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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 June 30, 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                     22,661,489
          (CLASS OF COMMON STOCK)       (OUTSTANDING AT JULY 31, 1997)


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                                COCENSYS, INC.
                         (A development stage company)
                                       
                               TABLE OF CONTENTS
                                       
                                                                   PAGE NUMBER
                                                                   -----------
PART I.  FINANCIAL INFORMATION
     
         ITEM 1. FINANCIAL STATEMENTS.
     
                 Condensed Balance Sheets as of June 30, 1997
                 and December 31, 1996                                    3
    
                 Condensed Statements of Operations for the 
                 three-month and six-month periods ended 
                 June 30, 1997 and 1996 and the period from 
                 inception (February 15, 1989) through June 30, 1997      4
    
                 Condensed Statements of Cash Flows for the 
                 three-month and six-month periods ended 
                 June 30, 1997 and 1996 and the period from 
                 inception (February 15, 1989) through June 30, 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 2. CHANGES IN SECURITIES.                                  14

         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.    14
    
         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                       14


SIGNATURES                                                               16


                                       2
<PAGE>

                                COCENSYS, INC.
                         (A development stage company)
                                       
                           CONDENSED BALANCE SHEETS
              (In thousands, except share and par value amounts)
                                       
<TABLE>
<CAPTION>
                                                         JUNE 30,      DECEMBER 31,
                                                           1997           1996
                                                       -----------     ------------
                                                       (Unaudited)
<S>                                                    <C>             <C>
ASSETS
Current assets:
 Cash and cash equivalents                               $  2,192       $  1,050
 Short-term investments                                    15,180         16,949
 Receivables from corporate partners                          657            659
 Other current assets                                         810            556
                                                         --------       --------
TOTAL CURRENT ASSETS                                       18,839         19,214

Property and equipment, net                                 2,494          2,685
Notes receivable from officers                                279            126
Other assets, net                                              26             26
                                                         --------       --------
                                                         $ 21,638       $ 22,051
                                                         --------       --------
                                                         --------       --------

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                          $  764       $  1,437
 Other accrued liabilities                                  2,828          2,556
 Advances from corporate partners                             151            446
 Capital lease obligation - current portion                   559            341
                                                         --------       --------
TOTAL CURRENT LIABILITIES                                   4,302          4,780

Capital lease obligation, less current portion                227            284
Other liabilities                                              38             40

Commitments and contingencies

Stockholders' equity:
 Preferred stock - $.001 par value,
  5,000,000 shares authorized; 100,000 shares of
  Series B convertible issued and outstanding
  at June 30, 1997 and December 31, 1996; 100,000 shares 
  of Series C convertible issued and outstanding at
  June 30, 1997                                            12,000          7,000
 Common stock - $.001 par value,
  75,000,000 shares authorized; 22,661,489 shares
  issued and outstanding at June 30, 1997 and
  22,083,346 at December 31, 1996                          96,076         93,986
 Deficit accumulated during the development stage         (90,468)       (83,162)
 Deferred compensation                                       (562)          (905)
 Unrealized gain (loss) on investments                         25             28
                                                         --------       --------
TOTAL STOCKHOLDERS' EQUITY                                 17,071         16,947
                                                         --------       --------
                                                         $ 21,638       $ 22,051
                                                         --------       --------
                                                         --------       --------
</TABLE>

                           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            SIX MONTHS ENDED        (FEBRUARY 15,
                                                                   JUNE 30,                     JUNE 30,             1989) TO
                                                         -----------------------       -----------------------       JUNE 30,
                                                            1997           1996           1997           1996          1997
REVENUES                                                 --------       --------       --------       --------     ------------
<S>                                                      <C>            <C>            <C>            <C>          <C>
  Co-promotion revenues from corporate partners          $  1,185       $  3,213       $  2,308       $  4,011      $  29,209
  Co-development revenues from corporate partners           6,247          3,716          6,949          4,549         14,992
                                                         --------       --------       --------       --------      ---------
Total revenues                                              7,432          6,929          9,257          8,560         44,201

OPERATING EXPENSES
  Research and development                                  5,984          4,961         11,416          9,784         79,588
  Marketing, general and administrative                     2,825          2,926          5,504          5,589         43,134
  Acquired research and development                             -              -              -              -         14,879
                                                         --------       --------       --------       --------      ---------
Total operating expenses                                    8,809          7,887         16,920         15,373        137,601
                                                         --------       --------       --------       --------      ---------
OPERATING LOSS                                             (1,377)          (958)        (7,663)        (6,813)       (93,400)

Interest income                                               189            357            408            629          3,503
Interest expense                                              (37)           (28)           (51)           (58)          (571)
                                                         --------       --------       --------       --------      ---------

NET LOSS                                                 $ (1,225)      $   (629)      $ (7,306)      $ (6,242)     $ (90,468)
                                                         --------       --------       --------       --------      ---------
                                                         --------       --------       --------       --------      ---------

Net loss per share                                       $  (0.05)      $  (0.03)      $  (0.33)      $  (0.29)
                                                         --------       --------       --------       --------     
                                                         --------       --------       --------       --------     

Shares used in computing net loss per share                22,519         21,917         22,391         21,555
                                                         --------       --------       --------       --------     
                                                         --------       --------       --------       --------     
</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
                                                           SIX MONTHS ENDED          (FEBRUARY 15,
                                                                JUNE 30,               1989) TO
                                                        -------------------------      JUNE 30,
                                                           1997           1996          1997
                                                        ----------     ----------    ------------
<S>                                                     <C>            <C>           <C>
OPERATING ACTIVITIES
Net loss                                                $  (7,306)     $  (6,242)    $  (90,468)

Adjustments to reconcile net loss to net cash used 
  in operating activities:
  Depreciation and amortization                               530          1,025          6,419
  Amortization of deferred compensation                       142            374          3,480
  Issuance of stock and warrants for services                   -              -          1,917
  Loss on sale of fixed assets                                 12              -             38
  Acquired research and development                             -              -         12,279
  Increase in other current assets                           (254)          (196)          (882)
  Decrease (increase) in receivable from corporate 
    partner                                                     2              -           (657)
  Increase (decrease) in advances from corporate 
    partners                                                 (295)           997            151
  Increase (decrease) in accounts payable and other
    accrued liabilities                                      (403)           (89)         3,354
                                                        ---------      ---------     ----------
NET CASH USED IN OPERATING ACTIVITIES                      (7,572)        (4,131)       (64,369)
                                                        ---------      ---------     ----------

INVESTING ACTIVITIES
Decrease (increase) in short-term investments               1,766         (8,560)       (15,156)
Purchase of property and equipment                           (351)          (475)        (5,976)
Increase in other assets and notes receivable from 
  officers                                                   (153)           (89)          (461)
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         1,262         (9,124)       (24,111)
                                                        ---------      ---------     ----------

FINANCING ACTIVITIES
Net cash proceeds from issuance of common stock             2,291         14,840         61,076
Net cash proceeds from issuance of preferred stock          5,000          7,000         28,381
Proceeds from sale/leaseback of fixed assets and notes
 payable                                                      529            535          4,762
Payments on capital lease obligations and notes payable     (368)          (553)         (3,547)
                                                        ---------      ---------     ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                   7,452         21,822         90,672
                                                        ---------      ---------     ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                   1,142          8,657          2,192
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD            1,050          6,895              -
                                                        ---------      ---------     ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $  2,192      $  15,462       $  2,192
                                                        ---------      ---------     ----------
                                                        ---------      ---------     ----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                      $  39          $  58         $  793
                                                        ---------      ---------     ----------
                                                        ---------      ---------     ----------
</TABLE>
                                                                 
                          See accompanying notes.

                                     5

<PAGE>

                                COCENSYS, INC.
                         (A development stage company)
                                       
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                       
                                 JUNE 30, 1997
                                  (UNAUDITED)
                                       
                                       
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   BASIS OF PRESENTATION

   The interim financial information for the three and six-month periods 
   ended June 30, 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 and six-month periods ended June 30, 
   1997, are not necessarily indicative of operating results to be expected 
   for the full year.

   REVENUE AND EXPENSE RECOGNITION

   See Notes 2 through 6 for revenue recognition policies related to 
   co-promotion and co-development revenues from corporate partners. The 
   initial costs incurred in establishing the sales and marketing 
   organization were deferred until initiation of the Company's sales efforts 
   on August 1, 1994. Such costs were amortized over the contract term 
   (through December 31, 1996) of the Company's Promotion Agreement with 
   Novartis (formerly Ciba-Geigy Corporation).

   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.

                                      6
<PAGE>
                                COCENSYS, INC.
                         (A development stage company)
                                       
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                       

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 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-promoted Parke-Davis' CNS drug, Cognex-Registered Trademark-, 
   to United States neurologists for the treatment of Alzheimer's disease.

   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.

   The original Parke-Davis Promotion Agreement, entered into in October 
   1995, was terminated on December 31, 1996, when a revised promotion 
   agreement relating to Cognex took effect. Under the original Parke-Davis 
   Promotion Agreement for Cognex, the Company realized co-promotion revenues 
   from its share of sales of Cognex above certain baseline levels specified 
   in the contract.  Under the revised Parke-Davis Promotion Agreement for 
   Cognex, the Company realized 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 
   revised Cognex agreement was terminated in June 1997.

   In July 1997, the Company entered into a new Parke-Davis Promotion 
   Agreement, pursuant to which the Company will co-promote 
   Zarontin-Registered Trademark-, Parke-Davis' drug for pediatric epilepsy.  
   Under the terms of the Zarontin agreement, the Company will realize 
   co-promotion revenue on the basis of the number of prescriptions for 
   Zarontin written each quarter over a specified baseline.


                                      7
<PAGE>


                                COCENSYS, INC.
                         (A development stage company)
                                       
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                       

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-Registered Trademark- 
   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.  
   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 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 

                                      8
<PAGE>
                                COCENSYS, INC.
                         (A development stage company)
                                       
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                       

   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 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.  While the Company is 
   actively looking for a new partner to develop ACEA 1021, there can be no 
   assurance that the Company will be able to secure another partner to 
   continue the development of this compound.

6. DEVELOPMENT AND COMMERCIALIZATION AGREEMENT WITH WYETH-AYERST LABORATORIES

   In May 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 ("AHP"). Under the terms of the agreement, Wyeth-Ayerst made 
   upfront payments to CoCensys of $5.0 million in licensing fees and AHP 
   paid $5.0 million to purchase convertible preferred stock.  Additionally, 
   CoCensys will receive specified milestone payments dependent upon the 
   achievement of key development events and $3.0 million per year for up to 
   three years to identify back-up compounds.  Payments due to CoCensys for 
   work performed identifying back-up compounds are due quarterly, beginning 
   in May 1997. 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 is convertible into common stock 
   after May 12, 1999, into a number of shares of common stock equal to $5.0 
   million divided by the conversion price, which will be determined pursuant 
   to a formula based on the market price of the common stock 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 third 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 and co-development 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 June 30, 1997, the Company's accumulated deficit was
  approximately $90.5 million.

  RESULTS OF OPERATIONS

  The Company recognized $1.2 and $2.3 million in co-promotion revenues for the
  three and six-month periods ended June 30, 1997, respectively, compared to
  $3.2 and $4.0 million during the same periods in 1996.  The decreases in both
  the three and six-month periods compared to the same periods a year earlier
  is due primarily to a nonrecurring adjustment of $2.3 million, relating to
  settlement of co-promotion activities with Novartis Pharma A.G. ("Novartis"),
  that was recorded in the second quarter of fiscal 1996.

  The Company recognized $6.2 and $6.9 million in co-development revenues for
  the three and six-month periods ended June 30, 1997, respectively, compared
  to $3.7 and $4.5 million for the comparable periods of 1996.  The increases
  in both the three and six-month periods of the current year are primarily due
  to recognition of $5.7 of co-development revenue under the Wyeth-Ayerst


                                      10
<PAGE>

  development and commercialization agreement that was signed in May of 1997.
  In the second quarter of fiscal 1996, the Company recognized $3.0 million of
  co-development revenue related to the G.D. Searle agreement.

  Research and development ("R&D") expenses increased to $6.0 and $11.4 million
  for the three and six-month periods ended June 30, 1997, respectively, from
  $4.9 and $9.8 million in the comparable periods of the prior year.  These
  increases resulted primarily from higher product development costs incurred
  to support Phase II clinical trials of CCD 1042 in both migraine and epilepsy
  and pre-clinical development of CCD 3693, 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 Novartis, the Company's development partner, 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.  There
  can be no assurance that the Company will be able to secure another partner
  to continue the clinical development of ACEA 1021.

  Marketing, general and administrative expense decreased to $2.8 and $5.5
  million for the three and six-month periods ended June 30, 1997,
  respectively, from $2.9 and $5.6 million in the same periods of the prior
  year.  The decreases in the three and six-month periods of the current year
  in comparison to the same periods in the prior year are primarily
  attributable to reductions in certain promotional marketing expenses,
  partially offset by increases in salaries and other general corporate
  expenses.

  Interest income decreased to $.2 and $.4 million for the three and six-month
  periods ended June 30, 1997, respectively, from $.4 and $.6 million in the
  same periods of the prior year.  The decrease was due to lower average levels
  of cash and short-term investment balances in the current year.

  LIQUIDITY AND CAPITAL RESOURCES

  From its inception in February 1989 through June 30, 1997, the Company has
  financed its operations primarily through private and public offerings of
  its equity securities, raising net proceeds of approximately $89.5 million
  through sales of these securities.  As of June 30, 1997, the Company's
  balance of cash, cash equivalents and short-term investments totaled $17.4
  million, compared to $18.0 million at December 31, 1996.

  As of June 30, 1997, the Company had invested $6.0 million in leasehold
  improvements, laboratory and computer equipment and office furnishings and
  equipment since inception.  The Company has financed $3.3 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 promoted Parke-
  Davis' CNS drug, Cognex-Registered Trademark-, to neurologists in the 
  United States.  Funds were prepaid to the Company quarterly to cover the 
  training and operating expenses incurred by the Company's sales force in 
  promoting Cognex.  This agreement was terminated in June 1997.  In July 
  1997, the Company entered into a 


                                      11
<PAGE>

  new agreement with Parke-Davis to co-promote Zarontin-Registered Trademark-,
  Parke-Davis' drug for pediatric epilepsy.  Under the terms of this agreement,
  the Company will be compensated based on the number of prescriptions written
  over a specified baseline.
  
  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 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.

  Pursuant to the 1997 Wyeth-Ayerst Development and Commercialization
  Agreement, Wyeth-Ayerst is obligated pay all development costs related to Co
  2-6749, as well as make milestone payments upon the occurrence of certain
  agreed upon events.  Furthermore, Wyeth-Ayerst is required to pay the Company
  $3.0 million per year for up to three years to identify back-up compounds.
  
  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.
  


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<PAGE>
  
  ADDITIONAL RISKS
  
  In addition to those discussed above, the Company is subject to the following
  risks:
  
  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.  The Company's strategy for the
  development, clinical testing and commercialization of its products includes
  entering into various 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 the 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.  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 due to various external
  factors, including but not limited to, 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 results relating to products under development,
  regulatory developments in both the United States and foreign countries and
  public concern as to the safety of biotechnology products.
  


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<PAGE>

                                       
PART II.  OTHER INFORMATION

  ITEM 2.   CHANGES IN SECURITIES

  On May 12, 1997, the Company sold 100,000 unregistered shares of Series C
  Convertible Preferred Stock (the "Preferred Stock") to American Home Products
  Corporation for an aggregate purchase price of $5,000,000.  The Preferred
  Stock is convertible at the option of the holder at any time after May 11,
  1999 at a Conversion Price determined pursuant to a formula based on the
  market price of the Common Stock at the time of conversion, subject to a
  minimum price of $4.37 and a maximum price of $7.76.  The transaction was
  exempt from registration under the Securities Act of 1933, as amended,
  pursuant to Section 4(2) thereof, as a transaction not involving any public
  offering.

  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  The Company held an Annual Meeting of Stockholders on June 25, 1997.
  
  The stockholders elected the Board's nominees as Class II directors by the
  votes indicated:
  
       Nominee                   Votes in Favor    Votes Withheld
       -------                   --------------    --------------
       F. Richard Nichol, Ph.D.    17,079,020         796,242
       Timothy J. Rink, M.D.       17,092,626         782,636
  
  The amendment to the Company's 1992 Non-Employee Directors' Stock Option Plan
  was ratified with 16,961,900 votes in favor, 836,422 against and 76,940
  abstentions.
  
  The Company's 1996 Equity Incentive Plan was approved by a vote of 10,530,958
  in favor, 2,474,023 against, 86,195 abstentions and 4,784,086 broker non-
  votes.
  
  The selection of Ernst & Young, LLP as the Company's independent auditors was
  ratified with 17,810,357 votes in favor, 28,550 against and 36,355
  abstentions.

  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          3(i).1   Amended and Restated Certificate of  Incorporation of 
                   the Company.
          3(i).2   Certificate of Designation of Series A Junior Participating
                   Preferred Stock of the Company.
          3(i).3   Certificate of Powers, Designation, Preferences, Rights 
                   and Limitations of Series B Convertible Preferred Stock 
                   of the Company.
          3(i).4   Certificate of Amendment of Amended and Restated 
                   Certificate of Incorporation of the Company.
          3(i).5   Certificate of Powers, Designation, Preferences, Rights 
                   and Limitations of 


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<PAGE>

                   Series C Convertible Preferred Stock of the Company.
            10.1*  1997 Promotion Agreement, effective April 7, 1997, between 
                   Somerset Pharmaceuticals, Inc. and the Company.
            10.2*  Development and Commercialization Agreement (No.1), dated 
                   May 12, 1997, between Wyeth-Ayerst Laboratories and the 
                   Company ("Wyeth-Ayerst Agreement No.1").
            10.3*  Development and Commercialization Agreement (No.2), 
                   dated May 12, 1997, between Wyeth-Ayerst Laboratories and 
                   the Company.
            10.4   Preferred Stock Purchase Agreement, dated May 12, 1997, 
                   between American Home Products, Inc. and the Company 
                   (included as Exhibit F to Wyeth-Ayerst Agreement No. 1)
            27.1   Financial Data Schedule

            * Confidential treatment requested.

      (b)   Reports on Form 8-K

            (i)   The Company filed a Form 8-K on June 17, 1997, reporting 
                  under Item 5 that the Company and the Parke-Davis Division 
                  of Warner-Lambert Company have agreed to terminate the 
                  Cognex Promotion Agreement.

            (ii)  The Company filed a Form 8-K on May 2, 1997, reporting 
                  under Item 5 that Novartis Pharma A.G. has decided not to 
                  participate further in the development of ACEA 1021, 
                  CoCensys' compound for the treatment of stroke and 
                  traumatic brain injury.

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<PAGE>

                                  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:  August 5, 1997             By:         /s/ Peter E. Jansen
                                      -------------------------------------
                                                 Peter E. Jansen
                                             Chief Financial Officer
                                        (PRINCIPAL FINANCIAL AND ACCOUNTING
                                                  OFFICER)



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