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As filed with the Securities and Exchange Commission on July 14, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Neurogen Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 2834 22-2845714
(State or other jurisdiction (Primary standard industrial (I.R.S. employer
of incorporation or organization) classification code number) identification number)
</TABLE>
35 Northeast Industrial Road
Branford, Connecticut 06405
(203) 488-8201
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
HARRY H. PENNER, JR.
President and Chief Executive Officer
Neurogen Corporation
35 Northeast Industrial Road
Branford, Connecticut 06405
(203) 488-8201
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
DONALD B. BRANT, JR., ESQ.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
(212) 530-5000
Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed Maximum
Proposed Maximum Aggregate Amount of
Title of Securities Amount to be Offering Price Offering Price Registration
to be Registered Registered Per Share (1) (1) Fee
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<S> <C> <C> <C> <C>
Common stock, par value
$.025 per share........ 1,638,000 $29.875 $48,935,250 $12,918.91
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee under Rule 457(c) of the Securities Act of 1933 based on
the average of the high and low sales prices of the common stock as
reported on the Nasdaq National Market on July 7, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in the preliminary prospectus is not complete and may be +
+changed. We may not sell these securities until the registration statement +
+filed with the Securities Exchange Commission is effective. This preliminary +
+prospectus is not an offer to sell these securities and it is not soliciting +
+an offer to buy these securities in any state where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 14, 2000
PROSPECTUS
Neurogen
Corporation
1,638,000 Shares
Common Stock
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The selling shareholders identified in this prospectus may sell up to
1,638,000 shares of common stock of Neurogen Corporation, a Delaware
corporation. The selling shareholders may offer and sell their shares of common
stock from time to time:
--on terms to be determined at the time of a sale;
--in transactions on the Nasdaq National Market;
--in privately negotiated transactions; or
--in a combination of these methods of sale.
Please see "Where You Can Find More Information" on page 9 for additional
information about us on file with the United States Securities and Exchange
Commission.
Neurogen's common stock is traded on the Nasdaq National Market under the
symbol "NRGN." On July 13, 2000 the closing price for the common stock on the
Nasdaq National Market was $30.00 per share.
-----------
Investing in our common stock involves risks which are described in the "Risk
Factors" section beginning on page 2 of this prospectus.
-----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
July [ ], 2000
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THE COMPANY
Neurogen is a leading drug discovery company. We engage in both the
discovery and development of a broad range of novel small molecule compounds
for pharmaceutical uses, and the development and exploitation of cutting-edge
drug discovery technologies.
We have diversified our drug discovery and development efforts across a
broad number of disease-related targets and across multiple drug candidates for
each target. Throughout the pharmaceutical industry the majority of all drug
candidates fail to overcome all of the obstacles on the way to
commercialization. Because of this high attrition rate, we believe that the
true value of a drug discovery company's pipeline is most accurately measured
by the company's ability to rapidly discover multiple generations of improved
candidates within each of several programs, rather than by the promise of any
single compound in any one program. We believe that this ability to rapidly and
systematically produce multiple generations of incrementally improved drug
candidates in multiple programs is our most valuable asset. Although we are
much smaller than the well-known pharmaceutical companies, we have discovered
eight small molecule drug candidates that we and our pharmaceutical company
partners have taken into human clinical trials over the last six years. For our
size, this represents a rate of clinical candidate generation that we believe
rivals any in the biotechnology and pharmaceutical industries.
We are constantly working to gain and maintain a competitive advantage in
the process of discovering and developing new drug candidates. As a result, we
have generated a high-quality collection, or library, of over 1.7 million
potential drug compounds and have created powerful new drug discovery and
refinement technologies. The prime example of these new technologies is our
Accelerated Intelligent Drug Discovery (AIDD(TM)) system. Our AIDD system is an
engine for the discovery of new drug leads and the optimization of these leads
to create clinical drug candidates. We believe that this system also enables us
to rapidly assess the functional utility of new gene-based potential targets.
The AIDD system is a key factor contributing to our belief that our small
molecule drug discovery, and development platform is among the most advanced
and efficient in the industry.
Recently, we have begun to exploit the utility of our drug discovery and
development platform beyond our own drug programs. In June 1999, we granted
Pfizer a non-exclusive license to a portion of our AIDD technology for up to
$27 million payable over three years. We are also exploring possible
partnerships with a number of leading biotechnology and genomics companies to
access new drug targets. Such a partnership could result in a number of
opportunities for us, including bolstering our existing drug pipeline or
licensing access to newly characterized targets, newly expanded portions of our
library or both.
Neurogen was incorporated in Delaware in September 1987 and commenced
operations in July 1988. Our executive offices and research and development
facilities are located at 35 Northeast Industrial Road, Branford, Connecticut
06405. Our telephone number is (203) 488-8201. We maintain websites at
www.neurogen.com and at www.AIDD.com. The contents of our websites are not part
of this prospectus.
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RISK FACTORS
You should consider carefully the following risks, together with all other
information included in this prospectus, before you decide to buy our common
stock. Please keep these risks in mind when reading this prospectus, including
any forward-looking statements appearing in this prospectus. If any of the
following risks actually occurs, our business, financial condition or results
of operations would likely suffer materially. As a result, the trading price of
our common stock may decline, and you could lose all or part of your
investment.
Risks Related to Our Business
We have not yet achieved profitability from product sales and expect to incur
losses for the foreseeable future.
We have been unprofitable in most years since our inception in 1987 and have
incurred a cumulative net loss of approximately $37.5 million through March 31,
2000. In 1999 and 1998, we lost $14.6 million and $9.5 million, respectively.
These losses are primarily attributable to costs we have incurred in the
discovery and development of our new drug candidates. We recognized a net loss
of $10.7 million for the three months ended March 31, 2000 as compared with a
net loss of $3.4 million for the same period in 1999. The increase in net loss
is primarily due to a non-recurring non-cash $6.5 million charge recognized in
the first quarter upon the vesting of 137,625 shares of restricted stock
granted to certain employees in 1998, and an increase in research and
development and general and administrative expenses for the first quarter of
2000. Research and development costs and general and administrative expenses
are expected to increase over the next several years. In 1999, research and
development costs increased 15 percent to $24.0 million from $20.9 million in
1998. The 1998 amount represented a six percent increase over the 1997 amount
of $19.7 million. As a result, we are likely to incur significant and
increasing losses over at least the next several years. We are unable to
predict when, or if, we will become profitable. If we continue to incur
operating losses, we may eventually be unable to continue our operations.
Our only current revenue sources come from our collaborations and we are
unlikely to derive any revenues from product sales in the foreseeable future.
Revenues to date have come from three collaborative research agreements and
one technology transfer agreement with Pfizer, one collaboration with Schering-
Plough, one license agreement with American Home Products and from interest
income. Payments under our drug collaboration agreements are currently
scheduled to end by December 31, 2000. Payments under the 1999 Pfizer
technology transfer agreement are scheduled to expire in June 2002. We have
concluded our collaboration with and stopped receiving revenues from
Schering-Plough. We have terminated our license agreement with and stopped
receiving revenues from American Home Products.
We have not achieved and do not expect to achieve revenues from product
sales for several years, if at all. Revenue from product sales depends on
whether we or one of our collaborative partners can successfully complete
product development of, obtain required regulatory approvals for, and
commercialize our products. We cannot assure you that we will ever achieve
significant product revenues or have profitable operations.
All of our drug candidates are still being developed and may not result in
commercial products for a number of years or at all.
We are in the early stage of product development and we do not expect to
have any products resulting from our research efforts commercially available
for a number of years, if at all. To date, we have stopped developing six
compounds which had previously been in clinical development. Currently, we have
several compounds in preclinical development and three compounds in Phase I
human clinical trials. The results of clinical testing to date on one of these
compounds, NGD 96-1, suggest that it may not have sufficient drug-like
characteristics to advance to the next stage of development. All of our
compounds currently being developed,
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whether in human clinical trials or not, will require significant additional
research, development and testing before they can be commercialized. We cannot
accurately predict the time required or the cost involved in commercializing
any new drug. In addition, developing new drugs is an extremely uncertain
process, and unanticipated developments such as clinical or regulatory delays,
unexpected side effects in test patients, or ineffectiveness would slow or
prevent the development of a product. We cannot assure you that our research or
product development efforts, or those of any of our collaborative partners
either present or future, will result in a successful product.
The drug testing process is long, costly, and uncertain and most drug
candidates fail to be approved. Even if approved for use in humans, a drug may
prove to be unsafe or ineffective.
A potential drug candidate must go through extensive preclinical (animal)
and clinical (human) trials to prove that the drug is safe and effective before
it can be commercialized. This extensive testing takes several years, is quite
expensive, and more often than not leads to the conclusion that a drug
candidate is not suitable for commercialization. Moreover, even if early drug
testing appears positive, later testing or even the results of usage after
commercialization may preclude further use of a drug. The results of
preclinical tests performed on animals are not always accurate predictors of
the safety, effectiveness, or suitability of drugs in humans. Similarly, the
results of initial clinical trials do not necessarily accurately predict the
results that will be obtained in the later stages of clinical trials. The
appearance of adverse side effects or a lack of effectiveness in clinical
trials could interrupt, delay or result in termination of clinical testing of
the product in question and could ultimately prevent its approval by the United
States Food and Drug Administration (the FDA) or foreign regulatory
authorities. Either the FDA or we may suspend clinical trials at any time if
the FDA or we believe that the individuals participating in the trials are
being exposed to unacceptable health risks. Even products approved by the FDA
or foreign regulatory authorities may later exhibit adverse side effects that
prevent their widespread use or necessitate their withdrawal from the market.
As a result, we cannot assure you that our drug candidates will be safe or
effective in humans, that they will not produce undesirable side effects, or
that they will ever get through the testing phases to commercialization. With
the exception of our three lead candidates, NGD 91-3, NGD 97-1, and NGD 96-1,
none of our current compounds has received regulatory clearance for any stage
of clinical trials in humans. We cannot assure you that we will receive
regulatory approval for clinical trials for any other compound being developed.
We have limited experience in the clinical process and we rely heavily on our
collaborative partners for research and development funding and
commercialization.
We depend on our collaborative partners to fund a significant portion of our
research and development expenses and to manufacture and market products
resulting from our collaborations. Because we have limited experience
conducting clinical trials, we also depend on our collaborative partners with
respect to regulatory filings relating to, and the clinical testing of,
compounds developed under our collaborations. In particular, we depend on
Pfizer to conduct clinical trials for compounds on which we collaborate,
including our lead compounds NGD 91-3, NGD 97-1, and NGD 96-1. Our reliance on
collaborative partners exposes us to many risks, including the following:
. That a collaborator will halt, delay, or repeat clinical trials;
. That a collaborator will alter the amount or timing of resources
dedicated to our collaboration;
. That a collaborator will dispute our rights under an agreement;
. That a collaborator will attempt to independently develop a competing
drug on its own or in conjunction with a third party;
. That existing collaboration agreements will not be extended;
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. That a collaborator will not continue to develop a drug candidate after
a collaboration agreement has ended; and
. That a collaborator will breach or terminate an agreement with us.
If any of these risks were to occur, the research program in question, and
possibly our business, would be adversely affected. We cannot assure you that
our existing collaborations will be successful or that we will receive any
future milestone payments. If our existing collaborations are not continued or
are unsuccessful, our business would be materially adversely affected. If our
collaborative partners do not continue the development of our compounds under
our collaborations, we may not be able to do so on our own. Under all our
collaborations with Pfizer, Pfizer controls the determination of when and if to
advance compounds in the clinical process. In addition, we may not be able to
find suitable partners for any new collaborations we may seek to enter. Any new
collaborations would be subject to the same risks as our existing
collaborations.
A consequence of entering into collaborative arrangements is that our potential
upside is smaller if a successful product emerges than if we successfully
commercialized a product on our own.
We have entered into strategic collaborations with large pharmaceutical
companies to develop and commercialize new drugs. Under our collaborations with
Pfizer, we have, with limited exceptions, granted Pfizer the exclusive
worldwide license to manufacture, use and sell products developed under the
Pfizer agreements. Under our collaboration with Schering-Plough, we have
granted Schering-Plough the exclusive worldwide license to market, and the
exclusive license to manufacture for sale outside the United States, products
developed under the Schering-Plough agreement. While these collaborations have
allowed us to recoup our research and development expenses and avoid risking
our own capital on these activities, they have, in most cases, limited our
upside to receiving only royalties based on net sales levels should a
successful drug result. Under our 1995 NPY-based obesity collaboration with
Pfizer, we retained the option to fund some of the research and development
costs associated with clinical trials in exchange for the right to share
profits equally on any resulting drug. Were we to successfully develop and
commercialize a drug completely on our own, however, our potential upside would
be even larger.
We are exploring new alliances that may never materialize or may fail.
We are exploring a number of possible partnerships or alliances in an effort
to gain access to new targets for our drug discovery and development efforts.
At the current time, we cannot predict what form such a partnership or alliance
might take. To date, our only experience working with other companies has come
from our drug program collaborations with large pharmaceutical companies. We do
not have experience working under a target partnership and we have no
experience managing a joint venture, merger or acquisition. We cannot assure
you that we will be able to find a suitable partner for any such alliance on
favorable terms or at all. We cannot assure you that if we find a suitable
partner that we will have the financial capability to conclude an agreement. If
we do form a partnership or other alliance to gain access to new targets, we
cannot assure you that the venture will be successful or that it will achieve
its intended purposes.
We are not certain about how much capital we may need and we may have
difficulty raising needed capital in the future on favorable terms or at all.
We have spent and will continue to spend substantial funds to complete the
research, development and clinical testing of our products. We will need
additional funds for these purposes, to establish additional clinical- and
commercial-scale manufacturing arrangements and to provide for the marketing
and distribution of our products. We may not be able to acquire additional
funds on acceptable terms or at all. If we cannot acquire adequate funds, we
may have to delay, reduce the scope of or eliminate one or more of our research
or development programs. This would materially and adversely affect our
business, financial condition and operations.
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We believe that our cash, cash equivalents and investments, plus future
scheduled payments under the Pfizer agreements, will be adequate to satisfy our
capital needs through at least calendar year 2002. However, our actual capital
requirements will depend on many factors, including:
. continued progress of our research and development programs;
. our ability to market and distribute any products we develop and to
establish new collaborative and licensing arrangements;
. changes in our existing collaborative relationships;
. progress with preclinical studies and clinical trials;
. the time and costs involved in obtaining regulatory clearance;
. the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims; and
. competing technological and market developments.
We may seek to raise any necessary additional funds through equity or debt
financings, collaborative arrangements with corporate partners or other sources
which may dilute the interest our existing stockholders have in our company. In
addition, in the event that we obtain additional funds through arrangements
with collaborative partners or other sources, these arrangements may require us
to give up rights to some of our technologies, product candidates or products
under development that we would otherwise seek to develop or commercialize
ourselves.
We face rapid technological change and intense competition.
The biopharmaceutical industry is highly competitive and subject to rapid
and substantial technological change. Developments by others may render our
products under development or our technologies noncompetitive or obsolete. We
may be unable to keep pace with technological developments or other market
factors. Technological competition in the industry, principally from major
pharmaceutical companies, but also from biotechnology companies, universities,
governmental entities and others diversifying into the field is intense and is
expected to increase. Our competitors may develop products that are safer, more
effective or less costly than any products we may develop or may be able to
complete their development more quickly. Our most advanced clinical programs
focus on central nervous system disorders and based on our review of patent
filings and information from industry sources, we believe that most of the
major pharmaceutical companies have drug programs to compete with ours. These
companies include Merck, Eli Lilly and Pfizer and there are likely others. Many
of these entities have significantly greater research and development
capabilities than we do, as well as substantially more marketing,
manufacturing, financial and managerial resources. In addition, acquisitions
of, or investments in, competing development-stage pharmaceutical or
biotechnology companies by large corporations could increase such competitors'
financial, marketing, manufacturing and other resources. If a competitor were
to develop and successfully commercialize a drug similar to one we were working
on before us, it would put us at a significant competitive disadvantage.
We are subject to strict governmental regulation. If we cannot obtain product
approvals or if we cannot comply with ongoing governmental regulations our
business could be adversely affected.
Our products are subject to extensive regulation and review by numerous
federal, state and local government agencies both in the United States and in
other countries where we intend to test and market our products. The process by
which we obtain regulatory approval to market a product involves substantial
cost and can take many years. The data we obtain from preclinical and clinical
trials may be subject to varying interpretations which can delay, limit or
prevent the approval of the relevant governmental authority. If there are
delays and costs in obtaining regulatory approvals, our business could be
materially affected. We cannot assure you that agencies, such as the FDA, will
not change the end points for clinical trials once they have begun, that
clinical data will be accepted by the FDA or similar agencies, or that any
approvals will be granted
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on a timely basis, if at all. Even if we obtain regulatory approval of a drug,
the approval may include limitations and restrictions on the drug's use. In
addition, we would be subject to continual review by the government and any
subsequent discovery of previously unrecognized problems could result in
restrictions being placed on either us or our products. These restrictions
could include an order to withdraw a product from the market. The failure to
comply with applicable regulatory requirements can, among other things, result
in fines, suspension of regulatory approvals, product recalls, seizure of
products, operating restrictions and criminal prosecution.
We may not be able to protect our intellectual property.
Our success depends, in part, on our ability to obtain patents, maintain
trade secrets and operate without infringing on the intellectual property
rights of third parties. We file patent applications both in the United States
and in foreign countries to protect both our products and our processes. The
patent position of biotechnology and pharmaceutical firms is highly uncertain
and involves many complex legal and technical issues. We cannot assure you that
our patent applications will be successful or that our current or future
patents will afford us protection against our competitors. It is possible that
our patents will be successfully challenged or that patents issued to others
may preclude us from commercializing our products. Litigation to establish the
validity of patents, to defend against infringement claims or to assert
infringement claims against others can be lengthy and expensive. Moreover, much
of our expertise and technology cannot be patented. We also rely heavily on
trade secrets and confidentiality agreements with collaborators, advisors,
employees, consultants, vendors and other service providers. We cannot assure
you that these agreements will not be breached or that our trade secrets will
not otherwise become known or be independently discovered by competitors. Our
business would be adversely affected if our competitors were able to learn our
secrets or if we were unable to protect our intellectual property.
We are subject to uncertainties regarding health care reimbursement and reform.
The continuing efforts of the government, insurance companies, health
maintenance organizations and other payers of healthcare costs to contain or
reduce costs of health care may affect our future revenues and profitability,
the future revenues and profitability of our potential customers, suppliers and
collaborative partners, and the availability of capital. For example, in
certain foreign markets, pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States, both
the federal and state governments will likely continue to focus on health care
reform, the cost of prescription pharmaceuticals and reform of the Medicare and
Medicaid systems. While we cannot predict whether any such proposals will be
adopted, the announcement or adoption of such proposals could have a material
adverse effect on our business, financial condition and results of operations.
Our ability to market our products successfully will depend, in part, on the
extent to which appropriate reimbursements for the cost of our products and
related treatments are available from governmental authorities, private health
insurers and other organizations, such as HMOs. Significant uncertainty exists
as to the reimbursement status of newly approved healthcare products. Third-
party payers, including Medicare, are constantly challenging the prices charged
for medical products and services. The cost containment measures that health
care payers and providers are instituting and the effect of any health care
reform could materially adversely affect our ability to operate profitably.
Our business depends on the retention of key personnel.
Our success to date has depended on the skills of our scientific and
management personnel. We believe our future success will depend, in large part,
on our ability to recruit and retain such personnel and consultants. We face
significant competition for such individuals from other companies, academic
institutions, government entities and other organizations. In particular, there
is currently a shortage of qualified Ph.D. chemists and drug metabolism
scientists in the industry. If we cannot attract or retain these key personnel
our business could be adversely affected.
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We rely heavily upon third parties for our manufacturing requirements.
To complete our clinical trials and to commercialize our product candidates
we need access to, or development of, facilities to manufacture a sufficient
supply of our product candidates. We will depend on our collaborators or third
parties for the manufacture of compounds for pre-clinical, clinical and
commercial purposes in their FDA-approved manufacturing facilities. Our
products may be in competition with other products for access to these
facilities. Consequently, our products may be subject to manufacturing delays
if collaborators or outside contractors give other products greater priority
than our products. For this and other reasons, our collaborators or third
parties may not be able to manufacture these products in a cost-effective or
timely manner. If not performed in a timely manner, the clinical trial
development of our product candidates or their submission for regulatory
approval could be delayed, and our ability to deliver products on a timely
basis could be impaired or precluded. We may not be able to enter into any
necessary third-party manufacturing arrangements on acceptable terms, if at
all. Our current dependence upon others for the manufacture of our products may
adversely affect our future profit margin and our ability to commercialize
products on a timely and competitive basis. We do not intend to develop or
acquire facilities for the manufacture of product candidates for clinical
trials or commercial purposes in the foreseeable future.
We lack marketing and sales experience.
We currently have limited marketing, sales or distribution experience and we
intend to rely on our collaborative partners for this expertise if one of our
products is successfully commercialized. Therefore, to service markets in which
we have retained sales and marketing rights or in the event that any of our
collaborative agreements is terminated, we must develop a sales force with
technical expertise. We have no experience in developing, training or managing
a sales force. We will incur substantial additional expenses in developing,
training and managing this sales force. We may be unable to build such a sales
force, the cost of establishing such a sales force may exceed any product
revenues, or our direct marketing and sales efforts may be unsuccessful. In
addition, we compete with many other companies that currently have extensive
and well-funded marketing and sales operations. Our marketing and sales efforts
may be unable to compete successfully against such other companies. Moreover,
even if we or one of our partners is able to bring a product to market, we
cannot assure you that these products will gain acceptance among physicians,
patients or third-party payers.
Our business exposes us to product liability claims.
We face an inherent risk of exposure to product liability claims in the
event that the use of one of our products is alleged to have caused an adverse
effect on patients. This risk exists for products being tested in human
clinical trials, as well as for products that receive regulatory approval for
commercial sale. Manufacturers of pharmaceuticals have been the subject of
significant product liability litigation and we cannot assure you that we will
not be threatened with or become subject to such a claim. We maintain product
liability insurance for compounds we are testing in clinical trials. We intend
to seek additional product liability insurance coverage if and when our
products are commercialized. We can give you no assurance, however, that we
will be able to obtain such insurance at acceptable costs, if at all or that
such coverage, if obtained, will be adequate to cover any claims. If we cannot
obtain sufficient insurance coverage at an acceptable cost or otherwise protect
against potential product liability claims we could be prevented from
commercializing our products. If we are subject to a product liability claim or
recall, our reputation, business, financial condition and results of operations
could be materially adversely affected.
Our business involves hazardous materials and the risk of environmental
liability.
As with many biotechnology companies, in connection with our research and
development activities, we are subject to federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture, storage,
air emission, effluent discharge, handling and disposal of certain materials,
biological specimens and wastes. Although we believe that we have complied with
the applicable laws, regulations and policies in all material respects and have
not been required to correct any material noncompliance, we may
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have to incur significant costs to comply with environmental and health and
safety regulations in the future. Our research and development involves the
controlled use of hazardous materials, including but not limited to certain
hazardous chemicals and radioactive materials. Although we believe that our
safety procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, we cannot completely
eliminate the risk of accidental contamination or injury from these materials.
In the event of such an occurrence, we could be held liable for any damages
that result and any such liability could adversely affect our business or
possibly exceed our resources.
Risks Related to the Offering
The price of our common stock may be volatile.
The market prices for securities of biotechnology companies, including ours,
have historically been highly volatile. The market has, from time to time,
experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. The market price of our common
stock may fluctuate significantly due to a variety of factors, including:
. the results of preclinical testing and clinical trials by us or our
competitors;
. technological innovations or new therapeutic products;
. governmental regulation;
. developments in patent or other proprietary rights;
. litigation;
. public concern as to the safety of products developed by us or others;
. comments by securities analysts; and
. general market conditions in our industry.
If our stockholders sell substantial amounts of our common stock, the market
price of our common stock may fall.
If our stockholders sell substantial amounts of our common stock including
shares issued upon the exercise of outstanding options and warrants, the market
price of our common stock may fall. These sales also might make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate.
We do not expect to pay dividends on our common stock.
We have never declared or paid dividends on our common stock in the past and
we do not expect to pay dividends on our common stock for the foreseeable
future.
FORWARD-LOOKING STATEMENTS
Some of the statements under "The Company," "Risk Factors" and elsewhere
included or incorporated by reference in this prospectus constitute forward-
looking statements. These statements relate to future events or our future
financial or business performance and are identified by terminology such as
"may," "might," "will," "should," "expect," "scheduled," "plan," "intend,"
"anticipate," "believe," "estimate," "potential," or "continue" or the negative
of such terms or other comparable terminology. In evaluating these statements,
you should specifically consider various factors, including the risks outlined
under "Risk Factors." These factors, among others, may cause actual events or
our actual performance to differ materially from any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.
8
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Available Information
We have filed with the SEC a registration statement on Form S-3 to register
the common stock offered by this prospectus. However, this prospectus does not
contain all of the information contained in the registration statement and the
exhibits and schedules to the registration statement. We strongly encourage you
to carefully read the registration statement and the exhibits and schedules to
the registration statement. We also file annual, quarterly and special reports,
proxy statements and other information with the SEC.
You may inspect and copy these materials at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as at the SEC's regional offices at 7 World Trade Center, Suite 1300, New
York, New York, 10048, and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may also obtain copies of these materials from the SEC at
prescribed rates by writing to the SEC's Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's website at www.sec.gov. Our common stock
is quoted on the Nasdaq National Market under the symbol "NRGN." You may
inspect reports and other information concerning us at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
Incorporation of Certain Documents by Reference
The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
which we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, filed on March 30, 2000, an amendment thereto filed on March 31,
2000 and an amendment thereto filed on May 1, 2000, including all
material incorporated by reference therein;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000, filed on May 15, 2000 including all material incorporated by
reference therein;
3. Our Current Report on Form 8-K, filed on July 12, 2000, including all
material incorporated by reference therein;
4. The description of our common stock which is contained in our
Registration Statement on Form 8-A filed under the Securities Exchange
Act on February 21, 1990, as amended on March 5, 1990.
If you request a copy of any or all of the documents incorporated by
reference, we will send you the requested copies at no charge. We will not,
however, send you the exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents. You should direct
requests for such copies to Stephen R. Davis, Senior Vice President and Chief
Business Officer of Neurogen, at 35 Northeast Industrial Road, Branford,
Connecticut 06504, (203) 315-3016.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of common stock by
any selling shareholder in this offering.
9
<PAGE>
SELLING SHAREHOLDERS
On June 29, 2000, we sold an aggregate of 1,638,000 shares of common stock
of the Company to the selling shareholders pursuant to a Stock Purchase
Agreement dated June 26, 2000. In connection with this sale, we agreed to file
a registration statement with the SEC covering the shares issued to each
selling shareholder and agreed to indemnify each selling shareholder against
claims made against them arising out of, among other things, statements made in
this registration statement. We have agreed to cause this registration
statement to remain effective until (a) all the common stock has been re-sold
or (b) two years after the closing of the sale of the common stock pursuant to
the Stock Purchase Agreement, whichever occurs earlier.
The following table provides certain information with respect to shares of
common stock held and to be offered under this prospectus from time to time by
each selling shareholder. Assuming the selling shareholders sell all the common
stock being offered by this prospectus, none of the selling shareholders will
own any common stock after the offering except as indicated in the table. There
can be no assurance that the selling shareholders will sell all the common
stock being offered. See "Plan of Distribution."
We are unaware of any material relationship between any of the selling
shareholders and us in the past three years other than as a result of the
ownership of the shares of common stock.
<TABLE>
<CAPTION>
Shares Beneficially
Owned Prior to Number of
Offering Shares
-------------------- Being
Selling Shareholder Number Percent(1) Offered
------------------- --------- ---------- ---------
<S> <C> <C> <C>
Clarion Capital Corporation................. 20,000 * 20,000
Clarion Offshore Fund LTD................... 6,400 * 6,400
Clarion Partners, L.P....................... 13,600 * 13,600
DWS Investments Gmbh........................ 800,000 4.63% 800,000
HCI Healthcare Investments Ltd.............. 40,000 * 40,000
Jackson Square Partners, L.P................ 200,000 1.16% 200,000
Marcuard Cook & CIE, S.A.................... 30,000 * 30,000
Metzler Investments(2)...................... 299,500 1.74% 150,000
Munder Framlington Healthcare............... 100,000 * 100,000
Oppenheimer & Co.(3)........................ 1,875,000 10.87% 200,000
Veritas SG Investment Trust GMBH............ 78,000 * 78,000
TOTAL..................................... 3,462,500 20.07% 1,638,000
</TABLE>
--------
* Less than one percent.
(1) Percentage of ownership is based on 17,253,515 shares of common stock
outstanding on June 30, 2000.
(2) If all shares being offered are sold, would own 149,500 or less than 1%,
following the offering.
(3) If all shares being offered are sold, would own 1,675,000 shares, or 9.71%,
following the offering.
PLAN OF DISTRIBUTION
We are registering the shares of common stock offered by the selling
shareholders pursuant to contractual registration rights contained in a
Registration Rights Agreement dated June 26, 2000. The selling shareholders may
sell their shares on the Nasdaq National Market, in private transactions or in
a combination of such methods of sale. The selling shareholders may sell their
shares at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated or at fixed prices. If the
selling shareholders sell shares to or through brokers or dealers, they may pay
the brokers or dealers compensation in the form of discounts, concessions or
commissions. We will not receive any proceeds from the sale of shares by the
selling shareholders.
10
<PAGE>
The selling shareholders and any persons who participate in the sale of the
shares may be deemed to be "underwriters" as defined in the Securities Act, and
any discounts, commissions or concessions received by them and any provided
pursuant to the sales of shares by them might be deemed underwriting discounts
and commissions under the Securities Act. In order to comply with the
securities laws of certain states, if applicable, the common stock may be sold
in such jurisdictions only through registered or licensed brokers or dealers.
We have agreed in the Registration Rights Agreement to register the shares
of our common stock received by the selling shareholders pursuant to the Stock
Purchase Agreement under applicable federal and state securities laws under
certain circumstances and at certain times. Pursuant to the Registration Rights
Agreement, we have filed a registration statement related to the shares offered
hereby and have agreed to keep such registration statement effective until (a)
all the common stock has been re-sold or (b) two years after the closing of the
sale of the common stock pursuant to the Stock Purchase Agreement, whichever
occurs earlier.
We are not paying any underwriting commissions or discounts in this
offering. We will, however, pay for the expenses incurred in this offering. We
estimate these expenses to be approximately $62,914. We have agreed to
indemnify the selling shareholders and certain other persons against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for the
Company by Milbank, Tweed, Hadley & McCloy, LLP, New York, New York.
EXPERTS
The financial statements of Neurogen Corporation as of December 31, 1998 and
1999 and for the years ended December 31, 1998 and 1999 incorporated in this
prospectus by reference to the Company's annual report on Form 10-K for the
year ended December 31, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of Neurogen Corporation for the year ended December
31, 1997, appearing in Neurogen Corporation's Annual Report (Form 10-K) for the
year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein,
and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report on the authority
of such firm as experts in accounting and auditing.
11
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WE HAVE AUTHORIZED NO ONE TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS THAT ARE NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD RELY ONLY
ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN THIS PROSPECTUS.
YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE
DOCUMENT.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANY.......................................................... 1
RISK FACTORS......................................................... 2
FORWARD-LOOKING STATEMENTS........................................... 8
WHERE YOU CAN FIND MORE INFORMATION.................................. 9
USE OF PROCEEDS...................................................... 9
SELLING SHAREHOLDERS................................................. 10
PLAN OF DISTRIBUTION................................................. 10
LEGAL MATTERS........................................................ 11
EXPERTS.............................................................. 11
</TABLE>
----------------
1,638,000 SHARES
Neurogen
Corporation
COMMON STOCK
----------------
PROSPECTUS
----------------
JULY [ ], 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by Neurogen Corporation
in connection with the sale of the shares of common stock being registered. All
of the amounts shown are estimates except for the registration fee. None of
these expenses will be paid by the selling shareholders.
<TABLE>
<S> <C>
Securities Act registration fee................................... $12,914
Legal fees and expenses........................................... 20,000
Accounting fees and expenses...................................... 15,000
Printing and engraving expenses................................... 10,000
Miscellaneous..................................................... 5,000
-------
Total........................................................... $62,914
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company is a Delaware corporation. Section 145 of the General
Corporation Law of Delaware permits indemnification of directors, officers and
employees of corporations organized thereunder under certain conditions and
subject to certain limitations. Article EIGHTH of the Restated Certificate of
Incorporation of the Company provides that the Company shall, to the full
extent permitted by Section 145, indemnify its directors and officers.
The Company's Certificate of Incorporation, pursuant to Section 102(b)(7) of
the General Corporation Law of Delaware, contains provisions eliminating the
personal liability of a director to the Company or its stockholders for money
damages for breach of fiduciary duty as a director. This provision in the
Restated Certificate of Incorporation does not eliminate the duty of care and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Company, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of the
law, for actions leading to improper personal benefits to the director, and for
payment of dividends or stock repurchases or redemptions that are unlawful
under Delaware law. The provision does not affect a director's responsibilities
under any other law, such as the state or federal securities laws or state or
federal environmental laws.
As permitted by the General Corporation Law of Delaware, the directors and
officers of the Company are covered by insurance against certain liabilities
which might be incurred by them in such capacities and in certain cases against
which they cannot be indemnified by the Company.
At present, there is no pending litigation or proceeding involving a
director or officer of the Company as to which indemnification is being sought
nor is the Company aware of any threatened litigation that may result in claims
for indemnification by any officer, director, or employee of the Company.
II-1
<PAGE>
ITEM 16. EXHIBITS
(a) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
3.1 Restated Certificate of Incorporation, filed June 17, 1994
(incorporated by reference to Exhibit 4.1 to Registration Statement
No. 33-81268 on Form S-8).
3.2 By-Laws, as amended (incorporated by reference to Exhibit 3.6 to the
Company's Form 10-K for the fiscal year ended December 31, 1993).
5.1 Opinion of Milbank, Tweed, Hadley & McCloy LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Milbank, Tweed, Hadley & McCloy LLP (contained in Exhibit
5.1).
24.1 Powers of Attorney of Frank C. Carlucci, Robert H. Roth, John Simon,
John F. Tallman, Robert N. Butler, Jeffrey J. Collinson, Suzanne
Woolsey, Mark Novitch, Barry M. Bloom, Julian C. Baker, and Felix J.
Baker.
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual
II-2
<PAGE>
report pursuant to section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. The undersigned registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to each person to whom
the prospectus is sent or given, the latest annual report to security holders
that is incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by registrant of expenses incurred or
paid by a director, officer or controlling person of registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Branford, State of Connecticut on this the 14th day
of July, 2000.
NEUROGEN CORPORATION
By: ______________________________
Harry H. Penner, Jr.
President and Chief Executive
Officer
Date: July 14, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities indicated and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and July 14, 2000
___________________________________________ Director
Frank C. Carlucci
* President, Chief Executive July 14, 2000
___________________________________________ Officer, Vice Chairman of
Harry H. Penner, Jr. the Board and Director
(Principal Executive
Officer)
* Executive Vice President, July 14, 2000
___________________________________________ Secretary and Director
John F. Tallman, Ph.D.
* Senior Vice President and July 14, 2000
___________________________________________ Chief Business Officer
Stephen R. Davis (Principal Financial and
Accounting Officer)
* Director July 14, 2000
___________________________________________
Robert H. Roth, Ph.D.
* Director July 14, 2000
___________________________________________
Jeffrey J. Collinson
* Director July 14, 2000
___________________________________________
John Simon
* Director July 14, 2000
___________________________________________
Robert N. Butler, M.D.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
* Director July 14, 2000
___________________________________________
Suzanne Woolsey, Ph.D.
* Director July 14, 2000
___________________________________________
Barry M. Bloom, Ph.D.
* Director July 14, 2000
___________________________________________
Mark Novitch, M.D.
* Director July 14, 2000
___________________________________________
Julian C. Baker
* Director July 14, 2000
___________________________________________
Felix J. Baker, Ph.D.
*By: ______________________________________
Harry H. Penner, Jr.,
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
3.1 Restated Certificate of Incorporation, filed June 17, 1994
(incorporated by reference to Exhibit 4.1 to Registration Statement
No. 33-81268 on Form S-8).
3.2 By-Laws, as amended (incorporated by reference to Exhibit 3.6 to the
Company's Form 10-K for the fiscal year ended December 31, 1993).
5.1 Opinion of Milbank, Tweed, Hadley & McCloy LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Milbank, Tweed, Hadley & McCloy LLP (contained in Exhibit
5.1).
24.1 Powers of Attorney of Frank C. Carlucci, Robert H. Roth, John Simon,
John F. Tallman, Robert N. Butler, Jeffrey J. Collinson, Suzanne
Woolsey, Mark Novitch, Barry M. Bloom, Julian C. Baker, and Felix J.
Baker.
</TABLE>
