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                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC  20549
                                       
                                  FORM 10-Q
                                       
(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended March 31, 1997
                                       
                                       OR
                                       
[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
          EXCHANGE ACT OF 1934
          For the transition period from ________ to ________

                          Commission File Number 0-20954
                                        

                                  COCENSYS, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                       
                                       
               DELAWARE                              33-0538836
   (STATE OR OTHER JURISDICTION OF        (I.R.S. EMPLOYER IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION)   
                                       
                       213 TECHNOLOGY DRIVE, IRVINE, CA  92718
             (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
                                       
                                (714) 753-6100
                (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        
                         -----                     -----

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

             $.001 PAR VALUE                            22,517,321
          (CLASS OF COMMON STOCK)              (OUTSTANDING AT MAY 9, 1997)

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                                COCENSYS, INC.
                                       
                              TABLE OF CONTENTS
                                           
                                                                    PAGE NUMBER
                                                                    -----------
PART I.   FINANCIAL INFORMATION
               
          ITEM 1.   FINANCIAL STATEMENTS.

                    Condensed Balance Sheets as of March 31, 1997
                    and December 31, 1996                                  3

                    Condensed Statements of Operations for the 
                    three-month periods ended March 31, 1997 and 1996 
                    and the period from inception (February 15, 1989) 
                    through March 31, 1997                                 4

                    Condensed Statements of Cash Flows for the 
                    three-month periods ended  March 31, 1997 and 1996 
                    and the period from inception (February 15, 1989) 
                    through March 31, 1997                                 5

                    Notes to Condensed Financial Statements                6


          ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS.                  10
               
               
PART II.  OTHER INFORMATION
               
          ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.                     14
 

SIGNATURES                                                                15

                                       2
<PAGE>

                                 COCENSYS, INC.
                         (A development stage company)
                                       
                            CONDENSED BALANCE SHEETS
               (In thousands, except share and par value amounts)
                                           
                                                 MARCH 31,       DECEMBER 31,
                                                   1997              1996    
                                               ------------     -------------
                                                (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                    $      2,195     $       1,050
  Short-term investments                             11,079            16,949
  Receivables from corporate partners                   632               659
  Other current assets                                  442               556
                                               ------------     -------------
TOTAL CURRENT ASSETS                                 14,348            19,214

Property and equipment, net                           2,656             2,685
Notes receivable from officers                          203               126
Other assets, net                                        26                26
                                               ------------     -------------
                                               $     17,233      $     22,051
                                               ------------     -------------
                                               ------------     -------------

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                            $       1,354     $       1,437
  Other accrued liabilities                           1,974             2,556
  Advances from corporate partners                       99               446
  Capital lease obligation - current portion            477               341
                                               ------------     -------------
TOTAL CURRENT LIABILITIES                             3,904             4,780

Capital lease obligation, less current portion          275               284
Other liabilities                                        39                40

Commitments and contingencies                              

Stockholders' equity:
  Preferred stock - $.001 par value,
    5,000,000 shares authorized; 100,000 shares 
    Series B convertible issued and outstanding       7,000             7,000
Common stock - $.001 par value,
    75,000,000 shares authorized; 22,495,769 shares 
    issued and outstanding at March 31, 1997 and 
    22,083,346 at December 31, 1996                  95,909            93,986
Deficit accumulated during the development stage    (89,243)          (83,162)
Deferred compensation                                  (639)             (905)
Unrealized gain (loss) on investments                   (12)               28
                                               ------------     -------------
TOTAL STOCKHOLDERS' EQUITY                           13,015            16,947
                                               ------------     -------------
                                               ------------     -------------
                                               $     17,233      $     22,051
                                               ------------     -------------
                                               ------------     -------------
                                       
                             See accompanying notes

                                       3
<PAGE>

                                COCENSYS, INC.
                        (A development stage company)
                                      
                     CONDENSED STATEMENTS OF OPERATIONS
                  (In thousands, except per share amounts)
                                 (Unaudited)
                                       
<TABLE>
<CAPTION>
                                                                                             PERIOD FROM
                                                                                              INCEPTION
                                                                  THREE MONTHS ENDED        (FEBRUARY 15,
                                                                       MARCH 31,               1989) TO
                                                               --------------------------      MARCH 31,
                                                                  1997            1996           1997 
                                                               -----------    -----------    -----------
<S>                                                            <C>            <C>            <C>
REVENUES
  Co-promotion revenues from corporate partners                $     1,123    $       798    $    28,024
  Co-development revenues from corporate partners                      702            833          8,745
                                                               -----------    -----------    -----------
Total revenues                                                       1,825          1,631         36,769
                                                               -----------    -----------    -----------
OPERATING EXPENSES
  Research and development                                           5,432          4,823         73,604
  Marketing, general and administrative                              2,679          2,663         40,309
  Acquired research and development and advances to Acea                 -              -         14,879
                                                               -----------    -----------    -----------
Total operating expenses                                             8,111          7,486        128,792
                                                               -----------    -----------    -----------
                                                               -----------    -----------    -----------

OPERATING LOSS                                                      (6,286)        (5,855)       (92,023)

Interest income                                                        219            272          3,774
Interest expense                                                       (14)           (30)          (994)
                                                               -----------    -----------    -----------

NET LOSS                                                       $    (6,081)   $    (5,613)   $   (89,243)
                                                               -----------    -----------    -----------
                                                               -----------    -----------    -----------

Net loss per share                                             $     (0.27)   $     (0.26)
                                                               -----------    -----------    
                                                               -----------    -----------    

Shares used in computing net loss per share                         22,251         21,193
                                                               -----------    -----------    
                                                               -----------    -----------    
</TABLE>

                             See accompanying notes

                                       4
<PAGE>

                                COCENSYS, INC.
                        (A development stage company)
                                      

                     CONDENSED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                                                                            PERIOD FROM
                                                                                                             INCEPTION
                                                                                 THREE MONTHS ENDED        (FEBRUARY 15,
                                                                                       MARCH 31,              1989) TO
                                                                               -------------------------      MARCH 31,
                                                                                 1997            1996           1997 
                                                                               ----------     ----------     ----------
<S>                                                                            <C>            <C>            <C>
OPERATING ACTIVITIES
Net loss                                                                       $   (6,081)    $   (5,613)    $  (89,243)

Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation and amortization                                                       267            488          6,156
  Amortization of deferred compensation                                                74            201          3,412
  Issuance of stock and warrants for services                                           -              -          1,917
  Loss on sale of fixed assets                                                          -              -             26
  Acquired research and development                                                     -              -         12,279
  Decrease (increase) in other current assets                                         114           (328)          (514)
  Decrease (increase) in receivable from corporate partner                             27              -           (632)
  Increase (decrease) in advances from corporate partners                            (347)         1,547             99
  Increase (decrease) in accounts payable and other accrued liabilities              (665)          (632)         3,092
                                                                               ----------     ----------     ----------
NET CASH USED IN OPERATING ACTIVITIES                                              (6,611)        (4,337)       (63,408)
                                                                               ----------     ----------     ----------
INVESTING ACTIVITIES
Decrease (increase) in short-term investments                                       5,830        (10,297)       (11,092)
Purchase of property and equipment                                                   (238)          (264)        (5,863)
Increase in other assets and notes receivable from officers                           (77)            (6)          (385)
Cash received on sale of fixed assets                                                   -              -             19
Increase in deferred sales organization costs                                           -              -         (1,571)
Increase in deferred patent costs                                                       -              -           (904)
Acquisition of Acea Pharmaceuticals, net of cash acquired                               -              -            (62)
                                                                               ----------     ----------     ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                 5,515        (10,567)       (19,858)
                                                                               ----------     ----------     ----------
FINANCING ACTIVITIES
Net cash proceeds from issuance of common stock                                     2,115         14,676         60,900
Net cash proceeds from issuance of preferred stock                                      -              -         23,381
Proceeds from sale/leaseback of fixed assets and notes payable                        334            253          4,567
Payments on capital lease obligations and notes payable                              (208)          (270)        (3,387)
                                                                               ----------     ----------     ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                           2,241         14,659         85,461
                                                                               ----------     ----------     ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                1,145           (245)         2,195
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    1,050          6,895              -
                                                                               ----------     ----------     ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $    2,195     $    6,650     $    2,195
                                                                               ----------     ----------     ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                                         $       14     $       30     $      768
                                                                               ----------     ----------     ----------

</TABLE>

                             See accompanying notes

                                       5
<PAGE>

                                COCENSYS, INC.
                        (A development stage company)

                   NOTES TO CONDENSED FINANCIAL STATEMENTS
                                      
                               MARCH 31, 1997
                                 (UNAUDITED)
                                           
                                           
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION

    The interim financial information for the three-month periods ended March 
    31, 1997 and 1996 is unaudited but includes all adjustments (consisting 
    only of normal recurring entries) which the Company's management believes 
    to be necessary for the fair presentation of the financial position, 
    results of operations and cash flows for the periods presented.  The 
    accompanying interim financial statements should be read in conjunction 
    with the financial statements and related notes included in the Company's 
    1996 Annual Report on Form 10-K for the year ended December 31, 1996. 
    Certain information and footnote disclosures normally included in 
    financial statements prepared in accordance with generally accepted 
    accounting principles have been condensed or omitted pursuant to 
    Securities and Exchange Commission rules and regulations.  Interim 
    results of operations for the three-month period ended March 31, 1997, 
    are not necessarily indicative of operating results to be expected for 
    the full year.

    REVENUE AND EXPENSE RECOGNITION

    See Notes 2, 3, 4 and 5 for revenue recognition policies related to 
    co-promotion and co-development revenues from corporate partners. 

    NET LOSS PER SHARE

    Net loss per share is computed using the weighted average number of 
    shares of common stock outstanding during the periods.  Common stock 
    equivalents from stock options and warrants are excluded from the 
    calculation as their effect would be antidilutive.

    RECLASSIFICATIONS
    
    Certain reclassifications have been made to the 1996 financial statements 
    to conform to the 1997 presentation.

    
2.  MARKETING AND DEVELOPMENT COLLABORATION WITH WARNER-LAMBERT COMPANY

    In October 1995, the Company entered into a collaboration with 
    Warner-Lambert Company and its Parke-Davis division to develop and market 
    therapeutic drugs for the treatment of certain CNS disorders.  This 
    arrangement consists of the Research, Development and Marketing 
    Collaboration Agreement (the "Warner Collaboration Agreement"), for the 
    worldwide development and 

                                       6
<PAGE>

                                COCENSYS, INC.
                        (A development stage company)

                   NOTES TO CONDENSED FINANCIAL STATEMENTS
                                      
    commercialization of a new class of neurological and psychiatric drugs, 
    termed subtype selective NMDA receptor antagonists ("SSNRAs"), and the 
    Parke-Davis Promotion Agreement, pursuant to which the Company 
    co-promotes Parke-Davis' CNS drug, Cognex, to United States neurologists 
    for the treatment of Alzheimer's disease.

    The original Parke-Davis Promotion Agreement, entered into in October 
    1995, was terminated on December 31, 1996, when a revised promotion 
    agreement took effect.  Under the original Parke-Davis Promotion 
    Agreement, the Company realized co-promotion revenues from its share of 
    sales of Cognex above certain baseline levels specified in the contract.  
    The agreement provided for funds to be prepaid to the Company each 
    quarter to cover training and operating expenses incurred by the CoCensys 
    sales force to promote Cognex. Under the revised Parke-Davis Promotion 
    Agreement, the Company realizes co-promotion revenues based upon the 
    number of prescriptions for Cognex written by certain targeted 
    neurologists and other doctors during each quarter, with a specified 
    minimum payment.  The agreement provides that funds equal to the 
    specified minimum payment will be prepaid to the Company each quarter to 
    cover training and operating expenses to be incurred by the CoCensys 
    sales force to promote Cognex.  The agreement is scheduled to terminate 
    December 31, 1997.  Either party has the right to terminate the Promotion 
    Agreement earlier, without cause.

    Under the Warner Collaboration Agreement, both companies are sharing 
    technology and resources to develop SSNRA candidates. The parties are 
    obligated to make specified contributions to development costs with 
    respect to any development candidates. Promotion costs of, and profits 
    from any products developed under the agreement will be shared equally in 
    the United States and Japan.  Warner-Lambert will have the exclusive 
    right to develop and market any product, at its own cost, for markets 
    outside the United States and Japan, subject to a specified royalty 
    payment to the Company. Warner-Lambert is obligated to pay its specified 
    portion of the development costs and to make certain milestone payments, 
    upon achievement of certain clinical development and regulatory 
    milestones, for each development compound.  Payments received under the 
    Warner Collaboration Agreement will be recognized as co-development 
    revenues by the Company.

    Pursuant to the Warner Collaboration Agreement, Warner-Lambert purchased 
    $2.0 million of CoCensys common stock in October 1995 and an additional 
    $2.0 million of CoCensys common stock in March 1997. 

3.  PROMOTION AGREEMENT WITH SOMERSET PHARMACEUTICALS, INC.

    In January 1996, the Company and Somerset Pharmaceuticals, Inc. 
    ("Somerset") entered into the Somerset Promotion Agreement, pursuant to 
    which the Company promotes Somerset's drug Eldepryl to neurologists in 
    the United States for the treatment of Parkinson's disease.  Effective 
    January 1, 1997, the initial agreement was superceded by the 1997 
    Somerset Promotion Agreement which is subject to certain provisions for 
    early termination and renewal.  Under the 1997 Somerset Promotion 
    Agreement, CoCensys has the exclusive right to detail Eldepryl to certain 
    neurologists and other physicians in the United States.  Under the 1997 
    Somerset Promotion Agreement, CoCensys is compensated based upon the 
    number of details undertaken and gross sales of Eldepryl.  

                                       7
<PAGE>

                                COCENSYS, INC.
                        (A development stage company)

                   NOTES TO CONDENSED FINANCIAL STATEMENTS





    Compensation paid to CoCensys is subject to adjustment in the event of 
    governmental or other third-party actions that may materially affect it.  
    To finance a portion of its sales force to promote Eldepryl, CoCensys 
    receives quarterly advances from Somerset, which are subject to repayment 
    on a pro rata basis if specified numbers of details are not undertaken by 
    the Company on behalf of Somerset.

4.  DEVELOPMENT AND COMMERCIALIZATION AGREEMENT WITH G.D. SEARLE & CO.

    In May 1996, the Company entered into an agreement with G.D. Searle & Co. 
    ("Searle") to co-develop and co-promote the Company's lead compound for 
    the treatment of insomnia along with its back-up compounds.  Pursuant to 
    the agreement, Searle paid a $3.0 million license fee and purchased 
    100,000 shares of the Company's Series B Convertible Preferred Stock for 
    $7.0 million. The license fee was recognized as co-development revenue in 
    1996. The preferred stock is convertible to common stock on May 17, 1998, 
    or earlier at the Company's discretion.  The number of shares issuable 
    upon conversion shall be equal to $7.0 million divided by the then 
    current common stock price (subject to certain minimum and maximum 
    limits). 

    Under the agreement, both companies are obligated to pay a portion of the 
    development costs of the compound and its back-up compounds.  In 
    addition, the Company will receive nonrefundable milestone payments upon 
    the occurrence of certain events in the development of the compound.  The 
    parties will co-promote any products derived from the collaboration in 
    the United States, while Searle will have the right to develop, register 
    and market the products in the rest of the world, subject to specified 
    royalty payments.  

5.  MARKETING AND DEVELOPMENT COLLABORATION WITH NOVARTIS PHARMA, A.G. 

    In May 1994, the Company entered into a marketing and development 
    collaboration with Novartis Pharma, A.G. (formerly Ciba-Geigy Limited) 
    for the co-promotion by the Company of certain Novartis products and the 
    development and commercialization of ACEA 1021, a compound being 
    developed by the Company.  This collaboration consisted of the Novartis 
    Promotion Agreement and the Novartis Research and Development Agreement.

    Pursuant to the Novartis Promotion Agreement, CoCensys established a 
    sales force to co-promote and market certain Novartis products in the 
    United States initially to psychiatrists.  The agreement provided for the 
    advance of funds to the Company to cover a portion of the expenses 
    incurred by the CoCensys sales force in promoting the Novartis products.  
    CoCensys realized co-promotion revenues from its share of sales of 
    Novartis products above certain baseline levels specified in the 
    contract.  The Novartis Promotion Agreement terminated at the end of 
    1996. 

    In connection with the Novartis Research and Development Agreement, 
    Novartis purchased $7.0 million of CoCensys common stock and agreed to 
    make certain nonrefundable milestone payments in 

                                       8
<PAGE>

                                COCENSYS, INC.
                        (A development stage company)

                   NOTES TO CONDENSED FINANCIAL STATEMENTS

    connection with specified events in the course of the development of ACEA 
    1021.  Novartis has advised the Company that it will not continue the 
    development of ACEA 1021.  The agreement will terminate in October 1997.  
    There can be no assurance that the Company will be able to secure another 
    partner to continue the development of ACEA 1021.

6.  SUBSEQUENT EVENT

    On May 12, 1997, the Company entered into a development and 
    commercialization agreement for Co 2-6749, its lead anxiolytic compound, 
    with Wyeth-Ayerst Laboratories, the pharmaceutical division of American 
    Home Products Corporation. Under the terms of the agreement, Wyeth-Ayerst 
    will pay CoCensys upfront payments of $5 million in licensing fees and $5 
    million to purchase convertible preferred stock.  Additionally, CoCensys 
    will receive specified milestone payments dependent upon the achievement 
    of key development events and $3 million per year for up to three years 
    to identify back-up compounds.   Wyeth-Ayerst will be responsible for the 
    development of Co 2-6749.  The Company and Wyeth-Ayerst will co-promote 
    any resulting product in certain market segments in the United States, 
    while Wyeth-Ayerst will have rights to develop, register and market any 
    drugs derived from the collaboration in the rest of the world, subject to 
    royalty payments.  The preferred stock will be convertible into common 
    stock after May 12, 1999, into a number of shares of common stock equal 
    to $5 million divided by the conversion price, which will be determined 
    at the time of conversion (subject to certain minimum and maximum limits).
    
                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


    EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING 
    DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND 
    UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY.  
    FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT 
    ARE NOT LIMITED TO, THOSE DISCUSSED BELOW AND IN THE COMPANY'S 1996 
    ANNUAL REPORT ON FORM 10-K.
                                           
    OVERVIEW

    CoCensys, Inc. is a biopharmaceutical company dedicated to the discovery, 
    development, marketing and sales of small molecule drugs to treat 
    neurological and psychiatric disorders.  The Company's product discovery 
    and development programs are focused on the exploration of novel 
    receptors and enzymes and their ligands and inhibitors through three 
    technology platforms: GABA receptor enhancers or Epalons; glutamate 
    antagonists; and ICE-like protease inhibitors.
                                       
    The Company's lead Epalon compound, CCD 1042 (ganaxolone), an 
    anticonvulsant and anti-migraine compound, is in separate Phase II 
    clinical trials for pediatric epilepsy, adult epilepsy and migraine. The 
    Company anticipates that CCD 3693, its lead compound for the treatment of 
    insomnia, will enter Phase I trials in the second quarter of 1997. 
                                       
    Since its inception in February 1989, the Company has devoted 
    substantially all of its resources to the discovery and development of 
    neuropharmaceutical products for the treatment of disorders affecting the 
    central nervous system.  The Company has incurred losses since inception 
    and expects losses to continue for the foreseeable future, primarily due 
    to the expansion of programs for research and development.  Operating 
    results are expected to fluctuate as a result of uncertainty in the 
    timing and amount of revenues to be earned from product co-promotion 
    activities and from achievement of research and development milestones, 
    and uncertainty in the timing and amount of expenses for product 
    development, including clinical trials.  As of March 31, 1997, the 
    Company's accumulated deficit was approximately $89.2 million.

    RESULTS OF OPERATIONS

    The Company recognized $1,123,000 in co-promotion revenues for the 
    three-month period ended March 31, 1997, compared to $798,000 during the 
    same period in 1996.  This increase is due primarily to higher revenues 
    under the Parke-Davis Promotion Agreement.  Due to the nature of its 
    co-promotion agreements, the Company has historically reported a 
    disproportionately large share of its co-promotion revenues during the 
    fourth quarter.  The decrease in revenue for the first quarter of 1997 of 
    $3.1 million as compared to the fourth quarter of 1996 is attributable 
    principally to this factor.  

    The Company recognized $702,000 in co-development revenues for the 
    three-month period ended March 31, 1997 compared to  $833,000 for the 
    same period of 1996, principally as a result of lower co-development 
    revenue from to the ACEA 1021 program, partially offset by increased 
    funding from Searle related to the development of CCD 3693.

                                      10
<PAGE>


    Research and development ("R&D") expenses increased to $5.4 million for 
    the three-month period ended March 31, 1997, from $4.8 million in the 
    first quarter of the prior year.  This increase resulted primarily from 
    higher product development costs and additional staffing required to 
    support Phase II clinical trials of CCD 1042 in migraine and epilepsy and 
    pre-clinical development of CCD 3693. These increases were partially 
    offset by lower product development costs associated with the ACEA 1021 
    program.  Clinical development of ACEA 1021 was suspended in April 1997 
    following the decision of the Company's development partner, Novartis 
    Pharma A.G. ("Novartis"), not to continue participation in the 
    development of ACEA 1021.  The Company does not intend to resume clinical 
    development of ACEA 1021 until it secures another partner.
                                   
    Marketing, general and administrative expense was $2.7 million for the 
    first quarter in each of 1997 and 1996.
                                   
    Interest income was $219,000 for the three-month period ended March 31, 
    1997 compared to $272,000 for the same quarter in 1996.  The decrease was 
    due to lower cash and short-term investment balances in the first quarter 
    of the current year when compared to the same quarter a year earlier. 
                                           

    LIQUIDITY AND CAPITAL RESOURCES
                                           
    From its inception in February 1989 through March 31, 1997, the Company 
    has financed its operations primarily through private and public 
    offerings of its equity securities, raising net proceeds of approximately 
    $84.3 million through sales of these securities. As of March 31, 1997, 
    the Company's balance of cash, cash equivalents and short-term 
    investments totaled $13.3 million, compared to $18.0 million at December 
    31, 1996.  In March 1997, Warner Lambert purchased $2.0 million of
    the Company's common stock. Subsequent to the end of the first quarter, 
    the Company received $10.7 million from Wyeth-Ayerst and American Home 
    Products, its parent, related to the Co 2-6749 development and 
    commercialization agreement signed on May 12, 1997.  

    As of March 31, 1997, the Company had invested $5.9 million in leasehold 
    improvements, laboratory and computer equipment and office furnishings 
    and equipment.  The Company has financed $3.0 million of these capital 
    additions through capital lease lines.  In addition, the Company leases 
    its laboratory and office facilities under operating leases.  Additional 
    equipment will be needed as the Company increases its research and 
    development activities.  The Company has no material commitments for the 
    acquisition of property and equipment.

    Pursuant to the Parke-Davis Promotion Agreement, the Company promotes 
    Parke-Davis' CNS drug, Cognex-Registered Trademark-, to neurologists in 
    the United States.  Funds are prepaid to the Company quarterly to cover 
    the training and operating expenses incurred by the Company's sales force 
    in promoting Cognex.  The Company will recognize co-promotion revenues 
    from its share of sales of Cognex above certain base levels specified in 
    the contract.

    Pursuant to the Warner Collaboration Agreement, Warner-Lambert is 
    obligated to make certain milestone payments for each compound selected 
    for development, as well as pay for its share of 

                                      11
<PAGE>

    development costs.  Also pursuant to this contract, Warner-Lambert 
    purchased $2.0 million of CoCensys common stock in October 1995 and an 
    additional $2.0 million of CoCensys common stock in March 1997.

    Pursuant to the 1997 Somerset Promotion Agreement, the Company promotes 
    Somerset's drug Eldepryl-Registered Trademark- to certain neurologists 
    and other physicians in the United States.  Funds are advanced to the 
    Company quarterly to cover a portion of the training and operating 
    expenses incurred by the Company's sales force in promoting Eldepryl. 

    CoCensys' operations to date have consumed substantial amounts of cash. 
    The negative cash flow from operations is expected to continue and will 
    likely increase over the foreseeable future, subject to the Company's 
    ability to mitigate such negative cash flows with revenues, if any, 
    derived from the sale of products from current and potential future 
    marketing collaborations.  The Company anticipates that its existing 
    capital resources, including funding expected to be available through 
    current partner collaborations (including milestone payments and 
    co-promotion revenues), will be adequate to satisfy its capital needs for 
    at least the next 12 months.  There can be no assurance that 
    milestone-based payments or co-promotion revenues will be sufficient to 
    meet the Company's capital requirements.  The Company will need to obtain 
    substantial additional funds to conduct the costly and time-consuming 
    research, preclinical development and clinical trials necessary to bring 
    its products to market.  The Company intends to seek additional funding 
    through additional research and development collaborations with suitable 
    corporate partners, through additional marketing collaborations to 
    increase revenues generated from sales of products and/or through public 
    or private financing.  There can be no assurance that additional 
    financings or suitable collaborations will be available on favorable 
    terms, if at all.  Insufficient funds may require the Company to delay, 
    scale back or eliminate some or all of its research and product 
    development programs or to license third parties to commercialize 
    products or technologies that the Company would otherwise seek to develop 
    itself. 

    The Company's future capital requirements will depend on many factors, 
    including the progress of the Company's research and development 
    programs, the level of co-promotion revenues, the scope and results of 
    preclinical testing and clinical trials, the time and costs involved in 
    obtaining regulatory approvals, the rate of technological advances, 
    determinations as to the commercial potential of the Company's products 
    under development, the status of competitive products, the expansion of 
    sales and marketing capabilities, the establishment of third-party 
    manufacturing arrangements and the establishment of additional 
    collaborative relationships. 

    ADDITIONAL RISKS

    In addition to those discussed above, the Company is subject to the 
    following risks:

    The Company's product candidates are in an early stage of development and 
    face a high degree of technological, regulatory and competitive risks. 
    Drug discovery and development are capital intensive activities, and 
    there can be no assurance the Company will be able to raise the 
    additional capital necessary to develop and commercialize products.  The 
    Company's strategy for the development, clinical testing and 
    commercialization of its products includes entering into various 

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<PAGE>

    collaborations with corporate partners, licensors, licensees and others. 
    There can be no assurance that the Company will be able to negotiate 
    further collaborative arrangements on acceptable terms, if at all, or 
    that its current collaborative efforts will be successful.  Human 
    clinical trials require considerable time and funding, and results from 
    any stage of testing may not predict results of later stages.  In 
    addition, if results of any clinical trial fail to meet the Company's 
    requirements, the study plan for such compound may be adjusted or another 
    compound may be substituted, either of which may result in delays in 
    future clinical studies.  Unfavorable clinical trials could result in 
    cancellation of future clinical studies.  Inherent in the fact that 
    CoCensys is an early stage biopharmaceutical company are a range of 
    additional risks, including those associated with obtaining and enforcing 
    patents and protecting proprietary technology and the risk of regulatory 
    change, among others.

    The securities markets have from time to time experienced significant 
    price and volume fluctuations that may be unrelated to the operating 
    performance of particular companies.  In addition, the market prices of 
    the common stock of many publicly traded biopharmaceutical companies have 
    in the past been, and can in the future be expected to be, especially 
    volatile. Announcements of technological innovations or new products by 
    the Company or its competitors, developments or disputes concerning 
    patents or proprietary rights, publicity regarding actual or potential 
    medical results relating to products under development by the Company or 
    its competitors, regulatory developments in both the United States and 
    foreign countries, public concern as to the safety of biotechnology 
    products and economic and other external factors, as well as 
    period-to-period fluctuations in the Company's financial results, may 
    have a significant impact on the market price of the Company's common 
    stock.  The Company's products are in an early stage of development and 
    face a high degree of technological, regulatory and competitive risks.  
    Drug discovery and development are capital-intensive activities, and 
    there can be no assurance the Company will be able to raise the 
    additional capital necessary to develop and commercialize products.  
    Human clinical trials require considerable time and funding, and results 
    from any stage of testing may not predict results of later stages.  In 
    addition, if results of any clinical trial fail to meet the Company's 
    requirements, the study plan for such compound may be adjusted or another 
    compound may be substituted, either of which may result in delays in 
    future clinical studies.  Unfavorable results of clinical trials results 
    could cause result in cancellation of future clinical studies.


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<PAGE>

                                 COCENSYS, INC.
                                       

PART II.      OTHER INFORMATION

    ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibit
              27.1 Financial Data Schedule

         (b)  No reports on Form 8-K were filed during the quarter ended March
              31, 1997.



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<PAGE>

                                COCENSYS, INC.
                                       
                                       
                                  SIGNATURES
                                       
                                       
Pursuant to the requirements of the Securities and Exchange Act of 1934, the 
registrant has duly caused this report to be signed in its behalf by the 
undersigned thereunto duly authorized.



                                 CoCensys, Inc.








Date: 5-13-97                              By: /s/ F. Richard Nichol, Ph.D.
-------------                                 -------------------------------
                                                 F. Richard Nichol, Ph.D.
                                          President and Chief Executive Officer
                                               (PRINCIPAL EXECUTIVE OFFICER)





Date: 5-13-97                              By: /s/ Peter E. Jansen
-------------                                 -------------------------------
                                                      Peter E. Jansen
                                                  Chief Financial Officer
                                                 (PRINCIPAL FINANCIAL AND 
                                                     ACCOUNTING OFFICER)


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