0000950130-95-001542.txt : 19950811 0000950130-95-001542.hdr.sgml : 19950811 ACCESSION NUMBER: 0000950130-95-001542 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUROGEN CORP CENTRAL INDEX KEY: 0000849043 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222845714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18311 FILM NUMBER: 95560720 BUSINESS ADDRESS: STREET 1: 35 NORTHEAST INDUSTRIAL RD CITY: BRANFORD STATE: CT ZIP: 06405 BUSINESS PHONE: 2034888201 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-18311 NEUROGEN CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-2845714 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 35 Northeast Industrial Road Branford, Connecticut 06405 (Address of principal executive offices) (Zip Code) (203) 488-8201 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of August 9, 1995, the registrant had 10,138,333 shares of Common Stock outstanding. NEUROGEN CORPORATION INDEX
Page Number ------ Part I - Financial Information Item 1. Financial Statements........................................... 1 Balance Sheets at June 30, 1995 and December 31, 1994.............................................. 1,2 Statements of Operations and Accumulated Deficit for the three-month periods ended June 30, 1995 and 1994 and for the six-month periods ended June 30, 1995 and 1994................. 3 Statements of Cash Flows for the six-month periods ended June 30, 1995 and 1994......................................... 4 Notes to Financial Statements.................................. 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 7-11
Part II - Other Information Item 1. Legal Proceedings.................................. 11 Item 2. Changes in Securities.............................. 11 Item 3. Defaults upon Senior Securities.................... 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information.................................. 12 Item 6. Exhibits and Reports on Form 8-K................... 12 Signature ................................................... 13
i PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS NEUROGEN CORPORATION BALANCE SHEETS
JUNE 30, DECEMBER 31, 1995 1994 (UNAUDITED) (AUDITED) ----------- --------- Assets Current assets: Cash and cash equivalents $ 24,246,293 $ 9,439,727 Marketable securities 5,697,547 6,040,434 Other current assets 333,465 398,542 ------------ ------------ Total current assets 30,277,305 15,878,703 Property, plant & equipment: Land 425,000 425,000 Building 8,401,582 8,379,703 Equipment 2,938,801 2,297,728 Furniture 140,364 110,668 Equipment and furniture under capital lease - 1,200,000 ------------ ------------ 11,905,747 12,413,099 Less accumulated depreciation 1,750,161 2,588,476 ------------ ------------ Net property, plant and equipment 10,155,586 9,824,623 Other assets, net 206,446 185,752 ------------ ------------ $ 40,639,337 $ 25,889,078 ============ ============
See accompanying notes to financial statements. 1 NEUROGEN CORPORATION BALANCE SHEETS
June 30, December 31, 1995 1994 (Unaudited) (Audited) ------------- ------------- Liabilities and Stockholders' Equity Current Liabilities: Accrued expenses $ 1,021,766 $ 949,717 Unearned revenue from collaborative partner 3,900,000 - Current portion of mortgage payable 150,178 141,125 Current portion of capital lease obligation - 30,863 ------------ ------------ Total current liabilities 5,071,944 1,121,705 Mortgage payable, excluding current portion 542,464 619,887 Other compensation 62,587 62,587 Deferred gain on sale of assets - 4,375 ------------ ------------ Total liabilities 5,676,995 1,808,554 Stockholders' Equity: Preferred stock, par value $.025 per share. Authorized 2,000,000 shares; none issued Common stock, par value $.025 per share. Authorized 30,000,000 shares; issued and outstanding 10,128,133 shares at June 30, 1995 and 10,082,763 shares at December 31, 1994 253,203 252,069 Additional paid-in capital 45,806,431 45,607,590 Accumulated deficit (11,232,368) (21,766,182) Unrealized gain (loss) on marketable securities 135,076 (12,953) ------------ ------------ Total stockholders' equity 34,962,342 24,080,524 ------------ ------------ $ 40,639,337 $ 25,889,078 ============ ============
See accompanying notes to financial statements. 2
NEUROGEN CORPORATION STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ----------- ----------- Operating revenues: License fees $ 14,000,000 $ - $ 14,000,000 $ - Research revenue 1,869,666 1,150,000 3,739,333 2,300,000 ------------ ------------ ------------ ------------ Total operating revenues 15,869,666 1,150,000 17,739,333 2,300,000 Operating expenses: Research & development 2,845,719 1,983,893 5,889,691 4,343,649 General & administrative 817,870 828,624 1,506,302 1,626,151 ------------ ------------ ------------ ------------ Total operating expenses 3,663,589 2,812,517 7,395,993 5,969,800 Other income (expense): Investment income 273,095 96,928 453,470 152,589 Interest expense (17,897) (22,846) (35,996) (48,057) ------------ ------------ ------------ ------------ Total other income, net 255,198 74,082 417,474 104,532 Net income (loss) before provision for income taxes $ 12,461,275 $ (1,588,435) $ 10,760,814 $ (3,565,268) Provision for income taxes $ 227,000 - $ 227,000 - ------------ ------------ ------------ ------------ Net income (loss) $ 12,234,275 $ (1,588,435) $ 10,533,814 $ (3,565,268) ------------ ------------ ------------ ------------ Earnings (loss) per share: Primary $ 1.10 $ (0.18) $ 0.96 $ (0.40) ============ ============ ============ ============ Fully diluted $ 1.07 $ - $ 0.93 $ - ============ ============ ============ ============ Shares used in calculation of earnings (loss) per share: Primary 11,172,000 8,974,000 10,958,000 8,972,000 ============ ============ ============ ============ Fully diluted 11,401,000 - 11,381,000 - ============ ============ ============ ============ Accumulated deficit: Beginning of period $(23,466,643) $(17,091,820) $(21,766,182) $(15,114,987) ------------ ------------ ------------ ------------ End of period $(11,232,368) $(18,680,255) $(11,232,368) $(18,680,255) ============ ============ ============ ============
See accompanying notes to condensed financial statements. 3 NEUROGEN CORPORATION STATEMENTS OF CASH FLOWS
Six Months Six Months Ended June 30, Ended June 30, 1995 1994 (Unaudited) (Unaudited) -------------- -------------- Cash flows from operating activities: Net income (loss) $ 10,533,814 $ (3,565,268) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization expense 376,173 427,131 Unrealized loss on marketable securities - 61,474 Net loss (gain) on sale of assets 3,053 (13,125) Changes in operating assets and liabilities: Increase in accrued expenses 72,043 29,184 Increase in unearned revenue from collaborative partner 3,900,000 - Decrease in other current assets 65,076 74,866 Increase in other assets, net (29,610) (149,275) ------------- ------------- Net cash provided by (used in) operating activities 14,920,549 (3,135,013) ------------- ------------- Cash flows from investing activities: Purchase of plant and equipment (705,648) (277,679) Purchases of marketable securities (7,573,237) (8,360,449) Sales of marketable securities 8,064,154 8,224,197 ------------- ------------- Net cash used in investing activities (214,731) (413,931) ------------- ------------- Cash flows from financing activities: Exercise of employee stock options 199,976 - Exercise of warrants - 50,000 Principal payments under mortgage payable (68,370) (60,375) Principal payments under capital lease obligations (30,858) (169,510) ------------- ------------- Net cash provided by (used in) financing activities 100,748 (179,885) ------------- ------------- Net increase (decrease) in cash and cash equivalents 14,806,566 (3,728,829) Cash and cash equivalents at beginning of period 9,439,727 6,403,987 ------------- ------------- Cash and cash equivalents at end of period $ 24,246,293 $ 2,675,158 ============= =============
See accompanying notes to financial statements. 4 NEUROGEN CORPORATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995 (UNAUDITED) (1) Basis of Presentation and Summary of Significant Accounting Policies --------------------------------------------------------------------- The unaudited financial statements have been prepared from the books and records of Neurogen Corporation (the "Company") in accordance with generally accepted accounting principles for interim financial information pursuant to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for the fiscal year. (2) Agreement with Schering-Plough Corporation ------------------------------------------ In June 1995, Neurogen and Schering Corporation and Schering-Plough Ltd. (together, "Schering-Plough") Schering-Plough entered into the Collaboration and License Agreement dated as of June 28, 1995 (the "Schering-Plough Agreement") to collaborate in the discovery and development of antipsychotics and drugs for other disorders which act through the dopamine family of receptors. Pursuant to the Schering-Plough Agreement, the Company received one-time license fees of $14.0 million for the rights to Neurogen's dopamine compounds and $3.0 million for the right to test Neurogen's combinatorial chemistry libraries in selected non-CNS assays. Schering-Plough also agreed to pay an additional $3.0 million in 1996 for the right to test additional libraries. Moreover, Neurogen is entitled to receive approximately $7.2 million during the two-year period which commenced June 28, 1995 for research and development funding of the Company's antipsychotic program and may receive additional research and development funding of up to $3.6 million per year for three additional one-year periods depending on whether and the extent to which Schering- Plough exercises its right to extend the collaboration beyond July 1997. Neurogen could also receive milestone payments of up to approximately $32.0 million if it achieves certain development and regulatory objectives regarding its products subject to the collaboration. In return, Schering- Plough received the exclusive worldwide license to market products subject to the collaboration and Neurogen retained the rights to receive royalties based on net sales levels, if any. In addition to the payments described above, Schering-Plough is responsible for funding the cost of all clinical development and marketing, if any, of drugs subject to the collaboration. 5 (3) Earnings per Common Share ------------------------- Earnings per common share are computed in accordance with the treasury stock method. Primary and fully diluted earnings per share are based upon the weighted average number of common shares and dilutive common stock equivalents outstanding. Common stock equivalents include outstanding options under the Company's stock option plan and outstanding warrants to purchase shares of the Company's common stock. The common stock equivalents have not been included in periods with losses as their inclusion would be antidilutive. (4) Filing of Registration Statement -------------------------------- In July 1995, the Company filed a Registration Statement with the Securities and Exchange Commission to offer and sell up to 2,875,000 shares of common stock through an underwritten public offering. The offering is expected to be completed in the third quarter of 1995. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Since its inception in September 1987, Neurogen has been engaged in the discovery and development of proprietary therapeutic products for the treatment of psychiatric and neurological disorders. The Company has not derived any revenue from product sales and excluding the effect of $14,000,000 in one-time license fees received from Schering-Plough in 1995, expects to incur significant and increasing losses over at least the next several years, as it continues to expand its discovery and development programs. Its revenues to date have come from two collaborative research agreements entered into with Pfizer Inc. ("Pfizer"), one collaboration and license agreement with Schering-Plough and from interest income. The Company and Pfizer entered into the Collaborative Research Agreement dated as of January 1, 1992 (the "1992 Pfizer Agreement") to collaborate with respect to the development of compounds for anxiety and cognition disorders. The Company and Pfizer entered into the Collaborative Research Agreement dated as of July 1, 1994 (the "1994 Pfizer Agreement" and together with the 1992 Pfizer Agreement, the "Pfizer Agreements") to collaborate with respect to its sleep disorder program. The Company entered into the Schering-Plough Agreement in June 1995 to develop and market compounds for the treatment of psychiatric disorders which act through the dopamine family of receptors. RESULTS OF OPERATIONS Results of operations may vary from period to period depending on numerous factors, including the timing of payments received under existing or future strategic alliances, joint ventures or financings, if any, the progress of the Company's research and development projects, technological advances and determinations as to the commercial potential of proposed products. Neurogen expects research and development costs to increase significantly over the next several years as its drug development programs progress. In addition, general and administrative expenses necessary to support the expanded research and development activities are expected to increase for the foreseeable future. THREE MONTHS ENDED JUNE 30, 1995 AND 1994 In June 1995, the Company received, and recognized as revenue, $14,000,000 in one-time license fees from Schering-Plough in connection with entering into the Schering-Plough Agreement. The Company's operating revenues were $15,869,666 for the three months ended June 30, 1995 compared to $1,150,000 for the same period in 1994. This increase is due primarily to the above-referenced $14,000,000 in one-time license fees. Research funding pursuant to the Pfizer Agreements increased 63% for the three-month period ended June 30, 1995 compared to the same period in 1994, due to the commencement of the 1994 Pfizer Agreement in the third quarter of 1994. The Company will begin recognizing research revenue under the Schering-Plough Agreement in the third quarter of 1995. Research funding under the 1992 Pfizer Agreement, which has represented $4.6 million per year for the last three years, is scheduled to terminate at the end of 1995 if Pfizer does not extend the collaboration. Research and development costs have increased $861,826, or 43%, to $2,845,719 for the three-month period ended June 30, 1995 as compared to the same period in 1994. This increase is due primarily to expansion of preclinical and clinical testing on the Company's lead antipsychotic compound, increased staffing levels and purchases of laboratory equipment, materials and supplies. Research and development costs represented 78% of total operating expenses for the second quarter of 1995 as compared to 71% for the same period in 1994. 7 General and administrative expenses decreased $10,754, or 1%, to $817,870 for the three-month period ended June 30, 1995 as compared to the same period in 1994. Other revenues, consisting primarily of interest income and gains and losses from U.S. government securities, increased 182% for the second quarter of 1995 compared to the same period in 1994 due to realized gains on U.S. government securities and a higher level of invested funds. The Company recognized net income of $12,234,275 for the three months ended June 30, 1995 as compared with a net loss of $1,588,435 for the same period in 1994. The net income in 1995 is primarily due to the increase in revenues resulting from one-time license fees of $14,000,000 from Schering- Plough Corporation for the rights to Neurogen's dopamine compounds. SIX MONTHS ENDED JUNE 30, 1995 AND 1994 In June 1995, the Company received, and recognized as revenue, $14,000,000 in one-time license fees from Schering-Plough in connection with entering into the Schering-Plough Agreement. The Company's operating revenues were $17,739,333 for the six months ended June 30, 1995 compared to $2,300,000 for the same period in 1994. This increase is due primarily to the above-referenced $14,000,000 in one-time license fees. In addition, research funding pursuant to the Pfizer Agreements increased 63% for the six-month period ended June 30, 1995 compared to the same period in 1994, due to the commencement of the 1994 Pfizer Agreement in the third quarter of 1994. The Company will begin recognizing research revenue under the Schering-Plough Agreement in the third quarter of 1995. Research funding under the 1992 Pfizer Agreement, which has represented $4.6 million per year for the last three years, is scheduled to terminate at the end of 1995 if Pfizer does not extend the collaboration. Research and development costs have increased $1,546,042 or 36% to $5,889,691 for the six-month period ended June 30, 1995 as compared to the same period in 1994. This increase is due primarily to expansion of preclinical and clinical testing on the Company's lead antipsychotic compound, increased staffing levels and purchases of laboratory equipment, materials and supplies. Research and development costs represented 80% of total operating expenses for the first six months of 1995 as compared to 73% for the same period in 1994. General and administrative expenses decreased $119,849 or 7% for the six-month period ended June 30, 1995 as compared to the same period in 1994. This decrease is primarily attributable to a refinement in the Company's allocation of expenses between research and development and general and administrative and to a general reduction of expenses in several areas. Other revenues, consisting primarily of interest income and gains and losses from U.S. government securities, increased 197% for the first six months of 1995 compared to the same period in 1994 due to higher interest rates, realized gains on U.S. government securities and a higher level of invested funds. The Company recognized net income of $10,533,814 for the six-month period ended June 30, 1995 as compared with a net loss of $3,565,268 for the same period in 1994. The net income in 1995 is primarily due to the increase in revenues resulting from one-time license fees of $14,000,000. 8 from Schering-Plough Corporation for the rights to Neurogen's dopamine compounds. In 1993 and 1994, respectively, the Company adopted Financial Accounting Standards Board Statements No. 109, "Accounting for Income Taxes" ("SFAS 109") and, No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"). Adoption of SFAS 109 and 115 did not have a significant impact on the Company's financial statements. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1995 and December 31, 1994, cash, cash equivalents and marketable securities were in the aggregate $29,944,000 and $15,480,000, respectively. The increase in 1995 was primarily due to $17,900,000 (including $3,900,000 of unearned revenue) received from Schering-Plough in connection with entering into the Schering-Plough Agreement, offset in part by the application of such resources to fund operations. At December 31, 1994, 1993 and 1992, cash, cash equivalents and marketable securities were in the aggregate $15,480,000, $12,326,000 and $19,423,000, respectively. The increase in 1994 was due to cash received pursuant to the 1994 Pfizer Agreement. The decrease in 1993 was primarily a result of $3,382,699 in cash required to fund operations in excess of cash generated from operations, together with office and research facility and equipment additions of $3,075,347. The Company's aggregate level of cash, cash equivalents and marketable securities have fluctuated in the past and are expected to fluctuate in the future as a result of the factors described below. Neurogen's cash requirements to date have been met by the proceeds of its financing activities, including interest earned on such proceeds and research funding received pursuant to the Pfizer Agreements and the Schering-Plough Agreement and one-time license fees from the Schering- Plough Agreement. The Company's financing activities have included three private placement offerings of the Company's common stock during 1988 and 1989, a public offering of the Company's common stock in each of 1989 and 1991 and the sale of common stock to Pfizer in 1992 and 1994 in connection with entering into the Pfizer Agreements. Total funding received from these financing activities was approximately $45,400,000. The Company's expenditures have been primarily to fund research and development and general and administrative expenses including hiring, management and administrative personnel, and to construct and equip its research and development facility. In the first quarter of 1992, the Company entered into the 1992 Pfizer Agreement effective January 1992 pursuant to which Pfizer made a $13,750,000 equity investment in the Company. Pursuant to the 1992 Pfizer Agreement, the Company expects to receive approximately $18,400,000 during the four-year period which commenced January 1, 1992 for research and development funding of the Company's anxiolytic (anxiety-reducing drugs) and cognitive enhancer programs, and may receive up to an additional $4,600,000 for a fifth year should Pfizer exercise its option to extend the collaboration. Neurogen could also receive milestone payments of up to $12,500,000 during the development and regulatory approval of its products. In return, Pfizer received the exclusive rights to manufacture and market anxiolytics that act through the family of receptors which interact with the neuro-transmitter gama-aminobutyric acid, or GABA, and cognition enhancers developed in the collaboration for which it will pay Neurogen royalties based upon net sales levels, if any, for such products. As of June 30, 1995, Pfizer had provided $16,100,000 of research funding to the Company pursuant to the 1992 Pfizer Agreement, in addition to its equity investment in 1992. Neurogen and Pfizer entered into their second collaborative agreement, the 1994 Pfizer Agreement, in July 1994, pursuant to which Pfizer provided $9,864,000 in equity financing. Pursuant to the 1994 Pfizer Agreement, the 9 Company expects to receive approximately $7,386,000 during the three-year period which commenced July 1, 1994, for research and development funding of the Company's sleep disorder program and may receive up to an additional $2,379,000 for a fourth year should Pfizer exercise its option to extend the collaboration. Neurogen could also receive milestone payments of up to $3,250,000 during the development and regulatory approval of its sleep disorder compounds. As part of this second collaboration, Pfizer received the exclusive rights to manufacture and market GABA-based sleep disorder products developed in the collaboration for which it will pay Neurogen royalties depending upon net sales levels, if any. As of June 30, 1995, Pfizer had provided $2,628,667 of research funding to the Company pursuant to the 1994 Pfizer Agreement, in addition to its equity investment in 1994. Under both the 1992 Pfizer Agreement and the 1994 Pfizer Agreement, in addition to making the equity investments and the research and milestone payments noted above, Pfizer is responsible for funding the cost of all clinical development and marketing, if any, of drugs developed from the collaboration. In June 1995, Neurogen and Schering-Plough entered into the Schering- Plough Agreement pursuant to which Neurogen and Schering-Plough are collaborating in the discovery and development of antipsychotics and drugs for other disorders which act through the dopamine family of receptors. Pursuant to the Schering-Plough Agreement, the Company received one-time license fees of $14,000,000 for the rights to Neurogen's dopamine compounds and $3,000,000 for the right to test certain of Neurogen's combinatorial chemistry libraries in selected non-CNS assays. Schering-Plough also agreed to pay an additional $3,000,000 in 1996 for the right to test additional libraries. Moreover, Neurogen expects to receive approximately $7,200,000 during the two-year period which commenced June 28, 1995, of which $900,000 had been paid as of June 30, 1995, for research and development funding of the Company's antipsychotic program. The Company may receive additional research and development funding of up to $3,600,000 per year for three additional one-year periods depending on whether and the extent to which Schering-Plough exercises its right to extend the collaboration. Neurogen could also receive milestone payments of up to approximately $32,000,000 if it achieves certain development and regulatory objectives regarding its products subject to the collaboration. In return, Schering-Plough received the exclusive worldwide license to market products subject to the collaboration and Neurogen retained the rights to receive royalties based on net sales levels, if any. The Company plans to use its cash balance for its research and development activities, working capital and general corporate purposes. Neurogen anticipates that its cash balance, as supplemented by research funding pursuant to the Pfizer Agreements and the Schering-Plough Agreement, will be sufficient to fund its current and planned operations through 1997. However, Neurogen's funding requirements may change and will depend upon numerous factors, including but not limited to, the progress of the Company's research and development programs, the timing and results of preclinical testing and clinical studies, the timing of regulatory approvals, technological advances, determinations as to the commercial potential of its proposed products, the status of competitive products and the ability of the Company to establish and maintain collaborative arrangements with others for the purpose of funding certain research and development programs, conducting clinical studies, obtaining regulatory approvals and, if such approvals are obtained, manufacturing and marketing products. The Company anticipates that it will augment its 10 cash balance through financing transactions, including the issuance of debt or equity securities and further corporate alliances. No arrangements have been entered into for any future financing and no assurances can be given that adequate levels of additional funding can be obtained on favorable terms, if at all. As of December 31, 1994, for federal income tax purposes, the Company had generated net operating loss carryforwards of approximately $22,800,000, which are scheduled to expire in the years 2003 through 2009. A significant portion of these net operating loss carryforwards will be utilized in 1995 as a result, in part, of one-time payments received and corresponding revenues recognized pursuant to the Schering-Plough Agreement. Future issuance of securities by the Company and/or sales of securities by the Company's principal shareholders could result in an ownership change as defined by Section 382 of the Internal Revenue Code of 1986. Such an ownership change could limit the Company's utilization of net operating loss carryforwards to offset future taxable income, if any. 11 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable for the quarter ended June 30, 1995. ITEM 2. CHANGES IN SECURITIES Not applicable for the quarter ended June 30, 1995. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable for the quarter ended June 30, 1995. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 6, 1995 the Company held its annual meeting of stockholders (i) to elect a board of eleven directors (Proposal 1) and (ii) to approve the appointment by the Board of Directors of KPMG Peat Marwick LLP as the independent auditors for the Company for fiscal year ending December 31, 1995 (Proposal 2). The stockholders elected the persons named below, the Company's nominees for directors, as directors of the Company, casting votes in favor of such nominees or withholding votes as indicated: Votes in Favor Votes Withheld -------------- --------------- Barry M. Bloom, Ph.D. 6,147,791 500 Robert N. Butler, M.D. 6,147,791 500 Frank C. Carlucci 6,147,791 500 Jeffrey J. Collinson 6,147,791 500 Robert M. Gardiner 6,147,791 500 Richard D. Harrison 6,147,791 500 Mark Novitch, M.D. 6,147,791 500 Harry H. Penner, Jr. 6,147,791 500 Robert H. Roth, Ph.D. 6,147,791 500 John Simon 6,147,791 500 John F. Tallman, Ph.D. 6,147,791 500 The Stockholders approved Proposal 2, voting as follows: Affirmative Votes Negative Votes Votes Abstained ----------------- -------------- --------------- 6,147,791 0 500 12 Of the shares held by brokers, shares not voted were as follows: Not Voted --------- Proposal 1 -0- Proposal 2 -0- ITEM 5. OTHER INFORMATION Not applicable for the quarter ended June 30, 1995. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (b) Reports on Form 8-K ------------------- The Company filed a Current Report on Form 8-K, dated June 15, 1995, reporting in Item 5 that the Company had entered into the Schering- Plough Agreement to jointly develop a new generation of pharmaceuticals that bind selectively to specific dopamine receptor sub-types. The Form 8-K included in Item 7 a copy of the news release dated June 15, 1995, announcing the matters described in Item 5 of the Form 8-K. The Company filed a Current Report on Form 8-K, dated July 28, 1995, including in Item 7 a copy of the Schering-Plough Agreement with certain confidential matters omitted under a request for Confidential Treatment. The Company made no other filings on Form 8-K during the quarter ended June 30, 1995. 13 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEUROGEN CORPORATION By:/s/ STEPHEN R. DAVIS ----------------------- Stephen R. Davis Vice President-Finance and Chief Financial Officer Date: August 10, 1995 Exhibit Index ------------- Exhibit ------- Number ------ 10.1 - Neurogen Corporation Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 10.2 - Form of Stock Option Agreement currently used in connection with the grant of options under Neurogen Corporation Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-K for the fiscal year ended December 31, 1992). 10.3 - Neurogen Corporation 1993 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.4 - Form of Stock Option Agreement currently used in connection with the grant of options under Neurogen Corporation 1993 Omnibus Incentive Plan (incorporated by reference of Exhibit 10.4 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.5 - Neurogen Corporation 1993 Non-Employee Directors Stock Option Program (incorporated by reference to Exhibit 10.5 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.6 - Form of Stock Option Agreement currently used in connection with the grant of options under Neurogen Corporation 1993 Non-Employee Directors Stock Option Program (incorporated by reference to Exhibit 10.6 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.7 - Employment Contract between the Company and Harry H. Penner, Jr., dated as of October 12, 1993 (incorporated by reference to Exhibit 10.7 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.8 - Employment Contract between the Company and John F. Tallman, dated as of December 1, 1993 (incorporated by reference to Exhibit 10.25 to the Company's Form 10-Q for the quarterly period ended September 30, 1994). 10.9 - Open-End Mortgage Deed and Security Agreement between the Company and Orion Machinery & Engineering Corp., dated March 16, 1989 (incorporated by reference to Exhibit 10.15 to Registration Statement No. 33-29709 on Form S-1). 15 10.10 - Construction Agreement between the Company and Frank E. Downes Construction Company, Inc., dated August 25, 1992 (incorporated by reference to Exhibit 10.17 to the Company's Form 10-K for the fiscal year ended December 31, 1992). 10.11 - Letter Agreement between the Company and Biotechnology Venture Fund S.A., dated August 5, 1988 (incorporated by reference to Exhibit 10.26 to Registration Statement No. 33-29709 on Form S-1). 10.12 - Letter Agreement between the Company and Biotechnology Venture Fund S.A., dated February 5, 1989 (incorporated by reference to Exhibit 10.27 to Registration Statement No. 33-29709 on Form S-1). 10.13 - Letter Agreement between David Blech and Peter McPartland, dated February 17, 1989 (incorporated by reference to Exhibit 10.28 to Registration Statement No. 33-29709 on Form S-1). 10.14 - Letter Agreement between David Blech and Isaac Blech and Michael Drew, dated February 21, 1989 (incorporated by reference to Exhibit 10.29 to Registration Statement No. 33-29709 on Form S-1). 10.15 - Letter Agreement between the Company and Schroder International Trust Co., Ltd., dated February 24, 1989 (incorporated by reference to Exhibit 10.30 to Registration Statement No. 33-29709 on Form S-1). 10.16 - Form of Proprietary Information and Inventions Agreement (incorporated by reference to Exhibit 10.31 to Registration Statement No. 33-29709 on Form S-1). 10.17 - Warrant to Purchase 47,058 Shares of Common Stock to MMC/GATX Partnership No. I, dated February 20, 1991 (incorporated by reference to Exhibit 10.34 to the Company's Form 10-K for the fiscal year ended December 31, 1990). 10.18 - Collaborative Research Agreement between the Company and Pfizer Inc, dated as of January 1, 1992 (incorporated by reference to Exhibit 10.35 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 10.19 - License Agreement between the Company and the National Technical Information Service, dated as of January 1, 1992 (incorporated by reference to Exhibit 10.36 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 16 10.20 - Cooperative Research and Development Agreement between the Company and the National Institutes of Health, dated as of January 21, 1992 (incorporated by reference to Exhibit 10.37 to the Company's Form 10-K for the fiscal year ended December 31, 1991). 10.21 - Letter Agreement between the Company and Robert H. Roth dated April 14, 1994 (incorporated by reference to Exhibit 10.26 to the Company's Form 10-K for the fiscal year ended December 31, 1994). 10.22 - Letter Agreement between the Company and Barry M. Bloom, dated January 12, 1994 (incorporated by reference to Exhibit 10.25 to the Company's Form 10-K for the fiscal year ended December 31, 1993). 10.23 - Collaborative Research Agreement between the Company and Pfizer Inc, dated as of July 1, 1994 (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarterly period ended June 30, 1994). 10.24 - Stock Purchase Agreement between the Company and Pfizer dated as of July 1, 1994 (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarterly period ended June 30, 1994). 10.25 - Registration Rights and Standstill Agreement Among Neurogen Corporation and the Persons and Entities listed on Schedule I thereto, dated as of July 11, 1994 (incorporated by reference to Exhibit 10.29 to the Company's Form 10-Q for the quarterly period ended September 30, 1994). 10.26 - Collaboration and License Agreement between the Company and Schering Corporation and Schering-Plough Ltd. dated as of June 28, 1995 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K dated July 28, 1995 and subject to a request for Confidential Treatment). 11.1 - Computation of Income (Loss) per Common Share. 27.1 - Financial Data Schedule. 17 EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11.1
NEUROGEN CORPORATION COMPUTATION OF INCOME (LOSS) PER COMMON SHARE (in thousands, except Income (Loss) per Common Share amounts) Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ------------- ------------- ------------- ------------- Primary: Weighted average shares of common stock outstanding 10,105 8,974 10,094 8,972 Dilutive effect of: Warrants(1) 37 - 36 - Stock options(1) 1,030 - 828 - -------- -------- -------- ------- Common and common equivalent shares 11,172 8,974 10,958 8,972 ======== ======== ======== ======= Net income (loss) $ 12,234 $ (1,588) $ 10,534 $(3,565) ======== ======== ======== ======= Earnings (loss) per common and common equivalent shares (1) $ 1.10 $ (0.18) $ 0.96 $ (0.40) ======== ======== ======== ======= Fully diluted: Weighted average shares of common stock outstanding 10,105 8,974 10,094 8,972 Dilutive effect of: Warrants(1) 40 - 39 - Stock Options(1) 1,256 - 1,248 - Common and common equivalent shares 11,401 8,974 11,381 8,972 ======== ======== ======== ======= Net income (loss) $ 12,234 $ (1,588) $ 10,534 $(3,565) ======== ======== ======== ======= Earnings per common and common equiva- lent shares (1) $ 1.07 $ - $ 0.93 $ - ======== ======== ======== =======
(1) The common stock equivalents have not been included in periods with losses as their inclusion would be antidilutive. EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 24246293 5697547 0 0 0 30277305 11905747 1750161 40639337 5071944 0 253203 0 0 34709139 40639337 0 17739333 0 7395993 (417474) 0 35996 10760814 227000 10533814 0 0 0 10533814 .96 .93