10KA

10-K/A 1 f10ka2002.htm 10KA

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 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)

Securities registered pursuant to Section 12(b) of
the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.025 per share (the "Common Stock")
(Title of Class)

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
filing requirements for the past 90 days.

YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The approximate aggregate market value of the Common Stock held by
non-affiliates of the registrant was $70,353,696 as of March 1, 2002, based upon
the closing price of the Common Stock as reported on The Nasdaq National Market
on such date. For purposes of determining this number, shares of Common Stock
held by officers, directors and stockholders whose ownership exceeds five
percent were excluded. This number is provided only for purposes of this report
and does not represent an admission by either the registrant or any such person
as to the status of such person.

As of March 1, 2002, the registrant had 17,773,476 shares of Common Stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Neurogen is filing this Form 10K/A to amend Part III to include the
information required by Items 401 through 405 of Regulation S-K. In accordance
with Rule 12b-15 of the Securities Exchange Act of 1934, Neurogen is including
the complete text of Items 10 through 13 in this 10K/A.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Name of Nominees Age Principal Occupation Director Since

Felix J. Baker, Ph.D. 33 Portfolio Manager, Tisch Family Interests; May 1999
Managing member of Baker Biotech Capital(GP), LLC;
Baker Biotech Capital II(GP), LLC; Baker Bros.
Capital(GP), LLC; Baker Tisch Capital(GP), LLC;
Baker Bros. Advisors, LLC; Baker Tisch Advisors,
LLC

Julian C. Baker 35 Portfolio Manager, Tisch Family Interests; May 1999
Managing member of Baker Biotech Capital(GP), LLC;
Baker Biotech Capital II(GP), LLC; Baker Bros.
Capital(GP), LLC; Baker Tisch Capital(GP), LLC;
Baker Bros. Advisors, LLC; Baker Tisch Advisors,
LLC

Barry M. Bloom, Ph.D. 73 Former Executive Vice President, Pfizer Inc December 1993

Robert N. Butler, M.D. 74 CEO and President, International Longevity July 1989
Center; Professor of Geriatrics, Mount Sinai
School of Medicine

Frank C. Carlucci 71 Chairman of the Board, Neurogen Corporation; February 1989
Chairman, The Carlyle Group

Jeffrey J. Collinson 60 President, Collinson Howe Venture Partners, Inc. May 1989

Stephen R. Davis 41 Executive Vice President and Chief Business September 2001
Officer, Neurogen Corporation

William H. Koster, Ph.D. 57 President and Chief Executive Officer, September 2001
Neurogen Corporation

Mark Novitch, M.D. 69 Former Vice Chairman of the Board, The Upjohn December 1993
Company; Former Professor of Health Care
Sciences, George Washington University
Medical Center

Robert H. Roth, Ph.D. 62 Professor of Psychiatry and Pharmacology, Yale December 1988
University

Craig Saxton, M.D. 59 Former Executive Vice President, Pfizer January 2002
Global Research and Development and Vice
President, Pfizer Inc.

John Simon 59 Managing Director, Allen & Company Incorporated May 1989

Suzanne H. Woolsey, Ph.D. 60 Chief Communications Officer, National Academy of January 1998
Sciences/National Research Council

There is no family relationship between any director, executive officer or
person nominated or chosen by the Company to become a director or executive
officer of the Company other than Julian and Felix Baker, who are brothers.

Felix J. Baker has served as a director of Neurogen since May 1999.
Together with his brother Julian C. Baker, he has managed healthcare investments
for the Tisch Family since 1994. The Baker brothers also manage other investment
funds focused on the life sciences industry. Dr. Baker is also a director of
Cellegy Pharmaceuticals and various private companies. He holds a B.S. with
honors and a Ph.D. in Immunology from Stanford University.

Julian C. Baker has served as a director of Neurogen since May 1999. Mr.
Baker and his brother Felix Baker co-founded a biotechnology investing
partnership with Tisch Family, which the Bakers have managed since 1994. Over
the past few years, the Bakers have also partnered with major university and
other endowments to create multiple additional funds. Collectively, these funds
are known as Baker/Tisch Investments, which has grown into one of the largest
private sources of capital focused on publicly traded life sciences companies.
Julian Baker is currently a managing partner of Baker/Tisch Investments. Mr.
Baker was employed from 1988 to 1993 by the private equity investment arms of
The First Boston Corporation and CSFB, and was a founding employee of The
Clipper Group, which managed $1.6 billion for First Boston and Credit Suisse.
Mr. Baker holds an A.B. magna cum laude from Harvard University.

Barry M. Bloom, Ph.D., has served as a director of Neurogen since December
1993. Dr. Bloom retired in 1993 from Pfizer where he had been Executive Vice
President, Research and Development and a member of the board of directors. Dr.
Bloom is a director of Vertex Pharmaceuticals, Inc., Incyte Genomics, Inc., and
Cubist Pharmaceuticals, Inc.

Robert N. Butler, M.D., has served as a director of Neurogen since July
1989. Dr. Butler has served as the Brookdale Professor and Chairman of the
Department of Geriatrics and Adult Development at Mount Sinai Medical Center
since 1982. From 1976 until 1982, Dr. Butler was the founding director of the
National Institute of Aging of the National Institutes of Health. Dr. Butler won
the 1976 Pulitzer Prize for his book, "Why Survive? Being Old in America". He
has served as the editor-in-chief of Geriatrics, a journal for primary care
physicians, and serves on the editorial board of several other professional
publications. Dr. Butler is presently Chief Executive Officer and President of
the International Longevity Center-USA. He is also a member of the Institute of
Medicine of the National Academy of Sciences and a founding Fellow of the
American Geriatrics Society. He has served as a consultant to the United States
Special Committee on Aging, the National Institute of Mental Health, the
Commonwealth Fund, the Brookdale Foundation and numerous other foundations and
corporations.

Frank C. Carlucci has served as a director and Chairman of the Board of
Neurogen since February 1989. Mr. Carlucci is principally employed as Chairman
of The Carlyle Group, a private merchant bank. Mr. Carlucci served as Secretary
of Defense of the United States from November 1987 through January 1989. Prior
to his appointment as Secretary of Defense, Mr. Carlucci was assistant to the
President of the United States for National Security Affairs. Mr. Carlucci had
been Chairman and Chief Executive Officer of Sears World Trade Inc. from 1984 to
1986, after having served as President and Chief Operating Officer since 1983.
Mr. Carlucci is also a director of Ashland, Inc., Kaman Corporation, Sun
Resorts, Pharmacia, Texas Biotech Inc. and United Defense L.P.

Jeffrey J. Collinson has served as a director of Neurogen since May 1989.
Mr. Collinson has served as President of Collinson Howe Venture Partners Inc., a
venture capital firm, since 1990 and was President of Schroder Venture Managers,
Inc., a venture capital firm, from 1983 to 1990. Mr. Collinson is also President
of Collinson Howe & Lennox, LLC and director of American Renal Associates,
LLC, Incyte Genomics Inc., Molecular Staging, Inc. and SemperCare, Inc.

Stephen R. Davis has been Executive Vice President of Neurogen since
September 2001 and Chief Business Officer since January 2000. Mr. Davis joined
Neurogen in 1994 as Vice President of Finance and Chief Financial Officer. From
1990 through June 1994, Mr. Davis was employed by Milbank, Tweed, Hadley &
McCloy as a corporate and securities attorney. Previously, Mr. Davis practiced
as a Certified Public Accountant with Arthur Andersen & Co. Mr. Davis received
his B.S. in Accounting from Southern Nazarene University and a J.D. degree from
Vanderbilt University.

Willam H. Koster, Ph.D., joined Neurogen as President and CEO in September
2001. Prior to Neurogen, Dr. Koster worked for approximately 30 years in drug
discovery and development with Bristol-Myers Squibb Company (BMS) and E.R.
Squibb & Sons, Inc., which merged with Bristol-Myers in 1989. In his most recent
position, Dr. Koster was Bristol-Myers' Senior Vice President for Science and
Technology Strategy and Acquisition, heading up the company's external science
and technology strategy, scientific intelligence, intellectual property and
science policy functions. In addition, he was responsible for leading the R&D
acquisition and integration team involved in the agreement to purchase and merge
the RD functions of DuPont Pharmaceutical Company into BMS. He was based at
Bristol-Myers' headquarters in Princeton, N.J. Dr. Koster serves as a member of
the Keystone Symposia Scientific Advisory Board, The National Council for
Harvard Medicine, and the Board of the Robert Wood Johnson Health Care
Corporation. Dr. Koster holds an undergraduate degree in chemistry from Colby
College and a Ph.D. in organic chemistry from Tufts University.

Mark Novitch, M.D., has served as a director of Neurogen since December
1993. Dr. Novitch was Professor of Health Care Sciences at The George Washington
University from 1994 to 1997 and Adjunct Professor from 1997 to 2001. He worked
in senior executive positions at The Upjohn Company from 1985 until his
retirement as Vice Chairman of the Board in 1993. Dr. Novitch served at the
United States Food and Drug Administration as Deputy Commissioner and as Acting
Commissioner from 1983-1984. Dr. Novitch is a director of Alteon, Inc.
(Chairman), Calypte Biomedical, Inc., Guidant Corporation and KOS
Pharmaceuticals, Inc.

Robert H. Roth, Ph.D., has served as a director of Neurogen since December
1988. Dr. Roth has been a Professor of Psychiatry and Pharmacology at Yale
University since 1974. Dr. Roth has a Ph.D. in Pharmacology from Yale University
and has published over 450 papers in the field of Neuropharmacology.

Craig Saxton, M.D. has served as a director of Neurogen since January 2002.
From 1993 until his retirement in 2001, Dr. Saxton was Vice President of Pfizer
Inc and Executive Vice President, Pfizer Global Research and Development at
Pfizer's Research and Development headquarters in Groton, CT. He held a variety
of executive and research posts at Pfizer over a 25-year span. Dr. Saxton earned
his B.S. in Anatomy in 1962 and his M.D. in 1965 from Leeds University in the
U.K. After internship and residency in Medicine, he was a Research Fellow in
Cardiovascular Research at the University of Leeds, and subsequently undertook
research in Applied Physiology at the Royal Air Force Institute of Aviation
Medicine and Physiology in Farnborough, U.K. Dr. Saxton is on the Board of
Directors of the African Medical and Research Foundation in New York, and a
member of the American Academy of Pharmaceutical Physicians and the Connecticut
Academy of Science and Engineering. Dr. Saxton was appointed to Tularik's Board
of Directors in September 2001.

John Simon has served as a director of Neurogen since May 1989. Mr. Simon
is a Managing Director of the investment banking firm of Allen & Company
Incorporated. Mr. Simon is a director of Advanced Technical Products, Inc. and
CoStar Group, Inc.

Suzanne H. Woolsey, Ph.D., has served as a director of Neurogen since
January 1998. From 1993 to 2000, Dr. Woolsey was Chief Operating Officer of the
National Academy of Sciences/National Research Council ("NAS/NRC"), an
independent, federally chartered policy institution. Since May 2000 Dr. Woolsey
has served as Chief Communications Officer at the NAS/NRC. She was a founding
partner of the Upstreet Partners, LLC (2000-2001). Prior to serving as Chief
Operating Officer, Dr. Woolsey served as the Executive Director of the
Commission on Behavioral and Social Sciences and Education at the National
Academy of Sciences/National Research Council. Dr. Woolsey also serves on the
Board of Trustees for open-end mutual funds distributed by Van Kampen Funds,
Inc. From 1980 to 1989, Dr. Woolsey served as a Consulting Partner at Coopers
and Lybrand, an accounting firm, where she developed and directed the firm's
consulting practice with healthcare institutions, research organizations, major
research universities and corporate general counsels. Dr. Woolsey holds a Ph.D.
in clinical and social psychology from Harvard University.

EXECUTIVE OFFICERS

In addition to Dr. Koster and Mr. Davis , the other executive officers of
the Company who are elected by and serve at the discretion of the Board of
Directors, are as follows:

Name Age Position Officer Since

Alan J. Hutchison, Ph.D. ...................48 Executive Vice President-Drug Discovery June 1994

Kenneth R. Shaw, Ph.D. .....................45 Senior Vice President - Chemistry April 1999
and Pre-Clinical Development

James V. Cassella, Ph.D. ...................47 Vice President - Clinical Research April 1999
and Development

Alan J. Hutchison, Ph.D., has been Executive Vice President-Drug Discovery
since April 2002. Dr. Hutchison joined Neurogen in 1989 as Director of Chemistry
and became Vice President of the Company in 1992 and a Senior Vice President in
1997. From 1981 through 1989, Dr. Hutchison was employed by Ciba Giegy, most
recently as a Distinguished Research Fellow. Dr. Hutchison received his B.S. in
Chemistry from Stevens Institute of Technology and received his Ph.D. from
Harvard University.

Kenneth R. Shaw joined Neurogen in 1989 and has been of Senior Vice
President of Chemistry and Pre-Clinical Development since 1999. Dr. Shaw began
his industrial career in 1983 at Ciba-Geigy as a Senior Scientist and also spent
2 years as Scientific Director at Franklin Diagnostics. Dr. Shaw received a B.S.
in Chemistry from the University of Rochester in 1979, and a Ph.D. in Organic
Chemistry from Columbia University in 1983.

James V. Cassella, Ph.D. joined Neurogen in 1989 and has been Vice
President of Clinical Research and Development since 1995. Prior to joining
Neurogen, Dr. Cassella was an Assistant Professor of Neuroscience at Oberlin
College. Dr. Cassella received his Ph.D. in Psychology from Dartmouth College in
1983 and subsequently held a Postdoctoral Fellowship in the Department of
Psychiatry at Yale University's School of Medicine.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that have been
received by the Company, the Company believes that all filing requirements for
2001 applicable to its officers, directors and beneficial owners of greater than
ten percent of its Common Stock have been complied with, except for the
following: William H. Koster, Ph.D., filed his Form 3-Initial Statement of
Beneficial Ownership of Securities late due to the tragic events of September
11, 2001.

ITEM 11. EXECUTIVE COMPENSATION

Director Compensation

Mr. Carlucci receives a fee of $12,500 per fiscal quarter for his services
as Chairman of the Board. Dr. Roth receives a fee of $1,500 per month for his
services as a director. Dr. Bloom and Dr. Saxton receive a fee of $5,000 per
fiscal quarter for consulting services provided to the Company. Directors of the
Company receive out-of-pocket travel expenses in connection with their
attendance at Board meetings and other activities on behalf of the Company.

Under the Neurogen Corporation 2000 Non-Employee Directors Stock Option
Program (the "2000 Program"), effective April 2000, each new non-employee
director will receive an option to acquire 5,000 shares of Common Stock (an
"Initial Grant"), subject to certain adjustments, at the fair market value on
the date the director is first elected or appointed to the Board of Directors.
Also under the 2000 Program, each current non-employee director receives
annually an option to acquire 5,000 shares of Common Stock, subject to certain
adjustments, at the fair market value on the anniversary of such director's
election, reelection, appointment or reappointment to the Board.

Officer Compensation

For the three years ended December 31, 2001, 2000, and 1999, the Company
paid the amounts shown in the following table with respect to each of the
named officers of the Company.

Summary Compensation Table

Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ------------------------- ---------

Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Year Salary Bonus Compensation Awards(a) Options(b) Payouts Compensation(c)
Position ($) ($) ($) ($) (#) ($) ($)
----------------------- ---- -------- -------- ----------- ------------ ---------- --------- ---------
William H. Koster(q) 2001 124,359 - - 1,939,000 400,000 - 602
President and 2000 - - - - - - -
Chief Executive Officer 1999 - - - - - - -

Harry H. Penner, Jr.(q) 2001 285,107 - 57,145(d) - - - 655,556
Former President, Chief Executive 2000 417,476 - 36,729(e) - - 1,417,500(p) 15,128
Officer and Vice Chairman of the Board 1999 397,083 - 37,748(f) - - - 13,735

Alan J. Hutchison 2001 274,152 60,849 22,415(g) - 35,000 - 10,830
Executive Vice President-Drug 2000 258,538 67,575 24,868(h) - 40,000 885,938(p) 10,830
Discovery 1999 246,417 32,025 26,063(i) - 22,500 - 10,543

Stephen R. Davis 2001 257,544 58,957 14,321(j) 969,500 - - 10,695
Executive Vice President and 2000 242,810 63,480 16,481(k) - 35,000 744,188(p) 10,646
Chief Business Officer 1999 217,917 24,188 16,327(l) - 17,000 - 10,100

Kenneth R. Shaw 2001 230,331 51,123 14,321(j) - 25,000 - 630
Senior Vice President - Chemistry 2000 216,275 56,775 16,481(k) - 35,000 708,750(p) 420
and Pre-Clinical Development 1999 205,000 23,063 16,327(l) - 16,000 - 567

James V. Cassella 2001 209,000 37,620 14,321(j) - 25,000 - 10,830
Vice President - Clinical Research 2000 190.000 42,750 16,481(k) - 30,000 442,969(p) 10,830
and Development 1999 170,000 19,125 16,327(l) - 13,500 - 10,524

James E. Krause 2001 216,050 48,179 5,752(m) - 25,000 - 10,830
Senior Vice President - Biology 2000 169,775 39,825 6,471(n) - 30,000 354,375(p) 10,830
1999 156,000 14,675 6,607(o) - 10,000 - 10,524
------------------

(a) An aggregate total of 150,000 shares of restricted stock were granted to
certain executive officers in 2001, of which all remain held by the
respective grantees at the end of 2001. The total value of these shares at
December 31, 2001 was $2,622,000. Of the total shares awarded, 10,000
vested at the date of grant in September 2001, 70,000 vest after four years
from the date of grant and the remaining 70,000 vest after five years.
Neurogen does not plan to pay dividends on this restricted stock.
(b) References to SARs in the Summary Compensation Table and all other tables
in this Proxy Statement have been omitted, since the Company has never
issued SARs, although under the Neurogen Corporation 1993 Omnibus Incentive
Plan it has the ability to do so.
(c) Represents premiums paid for group term life insurance for each of the
executive officers, except that for Messrs. Penner, Hutchison, Davis,
Cassella and Krause, the amounts also include matching contributions
received under the Company's 401(k) plan of $10,200, $10,200 and $9,600 for
each such officer in 2001, 2000 and 1999, respectively. For 2001, includes
$641,660 of compensation related to Mr. Penner's resignation and
corresponding termination in September 2001, pursuant to his severance
agreement and termination provisions in his employment agreement.
(d) Represents forgiveness of loan.
(e) Includes $28,571 of forgiveness of loan, forgiveness of interest of $4,442
on loan and income tax reimbursements of $3,716.
(f) Includes $28,571 of forgiveness of loan, forgiveness of interest of $4,997
on loan and income tax reimbursements of $4,180.
(g) Includes $21,429 of forgiveness of loan, forgiveness of interest of $547
and income tax reimbursements of $439.
(h) Includes $21,429 of forgiveness of loan, forgiveness of interest of $1,872
and income tax reimbursements of $1,567.
(i) Includes $21,429 of forgiveness of loan, forgiveness of interest of $2,523
on loan and income tax reimbursements of $2,111.
(j) Includes $10,714 of forgiveness of loan, forgiveness of interest of $2,000
and income tax reimbursements of $1,607.
(k) Includes $10,714 of forgiveness of loan, forgiveness of interest of $3,140
and income tax reimbursements of $2,627.
(l) Includes $10,714 of forgiveness of loan, forgiveness of interest of $3,056
on loan and income tax reimbursements of $2,257.
(m) Includes $5,000 of forgiveness of loan, forgiveness of interest of $417 and
income tax reimbursement of $335.
(n) Includes $5,000 of forgiveness of loan, forgiveness of interest of $801 and
income tax reimbursement of $670.
(o) Includes $5,000 of forgiveness of loan, forgiveness of interest of $891 and
income tax reimbursement of $716.
(p) Reflects the value of performance based restricted stock based upon the
February 18, 2000 closing price of $47.25 per share. On this date Neurogen
Common Stock met pre-specified performance criteria which triggered the
removal of the restrictions on trading.
(q) In August 2000, the Company announced that Mr. Penner planned to step down
from his position as President and Chief Executive Officer and would remain
at Neurogen until a new Chief Executive Officer was in place. Effective
September 2001, upon the hiring of Dr. Koster, Mr. Penner retired.

For the year ended December 31, 2001, the following tables summarize
incentive compensation paid to the named officers.

Option Grants in Last Fiscal Year

Individual Grants (a)
------------------------------------------------------------------------------------------
Number of
Securities % of Total Potential Realizable Value
Underlying Options Granted Exercise or at Assumed Annual Rates of
Options to Employees in Base Price Expiration Stock Price Appreciation
Name Granted Fiscal Year ($/Share) Date for Option Term
----------------- ----------- --------------- ----------- ------------ --------------------------
5%($) 10%($)
----- ------

William H. Koster 400,000 37.98% 19.39 9/4/11 4,877,707 12,361,067
Harry H. Penner, Jr. - - - - - -
Alan J. Hutchison 3,000 0.28% 17.48 12/31/07 17,839 40,471
3,000 0.28% 17.48 12/31/08 21,354 49,763
3,000 0.28% 17.48 12/31/09 25,044 59,985
3,000 0.28% 17.48 12/31/10 28,919 71,229
3,000 0.28% 17.48 12/31/11 32,987 83,597
5,000 0.47% 19.39 12/31/07 32,972 74,803
5,000 0.47% 19.39 12/31/08 39,468 91,978
5,000 0.47% 19.39 12/31/09 46,289 110,871
5,000 0.47% 19.39 12/31/10 53,451 131,653
Stephen R. Davis - - - - - -
Kenneth R. Shaw 1,000 0.09% 17.48 12/31/07 5,946 13,490
1,000 0.09% 17.48 12/31/08 7,118 16,588
1,000 0.09% 17.48 12/31/09 8,348 19,995
1,000 0.09% 17.48 12/31/10 9,640 23,743
1,000 0.09% 17.48 12/31/11 10,996 27,866
5,000 0.47% 19.39 12/31/07 32,972 74,803
5,000 0.47% 19.39 12/31/08 39,468 91,978
5,000 0.47% 19.39 12/31/09 46,289 110,871
5,000 0.47% 19.39 12/31/10 53,451 131,653
James V. Cassella 1,000 0.09% 17.48 12/31/07 5,946 13,490
1,000 0.09% 17.48 12/31/08 7,118 16,588
1,000 0.09% 17.48 12/31/09 8,348 19,995
1,000 0.09% 17.48 12/31/10 9,640 23,743
1,000 0.09% 17.48 12/31/11 10,996 27,866
5,000 0.47% 19.39 12/31/07 32,972 74,803
5,000 0.47% 19.39 12/31/08 39,468 91,978
5,000 0.47% 19.39 12/31/09 46,289 110,871
5,000 0.47% 19.39 12/31/10 53,451 131,653
James E. Krause 1,000 0.09% 17.48 12/31/07 5,946 13,490
1,000 0.09% 17.48 12/31/08 7,118 16,588
1,000 0.09% 17.48 12/31/09 8,348 19,995
1,000 0.09% 17.48 12/31/10 9,640 23,743
1,000 0.09% 17.48 12/31/11 10,996 27,866
5,000 0.47% 19.39 12/31/07 32,972 74,803
5,000 0.47% 19.39 12/31/08 39,468 91,978
5,000 0.47% 19.39 12/31/09 46,289 110,871
5,000 0.47% 19.39 12/31/10 53,451 131,653
--------------------------

(a) Options vest ratably each year on the anniversary of the date of grant,
over a four to five year period depending on the individual award agreements.
The options granted to Doctors Hutchison, Shaw, Cassella and Krause expire five
years after each vesting date, where as the options granted to Dr. Koster expire
ten years from the date of grant. All the above options are subject to earlier
expiration in connection with termination of employment.

Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values

Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options at Fiscal
Acquired on Value Fiscal Year-End Year-End($)(a)
Name Exercise(#) Realized($)(a) Exercisable/Unexercisable Exercisable/Unexercisable
--------------------- ----------- -------------- ------------------------- -------------------------

William H. Koster - - -/400,000 -/-
Harry H. Penner, Jr. 100,000 1,325,000 422,000/ - 1,583,922/-
Alan J. Hutchison - - 200,312/90,938 554,902/50,918
Stephen R. Davis - - 119,312/43,688 233,086/28,289
Kenneth R. Shaw - - 104,250/68,000 87,563/27,797
James V. Cassella 6,000 86,700 131,531/61,594 459,801/26,566
James E. Krause - - 51,127/64,375 20,867/12,891
------------------

(a) Difference between option price and fair market value of the shares at
year-end.

Terms and Conditions of Certain Employment and Severance Agreements

The compensation package for William H. Koster, as President and Chief
Executive Officer, includes a salary paid pursuant to a three year renewable
employment agreement between Dr. Koster and the Company effective September 4,
2001. Under such agreement, Dr. Koster is paid a base salary of $400,000 per
annum, which may be increased periodically at the discretion of the Board of
Directors. The employment agreement restricts Dr. Koster from competing with the
Company for the term of the agreement and for a two year period after
termination of his employment. The employment agreement also provides for
certain additional payments to be made to Dr. Koster upon his termination of
employment for certain reasons.

The compensation package during 1999 to 2001 for Harry H. Penner, Jr., as
President and Chief Executive Officer, included a salary paid pursuant to an
employment agreement between Mr. Penner and the Company which was effective from
October 1993 to September 2001. In August 2000, the Company announced that Mr.
Penner planned to step down from his position as President and Chief Executive
Officer and would remain at Neurogen until a new Chief Executive Officer was in
place. Effective September 2001, upon the hiring of Dr. Koster, Mr. Penner
retired. Under the termination clause of Mr. Penner's employment agreement, he
received a lump sum payment of $416,000 from the Company, representing one
year's salary at time of termination. Mr. Penner also received a gross bonus of
$207,000 on the date of termination under a separate severance agreement.

The compensation package for Alan J. Hutchison, as Executive Vice
President- Drug Discovery of Neurogen, includes a salary paid pursuant to a
two-year renewable employment agreement between Dr. Hutchison and the Company
effective December 1, 1997. The agreement was most recently extended for an
additional two-year term as of December 1, 2001. Under such agreement, Dr.
Hutchison's base salary of $272,865 per annum in 2001 was increased to $286,508
effective December 31, 2001. Such increase was, and any future increases will
be, at the discretion of the Board of Directors. The employment agreement
restricts Dr. Hutchison from competing with the Company for the term of the
agreement and, under certain conditions, for a period of one year after
termination of his employment with the Company. The employment agreement also
provides for certain additional payments to be made to Dr. Hutchison upon his
termination of employment for certain reasons.

The compensation package for Stephen R. Davis, Executive Vice President and
Chief Business Officer of Neurogen, includes a salary paid pursuant to a
two-year renewable employment agreement between Mr. Davis and the Company
effective December 1, 1997. The agreement was most recently extended for an
additional two-year term as of December 1, 2001. Under such agreement, Mr.
Davis' base salary of $256,335 per annum in 2001 was increased to $269,152
effective December 31, 2001. Such increase was, and any future increases will
be, at the discretion of the Board of Directors. The employment agreement
restricts Mr. Davis from competing with the Company for the term of the
agreement and, under certain conditions, for a period of one year after
termination of his employment with the Company. The employment agreement also
provides for certain additional payments to be made to Mr. Davis upon his
termination of employment for certain reasons.

The compensation package for Kenneth R. Shaw, Senior Vice President -
Chemistry and Pre-Clinical Development, includes a salary paid pursuant to a
two-year renewable employment agreement between Dr. Shaw and the Company
effective December 1, 1999. The agreement was most recently extended for an
additional two-year term as of December 1, 2001. Under such agreement, Dr.
Shaw's base salary of $229,250 per annum in 2001 was increased to $240,713
effective December 31, 2001. Such increase was, and any future increases will
be, at the discretion of the Board of Directors. The employment agreement
restricts Mr. Shaw from competing with the Company for the term of the agreement
and, under certain conditions, for a period of one year after termination of his
employment with the Company. The employment agreement also provides for certain
additional payments to be made to Dr. Shaw upon his termination of employment
for certain reasons.

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS(1):

The Compensation Committee consists entirely of outside directors. The
Compensation Committee is responsible for establishing and administering the
policies which govern both the annual compensation and stock ownership programs
of the Company. On an annual basis, the Compensation Committee evaluates the
performance of management and determines the compensation of the Company's
executive officers. The Compensation Committee's policies and programs are
designed to further the Company's goal of increasing shareholder value by
motivating and retaining executive officers. These policies include the
following objectives:

o Providing base salaries that take into consideration executive compensation
paid by other similar biotechnology companies. Peer companies generally are
at a comparable stage of development, are pursuing R&D programs of
comparable nature and complexity, have similar potential risks and rewards
and have similar market capitalization, size and financial condition. This
objective also takes into account the competitive demand for quality
personnel in the pharmaceutical and biotechnology experience and
capabilities.

o Providing periodic bonus awards for the accomplishment of significant
goals.

o Providing equity participation, such as stock option grants or restricted
stock, for the purpose of aligning executive officers' longer term
interests with those of the shareholders. The size and nature of equity
based compensation grants are based upon the Company's performance in
meeting its goals.

Traditional measures of corporate performance, such as earnings per share
or sales growth, do not readily apply to most biotechnology companies which are
heavily focused on research and development activities designed to produce
future earnings. In determining the compensation of the Company's executives,
the Compensation Committee looks to other criteria to measure the Company's
progress. These criteria include the Company's progress in:

o advancing drug candidates through clinical trials,

o discovering and developing multiple clinical candidates in the Company's
portfolio of drug programs,

o developing new drug targets and discovering potential drug leads for these
targets,

o developing valuable drug discovery technologies,

o establishing and executing strategic collaborations with other parties and

o securing capital sufficient to advance and expand the Company's drug
development and technology programs.

The Compensation Committee believes that outstanding performance in these
areas will contribute to the long-term success of the Company and the growth of
shareholder value. The Compensation Committee specifically considers the
achievement of milestones related to expansion of the Company's portfolio of
drug development programs, the development of multiple drug candidates within
individual programs and the progress of individual candidates within each such
program. In addition, the Compensation Committee considers the extent to which
the Company's shares have changed in value. However, the Compensation Committee
recognizes that, in the short-term, the market price of the Company's shares may
be affected by industry events and market conditions which are transient in
nature and beyond the control of management. This is especially true in the
biotechnology industry, which is characterized by long product lead times, the
iterative trial and error nature of drug development, highly volatile stock
prices and fluctuating availability of capital. Accordingly, the Compensation
Committee attempts to retain and appropriately motivate the Company's executives
by balancing the consideration of shorter term strategic goals with longer term
objectives essential to creating maximum shareholder value. In many instances
the qualitative factors by which the Compensation Committee judges corporate
performance necessarily involve a subjective assessment of management's
performance. Moreover, the Compensation Committee does not base its
considerations on any single performance factor nor does it specifically assign
relative weights to factors, but rather considers a mix of factors and evaluates
Company and individual performance against that mix.

Compensation paid by the Company to its executive officers is designed to
be competitive with compensation packages paid to the management of comparable
companies in the biotechnology industry. Toward that end, the Compensation
Committee reviews both independent survey data as well as data gathered
internally. From time to time, the Committee obtains the counsel of expert
compensation consultants. Total compensation for the Company's executive
officers includes a base salary component and may also include other forms of
incentives. Incentive compensation may consist of cash bonuses based on
satisfying corporate goals as well as on meeting individual performance
objectives. In addition, executive officers are eligible for grants of stock
options and restricted stock as an element of their total annual compensation
package. This component is intended to motivate and retain executive officers to
improve long-term stock performance. Stock option and restricted stock awards
are granted at the discretion of the Compensation Committee. Generally, stock
options vest in equal amounts over four or five years, have a term of five or
ten years and are exercisable during the term of the option at the fair market
value of the underlying Common Stock on the date of grant. As with cash bonuses,
the number of options to be granted to each executive officer is based on the
degree of attainment of predetermined Company and individual objectives, with
emphasis on those which have long-term strategic value. The Company generally
grants stock options to all employees and uses stock options as a bonus vehicle.
The Compensation Committee administers the Incentive Plan.

The Company achieved significant milestones and met most of its goals
during the fiscal year ended December 31, 2001. The Compensation Committee
considered the following developments in awarding incentive compensation based
on the Company's performance in 2001: advancement into Phase II human clinical
trials of NGD 97-1, the Company's lead Alzheimer's disease drug candidate;
uncertain results from Phase II human clinical trials of NGD 91-3, the Company's
lead anti-anxiety drug candidate; the advancement into Phase I human clinical
trials of NGD 2000-1, the Company's lead drug candidate for the treatment of
inflammatory disorders; the consummation of a new strategic collaboration with
Aventis Pharmaceuticals to develop drugs from Neurogen's CRF1 discovery program;
the closing of a $17.5 million debt financing on the Company's facilities; the
development of two new clinical candidates; the accomplishment of significant
milestones in implementing an AIDD technology system for Pfizer pursuant to a
$27 million three-year technology transfer agreement; the discovery of drug
leads in new areas; the advancement of drug leads and potential candidates in
many of the Company's programs; and the further advancement of the Company's
proprietary AIDD drug discovery platform.

In September 2001 Dr. Koster joined Neurogen as President and CEO. In
determining the starting compensation package for Dr. Koster, the Board of
Directors Search Committee considered Dr. Koster's extensive experience in drug
discovery and development and the compensation paid to CEO's at comparable
biotech companies. The committee also considered the recommendations of the
national executive search firm retained by the Company for this search.

At year-end, the Compensation Committee reviewed the Company's fiscal 2001
performance and the performance of the Company's executive officers together
with the incentive compensation levels of officers at comparable companies.
Based upon this review and in recognition of the Company's achievement of
significant milestones, the Committee awarded cash incentive bonuses and stock
option grants to executive officers. To remain competitive with the Company's
peers, the Committee also reviewed the base salary levels of officers at
comparable companies and raised the 2002 base salaries of the Company's
executive officers.

By the Compensation Committee: Jeffrey J. Collinson, Julian C. Baker, Frank
C. Carlucci and John Simon

---------------------

(1) This Section is not "soliciting material," is not deemed "filed" with
the SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, whether made before or after the date hereof and irrespective of
any general incorporation language in any such filing.

PERFORMANCE GRAPH(1)

The following graph compares the yearly percentage in the Company's
cumulative total stockholder return on its Common Stock during a period
commencing on December 31, 1996 and ending December 31, 2001 (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (B) the difference
between the Company's share price at the end and the beginning of the period; by
(ii) the share price at the beginning of the period) with the cumulative return
of the NASDAQ National Market Composite Index and the Amex Biotechnology Index.
The NASDAQ Composite Index has also been included for comparison purposes to an
index utilized in prior years. This index will not be included going forward as
Neurogen's Common Stock is traded on the NASDAQ National Market exchange. It
should be noted that Neurogen has not paid dividends on Common Stock, and no
dividends are included in the representation of the Company's performance. The
stock price performance on the graph below is not necessarily indicative of
future price performance.

                                                 NASDAQ
                                             National Market         NASDAQ                Amex
                              Neurogen         Composite           Composite           Biotechnology

12/31/96                       100.0             100.0               100.0                 100.0
12/31/97                        70.1             122.4               121.6                 112.6
12/31/98                        90.9             171.6               169.8                 128.3
12/31/99                        85.7             319.0               315.2                 271.3
12/31/00                       182.5             193.7               191.4                 439.6
12/31/01                        90.8             152.6               151.1                 402.3
---------------------

     (1) This Section is not  "soliciting  material," is not deemed "filed" with
the SEC and is not to be  incorporated by reference in any filing of the Company
under the  Securities  Act of 1933, as amended (the  "Securities  Act"),  or the
Exchange Act,  whether made before or after the date hereof and  irrespective of
any general incorporation language in any such filing.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                             PRINCIPAL STOCKHOLDERS

     The following  table sets forth, as of March 1, 2002,  certain  information
with respect to the beneficial ownership of Common Stock by each person known by
Neurogen to own  beneficially  more than five percent of its outstanding  Common
Stock,  by each  director  and  officer of  Neurogen  and by all  directors  and
officers as a group:


                                                            Amount and                             Approximate
Name and Address                                       Nature of Beneficial                          Percent
of Beneficial Owner                                        Ownership(1)                              Owned(2)


Andrew H. Tisch  (22)(23).........................          1,035,925                                   5.8%
Daniel R. Tisch  (22)(23).........................          1,035,925                                   5.8%
James S. Tisch  (22)(23)..........................          1,035,925                                   5.8%
Thomas J. Tisch (22)(24)..........................          1,335,925                                   7.5%
Preston R. Tisch  (22)(25)........................             24,100                                     *
Pfizer Inc........................................          2,846,000                                  16.0%
   235 East 42nd Street
   New York, NY 10017
Wellington Management Company, LLP................          1,817,400                                  10.2%
   75 State Street
   Boston, MA 02109
Oppenheimer Funds.................................          1,775,000                                  10.0%
   498 Seventh Ave.
   New York, NY 10018
Janus Capital Corporation.........................            983,320                                   5.5%
   100 Fillmore Street
   Denver, CO  80206
William H. Koster, Ph.D. (3)......................            100,000                                    *
Alan J. Hutchison, Ph.D. (5)......................            201,818                                   1.1%
Stephen R. Davis (6)..............................            172,298                                   1.0%
Kenneth R. Shaw, Ph.D. (7)........................            104,250                                    *
James V. Cassella, Ph.D. (8)......................            133,061                                    *
James E. Krause, Ph.D. (4)........................             52,503                                    *
Frank C. Carlucci (9)(10).........................            207,472                                   1.2%
Felix J. Baker, Ph.D. (11)(22)....................            646,006                                   3.6%
Julian C. Baker (12)(22)..........................            657,514                                   3.7%
Barry M. Bloom, Ph.D. (13)........................             39,558                                    *
Robert N. Butler, M.D. (14).......................             31,348                                    *
Jeffrey J. Collinson (15).........................             58,707                                    *
Mark Novitch, M.D. (16)...........................             62,002                                    *
Robert H. Roth, Ph.D. (17)........................             75,058                                    *
John Simon (18)(19)...............................             88,477                                    *
Suzanne H. Woolsey, Ph.D. (20)....................             36,641                                    *
All directors and officers
   as a group (16 persons) (21)...................          2,080,813                                  11.1%



---------------
 *     Less than one percent (1%).

(1)  Share ownership in each case includes shares  issuable upon  exercisable of
     outstanding  common  stock  options  exercisable within 60 days of March 1,
     2002.

(2)  Percentage  of  the  outstanding  shares  of  Common  Stock,   treating  as
     outstanding for each beneficial owner all shares of Common Stock which such
     beneficial owner has indicated are issuable under stock options exercisable
     within 60 days of March 1, 2002.

(3)  Includes  100,000  shares of  restricted  stock of which 10,000  shares are
     vested.

(4)  Includes 51,127 shares of Common Stock that James E. Krause,  Ph.D. has the
     right to acquire under stock options exercisable within 60 days of March 1,
     2002.

(5)  Includes 200,312 shares of Common Stock that Alan J. Hutchison,  Ph.D.  has
     the right to acquire  under  stock  options  exercisable  within 60 days of
     March 1, 2002.

(6)  Includes 119,312 shares of Common Stock that Stephen R. Davis has the right
     to acquire under stock options  exercisable within 60 days of March 1, 2002
     and 50,000 shares of unvested restricted stock.

(7)  Includes 104,250 shares of Common Stock that Kenneth R. Shaw, Ph.D. has the
     right to acquire under stock options exercisable within 60 days of March 1,
     2002.

(8)  Includes  131,531 shares of Common Stock that James V. Cassella,  Ph.D. has
     the right to acquire  under  stock  options  exercisable  within 60 days of
     March 1, 2002.

(9)  Includes 40,000  shares of Common  Stock  owned by Mr.  Carlucci's wife.

(10) Includes 56,892 shares of Common Stock subject to stock options exercisable
     within 60 days of March 1, 2002.

(11) Includes  25,025  shares  as to  which he has sole  voting  power  and sole
     dispositive  power,  32,541 shares of Common Stock that Felix Baker has the
     right to acquire under stock options exercisable within 60 days of March 1,
     2002,  and 588,400 shares as to which he has shared voting power and shared
     dispositive power.

(12) Includes  36,533  shares  as to  which he has sole  voting  power  and sole
     dispositive power,  32,541 shares of Common Stock that Julian Baker has the
     right to acquire under stock options exercisable within 60 days of March 1,
     2002,  and 588,400 shares as to which he has shared voting power and shared
     dispositive power.

(13) Includes 28,558 shares of Common Stock subject to stock options exercisable
     within 60 days of March 1, 2002.

(14) Includes 31,348 shares of Common Stock subject to stock options exercisable
     within 60 days of March 1, 2002.

(15) Includes  4,602  shares of Common  Stock  held by a  corporation  which Mr.
     Collinson controls. Also includes 31,473 shares of Common Stock exercisable
     within 60 days of March 1, 2002.

(16) Includes 58,002 shares of Common Stock subject to stock options exercisable
     within 60 days of March 1, 2002.

(17) Includes 42,058 shares of Common Stock subject to stock options exercisable
     within 60 days of March 1, 2002.

(18) Does  not  include   shares  of  Common  Stock  held  by  Allen  &  Company
     Incorporated  and  by  persons  and  entities  which  may be  deemed  to be
     affiliated  with Allen & Company  Incorporated,  of which  shares Mr. Simon
     disclaims beneficial ownership.

(19) Includes 54,973 shares of Common Stock subject to stock options exercisable
     within 60 days of March 1, 2002.

(20) Includes   36,641  shares   of  Common   Stock  subject  to  stock  options
     exercisable within 60 days of March 1, 2002.

(21) Includes  1,014,139  shares  of  Common  Stock  subject  to  stock  options
     exercisable within 60 days of March 1, 2002.

(22) The address of each  person is 667  Madison  Ave.,  New York,  N.Y.  10021,
     except for Daniel R. Tisch whose address is 500 Park Ave.,  New York,  N.Y.
     10022.

(23) Includes  547,125  shares  as to which he has sole  voting  power  and sole
     dispositive power and 488,800 shares as to which he has shared voting power
     and shared dispositive power.

(24) Includes  847,125  shares  as to which he has sole  voting  power  and sole
     dispositive power and 488,800 shares as to which he has shared voting power
     and shared dispositive power.

(25) He has sole voting  power and sole  dispositive  power with  respect to all
     shares.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pfizer Inc ("Pfizer"),  a beneficial owner of more than five percent of the
Common Stock, paid $2.9 million in research funding and $4.0 million in payments
related to a technology transfer agreement,  and made certain  reimbursements to
the  Company  in  the  last  fiscal  year  pursuant  to  the  terms  of  various
collaborative  agreements  and a  technology  transfer  between  Pfizer  and the
Company.  These  amounts  constituted  payments  in  excess of five  percent  of
Neurogen's  consolidated  gross  revenues  for the last  fiscal  year.  Neurogen
expects to receive amounts in excess of five percent of its  consolidated  gross
revenues from Pfizer in fiscal year 2001. In connection with the  collaborations
with Pfizer, the Company has granted Pfizer  registration rights with respect to
shares  of  the  Company's   Common  Stock  purchased  in  connection  with  the
collaborations  as well as the right to maintain its level of  investment in the
Company in future public offerings of Common Stock.

     In September  2001,  the Company made a recourse loan to William H. Koster,
President and Chief Executive Officer,  in the amount of $86,382 for the payment
of taxes related to the vesting of certain shares of restricted stock granted to
Dr. Koster upon his hiring date. The loan is payable in full plus interest at an
annual rate of 4.76% upon the  occurrence  of the earlier of five years from the
date of issuance or the termination of Dr. Koster's employment and is secured by
the restricted shares.


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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

                                                   /S/ WILLIAM H. KOSTER
                                               By:______________________________
                                                     William H. Koster
                                           President and Chief Executive Officer


Date: April 30, 2002

                                                                    EXHIBIT 23.1

                         Consent of Independent Accountants

     We hereby  consent to the  incorporation  by reference in the  Registration
Statements on Form S-8 (Nos. 33-43441,  33-43541,  33-81266,  33-46324, 33-73576
and  33-73586) of the Neurogen  Stock  Option Plan,  the 1993 Omnibus  Incentive
Plan, the 1993 Non-Employee Directors Plan of Neurogen Corporation, the Neurogen
Corporation 2000 Non-Employee  Directors Plan, the Amended and Restated Neurogen
Corporation  2001  Stock  Option  Plan  and  the  Neurogen  Corporation  Special
Committee  Stock Option Plan of our report dated  February 15, 2002  relating to
the consolidated financial statements of Neurogen Corporation,  which appears in
this Form 10-K/A.

PRICEWATERHOUSECOOPERS LLP


Hartford, Connecticut
April 29, 2002