. Hendrickson                  Director                                   September 19, 2003
           -----------------------------------------
           Robert F. Hendrickson

  By:      /s/ Kevin G. Lokay                         Director                                   September 19, 2003
           -----------------------------------------
           Kevin G. Lokay

   By:     /s/ H. Joseph Reiser                       Director                                   September 19, 2003
           -----------------------------------------
           H. Joseph Reiser


</TABLE>
                                                    53

<PAGE>
                                          Form 10-K Item 15(a)(1) and (2)

                                       CYTOGEN CORPORATION AND SUBSIDIARIES


(1)  Index to Financial Statements
     ------------------------------
<TABLE>
<CAPTION>
<S>                                                                                                     <C>
Independent Auditors' Report.........................................................................   F-2

Report of Independent Public Accountants on PSMA Development Company LLC.............................   F-3

Report of Independent Public Accountants on Cytogen Corporation......................................   F-4

Consolidated Balance Sheets as of December 31, 2002 and 2001.........................................   F-5

Consolidated Statements of Operations--Years Ended December 31, 2002, 2001 and 2000 .................   F-6

Consolidated Statements of Stockholders' Equity--Years Ended December 31, 2002, 2001 and 2000........   F-7

Consolidated Statements of Cash Flows--Years Ended December 31, 2002, 2001 and 2000..................   F-8

Notes to Consolidated Financial Statements...........................................................   F-9
</TABLE>


                                                         F-1

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



The Board of Directors and Stockholders
Cytogen Corporation:

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Cytogen
Corporation   and   subsidiaries  as  of  December  31,  2002  and  the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements  based  on our  audit.  We did  not  audit  the  financial
statements of PSMA Development  Company LLC (a development stage enterprise),  a
50% owned unconsolidated  investee company. The Company's equity interest in the
loss of PSMA  Development  Company  LLC was  $2.9  million  for the  year  ended
December 31, 2002. The financial statements of PSMA Development Company LLC were
audited  by other  auditors  whose  report  has been  furnished  to us,  and our
opinion,  insofar as it relates to the  amounts  included  for PSMA  Development
Company  LLC,  is  based  solely  on the  report  of  the  other  auditors.  The
consolidated  financial statements of Cytogen Corporation and subsidiaries as of
December  31,  2001  and for  each of the  years in the  two-year  period  ended
December 31, 2001,  were audited by other  auditors who have ceased  operations.
Those auditors' report dated February 5, 2002, on those  consolidated  financial
statements was  unqualified  before the  restatement  described in Note 1 to the
consolidated  financial  statements,  and included an explanatory paragraph that
described the change in Cytogen  Corporation's  method of accounting for revenue
recognition discussed in Note 1 to the consolidated financial statements.

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

In our opinion,  based on our audit and the report of other  auditors,  the 2002
consolidated  financial  statements  referred to above  present  fairly,  in all
material   respects,   the  financial   position  of  Cytogen   Corporation  and
subsidiaries  as of December 31, 2002,  and the results of their  operations and
their  cash  flows  for the  year  then  ended  in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed above, the consolidated financial statements of Cytogen Corporation
and  subsidiaries  as of  December  31,  2001 and for  each of the  years in the
two-year period ended December 31, 2001, were audited by other auditors who have
ceased  operations.  As described in Note 1, the Company  implemented  a reverse
stock  split in 2002,  and the  number of shares  and per share  amounts  in the
accompanying 2001 and 2000 consolidated  financial statements have been restated
to reflect  such  reverse  stock  split.  We audited the  adjustments  that were
applied to restate the number of shares and per share  amounts  reflected in the
2001 and 2000 consolidated  financial statements for the reverse stock split. In
our opinion,  such  adjustments are appropriate and have been properly  applied.
However,  we were not engaged to audit,  review or apply any  procedures  to the
2001 and 2000  consolidated  financial  statements  of Cytogen  Corporation  and
subsidiaries,  other than with respect to such adjustments and, accordingly,  we
do not  express  an  opinion  or any  form of  assurance  on the  2001  and 2000
consolidated financial statements taken a whole.



                                                     /s/ KPMG LLP



Princeton, New Jersey
January 31, 2003


                                      F-2
<PAGE>





Report of Independent Accountants

To the Board of Directors and Stockholders of PSMA Development Company LLC:


In our opinion,  the accompanying  balance sheets and the related  statements of
operations,  of stockholders' (deficit) equity and of cash flows present fairly,
in all material respects, the financial position of PSMA Development Company LLC
(the "Company") (a development  stage enterprise) at December 31, 2001 and 2002,
and the results of its operations and its cash flows for each of the three years
in the period ended  December 31, 2002 and the  cumulative  period from June 15,
1999 (inception) to December 31, 2002, in conformity with accounting  principles
generally accepted in the United States of America.  These financial  statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audit of these  financial  statements in accordance  with auditing
standards  generally accepted in the United States of America which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.


PricewaterhouseCoopers LLP


New York, New York
February 14,  2003,  except for Notes 1 and 3,
as to which the date is March 28, 2003





                                      F-3




<PAGE>


THE FOLLOWING IS A COPY OF A REPORT ISSUED BY ARTHUR  ANDERSEN LLP, AND INCLUDED
IN CYTOGEN  CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31,  2001.  THIS  REPORT HAS NOT BEEN  REISSUED BY ARTHUR  ANDERSEN,  AND ARTHUR
ANDERSEN HAS NOT CONSENTED TO ITS USE IN THIS ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED  DECEMBER 31,  2002.  ALL NUMBERS SET FORTH IN THIS FORM 10-K REFLECT
THE EFFECT OF A ONE-FOR-TEN REVERSE STOCK SPLIT EFFECTIVE OCTOBER 25, 2002.




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Cytogen Corporation:

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Cytogen
Corporation (a Delaware  Corporation)  and  Subsidiaries as of December 31, 2001
and 2000, and the related consolidated  statements of operations,  stockholders'
equity and cash flows for each of the three years in the period  ended  December
31, 2001.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  consolidated   financial  position  of  Cytogen
Corporation and Subsidiaries as of December 31, 2001 and 2000 and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 2001, in conformity  with  accounting  principles  generally
accepted in the United States.

As  explained  in Note 1 to the  consolidated  financial  statements,  effective
January 1, 2000,  the  Company  changed  its method of  accounting  for  revenue
recognition.

                               ARTHUR ANDERSEN LLP

Philadelphia, Pennsylvania
February 5, 2002


                                      F-4
<PAGE>



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

<TABLE>
<CAPTION>


                                                                                    December 31,
                                                                            -------------------------
                                                                                2002           2001
                                                                            ----------      ---------
<S>                                                                         <C>             <C>
ASSETS:
Current Assets:
   Cash and cash equivalents ..........................................     $  14,725       $  11,309
   Marketable securities ..............................................             -           1,376
   Receivable on income tax benefit sold ..............................             -           1,103
   Accounts receivable, net ...........................................         1,778           1,621
   Inventories ........................................................         1,262           1,889
   Other current assets ...............................................           643             508
                                                                            ---------       ---------

      Total current assets ............................................        18,408          17,806

Property and Equipment, net ...........................................         1,072           1,831

Other Assets ..........................................................           414           1,855
                                                                            ---------       ---------

                                                                            $  19,894       $  21,492
                                                                            =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
   Current portion of long-term liabilities ...........................     $      80       $      77
   Accounts payable and accrued liabilities ...........................         4,427           5,315
   Deferred revenue ...................................................           385             534
                                                                            ---------       ---------

      Total current liabilities .......................................         4,892           5,926
                                                                            ---------       ---------

Long-Term Liabilities .................................................         2,614           2,291
                                                                            ---------       ---------

Deferred Revenue ......................................................         1,800           2,061
                                                                            ---------       ---------

Commitments and Contingencies (Note 16)

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,  25,000,000 shares authorized,
     8,758,235 and 7,893,734 shares issued and outstanding
     at December 31, 2002 and 2001, respectively ......................            88              79
   Additional paid-in capital .........................................       366,884         351,577
   Deferred compensation ..............................................            (4)           (621)
   Accumulated other comprehensive income .............................             -             860
   Accumulated deficit ................................................      (356,380)       (340,681)
                                                                            ---------       ---------

     Total stockholders' equity .......................................        10,588          11,214
                                                                            ---------       ---------

                                                                            $  19,894       $  21,492
                                                                            =========       =========
</TABLE>

              The  accompanying  notes are an integral part of these statements.

                                                 F-5
<PAGE>

                                    CYTOGEN CORPORATION AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                              (All amounts in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                    Year Ended December 31,
                                                                            --------------------------------------
                                                                              2002           2001           2000
                                                                            --------       --------       --------
<S>                                                                         <C>            <C>            <C>
Revenues:
 Product related:
    ProstaScint .......................................................     $  7,923       $  7,640       $  7,004
    BrachySeed ........................................................        2,507            779              -
    Others ............................................................          196            363            519
                                                                            --------       --------       --------
      Total product sales .............................................       10,626          8,782          7,523

    Quadramet royalties ...............................................        1,842          2,063          2,004
                                                                            --------       --------       --------
      Total product related ...........................................       12,468         10,845          9,527

 License and contract .................................................          463            912          1,024
                                                                            --------       --------       --------

      Total revenues ..................................................       12,931         11,757         10,551
                                                                            --------       --------       --------

Operating Expenses:
 Cost of product related revenues .....................................        4,748          4,216          4,513
 Impairment of intangible assets ......................................        1,729              -              -
 Research and development .............................................        7,605         10,091          6,957
 Acquisition of marketing and technology rights .......................            -              -         13,241
 Equity loss in PSMA LLC ..............................................        2,886            332              -
 Selling and marketing ................................................        5,846          6,314          6,126
 General and administrative ...........................................        5,401          4,864          4,934
                                                                            --------       --------       --------

      Total operating expenses ........................................       28,215         25,817         35,771
                                                                            --------       --------       --------

      Operating loss ..................................................      (15,284)       (14,060)       (25,220)

Insurance reimbursement ...............................................            -            402              -
Loss on investment ....................................................         (516)             -              -
Interest income .......................................................          274            635            774
Interest expense ......................................................         (173)          (180)          (163)
                                                                            --------       --------       --------

      Loss before income taxes and cumulative effect
       of accounting change ...........................................      (15,699)       (13,203)       (24,609)
Income tax benefit ....................................................            -         (1,103)        (1,625)
                                                                            --------       --------       --------

           Loss before cumulative effect of accounting change .........      (15,699)       (12,100)       (22,984)
Cumulative effect of accounting change (Note 1) .......................            -              -         (4,314)
                                                                            --------       --------       --------

Net loss ..............................................................     $(15,699)      $(12,100)      $(27,298)
                                                                            ========       ========       ========

Net loss per share:
           Basic and diluted net loss before cumulative
            effect of accounting change  ..............................     $  (1.85)      $  (1.56)      $  (3.13)
           Cumulative effect of accounting change .....................            -              -          (0.59)
                                                                            --------       --------       --------
           Basic and diluted net loss .................................     $  (1.85)      $  (1.56)      $  (3.72)
                                                                            ========       ========       ========

Weighted average common shares outstanding ............................        8,466          7,778          7,334
                                                                            ========       ========       ========
</TABLE>

              The  accompanying  notes are an integral part of these statements.

                                                  F-6
<PAGE>


                                       CYTOGEN CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                  (All amounts in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                        Accumulated
                                                                                           Other
                                                               Additional    Deferred      Compre-      Accu-         Total
                                                      Common     Paid-in      Compen-      hensive     mulated    Stockholders'
                                                       Stock     Capital       sation      Income      Deficit       Equity
                                                      ------   -----------  -----------  ---------   ---------    -------------
<S>                                                   <C>      <C>          <C>          <C>         <C>           <C>
Balance, December 31, 1999                            $  71    $ 311,843    $    (82)    $    -      $(301,283)    $  10,549

Sale of 356,777 shares of common stock;
  including exercise of stock options .............       4       10,374           -          -              -        10,378
Issuance of 150,000 shares of common stock
  in connection with the acquisition of
  product candidates marketing rights .............       1       13,078           -          -              -        13,079
Issuance of options to purchase
   shares of common stock .........................       -          261           -          -              -           261
Deferred compensation related to
   stock options ..................................       -        1,062      (1,062)         -              -             -
Amortization of deferred compensation .............       -            -         249          -              -           249
Net loss ..........................................       -            -           -          -        (27,298)      (27,298)
                                                      -----    ---------    --------     ------      ---------     ---------

Balance, December 31, 2000 ........................      76      336,618        (895)         -       (328,581)        7,218

Sale of 324,149 shares of common stock;
  including exercise of stock options .............       3       14,235           -          -              -        14,238
Issuance of 10,141 shares of common stock and
  stock options related to compensation ...........       -          282           -          -              -           282
Issuance of options and warrants to purchase
  shares of common stock ..........................       -          201           -          -              -           201
Deferred compensation related to
  stock options ...................................       -          241        (241)         -              -             -
Amortization of deferred compensation .............       -            -         515          -              -           515
Comprehensive loss:
  Net loss ........................................       -            -           -          -        (12,100)      (12,100)
  Unrealized gain on marketable
   securities .....................................       -            -           -        860              -           860
                                                                                                                   ---------
     Total comprehensive loss .....................                                                                  (11,240)
                                                      -----    ---------    --------     ------      ---------     ---------

Balance, December 31, 2001 ........................      79      351,577        (621)       860       (340,681)       11,214

Sale of 716,290 shares of common stock;
  including exercise of stock options .............       7       12,966           -          -              -        12,973
Issuance of 20,512 shares of common stock and
  stock options related to compensation ...........       1          736           -          -              -           737
Issuance of 127,699 shares of common stock
  in connection with Prostagen ....................       1        2,038           -          -              -         2,039
Reversal of deferred compensation related to
  stock options ...................................       -         (433)        433          -              -             -
Amortization of deferred compensation .............       -            -         184          -              -           184
Comprehensive loss:
  Net loss ........................................       -            -           -          -        (15,699)      (15,699)
  Unrealized loss on marketable securities ........       -            -           -       (860)             -          (860)
                                                                                                                   ---------
     Total comprehensive loss .....................                                                                  (16,559)
                                                      -----    ---------    --------     ------      ---------     ---------
Balance, December 31, 2002 ........................   $  88    $ 366,884    $     (4)    $    -      $(356,380)    $  10,588
                                                      =====    =========    ========     ======      =========     =========
</TABLE>

                The accompanying notes are an integral part of these statements.

                                                    F-7
<PAGE>
                                      CYTOGEN CORPORATION AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (All amounts in thousands)

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                               ----------------------------------------
                                                                  2002           2001            2000
                                                               --------       ---------      -----------
<S>                                                            <C>            <C>            <C>
Cash Flows From Operating Activities:
Net loss ................................................      $(15,699)      $(12,100)      $ (27,298)
Adjustments to reconcile net loss to net cash used in
 operating activities:
   Depreciation and amortization ........................           779          1,186           1,027
   Imputed interest (income) expense ....................             -            (43)             29
   Stock based compensation expenses ....................           655            809             510
   Stock based milestone payment ........................         2,033              -               -
   Amortization of deferred revenue .....................          (410)          (860)           (859)
   Acquisition of marketing and technology rights .......             -              -          13,079
   Cumulative effect of accounting change ...............             -              -           4,314
   Asset impairment .....................................         2,446              -               -
   Loss on investment ...................................           516              -               -
   Gain on sale of property and equipment ...............             -              -            (148)
   Changes in assets and liabilities:
      Receivables, net ..................................           946            263             397
      Inventories .......................................           627         (1,006)           (198)
      Other assets ......................................           548             24          (1,631)
      Accounts payable and accrued liabilities ..........          (692)        (1,714)          1,740
                                                               --------       --------        --------

      Net cash used in operating activities .............        (8,251)       (13,441)         (9,038)
                                                               --------       --------        --------

Cash Flows From Investing Activities:
Purchases of property and equipment .....................          (148)          (813)         (1,209)
Purchase of product rights ..............................        (1,150)          (500)           (500)
Net proceeds from sale of property and equipment ........           100              -             148
Decrease in short-term investments ......................             -              -           1,593
                                                               --------       --------        --------
      Net cash provided by (used in) investing activities        (1,198)        (1,313)             32
                                                               --------       --------        --------

Cash Flows From Financing Activities:
Proceeds from issuance of common stock ..................        12,973         14,238         10,378
Payments of long-term liabilities .......................          (108)          (168)          (180)
                                                               --------       --------       --------
      Net cash provided by financing activities .........        12,865         14,070         10,198
                                                               --------       --------       --------

Net increase (decrease) in cash and cash equivalents ....         3,416           (684)         1,192
Cash and cash equivalents, beginning of year ............        11,309         11,993         10,801
                                                               --------       --------       --------
Cash and cash equivalents, end of year ..................      $ 14,725       $ 11,309       $ 11,993
                                                               ========       ========       ========
</TABLE>
              The accompanying notes are an integral part of these statements.

                                                  F-8
<PAGE>


                                       CYTOGEN CORPORATION AND SUBSIDIARIES
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Cytogen Corporation  ("Cytogen" or the "Company") of Princeton,  New Jersey is a
product-driven,  oncology-focused biopharmaceutical company. The Company markets
oncology products through its in-house sales force: ProstaScint(R) (a monoclonal
antibody-based  imaging  agent used to image the  extent and spread of  prostate
cancer) and NMP22(R)  BladderChek(TM)  (a point-of-care  test for bladder cancer
detection).  The Company has also developed  Quadramet(R),  a skeletal targeting
therapeutic  radiopharmaceutical  for the  relief of bone pain in  prostate  and
other types of cancer, for which the Company receives royalties on product sales
through Berlex Laboratories, the United States affiliate of Schering AG Germany,
which markets the product in the United States. The Company's pipeline comprises
product  candidates at various stages of clinical  development,  including fully
human monoclonal antibodies and cancer vaccines based on PSMA (prostate specific
membrane  antigen)  technology,  which the  Company  exclusively  licensed  from
Memorial  Sloan-Kettering  Cancer Center.  The Company also conducts research in
cell signaling through its AxCell  Biosciences  research  subsidiary in Newtown,
Pennsylvania.

In August 2000,  we expanded our product  pipeline by entering  into  marketing,
license and supply  agreements with Advanced  Magnetics,  Inc. for  Combidex(R),
which is an investigational magnetic resonance imaging (MRI) contrast agent that
assists in the differentiation of metastatic from non-metastatic lymph nodes. We
hold exclusive United States marketing rights to Combidex. Advanced Magnetics is
continuing its discussions with the FDA relating to outstanding issues regarding
an  approvable  letter  received  from the FDA dated June 2000,  in an effort to
bring Combidex to market.

Basis of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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.

Statements of Cash Flows

Cash and cash  equivalents  include  cash on hand,  cash in banks and all highly
liquid  investments  with  maturities  of  three  months  or less at the time of
purchase.  Cash paid for interest expense was $169,000,  $180,000 and $99,000 in
2002,  2001 and 2000,  respectively.  During  2002,  2001 and 2000,  the Company
purchased  $189,000,  $11,000 and  $49,000,  respectively,  of  equipment  under
various capital leases.

Marketable Securities

In connection  with the acquisition of Prostagen Inc. in June 1999 (see Note 5),
the  Company  received  275,350  shares  of  Northwest   Biotherapeutics,   Inc.
("Northwest")  common  stock.  The Company had  classified  this  investment  as
available-for-sale  securities.  The fair  value of  Northwest  stock,  based on
quoted market prices,  had significantly  decreased from the Company's  original
carrying  value of this  investment of $516,000.  Based on the evaluation of the
financial  condition of Northwest  and the  significant  decline in stock price,
management  concluded that the carrying amount of this  investment  would not be
recoverable.  Accordingly,  the Company  recorded a non-cash  charge of $516,000
related to the other  than  temporary  decline  in the value of this  investment
during 2002.

Receivables

At both December 31, 2002 and 2001, accounts receivable were net of an allowance
for doubtful accounts of $30,000.  There was no expense charged to the provision
for doubtful  accounts  during 2002,  2001 and 2000.  The Company  wrote off $0,
$5,000  and  $47,000  of   uncollectible   accounts  in  2002,  2001  and  2000,
respectively.

                                      F-9

<PAGE>

At December 31, 2001, the Company had a $1.1 million  receivable due from Public
Service  Electric  and Gas  Company  relating  to the sales of New Jersey  State
operating loss carryforwards and research and development  credits.  The Company
received the proceeds from this receivable in January 2002.

Inventories

The  Company's  inventories  are  primarily  related  to  ProstaScint  and NMP22
BladderChek.  Inventories  are  stated at the lower of cost or market  using the
first-in, first-out method and consisted of the following:

                                                          December 31,
                                                          ------------

                                                     2002            2001
                              -                      ----            ----
     Raw materials.............................  $  506,000       $  506,000
     Work-in process...........................      39,000        1,371,000
     Finished goods............................     717,000           12,000
                                                 ----------       ----------

                                                 $1,262,000       $1,889,000
                                                 ==========       ==========

Property and Equipment

Property  and  equipment  are  stated at cost,  net of  depreciation.  Leasehold
improvements are amortized on a straight-line basis over the lease period or the
estimated  useful  life,  whichever  is shorter.  Equipment  and  furniture  are
depreciated on a straight-line basis over three to five years.  Expenditures for
repairs  and  maintenance  are  charged  to expense as  incurred.  Property  and
equipment consisted of the following:
<TABLE>
<CAPTION>

                                                                     December 31,
                                                                     ------------

                                                                 2002            2001
                                                                 ----            ----
     <S>                                                    <C>              <C>
     Leasehold improvements...............................  $   103,000      $ 3,425,000
     Equipment and furniture..............................    2,420,000        6,224,000
                                                            -----------      -----------

                                                              2,523,000        9,649,000
     Less - accumulated depreciation and amortization.....   (1,451,000)      (7,818,000)
                                                            -----------      -----------

                                                            $ 1,072,000      $ 1,831,000
                                                            ===========      ===========
</TABLE>

In 2002, the Company wrote off  approximately  $1.7 million of fully depreciated
property and equipment,  and sold $5.3 million of its manufacturing property and
equipment which had a net value of $100,000 to Bard BioPharma L.P., a subsidiary
of Purdue  Pharma  L.P.,  for  proceeds of  $100,000.  Depreciation  expense was
$600,000, $1.2 million, and $1.0 million in 2002, 2001, and 2000, respectively.

Fair Value of Financial Instruments

The  Company's  financial   instruments  consist  primarily  of  cash  and  cash
equivalents,  marketable  securities,  accounts  receivable,  accounts  payable,
accrued expenses and long-term debt.  Management  believes the carrying value of
these assets and liabilities are considered to be  representative  of their fair
market value.

Impairment of Long-Lived Assets

In accordance with Statement of Financial  Accounting  Standards (SFAS) No. 144,
"Accounting for the Impairment or Disposal of Long-Lived  Assets," if indicators
of impairment  exist,  management  assesses 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 and eventual
disposition of the asset.  If impairment is indicated,  management  measures 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

                                      F-10
<PAGE>
asset.  During the fourth quarter of 2002, the Company recorded a charge of $1.7
million for the asset  impairment  associated  with  licensing  fees paid by the
Company related to BrachySeed I-125 and BrachySeed Pd-103 (See Note 4).

Other Assets

Other assets consisted of the following:
<TABLE>
<CAPTION>

                                                                             December 31,
                                                                             ------------
                                                                        2002            2001
                                                                        ----            ----

    <S>                                                               <C>            <C>
    NMP22 BladderChek license fee, net...........................     $145,000       $        -
    BrachySeed I-125 license fee, net (Note 4)...................            -          903,000
    Investment in PSMA Development Co. LLC (Note 6)..............        1,000          588,000
    Other .......................................................      268,000          364,000
                                                                     ---------       ----------
                                                                      $414,000       $1,855,000
                                                                      ========       ==========
</TABLE>

Revenue Recognition

Product related  revenues  include product sales by Cytogen to its customers and
Quadramet royalties.  Product sales are recognized upon shipment of the finished
goods. The Company does not grant price  protection to its customers.  Royalties
are recognized as revenue when earned.

License  and  contract  revenues  include  milestone  payments  and  fees  under
collaborative   agreements   with  third   parties,   revenues   from   contract
manufacturing  and  research  services,  and revenues  from other  miscellaneous
sources.  In 2000, the Company  discontinued  contract  manufacturing  services,
concurrent  with the sale of the  manufacturing  and  laboratory  facilities and
therefore has received no revenue from this source since 2000.

Effective  January 1, 2000,  the Company  adopted U.S.  Securities  and Exchange
Commission Staff Accounting Bulletin No. 101, "Revenue  Recognition in Financial
Statements" ("SAB 101"),  which, as applied to the Company,  requires  up-front,
non-refundable  license fees to be deferred and recognized  over the performance
period.  The  cumulative  effect of  adopting  SAB 101  resulted  in a one-time,
non-cash charge of $4.3 million or $0.59 per share,  which reflects the deferral
of an up-front license fee received from Berlex  Laboratories,  Inc. ("Berlex"),
net of associated  costs,  related to the  licensing of Quadramet  recognized in
October  1998 and a  license  fee for  certain  applications  of PSMA to a joint
venture  formed by Cytogen  and  Progenics  Pharmaceuticals  Inc.  ("Progenics")
recognized  in June 1999 (see Note 6).  Previously,  the Company had  recognized
up-front  license  fees when the Company had no  obligations  to return the fees
under any circumstances.  Under SAB 101, these payments are recorded as deferred
revenue to be recognized over the remaining term of the related agreements.  For
the years  ended  December  31,  2002,  2001 and 2000,  the  Company  recognized
$410,000, $860,000 and $859,000 in revenues, respectively, that were included in
the cumulative effect adjustment as of January 1, 2000.

Prior  year  financial  statements  have not  been  restated  to  apply  SAB 101
retroactively;  however, the following pro forma amounts present the net loss to
common   stockholders   and  net  loss  per  share   assuming  the  Company  had
retroactively applied SAB 101.

                                                      Year Ended December 31,
                                                               2000
                                                      ----------------------

   Net loss, as reported............................      $(27,298,000)
                                                          ============
   Net loss per share, as reported..................      $      (3.72)
                                                          ============

   Pro forma net loss ..............................      $(22,984,000)
                                                          ============
   Pro forma net loss per share.....................      $      (3.13)
                                                          ============

In  accordance  with  Emerging  Issues Task Force  ("EITF")  00-10,  the Company
records  shipping  and handling  charges  billed to customers as revenue and the
related costs as cost of product sales.


                                      F-11
<PAGE>

Research and Development

Research  and  development  expenditures  consist of projects  conducted  by the
Company and payments made to sponsored  research  programs and consultants.  All
research and development costs are charged to expense as incurred.  Research and
development  expenditures for customer sponsored programs were $53,000,  $17,000
and $45,000 in 2002, 2001 and 2000, respectively.

Patent Costs

Patent costs are charged to expense as incurred.

Income Taxes

The Company  accounts for income taxes under the asset and  liability  method in
accordance with SFAS No. 109, "Accounting for Income Taxes." Deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards.  Deferred tax assets and  liabilities  are measured using enacted
tax rates  expected  to apply to  taxable  income  in the  years in which  those
temporary  differences  are expected to be  recovered or settled.  The effect on
deferred tax assets and  liabilities  of a change in tax rates is  recognized in
income in the period that includes the enactment date.

Net Loss Per Share

Basic net loss per common share is based upon the weighted average common shares
outstanding during each period. Diluted net loss per common share is the same as
basic net loss per share, as the inclusion of common stock  equivalents would be
antidilutive due to the Company's losses (see Note 12).

Reverse Stock Split

On October 25, 2002, upon the receipt of approval of the Company's stockholders,
the  Company's  Board of Directors  authorized  and  implemented a reverse stock
split (the "Reverse  Split") of Cytogen's  issued,  outstanding  and  authorized
shares  of  common  stock  at a ratio  of  one-for-ten.  All  references  in the
accompanying  consolidated  financial statements to the number of shares and per
share amounts have been retroactively restated to reflect the Reverse Split.

Stock-based Compensation

The Company  follows the intrinsic  value method of accounting  for  stock-based
employee  compensation  in accordance  with APB Opinion No. 25,  "Accounting for
Stock Issued to Employees",  and related  interpretations.  The Company  records
deferred  compensation for option grants to employees for the amount, if any, by
which the market  price per share  exceeds the  exercise  price per share at the
measurement  date,  which is generally the grant date. In addition,  the Company
applies fair value  accounting for option grants to  non-employees in accordance
with SFAS No. 123,  "Accounting  for  Stock-Based  Compensation"  and EITF Issue
96-18,  "Accounting  for  Equity  Instruments  That Are  Issued  to  Other  Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."

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


                                      F-12
<PAGE>
<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                            -------------------------------------------------
                                                                2002              2001               2000
                                                            -------------     ------------      -------------
<S>                                                         <C>               <C>               <C>
Net loss, as reported                                       $(15,699,000)     $(12,100,000)     $(27,298,000)
   Add: Stock-based employee compensation
   expense included in reported net loss                         184,000           515,000           249,000
   Deduct: Total stock-based employee
   compensation expense determined under fair
   value-based method for all awards                          (4,000,000)       (5,838,000)       (3,640,000)
                                                            ------------      ------------      ------------

Pro forma net loss                                          $(19,515,000)     $(17,423,000)     $(30,689,000)
                                                            ============      ============      ============

Basic and diluted net loss per share, as reported                 $(1.85)           $(1.56)           $(3.72)
Pro forma basic and diluted net loss per share                    $(2.31)           $(2.24)           $(4.18)

Other Comprehensive Income
</TABLE>

The  Company  follows  SFAS No.  130,  "Reporting  Comprehensive  Income."  This
statement requires the classification of items of other comprehensive  income by
their nature and disclosure of the  accumulated  balance of other  comprehensive
income separately from retained  earnings and additional  paid-in capital in the
equity section of the balance sheet.

Recent Accounting Pronouncements


In June 2002,  the FASB issued  Statement of Financial  Accounting  Standard No.
146,   "Accounting  for  Exit  or  Disposal   Activities."  SFAS  146  addresses
significant issues regarding the recognition, measurement and reporting of costs
associated   with  exit  and  disposal   activities,   including   restructuring
activities.  SFAS 146 also  addresses  recognition  of certain  costs related to
terminating  a  contract  that is not a  capital  lease,  costs  to  consolidate
facilities  or  relocate  employees  and  termination  of  benefits  provided to
employees  that are  involuntarily  terminated  under  the  terms of a  one-time
benefit  arrangement that is not an ongoing benefit arrangement or an individual
deferred  compensation  contract.  SFAS 146 is  effective  for exit or  disposal
activities that are initiated after December 31, 2002.

Reclassifications

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

2.  DSM  BIOLOGICS COMPANY B.V.

In July 2000, the Company entered into a Development and Manufacturing Agreement
with DSM Biologics  Company B.V.  ("DSM"),  pursuant to which DSM was to conduct
certain  development  activities  with  respect to  ProstaScint,  including  the
delivery  of a  limited  number  of  batches  of  ProstaScint  for  testing  and
evaluation purposes.  During 2002, the parties ceased to operate under the terms
of such agreement.  In 2002, 2001 and 2000, the Company recorded $551,000,  $3.2
million and $559,000,  respectively,  of  development  expenses  related to this
agreement.

3.  ADVANCED MAGNETICS, INC.

In August 2000, the Company and Advanced  Magnetics,  Inc., a developer of novel
diagnostic  pharmaceuticals for use in magnetic resonance imaging (MRI), entered
into marketing, license and supply agreements ("AVM Agreements").  Under the AVM
Agreements,   Cytogen   acquired  certain  United  State's  rights  to  Advanced
Magnetics' product candidates: Combidex(R), MRI contrast agent for the detection
of lymph node metastases (for all applications) and imaging agent Code 7228 (for
oncology  applications  only).  Advanced  Magnetics will be responsible  for all
costs  associated  with the  clinical  development,  supply and  manufacture  of
Combidex and Code 7228 and will receive royalties based upon product sales.

In exchange for the future marketing  rights to Combidex (for all  applications)
and Code 7228 (for oncology applications only), Cytogen issued 150,000 shares of
its Common Stock to Advanced  Magnetics  at closing and may issue an  additional
50,000  shares,  which are currently in escrow,  subject to the  achievement  of

                                      F-13
<PAGE>

certain  milestones.  Of such  50,000  shares,  25,000  are being held in escrow
pending the  achievement of certain  milestones  relating to Combidex and 25,000
are being held in escrow pending the achievement of certain milestones  relating
to Code 7228.  Since the Advanced  Magnetics'  product  candidates  have not yet
received FDA approval,  the Company  recorded a $13.2 million charge in the 2000
consolidated  statement of  operations  for the  acquisition  of  marketing  and
technology  rights, of which $13.1 million was non-cash and represented the fair
value of the 150,000  shares of Common Stock  issued.  There can be no assurance
that  Advanced  Magnetics  will receive FDA approval to market  Combidex or Code
7228 for oncology  applications  in the United  States.  At this time,  Advanced
Magnetics does not intend to develop Code 7228 for oncology imaging.

4.  DRAXIMAGE INC.

In December 2000, the Company  entered into a Product  Manufacturing  and Supply
Agreement with Draximage,  Inc. to market and distribute BrachySeed implants for
prostate cancer therapy in the United States.  Under the terms of the agreement,
Draximage supplied radioactive iodine and palladium seeds to Cytogen in exchange
for product transfer  payments,  royalty payments on sales and certain milestone
payments.  Cytogen paid  Draximage  $500,000  upon  execution of the contract in
2000,  $500,000 upon the first sale of the  Iodine-125  BrachySeeds  in 2001 and
$1.0  million  related to the first  sale of  BrachySeed  Pd-103 in 2002.  These
payments were recorded as other assets in the accompanying  consolidated balance
sheet for the respective  period (see Note 1) and were being  amortized over the
ten year term of the Draximage  Agreement.  In January 2003,  the Company served
notice of  termination  for each of its License and  Distribution  Agreement and
Product  Manufacturing  and Supply Agreement with Draximage with respect to both
the BrachySeed  I-125 and BrachySeed  Pd-103  products.  As a result,  effective
January  24,  2003,  the  Company no longer  accepts or fills new orders for the
BrachySeed  products.  In 2002, the Company  recorded a non-cash  charge of $1.7
million  to  write  off the  carrying  values  of the  licensing  fees  paid for
BrachySeed I-125 and BrachySeed Pd-103. Prior to the write-off of such licensing
rights,  amortization expense was $174,000, $93,000 and $4,000 in 2002, 2001 and
2000,  respectively.  The Company also recorded $503,000 and $113,000 in royalty
expense for 2002 and 2001, respectively.

5.  ACQUISITION OF PROSTAGEN, INC.

Pursuant to a Stock Exchange Agreement  ("Prostagen  Agreement")  related to the
Company's acquisition of Prostagen Inc.  ("Prostagen") in June 1999, the Company
agreed to issue up to an additional  $4.0 million worth of Cytogen  Common Stock
to the shareholders and debtholders of Prostagen (the "Prostagen Partners"),  if
certain  milestones  are  achieved  in  the  dendritic  cell  therapy  and  PSMA
development programs. During 2002, the Company and the Prostagen Partners agreed
that a  milestone  was  achieved  based on the  progress of the  dendritic  cell
prostate cancer clinical trials at Northwest.  As a result, the Company recorded
a $2.0 million charge to research and development  expense which represented the
fair  value of the  122,699  shares of Common  Stock  issued.  In May 2002,  the
Company  entered into an addendum to the Prostagen  Agreement (the  "Addendum"),
which  clarifies  the future  milestone  payments to be made under the Prostagen
Agreement, as well as the timing of such payments. Pursuant to the Addendum, the
Company  may be  obligated  to pay two  additional  milestone  payments  of $1.0
million each, upon the earlier of certain  clinical  achievements  regarding the
PSMA development programs or January 2003 and July 2003, respectively,  provided
that  the  payments  shall  be due on  these  dates  only  if  safety  has  been
established in a completed  Phase I clinical  trial and the research  program on
immunotherapy  for  prostate  cancer is  continuing  on such  dates.  Any future
milestone  payments are payable in shares of Cytogen Common Stock.  In addition,
the Company  issued 5,000 shares of Common  Stock to the  Prostagen  Partners in
2002 upon the satisfactory  termination of a lease obligation originally assumed
by the Company.

6.  PROGENICS PHARMACEUTICALS, INC. JOINT VENTURE

In  June  1999,  Cytogen  entered  into a joint  venture  with  Progenics,  PSMA
Development  Company  LLC,  (the  "Joint  Venture"),   to  develop  vaccine  and
antibody-based  immunotherapeutic  products utilizing Cytogen's proprietary PSMA
technology. The Joint Venture is owned equally by Cytogen and Progenics. Through
November 2001,  Progenics funded the first $3.0 million of development  costs of
the Joint Venture.  Beginning in December 2001, the Company and Progenics  began
to  equally  share  the  future  costs of the  Joint  Venture.  Cytogen  has the
exclusive North American  marketing  rights for products  developed by the Joint
Venture.

The  Company  accounts  for  the  Joint  Venture  using  the  equity  method  of
accounting.  As discussed above,  through November 2001, Progenics was obligated
to fund the initial $3.0 million of the development costs. Beginning in December
2001,  Cytogen began to recognize 50% of the Joint Venture's  operating results,
expected to be losses, in its consolidated statement of operations. For the year
ended  December  31,  2002,  Cytogen  recognized  $2.9  million of these  losses
compared to $332,000 during the year ended December 31, 2001. As of December 31,
2002 and 2001,  the  carrying  value of the  Company's  investment  in the Joint
Venture  was $1,000  and  $588,000,  respectively,  which  represents  Cytogen's

                                      F-14
<PAGE>

investment to date in the Joint Venture,  less its  cumulative  share of losses,
which  net  investment  is  recorded  in other  assets  (see  Note 1).  Selected
financial statement information of the Joint Venture is as follows:
<TABLE>
<CAPTION>


                                                             December 31,
                                                  ---------------------------------
                                                      2002                  2001
                                                  ------------          -----------
Balance Sheet Data:

<S>                                               <C>                   <C>
Cash ...........................................  $    290,000          $ 1,010,000
                                                  ============          ===========

Accounts payable................................  $    304,000          $   351,000
Capital contributions...........................    11,399,000            6,799,000
Contribution receivable from Progenics..........             -             (500,000)
Accumulated deficit.............................   (11,413,000)          (5,640,000)
                                                  ------------          -----------

                                                  $    290,000          $ 1,010,000
                                                  ============          ===========
</TABLE>

<TABLE>
<CAPTION>


                                                                                         For the Period
                                                            For the Year Ended         From June 15, 1999
                                                ---------------------------------------  (inception) to
                                                    2002          2001         2000     December 31, 2002
                                                -----------   -----------   ----------- -----------------

<S>                                             <C>           <C>           <C>           <C>
Interest income.............................    $    13,000   $    47,000   $    96,000   $    229,000
Total expenses..............................      5,786,000     2,623,000     1,085,000     11,642,000
                                                -----------   -----------   -----------   ------------

Net loss....................................    $(5,773,000)  $(2,576,000)  $  (989,000)  $(11,413,000)
                                                ===========   ===========   ===========   ============
</TABLE>

In connection  with the licensing of the PSMA technology to the Joint Venture in
June 1999, Cytogen recognized approximately $1.8 million in license fee revenue.
In connection with the adoption of SAB 101,  effective January 1, 2000 (see Note
1),  the  Company  deferred   approximately  $1.5  million  of  this  previously
recognized  license fee and  recognized  $150,000  $599,000  and $599,000 of the
deferred  revenue  as  license  and  contract  revenue  in 2002,  2001 and 2000,
respectively. The remaining $125,000 of deferred revenue will be recognized on a
straight-line  basis  over the  estimated  remaining  performance  period of the
development program.

7.  THE DOW CHEMICAL COMPANY

In 1993, Cytogen acquired from The Dow Chemical Company an exclusive license for
the  treatment  of  osteoblastic  bone  metastases  in  the  United  States  for
Quadramet.  This license was amended in 1995 and 1998 to expand the territory to
include Canada, Latin America,  Europe and Japan, in 1996 to expand the field to
include all osteoblastic  diseases, and in 1998 to include rheumatoid arthritis.
The agreement requires the Company to pay Dow royalties based on a percentage of
net sales of Quadramet, or a guaranteed contractual minimum payments,  whichever
is greater,  and future  payments upon  achievement of certain  milestones.  The
Company  recorded  $1.0  million,  $824,000 and $802,000 in royalty  expense for
2002, 2001 and 2000,  respectively.  Future annual minimum  royalties due to Dow
are $1.0 million per year in 2003 through 2012 and $2.0 million in 2013.

8.  REVENUES FROM MAJOR CUSTOMERS

Revenues  from  major  customers  (greater  than 10%) as a  percentage  of total
revenues were as follows:


                                                         Year Ended December 31,
                                                        ------------------------
                                                        2002      2001      2000
                                                        ----      ----      ----

  Berlex Laboratories Inc...........................     16%       20%       22%
  Mallinckrodt Medical Inc..........................     18        20        19
  Medi-Physics......................................     12        12         7
  Syncor International Corporation..................      9        11        11


                                      F-15
<PAGE>

Mallinckrodt Medical Inc., Medi-Physics and Syncor International Corporation are
chains of  radiopharmacies,  which  distribute  ProstaScint  and OncoScint CR/OV
kits.

Revenues from Berlex include the recognition of deferred  revenue  following the
adoption of SAB 101.

As of December 31, 2002,  the  receivables  from four of the  Company's  largest
customers accounted for 57% of total accounts receivable.

9.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>

                                                                     December 31,
                                                             --------------------------
                                                                 2002           2001
                                                                 ----           ----

<S>                                                          <C>             <C>
Accounts payable.......................................      $1,726,000      $1,166,000
Accrued payroll and related expenses...................         298,000         989,000
Accrued research contracts and materials...............         238,000         831,000
Accrued commission and royalties.......................         720,000         250,000
Accrued professional and legal.........................         519,000       1,061,000
Facility payable and accrued restructuring.............         130,000         462,000
Other accruals.........................................         796,000         556,000
                                                               --------      ----------

                                                             $4,427,000      $5,315,000
                                                             ==========      ==========
</TABLE>
<TABLE>
<CAPTION>


10. LONG-TERM LIABILITIES
                                                                December 31,
                                                         ---------------------------
                                                            2002             2001
                                                         ----------       ----------
<S>                                                      <C>              <C>
Due to Elan Corporation, plc........................     $2,280,000       $2,280,000
Capital lease obligations...........................        162,000           88,000
Lease obligation....................................        246,000                -
Other...............................................          6,000                -
                                                         ----------       ----------

                                                          2,694,000        2,368,000
Less:   Current portion of long-term liabilities....        (80,000)         (77,000)
                                                         ----------       ----------

                                                         $2,614,000       $2,291,000
                                                         ==========       ==========
</TABLE>

In August  1998,  Cytogen  received  $2.0  million  from Elan  Corporation,  plc
("Elan") in exchange for a convertible  promissory note. The note is convertible
into shares of Cytogen  Common Stock at $28 per share,  subject to  adjustments,
and matures in August  2005.  The note bears annual  interest of 7%,  compounded
semi-annually,  however,  such interest was not payable in cash but was added to
the principal for the first 24 months; thereafter,  interest is payable in cash.
In 2002, 2001 and 2000, the Company  recorded  $160,000,  $160,000 and $141,000,
respectively,  in  interest  expense on this  note.  The note  contains  certain
non-financial covenants.

The Company leases certain equipment under capital lease obligations, which will
expire on various  dates  through  2005.  Property  and  equipment  leased under
non-cancellable capital leases have a net book value of $159,000 at December 31,
2002.  Payments to be made under  capital  lease  obligations  (including  total
interest of $9,000) are $86,000 in 2003, $79,000 in 2004 and $6,000 in 2005.

In an effort to reduce  expenses  and position  Cytogen for  stronger  long-term
growth  in  oncology,  the  Company  restructured  AxCell in  September  2002 by
reducing  75% of  AxCell's  workforce.  As a result,  during  2002,  the Company
recorded  a  charge  of  $869,000  related  to  employee  severance  costs,  the
impairment  of  property  and  equipment  and future  rental  payments on leased
facilities  that  will not be used in  operations,  which has been  included  in
general and administrative expense in the accompanying consolidated statement of

                                      F-16
<PAGE>

operations. As of December 31, 2002, the Company has accrued its obligations for
future lease  payments of $322,000,  of which  $246,000 is long-term and will be
paid through 2006.

11. COMMON STOCK

In 2000,  the Company sold 100,000  shares of Cytogen Common Stock to Berlex for
$1.0  million or  consideration  equal to $10.00 per share upon an exercise of a
warrant and 166,000 additional shares of Cytogen Common Stock for total proceeds
of $3.5  million at an average  price of $21.20 per share upon the  exercises of
employee stock options and other warrants.

In September 2000, the Company sold to Acqua Wellington North American  Equities
Fund, Ltd.,  ("Acqua  Wellington")  90,260  registered  shares of Cytogen Common
Stock at an aggregate price of $6.0 million or consideration equal to $66.47 per
share.  In October 2000, the Company entered into an equity  financing  facility
with Acqua Wellington for up to $70 million of Common Stock.  Under the terms of
the agreement, Cytogen could, at its discretion, sell shares of its Common Stock
to Acqua  Wellington at a small  discount to the market price.  Pursuant to this
Equity  Financing  Facility,  in  February  2001,  the  Company  sold  to  Acqua
Wellington  127,656  shares of its Common  Stock at an  aggregate  price of $6.5
million  or  consideration  equal to $50.92  per  share.  The  equity  financing
facility was terminated in June 2001.

In June 2001, the Company entered into a Share Purchase Agreement with the State
of  Wisconsin  Investment  Board  ("SWIB"),  pursuant to which the Company  sold
182,000 shares of Cytogen  Common Stock to SWIB for an aggregate  purchase price
of $8.2 million,  before transaction costs, or consideration equal to $45.00 per
share. In connection with the Share Purchase Agreement, the Company was required
to discontinue the use of the Acqua  Wellington  equity  financing  facility and
such agreement was terminated.

In January 2002, the Company sold 297,067 shares of Cytogen Common Stock to SWIB
for an aggregate  purchase  price of $8.0  million,  or  consideration  equal to
$26.90 per share  pursuant to a January 2002 Share  Purchase  Agreement  between
SWIB and the  Company.  In  connection  with our stock  issuances  to SWIB,  the
Company agreed not to enter into equity line  arrangements in the future,  issue
certain  securities  at less than fair market value or undertake  certain  other
securities issuances without requisite stockholder approval. The Company sold an
additional  416,670  shares  of its  Common  Stock  to SWIB in June  2002 for an
aggregate  purchase price of $5.0 million or  consideration  equal to $12.00 per
share.

See  Note  5 for  information  regarding  Cytogen  Common  Stock  issued  to the
Prostagen Partners.

12. STOCK OPTIONS

The Company has various  stock  option  plans that  provide for the  issuance of
incentive  and  non-qualified  stock  options to purchase  Cytogen  Common Stock
("Cytogen   Options")  to   employees,   non-employee   directors   and  outside
consultants,  for which an aggregate of 607,889 shares of Common Stock have been
reserved.  The  persons to whom  Cytogen  Options may be granted and the number,
type, and terms of the Cytogen Options vary among the plans. Cytogen Options are
granted with an exercise term of 10 years and generally  become  exercisable  in
installments  over  periods  of up to 5 years at an  exercise  price  determined
either by the plan or equal to the fair market value of the Cytogen Common Stock
at the date of grant.  Under  certain  circumstances,  vesting  may  accelerate.
Activity under these plans was as follows:

                                      F-17
<PAGE>
<TABLE>
<CAPTION>



                                                                            Weighted Average   Aggregate
                                           Number of        Price Range      Exercise Price     Exercise
                                        Cytogen Options      Per Share          Per Share         Price
                                        ---------------   ---------------   ----------------  -----------


      <S>                                  <C>            <C>                    <C>          <C>
      Balance at December 31, 1999          508,000       $ 7.00 - 166.30        $20.17       $10,248,263
          Granted                           134,050        24.70 - 169.38         63.64         8,530,540
          Exercised                        (134,344)        8.30 - 166.30         23.90        (3,210,282)
          Cancelled                         (38,077)        9.50 - 169.38         26.91        (1,024,568)
                                           ---------------------------------------------------------------

      Balance at December 31, 2000          469,629         7.00 - 169.38         30.97        14,543,953
          Granted                            74,736        25.60 -  61.30         38.08         2,845,773
          Exercised                         (13,090)        7.00 - 28.40          16.61          (217,478)
          Cancelled                         (37,027)        8.30 - 169.38         43.95        (1,627,480)
                                           ---------------------------------------------------------------

          Balance at December 31, 2001      494,248         7.00 - 169.38         31.45        15,544,768
          Granted                           102,063         3.48 - 23.30           4.32           440,688
          Exercised                            (905)        8.13 - 20.00          18.87           (17,077)
          Cancelled                        (123,300)        8.28 - 165.00         42.87        (5,285,848)
                                           ---------------------------------------------------------------

          Balance at December 31, 2002      472,106        $3.48 - 169.38         22.63       $10,682,531
                                           ---------------------------------------------------------------
</TABLE>

The  following  table  summarizes  information  about  Cytogen  stock options at
December 31, 2002:
<TABLE>
<CAPTION>


                  Outstanding Cytogen Stock Options                     Exercisable Cytogen Stock Options
 --------------------------------------------------------------------   ---------------------------------

                                   Weighted-Average
                                       Remaining                                        Weighted-Average
      Range of         Outstanding    Contractual    Weighted-Average     Exercisable       Exercise
  Exercise Prices         Shares          Life        Exercise Price         Shares           Price
  ---------------      -----------  ---------------  ----------------     -----------   ---------------
<S>         <C>           <C>             <C>             <C>                <C>            <C>
  $  3.48 - 18.33         304,751         3.6             $  8.66            252,538        $  9.41
    18.34 - 36.66          95,669         5.8               27.37             75,939          26.04
    36.67 - 54.99          24,220         6.4               47.38             14,796          46.80
    55.00 - 73.32          11,383         7.1               58.40             10,558          58.25
    73.33 - 91.65           2,550         4.1               78.23              2,430          77.67
    91.66 - 109.98         33,333         0.2              101.41             33,333         101.41
   164.97 - 169.38            200         7.2              169.38                140         169.38
-----------------------------------------------------------------          ------------------------

  $  3.48 - 169.38        472,106         4.1              $22.63            389,734         $23.75
=================================================================          ========================
</TABLE>

At December  31, 2002,  Cytogen  Options to purchase  389,734  shares of Cytogen
Common Stock were  exercisable  and 68,510  shares of Cytogen  Common Stock were
available for issuance under  approved  plans of additional  options that may be
granted under the plans.

Included in the above  tables is an option  granted to a key employee in 1998 to
purchase 135,000 shares of Cytogen Common Stock ("Performance  Options"),  at an
exercise  price of $10.94 per share.  The vesting of  Performance  Options  were
subject to the completion of certain  performance based milestones as determined
by the Board of Directors (the "Board"). The Company recorded approximately $1.1
million of deferred  compensation  upon the  commencement  of the vesting of the
Performance Options, which represented the fair market value of Cytogen's Common
Stock in excess of the exercise  price of the option on the date which the Board
determined the performance  milestones had been met.  Deferred  compensation was
amortized over the three-year  vesting period of the Performance  Options.  Upon
the  resignation of the key employee in December 2002,  $354,000 of the deferred
compensation related to unvested options was reversed.

                                      F-18

<PAGE>
Not  included in the above table are options to purchase  150,000  shares of our
common  stock  granted  in  2002 to our  executive  officer  outside  any of the
Company's  approved stock option plans, at an exercise price of $3.54 per share.
This option has three  separate and equal  traunches  which will each vest based
upon the  achievement  of certain  milestones  that will be  established  by the
Company's  Board of  Directors.  If the fair market value of the common stock is
greater than the exercise price of the option when such  milestones are met, the
Company  will  record  compensation  expense to be  recognized  over the vesting
period of such options, which will be established by the Board of Directors.

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  Options")  to  employees,  for  which
2,000,000 shares of AxCell common stock have been reserved. In 2002, the Company
granted  20,000 shares of AxCell Common Stock to members of AxCell's  Scientific
Advisory Board. The Company recorded $93,000 of expense related to these grants,
based upon the estimated fair value of those shares on the date of grant.  As of
December  31, 2002,  8,035,000  shares of AxCell  Common Stock are  outstanding;
8,000,000  of which are held by Cytogen.  AxCell  options  are  granted  with an
exercise term of 10 years and generally become  exercisable in installments over
periods  of up to 5 years.  The  Company  granted  AxCell  Options  to  purchase
183,035, 438,365 and 0 shares of AxCell Common Stock during 2002, 2001 and 2000,
respectively.  The weighted average exercise price per share for all outstanding
options was $3.52 in 2002 and $3.69 in 2001. As of December 31, 2002, options to
purchase 190,531 shares of AxCell Common Stock were outstanding, of which 85,537
shares were  exercisable  and 1,794,469  shares were available for future grant.
During  2001,  in  connection  with the grant of  AxCell  Options,  the  Company
recorded  deferred  compensation  of $241,000,  representing  the estimated fair
value of AxCell  Common Stock in excess of the exercise  price of the options on
the date such options were granted. The deferred compensation is being amortized
over the vesting period of the options. Due to employee terminations, primary as
a result of the  restructuring  at  AxCell,  $79,000  of  deferred  compensation
related to unvested options was reversed.

The  Company  adopted an  employee  stock  purchase  plan under  which  eligible
employees may elect to purchase  shares of Cytogen  Common Stock at the lower of
85% of  fair  market  value  as of the  first  trading  day  of  each  quarterly
participation  period,  or  as  of  the  last  trading  day  of  each  quarterly
participation  period. In 2002, 2001 and 2000,  employees purchased 4,911, 1,287
and 3,239 shares,  respectively,  for aggregate proceeds of $24,000, $28,000 and
$80,000,  respectively.  The  Company  has  reserved  30,639  shares  for future
issuance under its employee stock purchase plan.

The weighted  average fair value of the options  granted under the Cytogen stock
option plans during 2002, 2001 and 2000 is estimated as $3.70, $30.74 and $54.01
per option,  respectively,  on the date of grant using the Black-Scholes  option
pricing model with the following  assumptions for 2002, 2001 and 2000:  dividend
yield of  zero,  volatility  of  143.46%,  124.95%  and  120.39%,  respectively,
risk-free interest rate of 2.94%, 4.55% and 5.98%, respectively, and an expected
life  ranging from 4 to 5 years.  The average fair value per option  ascribed to
the employee  stock  purchase  plan during  2002,  2001 and 2000 is estimated at
$5.72,  $14.73  and  $13.53,  respectively,  on the  date  of  grant  using  the
Black-Scholes option pricing model with the following assumptions for 2002, 2001
and 2000:  dividend  yield of zero,  volatility of 20.83%,  125.41% and 109.83%,
respectively,  risk free interest rate of 1.67%, 4.12% and 5.52%,  respectively,
and expected  life of three  months.  The weighted  average fair value of AxCell
Options  granted  during  2002  and  2001  is  estimated  at  $4.16  and  $4.06,
respectively,  on the date of grant using the  Black-Scholes  pricing model with
the following  assumptions for 2002 and 2001: dividend yield of zero, volatility
of 142.07%  and  124.91%,  respectively,  risk-free  interest  rate of 4.02% and
4.59%, respectively, and an expected life of 5 years.

As of December 31, 2002, the Company has outstanding warrants to purchase 32,363
shares of Common  Stock,  at exercise  prices  ranging from $16.25 to $49.80 per
share. The warrants are exercisable through November 2004.

13. RELATED PARTY TRANSACTION

Consulting  services have been  provided to the Company under an agreement  with
the Chairman of the Board of Directors related to time spent in that function on
Company  matters.  Fees and expenses under this agreement were $52,000,  $53,000
and $54,000 in 2002, 2001 and 2000, respectively.

14. RETIREMENT SAVINGS PLAN

The  Company  maintains  a  defined  contribution  plan for its  employees.  The
contribution is determined by the Board of Directors each year and is based upon
a percentage of gross wages of eligible employees. The plan provides for vesting
over four years,  with credit  given for prior  service.  The Company also makes
contributions under a 401(k) plan in amounts which match up to 50% of the salary
deferred by the  participants.  Matching  is capped at 6% of deferred  salaries.
Total  expense  was  $98,000,  $140,000  and  $95,000  for 2002,  2001 and 2000,
respectively.


                                      F-19
<PAGE>

15. INCOME TAXES

As of December 31, 2002, Cytogen had federal net operating loss carryforwards of
approximately $264 million.  The Company also had federal and state research and
development tax credit  carryforwards of approximately  $7.1 million.  These net
operating loss and credit  carryforwards  have begun to expire and will continue
to  expire  through  2022.  In  addition,  certain  operating  loss  and  credit
carryforwards began to expire in 1995.

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

Deferred  income  taxes  reflect  the net tax  effect of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amount used for income tax purposes. Based on the Company's net
loss before  income  taxes during 2002,  2001 and 2000,  the Company  would have
recorded a tax benefit.  During  2002,  2001 and 2000,  there were  increases of
$3,529,000, $6,926,000 and $8,880,000,  respectively in the valuation allowance,
due to the Company's loss history, and uncertainty  regarding the realization of
deferred tax assets.  These  increases to the  valuation  allowance  reduced the
actual  benefit to zero.  Deferred  tax assets  have been fully  reserved  as of
December 31, 2002 and 2001.


A portion  of the  Company's  net  operating  loss  carryforward  relates to tax
deductions from stock option exercises and disqualifying dispositions that would
be accounted for as capital  contributions for financial  reporting  purposes to
the extent such deductions could be utilized by the Company.
<TABLE>
<CAPTION>

                                                         2002              2001
                                                         ----              ----
<S>                                                <C>               <C>
Deferred tax assets:
  Net operating loss carryforwards                 $  89,859,000     $  81,860,000
  Capitalized research and development expenses        7,396,000        11,808,000
  Research and development credit                      7,075,000         6,800,000
  Acquisition of in-process technology                   977,000           720,000
  Other, net                                           9,148,000         9,738,000
                                                   -------------     -------------

       Total deferred tax assets                     114,455,000       110,926,000
       Valuation allowance                          (114,455,000)     (110,926,000)
                                                   -------------     -------------
          Net deferred tax assets                  $          --     $          --
                                                   =============     =============
</TABLE>
In 1995,  Cytogen acquired CytoRad and Cellcor,  both of which had net operating
loss carryforwards. Due to Section 382 limitations, approximately $10 million of
CytoRad and $12.0  million of Cellcor  carryforwards  may be available to offset
future  taxable  income.  A full  valuation  allowance  was  established  on the
acquisition dates as realization of these tax assets is uncertain.

During  2001  and  2000,  the  Company  sold New  Jersey  state  operating  loss
carryforwards and research and development credits, resulting in the recognition
of a $1.1 million and $1.6 million tax benefit,  respectively.  In addition,  in
January 2003,  the Company sold  additional  New Jersey State net operating loss
carryforwards  which will result in $584,000 of income tax benefits,  which will
be recorded during the first quarter of 2003.

16. COMMITMENTS AND CONTINGENCIES

The Company leases its facilities and certain  equipment  under  non-cancellable
operating  leases that expire at various  times  through  2006.  Rent expense on
these leases was $832,000, $1.6 million and $1.3 million in 2002, 2001 and 2000,
respectively.  Minimum future  obligations  under the operating  leases are $1.8
million as of December  31, 2002 and will be paid as follows:  $837,000 in 2003,
$616,000  in 2004,  $291,000  in 2005 and  $103,000 in 2006.  In  addition,  the
Company has an agreement to receive annual  sublease  income of $54,000 in 2003,
2004 and 2005 and $36,000 in 2006.

The Company is obligated to make minimum future payments under manufacturing and
research and development  contracts that expire at various times. As of December
31, 2002, the minimum future  payments under contracts are $1.3 million in 2003,
$197,000 in 2004 and  $130,000  each year from 2005 to 2018.  In  addition,  the
Company is obligated  to pay  milestone  payments  upon  achievement  of certain
milestones  and royalties on revenues from  commercial  product sales  including
certain guaranteed minimum payments.


                                      F-20
<PAGE>
In subsequent  periods,  we expect to provide funding for the development of the
PSMA technologies through our joint venture with Progenics at even higher levels
than the current year. Such funding amount may vary dependent upon,  among other
things,  the  results  of the  clinical  trials  and  research  and  development
activities,    competitive   and   technological   developments,    and   market
opportunities.

On March 17, 2000, Cytogen was served with a complaint filed against the Company
in the United  States  Federal  Court for the District of New Jersey by M. David
Goldenberg  ("Goldenberg") and Immunomedics,  Inc. (collectively  "Plaintiffs").
The litigation claims that ProstaScint  infringes a patent  purportedly owned by
Goldenberg and licensed to  Immunomedics.  The Company believes that ProstaScint
does not infringe this patent, and that the patent is invalid and unenforceable.
The patent sought to be enforced in the litigation has now expired; as a result,
the claim even if  successful  would not  result in an  injunction  barring  the
continued  sale of  ProstaScint  or affect any other of  Cytogen's  products  or
technology.  In  addition,  the Company has  certain  rights to  indemnification
against litigation and litigation  expenses from the inventor of technology used
in  ProstaScint,  which  may be  offset  against  royalty  payments  on sales of
ProstaScint.  On December 17, 2001,  Cytogen filed a motion for summary judgment
of non-infringement of the asserted claims of the patent-in-suit. The Plaintiffs
opposed  that motion and filed their own  cross-motion  for summary  judgment of
infringement.  On July 3, 2002, the Court denied both parties'  summary judgment
motions, with leave to renew those motions after presenting expert testimony and
legal argument based upon that testimony.  Subsequently,  the Court heard expert
testimony and further argument,  and received further briefing, and the parties'
renewed summary judgment  motions are pending.  The Court has not indicated when
it expects to issue a ruling.  However,  given the  uncertainty  associated with
litigation,  the Company cannot give any assurance that the litigation could not
result in a material expenditure to the Company.

17. CONSOLIDATED QUARTERLY FINANCIAL DATA - UNAUDITED

The following  table  provides  quarterly  data for the years ended December 31,
2002 and 2001.
<TABLE>
<CAPTION>

                                                           Three Months Ended
                                               -------------------------------------------
                                               March 31,  June 30,   Sept. 30,   Dec. 31,
                                                  2002      2002        2002       2002
                                               --------   --------   ---------   --------
                                              (amounts in thousands except per share data)

<S>                                            <C>        <C>        <C>         <C>
Total revenues ............................    $ 3,296    $ 3,167    $ 3,101     $ 3,367

Total operating expenses ..................      8,329      6,404      6,588       6,894
                                               -------    -------    -------     -------

          Operating loss ..................     (5,033)    (3,237)    (3,487)     (3,527)

Other income (loss), net ..................         35         30       (484)          4
                                               -------    -------     -------     -------

Net loss ..................................    $(4,998)   $(3,207)   $(3,971)     $(3,523)
                                               =======    =======    =======      =======

Basic and diluted net loss per share ......    $ (0.62)   $ (0.39)   $ (0.46)     $ (0.40)
                                               =======    =======    =======      =======

Weighted average common share outstanding..      8,122      8,308      8,660        8,758
                                               =======    =======    =======      =======

Product related gross margin ..............    $ 2,027    $ 1,861     $1,882      $ 1,950
</TABLE>

                                      F-21
<PAGE>
<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                     ---------------------------------------------------
                                                     March 31,     June 30,     Sept. 30,       Dec. 31,
                                                       2001          2001          2001           2001
                                                     ---------     --------     ---------       --------
                                                        (amounts in thousands except per share data)

 <S>                                                 <C>            <C>           <C>           <C>
 Total revenues ................................     $  3,014       $ 2,856       $ 2,821       $ 3,066

 Total operating expenses ......................        5,840         6,053         6,718         7,206
                                                     --------       -------       -------       -------

          Operating loss .......................       (2,826)       (3,197)       (3,897)       (4,140)

 Other income, net .............................          172           112           118           455
                                                     --------       -------       -------       -------

          Loss before income taxes .............       (2,654)       (3,085)       (3,779)       (3,685)
Income tax benefit .............................            -             -             -        (1,103)
                                                     --------       -------       -------       -------

     Net loss ..................................     $ (2,654)      $(3,085)      $(3,779)      $(2,582)
                                                     ========       =======       =======       =======

     Basic and diluted net loss per share ......     $  (0.35)      $ (0.40)      $ (0.48)      $ (0.33)
                                                     ========       =======       =======       =======

     Weighted average common share outstanding..        7,624         7,744         7,887         7,890
                                                     ========       =======       =======       =======

     Product related gross margin ..............     $  1,624       $ 1,955       $ 1,175       $ 1,875
</TABLE>

18.  MATRITECH, INC.

In October 2002, the Company  entered into a five-year  agreement with Matritech
Inc.  to be the sole  distributor  for  Matritech's  NMP22  BladderChek  test to
urologists and oncologists in the United States. Retention of exclusivity rights
depends upon meeting certain minimum annual  purchases.  NMP22  BladderChek is a
point-of-care  antibody-based  diagnostic  test for  bladder  cancer  detection.
During  November  2002,  the  Company  began  promoting  NMP22   BladderChek  to
urologists in the United States using its in-house sales force. The Company paid
Matritech  $150,000 upon the execution of the  agreement,  which was recorded as
other  assets  in the  accompanying  consolidated  balance  sheet  and is  being
amortized over the five year estimated performance period of the agreement.