Cautionary Statement

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements regarding future events and our future results are based on current expectations, estimates, forecasts, and projections and the beliefs and assumptions of our management including, without limitation, our expectations regarding results of operations, selling, general and administrative expenses, research and development expenses and the sufficiency of our cash for future operations. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "estimate," "anticipate," "continue," or similar terms, variations of such terms or the negative of those terms. These forward-looking statements include statements regarding the growth and market penetration for CAPHOSOL, QUADRAMET and PROSTASCINT, our ability to obtain favorable coverage and reimbursement rates from government-funded and third party payors for our products, increased expenses resulting from our sales force and marketing expansion, including sales and marketing expenses for CAPHOSOL, QUADRAMET and PROSTASCINT, the sufficiency of our capital resources and supply of products for sale, the continued cooperation of our contractual and collaborative partners, our need for additional capital and other statements included in this Annual Report on Form 10-K that are not historical facts. Such forward-looking statements involve a number of risks and uncertainties and investors are cautioned not to put any undue reliance on any forward-looking statement. We cannot guarantee that we will actually achieve the plans, intentions or expectations disclosed in any such forward-looking statements. Factors that could cause actual results to differ materially, include: the risks of not consummating the merger agreement with EUSA; market acceptance of our products; the results of our clinical trials; our ability to hire and retain employees; economic and market conditions generally; our

receipt of requisite regulatory approvals for our products and product candidates; the continued cooperation of our marketing and other collaborative and strategic partners; our ability to protect our intellectual property; and the other risks identified under Item 1A "Risk Factors" in this Annual Report on Form 10-K, and those under the caption "Risk Factors," as included in certain of our other filings, from time to time, with the Securities and Exchange Commission.

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

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes thereto contained elsewhere herein, as well as from time to time in our other filings with the Securities and Exchange Commission.

Overview

We are a specialty pharmaceutical company dedicated to advancing the treatment and care of patients by building, developing, and commercializing a portfolio of oncology products. Our specialized sales force currently markets two therapeutic products and one diagnostic product to the U.S. oncology market. CAPHOSOL is an electrolyte solution for the treatment of oral mucositis and dry mouth that is approved in the U.S. as a prescription medical device. QUADRAMET is approved for the treatment of pain in patients whose cancer has spread to the bone. PROSTASCINT is a PSMA-targeting monoclonal antibody-based agent to image the extent and spread of prostate cancer.

Our audited financial statements for the fiscal year ended December 31, 2007, were prepared under the assumption that we will continue our operations as a going concern. We incorporated in 1980, and do not have a history of earnings. As a result, our independent registered accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt formation activities or to generate profitable operations. Such capital formation activities may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company.

Significant Events in 2007

In February 2007, we announced the settlement of our lawsuit against Advanced Magnetics, Inc., as well as Advanced Magnetics' counterclaims against Cytogen, by mutual agreement. Under the terms of the settlement agreement, Advanced Magnetics paid us $4 million and released 50,000 shares of Cytogen common stock held in escrow. In addition, both parties agreed to early termination of the 10-year license and marketing agreement and supply agreement established in August 2000, as amended, for two imaging agents being developed by

Advanced Magnetics, Combidex® (ferumoxtran-10) and ferumoxytol, previously Code 7228. The license and marketing agreement and supply agreement would have expired in August 2010.

Introduction of CAPHOSOL in the United States

In March 2007, we introduced CAPHOSOL, an advanced electrolyte solution indicated in the U.S. as an adjunct to standard oral care in treating oral mucositis (OM) caused by radiation or high dose chemotherapy. CAPHOSOL is also indicated for dryness of the mouth or throat (hyposalivation, xerostomia), regardless of the cause or whether the conditions are temporary or permanent.

Addition of Senior Vice President of Sales and Marketing

On June 11, 2007, we announced that we had appointed Stephen A. Ross to the newly created position of Senior Vice President, Sales and Marketing effective July 9, 2007. Mr. Ross has over 15 years of commercial pharmaceutical industry experience, as well as numerous key achievements specific to the oncology space. Mr. Ross joined Cytogen from GlaxoSmithKline (GSK) where most recently he served as Vice President, Specialist Business Units in the UK. In that capacity, Mr. Ross led a team of more than 300 employees and together they established new oncology and cervical business units in the UK. Previously, Mr. Ross served as Vice President and General Manager of GSK Ireland. His experience at GSK also included managing a portfolio of eight cytotoxic agents and two anti-emetic agents.

Sale of Common Stock and Warrants

On June 29, 2007, we entered into purchase agreements with certain institutional investors for the sale of 5,814,600 shares of our common stock and warrants to purchase 2,907,301 shares of our common stock, through a private placement offering. The transaction closed on July 6, 2007. The warrants have an exercise price of $2.23 per share and are exercisable beginning six months after their issuance and ending five years after they become exercisable. In exchange for $1.74, the purchasers received one share of common stock and a warrant to purchase .5 share of common stock. The offering provided us with net cash proceeds of approximately $9.3 million. The placement agents in this transaction received (i) a fee equal to 6% of the aggregate gross proceeds and (ii) warrants to purchase 348,876 shares of our common stock having an exercise price of $2.23 per share and exercisable beginning six months after their issuance and ending five years after they become exercisable. In connection with this sale, we entered into a Registration Rights Agreement with the investors. On August 22, 2007, the SEC declared the registration statement effective. The warrant agreement contains a cash settlement feature, which is available to the warrant holders at their option, upon an acquisition in certain circumstances. As a result, the warrants cannot be classified as permanent equity and are instead classified as a liability at their fair value in the accompanying consolidated balance sheet.

Engagement of Investment Banking Firm to Identify and Evaluate Strategic Alternatives

On November 5, 2007, we announced that we engaged ThinkEquity Partners LLC to assist us in identifying and evaluating strategic alternatives intended to enhance the future growth potential of our pipeline and maximize stockholder value.

On March 11, 2008, the Company announced that it has entered into a definitive merger agreement with EUSA Pharma Inc., pursuant to which all outstanding shares of the Company will be converted into $0.62 per share in cash, which represents a premium of approximately 35% over the closing price of $0.46 on March 10, 2008. EUSA Pharma is a transatlantic specialty pharmaceutical company focused on oncology, pain control and critical care.

Closing of the merger is conditioned on, among other things, the receipt of approval by holders of a majority of the outstanding shares of Cytogen's common stock, and the parties entrance into a sublicense agreement for the European and Asian rights to the Company's Caphosol product. It is also subject to certain regulatory review and other customary closing conditions. The transaction is expected to close in the second quarter of 2008. Upon closing of the merger, EUSA Pharma intends to apply to delist all of Cytogen's issued shares from the NASDAQ Stock Market.

Receipt of NASDAQ Notification Related to Minimum Bid Price

On November 5, 2007, we received notification from The NASDAQ Stock Market, or NASDAQ, that we are not in compliance with the $1.00 minimum bid price requirement for continued inclusion on the NASDAQ Global Market pursuant to Marketplace Rule 4450(a)(5). The closing price of our common stock has been below $1.00 per share since September 24, 2007. The letter states that we have 180 calendar days, or until May 5, 2008, to regain compliance with the minimum bid price requirement of $1.00 per share. We can achieve compliance, if at any time before May 5, 2008, our common stock closes at $1.00 per share or more for at least 10 consecutive business days. If compliance with NASDAQ's Marketplace Rules is not achieved by May 5, 2008, NASDAQ will provide notice that our common stock will be delisted from the NASDAQ Global Market. In the event of such notification, we would have an opportunity to appeal NASDAQ's determination. If faced with delisting, we may submit an application to transfer the listing of our common stock to the NASDAQ Capital Market.

Kevin Lokay appointed as President and Chief Executive Officer

On November 12, 2007, we announced that Kevin G. Lokay, a current member of our Board of Directors, was appointed to the position of President and Chief Executive Officer. Mr. Lokay has served on the our Board of Directors since January 2001 and will remain a member of the Board. Mr. Lokay has more than 26 years of pharmaceutical industry experience, including a strong concentration in the successful sales and marketing of oncology therapeutics and supportive care products. Mr. Lokay recently served as Vice President and Business Unit Head, Oncology and Acute Care Business Unit at GlaxoSmithKline Pharmaceuticals (GSK). While at GSK, he successfully launched three oncology and two acute care products and grew the business to over $2.3 billion in sales.

RESULTS OF OPERATIONS

Year Ended December 31, 2007 as Compared to December 31, 2006

Revenues

                                                                                          Increase/(Decrease)
                                                    2007               2006                 $              %
                                                        (All amounts in thousands, except percentage data)

PROSTASCINT                                     $      9,636       $      9,125       $        511               6 %
QUADRAMET                                              9,301              8,141              1,160              14 %
CAPHOSOL                                               1,275                  -              1,275             n/a
Other product revenue                                      -                 30                (30 )          (100 %)
License and contract                                       6                 11                 (5 )           (45 %)
                                                $     20,218       $     17,307       $      2,911              17 %

Total revenues for the year ended December 31, 2007 were $20.2 million compared to $17.3 million for the same period in 2006. Product revenues accounted for substantially all of total revenues in each of 2007 and 2006. Commencing with the second quarter of 2007, we began recognizing revenue from CAPHOSOL. We did not recognize any revenue in 2007 from SOLTAMOX which we introduced to the U.S. market in the second half of 2006, because shipments of this product did not meet the revenue recognition criteria under U.S. GAAP. We ceased selling and marketing SOLTAMOX effective January 1, 2008. If QUADRAMET or PROSTASCINT does not achieve broader market acceptance, either because we fail to effectively market such products or our competitors introduce competing products, and if we fail to successfully grow sales of CAPHOSOL, we may not be able to generate sufficient revenue to become profitable.

PROSTASCINT. PROSTASCINT sales were $9.6 million for the year ended December 31, 2007, compared to $9.1 million for 2006. Sales of PROSTASCINT accounted for 48% and 53% of product revenues for 2007 and 2006, respectively. Unit sales for 2007 decreased 8% from 2006. The sales increase from the prior year period was attributable to a higher average selling price in 2007 due to price increases for PROSTASCINT of 9% and 10% on September 1, 2006 and January 1, 2007, respectively. We cannot assure you that we will be able to successfully market PROSTASCINT, or that PROSTASCINT will achieve greater market penetration on a timely basis or result in significant revenues for us.

QUADRAMET. QUADRAMET sales were $9.3 million for the year ended December 31, 2007, compared to $8.1 million for 2006. Sales of QUADRAMET accounted for 46% and 47% of product revenues for 2007 and 2006, respectively. Unit sales for 2007 increased 2% from 2006. In addition to the volume increase, the sales increase from the prior year period was also attributable to a higher average selling price in 2007 due to price increases for QUADRAMET of 5% and 13% on September 1, 2006 and January 1, 2007, respectively. Currently, we market QUADRAMET only in the United States and have no rights to market

QUADRAMET in Europe. We cannot assure you that we will be able to successfully market QUADRAMET or that QUADRAMET will achieve greater market penetration on a timely basis or result in significant revenues for us.

CAPHOSOL. CAPHOSOL sales were $1.3 million for the year ended December 31, 2007. We introduced CAPHOSOL to the U.S market in March 2007. We began to recognize CAPHOSOL revenues in the second quarter of 2007, based on a number of factors including product sales to end-users, on-hand inventory estimates in the distribution channel, expiry dates, and data on product acceptance in the marketplace. Starting in the third quarter of 2007, we had sufficient evidence to reasonably estimate returns and chargebacks and have managed inventories in the distribution channels to not exceed targeted levels. As a result, we began to recognize revenues on CAPHOSOL based on shipments to customers. We cannot assure you that we will be able to successfully market CAPHOSOL or that CAPHOSOL will achieve greater market penetration on a timely basis or result in significant revenues for us.

Other Product Revenue. We did not recognize any SOLTAMOX revenue in 2007 because shipments of this product did not meet the revenue recognition criteria under U.S. GAAP. Due to limited end-user demand and inventory dating issues, substantially all of the SOLTAMOX inventory at wholesalers was returned to us resulting in our inability to recognize such shipments as revenue. For the year ended December 31, 2006, we recognized $30,000 in SOLTAMOX revenue. Effective January 1, 2008, we ceased selling and marketing SOLTAMOX.

Operating Expenses

                                                                                     Increase/(Decrease)
                                               2007               2006            $                   %
                                                   (All amounts in thousands, except percentage data)
Cost of product revenues                   $     13,053       $     10,150       $       2,903             29 %
Selling, general and administrative              39,086             30,166               8,920             30 %
Research and development                          5,851              7,301              (1,450 )          (20 %)
Equity in loss of joint venture                       -                120                (120 )         (100 %)
Impairment of intangible asset                    1,767                  -               1,767            n/a
                                           $     59,757       $     47,737       $      12,020             25 %

Total operating expenses for the year ended December 31, 2007 were $59.8 million compared to $47.7 million in 2006.

Cost of Product Revenues. Cost of product revenues for the year ended December 31, 2007 and 2006 were $13.1 million and $10.2 million for 2006 and primarily reflects (i) manufacturing and distribution costs for PROSTASCINT, QUADRAMET and CAPHOSOL; (ii) royalties on our sales of products; and (iii) amortization of the up-front payments to acquire the marketing rights to QUADRAMET in 2003, SOLTAMOX in April 2006 and CAPHOSOL in October 2006. The increase from the prior year period is primarily due to costs aggregating $882,000 and $160,000 associated with CAPHOSOL and SOLTAMOX which we introduced to the U.S. market in March 2007 and August 2006, respectively, a tentative settlement amount for

$125,000 to terminate the minimum royalty obligations with Rosemont; a reserve of $298,000 for excess SOLTAMOX inventory with short expiry dates; a tentative settlement amount of $100,000 related to PROSTASCINT infringement litigation; and a write down of $765,000 for costs related to a failed PROSTASCINT batch.

Selling, General and Administrative. Selling, general and administrative expenses for the year ended December 31, 2007 were $39.1 million compared to $30.2 million for the same period of 2006. The increase from the prior year period is primarily driven by: (i) a $6.0 million expense increase associated with the launch of CAPHOSOL late in the first quarter of 2007; (ii) increased commercial and selling support for all products; (iii) $1.0 million in managed care activities primarily related to SOLTAMOX and CAPHOSOL; and (iv) $505,000 of costs related to the evaluation of strategic alternatives.

Research and Development. Research and development expenses for the year ended December 31, 2007 were $5.9 million compared to $7.3 million for the same period of 2006. The decrease from the prior year period is primarily due to reduced expenditures for pre-clinical testing and production of clinical supplies for CYT-500 as compared to those incurred in 2006, partially offset by increased employment costs.

Equity in Loss of Joint Venture. Our share of the loss of the PSMA Development Company LLC (PDC), our former joint venture with Progenics, was $120,000 for the year ended December 31, 2006. Such amounts represented 50% of the joint venture's net losses. We equally shared ownership and costs of the joint venture with Progenics and accounted for the joint venture using the equity method of accounting until April 20, 2006 when we sold our ownership interest in PDC to Progenics. Following the sale of our interest in the joint venture in April 2006, we have no further obligations to the joint venture.

Impairment of Intangible Assets. We assess the carrying value of our intangible assets when circumstances indicate that the carrying amount of the underlying asset may not be recoverable. Due to limited end-user demand, uncertainty regarding future market penetration, the decision in the third quarter of 2007 to reallocate sales and marketing resources to other products, and inventory dating issues, we assessed the recoverability of the carrying amount of our SOLTAMOX license and determined an impairment existed. Accordingly, during the third quarter of 2007, we recorded a non-cash impairment charge of approximately $1.8 million to write-down this asset to zero.

Interest Income/Expense. Interest income for the year ended December 31, 2007 was $1.1 million compared to $1.5 million for the same period of 2006. The decrease from the prior year period was due to higher average cash balances in 2006. Interest expense for the year ended December 31, 2007 was $66,000 compared to $36,000 for the same period of 2006. Interest expense includes interest on finance charges related to various equipment leases that are accounted for as capital leases and interest on amounts to be escrowed in connection with the license agreement with InPharma.

Advanced Magnetics, Inc. Litigation Settlement, Net. In February 2007, we settled our lawsuit against Advanced Magnetics, Inc., as well as Advanced Magnetics' counterclaims against us, by mutual agreement. Under the terms of the settlement agreement, Advanced Magnetics

paid us $4.0 million and released 50,000 shares of Cytogen common stock held in escrow. As a result of the settlement, we recorded a gain of $3.9 million, net of transaction costs in 2007.

Gain on Sale of Equity Interest in Joint Venture. On April 20, 2006, we entered into a Membership Interest Purchase Agreement with Progenics providing for the sale to Progenics of our 50% ownership interest in PDC, our joint venture with Progenics for the development of in vivo cancer immunotherapies based on PSMA. In addition, we entered into an Amended and Restated PSMA/PSMP License Agreement with Progenics and PDC pursuant to which we licensed PDC certain rights in PSMA technology. Under the terms of such agreements, we sold our 50% interest in PDC for a cash payment of $13.2 million, potential future milestone payments totaling up to $52.0 million payable upon regulatory approval and commercialization of PDC products, and royalties on future PDC product sales, if any. As a result of the transaction, for the year ended December 31, 2006, we recorded a gain of $12.9 million on the sale of our equity interest in the joint venture. This amount represents the net proceeds after transaction costs less the carrying value of our investment in the joint venture at the time of sale.

Decrease in Warrant Liabilities. In connection with the sale of our common stock and warrants in 2005, 2006 and 2007, we recorded the warrants as a liability at their fair value using the Black-Scholes option-pricing model and will remeasure them at each reporting date until exercised or expired. Changes in the fair value of the warrants are reported in the statements of operations as non-operating income or expense. For the year ended December 31, 2007, we reported a non-cash unrealized gain of $8.9 million related to the decrease in fair value of these outstanding warrants during the period, compared to a $1.0 million non-cash unrealized gain for the same period of 2006. The market price for our common stock has been and may continue to be volatile. Consequently, future fluctuations in the price of our common stock may cause significant increases or decreases in the fair value of these warrants.

Net Loss. Net loss for the year ended December 31, 2007 was $25.7 million compared to $15.1 million for the same period of 2006. The basic and diluted net loss per share for 2007 was $0.79 based on 32.5 million weighted-average common shares outstanding, compared to a basic and diluted net loss per share of $0.64 based on 23.5 million weighted-average common shares outstanding for the same period in 2006.

RESULTS OF OPERATIONS

Year Ended December 31, 2006 as Compared to December 31, 2005

Revenues

                                                                                           Increase/(Decrease)
                                                    2006               2005            $                    %
                                                        (All amounts in thousands, except percentage data)

PROSTASCINT                                     $      9,125       $      7,407       $      1,718               23 %
QUADRAMET                                              8,141              8,350               (209 )             (3 %)
Other product revenue                                     30                 --                 30              n/a
License and contract                                      11                189               (178 )            (94 %)
                                                $     17,307       $     15,946       $      1,361                9 %

Total revenues for the year ended December 31, 2006 were $17.3 million compared to $15.9 million for 2005. Product revenues accounted for substantially all of total revenues in 2006 and 99% of total revenues in 2005. License and contract revenues accounted for the remainder of revenues.

PROSTASCINT. PROSTASCINT sales were $9.1 million for the year ended December 31, 2006, compared to $7.4 million for the same period of 2005. Sales of PROSTASCINT accounted for 53% and 47% of product revenues for 2006 and 2005, respectively. The increase from the prior year period was due to the implementation of a 9% price increase for PROSTASCINT on September 1, 2006 and increased demand associated with our focused marketing programs.

QUADRAMET. We recorded QUADRAMET sales of $8.1 million for the year ended December 31, 2006, compared to $8.4 million for 2005. QUADRAMET sales accounted for 47% and 53% of product revenues for 2006 and 2005, respectively. QUADRAMET year-over-year sales were essentially flat with the exception of a change in the timing of scheduled maintenance shutdowns for one of our raw material suppliers that negatively impacted product availability during the fourth quarter of 2006. Currently, we market QUADRAMET only in the United States and have no rights to market QUADRAMET in Europe.

Other Product Revenue. For the year ended December 31, 2006, other product revenue was comprised of $30,000 of SOLTAMOX sales. We introduced SOLTAMOX in the second half of 2006 and began supplying the distribution channels to support . . .