S-3/A

As filed with the Securities and Exchange Commission on July 24, 2008

Registration No. 333-150585        

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

to

Form S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

NEUROGEN CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	22-2845714
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

35 Northeast Industrial Road
Branford, Connecticut 06405
(203) 488-8201

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Stephen Davis
Chief Executive Officer
Neurogen Corporation
35 Northeast Industrial Road
Branford, Connecticut 06405
(203) 488-8201
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy to:
B. Shayne Kennedy, Esq.
Wesley C. Holmes, Esq.
Latham & Watkins LLP
650 Town Center Drive, 20^th Floor
Costa Mesa, California 92626-1925
(714) 540-1235

     Approximate date of commencement of proposed sale to the public:  From time to time after this Registration Statement becomes effective.  

     If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  o

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.  þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

     If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.  o

     If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.  o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated July 24, 2008

PROSPECTUS

19,704,032 Shares of Common Stock

     This prospectus covers the offer and sale by the selling stockholders identified in this prospectus of up to 19,704,032 shares of common stock, $0.025 par value, of Neurogen Corporation. Of this amount, 6,489,704 shares of common stock are issuable upon exchange of the 249,604 shares of Series A Exchangeable Preferred Stock which were sold by us on April 7, 2008 in a private placement in which we sold an aggregate of 981,411 shares of Series A Exchangeable Preferred Stock and 981,411 warrants. The remaining 13,214,328 shares of common stock were previously purchased by, and issued to, certain of the selling stockholders and their affiliates in a private placement by us on March 19, 2004. We are not selling any common stock under this prospectus and will not receive any of the proceeds from the sale or other disposition of shares by the selling stockholders. We will, however, receive proceeds from any warrants exercised for cash.

     The selling stockholders or their pledgees, assignees or successors-in-interest may offer and sell or otherwise dispose of the shares of common stock described in this prospectus from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The selling stockholders will bear all commissions and discounts, if any, attributable to the sales of shares. We will bear all other costs, expenses and fees in connection with the registration of the shares. See “Plan of Distribution” beginning on page 11 for more information about how the selling stockholders may sell or dispose of their shares of common stock.

     Our common stock is quoted on the Nasdaq Global Market under the symbol “NRGN.” On July 22, 2008, the closing price of a share of our common stock on the Nasdaq Global Market was $.30 per share.

     You should consider the risks that we have described in the section entitled “Risk Factors” on page 3 before investing in our common stock.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is            , 2008.

TABLE OF CONTENTS

About This Prospectus	i
About Neurogen Corporation	1
Summary of the Offerings	1
Risk Factors	3
Forward-Looking Statements	3
Use of Proceeds	4
Description of Series A Exchangeable Preferred Stock	4
Description of the Warrants	8
Selling Stockholders	8
Plan of Distribution	12
Legal Matters	14
Experts	14
Where You Can Find More Information	14
Incorporation by Reference of Certain Documents	14

ABOUT THIS PROSPECTUS

     This prospectus is a part of a registration statement that we filed with the Securities and Exchange Commission utilizing a “shelf” registration process. Under this shelf registration process, certain selling stockholders may from time to time sell the shares of common stock described in this prospectus in one or more offerings.

     We have not authorized anyone to give any information or to make any representation other than those contained or incorporated by reference in this prospectus. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus. The selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where it is lawful to do so. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any shares other than the registered shares to which they relate, nor does this prospectus constitute an offer to sell or the solicitation of an offer to buy shares in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained in this prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus is delivered or shares are sold on a later date.

     References to “Neurogen,” “we,” “our” or “us” in this prospectus mean Neurogen Corporation and its consolidated subsidiaries, unless the context suggests otherwise.

ABOUT NEUROGEN CORPORATION

     We are a drug development company focused on new small molecule drugs designed to improve the lives of patients suffering from disorders with significant unmet medical needs, including current programs in insomnia, Parkinson’s disease, restless legs syndrome, pain and anxiety. We conduct our development independently and, when advantageous, collaborate with leading pharmaceutical companies during the drug research and development process to obtain additional resources and to access complementary expertise. For example, we currently have a collaboration with Merck Sharp & Dohme Limited, a subsidiary of Merck & Co., Inc. to develop compounds for cough, pain and other disorders. In this collaboration our partner, Merck, is responsible for funding all drug development activities. Previously, Neurogen dedicated a significant amount of its resources to operating a drug discovery platform designed to efficiently advance drug candidates into human testing and development. We currently have four unpartnered programs in development and have recently restructured the company to focus our resources solely on our insomnia, Parkinson’s disease, restless legs syndrome and anxiety development programs.

     We were incorporated under the laws of the State of Delaware in 1987 and commenced operations in July 1988. Our principal executive offices and research and development facilities are located at 35 Northeast Industrial Road, Branford, Connecticut, 06405. Our telephone number is (203) 488-8201. We maintain a website at www.neurogen.com. Information contained on our website is not incorporated by reference into this prospectus, and should not be considered to be part of this prospectus.

SUMMARY OF THE OFFERINGS

     This prospectus covers the offer and sale by the selling stockholders identified in this prospectus of up to 19,704,032 shares of common stock, $0.025 par value, of Neurogen Corporation. Of this amount, 6,489,704 shares of common stock are issuable upon exchange of 249,604 shares of Series A Exchangeable Preferred Stock, par value $0.025 per share, or the Series A Exchangeable Preferred Stock which were sold by us in a private placement on April 7, 2008, in which we sold an aggregate of 981,411 shares of Series A Exchangeable Preferred Stock and 981,411 warrants, or Warrants, which we refer to as the 2008 Private Placement. The remaining 13,214,328 shares of common stock offered under this prospectus were previously purchased by certain of the selling stockholders and their affiliates from us in a private placement on March 19, 2004, which we refer to as the 2004 Private Placement. The terms of the Series A Exchange Stock and the Warrants are summarized below in the sections entitled “Description of the Series A Exchangeable Preferred Stock” and “Description of the Warrants,” respectively. Further information about the Series A Exchangeable Preferred Stock and Warrants can be found in our current report on Form 8-K filed, which was filed with the Securities and Exchange Commission on April 11, 2008.

     2008 Private Placement

     On April 7, 2008, we entered into a Securities Purchase Agreement pursuant to which we agreed to issue and sell to certain investors up to an aggregate of 981,411 shares of our Series A Exchangeable Preferred Stock. With each share of Series A Exchangeable Preferred Stock purchased, each investor also purchased a Warrant exercisable for the number of shares of our common stock equal to 50% of the number of shares of common stock into which one share of Series A Exchangeable Preferred Stock is exchangeable at the time the Warrant is exercised. The purchase price was $31.20 per unit, and on April 7, 2008, each unit represented a total of 39 shares of common stock, consisting of 26 shares of common stock issuable upon exchange of one share of Series A Exchangeable Preferred Stock and 13 shares of common stock issuable upon exercise of a Warrant. The initial exchange price of the Series A Exchangeable Preferred Stock is $1.20 per share, resulting in an initial exchange rate of 26 shares of common stock for each share of Series A Exchangeable Preferred Stock. The exercise price for each Warrant is $2.30 per share of our common stock. Prior to the 2008 Private Placement, we had 42,051,770 shares of common stock issued and outstanding, of which 21,704,763 were held by holders other than our affiliates, the selling stockholders or their affiliates. In connection with the issuance we paid an aggregate of approximately $1.67 million to Pacific Growth Equities, LLC, Leerink Swann LLC, Oppenheimer & Co. and Merriman Curhan Ford & Co., each of whom acted as

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placement agent, the Placement Agents, in connection with the 2008 Private Placement. We closed this transaction on April 11, 2008.

     The total purchase price paid by the selling stockholders for the units was $30,620,023, resulting in net proceeds to us of approximately $28,433,980, after deducting placement agent fees and offering expenses payable by us, but excluding any dividend payments or liquidated damages we may be required to pay pursuant to the terms of the Series A Exchangeable Preferred Stock. Based on the closing price of our common stock of $2.29 per share on the Nasdaq Global Market on April 4, 2008, the last trading day prior to entering into the Securities Purchase Agreement, the units had an aggregate value of approximately $87,649,816, consisting of approximately $58,433,211 in shares of common stock underlying the Series A Exchangeable Preferred Stock and approximately $29,216,605 in shares of common stock underlying the Warrants. The purchase price for the Series A Exchangeable Preferred Stock, on an as-exchanged for common stock basis, represented a 47.6% discount to the closing price of our common stock on the Nasdaq Global Market for the trading day immediately preceding the date of the Securities Purchase Agreement, and the exercise price of the Warrants exceeded the closing price of our common stock on such day. As of July 22, 2008, based on the closing price of our common stock of $.30 per share, the shares of common stock underlying the Series A Exchangeable Preferred Stock had an aggregate value of approximately $7,655,066, and the shares of common stock underlying the Warrants had an aggregate value of approximately $3,827,503. The table below summarizes the market price of the securities offered in the 2008 Offering in relation to the price paid by the selling stockholders.

Total Possible Shares Underlying the Series A Preferred Exchangeable Stock		25,516,686	(1)
Total Possible Shares Underlying the Warrants		12,758,343	(1)
Combined Market Price of Series A Preferred Stock and Warrants	$	87,649,816	(2)
Combined Conversion Price of Series A Exchangeable Preferred Stock	$	30,620,023	(3)
Combined Exercise Price for the Warrants	$	29,344,189	(4)
Total Discount to Market Price	$	27,685,604	(5)

(1)	Assumes no cash dividend payments and complete conversion of the shares of Series A Exchangeable Preferred Stock and Warrants
(2)	Calculated based on the closing price of our common stock on April 4, 2008, of $2.29 per share, the total possible shares of common stock issuable upon exchange of the Series A Exchangeable Preferred Stock and exercise of the Warrants.
(3)	Calculated using the conversion price of $1.20 per share.
(4)	Calculated using the exercise price of $2.30 per share.
(5)	Based on the closing price of our common stock on April 4, 2008, of $2.29 per share.

     In connection with the transaction, we also entered into a registration rights agreement, or the Registration Rights Agreement, with the selling stockholders pursuant to which we agreed to register the resale of the shares of common stock issuable upon exchange of the Series A Exchangeable Preferred Stock and exercise of the Warrants. Additionally, we agreed to register any shares of our common stock held by the investors that may not currently be sold pursuant to Rule 144 under the Securities Act without volume or manner of sale restrictions. We were required to file the registration statement within 20 days of the issuance of the Series A Exchangeable Preferred Stock and to use our reasonable best efforts to have the registration statement declared effective on the earlier of: (i) 15 days after the stockholder meeting, at which the Company’s stockholders will vote to approve the issuance of the common stock upon exchange of the Series A Exchangeable Preferred Stock, which we refer to as the Exchange, or (ii) the one year anniversary of the issuance of the Series A Exchangeable Preferred Stock. With the initial filing of this registration statement that includes this prospectus we satisfied our initial filing obligation. If we are unable to have this registration statement declared effective prior to effectiveness deadline, we will be required to pay the selling stockholders liquidated damages equal to 1.5% of their aggregate purchase price of $31.20 for each 30-day paid following the effectiveness deadline during which the registration statement is not effective. The liquidated damages are capped at, and will not exceed, 7.5% of the aggregate purchase price, or approximately $2,296,502. We have also agreed to register the resale of the shares of Series A Exchangeable Preferred Stock if those shares have

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not been exchanged for common stock within one-year of the issuance date. We will pay all of our fees and expenses related to the filing of the registration statements. We have agreed to indemnify the selling stockholders against certain liabilities and to reimburse the selling stockholders for the reasonable fees and disbursements of one counsel chosen by the holders, such amount not to exceed $25,000.

     2004 Private Placement

     On March 19, 2004, we entered into a Securities Purchase Agreement with Warburg Pincus Private Equity VIII, L.P., entities affiliated with Baker Brothers Investments and entities affiliated with the Tisch family, for the sale of an aggregate of 14,285,760 shares of our common stock. As noted in the table below in the section entitled “Selling Stockholders,” some of these entities and their affiliates were investors in the 2008 Private Placement and are selling stockholders in this registration statement and prospectus. The 2004 Private Placement was completed by way of a private placement transaction that was exempt from registration under Section 4(2) of the Securities Act. The purchase price in the sale transaction was $7.00 per share. On March 18, 2004, the last trading day prior to entering into the Securities Purchase Agreement, the closing price of our common stock was $6.82 per share. In connection with the 2004 Private Placement, we agreed to register the shares issued in the transaction with the Securities Exchange Commission, and we filed a registration statement for the shares on May 19, 2004. None of the shares of common stock registered on that registration statement were sold by the selling stockholders and the registration statement is no longer effective.

RISK FACTORS

     You should carefully consider the risk factors incorporated by reference to our most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and the other information contained in this prospectus, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the risk factors and other information contained in any applicable prospectus supplement before investing in our common stock. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities. Please also refer to the section below entitled “Forward-Looking Statements.”

FORWARD-LOOKING STATEMENTS

     This prospectus contains and incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this prospectus that are not historical facts. When used in this prospectus, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “could,” “should,” “may,” “will” and similar expressions are generally intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. Our actual results may differ materially from those expressed or forecasted in any forward-looking statements.

     We caution you to not place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof. You should carefully read this prospectus, any accompanying prospectus supplement, and the documents incorporated by reference in those documents, particularly, the section entitled “Risk Factors,” before making an investment decision. Important factors that may cause results to differ from expectations include, for example:

• risks inherent in research, development, testing, regulatory approval, production and marketing of any of our drug candidates;

• competitive factors;

• risks deriving from in-licensing of drug candidates, acquisitions or business combinations;

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• our dependence on our current or future corporate partners with respect to research and development funding, preclinical evaluation of drug candidates, human clinical trials of drug candidates, regulatory filings and manufacturing and marketing expertise;

• risks deriving from collaborations, alliances, in-licensing or other transactions;

• the risk that actual research and development costs and associated general and administrative costs may exceed budgeted amounts;

• the risk that drug targets pursued by us may prove to be invalid after substantial investment by us;

• inability to obtain sufficient funds through future collaborative arrangements, equity or debt financings or other sources to continue the operation of our business;

• uncertainty regarding our patents and trade secrets and confidentiality agreements with collaborators, employees, consultants or vendors;

• dependence upon third parties for the manufacture of our potential products and our inexperience in manufacturing if we establish internal manufacturing capabilities;

• dependence on third parties to market potential products and our lack of sales and marketing capabilities;

• unavailability or inadequacy of medical insurance or other third-party reimbursement for the cost of purchases of our products;

• inability to attract or retain scientific, management and other personnel;

• risks associated with the fact that a majority of our common stock is held by a limited number of stockholders; and

• risks associated with our recent operational restructuring.

USE OF PROCEEDS

     We will not receive any of the proceeds from the sale of shares of our common stock in this offering. The selling stockholders will receive all of the proceeds from this offering.

     A portion of the shares of our common stock covered by this prospectus are issuable upon exercise of the Warrants to purchase our common stock. The exercise price of the Warrants issued to the selling stockholders is $2.30 per share. Upon any exercise for cash of the Warrants, the selling stockholders will pay us the exercise price of the Warrants. The Warrants are also exercisable on a cashless basis. We will not receive any cash payment from the selling stockholders upon any exercise of the Warrants on a cashless basis. The exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances, including subdivisions and stock splits, stock dividends, combinations, reorganizations, reclassifications, consolidations, mergers or sales of properties and assets and upon the issuance of certain assets or securities to holders of our common stock, as applicable. To the extent we receive proceeds from the cash exercise of the Warrants, we intend to use the proceeds for the development of existing product candidates and other general corporate purposes.

DESCRIPTION OF SERIES A EXCHANGEABLE PREFERRED STOCK

     The rights, preferences and privileges of the Series A Exchangeable Preferred Stock are set forth in the certificate of designations, number, voting powers, preferences and rights of Series A Exchangeable Preferred Stock, or the Certificate of Designations, which was filed as an exhibit to our Current Report on

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Form 8-K on April 11, 2008. The following is intended to only be summary of those rights, privileges and preferences, and we encourage you to read the Certificate of Designations for a complete description of the terms of the Series A Exchangeable Preferred Stock.

     Dividends. Dividends on the Series A Exchangeable Preferred Stock are cumulative and will accrue at an annual rate of 20% of the $31.20 purchase price per share (i.e. $6.24 per share), compounded monthly from and including April 11, 2008; provided, however, no dividends will be payable if we obtain approval from our stockholders for the Exchange prior to August 11, 2008. Dividends will be payable until all or a portion of the Series A Exchangeable Preferred Stock is exchanged for our shares of our common stock or until the Series A Exchangeable Preferred Stock is redeemed by us upon a liquidation, dissolution or we experience a change in control, or is otherwise acquired by us. Dividends shall be paid by us in cash (provided we may lawfully do so) or additional shares of Series A Exchangeable Preferred Stock at the election of each holder of Series A Exchangeable Preferred Stock (which additional shares of Series A Exchangeable Preferred Stock shall be deemed to accrue and accumulate dividends (whether or not declared) as otherwise set forth herein in respect of which such dividends are paid).  In the event that we fail for any reason to pay dividends on the Series A Exchangeable Preferred Stock when we are lawfully permitted to do so or fail to redeem all shares of the Series A Exchangeable Preferred Stock within 30 days after receipt of a redemption demand notice, the dividend rate on the Series A Exchangeable Preferred Stock will be increased to 30% per annum. Assuming (i) the Series A Exchangeable Preferred Stock are not exchanged within four months of issuance and (ii) we make all required dividend payments as required and in cash, we expect to pay an aggregate amount of $6,717,760 in dividends on the Series A Exchangeable Preferred through April 11, 2009, representing 23.6% of the of the net proceeds to us from the sale of the Series A Preferred Stock and Warrants. So long as the shares of Series A Exchangeable Preferred Stock remain outstanding, we intend to make all required dividends payments on the outstanding Series A Exchangeable Preferred Stock in cash, or, at the election of the holders of the Series A Exchangeable Preferred Stock, with additional shares of Series A Exchangeable Preferred Stock. There can be no assurance that we will have the ability to make all required cash payments under the Series A Exchangeable Preferred Stock.

       For so long as any shares of Series A Exchangeable Preferred Stock remain outstanding, we may not, without the prior consent of the holders of a majority of the outstanding shares of Series A Exchangeable Preferred Stock, pay any dividend upon any other class or series of our equity securities, or Junior Stock, whether in cash or other property (other than shares of Junior Stock), or purchase, redeem or otherwise acquire any Junior Stock. In addition, if we declare, set aside for or pay any dividends or make any distributions on shares of Junior Stock, the holders of the Series A Exchangeable Preferred Stock then outstanding will be entitled to simultaneously receive such dividend or distribution on a pro rata basis as if the shares of Series A Exchangeable Preferred Stock then outstanding had been exchanged into the greatest number of shares of our common stock into which such shares of Series A Exchangeable Preferred Stock could be exchanged.

     Liquidation Preference.  If we experience a voluntary or involuntary liquidation, dissolution or winding up, the holders of any shares of Series A Exchangeable Preferred Stock that remains outstanding at such time will have the right to receive the greater of: (i) the sum of 120% of the then current stated value of a share of Series A Exchangeable Preferred Stock plus all accrued but unpaid dividends thereon (whether or not declared) through the date of such distribution and (ii) an amount equal to the average of the closing prices for our common stock on the Nasdaq Global Market for the 20 trading days immediately preceding the date which we or the holders of the outstanding Series A Exchangeable Preferred Stock exercise the liquidation preference right multiplied by the then current exchange rate for the Series A Exchangeable Preferred Stock, which we refer to as the Redemption Price.  If our assets are insufficient to make payment of the liquidation distributions, the holders of Series A Exchangeable Preferred Stock shall share equally and ratably in any distribution in proportion to the full payment to which each holder would otherwise be entitled.  After payment of the full amount of the liquidation distributions to which they are entitled, the holders of Series A Exchangeable Preferred Stock will have no further rights in respect of such shares of Series A Exchangeable Preferred Stock and shall not be entitled to participate in any further distributions of our assets.

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     Change in Control. If we consummate a “change in control,” as defined in the Certificate of Designations, the holders of any shares of Series A Exchangeable Preferred Stock that remain outstanding at that time will have the right to receive the greater of: (i) the sum of 120% of the then current stated value of a share of Series A Exchangeable Preferred Stock plus all accrued but unpaid dividends thereon (whether or not declared) through the date of such change in control and (ii) the consideration per share of our common stock received by the holders thereof in a change in control, provided, that, if the consideration is other than cash, its value will be deemed its fair market value as determined in good faith by our board of directors and the holders of at least a majority of the outstanding shares of Series A Exchangeable Preferred Stock. If our assets are insufficient to make payment of the distributions upon a change of control, the holders of Series A Exchangeable Preferred Stock shall share equally and ratably in any distribution in proportion to the full payment to which each holder would otherwise be entitled. After payment of the full amount of the distributions to which they are entitled upon a change of control, the holders of Series A Exchangeable Preferred Stock shall have no further rights in respect of such shares of Series A Exchangeable Preferred Stock and shall not be entitled to participate in any further distributions of our assets.

     Redemption. If the Series A Exchangeable Preferred Stock remains outstanding on or following the earlier of (i) April 11, 2009 and (ii) the date on which we issue any capital stock or debt securities (other than issuances pursuant to an equity incentive plan or as otherwise specified in the Certificate of Designations), both we and the holders of at least a majority of the outstanding shares of the Series A Exchangeable Preferred Stock will have the option to cause us, to the extent we may lawfully do so, to redeem, from time to time, any or all of the outstanding shares of the Series A Exchangeable Preferred Stock for cash in a per share amount equal to the Redemption Price.  

     Exchange for Common Stock. The Series A Exchangeable Preferred Stock cannot be exchanged for common stock until the later of (i) the approval by the holders of our common stock for the Exchange, as required by the applicable rules of The Nasdaq Stock Market and (ii) the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or HSR Act. We do not expect a waiting period will be imposed by the HSR Act. Accordingly, once stockholder approval of the Exchange is obtained, we expect each share of Series A Exchangeable Preferred Stock will, without any further action on the part of the holders thereof, be exchanged into shares of our common stock. We have agreed to hold a meeting of our stockholders on or prior to 120th day following the close of the 2008 Private Placement to obtain approval for the Exchange. This stockholders meeting is scheduled to occur on July 25, 2008.

     Consequences of Exchange for Common Stock. Upon Exchange, the holders of Series A Exchangeable Preferred Stock will receive the number of shares of our common stock determined by dividing (i) the then current stated value for the Series A Exchangeable Preferred Stock of $31.20 by (ii) the then current exchange price of the Series A Exchangeable Preferred Stock then in effect. The initial exchange price of the Series A Exchangeable Preferred Stock is $1.20 per share, resulting in an initial exchange rate of 26 shares of common stock for each share of Series A Exchangeable Preferred Stock, not including any shares of common

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stock that may be issued as a dividend pursuant to the terms of the Series A Exchangeable Preferred Stock. The exchange price is subject to appropriate adjustment in the event of any stock dividend, stock split, stock distribution or combination, subdivision, reclassification or other corporate action having the similar effect with respect to our common stock. Upon any such Exchange, all accrued but unpaid dividends on the Series A Exchangeable Preferred Stock will be paid in additional shares of our common stock. If the Exchange is approved at our upcoming annual meeting of stockholders, no dividends will be issued in connection with the Exchange because no dividends are payable if the Exchange occurs prior to August 11, 2008. Additionally, all rights with respect to the Series A Exchangeable Preferred Stock, including the liquidation preference and redemption rights, will terminate upon the Exchange, except the right to receive the shares of common stock.

     Consequences if the Exchange is Not Approved. If the Exchange is not approved prior to April 11, 2009, then the Series A Exchangeable Preferred Stock will (i) remain outstanding in accordance with its terms, (ii) continue to accrue cumulative dividends at an annual rate of 20% of the $31.20 per share purchase price (i.e., $6.24) compounded monthly, (iii) retain a senior liquidation preference over shares of the our common stock and (iv) continue to be subject to the redemption provisions described above.

     Proceeds and Expenses. The table below summarizes the proceeds from the 2008 Private Placement as well the expenses we may pay upon the occurrence of certain events.

Proceed/Expense	Amount
Gross Proceeds from 2008 Private Placement	$	30,620,023
Costs and Expenses of 2008 Private Placement	$	2,190,000	(1)
Net Proceeds	$	28,430,023
Liquidated Damages Payable to Selling Stockholders	$	2,296,502	(2)
Dividends Payable on Series A Preferred Stock	$	6,717,760	(3)
Amount Payable on Certain Events	$	36,744,027	(4)
Net Proceeds After Contingent Events	$	(17,328,266	) (5)
Realizable Profit by Selling Stockholders	$	27,813,187	(6)
Expenses and Total Discount as a Percentage of Net Proceeds		266	%

(1)	Represents approximately $1,670,000 in fees paid to the Placement Agents and $520,000 in legal and accounting fees paid by us in connection with the 2008 Private Placement.
(2)	Represents the maximum amount of liquidated damages payable by us to the selling stockholders pursuant to the Registration Rights Agreement. As described above, the liquidated damages will only be payable if we are unable to have this registration statement declared effective prior to the deadline set forth in the Registration Rights Agreement described above.
(3)	Represents the aggregate amounts of dividends on the Series A Exchangeable Preferred Stock through April 11, 2009, which assumes that the Exchange does not occur within four months of issuance at our annual meeting of stockholders and that all of the shares of the Series A Exchangeable Preferred Stock remain outstanding until April 11, 2009.
(4)	Represents the aggregate amount payable to the holders of the Series A Exchangeable Preferred Stock upon a liquidation, redemption or change of control, assuming that (i) the Series A Exchangeable Preferred Stock is outstanding at such time, (ii) the stated value of the Series A Exchangeable Preferred Stock at such time is $31.20 (the current stated value) and (iii) 120% of the stated value is greater than (x) in the event of a liquidation or redemption, the 20 day average closing price of our common stock immediately preceding such event and (y) in the event of a change in control, the per share consideration received by our holders of our common stock in a change of control, as applicable.
(5)	Assumes payment of liquidated damages and one year of dividends as well as a liquidation, redemption or change in control event.
(6)	Calculated using the closing price of a share of our common stock on April 4, 2008, of $2.29, and the conversion price of $1.20 per share for the Series A Exchangeable Preferred Stock and an exercise price of $2.30 per share for the Warrants. On April 7, 2008, the Series A Exchangeable Preferred Stock were

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exchangeable for an aggregate of 25,516,686 shares of common stock and the Warrants were exchangeable for an aggregate of 12,758,343 shares of common stock. Assumes no exercise of the Warrants due to the exercise price exceeding the market price of the underlying common stock.

DESCRIPTION OF THE WARRANTS

     The Warrants issued to the selling stockholders will become exercisable on the earlier of (i) the date that we hold a meeting of our stockholders to approve the Exchange and (ii) one year from the date of issuance of the Warrants. The Warrants are exercisable for 50% of the shares of common stock into which a share of Series A Exchangeable Preferred Stock is exchangeable at the time of exercise of such Warrant. The Warrants have an exercise price of $2.30 per share and will expire on April 11, 2013. The exercise price and the number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances, including subdivisions and stock splits, stock dividends, combinations, reorganizations, reclassifications, consolidations, mergers or sales of properties and assets and upon the issuance of certain assets or securities to holders of our common stock, as applicable.

SELLING STOCKHOLDERS

     Shares to be Registered

     Throughout this prospectus, when we refer to the shares of our common stock being registered on behalf of the selling stockholders, we are referring to (i) 13,214,328 shares of our common stock purchased by certain of the selling stockholders in the 2004 Private Placement, and (ii) 6,489,704 shares of our common stock into which the selling stockholders’ 249,604 shares of Series A Exchangeable Preferred Stock may be exchanged. When we refer to the selling stockholders in this prospectus, we are referring to each of the purchasers in the 2008 Private Placement and certain of the purchasers in the 2004 Private Placement, as identified in the table below.

     The following table sets forth the (i) name of each selling stockholder, (ii) number of shares beneficially owned by each of the respective selling stockholders prior to and after the 2008 Private Placement, (iii) number of shares that may be offered under this prospectus by each selling stockholder, (iv) the number of shares purchased by certain of the selling stockholders in the 2004 Private Placement, if any, and (v) number of shares of our common stock beneficially owned by the selling stockholders assuming all of the shares covered hereby are sold. The number of shares in the column “Number of Shares Being Offered” represents all of the shares of our common stock that a selling stockholder may offer under this prospectus, and assumes the exchange of all shares of Series A Exchangeable Preferred Stock and the cash exercise of all the Warrants held by such selling stockholder for shares of our common stock. The selling stockholders may sell some, all or none of their shares. We do not know how long the selling stockholders will hold the shares before selling them, and we currently have

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no agreements, arrangements or understandings with the selling stockholders regarding the sale or other disposition of any of the shares. The shares covered hereby may be offered from time to time by the selling stockholders.

     Based on the information provided to us, (i) each of the selling stockholders purchased the shares of our common stock, Series A Exchangeable Preferred Stock and Warrants, as applicable, for investment for its own account and not for resale or with a view towards distribution thereof and (ii) at the time of the purchase of the shares of our common stock, Series A Exchangeable Preferred Stock and the Warrants, as applicable, none of the selling stockholders had agreements or understandings, directly or indirectly, with any person to distribute the shares of common stock, Series A Preferred Stock, the Warrants or any shares of common stock acquired upon the Exchange or conversion of the Series A Exchangeable Preferred Stock or Warrants.

     The information set forth below is based upon information obtained from the selling stockholders and upon information in our possession regarding the issuance of shares of common stock to the selling stockholders in connection with the 2008 Private Placement. The percentages of shares beneficially owned after the offering are based on 42,306,158 shares of our common stock outstanding as of July 22, 2008, including the shares of common stock covered hereby.

										Shares Beneficially
	Shares of		Shares of		Number of Shares					Owned After
	Common		Common		Being Offered					Offering
	Stock		Stock		Shares of
	Beneficially		Beneficially		Common Stock
	Owned		Owned		Purchased
	Prior to April		Prior to		on March 19,			Exchange				Percent
Name of Beneficial Owner	7, 2008		Offering(1)		2004(2)			Shares(3)		Number		(%)
Warburg Pincus Private Equity VIII, L.P.(4)		8,571,429		16,071,402		8,571,429			1,271,655		6,228,318		14.7
Tang Capital Partners, LP(5)		0		4,999,995		0			847,772		4,152,223		9.8
Baker Tisch Investments, L.P.(6)		210,556		398,224		203,935			31,820		162,469		*
Baker Bros. Investments, L.P.(7)		230,162		435,302		170,762			34,783		229,757		*
Baker Bros. Investments II, L.P.(7)		203,190		384,306		110,992			30,709		242,605		*
Baker Biotech Fund I, L.P.(7)		2,195,509		4,152,334		1,915,924			331,789		1,904,621		4.5
Baker Brothers Life Sciences, L.P.(7)		2,307,661		4,364,404		2,241,286			348,730		1,774,388		4.2
Caduceus Capital Master Fund Limited(8) +		747,000		1,947,030		0			203,471		1,743,559		4.1
Caduceus Capital II, LP (8) +		474,000		1,824,024		0			228,903		1,595,121		3.8
UBS Eucalyptus Fund, LLC(8) +		497,000		1,171,973		0			114,445		1,057,528		2.5
PW Eucalyptus Fund, LLC(8)+		61,000		135,997		0			12,716		123,281		*
Summer Street Life Sciences Hedge Fund Investors LLC(8)		192,000		641,982		0			76,296		565,686		1.3
Domain Public Equity Partners, L.P.(9) +		139,520		3,889,526		0			635,830		3,253,696		7.7
Four-Fourteen Partners, LLC(10)		4,112,532		7,862,538		0	(19)		635,830		7,226,708		17.1
Special Situations Life Sciences Fund, LP(11) +		0		609,375		0			103,322		506,053		1.2
Special Situations Fund III QP, LP(11) +		0		3,140,631		0			532,508		2,608,123		6.2
Zeke, LP(12) +		0		2,500,017		0			423,889		2,076,128		4.9
Perceptive Life Sciences Master Fund, Ltd.(13)		0		1,500,018		0			254,335		1,245,683		2.9
PGE Partner Fund, LP(14) +		0		450,021		0			76,303		373,718		*
PGE Venture Fund, LLC(15)		0		125,034		0			21,200		103,834		*
PGE Partner Fund II, LP(16) +		0		299,988		0			50,864		249,124		*
Cascade Capital Partners, L.P.(17)		0		624,975		0			105,967		519,008		1.2
John Simon		58,504		433,489		0			63,580		369,909		*
Clarion Capital Corporation(18)		0		312,507		0			52,987		259,520		*

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*	Less than 1%
+	Purchaser in the 2006 Offering, as discussed below.
(1)	“Beneficial ownership” is a term broadly defined by the Securities and Exchange Commission in Rule 13d-3 under the Exchange Act, and includes more than the typical form of stock ownership, that is, stock held in the person’s name. The term also includes what is referred to as “indirect ownership,” meaning ownership of shares as to which a person has or shares investment power. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares that are currently exercisable or exercisable within 60 days of July 22, 2008.
(2)	None of the shares purchased in the 2004 Private Placement were sold under the registration statement filed in connection with that offering.
(3)	Assumes the exchange of all Series A Exchangeable Preferred Stock offered in this prospectus held by each of the selling stockholders for shares of Neurogen Corporation’s common stock.
(4)	Based upon a statement on Schedule 13D/A filed on April 14, 2008, Warburg Pincus Private Equity VIII, L.P. (“WP VIII”) is the direct record owner of 8,571,429 shares of common stock, 192,307 shares of Series A Exchangeable Preferred Stock and a Warrant.  The sole general partner of WP VIII is Warburg Pincus Partners, LLC, a New York limited liability company (“WPP LLC”).  Warburg Pincus & Co., a New York general partnership (“WP”), is the managing member of WPP LLC.  Warburg Pincus LLC, a New York limited liability company (“WP LLC”), manages WP VIII.  Charles R. Kaye and Joseph P. Landy are each Managing General Partners of WP and Co-Presidents and Managing Members of WP LLC.  By reason of the provisions of Rule 16a-1 of the Exchange Act, WP, WP LLC, WPP LLC, Mr. Kaye and Mr. Landy may be deemed to be the beneficial owners of any securities that may be deemed to be beneficially owned by WP VIII.  Each of WP, WP LLC, WPP LLC, Mr. Kaye and Mr. Landy all disclaim beneficial ownership of such securities except to the extent of any pecuniary interest therein.
(5)	The shares are held by Tang Capital Partners, LP. Kevin C. Tang is the sole manager of Tang Capital Management, LLC, which is the general partner of Tang Capital Partners, LP. Mr. Tang disclaims beneficial ownership of the securities except to the extent of his pecuniary interest therein.
(6)	Based on a Form 4 filed on April 11, 2008 by Baker/Tisch Capital (GP), all shares are held directly by Baker Tisch Investments, L.P. Tisch Capital, L.P. is the sole general partner of Baker Tisch Investments, L.P., the sole general partner of which Baker/Tisch (GP), LLC. Julian Baker and Felix Baker are the controlling members of Baker/Tisch Capital (GP).
(7)	Based on a Form 4 filed on March 15, 2008 by Baker Bros. Capital (GP), LLC, all shares are held directly by Baker Bros. Investments II, L.P. Baker Bros. Capital, L.P. is the sole general partner of Baker Bros. Investments II, L.P. Baker Bros. Capital (GP), LLC is the sole general partner of Baker Bros. Capital, L.P. Julian Baker and Felix Baker are the controlling members of Baker Bros. Capital (GP), LLC.
(8)	The shares are held by OrbiMed Advisors LLC and OrbiMed Capital LLC. Samual D. Isaly is the controlling member of OrbiMed Advisors LLC and OrbiMed Capital LLC.
(9)	All shares are held by Domain Public Equity Partners, L.P. (“DPEP”), whose sole general partner is Domain Public Equity Associates, L.L.C. (“DPEA”).  The managing members of DPEA are Nicole Vitullo and Domain Associates L.L.C.  The managing members of Domain Associates, L.L.C. are James C. Blair, Brian H. Dovey, Jesse I. Treu, Kathleen K. Schoemaker, Robert J. More,  Nicole Vitullo, and Brian Halak.  Nicole Vitullo and the other managing members of Domain Associates, L.L.C. share voting and investment control over the securities held by DPEP and disclaim beneficial ownership of such securities except to the extent of their pecuniary interest therein.
(10)	Based upon a statement on Schedule 13G filed on February 13, 2007 by Andrew H. Tisch, Daniel R. Tisch, James S. Tisch, Thomas J. Tisch and Joan H. Tisch. Because of certain business and family relationships among the reporting persons, the statement was filed by them as a group solely for informational purposes, and each of them disclaimed beneficial ownership of any shares owned by any other reporting person

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	except to the extent that beneficial ownership was expressly reported therein. According to the statement, each of Andrew H. Tisch, Daniel R. Tisch, James S. Tisch beneficially owned 947,108 shares; Thomas J. Tisch beneficially owned 1,247,108 shares, including 300,000 shares held by Four-Fourteen Partners LLC; and Joan H. Tisch beneficially owned 24,100 shares.
(11)	MGP Advisors Limited (“MGP”) is the general partner of the Special Situations Fund III, QP, L.P. AWM Investment Company, Inc. (“AWM”) is the general partner of MGP, and the investment adviser to Special Situations Fund III, QP, L.P. and Life Sciences Fund, L.P. Austin W. Marxe and David M. Greenhouse are the principal owners of MGP and AWM. Through their control of MGP and AWM, Messrs. Marxe and Greenhouse share voting and investment control over the portfolio securities of each of the funds listed above.
(12)	Edward Antonian is the general partner of Zeke, LP and hold voting and dispositive power over these shares.
(13)	The director of Perceptive Life Sciences Master Fund is Joseph Adelman, who exercises sole voting and investment powers.
(14)	The shares are held by the PGE Partner Fund, L.P. Pacific Growth Equity Management, LLC is the sole general partner of the PGE Partner Fund L.P. Stephen Massocca and John Menzies are the natural persons with investment decision and voting power for this entity.
(15)	The shares are held by the PGE Venture Fund, LLC. Thomas Dietz is the sole managing member of the PGE Venture Fund, LLC and is the natural person with investment decision and voting power for this entity.
(16)	The shares are held by the PGE Partner Fund II. Pacific Growth Equity Management, LLC is the sole general partner of the PGE Partner Fund II. Stephen Massocca and John Menzies are the natural persons with investment decision and voting power for this entity.
(17)	Gryphon Capital Management, LLC is the general partner of Cascade Capital Partners, L.P. Joseph E. Sweeney III is the managing member of Gryphon Capital Management, LLC.
(18)	Martin Cohen has voting and dispositive power for these shares.
(19)	Four-Fourteen Partners, LLC purchased 1,071,429 shares of our common stock in the 2004 Private Placement. These shares are not being registered for resale under this registration statement.

     The table above assumes that each of the selling stockholders will sell all of its shares available for sale during the effectiveness of the registration statement of which this prospectus is a part. None of the selling stockholders is required to sell its shares.

Relationships between the Company and the Selling Stockholders

     The following members of our board of directors were members or directors of the investors that purchased the in the 2008 Private Placement, and therefore were considered related parties: (i) Felix J. Baker, Ph.D., Managing Member, Baker Bros. Advisors, LLC; (ii) Julian C. Baker, Managing Member, Baker Bros. Advisors LLC; (iii) Stewart Hen, Managing Director, Warburg Pincus LLC; and (iv) Jonathan S. Leff, Managing Director, Warburg Pincus LLC. Each of Baker Bros. Advisors LLC and Warburg Pincus LLC, and their affiliated entities, beneficially own greater than 5% of our common stock. In addition, entities affiliated with the Tisch family members, who collectively beneficially own greater than 5% of our common stock, also participated in the April 7, 2008 sale transaction. In addition, John Simon, Ph.D., a director of the Company, was an investor in that transaction. Furthermore, at the time of the March 2004 private placement in which entities affiliated with the Tisch family purchased an aggregate of 1,071,429 shares of our common stock, members of the Tisch family were our stockholders and collectively beneficially held greater than 5% of our common stock.

     On December 18, 2006, we entered into purchase agreements with selected institutional investors to purchase aggregate of 6,993,000 shares of our common stock in a registered direct offering, which we refer to as the 2006 Offering. The following selling stockholders participated, or their affiliated entities participated, in the 2006 Offering: Zeke, L.P., Domain Public Equity Partners, L.P., Orbimed Advisors LLC, Special Situations Life Sciences Fund, LP, Special Situations Fund III QP. LP, PGE Partners Fund, LP and PGE Partners Fund II LP. The purchase price for each share of our common stock was $5.72, the closing price of our common stock on the Nasdaq Global Market on December 18, 2006. On July 22, 2008, the closing price

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of our common stock on the Nasdaq Global Market was $.30 per share. Net proceeds, following the payment of expenses, were approximately $37.3 million. The table below summarizes certain metrics of the 2006 Offering.

	Number of Shares		Percentage of Total Issued
Common stock outstanding prior to 2006 Offering		34,780,465		20.1
Common stock outstanding prior to 2006 Offering, not held by the selling stockholders, our affiliates or the affiliates of the selling stockholders		16,522,540		42.3
Number of shares of common stock issued		6,993,000		100

     We are unaware of any other material relationship between us and any of the selling stockholders that has occurred in the past three years other than as a result of the ownership of the shares of our securities as discussed above and as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007, as amended on April 4, 2008 and April 29, 2008.

PLAN OF DISTRIBUTION

     The selling stockholders and any of their pledgees, donees, transferees, assignees or other successors-in-interest may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock issuable upon the Exchange or exercise of the Warrants on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The selling stockholders may use one or more of the following methods when disposing of the shares or interests therein:

• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• through brokers, dealers or underwriters that may act solely as agents;

• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• short sales;

• through the writing or settlement of options or other hedging transactions entered into after the effective date of the registration statement of which this prospectus is a part, whether through an options exchange or otherwise;

• broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

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• the distribution of such shares to partners, members or security holders of the selling stockholders;

• a combination of any such methods of disposition; and

• any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

     Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

     The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under a supplement or amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

     Upon being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction.

     The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

     In connection with the sale of the shares of common stock or interests in shares of common stock, the selling stockholders may enter into hedging transactions after the effective date of the registration statement of which this prospectus is a part with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of common stock short after the effective date of the registration statement of which this prospectus is a part and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions after the effective date of the registration statement of which this prospectus is a part with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

     From time to time the selling stockholders may solicit offers to purchase securities directly from the public, designate agents to solicit offers to purchase securities from the public on their behalf, sell securities to one or more dealers acting as principals, or sell securities to one or more underwriters, who would purchase the securities as principal for resale to the public, either on a firm-commitment or best-efforts basis. If the selling stockholders sell securities to an underwriter, we and the selling stockholders may execute an underwriting agreement with them at the time of sale. Any broker-dealers, agents or underwriters that participate with the selling stockholders in the distribution of the common stock may be deemed to be “underwriters” within the meaning of the Securities Act, in which event any commissions received by these broker-dealers, agents or underwriters may be deemed to be underwriting commissions or discounts under the Securities Act.

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     The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. We will, however, receive the proceeds from any Warrants exercised for cash.

     We are required to pay all fees and expenses incident to the registration of the shares of common stock pursuant to this Registration Statement. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act or otherwise.

     We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the date on which the shares of common stock subject to registration rights may be sold without any volume limitations pursuant to Rule 144 of the Securities Act. Each selling stockholder may sell all, some or none of the shares offered by this prospectus.

LEGAL MATTERS

     Latham & Watkins LLP, Costa Mesa, California, will pass upon the validity of the securities being offered by this prospectus.

EXPERTS

     The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Annual Report on Internal Control Over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2007 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern, as described in Note 1 to the consolidated financial statements), an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

     We are subject to the informational requirements of the Exchange Act and file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. You may read and copy any reports, proxy statements and other information we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. You may also access filed documents at the SEC’s web site at www.sec.gov.

INCORPORATION BY REFERENCE OF CERTAIN DOCUMENTS

     We are incorporating by reference some information about us that we file with the SEC. We are disclosing important information to you by referencing those filed documents. Any information that we reference this way is considered part of this prospectus. The information in this prospectus supersedes information incorporated by reference that we have filed with the SEC prior to the date of this prospectus, while information that we file with the SEC after the date of this prospectus that is incorporated by reference will automatically update and supersede this information.

     We incorporate by reference the following documents we have filed, or may file, with the SEC:

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§	Our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed with the SEC on March 17, 2008;
§	Our Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended December 31, 2007, filed with the SEC on April 4, 2008;
§	Our Annual Report on Form 10-K/A (Amendment No. 2) for the fiscal year ended December 31, 2007, filed with the SEC on April 29, 2008;
§	Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed with the SEC on May 12, 2008;
§	Our Current Reports on Form 8-K filed with the SEC on February 4, 2008, as amended on February 5, 2008, February 6, 2008, as amended on February 19, 2008, February 8, 2008, February 15, 2008, April 11, 2008, April 14, 2008, April 24, 2008, May 16, 2008, May 23, 2008 and July 14, 2008; and
§	The description of our common stock contained in our Registration Statement on Form 8-A filed with the SEC on February 21, 1990 as updated by Form 8-A/A filed with the SEC on March 5, 1990.

     We also specifically incorporate by reference any documents filed by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and prior to the termination of this offering by the selling stockholders.

     To the extent that any information contained in any Current Report on Form 8-K, or any exhibit thereto, was furnished to, rather than filed with, the SEC, such information or exhibit is specifically not incorporated by reference in this prospectus.

     You may request a free copy of any of the documents incorporated by reference in this prospectus by writing or telephoning us at the following address:

Neurogen Corporation
35 Northeast Industrial Road
Branford, Connecticut 06405
(203) 488-8201

          Any statement contained in this prospectus or in a document incorporated by reference into, or deemed to be incorporated by reference into, this prospectus shall be deemed to be modified or superseded, for purposes of this prospectus, to the extent that a statement contained in any other subsequently filed document which also is incorporated by reference into, or is deemed to be incorporated by reference into, this prospectus modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

15

PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

     The following is a statement of the estimated costs and expenses incurred or expected to be incurred by us in connection with the issuance and distribution of the common stock being registered pursuant to this registration statement. All amounts except the Securities and Exchange Commission registration fee and the NASDAQ listing fee are estimated:

SEC Registration Fee	$	2,241
NASDAQ Listing Fee	$	65,000
Legal Fees and Expenses	$	110,000
Accounting Fees and Expenses	$	15,000
Total	$	192,241

Item 15. Indemnification of Directors and Officers.

     Neurogen is a Delaware corporation. Section 145 of the General Corporation Law of Delaware permits indemnification of directors, officers and employees of corporations organized thereunder under certain conditions and subject to certain limitations. Article EIGHTH of the Restated Certificate of Incorporation of Neurogen, as amended, provides that Neurogen shall, to the full extent permitted by Section 145, indemnify its directors and officers.

     Neurogen’s Restated Certificate of Incorporation, as amended, pursuant to Section 102(b)(7) of the General Corporation Law of Delaware, contains provisions eliminating the personal liability of a director to Neurogen or its stockholders for money damages for breach of fiduciary duty as a director. This provision in the Restated Certificate of Incorporation, as amended, does not eliminate the duty of care and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to the company, for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of the law, for actions leading to improper personal benefits to the director, and for payment of dividends or stock repurchases or redemptions that are unlawful under Delaware law. The provision does not affect a director’s responsibilities under any other law, such as the state or federal securities laws or state or federal environmental laws.

     As permitted by the General Corporation Law of Delaware, the directors and officers of Neurogen are covered by insurance against certain liabilities which might be incurred by them in such capacities and in certain cases against which they cannot be indemnified by Neurogen.

     At present, there is no pending litigation or proceeding involving a director or officer of Neurogen as to which indemnification is being sought nor is Neurogen aware of any threatened litigation that may result in claims for indemnification by any officer, director, or employee of Neurogen.

II-1

Item 16. Exhibits.

EXHIBIT INDEX

EXHIBIT
NUMBER	DESCRIPTION
3.1	Restated Certificate of Incorporation, as amended effective June 8, 2007 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2007).
3.2	By-Laws, as amended (incorporated by reference to Exhibit 3.6 to the Company’s Form 10-K for the fiscal year ended December 31, 1993).
3.3	Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Exchangeable Preferred Stock of Neurogen Corporation, filed April 10, 2008 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated April 7, 2008).
4.1	Registration Rights Agreement, between the Company and the certain investors named on Exhibit A thereto, dated April 7, 2008 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K dated April 7, 2008).
4.2*	Form of Series A Exchangeable Preferred Stock Certificate
4.3*	Form of Warrant Certificate
4.4*	Form of Common Stock Certificate
5.1	Opinion of Latham & Watkins LLP
10.1	Securities Purchase Agreement between the Company and the purchasers listed on Exhibit A thereto, dated April 7, 2008 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated April 7, 2008).
23.1	Consent of Latham & Watkins LLP (included in Exhibit 5.1)
23.2	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
24.1*	Powers of Attorney (included in signature page hereto)

* Previously filed

Item 17. Undertakings.

     The undersigned registrant hereby undertakes:

           (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

                     (i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

                     (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

                    (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the registration statement is on Form S-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in

II-2

periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) (§ 230.424(b) of this chapter) that is part of the registration statement.

          (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

          (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

                    (i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

                    (ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is a part of the registration statement will, as to a purchaser with a time of contract sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was a part of the registration statement or made in any such document immediately prior to such effective date.

     The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act and (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-3

SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Branford, State of Connecticut, on the 24^th day of July, 2008.

NEUROGEN CORPORATION
By:	/s/ Thomas A. Pitler
	Thomas A. Pitler
	Senior Vice President and Chief Business and Financial Officer

          Pursuant to the requirements of the Securities Act of 1933, this amendment No. 2 to the registration statement has been signed by or on behalf of the following persons in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
*
Craig Saxton	Chairman of the Board and Director	July 24, 2008
*
Stephen R. Davis	President and Chief Executive Officer (Principal	July 24, 2008
	Executive Officer) and Director
*
Felix J. Baker	Director	July 24, 2008
*
Julian C. Baker	Director	July 24, 2008
*
Eran Broshy	Director	July 24, 2008

II-4

SIGNATURE	TITLE	DATE
*
Stewart Hen	Director	July 24, 2008
*
William H. Koster	Director	July 24, 2008
*
John L. LaMattina	Director	July 24, 2008
*
Jonathan S. Leff	Director	July 24, 2008
*
John Simon	Director	July 24, 2008

/s/ Thomas A. Pitler
Thomas A. Pitler	Senior Vice President and Chief Business and	July 24, 2008
	Financial Officer (Principal Accounting Officer)

* By:	/s/ Thomas Pitler
	Thomas A. Pitler
	Attorney-in-fact

II-5

EXHIBIT INDEX

EXHIBIT
NUMBER	DESCRIPTION
3.1	Restated Certificate of Incorporation, as amended effective June 8, 2007 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2007).
3.2	By-Laws, as amended (incorporated by reference to Exhibit 3.6 to the Company’s Form 10-K for the fiscal year ended December 31, 1993).
3.3	Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Exchangeable Preferred Stock of Neurogen Corporation, filed April 10, 2008 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated April 7, 2008).
4.1	Registration Rights Agreement, between the Company and the certain investors named on Exhibit A thereto, dated April 7, 2008 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K dated April 7, 2008).
4.2*	Form of Series A Exchangeable Preferred Stock Certificate
4.3*	Form of Warrant Certificate
4.4*	Form of Common Stock Certificate
5.1	Opinion of Latham & Watkins LLP
10.1	Securities Purchase Agreement between the Company and the purchasers listed on Exhibit A thereto, dated April 7, 2008 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated April 7, 2008).
23.1	Consent of Latham & Watkins LLP (included in Exhibit 5.1)
23.2	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
24.1*	Powers of Attorney (included in signature page hereto)

* Previously filed

II-6

EX-5.1

Exhibit 5.1

	650 Town Center Drive, 20th Floor Costa Mesa, California 92626-1925 Tel: (714) 540-1235 Fax: (714) 755-8290 www.lw.com
	FIRM / AFFILIATE OFFICES
	Barcelona Brussels Chicago Frankfurt Hamburg Hong Kong London Los Angeles Madrid Milan Moscow Munich	New Jersey New York Northern Virginia Orange County Paris San Diego San Francisco Shanghai Silicon Valley Singapore Tokyo Washington, D.C.
	File No. 043493-0004

July 24, 2008

Neurogen Corporation
35 Northeast Industrial Road
Branford, CT 06405

Re: Registration Statement on Form S-3; 19,704,032 shares of common stock, par
value $0.025 per share

Ladies and Gentlemen:

     We have acted as special counsel to Neurogen Corporation, a Delaware corporation (the “Company”), in connection with the resale from time to time by the selling stockholders of up to 6,489,704 shares (the “Exchange Shares”) of the Company’s common stock, $0.025 par value per share (the “Common Stock”), issuable upon exchange of 249,604 shares of the Company’s Series A Exchangeable Preferred Stock held by the selling stockholders and 13,214,328 shares of Common Stock purchased by certain of the selling stockholders on March 19, 2004 (the “Shares”). The Exchange Shares and the Shares are included in a registration statement on Form S-3 under the Securities Act of 1933, as amended (the “Act”), filed with the Securities and Exchange Commission (the “Commission”) on May 1, 2008, as amended (File No. 333-150585) (the “Registration Statement”). This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or related prospectus (the “Prospectus”), other than as expressly stated herein with respect to the issue of the Exchange Shares and the Shares.

     As such counsel, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of this letter. With your consent, we have relied upon certificates and other assurances of officers of the Company and others as to factual matters without having independently verified such factual matters. We are opining herein as to the General Corporation Law of the State of Delaware (the “DGCL”), and we express no opinion with respect to any other laws.

     Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof:

     1. Upon (i) the approval by the requisite stockholders of the Company, by votes cast in favor at a meeting of the stockholders that has been duly called, noticed and held in accordance with the provisions of the Bylaws and the DGCL, of an amendment to the Restated

June 24, 2008
Page 2

Certificate of Incorporation of the Company, as amended (the “Restated Certificate”) that increases the authorized common stock to at least 100,000,000 shares (the “Amendment”) and (ii) the filing of the Amendment with, and the acceptance of the filed Amendment by, the Secretary of State of the State of Delaware, and assuming the Board of Directors of the Company at the time of the filing of the Amendment shall not have otherwise altered, withdrawn, repealed or revoked its prior adoption of the Amendment, approval of its filing or authorization and reservation of the Exchange Shares, the Exchange Shares will have been duly authorized by all necessary corporate action of the Company.

     2. When certificates representing the Exchange Shares (in the form of the specimen certificate examined by us) have been manually signed by an authorized officer of the transfer agent and registrar and the Exchange Shares have been issued and delivered by the Company in accordance with the terms of the Certificate of Designations, Number and Voting Powers, Preferences and Rights of Series A Exchangeable Preferred Stock of the Company (together with the Restated Certificate, the “Certificate of Incorporation”), the Exchange Shares will be validly issued, fully paid and non-assessable.

     3. The Shares have been duly authorized by all necessary corporate action of the Company and are validly issued, fully paid and nonassessable.

     This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.

Very truly yours,
 

/s/ Latham & Watkins LLP  

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form S-3/A of our report dated March 17, 2008 relating to the financial statements and the effectiveness of internal control over financial reporting (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern, as described in Note 1 to the consolidated financial statements), which appears in Neurogen Corporation’s Annual Report on Form 10-K for the year ended December 31, 2007. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
July 24, 2008

CORRESP

	650 Town Center Drive, 20th Floor Costa Mesa, California 92626-1925 Tel: +1.714.540.1235 Fax: +1.714.755.8290 www.lw.com
	FIRM / AFFILIATE OFFICES
	Barcelona Brussels Chicago Frankfurt Hamburg Hong Kong London Los Angeles Madrid Milan Moscow Munich	New Jersey New York Northern Virginia Orange County Paris San Diego San Francisco Shanghai Silicon Valley Singapore Tokyo Washington, D.C.

July 24, 2008

VIA EDGAR AND OVERNIGHT DELIVERY

Mr. Jeffrey P. Riedler
Assistant Director
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: Neurogen Corporation
Amendment No. 2 to Registration Statement on Form S-3
Filed July 24, 2008
File No. 333-150585

Dear Mr. Riedler:

     On behalf of our client, Neurogen Corporation, a Delaware corporation (the “Company”), and pursuant to the applicable provisions of the Securities Act of 1933, as amended, (the “Securities Act”) and the rules promulgated thereunder, please find enclosed for filing with the Securities and Exchange Commission (the “Commission”) a complete copy of Amendment No. 2 (“Amendment No. 2”) to the above-captioned Registration Statement on Form S-3 of the Company filed with the Commission on May 1, 2008 (the “Registration Statement”).

     This Amendment No. 2 reflects certain revisions of the Registration Statement in response to the comment letter to Mr. Stephen Davis, the Company’s Chief Executive Officer, dated July 16, 2008, from the staff of the Commission (the “Staff”). For your convenience, we are also providing copies of Amendment No. 2, marked to show changes against the Registration Statement, to each of Rose Zukin and you.

     The numbered paragraphs in italics below set forth the Staff’s comments together with our response. Unless otherwise indicated, capitalized terms used herein have the meanings assigned to them in the Registration Statement.

1. We note our prior Comment 7 and your response. The first bullet of that comment asked you to tell us the number of shares outstanding prior to the private placement transaction held by persons other than selling stockholders, affiliates of the company, and affiliates of the selling shareholders. While you have provided this information as of June 13, 2008, we were unable to locate information regarding ownership before the April 2008 private placement. Supplementally, please provide us with this information.

July 24, 2008
Page 2

	Response: The Company respectfully advises the Staff that the number of shares outstanding prior to the 2008 Private Placement held by persons other than selling stockholders, affiliates of the Company, and affiliates of the selling shareholders was 21,704,763 and is disclosed on page 1 of the Registration Statement.
2.	We note your response to Comment 12. Given the size relative to the number of shares outstanding held by non-affiliates, the nature of the offering and the selling security holders, the transaction appears to be a primary offering. Because you are not eligible to conduct a primary offering on Form S-3 you are not eligible to conduct a primary at-the-market offering under Rule 415(a)(4).

• Please file a registration statement for the “resale” offering at the time of each conversion because you are not eligible to conduct the offering on a delayed or continuous basis under Rule 415(a)(1)(x);

• Please Identify the selling shareholders as underwriters in the registration statement; and

• Please include the price at which the underwriters will sell the securities.

Response: The Company respectfully advises the Staff that it has reduced the number of shares of common stock being registered pursuant to the Registration Statement to cover only the shares of common stock issued by the Company in the 2004 Private Placement and 29.89% of the Company’s public float immediately prior to the 2008 Private Placement.

     We hope that the foregoing has been responsive to the Staff’s comments and look forward to resolving any outstanding issues as quickly as possible. Please do not hesitate to contact me at 714-755-8181 or my colleague, Wesley Holmes at 714-755-2231 with any questions or further comments you may have regarding this filing or if you wish to discuss the above.

Sincerely,


/s/ B. Shayne Kennedy
B. Shayne Kennedy
of LATHAM & WATKINS LLP
 

Enclosures

cc: (via fax)
Stephen Davis