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, 2001
                                       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, 2001 the  registrant  had  17,409,626  shares of Common Stock
outstanding.





                                NEUROGEN CORPORATION

                                       INDEX


                         Part I - Financial Information


Item 1. Consolidated Financial Statements

        Consolidated Balance Sheets at March 31, 2001 and
         December 31, 2000
        Consolidated Statements of Operations for the three-month periods
         ended March 31, 2001 and 2000
        Consolidated Statements of Cash Flows for the three-month periods
         ended March 31, 2001 and 2000
        Notes to Consolidated Financial Statements

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

                           Part II - Other Information

Item 1. Legal Proceedings

Item 2. Changes in Securities

Item 3. Defaults upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

Signature

Exhibit Index





                         PART I - FINANCIAL INFORMATION

ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS



                                                    NEUROGEN CORPORATION
                                                 CONSOLIDATED BALANCE SHEETS
                                                       (In thousands)
                                                         (UNAUDITED)


                                                            MARCH 31, 2001                DECEMBER 31, 2000

                                                            --------------                 ----------------
                     Assets

Current assets:
   Cash and cash equivalents                               $       26,670                  $        48,086
   Marketable securities                                           71,534                           60,670
   Receivables from corporate partners                              1,366                            1,517
   Other current assets                                             1,032                            1,364
                                                           --------------                  ----------------
       Total current assets                                       100,602                          111,637

Property, plant & equipment:
   Land, building and improvements                                 22,886                           17,949
   Construction in progress                                         7,108                            6,471
   Leasehold improvements                                              -                             4,026
   Equipment and furniture                                         14,567                           14,213
                                                           ---------------                 ----------------
                                                                   44,561                           42,659
   Less accumulated depreciation & amortization                    11,051                           12,079
                                                           ---------------                 ----------------
       Net property, plant and equipment                           33,510                           30,580

Other assets, net                                                     301                              371
                                                           ---------------                 ----------------
                                                           $      134,413                  $       142,588
                                                           ===============                 ================







See accompanying notes to consolidated financial statements.








                                                    NEUROGEN CORPORATION
                                                 CONSOLIDATED BALANCE SHEETS
                                             (In thousands, except per share data)
                                                          (UNAUDITED)


                                                             MARCH 31, 2001              DECEMBER 31, 2000
                                                           -----------------             -----------------
          Liabilities & Stockholders' Equity

Current Liabilities:
   Accounts payable and accrued expenses                   $          3,337              $           5,014
   Unearned revenue from corporate partner                            9,542                          9,542
                                                           -----------------             ------------------
       Total current liabilities                                     12,879                         14,556

Loans payable                                                         1,912                          1,912
                                                           -----------------             ------------------
       Total liabilities                                             14,791                         16,468

Commitments and Contingencies

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
       17,403 shares at March 31, 2001 and 17,386 shares
       at December 31, 2000                                             435                            434
   Additional paid-in capital                                       169,659                        169,440
   Accumulated deficit                                              (50,248)                       (42,323)
   Deferred compensation                                               (665)                        (1,706)
   Accumulated other comprehensive income                               441                            275
                                                           -----------------             ------------------
       Total stockholders' equity                                   119,622                        126,120
                                                           -----------------             ------------------
                                                           $        134,413              $         142,588
                                                           =================             ==================







See accompanying notes to consolidated financial statements.

                                                    NEUROGEN CORPORATION
                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                            (In thousands, except per share data)
                                                          (UNAUDITED)


                                                                      THREE MONTHS                THREE MONTHS
                                                                          ENDED                       ENDED
                                                                     MARCH 31, 2001              MARCH 31, 2000
                                                                    ----------------            ----------------
Operating revenues:
 License fees                                                       $         1,250             $            -
 Research and development                                                       720                       2,591
                                                                    ----------------            ----------------
       Total operating revenues                                               1,970                       2,591

Operating expenses:
 Research and development:
   Stock compensation                                                           885                       4,571
   Other research and development                                             8,668                       6,344
                                                                    ----------------            ----------------
 Total research and development                                               9,553                      10,915

 General and administrative:
  Stock compensation                                                             45                       2,025
  Other general and administrative                                            1,805                       1,498
                                                                    ----------------            ----------------
  Total general and administrative                                            1,850                       3,523
                                                                    ----------------            ----------------
       Total operating expenses                                              11,403                      14,438
                                                                    ----------------            ----------------
Operating loss                                                               (9,433)                    (11,847)

Other income:
   Investment income                                                          1,509                         928
                                                                    ----------------            ----------------
       Total other income, net                                                1,509                         928
                                                                    ----------------            ----------------
Net loss before cumulative effect of change in accounting principle          (7,924)                    (10,919)

Cumulative effect on prior years of the application of SAB 101,
Revenue Recognition in Financial Statements                                      -                         (500)
                                                                    ----------------            ----------------
Net loss                                                            $        (7,924)            $       (11,419)
                                                                    ================            ================

Basic and diluted loss per share:
 Before cumulative effect of change in accounting principle         $         (0.46)            $         (0.72)
 Change in accounting principle                                                  -                        (0.03)
                                                                    ----------------            ----------------
  Basic and diluted loss per share                                  $         (0.46)            $         (0.75)
                                                                    ================            ================

Shares used in calculation of loss per share:

  Basic and diluted                                                          17,394                      15,297
                                                                    ================            ================

See accompanying notes to consolidated financial statements.



                                                    NEUROGEN CORPORATION
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                       (In thousands)
                                                         (UNAUDITED)

                                                                   THREE MONTHS                 THREE MONTHS
                                                                       ENDED                        ENDED
                                                                  MARCH 31, 2001               MARCH 31, 2000
                                                               -----------------              ---------------

Cash flows from operating activities:
   Net loss                                                      $       (7,924)              $      (11,419)
   Adjustments to reconcile net loss to net cash (used in)
     provided by operating activities:
       Depreciation and amortization expense                                640                          676
       Stock compensation expense                                           930                        6,596
       Other noncash expense                                                292                          650
   Changes in operating assets and liabilities:
       Decrease in accounts payable and accrued expenses                 (1,677)                        (354)
       Increase in unearned revenue from corporate partner                   -                         4,000
       Decrease(increase) in receivables from corporate partners            152                         (416)
       Decrease in other assets, net                                        336                          296
                                                                 ---------------              ---------------
          Net cash(used in)provided by operating activities              (7,251)                          29

Cash flows from investing activities:
   Purchase of plant and equipment                                       (3,596)                        (770)
   Purchases of marketable securities                                   (30,405)                      (1,436)
   Maturities and sales of marketable securities                         19,644                       21,260
   Proceeds from sales of assets                                             25                           -
                                                                 ---------------              ---------------
          Net cash (used in)provided by investing activities            (14,332)                      19,054

Cash flows from financing activities:
   Exercise of stock options                                                167                        8,236
                                                                 ---------------              ---------------
          Net cash provided by financing activities                         167                        8,236
                                                                 ---------------              ---------------
          Net (decrease) increase in cash and cash equivalents          (21,416)                      27,319

Cash and cash equivalents at beginning of period                         48,086                       31,588
                                                                 ---------------              ---------------
Cash and cash equivalents at end of period                       $       26,670               $       58,907
                                                                 ===============              ===============




See accompanying notes to consolidated financial statements.





                              Neurogen Corporation
                    Notes to Consolidated Financial Statements
                                 March 31, 2001
                                   (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.   These  interim  financial
          statements  should be read in conjunction  with the audited  financial
          statements  for the year  ended  December  31,  2000  included  in the
          Company's  Annual  Report  on  Form  10-K.  Interim  results  are  not
          necessarily  indicative  of the results  that may be expected  for the
          fiscal year.

 (2)     REVENUE RECOGNITION

               Revenue under research and development arrangements is recognized
          as  earned  under  the  terms of the  respective  agreements.  Product
          research  funding is recognized  as revenue,  generally on a quarterly
          basis,  as  research  effort  is  performed.  License  and  technology
          transfer revenue is recognized when a contractual  arrangement exists,
          fees are  fixed  and  determinable,  delivery  of the  technology  has
          occurred  and  collectibility  is  reasonably   assured.  If  customer
          acceptance is required,  revenue is deferred until acceptance  occurs.
          If there are on-going services or obligations after delivery,  revenue
          is recognized  over the related term of the service on a percentage of
          completion  basis,  unless such  obligation  is  maintenance  which is
          recognized  on a straight  line basis.  For  contracts  with  multiple
          elements,  total contract fees are allocated to the different elements
          based on  evidence  of fair value.  Deferred  revenue  arises from the
          payments  received  for research  and  development  to be conducted in
          future periods or for licenses of Neurogen rights or technology  where
          Neurogen has  continuing  involvement.  Deferred  revenue is generally
          expected to be recognized within the next twelve months.

               In  December  1999,  the  staff of the  Securities  and  Exchange
          Commission  issued its Staff  Accounting  Bulletin  ("SAB")  No.  101,
          Revenue Recognition in Financial  Statements.  SAB No. 101, as amended
          by SAB No. 101A and 101B,  provides  guidance on the  measurement  and
          timing  of  revenue  recognition  in  financial  statements  of public
          companies.  SAB No. 101  permits  application  of its  guidance  to be
          treated as a change in  accounting  principle in  accordance  with APB
          Opinion No. 20, Accounting Changes.

               The  Company  adopted  the  guidance of SAB No. 101 in the fourth
          quarter of 2000,  retroactive  to January 1, 2000,  and,  in the first
          quarter of 2000, reflected a cumulative effect of change in accounting
          principle  on prior  years of  $500,000,  related to timing of revenue
          recognition on certain  non-refundable  up-front  payments  previously
          recognized on a technology transfer agreement. Consistent with SAB No.
          101, the Company also revised the  recognition of revenue in 2000 on a
          quarterly basis, resulting in a reduction in previously reported first
          quarter  revenue of $250,000.  This revenue was  recognized  under the
          Company's new revenue  recognition  policy in  subsequent  quarters in
          2000.

 (3)     PRINCIPLES OF CONSOLIDATION

               The consolidated financial statements include the accounts of the
          parent  company  and a  subsidiary,  Neurogen  Properties  LLC,  after
          elimination of intercompany transactions.

 (4)    RECLASSIFICATIONS

               Certain  reclassifications  have been made to the 2000  financial
          statements in order to conform to the 2001 presentation.


 (5)     NON-CASH COMPENSATION CHARGE

               On January 15,  2001,  certain  modifications  were made to stock
          options  previously  granted  to a retiring  executive  officer of the
          Company.  A  non-recurring,  non-cash charge to income of $803,000 for
          extending the life of the officer's  unvested  options was recorded in
          the first quarter of 2001.

               In 1998, a grant of 137,625  shares of restricted  stock was made
          to certain  employees.  The grant  stipulated  that if the stock price
          closed at or above  $45.00  per share  within  four years from date of
          grant the restriction  would be removed and the employee would be able
          to trade the stock,  but if the stock  price did not close at or above
          $45.00  within four years the shares would be  forfeited.  On February
          18, 2000,  Neurogen  stock  closed the trading day at $47.25,  thereby
          removing  the  restriction  and  vesting  the  stock  immediately.   A
          non-recurring, non-cash charge to income of $6,503,000 for all 137,625
          shares at $47.25 per share was recorded in the first quarter of 2000.

 (6)     BUILDING PURCHASE

               In 1995,  the Company  entered  into a ten year  operating  lease
          agreement to lease 24,000 square feet of space in a building  adjacent
          to the Company's existing research facility. The Company had an option
          to purchase the building  beginning in the sixth year of the lease. On
          January 11, 2001, the Company  exercised  this option,  purchasing the
          building for $2,437,500, and thereby terminating the lease.


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 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 and one
          technology  transfer  agreement  with Pfizer Inc.,  one  collaborative
          agreement with Schering-Plough and one license agreement with American
          Home Products.

         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,  technology transfer agreements,  joint
          ventures or financings, if any, the progress of the Company's research
          and  development  and  technology  transfer  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.

         THREE MONTHS ENDED MARCH 31, 2001 AND 2000

               The Company's  operating  revenues  decreased to $2.0 million for
          the three  months ended March 31, 2001 as compared to $2.6 million for
          the same period in 2000.  The  decrease in  research  and  development
          revenues is due  primarily to a scheduled  reduction in the  Company's
          staffing  on  collaborative  programs  with  Pfizer  (the GABA and NPY
          programs  descibed  below)  and the  related  reduction  in  discovery
          research funding.  License fees of $1.2 million were recognized in the
          first  quarter  of 2001  pursuant  to the Pfizer  Technology  Transfer
          Agreement (described below).  Operating revenues in future periods may
          fluctuate significantly due to many factors, including those described
          throughout this section.

               Research  and  development  expenses,  excluding  non-cash  stock
          compensation  charges,  increased  37 percent to $8.7  million for the
          three-month  period  ended March 31, 2001 as compared to $6.3  million
          for the  same  period  in  2000.  The  increase  is  primarily  due to
          increases in research and development  personnel,  further development
          of potential drug candidates, and the Company's continued expansion of
          its  AIDD  (Accelerated  Intelligent  Drug  Design)  Program  for  the
          discovery of new drug  candidates.  Research and development  expenses
          represented  83 percent  and 81 percent  of total  operating  expenses
          (excluding  non-cash  stock  compensation  charges)in  the three month
          periods ended March 31, 2001 and 2000, respectively.

               General and  administrative  expenses,  excluding  non-cash stock
          compensation  charges,  increased  20 percent to $1.8  million for the
          three-month  period  ended March 31, 2001 as compared to $1.5  million
          for the same period in 2000. This increase is attributed to additional
          administrative  and  technical  services and  personnel to support the
          protection of Neurogen's growing intellectual  property estate and the
          pursuit  of  potential  collaborative  relationships  to  support  and
          commercialize Neurogen's expanding research pipeline.

               On January 15,  2001,  certain  modifications  were made to stock
          options  previously  granted  to a retiring  executive  officer of the
          Company.  A  non-recurring,  non-cash charge to income of $803,000 for
          extending the life of the officer's  unvested  options was recorded in
          the first quarter of 2001.

               Other income,  consisting  primarily of interest income and gains
          and losses from invested cash and marketable securities,  increased 63
          percent  for the first  quarter of 2001 as compared to the same period
          in 2000 due primarily to a higher level of invested funds.

               The Company  recognized  a net loss of $7.9 million for the three
          months  ended  March  31,  2001 as  compared  with a net loss of $11.4
          million  for the same  period  in 2000.  The  decrease  in net loss is
          primarily due to a one-time non-cash $6.5 million charge recognized in
          the  first  quarter  of 2000 upon the  vesting  of  137,625  shares of
          restricted  stock granted to certain  employees in 1998,  offset by an
          increase in research and  development  and general and  administrative
          expenses  for the first  quarter of 2001 due to the factors  described
          above.

               In  December  1999,  the  staff of the  Securities  and  Exchange
          Commission  issued its Staff  Accounting  Bulletin  ("SAB")  No.  101,
          Revenue Recognition in Financial  Statements.  SAB No. 101, as amended
          by SAB No. 101A and 101B,  provides  guidance on the  measurement  and
          timing  of  revenue  recognition  in  financial  statements  of public
          companies.  SAB No. 101  permits  application  of its  guidance  to be
          treated as a change in  accounting  principle in  accordance  with APB
          Opinion No. 20, Accounting Changes.

               The  Company  adopted  the  guidance of SAB No. 101 in the fourth
          quarter of 2000,  retroactive  to January 1, 2000,  and,  in the first
          quarter of 2000, reflected a cumulative effect of change in accounting
          principle  on prior  years of  $500,000,  related to timing of revenue
          recognition on certain  non-refundable  up-front  payments  previously
          recognized on a technology transfer agreement. Consistent with SAB No.
          101, the Company also revised the  recognition of revenue in 2000 on a
          quarterly basis, resulting in a reduction in previously reported first
          quarter  revenue of $250,000.  This revenue was  recognized  under the
          Company's new revenue  recognition  policy in  subsequent  quarters in
          2000.

          LIQUIDITY AND CAPITAL RESOURCES

               At March 31, 2001 and December 31, 2000,  cash, cash  equivalents
          and  marketable  securities  were in the  aggregate  $98.2 million and
          $108.8  million,   respectively.   $41.5  million  of  the  marketable
          securities  at March 31, 2001 have  maturities  greater than one year,
          however the Company can and may liquidate such investments to meet its
          strategies or  investment  objectives.  While the Company's  aggregate
          level of cash, cash  equivalents and marketable  securities  decreased
          during  the  first  quarter  of 2001,  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 financing  activities,  amounts  received  pursuant to
          collaborative or technology transfer  arrangements and interest earned
          on invested funds. The Company's financing  activities include private
          placement offerings of the Company's common stock prior to its initial
          public offering, underwritten public offerings of the Company's common
          stock in 1989,  1991 and 1995, a private  placement of common stock in
          2000 and the private sale of common stock to Pfizer in connection with
          entering into the Pfizer Agreements and to American Home Products in a
          licensing  agreement.  Total  funding  received  from these  financing
          activities   was   approximately   $146.6   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.


PFIZER
- ------

               In the first quarter of 1992,  the Company  entered into the 1992
          Pfizer Agreement, pursuant to which Pfizer made a $13.8 million equity
          investment in the Company and agreed,  among other  things,  to fund a
          specified  level of resources for up to five years (later  extended as
          described below) for Neurogen's research programs for the discovery of
          GABA-based drugs for the treatment of anxiety and cognitive disorders.
          As of March 31, 2001,  Pfizer had provided  $41.5  million of research
          funding to the  Company  pursuant  to the 1992  Pfizer  Agreement,  as
          extended, and $0.5 million for the achievement of clinical development
          milestones.  Neurogen  is  eligible  to receive  additional  milestone
          payments of up to $12.0 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  GABA. Pfizer will pay Neurogen royalties based
          upon net sales levels, if any, for such products.

               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 and agreed,  among other things,  to fund a specified level of
          resources for up to four years (later extended as described below) for
          Neurogen's  research  program for the development of GABA-based  drugs
          for the treatment of sleep disorders. As of March 31, 2001, Pfizer had
          provided $13.6 million of research  funding to the Company pursuant to
          the 1994  Pfizer  Agreement,  as  extended,  and $0.3  million for the
          achievement of a clinical development  milestone.  Neurogen could also
          receive additional milestone payments of up to $3.0 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  GABA-based sleep disorder
          products for which it will pay Neurogen royalties based upon net sales
          levels, if any.

               In  December  1996,  December  1998 and again in  December  2000,
          Neurogen and Pfizer extended and combined  Neurogen's research efforts
          under  the  1992  and  1994  Agreements.  Pursuant  to  the  extension
          agreements,  Neurogen  has  received  $0.7  million in the first three
          months  of 2001  (which  amount  is  included  in the  above-described
          cumulative totals received for the 1992 and 1994 agreements) and under
          the extension expects to receive an additional $2.2 million during the
          remainder  of  2001  for  research  and  development  funding  of  the
          Company's   GABA-based   anxiolytic,   cognitive  enhancer  and  sleep
          disorders projects.

               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.  Pfizer also paid a $3.5 million  license fee.  Additionally,
          Pfizer  agreed,  among  other  things,  to fund a  specified  level of
          resources for up to five years for Neurogen's research program for the
          discovery  of  drugs  which  work  through  the  neuropeptide  Y (NPY)
          mechanism for the treatment of obesity and other  disorders.  In 1998,
          Pfizer  exercised its option under the 1995 Pfizer Agreement to extend
          the NPY research  program and also agreed to fund  increased  Neurogen
          staffing on the program and thereby pay Neurogen  $3.1 million to fund
          a fourth year of  research,  through  October  1999.  In 1999,  Pfizer
          elected to further extend the research  program  through October 2000.
          As of March 31, 2001,  Pfizer had provided  $13.7  million in research
          funding  pursuant to the 1995 Pfizer  Agreement.  Neurogen  could also
          receive  milestone  payments of up to  approximately  $28.0 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 clinical
          development  costs  and has  retained  the  right to  manufacture  any
          collaboration products in NAFTA countries.  Neurogen has also 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
          will 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 non-NAFTA countries.

               In October 2000, Neurogen and Pfizer concluded the research phase
          of their NPY-based collaboration according to schedule. Therefore, the
          annual  research  funding  formerly  received  from Pfizer came to its
          scheduled  conclusion on October 31, 2000. Should Pfizer in the future
          elect to continue the  development of any drug  candidates  subject to
          collaboration,  Neurogen could also receive development and regulatory
          milestone   payments   and   would  be   entitled   to  the   royalty,
          profit-sharing and manufacturing rights described above.

               In June 1999,  Neurogen  and  Pfizer  entered  into a  technology
          transfer agreement (the "Pfizer Technology Transfer Agreement"). Under
          the terms of this agreement, Pfizer has agreed to pay Neurogen up to a
          total of $27.0 million over a three-year  period for the licensing and
          transfer to Pfizer of certain of Neurogen's AIDD(TM)  technologies for
          the  discovery of new drugs,  along with the  installation  of an AIDD
          system. Additional payments are also possible upon Pfizer's successful
          utilization of this  technology.  Pfizer has received a  non-exclusive
          license to certain AIDD intellectual property, and the right to employ
          this technology in its own drug development  programs. As of March 31,
          2001,  Pfizer had provided  $20.8  million in license fees pursuant to
          the Pfizer AIDD agreement,  of which $12.4 million has been recognized
          as  revenue  to  date.  Remaining  revenues  associated  with  amounts
          received  under  the  Pfizer  Technology  Transfer  Agreement  will be
          recognized in future periods and may fluctuate significantly depending
          on the timing and  completion of the Company's  transfer of technology
          and systems pursuant to the agreement.

               The  Company  plans  to  use  its  cash,  cash   equivalents  and
          marketable  securities  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 fees it expects to receive under
          the Pfizer Technology Transfer  Agreement,  will be sufficient to fund
          its  current and planned  operations  through at least 2003.  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 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  assurances  can  be  given  that  adequate  levels  of
          additional funding can be obtained on favorable terms, if at all.

               As of December  31,  2000,  the Company had  approximately  $62.6
          million  and $3.7  million  of net  operating  loss and  research  and
          development credit carryforwards  respectively,  available for federal
          income tax purposes  which expire in the years 2004 through 2020.  The
          Company  also had  approximately  $51.1  million  and $2.2  million of
          Connecticut  state tax net operating loss  carryforwards  and research
          and development credits, respectively,  which expire in the years 2001
          through 2020.  Because of "change in ownership"  provisions of the Tax
          Reform Act of 1986,  the  Company's  utilization  of its net operating
          loss and research and development credit  carryforwards may be subject
          to an annual limitation in future periods.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

               Interest rate risk. The Company's  investment  portfolio includes
          investment  grade debt  instruments.  These  securities are subject to
          interest  rate  risk,  and could  decline in value if  interest  rates
          fluctuate.  Due to the short duration and conservative nature of these
          instruments,  the  Company  does not  believe  that it has a  material
          exposure to interest rate risk.  Additionally,  funds  available  from
          investment  activities are dependent upon available  investment rates.
          These  funds may be higher or lower than  anticipated  due to interest
          rate volatility.

               Capital  market  risk.  The  Company  currently  has  no  product
          revenues and is dependent on funds raised through other  sources.  One
          source of funding is through further equity offerings.  The ability of
          the Company to raise funds in this manner is  dependent  upon  capital
          market forces affecting the stock price of the Company.


                           Part II - Other Information


Item 1. Legal Proceedings

              Not applicable for the first quarter ended March 31, 2001

Item 2. Changes in Securities

              Not applicable for the first quarter ended March 31, 2001.

Item 3. Defaults upon Senior Securities

              Not applicable for the first quarter ended March 31, 2001.

Item 4. Submission of Matters to a Vote of Security Holders

              Not applicable for the first quarter ended March 31, 2001.

Item 5. Other information

              Not applicable for the first quarter March 31, 2001.

Item 6. Exhibits and Reports on Form 8-K

           (a) See Exhibit Index

           (b) None
























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 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 and 10-K/A for the year ended  December
31, 2000,  each of which could adversely  affect the Company's  business and the
accuracy of the forward-looking statements contained herein.




















                                    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
                                                    Senior Vice President
                                                    and Chief Business Officer

Date:  May 15, 2001



























                                  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   -  Form   of   Proprietary   Information    and    Inventions   Agreement
          (incorporated by reference to Exhibit 10.31 to Registration  Statement
          No. 33-29709 on Form S-1).


10.10   - 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).

10.11   - 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).

10.12   - 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).

10.13   - 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).

10.14   - 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).

10.15   - 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).

10.16   - 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).

10.17   - 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).



10.18   - 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).

10.19   - 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).

10.20   - 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).

10.21   - Technology  agreement  between the Company and Pfizer Inc, dated as of
          June  15,  1999  (confidential  treatment  requested)(Incorporated  by
          reference  to  Exhibit  10.27  to  the  Company's  Form  10-Q  for the
          quarterly  period ended June 30, 1999).

10.22   - Employment  Contract  between the Company and Alan J. Hutchison, dated
          as of December 1, 1997  (incorporated  by  reference  to Exhibit 10.28
          to the  Company's Form 10-K  for the  fiscal year  ended  December 31,
          1999).


10.23   - Employment  Contract  between the Company  and Stephen R. Davis, dated
          as of December 1, 1997 (incorporated  by  reference  to Exhibit  10.29
          to the Company's Form  10-K for the  fiscal  year  ended  December 31,
          1999).

10.24   - Employment  Contract  between  the Company  and Kenneth R. Shaw, dated
          as of December 1, 1999  (incorporated  by  reference  to Exhibit 10.30
          to the  Company's Form  10-K for the  fiscal  year ended  December 31,
          1999).

10.25   - Neurogen Corporation 2000 Non-Employee  Directors Stock Option Program
          (incorporated  by  reference to Exhibit 10.31  to  the Company's  Form
          10-Q for the quarterly period ended June 30, 2000).

10.26   - Form  of the Non-Qualified Stock  Option  Agreement  currently used in
          connection  with  the  grant of options under the Neurogen Corporation
          2000  Non-Employee  Directors  Stock  Option  Program (incorporated by
          reference  to  Exhibit  10.32  to  the  Company's  Form 10-Q  for  the
          quarterly period ended June 30,2000).

10.27   - Registration Rights  Agreement  dated  as of June 26, 2000 between the
          Company and the Purchasers listed on Exhibit  A thereto  (incorporated
          by  reference  to  Exhibit  10.33 to  the Company's  Form 10-Q for the
          quarterly  period ended June 30, 2000).

10.28   - Severance Agreement between the Company and John F. Tallman,  dated as
          of January 15, 2001.



                                                                   EXHIBIT 10.28

                                  SEVERANCE AGREEMENT

     This agreement (the  "Agreement"),  effective as of January 15, 2001,  (the
"Effective  Date")  is made by and  between  Neurogen  Corporation,  a  Delaware
corporation  (the  "Company"),   and  John  F.  Tallman,  Ph.D.,  an  individual
("Employee").

     Whereas,  the  Employee  and the  Company  have  mutually  agreed  that the
Employee's status as an employee of the Company will terminate as of January 15,
2001 (the "Termination Date").

     Now, the Company and the Employee agree as follows:

     1. Termination of Employment Agreement. The Employment Agreement,  dated as
of December 1, 1993, as previously amended, (the "Employment Agreement") between
the Company and the Employee  shall be terminated as of the Effective  Date and,
notwithstanding  anything  in the  Employment  Agreement  to the  contrary,  the
Employee  shall be entitled  only to the rights and  benefits  specified in this
Agreement and any rights,  benefits or  obligations  specified in the Employment
Agreement shall be void.

     2. Severance Benefits. Employee shall be entitled to the following benefits
as of the Effective Date:

     (i)  Employee  shall  receive by January 31, 2001 a lump sum payment in the
gross amount of $182,041.70,  from which customary  deductions shall be made for
the withholding of federal and state taxes, 401K contributions, etc.; and

     (ii) From the  Effective  Date until  September  30,  2001,  so long as the
Employee  remains  eligible for coverage  under the  Company's  insurance  plans
(pursuant to COBRA or otherwise), the Company will assume responsibility for the
cost of continued medical, dental,  disability,  and life (up to a maximum death
benefit of $500,000.00)  insurance  coverage under such plans.  Employee and the
Company  acknowledge  that in order to continue  eligibility  for some or all of
such plans the  Employee  may be  required to elect to  continue  such  coverage
pursuant to COBRA; and

     (iii) The remaining balance of $42, 857.00,  of the Employee's  $150,000.00
seven-year  forgivable  loan dated August 1, 1995,  shall be forgiven in full on
the Termination Date; and

     (iv)  Notwithstanding  the fact  that the  Employee  shall no  longer be an
employee of the  Company,  all  unvested  stock  options  currently  held by the
Employee, as specified in the attached schedule A, shall not be cancelled on the
Termination Date, but shall instead continue to become  exercisable on the dates
specified  in  schedule A. In all other  respects,  each of such  options  shall
continue  to be  subject  to the  terms  (including  without  limitation,  terms
relating to the timing of expiration of options held by former employees) of the
plan under which such option was issued,  i.e.  the  Neurogen  Corporation  1993
Omnibus Incentive Plan or the 1988 Neurogen Corporation Stock Option Plan; and

     (v) Employee shall be entitled to keep the Company computer he is currently
using .

     3. Release.

     (a)  The  Employee  and his  heirs,  assigns  and  agents  irrevocably  and
unconditionally  releases any and all claims described in subsection (b), below,
that the  Employee  may  have  against  the  Company  and all of its  employees,
officers,  directors,  insurers,  employee  benefit  programs (and the trustees,
administrators and fiduciaries of such).

     (b) Except as provided in subsection (d), the claims  released  include all
claims,  promises,  debts,  causes of action  or  similar  rights of any type or
nature the  Employee  has or had which in any way  relate to (1) the  Employee's
employment  with the Company,  or the  termination of that  employment,  such as
claims for  compensation,  bonuses,  commissions,  lost wages or unused  accrued
vacation or sick pay, (2) the design or  administration  of any employee benefit
program or the Employee's  entitlement  to benefits under any such program,  (3)
any rights the Employee has to severance or similar  benefits under any program,
policy or procedure of the Company,  including the Employment Agreement, (4) any
rights  the  Employee  may  have to the  continued  receipt  of  health  or life
insurance-type  benefits, (5) any claims to attorneys fees or other indemnities,
and (6) any other  claims or demands the  Employee  may on any basis  have.  The
Employee  acknowledges  that his release  covers  both claims that the  Employee
knows  about and those the  Employee  does not know  about and  understands  the
significance of releasing claims he may have. The claims released,  for example,
may have arisen under any of the following statutes or common law doctrines: (i)
anti-discrimination  statutes,  such as the Age Discrimination in Employment Act
and Executive  Order 11141,  which  prohibit age  discrimination  in employment;
Title VII of the Civil  Rights  Act of 1964,  § 1981 of the Civil  Rights Act of
1866 and Executive  Order 11246,  which prohibit  discrimination  based on race,
color,  national  origin,  religion or sex; the Equal Pay Act,  which  prohibits
paying men and women unequal pay for equal work; the American With  Disabilities
Act  and § § 503 and  504 of the  Rehabilitation  Act of  1973,  which  prohibit
discrimination  against the disabled; and any other federal, state or local laws
or regulations  prohibiting employment  discrimination and (ii) other employment
laws, such as any federal, state or local law (including public policy or common
law) or regulation  providing  workers  compensation  benefits,  restricting  an
employer's right to terminate employees or otherwise regulating employment;  any
federal, state or local law enforcing express or implied employment contracts or
requiring an employer to deal with  employees  fairly or in good faith;  and any
other  federal,  state or local laws  providing  recourse  for alleged  wrongful
discharge  (including any whistle blower  claim),  physical or personal  injury,
emotional distress and similar or related claims.

     (c)  Notwithstanding  the  above,  this  Agreement  does  not  release  the
Employee's right to enforce this Agreement.


     4. General Provisions.

     (a) This is the entire  Agreement  between  the  Employee  and the  Company
relating  to the  subject  matter of the  Agreement;  it may not be  modified or
canceled  in any manner  except by a writing  signed by both the Company and the
Employee.

     (b) This  Agreement  shall be  construed  as a whole  according to its fair
meaning, and not strictly for or against any of the parties.  Paragraph headings
used in this  Agreement  are intended  solely for  convenience  of reference and
shall not be used in the interpretation of any of this Agreement.

     (c)  This  Agreement  shall  be  governed  by  the  laws  of the  State  of
Connecticut, excluding any choice of law statutes.

     (d) The Company and the  Employee  both agree that,  without the receipt of
further consideration,  they will sign and deliver any documents and do anything
else that is necessary in the future to make the  provisions  of this  Agreement
effective.

     (e) Any  dispute or claim  about the  validity,  interpretation,  effect or
alleged  violations of this  Agreement  must be submitted to  arbitration in New
Haven,  Connecticut  before an  experienced  employment  arbitrator  licensed to
practice law in  Connecticut  and  selected in  accordance  with the  Commercial
Arbitration  Rules of the American  Arbitration  Association.  Arbitration shall
take place in accordance  with the Employment  Dispute  Resolution  rules of the
American Arbitration  Association.  The arbitrator may not modify or change this
Agreement  in any  way.  Each  party  shall  pay the  fees of  their  respective
attorneys, the expenses of their witnesses and any other expenses connected with
the arbitration,  but all other costs of the arbitration,  including the fees of
the   arbitrator   cost  of  any  record  or  transcript  of  the   arbitration,
administrative  fees and other fees and costs  shall be paid in equal  shares by
the Employee and the Company.  Arbitration in this manner shall be the exclusive
remedy for any dispute or claim under this Agreement.

     (f)  Notwithstanding  anything  in  this  Agreement  to the  contrary,  any
obligations of the Employee  under the  Proprietary  Information  and Inventions
Agreement between the Company and the Employee that, pursuant to such agreement,
survive his employment with the Company shall not be modified by this Agreement.

     In witness whereof, the parties have duly executed this agreement as of the
date specified above.



                                                            NEUROGEN CORPORATION




                                            __/s/ Steve Davis___________________
                                            By:      Steve Davis
                                            SVP and Chief Business Officer




                                            __/s/ John F. Tallman_______________
                                            John F. Tallman, Ph.D.







                                                                      Schedule A



                                     John F. Tallman
                                 Unvested Stock Options
                                 As of January 15, 2001



                                                              Shares
                                            Exercise          Currently         Scheduled
Grant Date        Grant Type                Price             Unvested          Vesting  

12/3/96           Incentive                 $18.38            5,442             12/3/01

12/3/96           Non-Qualified             $18.38            6,558             12/3/01

12/31/97          Incentive                 $13.50            7,407             12/31/02

12/31/97          Non-qualified             $13.50            12,000            12/31/01

12/31/97          Non-qualified             $13.50            4,593             12/31/02

12/31/98          Non-qualified             $17.50            5,625             12/31/01

12/31/98          Non-qualified             $17.50            5,625             12/31/02