<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

              [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         COMMISSION FILE NUMBER 0-18311

                              NEUROGEN CORPORATION
             (Exact name of registrant as specified in its charter)

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


                          35 NORTHEAST INDUSTRIAL ROAD
                           BRANFORD, CONNECTICUT 06405
               (Address of principal executive offices) (Zip Code)
                                 (203) 488-8201
              (Registrant's telephone number, including area code)

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

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

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was  required  to file such  reports),  and (2) has been  subject to
filing  requirements  for the past 90 days.

                              YES X      NO
                                 ---       ---
     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
     The  approximate  aggregate  market  value  of the  Common  Stock  held  by
non-affiliates  of the registrant was  $237,246,000  as of March 1, 2000,  based
upon the closing  price of the Common  Stock as reported on The Nasdaq  National
Market on such date. For purposes of determining  this number,  shares of Common
Stock held by officers,  directors and stockholders whose ownership exceeds five
percent were excluded.  This number is provided only for purposes of this report
and does not represent an admission by either the  registrant or any such person
as to the status of such person.
     As of March 1, 2000, the  registrant had 15,473,958  shares of Common Stock
outstanding.
                      DOCUMENTS INCORPORATED BY REFERENCE
     (1) The Neurogen  Corporation  Proxy  Statement  for the Annual  Meeting of
Stockholders  to be held on June 19, 2000,  is  incorporated  by reference  into
Items 10, 11, 12 and 13 of Part III of this Form 10-K.

<PAGE>

                                     PART I

ITEM 1. BUSINESS

Overview

     Neurogen  is a  leading  drug  discovery  company.  We  engage  in both the
discovery and development of a broad range of novel small molecule compounds for
pharmaceutical  uses, and the development and exploitation of cutting-edge  drug
discovery technologies.

     We have  diversified  our drug discovery and  development  efforts across a
broad number of disease-related  targets and across multiple drug candidates for
each target.  Throughout  the  pharmaceutical  industry the majority of all drug
candidates   fail   to   overcome   all  of  the   obstacles   on  the   way  to
commercialization. Because of this high attrition rate, we believe that the true
value of a drug discovery  company's pipeline is most accurately measured by the
company's  ability  to  rapidly  discover   multiple   generations  of  improved
candidates  within each of several  programs,  rather than by the promise of any
single compound in any one program.  We believe that this ability to rapidly and
systematically  produce  multiple  generations  of  incrementally  improved drug
candidates in multiple programs is our most valuable asset. Although we are much
smaller than the well-known  pharmaceutical  companies, we have discovered eight
small molecule drug candidates that we and our  pharmaceutical  company partners
have taken into human  clinical  trials  over the last six years.  For our size,
this represents a rate of clinical  candidate  generation that we believe rivals
any in the biotechnology and pharmaceutical industries.

     We are constantly  working to gain and maintain a competitive  advantage in
the process of discovering and developing new drug candidates.  As a result,  we
have  generated  a  high-quality  collection,  or  library,  of over 1.7 million
potential  drug  compounds  and have  created  powerful new drug  discovery  and
refinement  technologies.  The prime  example of these new  technologies  is our
Accelerated  Intelligent Drug Discovery (AIDD(TM)) system. Our AIDD system is an
engine for the discovery of new drug leads and the  optimization  of these leads
to create clinical drug candidates.  We believe that this system also enables us
to rapidly assess the functional  utility of new gene-based  potential  targets.
The AIDD  system  is a key  factor  contributing  to our  belief  that our small
molecule drug discovery, and development platform is among the most advanced and
efficient in the industry.

     Recently,  we have begun to exploit the utility of our drug  discovery  and
development  platform  beyond our own drug  programs.  In June 1999,  we granted
Pfizer a non-exclusive license to a portion of our AIDD technology for up to $27
million  payable over three years. We are also exploring  possible  partnerships
with a number of leading biotechnology and genomics companies to access new drug
targets.  Such a partnership  could result in a number of opportunities  for us,
including  bolstering  our existing drug  pipeline or licensing  access to newly
characterized targets, newly expanded portions of our library or both.

Background on the Drug Discovery Industry

The Traditional Drug Discovery Process

     Most  drugs work by binding  to a  particular  target in the body,  thereby
altering communications between cells or otherwise regulating cellular activity.
Therefore,  the traditional  path to discovering  small molecule drugs typically
begins  with the  identification  of a  biological  target  that is  believed to
regulate cellular communications or activities which could be altered to treat a
given disorder. A test or assay is then developed in order to discover compounds
with biological activity at this target. Such an assay facilitates the screening
of the target against a library of many compounds that have been  synthesized in
the laboratory. Compounds that bind to the target protein and alter its activity
are referred to as "hits".  Medicinal  chemists then  optimize  these hits until
they have  sufficient  potency to become lead  candidates and then improve their
"drug-like"  properties,  such as absorption,  stability,  freedom from unwanted
activities,  etc.,  with the goal of  producing a  successful  drug  development
candidate.

     Chemists  typically  try to  streamline  the  process by  copying  chemical
structures from known active compounds. Even taking this approach,  however, the
number of possible  compounds  that could be made is too large to actually  test
against even a single  target using any  available  technology.  Generally,  the
search  is  further  narrowed  only by  educated  guessing.  As a result  of the
uncertainty  of this  approach,  traditional  methods can take many years or may
fail entirely.

     If it were possible to predict in advance which compounds would result in a
hit, and which chemical  changes would help optimize hits into drug  candidates,
the drug  discovery  process  would be  vastly  simplified.  Unfortunately,  the
traditional drug discovery process has had to rely on a trial and error approach
that has proven extremely expensive, inefficient and unreliable. Further, making
all of the trillions upon trillions of possible  small organic  compounds,  much
less  testing  them all  against  even a  single  target,  would be  impossible.
Optimization of hits to achieve the delicate balance of properties necessary for
a successful  drug is still a daunting task.  Most hits are never optimized into
successful drugs despite years of effort.

Drug Discovery in the Post-Genomics Era

     The sequencing and  deciphering of the human genome provides a useful piece
in the drug discovery puzzle.  Genes and, more significantly,  the proteins they
code for can be regulators of biological  activity and thus represent  potential
drug targets. It has been estimated that about 10,000 genes could provide useful
targets  for drug  discovery.  We believe  that most of the value  created  from
genomics  efforts is not ultimately in the new targets they provide,  but in the
possibility  that these  targets  will  facilitate  the  discovery  of new small
molecule drugs.

     A  problem  facing  drug  discovery  in the  post-genomics  world is how to
quickly  determine  which genes might be useful targets for which  diseases.  An
even more  difficult  task is to  efficiently  exploit the  availability  of new
targets by rapidly discovering new lead compounds and optimizing such leads into
drug candidates. Finding superior methods and technologies to determine if newly
isolated  genes  represent  good targets and  devising  workable  strategies  to
identify  the most  promising  compounds  for  screening  and  optimization  are
essential steps in accelerating and increasing the probability of success of the
drug discovery process.

The Neurogen Competitive Advantage

     At Neurogen,  we have developed a drug discovery and  development  platform
designed to capitalize on the wealth of new genomics  information  and potential
drug  targets.  We believe our  proprietary  platform  enables us to rapidly and
efficiently discover compounds that hit new potential drug targets, evaluate the
utility of those targets and optimize useful leads into new drug candidates.

     We have chosen to focus our efforts on the  discovery  and  development  of
small  molecule  drugs.  Small molecule drugs are usually more stable and easily
absorbed than large molecule drugs,  and so in most cases may be administered as
a pill, a patch, or an ointment. In addition, small molecule drugs are generally
much  easier  and  less  expensive  to  manufacture,   distribute,   and  store.
Protein-based large molecule drugs typically require  refrigeration,  while most
small molecule drugs do not. Small molecule drugs can also be safely shipped and
stored at regular  temperatures.  Small  molecule drugs that can be taken orally
currently make up about three quarters of the sales of the top 100  prescription
drugs.  Additionally,  where there is a choice,  patients generally would rather
take a pill than an injection.

     Using our discovery platform,  we have discovered eight small molecule drug
candidates that we and our pharmaceutical company partners have taken into human
clinical trials over the last six years. We have been able to achieve this level
of speed and  efficiency  through the efforts of our  scientific  team,  both in
creating and  utilizing our AIDD(TM) system and  our enriched  compound  library
and in applying their  expertise in receptor  biology to identify  important new
targets and create powerful assay technologies. Finally, our management team has
been responsible for implementing a flexible and  opportunistic  business  model
that draws on the  expertise and  resources of our  pharmaceutical  partners and
leverages our drug discovery and development platform.

Components of Our Discovery and Development Platform

     o   Our Accelerated Intelligent Drug Discovery system.

             Accelerated  Intelligent  Drug  Discovery  (AIDD) is  an integrated
         system of hardware and software  that allows  scientists  to improve on
         the  trial  and  error  process  traditionally   associated  with  drug
         discovery and development.  This system incorporates automated robotics
         guided   by   state-of-the-art   computerization,    including   neural
         network-based artificial intelligence, to design, model, synthesize and
         screen new chemical compounds. Specifically, AIDD enables scientists to
         streamline  and  accelerate  the drug  discovery  process  through  the
         effective and efficient iterative  application of the various phases of
         discovery research.

             AIDD  works  in  a closed  drug  discovery loop of repeated  cycles
         of automated synthesis,  testing and analysis. During each cycle, which
         can take as little as two weeks, a computerized,  or virtual,  model of
         the  interaction  between the compounds  being  screened and the target
         being screened  against is created.  With each repetition of the cycle,
         the virtual model is improved and refined.  The neural  network  system
         then uses the  upgraded  model to make better  predictions  about which
         compounds should be synthesized and/or screened in the next cycle.

             AIDD extends compound  modeling, prediction and design capabilities
         beyond that  achievable by human  perception  alone.  At the same time,
         AIDD  is  designed  to  carry  out  this  drug  discovery   cycle  with
         exceptionally efficient use of discovery resources.

     o Our enriched compound library and our Virtual LibraryTM.

             Our  AIDD  system  works  in  tandem  with  our  compound  library.
         The AIDD process both utilizes and builds our library at the same time.
         Instead of randomly  generating  a compound  library as many other drug
         discovery  companies  have done, we have chosen to bias or "enrich" our
         compound  library in favor of selected  families of compounds.  Because
         the  number  of small  organic  compounds  that can be  synthesized  is
         virtually  infinite,  we  believe  that to be  successful  in the  drug
         discovery  process,  it is not the biggest or most diverse library that
         counts, but rather the richest and most intelligently designed.

              AIDD(TM),  builds and rationally enriches our compound library  by
         relating functional  molecules not just by their core  structures,  but
         by their overall posture in chemical space. By focusing  on the overall
         orientation  of active  compounds,  rather  than  solely  on their core
         structures,  AIDD  helps to  identify  functionally  related  groups of
         compounds that we  call  "IslandsTM."  Starting with computer models of
         key characteristics both of compounds  that work well and of those that
         work  poorly,  AIDD  allows  us to  rapidly  build a  large  number  of
         promising chemical variants using  our automated  high-speed  synthesis
         combinatorial  chemistry techniques.  This process  allows us to expand
         identified  Islands  and  to  discover  new ones.  We add  these  newly
         synthesized   compounds   to  our   enriched    compound   library  and
         subsequently  test them against  multiple  targets via  high throughput
         screening. The results  of each of these cycles of synthesis,  analysis
         and  testing are  exploited  to  refine the AIDD models so as to design
         better  compounds   and  to  discover  new  Islands  of  high  activity
         potential.

             AIDD's  ability  to  design  new  compounds  and  to  discover  new
         Islands  is  accomplished  not only by the  testing  of real  compounds
         already  in our  enriched  library,  but by  testing  computer-designed
         molecules   in  a  huge   "virtual"   library   that   exists  only  as
         computer-based  compound models,  against computer-based target models.
         The results of this Virtual ScreeningTM of our Virtual LibraryTM, which
         exceeds 500 billion compounds, are also integrated into each succeeding
         reiteration  of the  AIDD  process.  In  this  way,  promising  virtual
         compounds,  both within already  established Islands and in new Islands
         identified by virtual screening, are actually synthesized, added to the
         enriched compound  library,  and tested against actual targets via high
         throughput  screening.  The result is to both  generate  new Islands of
         high activity  potential  structures  and to refine the chemical  leads
         that we have  identified  until we reach  compounds that we believe are
         promising enough to move to the next phases of preclinical development.
         In addition, by determining which compounds in which Islands react with
         orphan  targets,  we  believe  we can  discover  a great deal about the
         functions and mechanisms of action of such  previously  uncharacterized
         target molecules.

     o   Our biological expertise

             The  scientists  who founded  Neurogen  are  world-leading  experts
         in the  area  of  gamma-aminobutyric  acid  (GABA)  receptors.  We have
         expanded this expertise in receptor biology beyond GABA receptors,  and
         today we believe we have one of the leading  receptor  biology teams in
         the world. We utilize this expertise in the design and  construction of
         screening  assays to  attack  novel and  poorly  understood  biological
         targets in our drug  discovery  efforts.  We do not engage in so-called
         "me too" drug  discovery,  by attempting to tweak an existing drug just
         enough to create a new  patentable  product that may offer little or no
         improvement over existing  therapies.  Rather,  we focus on discovering
         novel drugs,  and all of the  candidates  we have taken into the clinic
         work by distinct new target mechanisms  designed to provide significant
         therapeutic  advantages.  We  believe  that  our  scientific  expertise
         coupled with our AIDD system and our enriched  library will allow us to
         efficiently  capitalize  on the  large  number  of  targets  that  have
         resulted from the sequencing of the human genome,  especially those yet
         to be characterized.

Our Strategy

     Our  objective is to become the leading small  molecule drug  discovery and
development  company. The key elements of our strategy to meet our objective are
as follows:

        o Increase the  probability of success through  diversification  of drug
          programs - To increase our  probability  of success in drug  discovery
          and development  efforts,  we are pursuing multiple  promising targets
          and  multiple  drug  candidates  for  multiple  disorders.  Because we
          believe  that the  strength  of a drug  pipeline  is based more on the
          strength of the programs in that pipeline than on any individual  drug
          candidate, we believe that our ability to produce multiple generations
          of candidates in multiple programs using AIDD further  strengthens and
          diversifies our pipeline.

        o Selectively   partner  our  drug   programs  -  We  have   established
          capabilities  internally  to take  programs  from  target to  clinical
          development.  These  capabilities  enable  us  to  pursue  a  flexible
          business  model,   partnering   programs  when  we  feel  it  will  be
          economically  advantageous  to do so. When we partner our  programs we
          seek to collaborate  with  pharmaceutical  leaders such as Pfizer with
          demonstrated strength in development and marketing.

        o Independently  Develop  Drugs -  As  our  partnered  programs  advance
          through   the   later   stages  of  clinical  development, we plan  to
          independently develop and commercialize drugs we have discovered.

        o Leverage  our  technology  platform by accessing  new targets.  We are
          exploring  opportunities  to apply our drug discovery and  development
          platform beyond our own drug programs.  We believe that our technology
          platform  will  enable  us to  capitalize  on the vast  number  of new
          targets created by the sequencing of the human genome. The key to this
          strategy is to gain access to additional targets. We are exploring two
          principal types of opportunities:

            -  Individual  Target Licenses - We are exploring  individual target
               in-licensing    opportunities   from   universities   and   other
               biotechnology companies to augment our internal target generation
               efforts.  We intend to license one or more specific  targets from
               other parties to feed our drug development  platform in an effort
               to  bolster  our new drug  pipeline  more  rapidly  than we could
               achieve using only internally generated targets.

            -  Broad Target Partnerships - We are also exploring the possibility
               of forming a  large-scale  alliance or venture with a new partner
               with  complementary  technology  to gain access to a  significant
               quantity  of  new  targets.   This  kind  of  venture   could  be
               accomplished  with  either a  partner  already  holding  numerous
               characterized  targets  or with a  partner,  such  as a  genomics
               company, possessing numerous uncharacterized targets.

Our Drug Programs

     Our drug  development  programs  design drugs that are either more specific
for  particular  targets  than drugs  currently  available to treat a particular
disease or act at  targets  that have been  newly  identified  as mediators in a
disease. In both cases, we believe that by applying our drug design expertise to
designing drugs that  specifically  target a receptor,  such compounds offer the
potential for equivalent or improved efficacy with fewer side effects than drugs
currently  on the  market,  or may  cause  markets  to grow in  areas  where few
effective  therapeutics  currently exist. Our most advanced programs are focused
on regulating the  communication  between cells in the central  nervous  system.
<TABLE>

         The following table summarizes our current drug pipeline:

------------------------------ -------------------------- --------------------------- --------------------------
<S>                            <C>                        <C>                         <C>
Disorder                       Target Mechanism           Program Status              Commercial Rights
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------

------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Anxiety and Depression         GABA                       -Phase I (NGD 91-3)         Pfizer Marketing/
                                                          -Preclinical optimization   Neurogen Royalty
                                                           of other candidates
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Cognition Disorders            GABA                       -Phase I (NGD 97-1)         Pfizer Marketing/
                                                          -Preclinical optimization   Neurogen Royalty
                                                           of other candidates
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Insomnia                       GABA                       -Phase I (NGD 96-1)         Pfizer Marketing/
                                                          -Preclinical optimization   Neurogen Royalty
                                                           of other candidates
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Depression and Stress          CRF1                       Preclinical candidate       Neurogen
                                                          optimization
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Obesity                        NPY                        Preclinical candidate       Pfizer Marketing/
                                                          optimization                Neurogen Royalty,
                                                                                      Manufacturing and
                                                                                      Profit Sharing
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Inflammation and Rheumatoid    C5a                        Preclinical candidate       Neurogen
Arthritis                                                 optimization
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Pain                           VR1                        Leads identified            Neurogen
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Obesity                        MCH                        Leads identified            Neurogen
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Diabetes                       GLP1-like                  Leads identified            Neurogen
------------------------------ -------------------------- --------------------------- --------------------------
------------------------------ -------------------------- --------------------------- --------------------------
Depression                     NK3                        Leads identified            Neurogen
------------------------------ -------------------------- --------------------------- --------------------------
</TABLE>

     In the section below, we describe each of our drug development  programs in
detail.

Clinical and Preclinical Programs

Anxiety and Depression (GABA):

     Estimates by the National Institute of Mental Health,  suggest that anxiety
disorders,  characterized  by a sense of irrational fear or dread,  are the most
common  central  nervous  system   disorders  in  the  United  States  affecting
approximately 23 million people, or 12% of the adult population. The most common
anxiety-reducing  drugs are the class of drugs known as benzodiazepines (such as
Valium(R), Xanax(R) and Librium(R)) which are orally administered compounds that
exert   their   pharmacologic   effect  on  the  GABA   family   of   receptors.
Benzodiazepines  alleviate some of the symptoms of anxiety, but at the same time
cause numerous side effects,  including drowsiness,  impairment of motor skills,
memory loss and addiction. In addition,  benzodiazepines can cause coma or death
if a patient  consumes  excess alcohol in conjunction  with drug  treatment.  We
believe many of these side effects are due to  benzodiazepines  interacting with
and enhancing the activity of the wrong GABA  receptor  subtypes.  Despite these
side effects,  based on studies by market  sources,  we estimate that the annual
market for currently  marketed  drugs to treat anxiety is more than $2.0 billion
worldwide and over $1.0 billion in the United States.

     We have  discovered  many potential drug  candidates that have a novel GABA
receptor  binding  activity that we believe based upon numerous  animal  studies
will relieve  anxiety  while  avoiding or reducing  adverse side effects such as
sedation, memory impairment and interaction with alcohol.

     Our third generation development compound,  called NGD 91-3, has this novel
receptor subtype  activity.  We believe,  based upon the results of testing of a
previous  generation  candidate in a Phase I study designed to measure levels of
anxiety  and  sedation,  that  compounds  with this novel  activity  can relieve
anxiety without causing sedation.  NGD 91-3 is currently being tested in Phase I
studies which began in the fourth quarter of 1999.  Our  GABA-based  anxiety and
cognition programs are partnered with Pfizer under a 1992 agreement with Pfizer.
To increase the  probability of producing a successful drug from this program we
and Pfizer are  continuing to develop  additional  generations of compounds with
the novel receptor activity identified by our scientists.

     Some of our GABA-based compounds have also demonstrated  efficacy in animal
models of  depression.  In a 1998  extension  and expansion of the 1992 and 1994
agreements with Pfizer,  we added depression as an additional  target indication
for our development candidates from the anxiety drug development program.

Cognition Disorders (GABA):

     Memory loss is one of the most  devastating  symptoms of  neurodegenerative
diseases such as Alzheimer's disease and Parkinson's disease. Research sponsored
by the National  Institute for Mental Health indicates that as many as 5 million
people in the United States suffer from dementia,  a condition  characterized by
the impairment of learning and recall.  Another  prominent  study indicates that
approximately  10% of  people  over age 65 suffer  from  some form of  dementia.
Industry  analysts  estimate  the  current  annual  market  for  drugs  to treat
cognitive disorders to be approximately $1.0 billion worldwide.

     We have  discovered  a number of compounds  that  exhibit  activity at GABA
receptor  subtypes we believe may modulate the storage and  retrieval of memory.
Some drugs impair  memory by enhancing the activity of parts of the GABA system.
These drugs are often used in out-patient surgery to cause the patient to forget
the surgical  procedure.  Our approach in this program is to  selectively  drive
these parts of the GABA system in the  opposite  direction  and thereby  enhance
memory.  Animal studies,  to date, suggest that compounds with this activity are
efficacious in enhancing memory. Currently, Pfizer, our collaborative partner in
this program,  is evaluating the most advanced of these  compounds,  NGD 97-1 in
Phase I human clinical studies, which began in the first quarter of 1999. We are
pursuing our cognition  enhancement  program in collaboration  with Pfizer under
the 1992 Pfizer agreement.

Insomnia (GABA):

     Recent  studies  indicate  that as many as 20 million  people in the United
States experience  chronic insomnia and an additional 20 to 30 million Americans
experience  intermittent  sleep-disorders.  Industry  analysts estimate that the
annual  market for drugs to treat  insomnia is more than $1.5 billion  worldwide
and over $500 million in the United  States.  We are  developing  drugs to treat
sleep disorders,  primarily  insomnia.  While currently  marketed drugs to treat
sleep disorders, known as hypnotics, are effective, they may cause numerous side
effects,  including  "hangovers,"  rebound insomnia,  short-term memory loss and
addiction.

     We have identified  compounds in our library that interact selectively with
the GABA receptor subtypes we believe are involved in sleep  regulation.  Animal
studies, to date, suggest that these compounds are efficacious in inducing sleep
with fewer side effects  than  existing  therapies.  Pfizer,  our  collaborative
partner in this  program,  is currently  evaluating  the most  advanced of these
compounds,  NGD 96-1 in Phase I human clinical studies, which began in the first
quarter of 1999.  Drugs to treat insomnia  should not only induce sleep but they
should  have  properties  which  cause  the drug to work  quickly  and then stop
working before  morning.  Because NGD 96-1's  properties may cause it to operate
outside of this narrow window,  we and Pfizer are working to rapidly advance the
next  generation  of  candidates.  We may also  attempt  to  develop  additional
formulations  of NGD 96-1 which  could  improve its window of  activity.  We are
pursuing our sleep disorder program in collaboration  with Pfizer under the 1994
Pfizer agreement.

Depression and Stress (CRF1):

     Depression  is one of the most  prevalent  mental  illnesses  in the United
States,  affecting approximately 17 million people or 9% of the adult population
annually  according to the National  Institute  of Mental  Health.  While recent
pharmaceutical  research has led to improved drugs,  such as Prozac(R),  for the
treatment  of  depression,  these  medications  have  limitations  in their  use
primarily because of their slow onset of therapeutic  action (often greater than
10 days from the commencement of dosing), lack of efficacy in some patients, and
side effects such as sexual dysfunction.  Industry analysts estimate the current
annual market for antidepressants to be approximately $9.2 billion worldwide and
over $6.1 billion in the United States.

     Stress is a condition  commonly  associated  with  depression.  A number of
neuropeptide receptors that appear to be involved in stress responses, including
receptors for CRF, exhibit altered characteristics in depressed patients.

     We believe that an orally  available  drug  candidate  that blocks the CRF1
receptor may be  efficacious  in relieving  depression,  anxiety  and/or  stress
related  disorders  without  significant  side  effects.  Through  our  AIDD(TM)
program,  we have  discovered a number of compounds that block the CRF1 receptor
subtype  and have  demonstrated  efficacy  in animal  models of  depression  and
stress.  We are evaluating  the most advanced of these  compounds in preclinical
tests to select a lead candidate for clinical testing. To date, we have retained
all commercial rights relating to our CRF drug discovery program.

Obesity (NPY):

     Recent  studies on obesity  indicate  that  almost  one-third  of the adult
population  fits the  criteria  for at least  moderate  obesity  and that severe
obesity  affects a large  subgroup of this  population.  Many  health  problems,
including hypertension,  arthritis,  non-insulin dependent diabetes and elevated
cholesterol, are associated with obesity. Based on studies by market sources, we
believe the annual market for currently  marketed  obesity drugs to be more than
$600  million   worldwide  and  over  $350  million  in  the  U.S.  Obesity  has
traditionally  been treated with amphetamines or  amphetamine-like  drugs, which
can be highly  addictive.  Other  current  treatments  continue to be plagued by
serious side effects.

     Neuropeptide  Y (NPY) is a  neurotransmitter  that has been closely  linked
with animal feeding behavior and appetite  control.  We believe that a drug that
blocks  the  binding  of NPY to some of its  receptor  subtypes  located  in the
hypothalamus  may have the opposite effect of chronic exposure to NPY and reduce
the desire to eat.

     We and  Pfizer are  examining  several  new NPY  antagonist  candidates  in
pre-clinical  testing in order to select a candidate for human clinical  trials.
We are pursuing our NPY based obesity program in collaboration with Pfizer under
the 1995  Pfizer  agreement.  Under  this  agreement,  Pfizer  has the  right to
determine when to advance collaboration compounds in the clinical process, if at
all.

Inflammation and Rheumatoid Arthritis (C5a):

     Rheumatoid  arthritis  is a chronic  inflammatory  disease  involving  many
systems of the body.  While the cause of rheumatoid  arthritis is not known, the
progression   of  the  disease  is   believed  to  be  caused  by   inflammatory
T-lymphocytes,  a type of white blood cell,  which start a cascade  resulting in
the  activation of several  factors that  exacerbate the  inflammatory  process,
including  complement component C5a. C5a promotes  inflammation,  attracts white
blood cells, and may trigger the immune system to start attacking the body's own
cells, an inappropriate  reaction central to this and other autoimmune diseases.
The  National   Institutes  of  Health   estimates  that  this  disease  affects
approximately 1% of the U.S.  population.  Industry analysts estimate that sales
of drugs to treat rheumatoid  arthritis  exceed $6.0 billion  worldwide and $2.0
billion in the U.S.

     Neurogen  scientists  believe that  inhibiting  the  activation  of the C5a
receptor may work to treat  rheumatoid  arthritis  by blocking the  inflammatory
response  and  breakdown  of tissue.  Such a small  molecule  drug could also be
effective  in  treating  other  inflammatory  diseases,  with  the  ease of oral
delivery  and  without  many of the side  effects,  some of them  quite  severe,
associated with currently available treatments. Through our AIDD(TM) program, we
have  identified  several  compounds  that potently  block the activation of C5a
receptors.  These compounds are currently being evaluated in pre-clinical models
of  inflammation.  To date,  we have  retained all rights to our C5a  antagonist
program.

Emerging Programs

Pain (VR-1):

     We have  established  a program to explore  the utility of  compounds  that
modulate  the type 1 Vanilloid  Receptor  (VR-1) so as to develop  drugs for the
treatment of chronic pain. VR-1 has been shown in various  scientific studies to
modulate pain responses.  Neurogen  researchers believe that a drug which blocks
the VR-1  receptor  could  benefit  patients  suffering  from  neuropathic  pain
disorders such as diabetic neuropathy and post-herpetic  neuralgia.  Through our
AIDD  program,  we are  conducting  an early  stage  program  to  discover  VR-1
antagonist leads for further testing and optimization. To date, we have retained
all commercial rights to our VR-1 program.

Obesity (MCH):

     We have also  established  a program to explore  the utility of and develop
drugs that modulate the effects of Melanin  Concentrating  Hormone (MCH) for the
treatment  of  obesity.  MCH has been  shown in  various  scientific  studies to
stimulate  eating in  animals.  Neurogen  researchers  believe  that a drug that
blocks the activity of MCH could decrease appetite and body weight.  Through our
AIDD  program,  we are  conducting  an  early  stage  program  to  discover  MCH
antagonist leads for further testing and optimization. To date, we have retained
all commercial rights to our MCH program.

Diabetes (GLP1-like):

     Industry  tests  have  demonstrated  that  Glucagon  Like  Peptide 1 (GLP1)
increases  insulin  secretion from pancreatic  cells in the presence of elevated
glucose  levels  without  overstimulating  such secretion and has no effect when
glucose   levels  are  in  normal  range,   thereby   preventing   induction  of
hypoglycemia.   Efforts  to  use  GLP1  for  Type  II  diabetes  treatment  have
demonstrated that when injected (the only route of  administration  possible for
the natural  peptide),  it has a short  half-life  that  renders it difficult to
commercialize  as a  therapeutic  agent.  Through  our  AIDD  program,  we  have
identified a number of  non-peptide  small  molecules  that  exhibit  modulatory
effects  similar to GLP1  (GLP1-like) in in vitro tests. We are currently in the
process of further testing and optimizing these compounds and evaluating them in
our animal  models.  To date,  we have  retained  all  commercial  rights to our
GLP1-like program.

Depression (NK3):

     We have  applied  our  AIDD(TM)  program to discover  compounds  that block
certain types of neurokinin receptors,  which we believe may be an effective way
to treat  depression.  We have  identified  several lead  compounds that are NK3
receptor antagonists and are currently evaluating these leads in animal models.

Companion Animal Drug Program

     In September  1998,  we announced a new licensing  agreement  with Pfizer's
Companion  Animal Group that expands the 1992 Pfizer  agreement.  This expansion
covers the development of Neurogen's small molecule  compounds that work through
the GABA  neurotransmitter  system for the  treatment  of anxiety and  cognitive
dysfunction in companion  animals,  such as dogs and cats. All development costs
of this program will be borne by Pfizer. The initial goal of the agreement is to
develop a drug that will reduce anxiety in companion  animals without  producing
side effects such as sedation.  From our existing GABA drug development programs
for  humans,  we have been able to identify  several  lead  candidates  that are
currently in pre-clinical testing.

Our Collaborations

     As part of our business  strategy,  we seek  collaborative  agreements with
large  pharmaceutical  companies  where  we  believe  it to be  beneficial.  Our
collaborative  partners  offer us funding for our drug  development  programs as
well as clinical,  manufacturing,  marketing,  and sales expertise.  At the same
time, we are able to retain rights to future royalties or profit-sharing  should
a successful drug eventually  result from a collaborative  program.  Through our
strategic alliances, we hope to balance our exposure to research and development
risks inherent in the industry and to retain an increasing  share in the success
of our future products.

     The following  summarizes the material terms of our existing  collaborative
agreements:

Pfizer

         o The  1992  Pfizer  Agreement  - covers  our  GABA-based  anxiety  and
           cognitive  disorders program
           - Pfizer  purchased  1.0 million shares of our common stock for $13.8
             million.
           - We received  approximately $4.6 million per year from 1992  through
             1996  for  research  and  development expenses under these programs
             (plus additional funding under  the 1996  and  the  1998  extension
             agreements discussed below).
           - Pfizer has the right to determine when to advance compounds in  the
             clinical process.
           - We will receive milestone  payments if  specified  development  and
             regulatory objectives are achieved.
           - Pfizer  received  the  exclusive  worldwide license to manufacture,
             use   and   sell   GABA-based   anxiolytics,  anti-depressants  and
             cognition  enhancers developed in this collaboration.
           - Pfizer is required to pay  us  royalties based on net sales levels,
             if any,  for such products.

         o The 1994 Pfizer  Agreement  - covers our  GABA-based  sleep  disorder
           program
           - Pfizer purchased  approximately 1.1  million shares of  our  common
             stock for approximately $9.9 million.
           - We received approximately $2.4 million  per year during the  period
             July 1994 to June 1997 for research and development expenses  under
             this program (plus additional funding under  the 1996 and  the 1998
             extension agreements discussed below).
           - Pfizer has the right to determine when to advance compounds  in the
             clinical process.
           - We will receive  milestone  payments of  up to  approximately  $3.3
             million if specified  development  and  regulatory  objectives  are
             achieved.
           - Pfizer received the exclusive  worldwide  license  to  manufacture,
             use and sell GABA-based sleep disorder products  developed  in  the
             collaboration.
           - Pfizer is required to  pay us  royalties based on net sales levels,
             if any, for such products.

         o The 1995 Pfizer Agreement - covers our neuropeptide Y obesity program
           - Pfizer  purchased   750,000  shares  of  our   common   stock   for
             approximately  $16.5 million and paid us  a  license  fee  of  $3.5
             million.
           - We receive  between $2.4  million  and $3.1 million per  year  from
             November  1,  1995   through   October  2000,  for   research   and
             development  funding of our eating  disorder  program.
           - Pfizer has the right to determine when to advance  compounds in the
             clinical process.
           - We will receive  milestone  payments  of  up  to  approximately $28
             million if specified  development  and  regulatory  objectives  are
             achieved.
           - Pfizer   received   the  exclusive  worldwide  rights  to  products
             developed in the collaboration subject to  rights  retained  by  us
           - Pfizer is responsible for Phase II and later stage clinical  trials
             under this collaboration.
           - We have primary responsibility for the  preparation and  filing  of
             Investigational  New Drug  Applications and for the conduct of  the
             Phase I studies.
           - We will fund a minority share  of  early  stage  development  costs
           - We have retained the right to manufacture any  products   resulting
             from the  collaboration  for markets  in NAFTA countries  and  have
             retained a profit  sharing  option with respect to  sales in  NAFTA
             countries.
           - If  we  exercise  this  profit  sharing  option,  we  will  fund  a
             portion of the cost of late  stage clinical  trials  and  marketing
             and in return share in any profit generated by  sales  of  products
             developed pursuant to the collaboration in NAFTA countries.
           - If we chose not to  exercise  this  option,  Pfizer  would  pay  us
             royalties on drugs  marketed  in NAFTA  countries and would fund  a
             majority  of  early  stage  and  all  late  stage  development  and
             marketing expenses.
           - In any case,  we  are entitled to  royalties on drugs  marketed  in
             non-NAFTA countries.
           - In 1998, Pfizer exercised an option to extend the collaboration and
             paid us an additional $3.1 million through October 1999.
           - In 1999, Pfizer exercised an option to extend the collaboration yet
             again through October 2000.

         o The 1996 Pfizer  Extension  Agreement  -  extension  of 1992 and 1994
           Pfizer Agreements
           - Extension of the  research  programs  under  both the  1992  Pfizer
             Agreement and the 1994 Pfizer  Agreement  through  December  1998.
           - We received $11.5 million during 1997 and 1998 to fund our research
             efforts under these programs.

         o  The 1998 Pfizer  Extension  Agreements - extension  and expansion of
            1992 and 1994 Pfizer Agreements
            - Extension of the  research  programs under  both the  1992  Pfizer
              Agreement and the 1994 Pfizer Agreement through December 2000.
            - GABA-based drugs to treat depression would  also be  explored as a
              part of the research  programs.
            - We received $6.2 million in 1999  and will  receive an  additional
              $6.2 million in 2000 to  fund our  research  efforts  under  these
              programs.
            - Expansion of the anxiety  and  cognition enhancement  agreement to
              include drugs to treat anxiety disorders and memory impairment  in
              companion  animals,   with  specified   milestone payments and
              royalties for successful products.

         o The 1999 Pfizer Technology Transfer Agreement - license for a portion
           of our AIDD technology
           - Pfizer received a non-exclusive license to a  portion of  our  AIDD
             technology.
           - We will  receive up to $27 million  payable  over three years, with
             payments scheduled to expire in June 2002.
           - We may  receive additional payments based upon Pfizer's  success in
             using the technology.

Schering-Plough

         o The Schering-Plough Agreement - covers our dopamine-based
           schizophrenia program
           - We received  $3.6 million per year during the period from July 1995
             through  June  1998 for  research and development funding.
           - We received other fees totaling $20.0 million, in part for  limited
             access to our library.
           - We concluded our role in the research stage of the collaboration in
             June   1998   and    transferred   collaboration   candidates    to
             Schering-Plough  for any further research and  development.
           - We believe it  is  unlikely  that  any  candidate  subject  to  the
             collaboration will be further developed by Schering-Plough.

Patents and Proprietary Technology

     Our success  depends,  in part, on our ability to obtain patents,  maintain
trade secrets and operate without infringing the intellectual property rights of
third  parties.  We file patent  applications  both in the United  States and in
foreign countries,  as we deem appropriate,  for protection of both our products
and  processes.  To date,  we are the sole  assignee  of one  hundred and eleven
issued United States patents and several foreign patents:

        o 53 of our issued  United  States  patents and several  pending  patent
          applications  concern  the  compounds  in our  GABA-based  program  to
          discover drugs to treat anxiety, sleep disorders and dementia;

        o 46 of our issued  United  States  patents and several  pending  patent
          applications  concern the compounds in our dopamine  receptor targeted
          antipsychotic program;

        o Eight of our issued United States  patents and several  pending patent
          applications  are in our drug  discovery  program to treat  depression
          through the CRF1 receptor; and

        o Two of our issued United  States  patents and several  pending  patent
          applications are in our NPY-1 receptor-targeted drug discovery program
          to treat obesity.

     We are not  currently  engaged  in any  research  based  on any  technology
transfer that we believe would obligate us to pay royalties to any third party.

     The patent position of  biotechnology  and  pharmaceutical  firms is highly
uncertain  and involves many complex  legal and  technical  issues.  There is no
clear policy involving the breadth of claims allowed in such cases or the degree
of protection  afforded  under such patents.  As a result,  we cannot assure you
that our patent  applications  will be  successful or that our current or future
patents will afford us protection  against our competitors.  It is possible that
our patents will be successfully challenged or that patents issued to others may
preclude us from  commercializing  our  products.  Litigation  to establish  the
validity  of  patents,  to  defend  against  infringement  claims  or to  assert
infringement  claims  against  others can be lengthy  and  expensive,  even if a
favorable  result is obtained.  Moreover,  much of our expertise and  technology
cannot be patented.

     In   connection   with  the  Pfizer   collaboration   agreements   and  the
Schering-Plough   collaboration   agreement,   we  have   granted   Pfizer   and
Schering-Plough  license to manufacture,  use and sell drug candidate  compounds
subject  to  those  agreements.   To  the  extent  that  we  enter  into  future
collaborations or license  agreements with third parties,  we may have to share,
or may have no rights at all to,  intellectual  property  developed  or  patents
obtained in connection with these collaborations.

     We also rely heavily on trade secrets and  confidentiality  agreements with
collaborators,  advisors,  employees,  consultants,  vendors  and other  service
providers.  We cannot assure you that these  agreements  will not be breached or
that our trade  secrets  will not  otherwise  become  known or be  independently
discovered  by  competitors.  Our business  would be  adversely  affected if our
competitors  were able to learn our  secrets or if we were unable to protect our
intellectual property.

Competition

     The  biopharmaceutical  industry is highly competitive and subject to rapid
and  substantial  technological  change.  Developments  by others may render our
products under development or technologies noncompetitive or obsolete, or we may
be unable to keep pace with technological  developments or other market factors.
Technological  competition in the industry from pharmaceutical and biotechnology
companies, universities,  governmental entities and others diversifying into the
field is intense  and is  expected  to  increase.  Many of these  entities  have
significantly greater research and development  capabilities than we do, as well
as  substantially  more  marketing,  manufacturing,   financial  and  managerial
resources. These entities represent significant competition for us. In addition,
acquisitions of, or investments in, competing  development-stage  pharmaceutical
or   biotechnology   companies  by  large   corporations   could  increase  such
competitors' financial, marketing, manufacturing and other resources.

     Competitors have developed or are in the process of developing technologies
that are,  or in the  future  may be, the basis for  competitive  products.  Our
competitors may develop  products that are safer,  more effective or less costly
than any  products we may develop or may be able to complete  their  development
more quickly.  If a competitor were to develop and successfully  commercialize a
drug  similar  to one we  were  working  on  before  us,  it  would  put us at a
significant competitive disadvantage.

Manufacturing

     We are currently relying, in part, on third-party  manufacturers to produce
our compounds for research purposes and for pre-clinical and clinical trials. We
manufacture some of our compounds ourselves to conduct  pre-clinical studies and
we may expand our facilities to produce  sufficient  quantities of compounds for
the clinical stage of development in some cases. We have focused our research on
developing  compounds  that are small  molecules.  We believe  this will make it
easier  for us to do our own  manufacturing  in the  event we  choose  to do so,
because these compounds are more efficient to manufacture and do not require the
purification associated with many protein compounds.  However, we cannot predict
the cost of developing our own  manufacturing  capabilities and we may find that
these costs or other factors make such development impossible.

     Pfizer  manufactures,  or will be responsible for manufacturing,  drugs for
clinical  trials  which are  subject to the 1992 Pfizer  Agreement  and the 1994
Pfizer  Agreement and has the right to manufacture  future  products under these
collaborations,  if any, for commercialization.  Pfizer will also be responsible
for  manufacturing  drugs for Phase II and later stage clinical trials which are
subject to the 1995 Pfizer Agreement, and subject to our option described below,
has the right to manufacture future products, if any for  commercialization.  We
have  retained the option to  manufacture  future  products,  if any,  developed
pursuant  to the  1995  Pfizer  Agreement  for  sales in  NAFTA  countries.  See
"Collaborative Research and Licensing Agreements." With respect to compounds not
currently  subject  to  collaborations,  we  plan  to  either  establish  supply
arrangements  with  third-party   manufacturers  for  clinical  trials  and  for
commercial distribution or to develop our own manufacturing capabilities.

Sales and Marketing

     Our present  strategy is to market our products  either directly or through
co-promotion   arrangements   or  other   licensing   arrangements   with  large
pharmaceutical  or  biotechnology  companies.  We do not expect to  establish  a
direct  sales  capability  for at least the next  several  years,  though we may
pursue such a capability in the future. Pfizer has the right to market worldwide
future products,  if any, resulting from the Pfizer  Agreements,  except for our
option to co-market products under the 1995 Pfizer Agreement.

Government Regulation

     The  production  and  marketing  of  our  products  and  our  research  and
development  activities  are  subject to  regulation  for safety,  efficacy  and
quality by  numerous  governmental  authorities  in the United  States and other
countries.  In  the  United  States,  drugs  are  subject  to  rigorous  federal
regulation and to a lesser extent state  regulation.  The Federal Food, Drug and
Cosmetic Act, as amended, and the regulations promulgated thereunder,  and other
federal and state  statutes and  regulations  govern,  among other  things,  the
testing,  manufacture,  safety,  efficacy,  labeling,  storage,  record keeping,
approval,  advertising  and promotion of our products.  Product  development and
approval  within  this  regulatory  framework  will  take a number  of years and
involve the expenditure of substantial resources.

     The steps  required  before a  pharmaceutical  agent may be marketed in the
United States include:

          1. Pre-clinical  laboratory  tests, in vivo  pre-clinical studies  and
             formulation  studies,
          2. The   submission  to  the  FDA  of  an   Investigational   New Drug
             Application  (IND) for human  clinical  testing  which must  become
             effective before human clinical trials can commence,
          3. Adequate and well-controlled human clinical trials to establish the
             safety and efficacy of the drug,
          4. The submission  of  a  New  Drug  Application  or  Product  License
             Application to the FDA, and
          5. FDA approval  of  the  New  Drug  Application  or  Product  License
             Application prior to any commercial sale or shipment of the drug.


     In addition to obtaining FDA approval for each product,  each domestic drug
manufacturing  establishment  must be registered with, and approved by, the FDA.
Domestic manufacturing establishments are subject to biennial inspections by the
FDA and must comply with the FDA's Good  Manufacturing  Practices for both drugs
and  devices.  To  supply  products  for  use  in  the  United  States,  foreign
manufacturing  establishments must comply with Good Manufacturing  Practices and
are subject to periodic  inspection by the FDA or by regulatory  authorities  in
such countries under reciprocal agreements with the FDA.

     Pre-clinical  testing includes  laboratory  evaluation of product chemistry
and  formulation,  as well as animal studies to assess the potential  safety and
efficacy  of the  product.  Pre-clinical  safety  tests  must  be  conducted  by
laboratories  that  comply  with  FDA  regulations   regarding  Good  Laboratory
Practices.  The results of the pre-clinical  testing are submitted to the FDA as
part of an IND and are  reviewed by the FDA prior to the  commencement  of human
clinical trials. Unless the FDA objects to an IND, the IND will become effective
30 days following its receipt by the FDA.

     Clinical  trials  involve  the  administration  of the new drug to  healthy
volunteers  or to  patients  under  the  supervision  of a  qualified  principal
investigator. Clinical trials must be conducted in accordance with Good Clinical
Practices  under  protocols  that  detail  the  objectives  of  the  study,  the
parameters  to be  used  to  monitor  safety  and the  efficacy  criteria  to be
evaluated.  Each  protocol  must be  submitted  to the  FDA as part of the  IND.
Further,  each  clinical  study  must be  conducted  under  the  auspices  of an
independent  Institutional  Review Board at the institution where the study will
be conducted.  The Institutional Review Board will consider, among other things,
ethical factors,  the safety of human subjects and the possible liability of the
institution.  Compounds  must be  formulated  according  to  Good  Manufacturing
Practices.

     Clinical trials are typically conducted in three sequential phases, but the
phases  may  overlap.  In Phase I, the  initial  introduction  of the drug  into
healthy human  subjects,  the drug is tested for safety  (adverse side effects),
absorption,  dosage  tolerance,  metabolism,  bio-distribution,   excretion  and
pharmacodynamics (clinical pharmacology). Phase II involves studies in a limited
patient population

          1. to  determine  the  efficacy of the  drug  for  specific,  targeted
             indications,
          2. to determine dosage tolerance and optimal dosage, and
          3. to  identify  possible  adverse  side  effects  and safety  risks.

     When a compound is found to be effective and to have an  acceptable  safety
profile in Phase II  evaluations,  Phase III trials  are  undertaken  to further
evaluate  clinical  efficacy and to test for safety  within an expanded  patient
population at geographically  dispersed  clinical study sites. We or the FDA may
suspend  clinical  trials  at any time if it is  believed  that the  individuals
participating in such trials are being exposed to unacceptable health risks.

     The results of the  pharmaceutical  development,  pre-clinical  studies and
clinical studies are submitted to the FDA in the form of an New Drug Application
for approval of the marketing and  commercial  shipment of the drug. The testing
and  approval  process is likely to require  substantial  time and  effort.  The
approval  process is affected by a number of factors  including  the severity of
the  disease,  the  availability  of  alternative  treatments  and the risks and
benefits  demonstrated  in  clinical  trials.  Consequently,  there  can  be  no
assurance  that any approval will be granted on a timely  basis,  if at all. The
FDA may deny a New Drug  Application if applicable  regulatory  criteria are not
satisfied,  require additional testing or information or require  post-marketing
testing and  surveillance  to monitor  the safety of a company's  products if it
does not  believe the New Drug  Application  contains  adequate  evidence of the
safety and efficacy of the drug.  Notwithstanding  the  submission of such data,
the FDA may ultimately  decide that a New Drug  Application does not satisfy its
regulatory criteria for approval.  Moreover, if regulatory approval of a drug is
granted, such approval may entail limitations on the indicated uses for which it
may be marketed.  Finally, product approvals may be withdrawn if compliance with
regulatory  standards is not maintained or if problems occur  following  initial
marketing.

     Among the conditions for New Drug  Application  approval is the requirement
that any prospective manufacturer's quality control and manufacturing procedures
conform to Good Manufacturing  Practices.  In complying with standards set forth
in these  regulations,  manufacturers  must  continue to expend time,  money and
effort in the area of production  and quality  control to ensure full  technical
compliance.  Manufacturing  establishments,  both foreign and domestic, also are
subject  to  inspections  by or  under  the  authority  of the FDA and by  other
federal, state or local agencies.

     Whether or not FDA  approval  has been  obtained,  approval of a product by
regulatory  authorities  in  foreign  countries  must be  obtained  prior to the
commencement  of  commercial  sales  of  the  product  in  such  countries.  The
requirements governing the conduct of clinical trials and product approvals vary
widely from country to country, and the time required for approval may be longer
or  shorter  than  that  required  for FDA  approval.  Although  there  are some
procedures for unified filings for certain European countries,  in general, each
country at this time has its own procedures and requirements.

     In addition to  regulations  enforced by the FDA, we are also is subject to
regulation  under the  Occupational  Safety and Health  Act,  the  Environmental
Protection Act, the Toxic Substances Control Act, the Resource  Conservation and
Recovery Act and other  present and  potential  future  federal,  state or local
regulations.  Our  research  and  development  involves  the  controlled  use of
hazardous materials,  chemicals, and various radioactive compounds.  Although we
believe that our safety  procedures for handling and disposing of such materials
comply with the standards prescribed by state and federal regulations,  the risk
of accidental  contamination or injury from these materials cannot be completely
eliminated.  In the  event of any  accident,  we could  be held  liable  for any
damages that result and any such liability could exceed our resources.

Employees

     As of December  31,  1999,  we had 168  full-time  employees,  of which 133
persons were  scientists  and 56 had Ph.D.  degrees.  None of our  employees are
covered by collective bargaining agreements,  and we consider relations with our
employees to be good. Each of our current scientific  personnel has entered into
confidentiality and non-competition agreements with us.

Research and Development Expenses

     We incurred research and development expenses of $24,042,000,  $20,914,000,
and $19,710,000 in 1999, 1998, and 1997, respectively.

Properties

     We conduct our operations in laboratory and administrative  facilities on a
single site located in Branford,  Connecticut. Our currently occupied facilities
total  approximately  78,000 square feet, of which  approximately  54,000 square
feet are owned by us and  approximately  24,000  square feet are leased  under a
ten-year lease which commenced in July 1995. Pursuant to the lease agreement, we
have an option to extend  the lease for an  additional  ten-year  period  and an
option to purchase the facility  during the term of the lease.  In addition,  we
have recently purchased an approximately 54,000 square foot building adjacent to
our  currently  occupied  facility and are in the process of preparing to have a
portion of this  building  adapted for our research  uses.  We expect that these
facilities will  accommodate our anticipated  administrative  and research needs
for the foreseeable future.

Legal Proceedings

     We know of no material  litigation or  proceeding  pending or threatened to
which we are, or may become, a party.


<PAGE>

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The common stock of Neurogen is traded on The NASDAQ Stock Market under the
symbol NRGN. As of March 1, 2000, there were approximately 300 holders of record
of the Company's  common stock.  No dividends have been paid on the common stock
to date,  and the Company  currently  intends to retain any earnings for further
development of the Company's business.

     The following  table sets forth the high and low closing bid prices for the
common stock as reported by NASDAQ.

                                                                HIGH     LOW
                                                                ----     ---
FISCAL 1999:
First Quarter.................................................. 17 3/4  10 1/2
Second Quarter................................................. 15 1/2  10 1/2
Third Quarter.................................................. 19 3/4  14 3/8
Fourth Quarter................................................. 17 3/8  12 15/16
FISCAL 1998:
First Quarter.................................................. 17 3/4  13 3/8
Second Quarter................................................. 20 1/2  16 1/8
Third Quarter.................................................. 18 3/8  10 5/8
Fourth Quarter................................................. 18      13 5/8


ITEM 6.   SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

For the Year Ended December 31

                                                     (in thousands, except per share data)
                                                -----------------------------------------------
                                                  1999     1998     1997      1996      1995
<S>                                                <C>      <C>      <C>       <C>       <C>
                                                -------- -------- --------- --------- ---------
Total operating revenues.......................$ 10,209  $ 11,081  $ 17,979  $ 18,286 $ 26,929
Total operating expenses.......................$ 28,465  $ 24,834  $ 23,276  $ 17,229 $ 15,585
Net income (loss)..............................$(14,618) $ (9,458) $   (257) $  5,894 $ 13,353
Net income (loss) per share-basic (1)..........$  (1.00) $   (.66) $   (.02) $    .42 $   1.19
Net income (loss) per share-diluted (1)........$  (1.00) $   (.66) $   (.02) $    .38 $   1.07
Total assets...................................$ 92,134  $101,810  $111,869  $113,869 $104,856
Long-term debt.................................$  1,912         -  $     74  $    279 $    460
Stockholders' equity...........................$ 84,710  $ 98,567  $106,918  $106,245 $ 98,076
Weighted average number of shares outstanding-
basic..........................................  14,576    14,419    14,348    14,145   11,267

(1) All per share data conforms to SFAS No. 128, Earnings Per
    Share - See footnote 1 to the financial statements.
</TABLE>

ITEM 7.   MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

     Since  our  inception  in September  1987,  we  have been engaged in the
discovery and development of drugs. We have not derived any revenue from product
sales and we expect to incur significant  losses in most years prior to deriving
any such product revenues.  Revenues to date have come from three  collaborative
research  agreements and one  technology  transfer  agreement  with Pfizer,  one
collaboration  with  Schering-Plough,  one license  agreement with American Home
Products and from interest income.

RESULTS OF OPERATIONS

     Results of operations may vary from period to period  depending on numerous
factors,  including  the  timing  of  income  earned  under  existing  or future
strategic  alliances,   technology  transfer   agreements,   joint  ventures  or
financings,  if any, the progress of our research and development and technology
transfer  projects,   technological   advances  and  determinations  as  to  the
commercial  potential of proposed  products.  We expect research and development
costs  to  increase  significantly  over  the  next  several  years  as our drug
development  programs  progress.   In  addition,   we  expect  our  general  and
administrative   expenses   necessary  to  support  our  expanded  research  and
development activities to increase for the foreseeable future.
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

     Our fiscal 1999  operating  revenues  decreased 8 percent to $10.2  million
from 1998 operating revenues of $11.1 million,  which were  significantly  lower
than 1997 fiscal operating  revenues of $18.0 million.  The decrease in 1999 was
due primarily to the scheduled  conclusion in June 1998 of the research phase of
the  Schering-Plough  Agreement (as described  below).  The decrease in 1998 was
also due  partly  to the  conclusion  of the  Schering-Plough  research  program
together  with a  reduction  in  reimbursement  revenues  from  Pfizer for human
clinical  trials  conducted  in 1997 under our NPY obesity  collaboration  and a
reduction  in license  fees as  described  below.  Operating  revenues in future
periods  may  fluctuate  significantly  due to  many  factors,  including  those
described throughout this section.

     Our  license  fees of $0.5  million  in  1999,  and  $3.0  million  in 1997
represent  non-recurring,  nonrefundable  fees which  relate to the  granting of
certain  commercial  licenses and rights to collaborative  partners as described
below.  License fees in 1999 represent  recognition of part of a $3.0 million up
front  fee  paid  by  Pfizer  for  a  non-exclusive   license  to  certain  AIDD
intellectual  property and the right to employ this  technology  in its own drug
development  programs.  License fees in 1997  represented a $3.0 million library
access fee from  Schering-Plough  for  access to a portion of our  combinatorial
chemistry libraries.

     Research and  development  costs  increased 15 percent to $24.0  million in
1999 as compared to 1998.  Research and development costs increased 6 percent to
$20.9 million in 1998 compared to $19.7 million in 1997. These increases are due
primarily  to an increase in research and  development  personnel as well as the
further  expansion  of our AIDD(TM)  (Accelerated  Intelligent  Drug  Discovery)
program for the  discovery  of new drug  candidates.  Research  and  development
expenses  represented 84 percent,  84 percent and 85 percent of total  operating
expenses for the years ended December 31, 1999, 1998 and 1997, respectively.

     General and administrative expenses increased 13 percent to $4.4 million in
1999 from $3.9  million in 1998 and 8 percent in 1998 from $3.6 million in 1997.
These  increases  are  attributed  to  additional  administrative  and technical
services to support our expanding product pipeline.

     Other income,  consisting primarily of interest income and gains and losses
from invested cash and  marketable  securities,  was $3.6 million in 1999,  $4.3
million in 1998 and $5.0  million in 1997,  respectively.  The  decrease in 1999
compared to 1998 and 1997 was due primarily to a lower level of invested funds.

     We recognized a net loss of $14.6  million for the year ended  December 31,
1999, a net loss of $9.5 million for the year ended  December 31, 1998 and a net
loss of $0.3 million for the year ended  December 31, 1997. The increases in net
losses are primarily due to a decrease in operating  revenues and an increase in
research  and  development  and general and  administrative  expenses due to the
factors described above.

LIQUIDITY AND CAPITAL RESOURCES

     At December  31,  1999 and 1998,  cash,  cash  equivalents  and  marketable
securities were in the aggregate $65.0 million and $75.0 million,  respectively.
The decrease in 1999 was due  primarily to our use of cash to fund our operating
activities  together  with capital  expenditures  for plant and  equipment.  Our
aggregate  level  of  cash,  cash  equivalents  and  marketable  securities  has
fluctuated significantly in the past and is expected to do so in the future as a
result of the factors described below.

     Our  cash  requirements  to  date  have  been  met by the  proceeds  of our
financing  activities,  amounts received pursuant to collaborative  arrangements
and interest earned on invested funds.  Our financing  activities  include three
private  placement  offerings  of  common  stock  prior  to our  initial  public
offering,  underwritten  public  offerings of our common stock in 1989, 1991 and
1995, and the private sale of common stock to Pfizer in connection with entering
into the Pfizer  Agreements  and to American  Home Products in the American Home
Products Agreement.  Total funding received from these financing  activities was
approximately  $105.6  million.  Our  expenditures  have been  primarily to fund
research  and  development  and  general  and  administrative  expenses  and  to
construct and equip our research and development facilities.

PFIZER
------

     In the first  quarter of 1992,  we entered  into the 1992 Pfizer  Agreement
pursuant to which Pfizer made a $13.8 million equity  investment in Neurogen and
agreed,  among other  things,  to fund a specified  level of resources for up to
five years (later extended as described below) for our research programs for the
discovery  of  GABA-based  drugs for the  treatment  of  anxiety  and  cognitive
disorders.  As of  December  31,  1999,  Pfizer has  provided  $36.3  million of
research  funding to the  Company  pursuant  to the 1992  Pfizer  Agreement,  as
extended,  and  $0.3  million  for the  achievement  of a  clinical  development
milestone.  We are eligible to receive  additional  milestone  payments of up to
$12.2 million if certain  development  and  regulatory  objectives  are achieved
regarding our products subject to the collaboration.  In return, Pfizer received
the exclusive  rights to manufacture  and market  collaboration  anxiolytics and
cognition enhancers that act through the family of receptors which interact with
the  neuro-transmitter  GABA.  Pfizer will pay us royalties based upon net sales
levels, if any, for such products.

     We and Pfizer  entered into our second  collaborative  agreement,  the 1994
Pfizer Agreement, in July 1994, pursuant to which Pfizer made an additional $9.9
million equity investment in Neurogen and agreed,  among other things, to fund a
specified  level of resources for up to four years (later  extended as described
below) for our research  program for the development of GABA-based drugs for the
treatment of sleep disorders. As of December 31, 1999, Pfizer had provided $11.8
million  of  research  funding  to  the  company  pursuant  to the  1994  Pfizer
Agreement,  as  extended,  and $0.3  million for the  achievement  of a clinical
development milestone. We could also receive additional milestone payments of up
to $3.0 million if certain  development  and regulatory  objectives are achieved
regarding our products subject to the collaboration.  In return, Pfizer received
the  exclusive  rights to  manufacture  and  market  GABA-based  sleep  disorder
products for which it will pay us royalties based upon net sales levels, if any.

     In December  1996 and again in December  1998,  we and Pfizer  extended and
combined our research  efforts under the 1992 and 1994  Agreements.  Pursuant to
the  extension  agreements,  we received  $6.2 million in 1999 (which  amount is
included in the above-described cumulative totals received for the 1992 and 1994
agreements)  and under the  extension  we expect to receive an  additional  $6.2
million  during  2000 for  research  and  development  funding of the  Company's
GABA-based anxiety, cognitive enhancer and sleep disorders projects.

     Under both the 1992  Pfizer  Agreement  and the 1994 Pfizer  Agreement,  in
addition  to making  the  equity  investments  and the  research  and  milestone
payments noted above, Pfizer is responsible for funding the cost of all clinical
development and the manufacturing and marketing, if any, of drugs developed from
the collaborations.

     We and Pfizer  entered  into our third  collaborative  agreement,  the 1995
Pfizer  Agreement,  in  November  1995.  Under  this  agreement  Pfizer  made an
additional  $16.5  million  equity  investment  in  Neurogen  bringing  Pfizer's
ownership of our common stock up to approximately  21 percent.  Pfizer also paid
us a $3.5 million license fee. Pfizer also agreed, among other things, to fund a
specified  level of resources for up to five years for our research  program for
the discovery of drugs which work through the neuropeptide Y (NPY) mechanism for
the treatment of obesity and other  disorders.  As of December 31, 1999,  Pfizer
had  provided  $11.4  million in  research  funding  pursuant to the 1995 Pfizer
Agreement.  In 1998, Pfizer exercised its option under the 1995 Pfizer Agreement
to extend the NPY research  program and also agreed to fund  increased  Neurogen
staffing on the program and thereby pay us$3.1  million to fund a fourth year of
research,  through  October 1999. In 1999,  Pfizer elected to further extend the
research  program through October 2000 and to fund Neurogen's  research for this
fifth year at staffing  levels to be determined by us and Pfizer.  We could also
receive  milestone  payments  of up to  approximately  $28.0  million if certain
development  and  regulatory  objectives  are  achieved  regarding  our products
subject  to the  collaboration.  As  part of this  third  collaboration,  Pfizer
received the exclusive  worldwide  rights to  manufacture  and market  NPY-based
collaboration  compounds,  subject to certain  rights  retained by us. Under the
1995 Pfizer  Agreement,  we will fund a minority  share of early stage  clinical
development  costs and have retained the right to manufacture any  collaboration
products in NAFTA countries.  We have also retained a profit sharing option with
respect to product sales in NAFTA  countries.  If we exercise the profit sharing
option,  we will fund a portion  of the cost of late stage  clinical  trials and
marketing costs and in return will receive a specified  percentage of any profit
generated by sales of collaboration  products in NAFTA  countries.  If we choose
not to exercise  our  profit-sharing  option,  Pfizer  would pay us royalties on
drugs  marketed in NAFTA  countries  and will fund a majority of early stage and
all late stage  development and marketing  expenses.  In either case we would be
entitled to royalties on drugs marketed in non-NAFTA countries.

     In June 1999, we and Pfizer entered into a technology  transfer  agreement,
(the "Pfizer Technology Transfer Agreement"). Under the terms of this agreement,
Pfizer  has  agreed to pay us up to a total of $27.0  million  over a three year
period  for the  licensing  and  transfer  to Pfizer of certain  of our AIDD(TM)
technologies  for the discovery of new drugs,  along with the installation of an
AIDD system.  Additional  payments are also possible  upon  Pfizer's  successful
utilization of this technology.  Pfizer has received a non-exclusive  license to
certain AIDD intellectual  property,  and the right to employ this technology in
its own drug  development  programs.  As of December 31,  1999,  the Company had
received $3.0 million in license fees  pursuant to the Pfizer AIDD  agreement of
which $0.5 million has been recognized in 1999.  Remaining  revenues  associated
with amounts  received under the Pfizer  Technology  Transfer  Agreement will be
recognized in future  periods and may fluctuate  significantly  depending on the
timing and completion of our transfer of technology and systems.

SCHERING-PLOUGH
---------------

     In June  1995,  we and  Schering-Plough  entered  into the  Schering-Plough
Agreement to  collaborate  in the  discovery  and  development  of drugs for the
treatment of  schizophenia  and other  disorders  which act through the dopamine
family of receptors.  Under the Schering-Plough  Agreement, we received one-time
license fees of $14.0 million for rights relating to Neurogen's dopamine program
and $3.0  million in 1995 and again in 1996 for the right to test certain of our
combinatorial  chemistry  libraries  in  selected  non-CNS  assays.  We received
scheduled  funding  totaling  approximately  $10.8 million during the three-year
period from June 1995 through June 1998, for research and development funding of
our dopamine program.

     In July  1998,  we  announced  that the  Company  and  Schering-Plough  had
concluded the research  phase of the  collaboration.  Therefore,  the funding of
$3.6  million  per  year  formerly  received  from  Schering-Plough  came to its
scheduled  conclusion on July 1, 1998. Although we currently believe it unlikely
that they would do so, should  Schering-Plough elect to continue the development
of drug candidates subject to the collaboration, we could also receive milestone
payments  of up to  approximately  $32.0  million  if  certain  development  and
regulatory  objectives  are achieved.  In return,  Schering-Plough  received the
exclusive  worldwide  license to market  dopamine-based  products subject to the
collaboration.  We retained the rights to receive  royalties  based on net sales
levels,  if any, and an option to  manufacture  products  for the United  States
market.  In  addition  to  the  payments  described  above,  Schering-Plough  is
responsible for funding the cost of all clinical  development and marketing,  if
any, of drugs subject to the collaboration.

     We plan to use our cash, cash equivalents and marketable securities for our
research  and  development  activities,  working  capital and general  corporate
purposes.  We  anticipate  that our current cash  balance,  as  supplemented  by
research  funding  pursuant to the Pfizer  Agreements will be sufficient to fund
our  current  and  planned  operations  through  2002.   However,   our  funding
requirements may change and will depend upon numerous factors, including but not
limited to, the  progress of the our  research  and  development  programs,  the
timing and results of preclinical  testing and clinical  studies,  the timing of
regulatory  approvals,   technological   advances,   determinations  as  to  the
commercial  potential  of our  proposed  products,  the  status  of  competitive
products and the ability of the Company to establish and maintain  collaborative
arrangements  with  others  for the  purpose  of funding  certain  research  and
development   programs,   conducting  clinical  studies,   obtaining  regulatory
approvals  and, if such  approvals  are  obtained,  manufacturing  and marketing
products.  We anticipate that we may augment our cash balance through  financing
transactions,  including the issuance of debt or equity  securities  and further
corporate  alliances.  No  assurances  can be  given  that  adequate  levels  of
additional funding can be obtained on favorable terms, if at all.

     As of  December  31,  1999,  we had  approximately  $37.1  million and $2.8
million  of net  operating  loss  carryforwards  and  research  and  development
credits,  respectively,  available for federal  income tax purposes which expire
from the years 2004 through  2019. We also had  approximately  $25.6 million and
$0.7 million of  Connecticut  state tax net  operating  loss  carryforwards  and
research and development credits,  respectively,  which expire in the years 2000
through 2014. Because of "change in ownership"  provisions of the Tax Reform Act
of 1986, our  utilization of our net operating loss and research and development
credit carryforwards may be subject to an annual limitation in future periods.

Recently Issued Accounting Pronouncements

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standard  ("SFAS")  No. 133,  Accounting  for  Derivative
Instruments and Hedging Activities.  Neurogen is required to adopt SFAS No. 133,
as amended by SFAS No. 137, in fiscal 2001. SFAS No. 133 establishes  methods of
accounting for derivative  financial  instruments and hedging activities related
to those  instruments as well as other hedging  activities.  The Company has not
entered into any derivative  financial  instrumentsor  hedging activities.  As a
result,  management  believes  adoption of SFAS No. 133 will not have a material
impact on the financial statements.

     In December  1999,  the staff of the  Securities  and  Exchange  Commission
issued its Staff Accounting Bulletin ("SAB") No. 101, Revenue  Recognition.  SAB
No. 101, as amended by SAB No. 101A,  provides  guidance on the  measurement and
timing of revenue  recognition  in  financial  statements  of public  companies.
Changes in  accounting  policies  to apply the  guidance  of SAB No. 101 must be
adopted by recording the  cumulative  effect of the change in the fiscal quarter
ending June 30, 2000.  Management  has not yet determined the effect SAB No. 101
will have, if any, on its  accounting  policies or the amount of the  cumulative
effect to be recorded from adopting SAB No. 101.

Discussion of the Year 2000 issue

     Our  program  to  address  the Year 2000  issue  consisted  of  assessment,
remediation,  testing and  contingency  planning.  Our program was initiated and
executed  to  prevent  major  interruptions  in the  business  due to Year  2000
problems.  As of  December  31,  1999,  all phases  were  completed.  We did not
experience any  significant  disruption as a result of the Year 2000 issue.  The
total cost of the Year 2000 program was  approximately  $200,000,  primarily for
the cost of replacing/upgrading noncompliant software.

     We completed our  assessment of our Year 2000 risks related to  significant
relationships  with our critical third party  suppliers and  customers.  Despite
these  efforts,  there can be no assurance  that all supplier and customer  Year
2000 compliance plans were successfully  completed in a timely manner,  although
we are not currently aware of any problems which would significantly  impact our
operations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest rate risk. Our investment portfolio includes investment grade debt
instruments. These bonds are subject to interest rate risk, and could decline in
value if interest rates  fluctuate.  Due to the short duration and  conservative
nature of these  instruments,  we do not believe that we has a material exposure
to interest rate risk. Additionally,  funds available from investment activities
are dependent  upon  available  investment  rates.  These funds may be higher or
lower than anticipated due to interest rate volatility.

     Capital Market Risk. We currently have no product revenues and is dependent
on funds raised through other sources.  One source of funding is through further
equity  offerings.  Our ability to raise funds in this manner is dependent  upon
capital market forces affecting our stock price.

<PAGE>


ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page
                                                                            ----
Consolidated Balance Sheets at December 31, 1999 and 1998..................20,21

Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997...........................................   22

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1999, 1998 and 1997...........................................   23

Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997...........................................   24

Notes to Consolidated Financial Statements.................................   25

Report of Independent Accountants..........................................32,33



<PAGE>
<TABLE>
<CAPTION>
                              NEUROGEN CORPORATION

                           CONSOLIDATED BALANCE SHEETS


                                                                           December 31
                                                                       -------------------
                                                                         1999      1998
                                                                       --------- ---------
                                                                      (In thousands, except
                                                                         per share data)
<S>                                                                       <C>       <C>
                                Assets
Current Assets:
  Cash and cash equivalents........................................... $ 31,588  $ 26,066
  Marketable securities...............................................   33,441    48,944
  Receivable from corporate partners..................................      286       656
  Other current assets................................................      921     1,298
                                                                       --------- ---------
Total current assets..................................................   66,236    76,964

Property, plant & equipment:
  Land and land improvements..........................................      875       542
  Building and building improvements..................................   16,834    16,704
  Construction in progress............................................    1,702        -
  Leasehold improvements..............................................    4,026     4,026
  Equipment...........................................................   11,440     9,949
  Furniture...........................................................      578       534
                                                                       --------- ---------
                                                                         35,455    31,755
Less accumulated depreciation and amortization........................    9,840     7,265
                                                                       --------- ---------
Net property, plant and equipment.....................................   25,615    24,490
Other assets, net.....................................................      283       356
                                                                       --------- ---------
                                                                       $ 92,134  $101,810
                                                                       ========= =========

           See accompanying notes to consolidated financial statements

<PAGE>
                              NEUROGEN CORPORATION

                    CONSOLIDATED BALANCE SHEETS--(Continued)
                                                                           December 31
                                                                       -------------------
                                                                         1999      1998
                                                                       --------- ---------
                                                                      (In thousands, except
                                                                         per share data)


              Liabilities and Stockholders' Equity
Current Liabilities:
  Accounts payable and accrued expenses...............................  $ 2,704   $ 2,862
  Unearned revenue from corporate partners............................    2,760       260
  Current portion of mortgage payable.................................       -        73
                                                                     --------- ---------
Total current liabilities.............................................    5,464     3,195

Loans payable ........................................................    1,912        -
Other compensation....................................................       48        48
                                                                       --------- ---------
Total liabilities.....................................................    7,424     3,243
Commitments and Contingencies

Stockholders' Equity:
  Preferred stock, par value $.025 per share authorized 2,000 shares;
  none issued.........................................................       -         -
  Common stock, par value $.025 per share authorized 30,000 shares;
  issued and outstanding 14,800 shares in 1999 and 14,656 in 1998.....      370       366
  Additional paid-in capital..........................................  114,519   113,901
  Accumulated deficit.................................................  (26,852)  (12,234)
  Deferred compensation...............................................   (3,076)    3,540)
  Accumulated other comprehensive income..............................     (251)       74
                                                                       --------- ---------
Total stockholders' equity............................................   84,710    98,567
                                                                       --------- ---------
                                                                       $ 92,134  $101,810
                                                                       ========= =========


           See accompanying notes to consolidated financial statements

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                              NEUROGEN CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                          For the Years Ended December 31
                                                         ---------------------------------
                                                            1999        1998       1997
                                                         ----------- ---------- ----------
<S>                                                          <C>        <C>         <C>
                                                       (In thousands, except per share data)
Operating revenues:
License fees............................................     $  500     $   -      $3,000
Research and development................................      9,709     11,081     14,979
                                                         ----------- ---------- ----------
Total operating revenues................................     10,209     11,081     17,979
Operating expenses:
Research and development................................     24,042     20,914     19,710
General and administrative..............................      4,423      3,920      3,566
                                                         ----------- ---------- ----------
Total operating expenses................................     28,465     24,834     23,276
                                                         ----------- ---------- ----------
Operating income (loss).................................    (18,256)   (13,753)    (5,297)
Other income (expense):
Investment income.......................................      3,639      4,312      5,075
Interest expense........................................         (1)       (17)       (35)
                                                         ----------- ---------- ----------
Total other income, net.................................      3,638      4,295      5,040
                                                         ----------- ---------- ----------
Loss before provision for income taxes..................    (14,618)    (9,458)      (257)
Provision for income taxes..............................        -          -           -
                                                         ----------- ---------- ----------
Net loss................................................   $(14,618)   $(9,458)     $(257)
                                                         =========== ========== ==========
Loss per share:
Basic...................................................     $(1.00)    $ (.66)     $(.02)
                                                         ----------- ---------- ----------
Diluted.................................................     $(1.00)    $ (.66)     $(.02)
                                                         ----------- ---------- ----------
Shares used in calculation of earnings (loss) per share:
Basic...................................................     14,576     14,419     14,348
                                                         ----------- ---------- ----------
Diluted.................................................     14,576     14,419     14,348
                                                         =========== ========== ==========





           See accompanying notes to consolidated financial statements
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                              NEUROGEN CORPORATION

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                     For the Years Ended December 31, 1999, 1998 and 1997
                                                                        (in thousands)
                                                 --------------------------------------------------------------------------

                                                                                                     Accumulated
                                                                Additional                           Other
                                                   Common Stock   Paid-in  Accumulated   Deferred    Comprehensive
                                                  Shares Amount   Capital    Deficit   Compensation  Income          Total

                                                  ------ ------ ---------- ----------- ------------  ------------- --------
<S>                                                <C>    <C>       <C>          <C>        <C>          <C>       <C>




Balance at December 31, 1996.................... 14,252   $356   $108,491   $(2,519)     $  -            $(83)    $106,245
Deferred compensation...........................     -       -        894        -       (894)            -             -
Exercise of stock options.......................    138      4        846        -          -             -            850
Comprehensive income:
  Net loss......................................     -      -          -       (257)        -             -           (257)
  Unrealized gain on marketable securities......     -      -          -          -         -              80           80
                                                 ------ ------ ---------- ----------- ------------  ------------- ---------
Balance at December 31, 1997.................... 14,390    360    110,231    (2,776)     (894)             (3)     106,918
Issuance of restricted stock....................    145      4      2,536        -     (2,540)            -             -
Deferred compensation ..........................     -      -         265        -       (106)            -            159
Exercise of stock options.......................     98      2        564        -         -              -            566
Stock issued in 401(k) match....................     19     -         299        -         -              -            299
Exercise of warrants............................      4     -           6        -         -              -              6
Comprehensive income:
  Net loss......................................     -      -          -     (9,458)       -              -         (9,458)
  Unrealized gain on marketable securities......     -      -          -         -         -               77           77
                                                 ------ ------ ---------- ----------- ------------  ------------- ---------
Balance at December 31, 1998                     14,656    366    113,901   (12,234)   (3,540)             74       98,567
Forfeiture of restricted stock .................     (7)     0       (131)       -        131              -            -
Deferred compensation ..........................     -      -        (204)       -        333              -           129
Exercise of stock options ......................    126      3        600        -         -               -           603
Stock issued in 401(k) match ...................     25      1        353        -         -               -           354
Comprehensive income:
  Net loss: ....................................     -      -          -    (14,618)       -               -       (14,618)
  Unrealized loss on marketable securities .....     -      -          -         -         -             (325)        (325)
                                                 ------ ------ ---------- ---------- ------------   ------------- ---------
Balance at December 31, 1999                     14,800   $370   $114,519  $(26,852)  $(3,076)          $(251)     $84,710
                                                 ====== ======   ========  =========  ============   ============  ========

           See accompanying notes to consolidated financial statements

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                              NEUROGEN CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                For the Years ended December 31
                                                                --------------------------------
                                                                   1999       1998       1997
                                                                ---------- ---------- ----------
<S>                                                                 <C>        <C>        <C>
                                                                         (In thousands)
Cash flows from operating activities:
Net loss.......................................................  $(14,618)   $(9,458)    $ (257)
Adjustments to reconcile net loss to net cash provided
     by (used in) operating activities:
Depreciation and amortization expense..........................     2,608      2,365      1,849
Noncash compensation expense...................................       483        458        -
Loss on disposal of assets.....................................        33          6          4
Changes in operating assets and liabilities:
(Decrease) increase in accounts payable and accrued expenses...      (155)    (1,557)     1,408
Increase (decrease)in unearned revenue from corporate partners.     2,500         60     (3,900)
Decrease (increase) in other current assets....................       377       (176)        10
Decrease (increase) in receivable from corporate partners......       369        536       (732)
Decrease (increase) in other assets, net.......................        59        127       (110)
                                                                ---------- ---------- ----------
Net cash used in operating activities..........................    (8,344)    (7,639)    (1,728)
                                                                ---------- ---------- ----------
Cash flows from investing activities:
Purchase of plant and equipment................................    (3,753)    (1,974)   (10,033)
Purchases of marketable securities.............................   (35,629)   (66,242)   (35,060)
Maturities and sales of marketable securities..................    50,806     34,602     50,227
Proceeds from sale of assets...................................       -           34         26
                                                                ---------- ---------- ----------
Net cash provided by (used in) investing activities............    11,424    (33,580)     5,160
                                                                ---------- ---------- ----------
Cash flows from financing activities:
Exercise of stock options......................................       603        566        850
Principal payments under mortgage payable......................       (73)      (205)      (181)
Increase in loans payable .....................................     1,912         -          -
                                                                ---------- ---------- ----------
Net cash provided by financing activities......................     2,442         361        669
                                                                ---------- ---------- ----------
Net increase (decrease)in cash and cash equivalents............     5,522    (40,858)     4,101
Cash and cash equivalents at beginning of year.................    26,066     62,924     62,823
                                                                ---------- ---------- ----------
Cash and cash equivalents at end of year.......................   $31,588    $26,066    $66,924
                                                                ========== ========== ==========



           See accompanying notes to consolidated financial statements
</TABLE>


<PAGE>


                              NEUROGEN CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BUSINESS--Neurogen   Corporation   ("Neurogen"   or  the  "Company")  is  a
neuropharmaceuticals  Company engaged in the discovery and development of drugs.
Neurogen's   strategy  is  to  discover   and  develop   drugs  which   modulate
communications  between cells in such a way as to avoid or minimize the negative
side effects typically  associated with many currently  prescribed  medications.
The Company has not derived any revenue from product sales to date.

     USE OF  ESTIMATES--The  preparation  of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

     CASH  EQUIVALENTS  AND MARKETABLE  SECURITIES--The  Company  considers cash
equivalents  to be only  those  investments  which are  highly  liquid,  readily
convertible  to cash and which mature within three months from date of purchase.
The  carrying  values of cash  equivalents  at  December  31, 1999 and 1998 were
approximately $31,304,000 and $26,310,000, respectively.

     The Company  considers its  investment  portfolio to be  available-for-sale
securities as defined in Statement of Financial  Accounting  Standards  ("SFAS")
No. 115.  Marketable  securities  at December  31, 1999 and 1998 consist of debt
securities  with  maturities  of three  months  to four  years.  Securities  are
available  for  sale  and  are  carried  at  fair  value  with  the   unrealized
gains/losses  reported as a separate  component  of  stockholders'  equity.  The
aggregate  cost of  marketable  securities  at  December  31,  1999 and 1998 was
approximately  $33,692,000  and  $48,870,000,  respectively.  Realized gains and
losses have been determined by the specific  identification  method. The Company
recognized  gross  realized  gains of  $15,000  and  $52,000  in 1999 and 1998,
respectively.  Gross realized losses were $108,000 and $60,000 in 1999 and 1998,
respectively.

     PROPERTY, PLANT AND EQUIPMENT--Property,  plant and equipment are stated at
cost. Depreciation is provided using the straight-line method over the estimated
useful  lives of the  assets,  ranging  from  three to  forty  years.  Leasehold
improvements are amortized over the life of the lease.

     REVENUE RECOGNITION--Revenue under research and development arrangements is
recognized  as  earned  under the terms of the  respective  agreements.  License
payments  under separate  license  agreements are recorded when received and the
license  agreements  are signed and there are no continuing  obligations  on the
part of the Company.  When further  efforts are  required,  the license fees are
recognized  over the  related  term.  Product  research  funding is  recorded as
revenue,  generally  on a  quarterly  basis,  as  research  effort is  incurred.
Deferred  revenue  arises from payments  received which have not yet been earned
under research and development programs, as well as under licensing arrangements
for  which  Neurogen  has  some  level of  continued  involvement.

     In December  1999,  the staff of the  Securities  and  Exchange  Commission
Issued its Staff Accounting Bulletin ("SAB") No. 101, REVENUE  RECOGNITION.  SAB
No. 101, as amended by SAB No. 101A, provides  guidance on the  measurement  and
timing of revenue  recognition  in  financial  statements  of public  companies.
Changes in  accounting  policies  to apply the  guidance  of SAB No. 101 must be
adopted by recording the  cumulative  effect of the change in the fiscal quarter
ending June 30, 2000.  Management  has not yet  determined the effect on SAB No.
101  will  have,  if  any,  on its  accounting  policies  or the  amount  of the
cumulative effect to be recorded from adopting SAB No. 101.

     PRINCIPLES OF CONSOLIDATION--The  consolidated financial statements include
the accounts of the parent company and a  subsidiary,  Neurogen  Properties LLC,
after elimination of intercompany transactions.

     SEGMENT  INFORMATION--In  1998, the Company adopted  Statement of Financial
Accounting  Standards No. 131,  Disclosures  about Segments of an Enterprise and
Related  Information  (SFAS No.  131).  SFAS No.  131  supersedes  SFAS No.  14,
Financial  Reporting  for  Segments  of a  Business  Enterprise,  replacing  the
"industry  segment"  approach with the  "management"  approach.  The  management
approach  designates  the internal  organization  that is used by management for
making  operating  decisions  and  assessing  performance  as the source of the
Company's  reportable  segments.  The  Company  operates  in one  segment:  drug
discovery and pharmaceutical development. SFAS No. 131 also requires disclosures
about products and services,  geographic area, and major customers. The adoption
of SFAS No.  131 had no impact on the  Company's  financial  statements  for the
periods presented.

     STOCK-BASED  COMPENSATION--The Company grants qualified stock options for a
fixed  number of shares to  employees  with an exercise  price equal to the fair
market value of the shares at the date of grant.  The Company accounts for stock
option  grants in  accordance  with APB  Opinion No. 25,  "Accounting  for Stock
Issued to Employees," and,  accordingly,  recognizes no compensation expense for
qualified stock option grants.

     INCOME  TAXES--The  liability  method is used to account for income  taxes.
Deferred tax assets and liabilities are determined based on differences  between
financial  reporting and income tax bases of assets and  liabilities  as well as
net operating  loss  carryforwards  and are measured using the enacted tax rates
and laws  that are  expected  to be in  effect  when  the  differences  reverse.
Deferred  tax  assets may be reduced by a  valuation  allowance  to reflect  the
uncertainty associated with their ultimate realization.

     EARNINGS  (LOSS) PER  SHARE--In  1997,  the Company  adopted  Statement  of
Accounting Standards No. 128, "Earnings Per Share" (EPS) under which primary EPS
computed  in  accordance  with APB Opinion 15 has been  replaced  with a simpler
calculation  called  basic  EPS.  Basic EPS is  calculated  by  dividing  income
available  to  common   stockholders  by  the  weighted  average  common  shares
outstanding.  Fully  dilutive  EPS did not  change  significantly  but has  been
renamed  diluted EPS.  All earnings per share  amounts for all periods have been
presented,  and where  appropriate,  restated  to conform to the  Statement  128
requirements.

     FAIR VALUE OF FINANCIAL  INSTRUMENTS--The carrying amounts of the Company's
invested  cash and  marketable  securities  approximate  fair value as estimated
based on quoted market prices. The carrying value of long-term debt approximates
its fair value based upon currently  available debt  instruments  having similar
interest  rates and  maturities.  The carrying  amounts of the  Company's  other
financial instruments approximate their fair value.

2.   CORPORATE PARTNER AGREEMENTS

PFIZER
------

     In 1992, the Company entered into a collaborative  research  agreement (the
"1992 Pfizer Agreement") with Pfizer Inc.  ("Pfizer"),  pursuant to which Pfizer
has  provided  $13,750,000  in equity  financing.  Pursuant  to the 1992  Pfizer
Agreement,  the Company has received an aggregate of  approximately  $36,325,000
for research and development  funding of the Company's  anxiolytic and cognition
enhancement  projects and $250,000 for the achievement of a clinical development
milestone.  Neurogen could also receive  additional  milestone payments totaling
$12,250,000  if certain  development  and  regulatory  objectives  are  achieved
regarding its products subject to the 1992 Pfizer Agreement.  In return,  Pfizer
received the exclusive rights to manufacture and market  GABA-based  anxiolytics
and cognition  enhancers  developed in the  collaboration  for which it will pay
Neurogen  royalties based upon net sales levels,  if any, for such products.  In
each of  1999,  1998  and  1997,  Neurogen  received  approximately  $4,680,000,
$4,685,000 and $3,960,000 respectively,  in research funding, which approximates
the research costs it incurred in such years under the 1992 Pfizer Agreement.

     The Company  entered  into its second  collaborative  agreement  (the "1994
Pfizer  Agreement")  with Pfizer in June 1994  pursuant to which  Pfizer made an
additional equity investment in the Company of $9,864,000.  Pursuant to the 1994
Pfizer  Agreement,  the  Company  has  received an  aggregate  of  approximately
$11,800,000  during the  three-year  period which  commenced  July 1, 1994,  for
research and  development  funding of the Company's  sleep  disorder project and
$250,000 for the achievement of a clinical development milestone. Neurogen could
also  receive  additional  milestone  payments  totaling  $3,000,000  if certain
development  and  regulatory  objectives  are  achieved  regarding  its products
subject to the 1994 Pfizer Agreement.  In return,  Pfizer received the exclusive
right to manufacture and market GABA-based sleep disorder products  developed in
the  collaboration for which it will pay Neurogen  royalties  depending upon net
sales levels,  if any. In 1999,  1998 and 1997,  the Company  received  research
funding of approximately  $1,600,000,  $1,600,000 and $2,500,000,  respectively,
which  approximates  the  research  costs  incurred in such years under the 1994
Pfizer Agreement.

     In 1996 and again in  December  1998,  Neurogen  and  Pfizer  extended  and
combined  Neurogen's  research  efforts  under  the 1992  and  1994  Agreements.
Pursuant to the extension agreements,  Neurogen received $6,240,000,  $6,080,000
and  $6,470,000  in 1999,  1998 and 1997,  respectively,  and expects to receive
research  funding of  $6,240,000 in the year 2000.  Additionally,  the companies
agreed to expand the 1992  Agreement  to  include  depression  as a new  target.
Pursuant  to this  agreement,  Neurogen  will be  eligible  to  receive  certain
milestone payments upon the achievement of development and regulatory objectives
and royalties  based on net sales levels,  if any. Pfizer received the exclusive
right to  manufacture  and  market  GABA  based  drugs for  depression  from the
collaboration.

     Neurogen and Pfizer entered into their third  collaborative  agreement (the
"1995  Pfizer  Agreement")  in  November  1995,  pursuant  to which  Pfizer paid
$3,500,000 in one-time license fees and made an additional  equity investment in
the Company of $16,500,000,  bringing Pfizer's ownership of the Company's common
stock up to 21%.  Pfizer also agreed,  among other  things,  to fund a specified
level of resources for up to five years for Neurogen's  research program for the
discovery of drugs which work through the neuropeptide Y (NPY) mechanism for the
treatment of obesity and other  disorders.  As of December 31, 1999,  Pfizer had
provided  $11,400,000 in research funding pursuant to the 1995 Pfizer Agreement.
In 1998,  Pfizer  exercised its option under the 1995 Pfizer Agreement to extend
the NPY research program and also agreed to fund increased  Neurogen staffing on
the  program  and  thereby  pay  Neurogen  $3,120,000  to fund a fourth  year of
research,  through  October 1999. In 1999,  Pfizer elected to further extend the
research  program through October 2000 and to fund Neurogen's  research for this
fifth year at staffing levels to be determined by Neurogen and Pfizer.  Neurogen
could also receive  milestone  payments of up to  approximately  $28,000,000  if
certain  development  and  regulatory  objectives  are  achieved  regarding  its
products  subject to the  collaboration.  As part of this  third  collaboration,
Pfizer  received  the  exclusive  worldwide  rights to  manufacture  and  market
NPY-based  collaboration  compounds,  subject  to  certain  rights  retained  by
Neurogen.  Pursuant to the 1995 Pfizer Agreement,  Neurogen will fund a minority
share of early stage  clinical  development  costs and has retained the right to
manufacture  any  collaboration  products in NAFTA  (North  American  Free Trade
Agreement)  countries.  Neurogen has also retained a profit  sharing option with
respect to product sales in NAFTA  countries.  If Neurogen  exercises the profit
sharing option, it will fund a portion of the cost of late stage clinical trials
and marketing  costs and in return receive a specified  percentage of any profit
generated by sales of  collaboration  products in NAFTA  countries.  If Neurogen
chooses not to exercise  its profit  sharing  option,  Pfizer would pay Neurogen
royalties on drugs marketed in NAFTA countries and will fund a majority of early
stage and all late stage  development  and  marketing  expenses.  In either case
Neurogen  would  be  entitled  to  royalties  on  drugs  marketed  in  non-NAFTA
countries.

     In June of 1999,  Neurogen and Pfizer  entered  into a technology  transfer
agreement, (the "Pfizer Technology Transfer Agreement"). Under the terms of this
agreement, Pfizer has agreed to pay Neurogen up to a total of $27.0 million over
a three  year  period for the  licensing  and  transfer  to Pfizer of certain of
Neurogen's  AIDD  technologies  for the  discovery of new drugs,  along with the
installation  of an AIDD  system.  Additional  payments are also  possible  upon
Pfizer's  successful  utilization  of this  technology.  Pfizer  has  received a
non-exclusive  license to certain AIDD intellectual  property,  and the right to
employ this technology in its own drug development  programs. As of December 31,
1999,  The company had received  $3.0  million in license  fees  pursuant to the
Pfizer  AIDD  agreement  of which  $0.5  million  has been  recognized  in 1999.
Remaining revenues  associated with amounts received under the Pfizer Technology
Transfer  Agreement  will be  recognized  in future  periods  and may  fluctuate
significantly  depending on the timing and completion of the Company's  transfer
of technology and systems pursuant to the agreement.

SCHERING-PLOUGH
---------------

     In June 1995, Neurogen and Schering  Corporation and  Schering-Plough  Ltd.
(together,  "Schering-Plough")  entered into an Agreement (the  "Schering-Plough
Agreement")  to  collaborate  in the discovery and  development of drugs for the
treatment of  schizophrenia  and other  disorders which act through the dopamine
family of  receptors.  Pursuant to the  Schering-Plough  Agreement,  the Company
received in 1995  one-time  license fees of  $14,000,000  in exchange for rights
relating to Neurogen's  dopamine program and $3,000,000 in each of 1995 and 1996
for the right to test certain of Neurogen's combinatorial chemistry libraries in
selected  non-CNS  assays.   Neurogen   received   scheduled   funding  totaling
approximately  $10,800,000  during the three year period from June 1995  through
June  1998 for  research  and  development  funding  of the  Company's  dopamine
program.

     In July 1998 Neurogen  announced that the Company and  Schering-Plough  had
concluded the research phase of the collaboration.  Accordingly,  the funding of
$3.6  million  per  year  formerly  received  from  Schering-Plough  came to its
scheduled conclusion on July 1, 1998. Should  Schering-Plough  elect to continue
the development of drug candidates subject to the collaboration,  Neurogen could
also receive milestone payments of up to approximately  $32.0 million if certain
development and regulatory objectives are achieved.  In return,  Schering-Plough
received  the  exclusive  worldwide  license to market  dopamine-based  products
subject to the collaboration.  Neurogen retained the rights to receive royalties
based on net sales levels, if any, and an option to manufacture products for the
United   States   market.   In  addition  to  the  payments   described   above,
Schering-Plough is responsible for funding the cost of all clinical  development
and marketing, if any, of drugs subject to the collaboration.


3.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts  payable and accrued  expenses  at December 31 are  summarized  as
follows (in thousands):
                                         1999   1998
                                        ------ ------
Accounts payable......                  $1,951 $1,798
Accrued compensation..                     753  1,064
                                        ------ ------
                                        $2,704 $2,862
                                        ====== ======

4.   LONG-TERM DEBT AND LEASE OBLIGATIONS


     In 1995, the Company  entered into a ten year operating  lease agreement to
lease  24,000  square  feet of space in a  building  adjacent  to the  Company's
existing research facility. The Company has a renewal option to extend the lease
for an  additional  ten year period.  The Company may also exercise an option to
purchase the building after the sixth year of the lease. The  improvements  made
to the leased  facility for  laboratory  and office space were  completed in the
fourth  quarter of 1996 and are to be amortized  over the life of the lease,  or
ten years. Rent expense approximated $140,000 in 1999, 1998 and 1997.

     Future minimum rental lease payments subsequent to December 31, 1999
(in thousands) are:

2000..........................    130
2001..........................    151
2002..........................    151
2003..........................    151
2004..........................    151
Thereafter....................    127
                               ------
Total minimum lease payments.. $  861
                               ======

    In the first  quarter of 1999,  the Company  made the final  payment on the
mortgage secured by its Branford, Connecticut office and research facility.

     In  the  fourth  quarter  of  1999,   Neurogen  entered  into  a  financing
arrangement with Connecticut Innovations,  Inc. (CII) secured by the property at
45  Northeast  Industrial  Road,  whereby CII will provide up to $5.0 million to
Neurogen for the purchase and development of a new building to create additional
laboratory space. As of December 31, 1999, CII had advanced  Neurogen $1,912,280
for the purchase of the building.  The remainder of the loan will be advanced as
construction progresses. Substantial completion of the renovation is expected by
the end of 2000. The loan will be repayable in monthly installments at a rate of
7.5% over 10 years  beginning  upon the  substantial  completion  of  renovation
construction and the closing of the construction loan.

5. STOCK  OPTIONS,  WARRANTS AND  RESTRICTED STOCK

     The Neurogen  Corporation Stock Option Plan (the "Plan") originally adopted
in 1988  and  amended  in 1992,  provided  for the  issuance  of  incentive  and
non-qualified  stock options for up to 1,200,000  shares of common stock. In May
1994, the Company's  shareholders approved its 1993 Omnibus Incentive Plan which
made 3,000,000  shares available for grant and its 1993  Non-Employee  Directors
Stock Option Program which made 500,000 shares  available for grant. In November
1998,  the  shareholders  approved a  1,500,000  increase  in shares to the 1993
Omnibus  Incentive  Plan.  The Plan  allows for  issuance  of   incentive  stock
options,  non-qualified  stock options,  stock appreciation  rights,  restricted
shares, and performance units. All options expire not later than ten years after
the date of grant. Employee options vest annually over four or five years, while
directors vest monthly over three years.

Options
-------

     The  following  table  presents the  combined  activity of its stock option
plans for the years ended December 31, as follows:
<TABLE>
     <CAPTION>
                                             1999               1998               1997
                                     ------------------- ------------------- -------------------
                                                Weighted            Weighted            Weighted
                                                 Average             Average             Average
                                                Exercise            Exercise            Exercise
                                      Options     Price   Options     Price   Options     Price
<S>                                     <C>       <C>       <C>         <C>      <C>       <C>
                                     ---------- -------- ---------- -------- ---------- --------
Outstanding at January 1............ 3,680,880    $14.55 3,389,576    $14.11 2,874,994    $13.70
Granted.............................   491,712     15.75   519,788     16.91   777,349     16.27
Exercised...........................  (147,492)     6.44  ( 97,645)     5.80  (138,382)     6.60
Canceled............................   (85,296)    18.69  (130,839)    18.95  (124,385)    20.53
                                     ---------- -------- ---------- -------- ---------- --------
Outstanding at December 31.......... 3,939,804    $14.91 3,680,880    $14.56 3,389,576    $14.11
                                     ========== ======== ========== ======== ========== ========
Options exercisable at December 31.. 2,419,722    $13.60 2,006,784    $12.21 1,504,716    $10.78
</TABLE>

     With respect to certain  options for 66,250 shares  granted on December 31,
1997, if the recipient  remains  employed with the Company for a period of seven
years from the date of grant,  the exercise  price for any of such options which
have not been  exercised at the end of the ten year term of such  option,  shall
become zero and the options will be exercised and the shares will be conveyed to
the respective  optionees.  The exercise price for any of such options exercised
prior to the end of such  ten-year  term shall be $13.50  per share,  the market
price of the common stock on the date of grant.  In connection  with this grant,
as of December 31, 1999, the Company had recorded deferred compensation totaling
$1,093,000.  Such deferred  compensation  is being amortized over the seven year
service  period  required for these  options to vest.  The  unamortized  balance
related to this grant at December 31, 1999 was $805,000.

     The Company has adopted the  disclosure  provisions  only of  Statement  of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation"  ("FAS 123").  The Company will  continue to account for its stock
option plans in accordance with the provisions of APB 25,  "Accounting for Stock
Issued to Employees."

     The following table presents  weighted  average price and life  information
about significant option groups outstanding at December 31, 1999:

                               Weighted
                                Average   Weighted             Weighted
                               Remaining   Average              Average
     Range of        Number   Contractual Exercise    Number   Exercise
 Exercise Prices  Outstanding Life (Yrs.)   Price  Exercisable   Price
----------------- ----------- ----------- -------- ----------- --------
Less than $6.49..      61,425         2.9   $5.45      61,425    $5.45
$6.50-$9.99......   1,121,971         3.9    6.57   1,119,871     6.56
$10.00-$19.99....   2,030,362         8.1   16.20     702,062    16.55
$20.00-$34.88....     726,046         6.1   25.01     536,364    25.34
                  -----------                      -----------
                    3,939,804                        2,419,722
                  ===========                      ===========


Restricted Stock
----------------

     As of December  31,1999,  137,625  shares of restricted  stock were held by
certain  employees.  The original December 31, 1998 grant stipulated that if the
stock price  closed at $45.00 per share within four years from date of grant the
restriction  will be removed and the individual  will be able to trade the stock
with no cost to the  employee.  If the stock  price  does not reach  $45.00  the
shares  will be  forfeited.  In  connection  with this  grant,  the  Company has
recorded $2,408,000 of deferred compensation within stockholders' equity.

     On  February  18,  2000,  Neurogen  stock  closed the trading day at 47.25,
thereby removing the restriction and vesting the stock immediately.  A charge to
income for all shares at $47.25 per share will be recorded in the first  quarter
of 2000.

Warrants
--------

     As of  December  31,  1999,  the Company  had a total  of  36,266  warrants
outstanding  issuable  for  shares of  common  stock at $2.55  per  share.  Such
warrants were issued to a prior lessor in connection  with a sale and lease back
of certain of the Company's  furniture and equipment and will expire in the year
2001.

     In February 1995, the Board of Directors approved the conversion of 112,000
warrants granted to the Company's  scientific  advisory board at $6.50 per share
to  options  under  the  1993  Omnibus  Incentive  Plan.  The new  options  have
substantially  the same  terms  as the  warrants  which  they  replaced  and are
included in the table above as options granted.

     As of December 31, 1999  compensation  cost has not been recognized for the
stock option plans, except as noted above for 66,250 options granted at year-end
1997. Had compensation cost for the Company's stock option plans been determined
based on the fair  value at the grant  date for  awards  in 1999,  1998 and 1997
consistent  with the provisions of SFAS No. 123, the Company's net loss and loss
per share would have been adjusted to the pro forma amounts  indicated below (in
thousands):
<TABLE>
<CAPTION>
                                                  1999          1998         1997
<S>                                                <C>           <C>          <C>
                                              -------------   --------     --------
Net loss as reported.........................  $(14,618)    $  (9,458)      $  (257)
Net loss pro forma...........................   (20,384)      (15,971)       (6,613)
Diluted loss per share as reported...........     (1.00)         (.66)         (.02)
Diluted loss per share-pro forma.............     (1.40)        (1.11)         (.46)
</TABLE>

     The estimated fair value at the date of grant for options  granted in 1999,
1998  and  1997  was  $9.09  $10.15  and  $9.07,   respectively,   using  the
Black-Scholes model with the following weighted average assumptions:
<TABLE>
<CAPTION>
                                1999     1998    1997
<S>                             <C>       <C>     <C>
                              -------  ------  -------
Expected life...............       5       5        5
Interest rate...............     6.2%    4.6%    5.75%
Volatility..................      68%     66%      65%

</TABLE>
     As  additional  options are  expected to be granted in future years and the
options vest over several years, the above pro forma results are not necessarily
indicative of future pro forma results.

     The Company has reserved  5,229,904 shares of common stock for the exercise
of options, restricted stock and warrants.
<PAGE>
6.   INCOME TAXES

     The difference between the Company's "expected" tax provision (benefit), as
computed by applying the U.S. federal corporate tax rate of 34% to income (loss)
before  provision  for income  taxes,  and actual  tax is  reconciled  below (in
thousands):
<TABLE>
<CAPTION>

                                                                 1999      1998      1997
<S>                                                               <C>       <C>       <C>
                                                               --------- --------- ---------
Expected tax benefit at 34%...................................  $(4,919) $(3,216)  $  (87)
State tax benefit net of federal benefit......................     (762)    (593)     (20)
Change in valuation allowance ................................    6,840    3,993      100
R & D credit..................................................   (1,421)      -        -
Disqualifying stock dispositions..............................     (326)    (342)      -
Expiring loss carry forward...................................      346      148       -
State tax rate change ........................................      240       -        -
Other.........................................................        2       10        7
                                                               --------- --------- ---------
                                                                  $  -     $  -      $ -
                                                               ========= ========= =========
</TABLE>


     The tax  effect of  temporary  differences  that  give rise to  significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1999 and 1998 are presented below (in thousands):

                                               1999      1998
                                             ---------  ---------
DEFERRED TAX ASSETS:
Federal tax operating loss carryforwards..    $12,618    $8,256
State tax operating loss carryforwards....      1,270     1,239
Research & development credit carryover...      3,503     2,084
Alternative minimum tax credit carryover..        362       362
Deferred revenue..........................        974         -
Other ....................................        317       283
                                             ---------  ---------
Gross deferred asset......................     19,044    12,224
Valuation allowance.......................    (18,165)  (11,325)
                                             ---------  ---------
Net deferred asset........................        879       899
DEFERRED TAX LIABILITY:
Depreciation..............................       (879)     (899)
                                             ---------  ---------
Net asset/liability.......................     $   -     $   -
                                             =========  =========

     The valuation  allowance changed by $6,840,000 during 1999 due primarily to
the increase in net operating loss and research and development tax credit carry
forwards.  The Company has provided a valuation allowance for the full amount of
the net deferred  tax asset,  since  management  has not  determined  that these
future benefits will more likely than not be realized as of December 31, 1999.

     Any  subsequently   recognized  tax  benefits  relating  to  the  valuation
allowance  for deferred tax assets as of December 31, 1999 would be allocated as
follows (in thousands):

Income tax provision........ $13,337
Additional paid-in-capital..   4,828
                             -------
                             $18,165
                             =======

     As of  December  31, 1999, the Company  had  approximately  $37,111,000 and
$2,755,000  of net operating  loss  carryforwards  and research and  development
credits, respectively, available for federal income tax purposes which expire in
the years 2004 through 2019. The Company also had approximately  $25,650,000 and
$748,000 of Connecticut state tax operating loss  carryforwards and research and
development credits,  respectively,  as of December 31, 1999 which expire in the
years 2000 through 2014. Because of "change in ownership"  provisions of the Tax
Reform Act of 1986,  the Company's  utilization  of its net  operating  loss and
research  and  development  credit  carryforwards  may be  subject  to an annual
limitation in future periods.

7.   COMMITMENTS AND CONTINGENCIES

     The Company has granted Pfizer certain  registration rights with respect to
2,846,000 shares of Common stock and limited  preemptive  rights with respect to
future public offerings  pursuant to stock purchase  agreements  entered into in
connection  with  the  Pfizer  Agreements.   The  Company  has  granted  certain
registration  rights to American  Home Products with respect to 37,442 shares of
common stock purchased in connection with entering into a licensing agreement in
1996.
<PAGE>

8.   BENEFIT PLANS

     The  Company  maintains  a 401(k)  Plan  under  which all of the  Company's
employees  are  eligible to  participate.  Each year the Company may, but is not
required to, make a discretionary  matching  contribution to the Plan. Effective
January 1, 1998, the Company  increased the match on employee  contributions  to
100% of up to 6% of an employee's salary. One third of the match is made in cash
and two  thirds  of the match is made in  company  stock.  Contributions  to the
401(k)  plan  totaled  approximately  $531,000  in  1999,  $432,000  in 1998 and
$111,000 in 1997.

     The Company has made loans to certain  officers  and  employees  subject to
various  compensation  agreements.  The loans will be forgiven and recognized as
compensation  expense ratably over service  periods of five to seven years.  The
amount of loans outstanding at December 31, 1999 was $379,000, of which $125,000
was short-term.

9.   SUPPLEMENTAL CASH FLOW INFORMATION

     The  Company  made  interest  payments  of  approximately  $30,000 in 1999,
$17,000 in 1998 and $36,000 in 1997.  The Company made no income tax payments in
1999, 1998 and 1997.

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and
Stockholders of Neurogen Corporation

     In our opinion, the accompanying consolidated balance sheets as of December
31, 1999 and 1998 and the related  statements of  operations,  of  stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of Neurogen  Corporation  and its  subsidiary  at December 31, 1999 and
December 31, 1998, and the results of their  operations and their cash flows for
the years  then  ended,  in  conformity  with  accounting  principles  generally
accepted in the United States. These financial statements are the responsibility
of the  Company's  management;  our  responsibility  is to express an opinion on
these financial  statements  based on our audit. We conducted our audit of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States,  which  require  that we plan and  perform  the  audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for the opinion expressed above. The financial
statements  of the Company as of  December  31, 1997 and for the year then ended
were audited by other  independent  accountants  whose report dated February 13,
1998 expressed an unqualified opinion on those statements.

                                                   PRICEWATERHOUSECOOPERS LLP


Hartford, Connecticut
February 18, 2000

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Neurogen Corporation

     We have audited the statements of operations, stockholders' equity and cash
flows of  Neurogen  Corporation  for the year ended  December  31,  1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the results of operations and cash flows of Neurogen
Corporation,  for the year ended December 31, 1997 in conformity  with generally
accepted accounting principles.

                                                           ERNST & YOUNG LLP

Boston, Massachusetts
February 13, 1998



<PAGE>



ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     As previously  reported on the Company's  Current  Report on Form 8-K dated
December 17, 1998, the Company,  upon the approval of the Audit Committee of its
Board of  Directors,  elected not to retain  Ernst & Young LLP as its  principal
independent accountants.  On December 11, 1998, the Audit Committee of the Board
of Directors appointed  PriceWaterhouseCoopers  LLP to succeed Ernst & Young LLP
as the principal independent accountants of the Company.

     Neither of the  accountant's  reports for the last two years  contained any
adverse  opinion,  disclaimer  or  qualification.  There  has  also not been any
disagreements  with  the  Company's  accountants  on any  matter  of  accounting
principles  or  practices,  financial  statement  disclosure  or audit  scope or
procedure in the last two fiscal years.

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     For  information  relating  to  directors  and  executive  officers  of the
Company,  reference  is  made to  pages 4  through  7 and 10  through  13 of the
Company's  Proxy  Statement  delivered to  stockholders  in connection  with the
Annual Meeting of  Stockholders to be held  June 19, 2000, which  information is
incorporated herein by reference.

ITEM 11.   EXECUTIVE COMPENSATION

     For information  relating to executive  compensation,  reference is made to
pages 10 through 13 of the Company's Proxy  Statement  delivered to stockholders
in  connection  with the Annual  Meeting of  Stockholders to be held on June 19,
2000, which information is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     For information  relating to the security  ownership of certain  beneficial
owners and management, reference is made to pages 8 and 9 of the Company's Proxy
Statement  delivered to  stockholders  in connection  with the Annual Meeting of
Stockholders  to be held on June 19, 2000,  which  information  is  incorporated
herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     For information relating to certain relationships and related transactions,
reference  is made to page 7 and  pages 10  through  13 of the  Company's  Proxy
Statement  delivered to  stockholders  in connection  with the Annual Meeting of
Stockholders  to be held on June 19, 2000,  which  information  is  incorporated
herein by reference.


<PAGE>


                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

   (a)(1)   Financial Statements

     Reference is made to the Index to Financial  Statements under Item 8 in
     Part II hereof,  where these documents are listed.

   (2)   Financial Statement Schedule

     Note:  Schedules  are  omitted  as not  applicable,  not  required,  or
     the information is included in the financial statements or notes thereto.

   (3)   Executive Compensation Plans and Arrangements

     The following executive  compensation plans or arrangements are required to
be filed, and are filed, as exhibits to this Form 10-K:

EXHIBIT
NUMBER                               DESCRIPTION
-------   ----------------------------------------------------------------------
10.1    - Neurogen Corporation Stock Option Plan, as amended (incorporated by
          reference to Exhibit 10.1 to the Company's Form 10-K for the fiscal
          year ended December 31, 1991).

10.2    - Form of Stock Option  Agreement  currently used in connection with the
          grant  of  options  under  Neurogen   Corporation  Stock  Option  Plan
          (incorporated by reference to Exhibit 10.2 to the Company's Form 10-K
          for the fiscal year ended December 31, 1992).

10.3    - Neurogen  Corporation   1993  Omnibus   Incentive  Plan,  as  amended
         (incorporated by  reference to Exhibit 10.3 to the Company's Form 10-K
         for the fiscal year ended December 31, 1993).

10.4    - Form of Stock Option  Agreement  currently used in connection with the
          grant of options under  Neurogen  Corporation  1993 Omnibus  Incentive
          Plan (incorporated by reference to Exhibit 10.4 to the Company's Form
          10-K for the fiscal year ended December 31, 1993).

10.5    - Neurogen  Corporation  1993  Non-Employee  Directors  Stock  Option
          Program  (incorporated  by reference to Exhibit 10.5 to the Company's
          Form 10-K for the fiscal year ended December 31, 1993).

10.6    - Form of Stock Option  Agreement  currently used in connection with the
          grant  of  options  under  Neurogen   Corporation  1993   Non-Employee
          Directors Stock Option Program  (incorporated  by reference to Exhibit
          10.6 to the Company's Form 10-K for the fiscal year ended December 31,
          1993).

10.7    - Employment  Contract  between the Company  and Harry H.  Penner,  Jr.,
          dated as of October 12, 1993  (incorporated  by  reference  to Exhibit
          10.7 to the Company's Form 10-K for the fiscal year ended December 31,
          1993).

10.8    - Employment Contract between the Company and John F. Tallman, dated as
          of December 1, 1993 (incorporated by reference to Exhibit 10.25 to the
          Company's Form 10-Q for the quarterly period ended September 30,
          1994).

10.28   - Employment  Contract  between the Company and Alan J. Hutchison, dated
          as of December 1, 1997  (incorporated  by  reference  to Exhibit 10.28
          to the  Company's Form 10-K  for the  fiscal year  ended  December 31,
          1999).

10.29   - Employment  Contract  between the Company  and Stephen R. Davis, dated
          as of December 1, 1997 (incorporated  by  reference  to Exhibit  10.29
          to the Company's Form  10-K for the  fiscal  year  ended  December 31,
          1999).

10.30   - Employment  Contract  between  the Company  and Kenneth R. Shaw, dated
          as of December 1, 1999  (incorporated  by  reference  to Exhibit 10.30
          to the  Company's Form  10-K for the  fiscal  year ended  December 31,
          1999).



 (4) Exhibits

EXHIBIT
NUMBER                               DESCRIPTION
-------   ----------------------------------------------------------------------
3.1    -  Restated Certificate of Incorporation, filed June 17, 1994.

3.2    -  By-Laws, as amended (incorporated by reference to Exhibit 3.6 to the
          Company's Form 10-K for the fiscal year ended December 31, 1993).

10.1   -  Neurogen Corporation Stock Option Plan, as amended (incorporated by
          reference to Exhibit 10.1 to the Company's Form 10-K for the fiscal
          year ended December 31, 1991).

10.2    - Form of Stock Option  Agreement  currently used in connection with the
          grant  of  options  under  Neurogen   Corporation  Stock  Option  Plan
          (incorporated by reference to Exhibit 10.2 to the Company's Form 10-K
          for the fiscal year ended December 31, 1992).

10.3    - Neurogen   Corporation   1993  Omnibus   Incentive  Plan,  as  amended
          (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K
          for the fiscal year ended December 31, 1993).

10.4    - Form of Stock Option  Agreement  currently used in connection with the
          grant of options under  Neurogen  Corporation  1993 Omnibus  Incentive
          Plan (incorporated by reference to Exhibit 10.4 to the Company's Form
          10-K for the fiscal year ended December 31, 1993).

10.5    - Neurogen Corporation 1993 Non-Employee  Directors Stock Option Program
          (incorporated  by reference to Exhibit 10.5 to the Company's Form 10-K
          for the fiscal year ended December 31, 1993).

10.6    - Form of Stock Option  Agreement  currently used in connection with the
          grant  of  options  under  Neurogen   Corporation  1993   Non-Employee
          Directors Stock Option Program  (incorporated  by reference to Exhibit
          10.6 to the Company's Form 10-K for the fiscal year ended December 31,
          1993).

10.7    - Employment  Contract  between the Company  and Harry H.  Penner,  Jr.,
          dated as of October 12, 1993  (incorporated  by  reference  to Exhibit
          10.7 to the Company's Form 10-K for the fiscal year ended December 31,
          1993).

10.8    - Employment Contract between the Company and John F. Tallman,  dated as
          of December 1, 1993 (incorporated by reference to Exhibit 10.25 to the
          Company's Form 10-Q for the quarterly period
          ended September 30, 1994).

10.9    - Open-End Mortgage Deed and Security  Agreement between the Company and
          Orion   Machinery   &   Engineering   Corp.,   dated  March  16,  1989
          (incorporated by reference to Exhibit 10.15 to Registration Statement
          No. 33-29709 on Form S-1).

10.10   - Form of Proprietary Information and Inventions Agreement(incorporated
          by reference to Exhibit 10.31 to Registration Statement No. 33-29709
          on Form S-1).

10.11   - Warrant to Purchase 47,058 Shares of Common Stock to MMC/GATX
          Partnership No. I, dated February 20, 1991 (incorporated by reference
          to Exhibit 10.34 to the Company's Form 10-K for the fiscal year ended
          December 31, 1990).

10.12   - Collaborative  Research  Agreement  and License and Royalty  Agreement
          between  the  Company  and  Pfizer  Inc,  dated as of  January 1, 1992
          (confidential  treatment  requested)  (incorporated  by  reference  to
          Exhibit  10.35 to the  Company's  Form 10-K for the fiscal  year ended
          December 31, 1991).


10.13   - License  Agreement  between  the Company  and the  National  Technical
          Information  Service,  dated as of  January 1, 1992  (incorporated  by
          reference to Exhibit 10.36 to the Company's Form 10-K for the fiscal
          year ended December 31, 1991).

10.14   - Cooperative Research and Development Agreement between the Company and
          the  National  Institutes  of  Health,  dated as of January  21,  1993
          (incorporated by reference to Exhibit 10.37 to the Company's Form 10-K
          for the fiscal year ended December 31, 1991).

10.15   - Letter Agreement between the Company and Barry M. Bloom, dated January
          12, 1994  (incorporated by reference to Exhibit 10.25 to the Company's
          Form 10-K for the fiscal year ended December 31, 1993).

10.16   - Letter  Agreement  between the Company and Robert H. Roth, dated April
          14, 1994  (incorporated by reference to Exhibit 10.26 to the Company's
          Form 10-K for the fiscal year ended December 31, 1994).

10.17   - Collaborative  Research  Agreement  and License and Royalty  Agreement
          between  the  Company  and  Pfizer  Inc,  dated  as of  July  1,  1994
          (confidential  treatment  requested)  (incorporated  by  reference  of
          Exhibit 10.1 to the Company's Form 10-Q for the quarterly period ended
          June 30, 1994).

10.18   - Stock  Purchase  Agreement  between the Company and Pfizer dated as of
          July  1,  1994  (incorporated  by  reference  to  Exhibit  10.2 to the
          Company's Form 10-Q for the quarterly period ended June 30, 1994).

10.19   - Registration Rights and Standstill Agreement among the Company and the
          Persons and  Entities  listed on Schedule I thereto,  dated as of July
          11, 1994 (incorporated by reference to Exhibit 10.29 to the Company's
          Form 10-Q for the quarterly period ended September 30, 1994).

10.20   - Collaboration  and License  Agreement and Screening  Agreement between
          the Company and Schering-Plough  Corporation  (confidential  treatment
          requested) (incorporated by reference to Exhibit 10.1 to the Company's
          Form 8-K dated July 28, 1995).

10.21   - Lease Agreement between the Company and Commercial Building Associates
          dated as of August 30,  1995  (incorporated  by  reference  to Exhibit
          10.27 to the Company's Form 10-Q for the quarterly period ended
          September 30, 1995).

10.22   - Collaborative  Research Agreement between the Company and Pfizer dated
          as  of   November   1,   1995   (confidential   treatment   requested)
          (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K
          dated November 1, 1995).

10.23   - Development and  Commercialization  Agreement  between the Company and
          Pfizer dated as of November 1, 1995 (confidential treatment requested)
          (incorporated by reference to Exhibit 10.2 of the Company's Form 8-K
          dated November 1, 1995).

10.24   - Stock  Purchase  Agreement  between the Company and Pfizer dated as of
          November  1, 1995  (incorporated  by  reference  to Exhibit  10.3 of
          the Company's Form 8-K dated November 1, 1995).

10.25   - Licensing  Agreement  dated as of November 25, 1996  between  American
          Home Products Corporation,acting through its Wyeth-Ayerst Laboratories
          Division, and Neurogen Corporation  (CONFIDENTIAL TREATMENT REQUESTED)
         (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K
          dated March 31, 1997).

10.26   - Stock  Purchase  Agreement  dated  as of  November  25,  1996  between
          American Home Products  Corporation,  acting through its  Wyeth-Ayerst
          Laboratories   Division,   and  Neurogen   Corporation   (CONFIDENTIAL
          TREATMENT REQUESTED) (incorporated by reference to Exhibit 10.1 of
          the Company's Form 8-K dated March 31, 1997).

10.27   - Technology  agreement  between the Company and Pfizer Inc, dated as of
          June  15,  1999  (CONFIDENTIAL  TREATMENT  REQUEST)  (Incorporated  by
          reference  to  Exhibit  10.27  to  the  Company's  Form  10-Q  for the
          quarterly  period ended June 30, 1999).

10.28   - Employment  Contract  between the Company and Alan J. Hutchison, dated
          as of December 1, 1997  (incorporated  by  reference  to Exhibit 10.28
          to the  Company's Form 10-K  for the  fiscal year  ended  December 31,
          1999).


10.29   - Employment  Contract  between the Company  and Stephen R. Davis, dated
          as of December 1, 1997 (incorporated  by  reference  to Exhibit  10.29
          to the Company's Form  10-K for the  fiscal  year  ended  December 31,
          1999).

10.30   - Employment  Contract  between  the Company  and Kenneth R. Shaw, dated
          as of December 1, 1999  (incorporated  by  reference  to Exhibit 10.30
          to the  Company's Form  10-K for the  fiscal  year ended  December 31,
          1999).



16      - Letter re Change in Certifying Accountant (incorporated by reference
          to Exhibit 16 of the Company's Form 8-K dated December 17, 1998.

21.1    - Subsidiary of the registrant.

23.1    - Consent of Price Waterhouse Coopers LLP, Independent Auditors.

23.2    - Consent of Ernst & Young LLP, Independent Auditors.

24.1    - Powers of Attorney of Frank C. Carlucci, Robert H. Roth, John Simon,
          John F. Tallman, Robert M. Gardiner, Robert N. Butler, Jeffrey J.
          Collinson, Suzanne Woolsey, Mark Novitch and Barry M. Bloom.

27      - Financial Data Schedule.

99.1    - Proxy Statement for the Annual Meeting of Stockholders to be held on
          June 19, 2000 (to be filed with the Commission on or before April 30,
          2000).



<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                   NEUROGEN CORPORATION

                                                   /S/ HARRY H. PENNER, JR.
                                               By:______________________________
                                                     Harry H. Penner, Jr.
                                           President and Chief Executive Officer


Date: March 30, 2000

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated and on the dates indicated:


       SIGNATURE                    TITLE                              DATE
      -----------                  -------                            ------


            *
___________________________  Chairman of the Board                March 30, 2000
     Frank C. Carlucci         and Director





 /S/ HARRY H. PENNER, JR.
___________________________  President, Chief Executive           March 30, 2000
    Harry H. Penner, Jr.       Officer and Director
                               (Principal Executive
                               Officer)


             *
___________________________  Executive Vice President,            March 30, 2000
    John F. Tallman, Ph.D.     Secretary and Director



  /S/ STEPHEN R. DAVIS
___________________________  Vice President--Finance,             March 30, 2000
     Stephen R. Davis          Chief Financial Officer
                               and Treasurer (Principal
                               Financial and Accounting
                               Officer)


             *
_________________________   Director                              March 30, 2000
   Robert H. Roth, Ph.D.



             *
__________________________  Director                              March 30, 2000
   Jeffrey J. Collinson



             *
_________________________  Director                               March 30, 2000
        John Simon



             *
_________________________  Director                               March 30, 2000
     Robert M. Gardiner




             *
_________________________  Director                               March 30, 2000
  Robert N. Butler, M.D.



             *
________________________  Director                                March 30, 2000
      Suzanne Woolsey



             *
________________________  Director                                March 30, 2000
     Barry M. Bloom



             *
________________________  Director                                March 30, 2000
      Mark Novitch




________________________  Director                                March 30, 2000
      Julian Baker




________________________  Director                                March 30, 2000
      Felix Baker



 /S/ HARRY H. PENNER, JR.
*By:____________________
Harry H. Penner, Jr., Attorney-in-Fact


 <PAGE>

                                                                   EXHIBIT 10.28



                              EMPLOYMENT AGREEMENT
     This EMPLOYMENT AGREEMENT, effective as of December 1, 1997, is made by and
between Neurogen  Corporation,  a Delaware  corporation  (the  "Company"),  with
offices at 35 Northeast Industrial Road,  Branford,  Connecticut 06405, and Alan
J. Hutchison (the "Employee").

     WHEREAS,  the Employee has been  employed by the Company since 1989 and the
Company  and the  Employee  desire to enter into this  Agreement  to extend such
employment on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, the Company and the Employee agree as follows:

1. DEFINITIONS

  (a) Cause

     For purposes of this Agreement "cause" means:

     (i) the Employee's conviction for commission of a felony;

     (ii) any willful act or omission by the Employee  which  constitutes  gross
misconduct or gross  negligence  and which results in material  economic harm to
the Company;

     (iii) the Employee's  willful and continuous  failure to perform his duties
with the Company after reasonable notice of such failure;

     (iv) the  Employee's  participation  in any act of  dishonesty  intended to
result in his material personal enrichment at the expense of the Company; or

     (v) the Employee's failure to substantially comply with the terms set forth
in the Proprietary Information and Inventions Agreement between the Employee and
the Company.

     No act, or failure to act, by the Employee  shall be  considered  "willful"
unless  committed in bad faith and without a  reasonable  belief that the act or
omission was in the Company's best interest.

  (b) Good Reason

     For purposes of this  Agreement  "good reason" means and shall be deemed to
exist if, without the prior written consent of the Employee,

     (i) the Company  permanently  relocates  its  principal  offices  more than
thirty (30) miles from its current offices located in Branford, Connecticut;

     (ii) the Employee (a) is assigned duties and/or  responsibilities which are
inconsistent in any material respect with the nature and scope of the duties and
responsibilities  typically associated with the Employee's title or position, as
set  forth  and  described  in  Section 3 of this  Agreement,  or (b)  suffers a
material reduction in his duties,  responsibilities  or effective authority as a
result of any action or inaction on the part of the Company typically associated
with his title and  position  as set forth and  described  in  Section 3 of this
Agreement;

     (iii) the  Employee's  rate of Base  Salary  (as  hereinafter  defined)  is
materially  decreased by the Company,  and/or the Employee's  benefits under the
Company's  employee  benefit plans or programs are in the  aggregate  materially
decreased as compared to such benefits  maintained by the Company on the date of
this Agreement;

     (iv) the Company fails to obtain the full assumption of this Agreement by a
successor entity in accordance with Section 12(b) of this Agreement; or

     (v) the Board of Directors of the Company  (the  "Board") or the  Company's
stockholders,  either or both, as may be required to authorize  the same,  shall
approve any  liquidation or  dissolution  of the Company,  or the sale of all or
substantially all of the assets of the Company.

2. TERM

     The term of  Employee's  employment  under  this  Agreement  shall,  unless
earlier  terminated under Section 7 herein or extended as hereinafter  provided,
be for a period commencing as of December 1, 1997 (the "Commencement  Date") and
terminating on November 30, 1999, subject to the terms and conditions  contained
in this  Agreement  (the  "Employment  Period").  The  Employment  Period  shall
automatically be extended,  commencing on December 1, 1999 and thereafter on the
relevant alternate  anniversary of the Commencement Date, for successive two (2)
year periods  unless,  not later than three (3) months prior to December 1, 1999
or any such  anniversary,  either  party to this  Agreement  shall give  written
notice to the other that such  party  does not wish to extend or further  extend
the Employment  Period beyond its then already  automatically  extended term, if
any.

3. DUTIES AND SERVICES

     During the  Employment  Period,  the Employee shall be employed as a Senior
Vice  President of the Company.  In such  position,  the Employee shall have the
duties,  responsibilities  and authority normally  associated with, or otherwise
appropriate  to, the  offices and  positions  of a Senior  Vice  President  of a
corporation.  In the  performance of his duties and  responsibilities  as Senior
Vice President,  the Employee shall report only to the chief scientific  officer
of the  Company.  During  the  Employment  Period,  the  Employee  shall  devote
substantially  all of his business time,  during normal  business  hours, to the
business and affairs of the Company and the Employee  shall use his best efforts
to  perform   faithfully  and  efficiently   the  duties  and   responsibilities
contemplated by this Agreement;  provided,  however, the Employee may manage his
personal,  financial  and  legal  affairs  and  engage  in any  activities  of a
volunteer,  civic  or  business  nature,  as  long  as  such  activities  do not
materially   interfere  with  Employee's   responsibilities  as  a  Senior  Vice
President.

4. COMPENSATION AND OTHER BENEFITS

  (a) Salary

     As compensation for the Employee's services under this Agreement, beginning
the Commencement  Date and until the termination of the Employment  Period,  the
Employee  shall be paid by the  Company a base  salary of  $215,000  per  annum,
payable in equal  semi-monthly  installments  in  accordance  with the Company's
normal payroll  practices,  which base salary may be increased but not decreased
during  the  Employment  Period by the Board in its sole  discretion  (the "Base
Salary"). Such increased Base Salary shall then constitute the "Base Salary" for
purposes of this Agreement.

  (b) Annual Bonus

     In  addition  to the Base  Salary,  the  Employee  is  eligible to receive,
subject to certain  objective  and/or  subjective  performance  goals set by the
President and Chief Executive Officer, such annual bonuses during the Employment
Period as the Board may approve.

  (c) Benefits

     During the Employment Period, the Employee shall be eligible to participate
in all employee pension and incentive benefit plans and programs maintained from
time to time by the  Company for the  benefit of senior  executives.  During the
Employment Period,  the Employee,  Employee's spouse, if any, and their eligible
dependents, if any, shall be eligible to participate in and be covered under all
the  employee  and  dependent  health  and  welfare  benefit  plans or  programs
maintained from time to time by the Company.

5. NON-COMPETITION

     During the Employment Period and, if the Employee's employment hereunder is
terminated by the Company for cause or if the Employee terminates his employment
with the Company  without good  reason,  for one year after the date of any such
termination of employment,  the Employee agrees that,  without the prior express
written consent of the Company,  he shall not,  directly or indirectly,  for his
own  benefit  or for,  with or  through  any other  person,  firm,  partnership,
corporation or other entity or individual  (other than the Company) as or in the
capacity of an owner,  shareholder,  employee,  consultant,  director,  officer,
trustee,   partner,   agent,   independent   contractor   and/or  in  any  other
representative  capacity  or  otherwise,  (i) in or with  respect  to the United
States of America, engage in, or assist any individual or entity in engaging in,
the discovery  and/or  development of  therapeutic,  diagnostic or  prophylactic
products  or services  which at the time of such  termination  are under  active
clinical or  pre-clinical  development or have been developed by the Company and
which the Company has not abandoned or (ii) solicit the services of any employee
of the Company or attempt to induce any such  employee or any  consultant to the
Company to leave the employ of the Company  (except when such acts are performed
in good faith by the  Employee on behalf of the  Company).  Notwithstanding  the
above,  the Employee  shall at all times be permitted to own not more than 1% of
the outstanding  common stock of any  corporation,  if such stock is listed on a
national securities exchange, is reported on the NASDAQ System, or is regularity
traded  in the  over-thecounter  market  by a member  of a  national  securities
exchange.

This provision shall not prevent or prohibit  Employee from being employed by an
academic  institution  during such one-year period,  provided that Employee does
not violate the terms of Section 6 hereof and does not render advice  concerning
the products or services described in clause (i) above.

6. CONFIDENTIAL INFORMATION

         The Employee agrees to substantially comply with the terms set forth in
 the Proprietary  Information and Inventions  Agreement between the Employee and
 the Company,  a copy of which is attached hereto as Exhibit A and  incorporated
 by reference herein.

7.       TERMINATION

 (a) Termination by the Company for Cause

     The Company may terminate the Employee's employment hereunder for cause. If
the Company  terminates  the  Employee's  employment  hereunder  for cause,  the
Employment  Period shall end and the Employee shall only be entitled to any Base
Salary  accrued or annual  bonus  awarded  and earned but not yet paid as of the
date of termination of the Employee's employment with the Company.

     If the  Employee's  employment is to be terminated  for cause,  the Company
shall give written notice of such termination to the Employee. Such notice shall
specify the particular act or acts, or failure to act, which is or are the basis
for the decision to so terminate the Employee's employment for cause.

 (b) Termination Without Cause or Termination For Good Reason

     The Company may terminate the Employee's employment hereunder without cause
and the Employee may terminate his employment  hereunder for good reason. If the
Company terminates the Employee's  employment hereunder without cause, or if the
Employee  terminates  his employment  hereunder for good reason,  the Employment
Period shall end and the Employee  shall only be entitled to (i) any Base Salary
accrued  or annual  bonus  awarded  and earned but not yet paid as of the actual
date of termination of the Employee's  employment with the Company;  (ii) a lump
sum payment in an amount equal to the Employee's  annual Base Salary as provided
in Section 4(a) above;  (iii) continuation of the health and welfare benefits of
the  Employee,  as set forth in Section 4(c) above,  or the economic  equivalent
thereof,  at the same cost and level in effect on the date of termination of the
Employee's  employment  with the  Company  for one (1) year  after  such date of
termination;  and (iv) the  right to  exercise  immediately  any  stock  options
granted to the Employee which would become exercisable on or before the December
1 immediately  following the date of termination  of the  Employee's  employment
with the Company.

     If the Employee's employment is to be terminated without cause, the Company
shall give the Employee  thirty (30) days prior written  notice of its intent to
so terminate the Employee's employment. If the Employee intends to terminate his
employment  for good reason,  the  Employee  agrees to give the Company at least
thirty (30) days prior written notice.

 (c) Termination Due to Death or Disabilitv

     The Company may terminate the  Employee's  employment  hereunder due to the
Employee's  inability  to  render,  for a period  of three  consecutive  months,
services  hereunder  by reason of permanent  disability,  as  determined  by the
written medical  opinion of an independent  medical  physician  selected in good
faith by the Company  ("Disability").  In the event of the Employee's death or a
termination of the Employee's  employment by the Company due to Disability,  the
Employment  Period  shall  end  and  the  Employee,  his  estate  or  his  legal
representative,  as the case may be,  shall only be entitled to (i) (a) any Base
Salary  accrued or annual  bonus  awarded  and earned but not yet paid as of the
actual date of termination of the Employee's  employment  with the Company,  and
(b) any other  compensation  and benefits as may be provided in accordance  with
the terms and  provisions of any  applicable  plans and programs of the Company;
and  (ii)  in the  case  of  Disability,  (a)  continuation  of  payment  of the
Employee's Base Salary,  as set forth in Section 4(a) above,  until the Employee
commences to receive payments under the Company's longterm  disability plan, (b)
continuation of the health and welfare benefits of the Employee, as set forth in
Section 4(c) above,  or the economic  equivalent  thereof,  at the same cost and
level in effect on the date of  termination  for one (1) year  after the date of
termination and (c) the right to exercise  immediately that proportion  (rounded
up to the nearest  whole  number) of the stock  options  granted to the Employee
which would become exercisable on or before the December 1 immediately following
the date of  termination of the  Employee's  employment  with the Company due to
Disability which is equal to the number of days worked by the Employee from, but
excluding,  the December 1 immediately  preceding such  termination date to, and
including, such termination date divided by 365 days.

 (d) Voluntary Termination

     The Employee may effect a Voluntary  Termination of his employment with the
Company  hereunder.  A  "Voluntary  Termination"  shall  mean a  termination  of
employment by the Employee on his own initiative other than a termination due to
death or Disability or a termination  for good reason.  A Voluntary  Termination
shall not be,  and shall  not be  deemed to be, a breach of this  Agreement  and
shall result in the end of the  Employment  Period and only entitle the Employee
to all of the rights and benefits  which the  Employee  would be entitled in the
event of a termination of the Employee's employment by the Company for cause. If
the Employee intends to effect a Voluntary Termination  hereunder,  the Employee
agrees to give the  Company  at least  thirty  (30) days  prior  written  notice
thereof.

 (e) Termination bv the Company at End of Employment Period

     Notwithstanding any provision of this Agreement to the contrary, if (a) the
Employment Period (i) is not terminated early under Sections 7(a), 7(b), 7(c) or
7(d)  above  and (ii) the  Company  provides  written  notice  to the  Employee,
pursuant to Section 2 above,  that it does not wish to extend or further  extend
the Employment  Period,  and (b) the Employee's  employment  with the Company is
subsequently  terminated at the end of the Employment Period, the Employee shall
be entitled to (x)  continuation  of payment of the Employee's  Base Salary,  as
provided in Section 4(a) above,  as of the date of termination of the Employee's
employment  with the Company for a period  equal to (1) one year less the number
of days  notice  given by the Company to the  Employee  that it does not wish to
extend or further  extend the  Employment  Period (such  notice  period shall be
deemed to commence as of the date of such written  notice by the  Company);  (y)
continuation of the health and welfare benefits of the Employee, as set forth in
4(c) above, or the economic  equivalent  thereof,  at the same cost and level in
effect on the date of termination of the Employee's  employment with the Company
for one  (1)  year  after  such  termination;  and (z)  the  right  to  exercise
immediately  any stock  options  granted  to the  Employee  which  would  become
exercisable on or before the December 1 immediately  following the date on which
the one (1) year period referred to the preceding subclause (x) ends;  provided,
however,  that the  severance  payment  by the  Company  to the  Employee  under
subclause  (x) of this Section 7(e) shall be offset on a dollar for dollar basis
by any cash, or the fair market value of any non-cash, remuneration,  benefit or
other entitlement  earned,  received or receivable by the Employee in connection
with the  employment  of such Employee in any  capacity,  other than  dividends,
interest  income or other  passive  investment  income  earned as a result of an
interest in a business or entity of which the Employee  owns less than 2% of the
beneficial  ownership.  If the Employee  shall be entitled to any such severance
payment from the Company after the  termination  of the Employment  Period,  the
Employee  shall have the  obligation  to notify the  Company of any  employment,
consultation or other activity which may involve any  remuneration,  benefits or
other  entitlements  as  described  above,  and as to which the  Company  may be
entitled to an offset.

8. SURVIVAL

     The rights and  obligations  of the  parties  hereunder  shall  survive the
termination of the Employee's  employment  hereunder and the termination of this
Agreement to the extent  necessary to the intended  preservation  of such rights
and obligations.

9. WHOLE AGREEMENT AND MODIFICATION

     This Agreement  sets forth the entire  agreement and  understanding  of the
parties with respect to the subject matter contained herein,  and supersedes all
prior and existing agreements,  whether written or oral, between them concerning
the subject matter  contained  herein.  This Agreement may be modified only by a
written agreement executed by each party to this Agreement.

10. NOTICES

     Any notice or other  communication  required or permitted to be given under
this Agreement shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth  above or to such other  address as
the party shall have  furnished in writing in  accordance  with this  provision.
Notice to the estate of the  Employee  shall be  sufficient  if addressed to the
Employee in accordance  with this provision.  Any notice or other  communication
given by  certified  mail shall be deemed  given  three (3) days after  posting.
However,  a notice  changing a party's address shall be deemed given at the time
of the receipt of the notice.

11. WAIVER

     Any waiver by either party of a breach of any  provision of this  Agreement
shall not operate as or be  construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict  adherence to any term of this Agreement on one
or more occasions  shall not be considered a waiver or deprive that party of the
right  thereafter to insist upon strict adherence to that term or any other term
of this  Agreement.  Any waiver must be in writing,  signed by the party  giving
such waiver.

12. SUCCESSORS

 (a) Effect on Emplovee

     This  Agreement is personal to the Employee and,  without the prior express
written consent of the Company, shall not be assignable by the Employee,  except
that the Employee's  rights to receive any  compensation  or benefits under this
Agreement  may  be   transferred   or  disposed  of  pursuant  to   testamentary
disposition, intestate succession or pursuant to a domestic relations order of a
court of competent  jurisdiction.  This Agreement  shall inure to the benefit of
and  be  enforceable  by  the  Employee's  heirs,   beneficiaries  and/or  legal
representatives.

 (b)      Effect on company

     This Agreement  shall inure to the benefit of and be binding on the Company
and its  successors  and  assigns.  The  Company  shall  reasonably  require any
successor  to all or  substantially  all of the  business  and/or  assets of the
Company,  whether  direct  or  indirect,  by  purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  by an  agreement  in form and  substance
reasonably  satisfactory  to the  Employee,  expressly  to  assume  and agree to
perform this  Agreement in the same manner and to the same extent as the Company
would be required to perform if no such succession had taken place.

13. NO THIRD PARTY BENEFICIARIES

     This Agreement does not create, and shall not be construed as creating, any
rights  enforceable  by any  person  not a party  to this  Agreement  except  as
provided in Section 12 of this Agreement.

14. COUNTERPARTS

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original,  but all of which together shall constitute one and
the same instrument.

15. GOVERNING LAW

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the State of New  York,  without  giving  effect  to the  principles  of
conflict of laws thereof.

16. SEVERABILITY

     The invalidity or unenforceability of any provision of this Agreement shall
not  affect  the  validity  or  enforceability  of any other  provision  of this
Agreement.

17. NO VIOLATION OF OUTSTANDING AGREEMENT(S)

     Employee  hereby  warrants  that the  execution of this  Agreement  and the
performance  of his duties  hereunder do not and will not violate any  agreement
with any other person or entity.

     IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement  which
shall be effective as of the effective date noted above.

                              NEUROGEN CORPORATION



                           By:/s/HARRY H. PENNER, JR.
                           __________________________
                              Harry H. Penner, Jr.
                     President and Chief Executive Officer:



                                                       /s/ALAN J. HUTCHINSON
                                                      --------------------------
                                                      Alan J. Hutchison



<PAGE>

                                                                   EXHIBIT 10.29


                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT, effective as of December 1, 1997, is made by and
between Neurogen  Corporation,  a Delaware  corporation  (the  "Company"),  with
offices at 35  Northeast  Industrial  Road,  Branford,  Connecticut  06405,  and
Stephen R. Davis (the "Employee").

     WHEREAS,  the Employee has been  employed by the Company since 1994 and the
Company  and the  Employee  desire to enter into this  Agreement  to extend such
employment on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, the Company and the Employee agree as follows:

1. DEFINITIONS
   (a) Cause

     For purposes of this Agreement "cause" means:

     (i) the Employee's conviction for commission of a felony;

     (ii) any willful act or omission by the Employee  which  constitutes  gross
misconduct or gross  negligence  and which results in material  economic harm to
the Company;

     (iii) the Employee's  willful and continuous  failure to perform his duties
with the Company after reasonable notice of such failure;

     (iv) the  Employee's  participation  in any act of  dishonesty  intended to
result in his material personal enrichment at the expense of the Company; or

     (v) the Employee's failure to substantially comply with the terms set forth
in the Proprietary Information and Inventions Agreement between the Employee and
the Company.

     No act, or failure to act, by the Employee  shall be  considered  "willful"
unless  committed in bad faith and without a  reasonable  belief that the act or
omission was in the Company's best interest.

  (b) Good Reason

     For purposes of this  Agreement  "good reason" means and shall be deemed to
exist if, without the prior written consent of the Employee,

     (i) the Company  permanently  relocates  its  principal  offices  more than
thirty (30) miles from its current offices located in Branford, Connecticut;

     (ii) the Employee (a) is assigned duties and/or  responsibilities which are
inconsistent in any material respect with the nature and scope of the duties and
responsibilities  typically associated with the Employee's title or position, as
set  forth  and  described  in  Section 3 of this  Agreement,  or (b)  suffers a
material reduction in his duties,  responsibilities  or effective authority as a
result of any action or inaction on the part of the Company typically associated
with his title and  position  as set forth and  described  in  Section 3 of this
Agreement;

     (iii) the  Employee's  rate of Base  Salary  (as  hereinafter  defined)  is
materially  decreased by the Company,  and/or the Employee's  benefits under the
Company's  employee  benefit plans or programs are in the  aggregate  materially
decreased as compared to such benefits  maintained by the Company on the date of
this Agreement;

     (iv) the Company fails to obtain the full assumption of this Agreement by a
successor entity in accordance with Section 12(b) of this Agreement; or

     (v) the Board of Directors of the Company  (the  "Board") or the  Company's
stockholders,  either or both, as may be required to authorize  the same,  shall
approve any  liquidation or  dissolution  of the Company,  or the sale of all or
substantially all of the assets of the Company

 2. TERM

     The term of  Employee's  employment  under  this  Agreement  shall,  unless
earlier  terminated under Section 7 herein or extended as hereinafter  provided,
be for a period commencing as of December 1, 1997 (the "Commencement  Date") and
terminating on November 30, 1999, subject to the terms and conditions  contained
in this  Agreement  (the  "Employment  Period").  The  Employment  Period  shall
automatically be extended,  commencing on December 1, 1999 and thereafter on the
relevant alternate  anniversary of the Commencement Date, for successive two (2)
year periods  unless,  not later than three (3) months prior to December 1, 1999
or any such  anniversary,  either  party to this  Agreement  shall give  written
notice to the other that such  party  does not wish to extend or further  extend
the Employment  Period beyond its then already  automatically  extended term, if
any.

 3. DUTIES AND SERVICES

     During the  Employment  Period,  the Employee shall be employed as a Senior
Vice  President of the Company.  In such  position,  the Employee shall have the
duties,  responsibilities  and authority normally  associated with, or otherwise
appropriate  to, the  offices and  positions  of a Senior  Vice  President  of a
corporation.  In the  performance of his duties and  responsibilities  as Senior
Vice  President  the  Employee  shall  report  only to the  President  and Chief
Executive  Officer of the Company.  During the Employment  Period,  the Employee
shall devote  substantially  all of his business  time,  during normal  business
hours, to the business and affairs of the Company and the Employee shall use his
best   efforts   to  perform   faithfully   and   efficiently   the  duties  and
responsibilities contemplated by this Agreement; provided, however, the Employee
may  manage  his  personal,  financial  and  legal  affairs  and  engage  in any
activities of a volunteer,  civic or business nature, as long as such activities
do not materially  interfere with Employee's  responsibilities  as a Senior Vice
President.

 4. COMPENSATION AND OTHER BENEFITS

  (a) Salary

     As compensation for the Employee's services under this Agreement, beginning
the Commencement  Date and until the termination of the Employment  Period,  the
Employee  shall be paid by the  Company a base  salary of  $180,000  per  annum,
payable in equal  semi-monthly  installments  in  accordance  with the Company's
normal payroll  practices,  which base salary may be increased but not decreased
during  the  Employment  Period by the Board in its sole  discretion  (the "Base
Salary"). Such increased Base Salary shall then constitute the "Base Salary" for
purposes of this Agreement.

  (b) Annual Bonus

     In  addition  to the Base  Salary,  the  Employee  is  eligible to receive,
subject to certain  objective  and/or  subjective  performance  goals set by the
President and Chief Executive Officer, such annual bonuses during the Employment
Period as the Board may approve.

 (c) Benefits

     During the Employment Period, the Employee shall be eligible to participate
in all employee pension and incentive benefit plans and programs maintained from
time to time by the  Company for the  benefit of senior  executives.  During the
Employment Period,  the Employee,  Employee's spouse, if any, and their eligible
dependents, if any, shall be eligible to participate in and be covered under all
the  employee  and  dependent  health  and  welfare  benefit  plans or  programs
maintained from time to time by the Company.

5. NON-COMPETITION

     During the Employment Period and, if the Employee's employment hereunder is
terminated by the Company for cause or if the Employee terminates his employment
with the Company  without good  reason,  for one year after the date of any such
termination of employment,  the Employee agrees that,  without the prior express
written consent of the Company,  he shall not,  directly or indirectly,  for his
own  benefit  or for,  with or  through  any other  person,  firm,  partnership,
corporation or other entity or individual  (other than the Company) as or in the
capacity of an owner,  shareholder,  employee,  consultant,  director,  officer,
trustee,   partner,   agent,   independent   contractor   and/or  in  any  other
representative  capacity  or  otherwise,  (i) in or with  respect  to the United
States of America, engage in, or assist any individual or entity in engaging in,
the discovery  and/or  development of  therapeutic,  diagnostic or  prophylactic
products  or services  which at the time of such  termination  are under  active
clinical or  pre-clinical  development or have been developed by the Company and
which the Company has not abandoned or (ii) solicit the services of any employee
of the Company or attempt to induce any such  employee or any  consultant to the
Company to leave the employ of the Company  (except when such acts are performed
in good faith by the  Employee on behalf of the  Company).  Notwithstanding  the
above,  the Employee  shall at all times be permitted to own not more than 1% of
the outstanding  common stock of any  corporation,  if such stock is listed on a
national securities exchange, is reported on the NASDAQ System, or is regularity
traded  in the  over-thecounter  market  by a member  of a  national  securities
exchange.

This provision shall not prevent or prohibit  Employee from being employed by an
academic  institution  during such one-year period,  provided that Employee does
not violate the terms of Section 6 hereof and does not render advice  concerning
the products or services described in clause (i) above.

6. CONFIDENTIAL INFORMATION

     The Employee agrees to substantially comply with the terms set forth in the
Proprietary  Information and Inventions  Agreement  between the Employee and the
Company,  a copy of which is attached  hereto as Exhibit A and  incorporated  by
reference herein.

7. TERMINATION

(a) Termination by the Company for Cause

     The Company may terminate the Employee's employment hereunder for cause. If
the Company  terminates  the  Employee's  employment  hereunder  for cause,  the
Employment  Period shall end and the Employee shall only be entitled to any Base
Salary  accrued or annual  bonus  awarded  and earned but not yet paid as of the
date of termination of the Employee's employment with the Company.

     If the  Employee's  employment is to be terminated  for cause,  the Company
shall give written notice of such termination to the Employee. Such notice shall
specify the particular act or acts, or failure to act, which is or are the basis
for the decision to so terminate the Employee's employment for cause.

(b) Termination Without Cause or Termination For Good Reason

     The Company may terminate the Employee's employment hereunder without cause
and the Employee may terminate his employment  hereunder for good reason. If the
Company terminates the Employee's  employment hereunder without cause, or if the
Employee  terminates  his employment  hereunder for good reason,  the Employment
Period shall end and the Employee  shall only be entitled to (i) any Base Salary
accrued  or annual  bonus  awarded  and earned but not yet paid as of the actual
date of termination of the Employee's  employment with the Company;  (ii) a lump
sum payment in an amount equal to the Employee's  annual Base Salary as provided
in Section 4(a) above;  (iii) continuation of the health and welfare benefits of
the  Employee,  as set forth in Section 4(c) above,  or the economic  equivalent
thereof,  at the same cost and level in effect on the date of termination of the
Employee's  employment  with the  Company  for one (1) year  after  such date of
termination;  and (iv) the  right to  exercise  immediately  any  stock  options
granted to the Employee which would become exercisable on or before the December
1 immediately  following the date of termination  of the  Employee's  employment
with the Company.

     If the Employee's employment is to be terminated without cause, the Company
shall give the Employee  thirty (30) days prior written  notice of its intent to
so terminate the Employee's employment. If the Employee intends to terminate his
employment  for good reason,  the  Employee  agrees to give the Company at least
thirty (30) days prior written notice.

 (c) Termination Due to Death or Disabilitv

     The Company may terminate the  Employee's  employment  hereunder due to the
Employee's  inability  to  render,  for a period  of three  consecutive  months,
services  hereunder  by reason of permanent  disability,  as  determined  by the
written medical  opinion of an independent  medical  physician  selected in good
faith by the Company  ("Disability").  In the event of the Employee's death or a
termination of the Employee's  employment by the Company due to Disability,  the
Employment  Period  shall  end  and  the  Employee,  his  estate  or  his  legal
representative,  as the case may be,  shall only be entitled to (i) (a) any Base
Salary  accrued or annual  bonus  awarded  and earned but not yet paid as of the
actual date of termination of the Employee's  employment  with the Company,  and
(b) any other  compensation  and benefits as may be provided in accordance  with
the terms and  provisions of any  applicable  plans and programs of the Company;
and  (ii)  in the  case  of  Disability,  (a)  continuation  of  payment  of the
Employee's Base Salary,  as set forth in Section 4(a) above,  until the Employee
commences to receive payments under the Company's longterm  disability plan, (b)
continuation of the health and welfare benefits of the Employee, as set forth in
Section 4(c) above,  or the economic  equivalent  thereof,  at the same cost and
level in effect on the date of  termination  for one (1) year  after the date of
termination and (c) the right to exercise  immediately that proportion  (rounded
up to the nearest  whole  number) of the stock  options  granted to the Employee
which would become exercisable on or before the December 1 immediately following
the date of  termination of the  Employee's  employment  with the Company due to
Disability which is equal to the number of days worked by the Employee from, but
excluding,  the December 1 immediately  preceding such  termination date to, and
including, such termination date divided by 365 days.

 (d) Voluntary Termination

     The Employee may effect a Voluntary  Termination of his employment with the
Company  hereunder.  A  "Voluntary  Termination"  shall  mean a  termination  of
employment by the Employee on his own initiative other than a termination due to
death or Disability or a termination  for good reason.  A Voluntary  Termination
shall not be,  and shall  not be  deemed to be, a breach of this  Agreement  and
shall result in the end of the  Employment  Period and only entitle the Employee
to all of the rights and benefits  which the  Employee  would be entitled in the
event of a termination of the Employee's employment by the Company for cause. If
the Employee intends to effect a Voluntary Termination  hereunder,  the Employee
agrees to give the  Company  at least  thirty  (30) days  prior  written  notice
thereof.

 (e) Termination bv the Company at End of Employment Period

     Notwithstanding any provision of this Agreement to the contrary, if (a) the
Employment Period (i) is not terminated early under Sections 7(a), 7(b), 7(c) or
7(d)  above  and (ii) the  Company  provides  written  notice  to the  Employee,
pursuant to Section 2 above,  that it does not wish to extend or further  extend
the Employment  Period,  and (b) the Employee's  employment  with the Company is
subsequently  terminated at the end of the Employment Period, the Employee shall
be entitled to (x)  continuation  of payment of the Employee's  Base Salary,  as
provided in Section 4(a) above,  as of the date of termination of the Employee's
employment  with the Company for a period  equal to (1) one year less the number
of days  notice  given by the Company to the  Employee  that it does not wish to
extend or further  extend the  Employment  Period (such  notice  period shall be
deemed to commence as of the date of such written  notice by the  Company);  (y)
continuation of the health and welfare benefits of the Employee, as set forth in
4(c) above, or the economic  equivalent  thereof,  at the same cost and level in
effect on the date of termination of the Employee's  employment with the Company
for one  (1)  year  after  such  termination;  and (z)  the  right  to  exercise
immediately  any stock  options  granted  to the  Employee  which  would  become
exercisable on or before the December 1 immediately  following the date on which
the one (1) year period referred to the preceding subclause (x) ends;  provided,
however,  that the  severance  payment  by the  Company  to the  Employee  under
subclause  (x) of this Section 7(e) shall be offset on a dollar for dollar basis
by any cash, or the fair market value of any non-cash, remuneration,  benefit or
other entitlement  earned,  received or receivable by the Employee in connection
with the  employment  of such Employee in any  capacity,  other than  dividends,
interest  income or other  passive  investment  income  earned as a result of an
interest in a business or entity of which the Employee  owns less than 2% of the
beneficial  ownership.  If the Employee  shall be entitled to any such severance
payment from the Company after the  termination  of the Employment  Period,  the
Employee  shall have the  obligation  to notify the  Company of any  employment,
consultation or other activity which may involve any  remuneration,  benefits or
other  entitlements  as  described  above,  and as to which the  Company  may be
entitled to an offset.

8. SURVIVAL

     The rights and  obligations  of the  parties  hereunder  shall  survive the
termination of the Employee's  employment  hereunder and the termination of this
Agreement to the extent  necessary to the intended  preservation  of such rights
and obligations.

9. WHOLE AGREEMENT AND MODIFICATION

     This Agreement  sets forth the entire  agreement and  understanding  of the
parties with respect to the subject matter contained herein,  and supersedes all
prior and existing agreements,  whether written or oral, between them concerning
the subject matter  contained  herein.  This Agreement may be modified only by a
written agreement executed by each party to this Agreement.

10. NOTICES

     Any notice or other  communication  required or permitted to be given under
this Agreement shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth  above or to such other  address as
the party shall have  furnished in writing in  accordance  with this  provision.
Notice to the estate of the  Employee  shall be  sufficient  if addressed to the
Employee in accordance  with this provision.  Any notice or other  communication
given by  certified  mail shall be deemed  given  three (3) days after  posting.
However,  a notice  changing a party's address shall be deemed given at the time
of the receipt of the notice.

11. WAIVER

     Any waiver by either party of a breach of any  provision of this  Agreement
shall not operate as or be  construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict  adherence to any term of this Agreement on one
or more occasions  shall not be considered a waiver or deprive that party of the
right  thereafter to insist upon strict adherence to that term or any other term
of this  Agreement.  Any waiver must be in writing,  signed by the party  giving
such waiver.

12. SUCCESSORS

 (a) Effect on Emplovee

     This  Agreement is personal to the Employee and,  without the prior express
written consent of the Company, shall not be assignable by the Employee,  except
that the Employee's  rights to receive any  compensation  or benefits under this
Agreement  may  be   transferred   or  disposed  of  pursuant  to   testamentary
disposition, intestate succession or pursuant to a domestic relations order of a
court of competent  jurisdiction.  This Agreement  shall inure to the benefit of
and  be  enforceable  by  the  Employee's  heirs,   beneficiaries  and/or  legal
representatives.

 (b) Effect on company

     This Agreement  shall inure to the benefit of and be binding on the Company
and its  successors  and  assigns.  The  Company  shall  reasonably  require any
successor  to all or  substantially  all of the  business  and/or  assets of the
Company,  whether  direct  or  indirect,  by  purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  by an  agreement  in form and  substance
reasonably  satisfactory  to the  Employee,  expressly  to  assume  and agree to
perform this  Agreement in the same manner and to the same extent as the Company
would be required to perform if no such succession had taken place.

13. NO THIRD PARTY BENEFICIARIES

     This Agreement does not create, and shall not be construed as creating, any
rights  enforceable  by any  person  not a party  to this  Agreement  except  as
provided in Section 12 of this Agreement.

14. COUNTERPARTS

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original,  but all of which together shall constitute one and
the same instrument.

15. GOVERNING LAW

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the State of New  York,  without  giving  effect  to the  principles  of
conflict of laws thereof.

16. SEVERABILITY

     The invalidity or unenforceability of any provision of this Agreement shall
not  affect  the  validity  or  enforceability  of any other  provision  of this
Agreement.

17. NO VIOLATION OF OUTSTANDING AGREEMENT(S)

     Employee  hereby  warrants  that the  execution of this  Agreement  and the
performance  of his duties  hereunder do not and will not violate any  agreement
with any other person or entity.

     IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement  which
shall be effective as of the effective date noted above.

                              NEUROGEN CORPORATION



                           By:/s/HARRY H. PENNER, JR.
                           __________________________
                              Harry H. Penner, Jr.
                     President and Chief Executive Officer:



                                                       /s/STEPHEN R. DAVIS
                                                      --------------------------
                                                      Stephen R. Davis

<PAGE>


                                                                   EXHIBIT 10.30



                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT, effective as of December 1, 1999, is made by and
between Neurogen  Corporation,  a Delaware  corporation  (the  "Company"),  with
offices at 35  Northeast  Industrial  Road,  Branford,  Connecticut  06405,  and
Kenneth R. Shaw (the "Employee").

     WHEREAS,  the Employee has been  employed by the Company since 1989 and the
Company  and the  Employee  desire to enter into this  Agreement  to extend such
employment on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, the Company and the Employee agree as follows:

1. DEFINITIONS

  (a) Cause

     For purposes of this Agreement "cause" means:

     (i) the Employee's conviction for commission of a felony;

     (ii) any willful act or omission by the Employee  which  constitutes  gross
misconduct or gross  negligence  and which results in material  economic harm to
the Company;

     (iii) the Employee's  willful and continuous  failure to perform his duties
with the Company after reasonable notice of such failure;

     (iv) the  Employee's  participation  in any act of  dishonesty  intended to
result in his material personal enrichment at the expense of the Company; or

     (v) the Employee's failure to substantially comply with the terms set forth
in the Proprietary Information and Inventions Agreement between the Employee and
the Company.

     No act, or failure to act, by the Employee  shall be  considered  "willful"
unless  committed in bad faith and without a  reasonable  belief that the act or
omission was in the Company's best interest.

  (b) Good Reason

     For purposes of this  Agreement  "good reason" means and shall be deemed to
exist if, without the prior written consent of the Employee,

     (i) the Company  permanently  relocates  its  principal  offices  more than
thirty (30) miles from its current offices located in Branford, Connecticut;

     (ii) the Employee (a) is assigned duties and/or  responsibilities which are
inconsistent in any material respect with the nature and scope of the duties and
responsibilities  typically associated with the Employee's title or position, as
set  forth  and  described  in  Section 3 of this  Agreement,  or (b)  suffers a
material reduction in his duties,  responsibilities  or effective authority as a
result of any action or inaction on the part of the Company typically associated
with his title and  position  as set forth and  described  in  Section 3 of this
Agreement;

     (iii) the  Employee's  rate of Base  Salary  (as  hereinafter  defined)  is
materially  decreased by the Company,  and/or the Employee's  benefits under the
Company's  employee  benefit plans or programs are in the  aggregate  materially
decreased as compared to such benefits  maintained by the Company on the date of
this Agreement;

     (iv) the Company fails to obtain the full assumption of this Agreement by a
successor entity in accordance with Section 12(b) of this Agreement; or

     (v) the Board of Directors of the Company  (the  "Board") or the  Company's
stockholders,  either or both, as may be required to authorize  the same,  shall
approve any  liquidation or  dissolution  of the Company,  or the sale of all or
substantially all of the assets of the Company.

2. TERM

     The term of  Employee's  employment  under  this  Agreement  shall,  unless
earlier  terminated under Section 7 herein or extended as hereinafter  provided,
be for a period commencing as of December 1, 1999 (the "Commencement  Date") and
terminating on November 30, 2001, subject to the terms and conditions  contained
in this  Agreement  (the  "Employment  Period").  The  Employment  Period  shall
automatically be extended,  commencing on December 1, 2001 and thereafter on the
relevant alternate  anniversary of the Commencement Date, for successive two (2)
year periods  unless,  not later than three (3) months prior to December 1, 2001
or any such  anniversary,  either  party to this  Agreement  shall give  written
notice to the other that such  party  does not wish to extend or further  extend
the Employment  Period beyond its then already  automatically  extended term, if
any.

3. DUTIES AND SERVICES

     During the  Employment  Period,  the Employee shall be employed as a Senior
Vice  President of the Company.  In such  position,  the Employee shall have the
duties,  responsibilities  and authority normally  associated with, or otherwise
appropriate  to, the  offices and  positions  of a Senior  Vice  President  of a
corporation.  In the performance of his duties and  responsibilities  as, Senior
Vice President,  the Employee shall report only to the chief scientific  officer
of the  Company.  During  the  Employment  Period,  the  Employee  shall  devote
substantially  all of his business time,  during normal  business  hours, to the
business and affairs of the Company and the Employee  shall use his best efforts
to  perform   faithfully  and  efficiently   the  duties  and   responsibilities
contemplated by this Agreement;  provided,  however, the Employee may manage his
personal,  financial  and  legal  affairs  and  engage  in any  activities  of a
volunteer,  civic  or  business  nature,  as  long  as  such  activities  do not
materially interfere with Employee's responsibilities as Senior Vice President.

4. COMPENSATION AND OTHER BENEFITS

  (a) Salary

     As compensation for the Employee's services under this Agreement, beginning
the Commencement  Date and until the termination of the Employment  Period,  the
Employee  shall be paid by the  Company a base  salary of  $216,275  per  annum,
payable in equal  semi-monthly  installments  in  accordance  with the Company's
normal payroll  practices,  which base salary may be increased but not decreased
during  the  Employment  Period by the Board in its sole  discretion  (the "Base
Salary"). Such increased Base Salary shall then constitute the "Base Salary" for
purposes of this Agreement.

  (b) Annual Bonus

     In  addition  to the Base  Salary,  the  Employee  is  eligible to receive,
subject to certain  objective  and/or  subjective  performance  goals set by the
President and Chief Executive Officer, such annual bonuses during the Employment
Period as the Board may approve.

 (c) Benefits

     During the Employment Period, the Employee shall be eligible to participate
in all employee pension and incentive benefit plans and programs maintained from
time to time by the  Company for the  benefit of senior  executives.  During the
Employment Period,  the Employee,  Employee's spouse, if any, and their eligible
dependents, if any, shall be eligible to participate in and be covered under all
the  employee  and  dependent  health  and  welfare  benefit  plans or  programs
maintained from time to time by the Company.

5. NON-COMPETITION

     During the Employment Period and, if the Employee's employment hereunder is
terminated by the Company for cause or if the Employee terminates his employment
with the Company  without good  reason,  for one year after the date of any such
termination of employment,  the Employee agrees that,  without the prior express
written consent of the Company,  he shall not,  directly or indirectly,  for his
own  benefit  or for,  with or  through  any other  person,  firm,  partnership,
corporation or other entity or individual  (other than the Company) as or in the
capacity of an owner,  shareholder,  employee,  consultant,  director,  officer,
trustee,   partner,   agent,   independent   contractor   and/or  in  any  other
representative  capacity  or  otherwise,  (i) in or with  respect  to the United
States of America, engage in, or assist any individual or entity in engaging in,
the discovery  and/or  development of  therapeutic,  diagnostic or  prophylactic
products  or services  which at the time of such  termination  are under  active
clinical or  pre-clinical  development or have been developed by the Company and
which the Company has not abandoned or (ii) solicit the services of any employee
of the Company or attempt to induce any such  employee or any  consultant to the
Company to leave the employ of the Company  (except when such acts are performed
in good faith by the  Employee on behalf of the  Company).  Notwithstanding  the
above,  the Employee  shall at all times be permitted to own not more than 1% of
the outstanding  common stock of any  corporation,  if such stock is listed on a
national securities exchange, is reported on the NASDAQ System, or is regularity
traded  in the  over-thecounter  market  by a member  of a  national  securities
exchange.

This provision shall not prevent or prohibit  Employee from being employed by an
academic  institution  during such one-year period,  provided that Employee does
not violate the terms of Section 6 hereof and does not render advice  concerning
the products or services described in clause (i) above.

6. CONFIDENTIAL INFORMATION

     The Employee agrees to substantially comply with the terms set forth in the
Proprietary  Information and Inventions  Agreement  between the Employee and the
Company,  a copy of which is attached  hereto as Exhibit A and  incorporated  by
reference herein.

7. TERMINATION

(a) Termination by the Company for Cause

     The Company may terminate the Employee's employment hereunder for cause. If
the Company  terminates  the  Employee's  employment  hereunder  for cause,  the
Employment  Period shall end and the Employee shall only be entitled to any Base
Salary  accrued or annual  bonus  awarded  and earned but not yet paid as of the
date of termination of the Employee's employment with the Company.

     If the  Employee's  employment is to be terminated  for cause,  the Company
shall give written notice of such termination to the Employee. Such notice shall
specify the particular act or acts, or failure to act, which is or are the basis
for the decision to so terminate the Employee's employment for cause.

(b) Termination Without Cause or Termination For Good Reason

    The Company may terminate the Employee's employment hereunder without cause
and the Employee may terminate his employment  hereunder for good reason. If the
Company terminates the Employee's  employment hereunder without cause, or if the
Employee  terminates  his employment  hereunder for good reason,  the Employment
Period shall end and the Employee  shall only be entitled to (i) any Base Salary
accrued  or annual  bonus  awarded  and earned but not yet paid as of the actual
date of termination of the Employee's  employment with the Company;  (ii) a lump
sum payment in an amount equal to the Employee's  annual Base Salary as provided
in Section 4(a) above;  (iii) continuation of the health and welfare benefits of
the  Employee,  as set forth in Section 4(c) above,  or the economic  equivalent
thereof,  at the same cost and level in effect on the date of termination of the
Employee's  employment  with the  Company  for one (1) year  after  such date of
termination;  and (iv) the  right to  exercise  immediately  any  stock  options
granted to the Employee which would become exercisable on or before the December
1 immediately  following the date of termination  of the  Employee's  employment
with the Company.

     If the Employee's employment is to be terminated without cause, the Company
shall give the Employee  thirty (30) days prior written  notice of its intent to
so terminate the Employee's employment. If the Employee intends to terminate his
employment  for good reason,  the  Employee  agrees to give the Company at least
thirty (30) days prior written notice.

 (c) Termination Due to Death or Disability

     The Company may terminate the  Employee's  employment  hereunder due to the
Employee's  inability  to  render,  for a period  of three  consecutive  months,
services  hereunder  by reason of permanent  disability,  as  determined  by the
written medical  opinion of an independent  medical  physician  selected in good
faith by the Company  ("Disability").  In the event of the Employee's death or a
termination of the Employee's  employment by the Company due to Disability,  the
Employment  Period  shall  end  and  the  Employee,  his  estate  or  his  legal
representative,  as the case may be,  shall only be entitled to (i) (a) any Base
Salary  accrued or annual  bonus  awarded  and earned but not yet paid as of the
actual date of termination of the Employee's  employment  with the Company,  and
(b) any other  compensation  and benefits as may be provided in accordance  with
the terms and  provisions of any  applicable  plans and programs of the Company;
and  (ii)  in the  case  of  Disability,  (a)  continuation  of  payment  of the
Employee's Base Salary,  as set forth in Section 4(a) above,  until the Employee
commences to receive payments under the Company's longterm  disability plan, (b)
continuation of the health and welfare benefits of the Employee, as set forth in
Section 4(c) above,  or the economic  equivalent  thereof,  at the same cost and
level in effect on the date of  termination  for one (1) year  after the date of
termination and (c) the right to exercise  immediately that proportion  (rounded
up to the nearest  whole  number) of the stock  options  granted to the Employee
which would become exercisable on or before the December 1 immediately following
the date of  termination of the  Employee's  employment  with the Company due to
Disability which is equal to the number of days worked by the Employee from, but
excluding,  the December 1 immediately  preceding such  termination date to, and
including, such termination date divided by 365 days.

 (d) Voluntary Termination

     The Employee may effect a Voluntary  Termination of his employment with the
Company  hereunder.  A  "Voluntary  Termination"  shall  mean a  termination  of
employment by the Employee on his own initiative other than a termination due to
death or Disability or a termination  for good reason.  A Voluntary  Termination
shall not be,  and shall  not be  deemed to be, a breach of this  Agreement  and
shall result in the end of the  Employment  Period and only entitle the Employee
to all of the rights and benefits  which the  Employee  would be entitled in the
event of a termination of the Employee's employment by the Company for cause. If
the Employee intends to effect a Voluntary Termination  hereunder,  the Employee
agrees to give the  Company  at least  thirty  (30) days  prior  written  notice
thereof.

 (e) Termination bv the Company at End of Employment Period

     Notwithstanding any provision of this Agreement to the contrary, if (a) the
Employment Period (i) is not terminated early under Sections 7(a), 7(b), 7(c) or
7(d)  above  and (ii) the  Company  provides  written  notice  to the  Employee,
pursuant to Section 2 above,  that it does not wish to extend or further  extend
the Employment  Period,  and (b) the Employee's  employment  with the Company is
subsequently  terminated at the end of the Employment Period, the Employee shall
be entitled to (x)  continuation  of payment of the Employee's  Base Salary,  as
provided in Section 4(a) above,  as of the date of termination of the Employee's
employment  with the Company for a period  equal to (1) one year less the number
of days  notice  given by the Company to the  Employee  that it does not wish to
extend or further  extend the  Employment  Period (such  notice  period shall be
deemed to commence as of the date of such written  notice by the  Company);  (y)
continuation of the health and welfare benefits of the Employee, as set forth in
4(c) above, or the economic  equivalent  thereof,  at the same cost and level in
effect on the date of termination of the Employee's  employment with the Company
for one  (1)  year  after  such  termination;  and (z)  the  right  to  exercise
immediately  any stock  options  granted  to the  Employee  which  would  become
exercisable on or before the December 1 immediately  following the date on which
the one (1) year period referred to the preceding subclause (x) ends;  provided,
however,  that the  severance  payment  by the  Company  to the  Employee  under
subclause  (x) of this Section 7(e) shall be offset on a dollar for dollar basis
by any cash, or the fair market value of any non-cash, remuneration,  benefit or
other entitlement  earned,  received or receivable by the Employee in connection
with the  employment  of such Employee in any  capacity,  other than  dividends,
interest  income or other  passive  investment  income  earned as a result of an
interest in a business or entity of which the Employee  owns less than 2% of the
beneficial  ownership.  If the Employee  shall be entitled to any such severance
payment from the Company after the  termination  of the Employment  Period,  the
Employee  shall have the  obligation  to notify the  Company of any  employment,
consultation or other activity which may involve any  remuneration,  benefits or
other  entitlements  as  described  above,  and as to which the  Company  may be
entitled to an offset.

8. SURVIVAL

     The rights and  obligations  of the  parties  hereunder  shall  survive the
termination of the Employee's  employment  hereunder and the termination of this
Agreement to the extent  necessary to the intended  preservation  of such rights
and obligations.

9. WHOLE AGREEMENT AND MODIFICATION

     This Agreement  sets forth the entire  agreement and  understanding  of the
parties with respect to the subject matter contained herein,  and supersedes all
prior and existing agreements,  whether written or oral, between them concerning
the subject matter  contained  herein.  This Agreement may be modified only by a
written agreement executed by each party to this Agreement.

10. NOTICES

     Any notice or other  communication  required or permitted to be given under
this Agreement shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth  above or to such other  address as
the party shall have  furnished in writing in  accordance  with this  provision.
Notice to the estate of the  Employee  shall be  sufficient  if addressed to the
Employee in accordance  with this provision.  Any notice or other  communication
given by  certified  mail shall be deemed  given  three (3) days after  posting.
However,  a notice  changing a party's address shall be deemed given at the time
of the receipt of the notice.

11. WAIVER

     Any waiver by either party of a breach of any  provision of this  Agreement
shall not operate as or be  construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict  adherence to any term of this Agreement on one
or more occasions  shall not be considered a waiver or deprive that party of the
right  thereafter to insist upon strict adherence to that term or any other term
of this  Agreement.  Any waiver must be in writing,  signed by the party  giving
such waiver.

12. SUCCESSORS

(a) Effect on Emplovee

    This  Agreement is personal to the Employee and,  without the prior express
written consent of the Company, shall not be assignable by the Employee,  except
that the Employee's  rights to receive any  compensation  or benefits under this
Agreement  may  be   transferred   or  disposed  of  pursuant  to   testamentary
disposition, intestate succession or pursuant to a domestic relations order of a
court of competent  jurisdiction.  This Agreement  shall inure to the benefit of
and  be  enforceable  by  the  Employee's  heirs,   beneficiaries  and/or  legal
representatives.

 (b) Effect on company

     This Agreement  shall inure to the benefit of and be binding on the Company
and its  successors  and  assigns.  The  Company  shall  reasonably  require any
successor  to all or  substantially  all of the  business  and/or  assets of the
Company,  whether  direct  or  indirect,  by  purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  by an  agreement  in form and  substance
reasonably  satisfactory  to the  Employee,  expressly  to  assume  and agree to
perform this  Agreement in the same manner and to the same extent as the Company
would be required to perform if no such succession had taken place.

13. NO THIRD PARTY BENEFICIARIES

     This Agreement does not create, and shall not be construed as creating, any
rights  enforceable  by any  person  not a party  to this  Agreement  except  as
provided in Section 12 of this Agreement.

14. COUNTERPARTS

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original,  but all of which together shall constitute one and
the same instrument.

15. GOVERNING LAW

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the State of New  York,  without  giving  effect  to the  principles  of
conflict of laws thereof.

16. SEVERABILITY

     The invalidity or unenforceability of any provision of this Agreement shall
not  affect  the  validity  or  enforceability  of any other  provision  of this
Agreement.

17. NO VIOLATION OF OUTSTANDING AGREEMENT(S)

     Employee  hereby  warrants  that the  execution of this  Agreement  and the
performance  of his duties  hereunder do not and will not violate any  agreement
with any other person or entity.

     IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement  which
shall be effective as of the effective date noted above.

                              NEUROGEN CORPORATION



                           By:/s/HARRY H. PENNER, JR.
                           __________________________
                              Harry H. Penner, Jr.
                     President and Chief Executive Officer:



                                                       /s/KENNETH R. SHAW
                                                      --------------------------
                                                      Kenneth R. Shaw



<PAGE>

                                                               EXHIBIT 21.1

                         Subsidiary of the Registrant

     The  Registrant  has one  subsidiary,  Neurogen  Properties, LLC,  which is
incorporated in the state of Connecticut.



<PAGE>




                                                               EXHIBIT 23.1

                         Consent of Independent Auditors

     We hereby  consent to the  incorporation  by reference in the  Registration
Statements on Forms S-8 (No. 33-43441,  33-43541 and 33-81266) pertaining to the
Neurogen  Stock  Option  Plan,  the  1993  Omnibus  Incentive  Plan and the 1993
Non-Employee Directors Plan of Neurogen Corporation of our report dated February
18, 2000, appearing on page 54 of this form 10-K.

                                            PRICEWATERHOUSECOOPERS LLP


  Hartford, Connecticut
  March 30, 2000


<PAGE>





                                                              EXHIBIT 23.2
                        Consent of Independent Auditors

  The Board of Directors
  Neurogen Corporation:

     We consent to the use of our report dated  February  13, 1998,  included in
the  Annual  Report  (Form  10-K) of  Neurogen  Corporation  for the year  ended
December 31, 1997,  with respect to the  statements  of  operations,  changes in
stockholders'  equity and cash flows of Neurogen  Corporation for the year ended
December 31, 1997, included in this Annual Report (Form 10-K) for the year ended
December 31, 1999.

                                                       ERNST & YOUNG LLP

  Boston, Massachusetts
  March 27, 2000




<PAGE>



                                POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ FRANK C. CARLUCCI
                                                    ----------------------------
                                                       Frank C. Carlucci
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ JOHN F. TALLMAN
                                                    ----------------------------
                                                       John F. Tallman
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ ROBERT H. ROTH, PH.D.
                                                    ----------------------------
                                                       Robert H. Roth, Ph.D.
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ JEFFREY J. COLLINSON
                                                    ----------------------------
                                                       Jeffrey J. Collinson
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ JOHN SIMON
                                                    ----------------------------
                                                       John Simon
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ ROBERT M. GARDINER
                                                    ----------------------------
                                                       Robert M. Gardiner
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ ROBERT N BUTLER, M D
                                                    ----------------------------
                                                       Robert N. Butler, M.D.

<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ BARRY M. BLOOM
                                                    ----------------------------
                                                        Barry M. Bloom
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ MARK NOVITCH
                                                    ----------------------------
                                                        Mark Novitch
<PAGE>


                               POWER OF ATTORNEY

     KNOW ALL YE PERSONS BY THESE  PRESENTS,  that the  undersigned  does hereby
make,  constitute and appoint Harry H. Penner,  Jr., and Stephen R. Davis,  each
his   attorney-in-fact   and  agent   with  full  power  of   substitution   and
resubstitution  for  him  and in his  name,  place  and  stead,  in any  and all
capacities,  to execute for him and on his behalf an Annual  Report  pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended,  on form 10-K
relating to the fiscal year ended  December  31, 1999,  of Neurogen  Corporation
(the  "Company"),  and any and all amendments to the foregoing  Annual Report on
Form 10-K,  which  amendments may make such changes in the Annual Report on Form
10-K as such  attorney-in-fact  deems  appropriate,  and any other documents and
instruments  incidental thereto, and to file the same, with all exhibits thereto
and all  documents in connection  therewith,  with the  Securities  and Exchange
Commission and the National  Association of Securities  Dealers,  Inc., granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Power of Attorney
this 20th day of March, 2000.

                                                    /s/ SUZANNE WOOLSEY
                                                    ----------------------------
                                                        Suzanne Woolsey
<PAGE>