By Randall Osborne

Cytogen Inc., developer of imaging agents and a recently approved pain drug for bone cancer victims, has raised the first $7.5 million of a financing commitment that totals up to $20 million from a small group of private investors who are buying six percent convertible preferred stock.

The stock is convertible at any time and convertible or redeemable by Princeton, N.J.-based Cytogen in three years. On satisfying certain conditions, Cytogen can draw down as much as $12.5 million with the same investors during the next year.

"It's at our option," said John Bagalay, chief financial officer of Cytogen. "It would be sometime by May or perhaps June, if we take it down."

Conversion to common stock will be based on the price of Cytogen stock at the time, and holders may convert at either 120 percent of the average closing bid price during the ten-day period before closing or at a stated discount of the common stock price ranging from 5 percent to 15 percent (depending on when the conversions occur).

In April, Cytogen became one in the small group of biotechnology companies with three or more products on the market, when Quadramet was approved for marketing by the FDA. The drug is a radiopharmaceutical complex of samarium and a tetraphosphonate chelator of EDTMP that relieves pain in bone cancer victims by concentrating in areas invaded by tumor. (See BioWorld Today, April 1, 1997, p. 1.)

The company's diagnostic imaging agent for prostate cancer, ProstaScint, was launched in February, following approval in October 1996. Its monoclonal antibody-based imaging agent for detecting colorectal and ovarian cancers, OncoScint CR/OV, was approved by the FDA and marketed in 1992.

Quadramet is in trials for other indications: Phase II for therapy for bone-cancer metastases and Phase I for refractory rheumatoid arthritis pain relief.

Cytogen's stock (NASDAQ:CYTO) closed Wednesday at $2.312, down $0.406. *