<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-18311
NEUROGEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2845714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
35 Northeast Industrial Road
Branford, Connecticut 06405
(Address of principal executive offices) (Zip Code)
(203) 488-8201
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -
As of May 15, 1997, the registrant had 14,338,838 shares of Common Stock
outstanding.
<PAGE>
NEUROGEN CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
------
Part I - Financial Information
<S> <C> <C>
Item 1. Financial Statements........................................... 1
Balance Sheets at March 31, 1997 and
December 31, 1996.............................................. 1,2
Statements of Operations for the three-month periods ended
March 31, 1997 and 1996........................................ 3
Statements of Cash Flows for the three-month periods ended
March 31, 1997 and 1996........................................ 4
Notes to Financial Statements.................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 6-10
<CAPTION>
Part II - Other Information
<S> <C> <C>
Item 1. Legal Proceedings.............................................. 11
Item 2. Changes in Securities.......................................... 11
Item 3. Defaults upon Senior Securities................................ 11
Item 4. Submission of Matters to a Vote of Security Holders............ 11
Item 5. Other Information.............................................. 11
Item 6. Exhibits and Reports on Form 8-K............................... 11
Signature................................................................. 13
Exhibit Index............................................................. 14-16
</TABLE>
i
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
Neurogen Corporation
Balance Sheets
(in thousands)
March 31, December 31,
1997 1996
----------- -----------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 73,305 $ 62,823
Marketable securities 20,470 32,314
Receivables from corporate
partners 634 460
Other current assets 887 1,132
--------- ---------
Total current assets 95,296 96,729
Property, plant & equipment:
Land and land improvements 523 523
Building and building 8,679 8,679
improvements
Leasehold improvements 4,022 4,005
Equipment 6,594 5,903
Furniture 325 311
Construction in progress 1,260 440
--------- ---------
21,403 19,861
Less accumulated
depreciation and
amortization 3,524 3,136
--------- ---------
Net property, plant and
equipment 17,879 16,725
Other assets, net 400 415
--------- ---------
$ 113,575 $ 113,869
========= =========
See accompanying notes to financial statements.
1
<PAGE>
Neurogen Corporation
Balance Sheets
(in thousands, except per share data)
March 31, December 31,
1997 1996
----------- -----------
(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses $ 1,917 $ 3,010
Unearned revenue from corporate
partners 1,695 4,100
Current portion of mortgage payable 187 181
--------- ---------
Total current liabilities 3,799 7,291
Mortgage payable, excluding current
portion 230 279
Other compensation 54 54
--------- ---------
Total liabilities 4,083 7,624
Stockholders' Equity:
Preferred stock, par value $.025 per share.
Authorized 2,000 shares; none issued - -
Common stock, par value $.025 per share.
Authorized 30,000 shares; issued and
outstanding 14,330 shares at March 31,
1997 and 14,252 shares at December 31,
1996 358 356
Additional paid-in capital 108,935 108,491
Retained earnings (deficit) 331 (2,519)
Unrealized loss on marketable securities (132) (83)
--------- ---------
Total stockholders' equity 109,492 106,245
--------- ---------
$ 113,575 $ 113,869
========= =========
See accompanying notes to financial statements.
2
<PAGE>
Neurogen Corporation
Statements of Operations
(In thousands, except per share data)
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
----------- -----------
Operating revenues:
License fees $ 3,000 $ 3,000
Research and Development 3,979 3,503
-------------- --------------
Total operating revenues 6,979 6,503
Operating expenses:
Research and development 4,369 3,310
General and administrative 955 748
-------------- --------------
Total operating expenses 5,324 4,058
-------------- --------------
Total operating income 1,655 2,445
Other income (expense):
Investment income 1,241 1,249
Interest expense (11) (14)
-------------- --------------
Total other income, net 1,230 1,235
-------------- --------------
Income before provision for income taxes 2,885 3,680
Provision for income taxes 35 70
============== ==============
Net income $ 2,850 $ 3,610
============== ==============
Earnings per share: $ 0.19 $ 0.23
============== ==============
Shares used in calculation of
earnings per share: 15,366 15,547
============== ==============
See accompanying notes to financial statements.
3
<PAGE>
Neurogen Corporation
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Three Months Three Months
Ended March 31, Ended March 31,
1997 1996
(Unaudited) (Unaudited)
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,850 $ 3,610
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization expense 394 217
Changes in operating assets and liabilities:
Decrease in accounts payable and accrued expenses (1,093) (965)
Decrease in unearned revenue from corporate partner (2,405) (2,605)
Decrease in other current assets 245 312
Increase in receivable from corporate partners (174) (903)
Decrease in other assets, net 9 40
---------------- ---------------
Net cash used in operating
activities (174) (294)
Cash flows from investing activities:
Purchase of plant and equipment (1,542) (678)
Purchases of marketable securities (10) (3,070)
Maturities and sales of marketable securities 11,805 9,442
---------------- ---------------
Net cash provided by investing activities 10,253 5,694
Cash flows from financing activities:
Exercise of employee stock options 446 683
Principal payments under mortgage payable (43) (38)
-----------------------------------
Net cash provided by financing
activities 403 645
---------------- ---------------
Net increase in cash and cash equivalents 10,482 6,045
Cash and cash equivalents at beginning of period 62,823 26,005
---------------- ---------------
Cash and cash equivalents at end of period $ 73,305 $ 32,050
================ ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
NEUROGEN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(1) Basis of Presentation and Summary of Significant Accounting Policies
---------------------------------------------------------------------
The unaudited financial statements have been prepared from the books and
records of Neurogen Corporation (the "Company") in accordance with
generally accepted accounting principles for interim financial information
pursuant to Rule 10-01 of Regulation S-X. 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. Interim
results are not necessarily indicative of the results that may be expected
for the fiscal year.
(3) Adoption of New Accounting Pronouncements
-----------------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The
impact is expected to result in an increase in primary earnings per share
for the first quarter ended March 31, 1997 and March 31, 1996 of $.01 and
$.03 per share, respectively. The impact of Statement 128 on the
calculation of fully diluted earnings per share for these quarters is not
expected to be material.
(4) Reclassifications
-----------------
Certain reclassifications have been made to the 1996 financial statements
in order to conform to the 1997 presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Since its inception in September 1987, Neurogen has been engaged in the
discovery and development of drugs. The Company has not derived any revenue
from product sales and, excluding the effect of one-time license fees
received in 1996 from Schering-Plough and American Home Products and from
Schering-Plough and Pfizer in 1995, expects to incur significant losses in
most years prior to deriving any such product revenues. Revenues to date
have come from three collaborative research agreements entered into with
Pfizer, one collaboration with Schering-Plough, one license agreement with
American Home Products and from interest income.
RESULTS OF OPERATIONS
Results of operations may vary from period to period depending on
numerous factors, including the timing of income earned under existing or
future strategic alliances, joint ventures or financings, if any, the
progress of the Company's research and development projects, technological
advances and determinations as to the commercial potential of proposed
products. Neurogen expects research and development costs to increase
significantly over the next several years as its drug development programs
progress. In addition, general and administrative expenses necessary to
support the expanded research and development activities are expected to
increase for the foreseeable future.
The Company's operating revenues increased to $7.0 million for the three
months ended March 31, 1997 from $6.5 million for the same period in 1996.
Research and development revenues increased $0.5 million, or 14 percent, to
$4.0 million due to an increase in research funding pursuant to a December
1996 amendment to the 1992 and 1994 Pfizer Agreements (as defined below)
and an increase in the reimbursement of the Company's expense of developing
its obesity drug candidate, NGD 95-1 pursuant to a cost sharing arrangement
under the 1995 Pfizer Agreement (as defined below).
Research and development expenses increased 32 percent to $4.4 million
for the three-month period ended March 31, 1997 as compared to the same
period in 1996 due primarily to an increase in research and development
personnel, an increase in clinical development costs and an expansion of
Neurogen's AIDD (Accelerated Intelligent Drug Design) program. Research and
development costs represented 82 percent of total operating expenses for
the first quarter of 1997 and 1996.
General and administrative expenses increased 28 percent to $1.0 for the
three-month period ended March 31, 1997 as compared to the same period in
1996. This increase is due primarily to an increase in administrative and
technical activities and to support the Company's expanded research
programs.
<PAGE>
Other income consisting primarily of interest income, and gains and
losses from marketable securities remained flat for the three-month period
ended March 31, 1997 as compared to the same period in 1996.
The Company recognized net income of $2.9 million for the three months
ended March 31, 1997 as compared with a net income of $3.6 million for the
same period in 1996. The decrease in net earnings is primarily due to the
increase in research and development and general and administrative
expenses, partially offset by an increase in total revenues, all as noted
above.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997 and December 31, 1996, cash, cash equivalents and
marketable securities were in the aggregate $93.8 million and $95.1 million
respectively. While the Company's aggregate level of cash, cash
equivalents and marketable securities did not change significantly during
the first quarter of 1997, these levels have fluctuated significantly in
the past and are expected to do so in the future as a result of the factors
described below.
Neurogen's cash requirements to date have been met by the proceeds of its
equity financing activities, amounts received pursuant to collaborative
arrangements and interest earned on invested funds. The Company's financing
activities include three private placement offerings of its common stock
prior to its initial public offering, underwritten public offerings of the
Company's common stock in 1989, 1991 and 1995, and the private sale of
common stock to Pfizer in connection with entering into the Pfizer
Agreements and to American Home Products in the American Home Products
Agreement (as defined below). Total funding received from these equity
financing activities was approximately $105.6 million. The Company's
expenditures have been primarily to fund research and development and
general and administrative expenses and to construct and equip its research
and development facilities.
In the first quarter of 1992, the Company entered into its first
collaborative agreement with Pfizer (the "1992 Pfizer Agreement") pursuant
to which Pfizer made a $13.8 million equity investment in the Company.
Under this agreement, the Company received $4.6 million in each year from
1992 through 1996. Neurogen could also receive milestone payments of up to
$12.5 million if certain development and regulatory objectives are achieved
regarding its products subject to the collaboration. In return, Pfizer
received the exclusive rights to manufacture and market collaboration
anxiolytics and cognition enhancers that act through the family of
receptors which interact with the neuro-transmitter gamma-aminobutyric
acid, or GABA, and for which it will pay Neurogen royalties based upon net
sales levels, if any, for such products. As of March 31, 1997, Pfizer had
provided $24.3 million of research funding to the Company pursuant to the
1992 Pfizer Agreement, in addition to its $13.8 million equity investment
in 1992.
Neurogen and Pfizer entered into their second collaborative agreement
(the "1994 Pfizer Agreement") in July 1994, pursuant to which Pfizer made
an additional $9.9 million equity investment in the Company. Under this
agreement, the Company is scheduled to receive
<PAGE>
approximately $7.4 million during the three-year period which commenced
July 1, 1994, to fund Neurogen's sleep disorder program. Neurogen could
also receive milestone payments of up to $3.3 million if certain
development and regulatory objectives are achieved regarding its products
subject to the collaboration. As part of this second collaboration, Pfizer
received the exclusive rights to manufacture and market GABA-based sleep
disorder products for which it will pay Neurogen royalties depending upon
net sales levels, if any. As of March 31, 1997, Pfizer had provided $7.4
million (including $0.6 million of unearned revenues) of research funding
to the Company pursuant to the 1994 Pfizer Agreement, in addition to its
$9.9 million equity investment in 1994.
In December 1996, Neurogen and Pfizer extended the research programs
under the 1992 Pfizer Agreement and 1994 Pfizer Agreement through December
1998. Pursuant to the extension agreement, Neurogen expects to receive $5.3
million in each of 1997 and 1998 for research funding of the Company's
GABA-based anxiety, cognition enhancement and sleep disorders programs.
Under both the 1992 Pfizer Agreement and the 1994 Pfizer Agreement, in
addition to making the equity investments and the research and milestone
payments noted above, Pfizer is responsible for funding the cost of all
clinical development and the manufacturing and marketing, if any, of drugs
developed from the collaborations.
Neurogen and Pfizer entered into their third collaborative agreement (the
"1995 Pfizer Agreement") in November 1995, pursuant to which Pfizer made an
additional $16.5 million equity investment in the Company bringing Pfizer's
ownership of the Company's common stock up to 21 percent and paid a $3.5
million license fee. The Company is scheduled to receive approximately $7.2
million during the three-year period which commenced November 1, 1995, to
fund Neurogen's neuropeptide Y (NPY) eating disorders program and may
receive up to an additional $2.4 million per year for a fourth and fifth
year should Pfizer exercise its option to extend the research program under
the collaboration. Neurogen could also receive milestone payments of up to
approximately $28 million if certain development and regulatory objectives
are achieved regarding its products subject to the collaboration. As part
of this third collaboration, Pfizer received the exclusive worldwide rights
to manufacture and market NPY-based collaboration compounds, subject to
certain rights retained by Neurogen. Pursuant to the 1995 Pfizer Agreement,
Neurogen will fund a minority share of early stage development costs and
has retained the right to manufacture any collaboration products in NAFTA
countries and has retained a profit sharing option with respect to product
sales in NAFTA countries. If Neurogen exercises the profit sharing option,
it will fund a portion of the cost of late stage clinical trials and
marketing costs and in return receive a specified percentage of any profit
generated by sales of collaboration products in NAFTA countries. If
Neurogen chooses not to exercise its profit-sharing option, Pfizer would
pay Neurogen royalties on drugs marketed in NAFTA countries and would fund
a majority of early stage and all late stage development and marketing
expenses. In either case, Neurogen would be entitled to royalties on drugs
marketed in
<PAGE>
non-NAFTA countries. As of March 31, 1997, Pfizer had provided $3.6 million
in research funding (including $0.2 million in unearned revenues) pursuant
to the 1995 Pfizer Agreement.
In June 1995, Neurogen and Schering-Plough entered into a collaborative
agreement (the "Schering-Plough Agreement") to collaborate in the discovery
and development of drugs for the treatment of schizophrenia and other
disorders which act through the dopamine family of receptors. Pursuant to
the Schering-Plough Agreement, the Company received one-time license fees
of $14 million for rights relating to Neurogen's dopamine program and $3
million in 1995 and 1996 for the right to test certain of Neurogen's
combinatorial chemistry libraries in selected non-CNS assays. Neurogen has
received or expects to receive an aggregate of approximately $7.2 million
during the two-year period which commenced June 28, 1995, for research and
development funding of the Company's dopamine program. The Company may
receive additional research and development funding of up to $3.6 million
per year for three additional one-year periods depending on whether and the
extent to which Schering-Plough exercises its right to extend the research
program under the collaboration. In March 1997, Neurogen received notice
from Schering-Plough of its election to extend the research program under
the Schering-Plough Agreement for an additional one-year period, through
June 1998, pending the parties' adoption of a formal research plan relating
to the extension period. Neurogen could also receive milestone payments of
up to approximately $32 million if certain development and regulatory
objectives are achieved regarding its products subject to the
collaboration. In return, Schering-Plough received the exclusive worldwide
license to market products subject to the collaboration and Neurogen
retained the rights to receive royalties based on net sales levels, if any,
and an option to manufacture products for the United States market. As of
March 31, 1997, Schering-Plough had provided $7.2 million in research
funding (including $0.9 million in unearned revenue) pursuant to the
Schering-Plough Agreement. In addition to the payments described above,
Schering-Plough is responsible for funding the cost of all clinical
development and marketing, if any, of drugs subject to the collaboration.
In the fourth quarter of 1996, Neurogen entered into an agreement with
American Home Products Corporation, acting through its Wyeth-Ayerst
Laboratories division. Under the terms of the agreement, Neurogen received
$0.75 million in license fees for ADCI, a small molecule pharmaceutical
that Neurogen has been developing for the treatment of epilepsy and related
disorders, and $0.75 million for 37,442 shares of common stock. Neurogen
may receive up to an additional $11.0 million in the form of license fees,
equity investment and milestone payments. Neurogen is also entitled to
receive royalties on any world-wide sales of ADCI.
The Company plans to use its cash balance for its research and
development activities, working capital and general corporate purposes.
Neurogen anticipates that its current cash balance, as supplemented by
research funding pursuant to the Pfizer Agreements and the Schering-Plough
Agreement, will be sufficient to fund its current and planned operations
through 2000. However, Neurogen's funding requirements may change and will
depend upon numerous factors, including but not limited to, the progress of
the Company's research and development
<PAGE>
programs, the timing and results of preclinical testing and clinical
studies, the timing of regulatory approvals, technological advances,
determinations as to the commercial potential of its proposed products, the
status of competitive products and the ability of the Company to establish
and maintain collaborative arrangements with others for the purpose of
funding certain research and development programs, conducting clinical
studies, obtaining regulatory approvals and, if such approvals are
obtained, manufacturing and marketing products. The Company anticipates
that it may augment its cash balance through financing transactions,
including the issuance of debt or equity securities and further corporate
alliances. No arrangements have been entered into for any future financing
and no assurances can be given that adequate levels of additional funding
can be obtained on favorable terms, if at all.
As of December 31, 1996, the Company had approximately $11,490,000 of net
operating loss carryforwards available for federal income tax purposes
which expire from the years 2003 through 2009. The Company had
approximately $9,405,000 of Connecticut state tax net operating loss
carryforwards as of December 31, 1996 which expire in the years 1997
through 1999. Because of "change in ownership" provisions of the Tax
Reform Act of 1986, the Company's utilization of its net operating loss
carryforwards may be subject to an annual limitation in future periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable for the first quarter ended March 31, 1997.
ITEM 2. CHANGES IN SECURITIES
Not applicable for the first quarter ended March 31, 1997.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable for the first quarter ended March 31, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable for the first quarter ended March 31, 1997.
ITEM 5. OTHER INFORMATION
Not applicable for the first quarter ended March 31, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index on page 11.
(b) Exhibits and Reports on Form 8-K.
The Company filed a Current Report on Form 8-K on March 31, 1997 to submit
for filing (confidential treatment requested) a Licensing Agreement and Stock
Purchase Agreement dated November 25, 1996 between American Home Products
Corporation, acting through its Wyeth-Ayerst Laboratories Division, and Neurogen
Corporation.
SAFE HARBOR STATEMENT
Statements which are not historical facts, including statements about the
Company's confidence and strategies, the status of various product development
programs, the sufficiency of cash to fund planned operations and the Company's
expectations concerning its development compounds, drug discovery technologies
and opportunities in the pharmaceutical marketplace are "forward looking
statements" within the meaning of the Private Securities Litigations Reform Act
of 1995 that involve risks and uncertainties and are not guarantees of future
performance. These risks include, but are not limited to, difficulties or
delays in development, testing, regulatory approval, production and marketing of
any of the Company's drug candidates, the failure to attract or retain
scientific management personnel, any unexpected adverse side effects or
inadequate therapeutic efficacy of the Company's drug candidates which could
slow or prevent product development efforts, competition within the Company's
anticipated product markets, the Company's dependence on corporate partners with
respect to research and development funding, regulatory filings and
manufacturing and marketing expertise, the uncertainty of product development in
the pharmaceutical industry, inability to obtain sufficient funds through
<PAGE>
future collaborative arrangements, equity or debt financings or other sources to
continue the operation of the Company's business, risk that patents and
confidentiality agreements will not adequately protect the Company's
intellectual property or trade secrets, dependence upon third parties for the
manufacture of potential products, inexperience in manufacturing and lack of
internal manufacturing capabilities, dependence on third parties to market
potential products, lack of sales and marketing capabilities, potential
unavailability or inadequacy of medical insurance or other third-party
reimbursement for the cost of purchases of the Company's products, and other
risks detailed in the Company's Securities and Exchange Commission filings,
including its Annual Report on Form 10-K for the year ended December 31, 1996,
each of which could adversely affect the Company's business and the accuracy of
the forward-looking statements contained herein.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEUROGEN CORPORATION
By:/s/ STEPHEN R. DAVIS
-----------------------
Stephen R. Davis
Vice President-Finance and
Chief Financial Officer
Date: May 15, 1997
<PAGE>
Exhibit Index
-------------
Exhibit
-------
Number
------
10.1 - Neurogen Corporation Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.1 to the Company's
Form 10-K for the fiscal year ended December 31, 1991).
10.2 - Form of Stock Option Agreement currently used in connection
with the grant of options under Neurogen Corporation Stock
Option Plan (incorporated by reference to Exhibit 10.2 to the
Company's Form 10-K for the fiscal year ended December 31,
1992).
10.3 - Neurogen Corporation 1993 Omnibus Incentive Plan, as amended
(incorporated by reference to Exhibit 10.3 to the Company's
Form 10-K for the fiscal year ended December 31, 1993).
10.4 - Form of Stock Option Agreement currently used in connection
with the grant of options under Neurogen Corporation 1993
Omnibus Incentive Plan (incorporated by reference to Exhibit
10.4 to the Company's Form 10-K for the fiscal year ended
December 31, 1993).
10.5 - Neurogen Corporation 1993 Non-Employee Directors Stock Option
Program (incorporated by reference to Exhibit 10.5 to the
Company's Form 10-K for the fiscal year ended December 31,
1993).
10.6 - Form of Stock Option Agreement currently used in connection
with the grant of options under Neurogen Corporation 1993 Non-
Employee Directors Stock Option Program (incorporated by
reference to Exhibit 10.6 to the Company's Form 10-K for the
fiscal year ended December 31, 1993).
10.7 - Employment Contract between the Company and Harry H. Penner,
Jr., dated as of October 12, 1993 (incorporated by reference
to Exhibit 10.7 to the Company's Form 10-K for the fiscal year
ended December 31, 1993).
10.8 - Employment Contract between the Company and John F. Tallman,
dated as of December 1, 1993 (incorporated by reference to
Exhibit 10.25 to the Company's Form 10-Q for the quarterly
period ended September 30, 1994).
10.9 - Open-End Mortgage Deed and Security Agreement between the
Company and Orion Machinery & Engineering Corp., dated March
16, 1989 (incorporated by reference to Exhibit 10.15 to
Registration Statement No. 33-29709 on Form S-1).
10.10 - Form of Proprietary Information and Inventions Agreement
(incorporated by reference to Exhibit 10.31 to Registration
Statement No. 33-29709 on Form S-1).
<PAGE>
10.11 - Warrant to Purchase 47,058 Shares of Common Stock to MMC/GATX
Partnership No. I, dated February 20, 1991 (incorporated by
reference to Exhibit 10.34 to the Company's Form 10-K for the
fiscal year ended December 31, 1990).
10.12 - Collaborative Research Agreement and License and Royalty
Agreement between the Company and Pfizer Inc, dated as of
January 1, 1992 (confidential treatment requested)
(incorporated by reference to Exhibit 10.35 to the Company's
Form 10-K for the fiscal year ended December 31, 1991).
10.13 - License Agreement between the Company and the National
Technical Information Service, dated as of January 1, 1992
(incorporated by reference to Exhibit 10.36 to the Company's
Form 10-K for the fiscal year ended December 31, 1991).
10.14 - Cooperative Research and Development Agreement between the
Company and the National Institutes of Health, dated as of
January 21, 1993 (incorporated by reference to Exhibit 10.37
to the Company's Form 10-K for the fiscal year ended December
31, 1991).
10.15 - Letter Agreement between the Company and Barry M. Bloom, dated
January 12, 1994 (incorporated by reference to Exhibit 10.25
to the Company's Form 10-K for the fiscal year ended December
31, 1993).
10.16 - Letter Agreement between the Company and Robert H. Roth, dated
April 14, 1994 (incorporated by reference to Exhibit 10.26 to
the Company's Form 10-K for the fiscal year ended December 31,
1994).
10.17 - Collaborative Research Agreement and License and Royalty
Agreement between the Company and Pfizer Inc, dated as of July
1, 1994 (confidential treatment requested) (incorporated by
reference of Exhibit 10.1 to the Company's Form 10-Q for the
quarterly period ended June 30, 1994).
10.18 - Stock Purchase Agreement between the Company and Pfizer dated
as of July 1, 1994 (incorporated by reference to Exhibit 10.2
to the Company's Form 10-Q for the quarterly period ended June
30, 1994).
10.19 - Registration Rights and Standstill Agreement among the Company
and the Persons and Entities listed on Schedule I thereto,
dated as of July 11, 1994 (incorporated by reference to
Exhibit 10.29 to the Company's Form 10-Q for the quarterly
period ended September 30, 1994).
10.20 - Collaboration and License Agreement and Screening Agreement
between the Company and Schering-Plough Corporation
(confidential treatment requested) (incorporated by reference
to Exhibit 10.1 to the Company's Form 8-K dated July 28,
1995).
<PAGE>
10.21 - Lease Agreement between the Company and Commercial Building
Associates dated as of August 30, 1995 (incorporated by
reference to Exhibit 10.27 to the Company's Form 10-Q for the
quarterly period ended September 30, 1995).
10.22 - Collaborative Research Agreement between the Company and
Pfizer dated as of November 1, 1995 (confidential treatment
requested) (incorporated by reference to Exhibit 10.1 of the
Company's Form 8-K dated November 1, 1995).
10.23 Development and Commercialization Agreement between the
Company and Pfizer dated as of November 1, 1995 (confidential
treatment requested) (incorporated by reference to Exhibit
10.2 of the Company's Form 8-K dated November 1, 1995).
10.24 - Stock Purchase Agreement between the Company and Pfizer dated
as of November 1, 1995 (incorporated by reference to Exhibit
10.3 of the Company's Form 8-K dated November 1, 1995).
10. 25 - Licensing Agreement dated as of November 25, 1996 between
American Home Products Corporation, acting through its Wyeth-
Ayerst Laboratories Division, and Neurogen Corporation
(CONFIDENTIAL TREATMENT REQUESTED) (incorporated by reference
to Exhibit 10.1 of the Company's Form 8-K dated March 31,
1997).
10. 26 - Stock Purchase Agreement dated as of November 25, 1996 between
American Home Products Corporation, acting through its Wyeth-
Ayerst Laboratories Division, and Neurogen Corporation
(CONFIDENTIAL TREATMENT REQUESTED) (incorporated by reference
to Exhibit 10.1 of the Company's Form 8-K dated March 31,
1997).
11.1 - Computation of Earnings per Common Share.
27.1 - Financial Data Schedule
<PAGE>
Exhibit 11.1
Neurogen Corporation
Computation of Net Earnings Per Common Share
(in thousands, except Net Earnings per Common Share amounts)
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
----------- -----------
Weighted average shares of
common stock outstanding 14,282 14,020
Dilutive effect of :
Warrants 36 43
Stock options 1,048 1,484
------------- -------------
Common and common
equivalent shares 15,366 15,547
============= =============
Net income $ 2,850 $ 3,610
============= =============
Earnings per common and
common equivalent shares $ 0.19 $ 0.23
============= =============
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 73,305
<SECURITIES> 20,470
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 95,296
<PP&E> 21,403
<DEPRECIATION> 3,524
<TOTAL-ASSETS> 113,575
<CURRENT-LIABILITIES> 3,799
<BONDS> 0
0
0
<COMMON> 358
<OTHER-SE> (132)
<TOTAL-LIABILITY-AND-EQUITY> 113,575
<SALES> 0
<TOTAL-REVENUES> 6,979
<CGS> 0
<TOTAL-COSTS> 5,324
<OTHER-EXPENSES> (1,230)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 2,885
<INCOME-TAX> 35
<INCOME-CONTINUING> 2,850
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,850
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>