SIBIA NEUROSCIENCES INC
10-Q, 1999-05-14
PHARMACEUTICAL PREPARATIONS
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<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the Quarterly Period Ended March 31, 1999

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                         Commission File Number: 0-28310

                            SIBIA Neurosciences, Inc.
 ------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                     95-3616229
- ------------------------------------------------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

505 Coast Boulevard South, Suite 300, La Jolla, CA                   92037
- ------------------------------------------------------------------------------
(Address of principal executive offices)                           (Zip Code)

                                 (619) 452-5892
- ------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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


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

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


<TABLE>
<CAPTION>
                Class                     Outstanding at March 31, 1999
                -----                     -----------------------------
<S>                                                   <C>      
    Common Stock, $.001 par value                     9,546,841
</TABLE>



<PAGE>   2

                            SIBIA Neurosciences, Inc.

                                      INDEX



<TABLE>
<CAPTION>
                                                                                       PAGE
                                                                                       ----
<S>                                                                                   <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.  Condensed Financial Statements

         Condensed Balance Sheet as of  March 31, 1999 (Unaudited) and
         December 31, 1998................................................................3

         Condensed Statement of Operations and Comprehensive Loss
         (Unaudited) for the Three Months Ended March 31, 1999 and 1998...................4

         Condensed Statement of Cash Flows (Unaudited) for the Three Months
         Ended March 31, 1999 and 1998....................................................5

         Notes to Financial Statements (Unaudited)........................................6

ITEM 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................................7

ITEM 3.  Quantitative and Qualitative Disclosure About Market Risk.......................10


PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings...............................................................11

ITEM 2.  Changes in Securities and Use of Proceeds.......................................11

ITEM 3.  Defaults Upon Senior Securities.................................................11

ITEM 4.  Submission of Matters to a Vote of Security Holders.............................12

ITEM 5.  Other Information...............................................................12

ITEM 6.  Exhibits and Reports on Form 8-K................................................12

SIGNATURE................................................................................13
</TABLE>




                                       2
<PAGE>   3

PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Financial Statements



                            SIBIA NEUROSCIENCES, INC.
                             CONDENSED BALANCE SHEET



<TABLE>
<CAPTION>
                                                                           March 31, 1999            December 31, 1998
                                                                           --------------            -----------------
                                                                            (Unaudited)
<S>                                                                        <C>                        <C>
                                         ASSETS

Current assets:
  Cash and cash equivalents ..................................              $  8,899,000               $  4,595,000
  Investment securities ......................................                 5,444,000                 12,592,000
  Contracts and accounts receivable ..........................                 1,719,000                    501,000
  Prepaid expenses and other current assets ..................                   386,000                    683,000
                                                                            ------------               ------------
          Total current assets ...............................                16,448,000                 18,371,000
Property and equipment, net ..................................                 2,539,000                  2,638,000
Other assets .................................................                   188,000                    190,000
                                                                            ------------               ------------
                                                                            $ 19,175,000               $ 21,199,000
                                                                            ============               ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ...........................................              $  3,215,000               $  2,567,000
  Accrued liabilities ........................................                 2,403,000                  2,142,000
                                                                            ------------               ------------
          Total current liabilities ..........................                 5,618,000                  4,709,000
Long-term debt, less current portion .........................                 1,280,000                  1,350,000
Commitments and contingencies (Note 3)
Stockholders' equity:
  Preferred Stock, $.001 par value; 5,000,000
      shares authorized
 Common Stock, $.001 par value; 25,000,000
    shares authorized; 9,546,841 and 9,515,588
    shares issued and outstanding at March 31,
    1999 and December 31, 1998, respectively .................                    10,000                     10,000
  Additional paid-in capital .................................                60,243,000                 60,206,000
  Deferred compensation ......................................                  (207,000)                  (273,000)
  Notes receivable from stockholders .........................                   (83,000)                   (83,000)
  Accumulated other comprehensive income .....................                   247,000                    373,000
  Accumulated deficit ........................................               (47,933,000)               (45,093,000)
                                                                            ------------               ------------
          Total stockholders' equity .........................                12,277,000                 15,140,000
                                                                            ------------               ------------
                                                                            $ 19,175,000               $ 21,199,000
                                                                            ============               ============
</TABLE>


                 See accompanying notes to financial statements.




                                       3
<PAGE>   4

                            SIBIA NEUROSCIENCES, INC.
      CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)



<TABLE>
<CAPTION>
                                             Three Months Ended
                                                    March 31,
                                              1999              1998
                                          -----------        -----------
<S>                                       <C>                <C>        
Revenue:
  Contract ........................       $ 1,010,000        $ 1,534,000
  License and royalty .............         1,505,000
                                          -----------        -----------
     Total revenue (Note 2) .......         2,515,000          1,534,000
                                          -----------        -----------
Operating expenses:
  Research and development ........         4,502,000          4,796,000
  General and administrative ......         1,175,000          1,491,000
                                          -----------        -----------
     Total operating expenses .....         5,677,000          6,287,000
                                          -----------        -----------
                                           (3,162,000)        (4,753,000)
Other income (expense):
  Interest income .................           221,000            464,000
  Interest expense ................           (33,000)           (23,000)
  Gain on sale of investment                  134,000            260,000
                                          -----------        -----------
                                              322,000            701,000
                                          -----------        -----------
Net loss ..........................        (2,840,000)        (4,052,000)
Other comprehensive income -
  unrealized holding gains (losses)
  arising during period ...........             8,000           (217,000)
Less:  reclassification adjustment
  for gains included in net loss ..          (134,000)          (260,000)
                                          -----------        -----------
Comprehensive loss ................       $(2,966,000)       $(4,529,000)
                                          ===========        ===========
Basic and diluted net loss per
  common share ....................       $     (0.30)       $     (0.43)
                                          ===========        ===========
Shares used in computing basic and
  diluted net loss per common share         9,523,330          9,365,155
                                          ===========        ===========
</TABLE>



                 See accompanying notes to financial statements.



                                       4
<PAGE>   5

                            SIBIA NEUROSCIENCES, INC.
                  CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)



<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                          March 31,
                                                                   1999                1998
                                                               -----------        ----------- 
<S>                                                            <C>                <C>         
Cash flows from operating activities:
    Net loss ...........................................       $(2,840,000)       $(4,052,000)
 Adjustments to reconcile net loss to net cash used
      by operating activities:
    Depreciation and amortization ......................           264,000            217,000
    Compensation from issuance of common stock options..            53,000             81,000
    Gain on sale of investment .........................          (134,000)          (260,000)
    Net amortization of premium and discount on
      investment securities ............................             3,000            (23,000)
  Increase (decrease) in cash resulting from changes in:
    Contract and accounts receivable ...................        (1,218,000)           273,000
    Prepaid expenses and other assets ..................           297,000           (563,000)
    Accounts payable and accrued liabilities ...........           902,000          1,181,000
    Deferred revenue ...................................                               92,000
                                                               -----------        -----------
         Net cash used by operating activities .........        (2,673,000)        (3,054,000)
                                                               -----------        -----------

Cash flows from investing activities:
  Purchase of investment securities available-for-sale .                           (2,977,000)
  Maturities and sales of investment securities
   available-for-sale ..................................         7,134,000          4,760,000
  Principal payments received on investment securities
    available-for-sale .................................            19,000             12,000
  Acquisition of property and equipment ................           (27,000)           (34,000)
                                                               -----------        -----------
         Net cash provided by investing activities .....         7,126,000          1,761,000
                                                               -----------        -----------

Cash flows from financing activities:
  Proceeds from issuance of stock ......................            50,000             44,000
  Principal payments on capital lease obligations ......          (199,000)          (186,000)
                                                               -----------        -----------
         Net cash used by financing activities .........          (149,000)          (142,000)
                                                               -----------        -----------

Net increase (decrease) in cash and cash equivalents ...         4,304,000         (1,435,000)
Cash and cash equivalents at beginning of period .......         4,595,000          4,972,000
                                                               -----------        -----------
Cash and cash equivalents at end of period .............       $ 8,899,000        $ 3,537,000
                                                               ===========        ===========

Supplemental Information:
  Equipment acquired under capital leases ..............       $   138,000        $   497,000
                                                               ===========        ===========
</TABLE>


                 See accompanying notes to financial statements.






                                       5
<PAGE>   6

                            SIBIA Neurosciences, Inc.
                        NOTES TO THE FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (Unaudited)



1.      BASIS OF PRESENTATION

The accompanying unaudited financial statements of SIBIA Neurosciences, Inc.
("SIBIA" or the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
rules and regulations of the Securities and Exchange Commission ("SEC").
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. For further information, refer to the financial statements
and footnotes thereto for the year ended December 31, 1998, included in the
Company's Form 10-K filed with the SEC.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosures as of the date of the financial statements. Actual results
could differ from such estimates.

2.      RELATED PARTY TRANSACTIONS

Total revenue for the quarter ended March 31, 1999 included no amounts from
collaborative partners that are related parties. For the corresponding period in
1998, total revenue included $713,000 from a collaborative partner that is a
related party.

3.      COMMITMENTS AND CONTINGENCIES

The Company is involved in certain litigation with Cadus Pharmaceutical
Corporation and Pfizer, Inc. See further discussion of these matters at Item 1 
in Part II of this Form 10-Q.

4.      SIGNIFICANT OPTION AND LICENSE AGREEMENTS

In March 1999, SIBIA entered into an agreement with Bristol-Myers Squibb. Under
the agreement, the Company licensed to Bristol-Myers Squibb non-exclusive rights
to use its patented transcription-based assay technology. SIBIA will receive
annual maintenance payments as well as royalties on the sales of any products
identified using the licensed technology.

5.      SUBSEQUENT EVENTS

In April 1999, SIBIA entered into an agreement with SmithKline Beecham. Under
the agreement, the Company licensed to SmithKline Beecham non-exclusive rights
to use its patented transcription-based assay technology. SIBIA will receive
annual maintenance payments as well as royalties on the sales of any products
identified using the licensed technology.





                                       6
<PAGE>   7


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



OVERVIEW

Except for the historical information contained herein, the discussion in this
report contains forward-looking statements that involve risks and uncertainties.
The Company's actual results may differ significantly from those discussed in
this report. Factors that might cause or contribute to such differences include,
without limitation, those discussed in this Item 2, as well as those discussed
in the Company's Form 10-K for the year ended December 31, 1998 under the
headings "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

SIBIA, incorporated in Delaware in 1981, was established by The Salk Institute
for Biological Studies. Through 1990, SIBIA successfully developed several
proprietary life-sciences technologies in collaboration with corporate partners.
In 1987, SIBIA initiated research in the neuroscience field and in 1991 shifted
its focus completely to the development of novel therapeutics to treat nervous
system disorders.

The Company has no products available for sale and does not expect to have any
products resulting from its research efforts, including its collaborations with
others, commercially available for at least several years, if at all. Except for
1995, the Company has incurred net losses every year since shifting its area of
therapeutic focus to the central nervous system in 1991. The Company expects
that its revenue and other income for the next several years will fluctuate
significantly on a quarterly and annual basis and will be limited to payments
under its collaborative relationships, license fees, interest income and other
miscellaneous income.

RESULTS OF OPERATIONS

Revenue

The Company had total revenue of $2,515,000 for the first quarter of 1999
compared with $1,534,000 for the same period in 1998. The increase in the
comparable three-month period was due primarily to the signing, in March 1999,
of a non-exclusive license agreement with Bristol-Myers Squibb to use the
Company's patented transcription-based assay technology. This increase was
partially offset by a decrease in revenue due to the completion of collaborative
research, in September 1998, with Novartis AG.

Expenses

Research and development expenses decreased to $4,502,000 for the first quarter
of 1999 from $4,796,000 for the same period in 1998. The decrease in research
and development expenses for the comparable three-month period was due primarily
to decreases in clinical and non-clinical costs related to the development of
SIB-1508Y, SIBIA's lead compound for Parkinson's disease and SIB-1553A, SIBIA's
lead compound for Alzheimer's disease, however, research costs increased related
to expanded drug discovery programs for chronic pain, apoptosis, psychiatric
disorders and neuroprotection.





                                       7
<PAGE>   8


General and administrative expenses decreased to $1,175,000 for the first
quarter of 1999 from $1,491,000 for the same period in 1998. The decrease in
general and administrative expenses for the comparable three month period was
due primarily to decreased legal fees related to the Company's patent
litigation.

Other Income

Other income was $322,000 for the first quarter of 1999 compared to $701,000 for
the same period in 1998. The decrease in other income in the comparable
three-month period was due primarily to decreased interest income as a result of
lower average cash and investment balances carried in 1999 and lower gains on
the sale of equity securities.

Liquidity and Capital Resources

Cash and cash equivalents and investment securities totaled approximately
$14,343,000 at March 31, 1999 as compared to $17,187,000 at December 31, 1998.
The primary use of cash and investments was to finance the Company's continuing
operations.

To date, the Company has financed its operations primarily through equity
financings, research contracts (generally conducted on a best efforts basis),
and license and royalty revenues. The Company will continue to seek licensing
opportunities relating to its patented TBA technology where feasible. Since
1991, the Company has received approximately $41,775,000 in net proceeds from
the sale of Convertible Preferred Stock and Common Stock to investors and
collaborative partners and approximately $56,776,000 in contract, license and
royalty revenue. As of March 31, 1999, the Company had an accumulated deficit of
approximately $47,933,000.

The Company is entitled to receive additional payments under its collaborative
agreements in the form of contract revenue, milestone payments, if milestones
are achieved, and royalties, if products are commercialized.

The Company leases laboratory and office facilities under an agreement expiring
on December 31, 2001. The average minimum annual payment under the lease is
approximately $1,518,000, before consideration of sublease income. The Company
believes that its present facility will be adequate to conduct its research
activities through December 2001. Management believes that it should be able to
secure additional space at commercially reasonable rates, if necessary. The
Company has an option to extend its lease for an additional five years. Since
1991, the Company has invested $5,900,000 in property and equipment. Included in
this amount is $4,789,000 of equipment under capital leases.

The Company anticipates that the cash, cash equivalents and investment
securities balance of $14,343,000 as of March 31, 1999 will be used to support
continued research and development of its technologies and fund other general
and administrative expenditures and will be sufficient to maintain operations
into 2000. However, the Company expects to incur substantial research and
development expenses including increases in personnel costs and costs related to
the expansion of its drug discovery platforms and pre-clinical testing and early
stage clinical trials. The Company's future capital needs will be dependent upon
many factors, including progress in its research and development activities, the
magnitude and scope of these activities, progress with



                                       8
<PAGE>   9


pre-clinical and clinical trials, the cost of preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes in or
terminations of existing collaborative arrangements, the establishment of
additional licensing and/or collaborative arrangements, and the cost of
manufacturing scale-up and development of marketing activities, if undertaken by
the Company.

The Company believes its drug discovery programs and technologies will lead to
corporate collaboration and licensing opportunities which may generate future
revenues in the form of license fees, milestone payments and/or royalties. The
Company may also seek additional funding through public or private financing.
There can be no assurance that the Company will be successful in its efforts to
collaborate with additional partners or that additional financing from other
sources will be available on favorable terms, if at all. If additional funds are
raised by issuing equity securities, further dilution to then existing
stockholders would result. If adequate funds are not available, the Company may
be required to curtail significantly or eliminate one or more of its research,
discovery or development programs.

Year 2000

As many computer systems and other equipment with embedded chips or processors
use only two digits to represent the year, they may be unable to process
accurately certain data before, during or after the year 2000. As a result,
internal systems of the Company and its suppliers and vendors are at risk for
possible miscalculations or systems failures causing disruptions in their
business operations. This is commonly known as the Year 2000 ("Y2K") issue.

The Company has formed a Y2K Compliance Committee ("Y2K Committee"), with
representation from each major functional area within the organization that has
been charged with implementing the Company's Y2K Compliance Program ("Y2K
Program"). The Y2K Program has been designed to identify those issues (both
internal and external and involving both information technology ("IT") and
non-IT systems) that would cause material interruption to the Company's
"business as usual" and consists of the following phases: (1) identification of
all Y2K issues; (2) assigning priorities to identified items; (3) assessing the
Y2K compliance of items determined to be material to the Company; (4) repairing
or replacing items that are determined to be material to the Company; (5)
testing material items; and (6) designing contingency and business continuation
plans.

The Company has completed the identification, assignment and assessment phases
for all material Y2K issues. During the assessment phase the Company identified
material third parties which the Company relies upon for its operations.
Additionally, the Company obtained compliance verification from key third party
vendors in order to determine their plans to address their own Y2K issues. The
repair or replacement and testing phases are currently underway with various
expected completion dates through the third quarter of 1999. The Company
currently plans to complete a contingency plan by the fourth quarter of 1999 for
any systems or third party vendors not expected to be Y2K compliant by December
31, 1999.

No material costs (including, without limitation, costs related to system
replacement) have been incurred to date in the Company's effort to address its
Y2K issues, and the Company does not expect the amounts to become material in
the future. The total Y2K issue cost to the Company is expected to be less than
$50,000. Y2K costs will be funded with cash from the Company's



                                       9
<PAGE>   10


working capital. The Company estimates that Y2K issues will use less than 5% of
its IT budget. No other material IT projects have been deferred because of
efforts put into Y2K compliance.

The failure to correct a material Y2K issue could result in an interruption in,
or a failure of the Company's business as usual. Due to the general uncertainty
inherent in the Y2K issue, resulting in part from the uncertainty of the Y2K
readiness of third-party suppliers and service providers, the Company is unable
to determine at this time whether the consequences of Y2K failures will have a
material impact on the Company's results of operations, liquidity and financial
condition. The Company's Y2K program is expected to significantly reduce the
Company's level of uncertainty about the Y2K issue and, in particular, about the
Y2K readiness of its suppliers and service providers. The Company believes that
with the completion of the Y2K program as scheduled, the possibility of
significant interruptions of normal operations will be greatly reduced. The
Company believes that its most likely worst case scenario would be if third
parties do not adequately address their Y2K issues. The Company has begun to
identify alternative vendors as a contingency for inadequate Y2K preparedness of
key third-party vendors. Contingency plans will be finalized after re-assessment
of key third-party vendor preparedness has been completed in the third quarter
of 1999.

The estimated timing of completion of these efforts is a forward-looking
statement that involves risk and uncertainties, including the risk that such
efforts will not adequately address such Y2K problems and that, as a result, the
Company's business will be adversely affected.


ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

The Company's exposure to market-rate risk for changes in interest rates relates
primarily to the Company's investment portfolio. The Company employs established
policies and procedures to manage its exposure to fluctuations in interest
rates. The Company places its investments with high quality issuers and, by
policy, limits the amount of credit exposure to any one issuer and does not use
derivative financial instruments in its investment portfolio. The Company
maintains an investment portfolio of various issuers, types and maturities,
which consist mainly of fixed rate financial instruments. These securities are
classified as available-for-sale and, consequently, are recorded on the balance
sheet at fair value with unrealized gains or losses reported as a separate
component in stockholders' equity. At any time, sharp changes in interest rates
can affect the fair value of the investment portfolio and its interest earnings.
Currently, the Company does not hedge these interest rate exposures.





                                       10
<PAGE>   11


PART II. OTHER INFORMATION


ITEM 1. Legal Proceedings:


a. Cadus Pharmaceutical Corporation. On July 9, 1996, the Company filed an
action for patent infringement against Cadus Pharmaceutical Corporation
("Cadus") in the United States District Court for the Southern District of
California. The complaint asserted that Cadus' assay technology infringed the
Company's United States Patent No. 5,401,629 (the "'629 Patent"). In the
complaint, the Company sought damages in an unspecified amount and injunctive
relief.

Cadus responded by asserting that the `629 Patent and the Company's United
States Patent No. 5,436,128 (the "'128 Patent") were invalid, unenforceable and
not infringed, and further asserting claims for intentional interference with
prospective economic advantage and unfair competition. Cadus sought declaratory
relief and compensatory and punitive damages against the Company. On August 3,
1998, the Court granted summary judgment for the Company on Cadus'
counterclaims. Cadus subsequently dismissed its counterclaim alleging invalidity
and unenforceability of the `128 Patent.

On December 18, 1998, the jury returned a verdict in favor of the Company,
finding that the `629 Patent is valid and enforceable and awarding the Company
damages in the amount of $18 million. On January 29, 1999, the Court granted the
Company's request for a permanent injunction preventing Cadus, and all persons
acting in concert or otherwise participating with Cadus from practicing the
methods claimed in the `629 Patent. On March 10, 1999, the Court confirmed the
jury's verdict in all respects and entered judgment in favor of the Company.
Cadus filed a notice of appeal from the judgment on March 25, 1999.

The Company has recently been notified that the Patent & Trademark Office has
granted a request for reexamination of the `629 Patent. The Company's management
intends to vigorously defend the `629 Patent in that proceeding.

b. Pfizer, Inc. On May 5, 1999, Pfizer, Inc. ("Pfizer") filed an action for
declaratory relief against the Company in the United States District Court for
the District of Delaware. The complaint purports to seek a judgment regarding
the Company's `629 and `128 patents that Pfizer does not infringe and the
patents are invalid or unenforceable.

The Company's management does not believe that the Pfizer complaint is
meritorious and intends to contest that action.


ITEM 2. Changes in Securities and Use of Proceeds:

        None.

ITEM 3. Defaults Upon Senior Securities:

        None.




                                       11
<PAGE>   12

ITEM 4. Submission of Matters to a Vote of Security Holders:

        None.

ITEM 5. Other Information:

        None.

ITEM 6. Exhibits and Reports on Form 8-K:

         (a)      Exhibits

                  10.11      Registrant's Management Change of Control Plan, as
                             amended.

                  27.1       Financial Data Schedule. (Exhibit 27 is submitted
                             as an exhibit in the electronic format of this
                             Quarterly Report on Form 10-Q submitted to the
                             Securities and Exchange Commission.)

         (b)      Reports on Form 8-K

                  None.





                                       12
<PAGE>   13


                                   SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.





                                   SIBIA Neurosciences, Inc.



Date: May 14, 1999                By: /s/ THOMAS A. REED
      ----------------------          -----------------------------------------
                                      Thomas A. Reed
                                      Vice President, Finance & Administration,
                                      and Chief Financial Officer
                                      (on behalf of the registrant and as the
                                      registrant's principal financial officer)









                                       13

<PAGE>   1
                                                                   EXHIBIT 10.11



                                                                    CONFIDENTIAL


                            SIBIA NEUROSCIENCES, INC.
                              AMENDED AND RESTATED
                        MANAGEMENT CHANGE-OF-CONTROL PLAN

                  AMENDED AND RESTATED AS OF DECEMBER 10, 1998

                                  INTRODUCTION

        This SIBIA Neurosciences, Inc. (formerly, "The Salk Institute
Biotechnology/Industrial Associates, Inc."), a Delaware corporation (the
"Company"), Management Change-of-Control Plan (the "Plan") was adopted by the
Board of Directors (the "Board") of the Company, effective November 10, 1994.
The Plan is intended to provide members of management who are Participants in
the Plan with the Benefits specified herein in the event of a Change of Control.

        WHEREAS, the Plan was previously amended by the Board in November 1995,
March 1996 and June 1997 and amended and restated on February 26, 1998 (the
"Prior Amendments");

        WHEREAS, the Board wishes to amend and restate the Plan to include
Stephen F. Keane as a Plan participant, to exclude former Plan participants, and
to provide participants with severance benefits in the event of certain
transactions not currently contemplated or provided for in the Plan and to
provide for administrative ease.

        NOW, THEREFORE, upon authorization duly granted by the Board, the
undersigned parties hereto agree to amend and restate the Plan as provided
herein.

        Certain capitalized terms used in the Plan are defined in Article 13.

                                    ARTICLE 1

                    ESTABLISHMENT OF THE PLAN AND ELIGIBILITY

        1.1 ESTABLISHMENT OF PLAN. As of the Effective Date, the Company hereby
establishes a plan to be known as the "Management Change-of-Control Plan" (the
"Plan"), as set forth herein.

        1.2 APPLICABILITY OF PLAN. The benefits provided by the Plan shall be
available to all Participants, unless otherwise specifically provided.



                                       1.
<PAGE>   2

                                    ARTICLE 2

                                   ELIGIBILITY

        2.1 PARTICIPATION. William T. Comer will be a Participant in the Plan
and will serve in the position of Chief Executive Officer. Jeffrey McKelvy will
be a Participant in the Plan and will serve in the position of Executive Vice
President. The following members of management shall also be Participants in the
Plan and shall each serve in a position of Vice President: Stephen F. Keane, G.
Kenneth Lloyd, Ian A. McDonald, David E. McClure, and Thomas A. Reed. The Board
or the Compensation Committee of the Board (the "Compensation Committee") may,
in its sole discretion, designate additional members of management or employees
to be Participants in the Plan and, subject to the terms of Section 2.2, may
decide that members of management or employees who have been designated as
Participants in the Plan shall no longer be Participants.

        2.2 DURATION OF PARTICIPATION. A Participant shall cease to be a
Participant in the Plan upon a determination thereof by the Board or the
Compensation Committee; provided, however, that in no event shall any such
determination impair a Participant's rights under this Plan with respect to
Benefits that have accrued prior to such determination. Without limiting the
foregoing, if a Participant is then entitled to payment of Benefits as a result
of a Change of Control that occurred prior to such determination, such
Participant shall remain a Participant in the Plan until the full amount of such
Benefits has been paid to such Participant. In no event shall any Participant be
entitled to Benefits pursuant to this Plan with respect to a Change of Control
that occurs after the termination of such Participant's employment with the
Company, for any reason or for no reason, and nothing in this Plan shall alter
the status of each Participant as an at-will employee of the Company.

                                    ARTICLE 3

                                    BENEFITS

        Participants shall be entitled to the following Benefits pursuant to
this Plan: Bonus Payments, as provided in Article 4; Stock Options, as provided
in Article 5 (except Dr. David McClure, Dr. Jeffrey McKelvy, and Stephen F.
Keane shall not be entitled to any benefits provided to Plan Participants under
Article 5); and Severance Benefits, as provided in Article 6.

                                    ARTICLE 4

                                 BONUS PAYMENTS

        4.1 BONUS PAYMENT UPON CHANGE OF CONTROL. If a Change of Control occurs,
then each Participant (i) who remains employed by the Company or its successor
for a period of six months following such Change of Control (the "Bonus Service
Period") or (ii) whose employment shall be Terminated Without Cause (including
without limitation and as defined in Section 13.12, a reduction of the
Participant's rate of compensation or a change in Participant's
responsibilities, authority, titles or offices) during the Bonus Service Period,
shall receive a



                                       2.
<PAGE>   3

         Bonus Payment based upon the Company's valuation at the time of the
Change of Control in accordance with the following schedule:


            VALUE OF COMPANY                              BONUS AMOUNT AS A
          UPON CHANGE OF CONTROL                        PERCENT OF BASE SALARY
         Less than $10,000,000                                   0%
         $10,000,000 to $20,000,000                             10%
         Greater than $20,000,000                               25%

        4.2 DETERMINATION OF VALUE OF THE COMPANY. For purposes of determining
the Bonus amounts to be paid under this Article 4 and the number of Stock
Options under Article 5, the value of the Company shall be determined as of the
closing date of the applicable Change of Control transaction (the "Value
Determination Date ") and shall be equal to the market capitalization of the
Company immediately prior to such closing.

        4.3 TIME OF BONUS PAYMENT. The Bonus Payments under this Article 4 shall
be paid in a cash lump sum no later than fifteen (15) days following the
earliest of (i) the Bonus Completion Date, or (ii) the date the Participant's
employment is Terminated Without Cause.

                                    ARTICLE 5

                       STOCK OPTIONS AND OTHER INCENTIVES

        5.1 STOCK OPTIONS. Participants (except Dr. David McClure, Dr. Jeffrey
McKelvy, and Stephen F. Keane who shall not be entitled to any benefits provided
under this Article 5) shall receive a one-time grant of nonqualified stock
options to acquire the Company's common stock ("Stock Options"). The number of
such Stock Options granted shall be based upon the Participant's position with
the Company on the date the Participant is initially designated as a Participant
by the Board or the Compensation Committee and in accordance with the schedule
set forth in this Section 5.1. Notwithstanding the foregoing, in the event the
Board or Compensation Committee subsequently promotes a Participant (other than
Dr. David McClure, Dr. Jeffrey McKelvy, or Steven F. Keane) to a more senior
officer position, such Participant shall be entitled to receive an additional
grant of Stock Options in an amount equal to that required to make the total
Stock Options granted to such Participant equal to that number of Stock Options
granted to other Participants serving in like positions with the Company. Each
Stock Option granted under this Article 5 shall have an exercise price of $2.00
per share (which price does not reflect the 2.35-to-1 reverse stock split
effected by the Company in May of 1996). Each Stock Option shall not be granted
pursuant to the Company's Amended and Restated 1992 Stock Option and Restricted
Stock Plan, but shall incorporate the terms of such plan to the extent not
inconsistent with this Plan, as determined by the Board or the Compensation
Committee in its sole discretion, including terms related to the transferability
of stock options granted hereunder.



                                       3.
<PAGE>   4

OFFICER STATUS WITH COMPANY                       NUMBER OF STOCK
                                                  OPTIONS GRANTED

Vice President                                    25,000 shares
Chief Executive Officer (CEO)                     40,000 shares


        5.2 TIME AND EXERCISE OF STOCK OPTION GRANT. The Stock Options granted
under this Article 5 shall be granted as of the Effective Date or, if later, the
date the Participant is initially designated as a Participant by the Board or
the Compensation Committee; provided that Stock Options granted to a Participant
by reason of the promotion of such Participant to a more senior officer position
pursuant to Section 5.1 shall be granted as of the effective date of such
promotion. Except as set forth below, the Stock Options granted under this
Section 5 shall be subject to vesting and shall not become exercisable in any
respect until seven (7) years following the date of grant, at which time they
shall become fully vested and exercisable pursuant to the terms thereof.
Notwithstanding the foregoing, in the event that at any time subsequent to the
Effective Date the Company shall consummate an initial public offering of its
Common Stock, 25% of all then outstanding options under the Plan shall vest and
become fully exercisable immediately prior to the effective date of the
registration statement pursuant to which such shares of Common Stock are being
registered, with the remaining 75% of the then outstanding options vesting in
three equal annual installments commencing on the anniversary date of the
effectiveness of the registration statement. In addition to the foregoing,
vesting of options outstanding under the Plan shall be accelerated and the Stock
Options will become fully vested and exercisable pursuant to their terms
effective immediately prior to a Change of Control.

        Stock Options granted to each eligible Participant hereunder shall be
exercisable for not more than thirty (30) days following such Participant's
termination of employment (for any reason or for no reason) and shall also be
subject to the terms and conditions specified in a standard form of stock option
agreement as set forth in Appendix A.

                                    ARTICLE 6

                               SEVERANCE BENEFITS

        6.1 RIGHT TO SEVERANCE BENEFITS. Each Participant shall be entitled to
receive Severance Benefits from the Company as set forth in Section 6.2 in the
event such Participant is Terminated Without Cause at any time during the period
commencing one (1) month before and ending thirteen (13) months after the
effective date of a Change of Control.

        6.2 DETERMINATION OF SEVERANCE BENEFITS. Severance Benefits payable
pursuant to Section 6.1 shall be determined as follows:

               (a) Each Vice-President participating in the Plan will receive as
a Severance Payment the equivalent of one and one-half (1 1/2) times Base Salary
and his or her prorated



                                       4.
<PAGE>   5

annual bonus. The Chief Executive Officer (CEO) and each Executive
Vice-President will receive as a Severance Payment the equivalent of two (2)
times Base Salary and his or her prorated annual bonus.

               (b) The Company shall pay the premiums for the terminated
Participant and for the eligible spouse and other COBRA qualified beneficiaries
of the terminated Participant for the health insurance continuation benefits
provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code"), for the maximum period provided by law for such qualified
beneficiary's COBRA continuation rights.

               (c) The Company shall reimburse the Participant for outplacement
expenses incurred during the three months following the Date of Termination as a
result of the Participant's search for other employment. In no event, however,
will such outplacement expenses exceed a total of seven thousand five hundred
dollars ($7,500) per Participant. The Participant shall provide to the Company
proof of such outplacement expenses in a form mutually acceptable to the Company
and the Participant.

        6.3 TIME OF SEVERANCE PAYMENT. The Severance Payment shall be paid in
lump sum in cash not later than thirty (30) days following the Date of
Termination.

        6.4 NO MITIGATION. The Participant shall not be required to mitigate the
amount of the Severance Benefits by seeking other employment or otherwise, and
any amount earned by the Participant as the result of employment by another
employer after the Date of Termination shall not reduce the amount of the
Severance Payment.

        6.5 WITHHOLDING. The Company shall withhold appropriate federal, state,
local and foreign income and employment taxes from any payments hereunder.

        6.6 NOTICE OF TERMINATION. Any termination by the Company for Cause or
by the Participant for Good Reason shall be communicated by Notice of
Termination to the other party hereto given by hand delivery or by registered or
certified mail, return receipt requested, postage prepaid, if to the
Participant, to the Participant at the Participant's address as set forth in the
Company's records, and, if to the Company, to SIBIA, 505 Coast Boulevard South,
La Jolla, California 92037-4641, or to such other address as may be designated
by the Company. Any notices given pursuant to this Section 6.6 shall be
effective on the earlier of the date on which such notice is actually received
by the addressee or the date that is three days after such notice is sent by the
addressor. For purposes of the Plan, a "Notice of Termination" means a written
notice which (i) indicates the provisions in the Plan that are affected by such
termination and (ii) if the Date of Termination, as defined below, is other than
the date of receipt of such notice, specifies the termination date (which date
shall be not more than fifteen (15) days after the giving of such notice). The
failure by the Company or the Participant to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Cause or
of Good Reason shall not waive any right of the Company or of the Participant,
respectively, hereunder or



                                       5.
<PAGE>   6

preclude the Company or the Participant, respectively, from asserting such fact
or circumstance in enforcing its or his rights hereunder.

        6.7 DATE OF TERMINATION. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be; provided, however, that (i) if the Participant's employment terminates
by the Company other than by reason of death or Disability, or for Cause, the
Date of Termination shall be the date on which the Company notifies the
Participant of such termination and (ii) if the Participant's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death or determination of termination of employment on account of
Disability pursuant to Section 13.9, as the case may be.

        6.8 CERTAIN REDUCTION OF PAYMENTS. In the event that any distribution
received or to be received by a Participant pursuant to the Plan
("Distribution") would (i) constitute a "parachute payment" within the meaning
of Section 280G of the Code and (ii) be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then such Distribution shall be
reduced to the largest amount which would result in no portion of the
Distribution being subject to the Excise Tax or such Distribution may be paid in
full, whichever produces the better after-tax result for the Participant.
Necessary calculations will be prepared by a mutually acceptable accounting
firm.

                                    ARTICLE 7

                          PAYMENTS TO AND FROM THE PLAN

        The cash benefits under the Plan shall be paid from the general funds of
the Company (by certified or official bank check or wire transfer of immediately
available funds to an account designated by the applicable Participant), and the
Participants shall be no more than unsecured general creditors of the Company.

                                    ARTICLE 8

                     OTHER RIGHTS AND BENEFITS NOT AFFECTED

        8.1 NONEXCLUSIVITY. Nothing in the Plan shall prevent or limit any
Participant's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company and for which a Participant may otherwise qualify, nor shall anything
herein limit or otherwise affect such rights as any Participant may have under
any stock option or other agreements with the Company. Except as otherwise
expressly provided herein, amounts which are vested benefits or which a
Participant is otherwise entitled to receive under any plan, policy, practice or
program of the Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program.



                                       6.
<PAGE>   7

        8.2 EMPLOYMENT STATUS. The Plan does not constitute a contract of
employment or impose on any Participant or the Company any obligation to retain
any Participant as an employee, to change the status of the Participant's
employment, or to change the Company's policies regarding termination of
employment. In no event shall any Participant be entitled to Benefits pursuant
to this Plan with respect to a Change of Control that occurs after the
termination of such Participant's employment with the Company, for any reason or
for no reason, and nothing in this Plan shall alter the status of each
Participant as an at-will employee of the Company.

                                    ARTICLE 9

                              SUCCESSOR TO COMPANY

        The Plan shall be binding upon any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, and any such successor
or assignee shall be required to perform the Company's obligations under the
Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place. In such
event, the term "Company," as used in the Plan, shall mean the Company as
hereinafter defined and any successor or assignee to the business or assets
which by reason hereof becomes bound by the terms and provisions of the Plan.

                                   ARTICLE 10

          DURATION, AMENDMENT AND TERMINATION; RIGHT TO INTERPRETATION

        10.1 DURATION. Beginning on December 31, 1995, and on each subsequent
anniversary of such date, one year shall be added to the term of the Plan,
unless, prior to such date or anniversary, the Company, by resolution of the
Board, shall have notified each Participant in writing that such extension will
not become effective. If such resolutions are adopted by the Board, the term of
the Plan will not be extended and the Plan will terminate on the December 31 on
or following the first anniversary date of the date that such resolutions are
adopted. No termination of the Plan will occur any earlier than thirteen (13)
months following the Change of Control. Notwithstanding the foregoing, the Plan
shall not terminate or expire with respect to any Participant who becomes
entitled to Benefits hereunder until such Participant has received such payments
or other rights in full.

        10.2 NO AMENDMENT OR TERMINATION. Except as set forth in Section 10.1
above, the Company may not change or terminate this Plan with respect to any
Participant without the written consent of such Participant.

        10.3 EXCLUSIVE DISCRETION. The Company shall have the exclusive
discretion and authority to establish rules, forms and procedures for the
administration of the Plan, and to construe and interpret the Plan and to decide
any and all questions of fact, interpretation, definition, computation or
administration arising in connection with the operation of the Plan,



                                       7.
<PAGE>   8

including, but not limited to, the eligibility to participate in the Plan and
amount of benefits paid under the Plan. The rules, interpretations, computations
and other actions of the Company shall be binding and conclusive on all persons.

                                   ARTICLE 11

                            NON-TRANSFER OF BENEFITS

        No benefit hereunder shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to do so
shall be void.

                                   ARTICLE 12

                       LEGAL CONSTRUCTION AND ARBITRATION

        12.1 APPLICABLE LAW. This Plan shall be construed in accordance with the
laws of the State of California without regard to the conflict of laws
provisions thereof.

        12.2 ARBITRATION. Any and all disputes or controversies, whether of law
or fact of any nature whatsoever, arising from or respecting the application of
the Plan to any Participant shall be decided by arbitration by the American
Arbitration Association in accordance with the rules and regulations of that
Association, or by any other arbitration body mutually agreed upon by the
parties. Pre-arbitration discovery shall be permitted at the request of either
party to a dispute under appropriate protection for proprietary and confidential
business information.

        The arbitrators shall be selected as follows: the Company and the
Participant who is a party to the dispute shall each select one independent,
qualified arbitrator and the two arbitrators so selected shall select the third
arbitrator. The Company reserves the right to disqualify any individual
arbitrator who shall be employed by or affiliated with a competing organization.
The Company will pay all of the costs of any arbitrator hired to resolve a
dispute as determined by the American Arbitration Association.

        Arbitration shall take place in San Diego County, California, or any
other location mutually agreeable to the parties. At the request of either
party, arbitration proceedings will be conducted in the utmost secrecy and, in
such case, all documents, testimony and records shall be received, heard and
maintained by the arbitrators in secrecy under seal, available for inspection
only by the parties to the arbitration, their respective attorneys, and their
respective expert consultants or witnesses who shall agree, in advance and in
writing, to receive all such information confidentially and to maintain such
information in secrecy, and make no use of such information except for the
purposes of the arbitration, until such information shall become generally
known.

        The arbitrators, who shall act by majority vote, shall be able to decree
any and all relief of an equitable nature, including but not limited to such
relief as a temporary restraining order, a temporary injunction, or a permanent
injunction, and shall also be able to award damages, with



                                       8.
<PAGE>   9

or without an accounting and costs. The decree or judgment of an award rendered
by the arbitrators may be entered and enforced in any court having jurisdiction
over the parties.

        Reasonable notice of the time and place of arbitration shall be given to
persons other than the parties, if such notice is required by law, in which case
such persons or their authorized representatives shall have the right to attend
or participate in the arbitration hearing in such manner as the law shall
require.

        If any action is necessary to enforce or interpret the application of
the Plan to a Participant, then that Participant shall be entitled to reasonable
attorneys fees, costs, and necessary disbursements in addition to any other
relief to which that Participant may be entitled, if any, under all
circumstances regardless of the outcome of the action.

                                   ARTICLE 13

                                   DEFINITIONS

        For purposes of the Plan, the following terms shall have the meanings
set forth below.

        13.1 "BASE SALARY" means, as of December 10, 1998 (or if the individual
named below became a participant in the Plan following December 10, 1998, the
date as of which such individual first became a Participant), the following
salaries for each Participant: William T. Comer, $280,000; Stephen F. Keane,
$150,000; G. Kenneth Lloyd, $200,000; Ian A. McDonald, $173,000; David E.
McClure, $170,000; Thomas A. Reed; $165,000 and Jeffrey McKelvy, $250,000. The
Base Salary for each Participant or any Participant may be increased by the
Compensation Committee in its sole discretion and such increased Base Salary in
effect on the Value Determination Date shall constitute Base Salary for purposes
of payments under the Plan.

        13.2 "BENEFITS" means, collectively, the various benefits payable or
awarded under this Plan, which are the Bonus Payments, the Stock Options, and
the Severance Benefits.

        13.3 "BONUS COMPLETION DATE" means the last date of the Bonus Service
Period.

        13.4 "BONUS PAYMENTS" means the payments described in Article 4.

        13.5 "BONUS SERVICE PERIOD" shall have the meaning assigned in Section
4.1 herein.

        13.6 "CAUSE" means (a) gross or habitual failure to perform assigned
duties of the Participant's job, that is, performance failure not corrected
within thirty (30) days after written notice to the Participant thereof or (b)
misconduct, including but not limited to: (i) conviction of a crime, or entry of
a plea of nolo contendere, with regard to a crime involving moral turpitude or
dishonesty, (ii) illegal drug use or alcohol abuse on Company premises or at a
Company sponsored event, (iii) conduct by the Participant which in the good
faith and reasonable determination by two-thirds (2/3) of the Board demonstrates
gross unfitness to serve, or (iv) intentional, material violation by the
Participant of any contract between the Participant and the Company or any
statutory duty of the Participant to the Company.



                                       9.
<PAGE>   10

               Provided that in the event that any of the events described in
(iii) above may be cured, the Company shall provide written notice to the
Participant describing the nature of such event and the Participant shall
thereafter have thirty (30) days to cure such event.

        13.7   "CHANGE OF CONTROL" means any one of the following:

               (a) a sale of all or substantially all of the assets of the
Company;

               (b) a merger or consolidation in which the Company is not the
surviving corporation (other than a transaction the principal purpose of which
is to change the state of the Company's incorporation or a transaction in which
the voting securities of the Company are exchanged for beneficial ownership of
at least 50% of the voting securities of the controlling acquiring corporation);

               (c) a merger or consolidation in which the Company is the
surviving corporation and less than 50% of the voting securities of the Company
which are outstanding immediately after the consummation of such transaction are
beneficially owned, directly or indirectly, by the persons who owned such voting
securities immediately prior to such transaction;

               (d) any transaction or series of related transactions after which
any person (as such term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended), other than any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary of the Company,
becomes the beneficial owner of voting securities of the Company representing
50% or more of the combined voting power of all of the voting securities of the
Company.

               (e) during any period of two consecutive years, individuals who
at the beginning of such period constitute the membership of the Company's Board
of Directors ("Incumbent Directors") cease for any reason to have authority to
cast at least a majority of the votes which all directors on the Board of
Directors are entitled to cast, unless the election, or the nomination for
election by the Company's stockholders, of a new director was approved by a vote
of at least two-thirds of the votes entitled to be cast by the Incumbent
Directors, in which case such director shall also be treated as an Incumbent
Director in the future; or

               (f) the liquidation or dissolution of the Company.

        13.8 "COMPANY" means SIBIA Neurosciences, Inc., a Delaware corporation,
and any successor as provided in Article 9 hereof.

        13.9 "DATE OF TERMINATION" has the meaning set forth in Section 6.7.

        13.10 "DISABILITY" means that the Participant has exhausted any
short-term disability benefits to which he is entitled and is permanently
unable, by reason of a physical or mental incapacity, to perform the normal
duties of the work for which he was employed by the Company.



                                      10.
<PAGE>   11

        13.11 "EFFECTIVE DATE" shall mean November 10, 1994.

        13.12 "GOOD REASON" means any action taken by the Company or its
successor, as the case may be, that results in a (i) reduction of the
Participant's rate of compensation as in effect immediately prior to the Change
of Control, (ii) failure to provide a package of welfare benefit plans which,
taken as a whole, provide substantially similar benefits to those in which the
Participant is entitled to participate immediately prior to the Change of
Control (except that employee contributions may be raised to the extent of any
cost increases imposed by third parties) or any action by the Company which
would adversely affect the Participant's participation or reduce the
Participant's benefits under any of such plans, (iii) change in the
Participant's responsibilities, authority, titles or offices resulting in
diminution of position, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith which is remedied by the Company
promptly after notice thereof is given by the Participant, (iv) request that the
Participant relocate to a worksite that is more than 35 miles from his prior
worksite, unless the Participant accepts such relocation opportunity, (v)
material reduction in duties, (vi) failure or refusal of the successor company
to assume the Company's obligations under this Plan, as required by Article 9,
or (vii) material breach by the Company or any successor company of any of the
material provisions of the Plan.

        13.13 "NOTICE OF TERMINATION" has the meaning set forth in Section 6.6.

        13.14 "PARTICIPANT" shall mean an employee who has been designated as a
Participant as provided in Section 2.1.

        13.15 "PLAN" has the meaning set forth in Section 1.1.

        13.16 "SEVERANCE BENEFITS" has the meaning set forth in Section 6.2.

        13.17 "SEVERANCE PAYMENT" has the meaning set forth in Section 6.2.

        13.18 "STOCK OPTIONS" means the options to purchase Company stock
described in Article 5.

        13.19 "TERMINATED WITHOUT CAUSE" shall occur if a Participant's
employment with the Company:

               (a) shall be involuntarily terminated, unless the Company
terminates the employment of the Participant for Cause, or unless the
Participant's employment is terminated by reason of death or Disability; or

               (b) shall be voluntarily terminated by the Participant for Good
Reason.



                                      11.
<PAGE>   12

                                   ARTICLE 14

                                  MISCELLANEOUS

        14.1 SEVERABILITY. If any term, provision, covenant or restriction of
the Plan is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of the Plan shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

        14.2 CONSTRUCTION OF PLAN. Any gender, where appearing in the Plan,
shall be deemed to include the other gender, the singular shall include the
plural, and the plural shall include the singular, unless the context otherwise
requires. Descriptive headings of the several Articles of the Plan are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof. In the event of a conflict between the text of
the Plan and any summary, description or other information regarding the Plan,
the text of the Plan shall control.

        14.3 ADJUSTMENTS TO STOCK. If any change is made in the stock subject to
options granted under the Plan (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the number of shares remaining subject
to such options will be appropriately adjusted in the type(s) and maximum
number. Such adjustments shall be made by the Board or the Compensation
Committee of the Board, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company".)

                                   ARTICLE 15

                          CLAIMS, INQUIRIES AND APPEALS

        15.1 APPLICATIONS FOR BENEFITS AND INQUIRIES. Any application for
benefits, inquiries about the Plan or inquiries about present or future rights
under the Plan must be submitted to the Plan Administrator in writing. The
Company, or any successor, shall at all times maintain a Plan Administrator, and
shall give each Participant written notice of any change in the Plan
Administrator or the address to which benefits or inquiries should be sent. The
Plan Administrator is:

                             SIBIA Neurosciences, Inc.
                             Attention: Treasurer
                             505 Coast Boulevard South
                             La Jolla, CA 92037-4641



                                      12.
<PAGE>   13

        15.2 DENIAL OF CLAIMS. In the event that any application for benefits is
denied in whole or in part, the Plan Administrator must notify the applicant, in
writing, of the denial of the application. The written notice of denial will be
set forth in a manner designed to be understood by the Participant, and will
include specific reasons for the denial, specific references to the Plan
provision upon which the denial is based and a description of any information or
material that the Plan Administrator needs to complete the review. This written
notice will be given to the employee within 20 days after the Plan Administrator
receives the application.

        15.3 LEGAL ACTION. No legal action for benefits under the Plan may be
brought until the claimant (i) has submitted a written application for benefits
in accordance with the procedures described by Section 15.1 above and (ii) has
been notified by the Plan Administrator that the application is denied (or the
application is deemed denied due to the Plan Administrator's failure to act on
it within the established time period).

                                   ARTICLE 16

                             OTHER PLAN INFORMATION

        16.1 EMPLOYER AND PLAN IDENTIFICATION NUMBERS. The Employer
Identification Number assigned to the Company (which is the "Plan Sponsor" as
that term is used in ERISA) by the Internal Revenue Service is 95-3616229. The
Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 530.

        16.2 ENDING DATE FOR PLAN'S FISCAL YEAR. The date of the end of the
fiscal year for the purpose of maintaining the Plan's records is December 31.

        16.3 AGENT FOR THE SERVICE OF LEGAL PROCESS. The agent for the service
of legal process with respect to the Plan is: SIBIA Neurosciences, Inc., 505
Coast Boulevard South, La Jolla, CA 92037-4641, Attn: Treasurer. Service of
legal process also may be made upon the Plan Administrator.

        16.4 PLAN SPONSOR AND ADMINISTRATOR. The "Plan Sponsor" and the "Plan
Administrator" of the Plan is SIBIA Neurosciences, Inc., 505 Coast Boulevard
South, La Jolla, CA 92037-4641. The Plan Sponsor's and Plan Administrator's
telephone number is (619) 452-5892. The Plan Administrator is the named
fiduciary charged with the responsibility for administering the Plan.



                                      13.
<PAGE>   14

                                   ARTICLE 17


                                    EXECUTION

        Having been originally adopted by the Board on November 10, 1994, and
having been amended, this Amended and Restated Management Change of Control Plan
is executed by a duly authorized officer and the Chairman of the Board as of the
26th day of February, 1998.

                                        SIBIA NEUROSCIENCES, INC.


                                        By:  /s/ WILLIAM T. COMER
                                            ------------------------------------
                                              William T. Comer,
                                              Chief Executive Officer


                                        By: /s/ WILLIAM T. COMER
                                            ------------------------------------
                                              William R. Miller,
                                              Chairman of the Board


                                        PARTICIPANTS:


                                        /s/ WILLIAM T. COMER
                                        ----------------------------------------
                                        William T. Comer


                                        /s/ STEPHEN F. KEANE
                                        ----------------------------------------
                                        Stephen F. Keane


                                        /s/ G. KENNETH LLOYD
                                        ----------------------------------------
                                        G. Kenneth Lloyd


                                        /s/ DAVID E. MCCLURE
                                        ----------------------------------------
                                        David E. McClure


                                        /s/ IAN A. MCDONALD
                                        ----------------------------------------
                                        Ian A. McDonald


                                        /s/ JEFFREY MCKELVY
                                        ----------------------------------------
                                        Jeffrey McKelvy


                                        /s/ THOMAS A. REED
                                        ----------------------------------------
                                        Thomas A. Reed



                                      14.


<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF MARCH 31, 1999 AND UNAUDITED STATEMENT OF
OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               MAR-31-1999
<CASH>                                       8,899,000
<SECURITIES>                                 5,444,000
<RECEIVABLES>                                1,719,000
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                            16,448,000
<PP&E>                                       2,539,000
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                              19,175,000
<CURRENT-LIABILITIES>                        5,618,000
<BONDS>                                              0
                                0
                                          0
<COMMON>                                        10,000
<OTHER-SE>                                  12,267,000
<TOTAL-LIABILITY-AND-EQUITY>                19,175,000
<SALES>                                              0
<TOTAL-REVENUES>                             2,515,000
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                             5,677,000
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              33,000
<INCOME-PRETAX>                            (2,840,000)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                        (2,840,000)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                               (2,840,000)
<EPS-PRIMARY>                                   (0.30)
<EPS-DILUTED>                                   (0.30)
        

</TABLE>


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