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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A
                               (AMENDMENT NO. 2)

              [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR
             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 0-18311

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

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

                          35 NORTHEAST INDUSTRIAL ROAD
                           BRANFORD, CONNECTICUT 06405
               (Address of principal executive offices) (Zip Code)

                                 (203) 488-8201
              (Registrant's telephone number, including area code)

               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  $168,201,000  as of March 1, 2001,  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, 2001, the  registrant had 17,396,215  shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

None.

     Neurogen is filing this Form 10K/A to amend the last sentence of the first
paragraph of Note 7 of the Financial Statements to read as follows:

     "Under all plans,  there were 4,373,636 shares of common stock reserved for
future issuance (of which 3,705,588 are for options  outstanding and 668,048 are
for options available for future grant) as of December 31, 2000."

     In  accordance  with Rule 12b-15 of the  Securities  Exchange  Act of 1934,
Neurogen is including the complete text of Item 8 in this 10K/A.

ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets at December 31, 2000 and 1999Consolidated Statements of Operations for the years endedDecember 31, 2000, 1999 and 1998Consolidated Statements of Stockholders' Equity for the years endedDecember 31, 2000, 1999 and 1998Consolidated Statements of Cash Flows for the years endedDecember 31, 2000, 1999 and 1998Notes to Consolidated Financial StatementsReport of Independent Accountants

                              NEUROGEN CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                                                                           December 31
                                                                       -------------------
                                                                         2000      1999
                                                                       --------- ---------
                                                                          (In thousands)

                                Assets
Current Assets:
  Cash and cash equivalents...........................................   $48,086   $31,588
  Marketable securities...............................................    60,670    33,441
  Receivables from corporate partners.................................     1,517       286
  Other current assets................................................     1,364       921
                                                                       --------- ---------
Total current assets.................................................   $111,637    66,236

Property, plant & equipment:
  Land, building and improvements.....................................    17,949    17,709
  Construction in progress............................................     6,471     1,702
  Leasehold improvements..............................................     4,026     4,026
  Equipment and furniture.............................................    14,213    12,018
                                                                       --------- ---------
                                                                          42,659    35,455
Less accumulated depreciation and amortization........................    12,079     9,840
                                                                       --------- ---------
Net property, plant and equipment.....................................    30,580    25,615
Other assets, net.....................................................       371       283
                                                                       --------- ---------
                                                                        $142,588   $92,134
                                                                       ========= =========

           See accompanying notes to consolidated financial statements

                              NEUROGEN CORPORATION

                    CONSOLIDATED BALANCE SHEETS--(Continued)
                                                                           December 31
                                                                       -------------------
                                                                         2000      1999
                                                                       --------- ---------
                                                                      (In thousands, except
                                                                         per share data)

              Liabilities and Stockholders' Equity
Current Liabilities:
  Accounts payable and accrued expenses...............................   $ 5,014   $ 2,704
  Unearned revenue from corporate partner.............................     9,542     2,760
                                                                       --------- ---------
Total current liabilities.............................................    14,556     5,464

Loans payable ........................................................     1,912     1,912
Accrued compensation..................................................       -          48
                                                                       --------- ---------
Total liabilities.....................................................    16,468     7,424
Commitments and Contingencies(Note 8)

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 17,386 shares in 2000 and 14,800 shares in
  1999...............................................................        434      370
  Additional paid-in capital..........................................   169,440  114,519
  Accumulated deficit.................................................   (42,323) (26,852)
  Deferred compensation...............................................    (1,706)  (3,076)
  Accumulated other comprehensive income..............................       275     (251)
                                                                       --------- ---------
Total stockholders' equity............................................   126,120   84,710
                                                                       --------- ---------
                                                                        $142,588  $92,134
                                                                       ========= =========

           See accompanying notes to consolidated financial statements

                             NEUROGEN CORPORATION                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                          For the Years Ended December 31
                                                         ---------------------------------
                                                            2000        1999       1998
                                                         ----------- ---------- ----------

                                                       (In thousands, except per share data)
Operating revenues:
License fees............................................   $ 11,208    $   500     $   -
Research and development................................      9,205      9,709     11,081
                                                         -----------  ---------  ---------
Total operating revenues................................     20,413     10,209     11,081

Operating expenses:
 Research and development:
  Stock compensation....................................      4,637         77         96
  Other research and development........................     28,048     23,965     20,818
                                                         -----------  ---------  ---------
 Total research and development.........................     32,685     24,042     20,914

 General and administrative:
  Stock compensation ...................................      2,456         51         63
  Other general and administrative......................      5,717      4,372      3,857
                                                          ---------- ----------  ---------
 Total general and administrative.......................      8,173      4,423      3,920
                                                          ---------- ----------  ---------
Total operating expenses................................     40,858     28,465     24,834
                                                          ---------- ----------  ---------
Operating loss..........................................    (20,445)   (18,256)   (13,753)

Other income (expense):
Investment income.......................................      5,474      3,639      4,312
Interest expense........................................         -          (1)       (17)
                                                          ---------- ----------  ---------
Total other income, net.................................      5,474      3,638      4,295
                                                          ---------- ----------  ---------
Net loss before cumulative effect of change in
accounting principle ...................................    (14,971)   (14,618)    (9,458)
                                                          ---------- ----------  ---------
Cumulative effect on prior years of the application of
SAB 101 "Revenue Recognition in Financial Statements" ..       (500)      -           -
                                                          ---------- ----------  ---------
Net Loss ...............................................   $(15,471)  $(14,618)   $(9,458)
                                                          ========== ==========  =========
Basic and diluted loss per share:
Before cumulative effect of change in accounting
principle ..............................................   $  (0.91)  $  (1.00)   $ (0.66)
Change in accounting principle .........................      (0.03)       -          -
                                                          ---------- ----------  ---------
Basic and diluted loss per share .......................    $ (0.94)  $  (1.00)   $ (0.66)
                                                          ========== ==========  =========
Shares used in calculation of loss per share:
Basic and diluted.......................................     16,490     14,576     14,419
                                                          ========== ==========  =========

           See accompanying notes to consolidated financial statements

                              NEUROGEN CORPORATION                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                     For the Years Ended December 31, 2000, 1999 and 1998
                                                                        (in thousands)
                                                 --------------------------------------------------------------------------

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

                                                 ------ ------ ---------- ----------- ------------  ------------- --------

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)    -        (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
Stock issued in private placements, net of
offering expenses...............................  1,638     41     38,657        -          -              -        38,698
Deferred compensation...........................     -      -       5,523        -      1,370              -         6,893
Issuance of stock options.......................     -      -         200        -         -               -           200
Exercise of stock options.......................    899     22     10,010        -         -               -        10,032
Stock issued in 401(k) match ...................     13     -         436        -         -               -           436
Exercise of warrants ...........................     36      1         95        -         -               -            96
Comprehensive income:
  Net loss......................................     -      -          -    (15,471)       -               -       (15,471)
  Unrealized gain on marketable securities......     -      -          -         -         -              526          526
                                                 ------ ------ ---------- ----------- ------------  ------------- ---------
Balance at December 31, 2000.................... 17,386   $434   $169,440  $(42,323)  $(1,706)           $275     $126,120
                                                 ====== ====== ========== =========== ============  ============= =========

           See accompanying notes to consolidated financial statements

                              NEUROGEN CORPORATION                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                For the Years ended December 31
                                                                --------------------------------
                                                                   2000       1999       1998
                                                                ---------- ---------- ----------
                                                                         (In thousands)
Cash flows from operating activities:
Net loss.......................................................   $(15,471) $(14,618)   $(9,458)
Adjustments to reconcile net loss to net cash provided
     by (used in) operating activities:
Depreciation and amortization expense..........................      2,762     2,608      2,365
Stock compensation expense ....................................      7,093       129        159
Other noncash compensation ....................................        517       459        437
Loss on disposal of assets.....................................        141        33          6
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable and accrued expenses...      2,309      (155)    (1,557)
Increase in unearned revenue from corporate partner............      6,782     2,500         60
(Increase) decrease in receivables from corporate partners.....     (1,231)      369        536
(Increase) decrease in other assets, net.......................       (664)      331       (187)
                                                                ---------- ---------- ----------
Net cash provided by (used in)operating activities.............      2,238    (8,344)    (7,639)
                                                                ---------- ---------- ----------
Cash flows from investing activities:
Purchases of plant and equipment...............................     (7,899)   (3,753)    (1,974)
Purchases of marketable securities.............................    (56,230)  (35,629)   (66,242)
Maturities and sales of marketable securities..................     29,580    50,806     34,602
Proceeds from sale of assets...................................         31        -          34
                                                                ---------- ---------- ----------
Net cash (used in)provided by  investing activities............    (34,518)   11,424    (33,580)
                                                                ---------- ---------- ----------
Cash flows from financing activities:
Exercise of stock options and warrants ........................     10,080       603        566
Net proceeds from private placement of common stock ...........     38,698        -          -
Principal payments under mortgage payable......................       -          (73)      (205)
Increase in loans payable .....................................       -        1,912         -
                                                                ---------- ---------- ----------
Net cash provided by financing activities......................     48,778     2,442        361
                                                                ---------- ---------- ----------
Net increase (decrease)in cash and cash equivalents............     16,498     5,522    (40,858)
Cash and cash equivalents at beginning of year.................     31,588    26,066     66,924
                                                                ---------- ---------- ----------
Cash and cash equivalents at end of year.......................    $48,086   $31,588    $26,066
                                                                ========== ========== ==========

           See accompanying notes to consolidated financial statements

                              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, 2000 and 1999 were
approximately $47,121,000 and $31,308,000, 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, 2000 and 1999 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 other comprehensive  income.  Realized gains and losses
have  been  determined  by  the  specific  identification  method.  The  Company
recognized  gross realized gains of $84,000,  $15,000 and $52,000 in 2000,  1999
and 1998,  respectively.  Gross  realized  losses were  $288,000,  $108,000  and
$60,000 in 2000, 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, which are as follows:

                Equipment and furniture.........3 to 7 years
                Leasehold improvements..........Shorter of life of
                                                lease or 10 years
                Building and building/
                land improvements...............15 to 40 years

     REVENUE RECOGNITION--Revenue under research and development arrangements is
recognized  as  earned  under the terms of the  respective  agreements.  Product
research  funding is recognized as revenue,  generally on a quarterly  basis, as
research  effort is  performed.  License  and  technology  transfer  revenue  is
recognized  when  a  contractual   arrangement   exists,   fees  are  fixed  and
determinable,  delivery of the  technology  has occurred and  collectibility  is
reasonably  assured.  If customer  acceptance  is required,  revenue is deferred
until acceptance  occurs.  If there are on-going  services or obligations  after
delivery,  revenue  is  recognized  over the  related  term of the  service on a
percentage of completion  basis,  unless such obligation is maintenance which is
recognized on a straight line basis. For contracts with multiple elements, total
contract fees are allocated to the different  elements based on evidence of fair
value.  Deferred  revenue  arises from the  payments  received  for research and
development to be conducted in future periods or for licenses of Neurogen rights
or technology  where Neurogen has continuing  involvement.  Deferred  revenue is
generally expected to be recognized within the next twelve months.

     Prior to January 1, 2000,  one-time  non-refundable fees were recognized as
revenue on a  straight-line  basis over the  related  minimum  contract  period.
Beginning in 2000 such fees are deferred and allocated to the other  elements of
the  contract  based on  verifiable  objective  evidence  of fair value of those
elements.

     In December  1999,  the staff of the  Securities  and  Exchange  Commission
issued its Staff Accounting  Bulletin  ("SAB") No. 101,  REVENUE  RECOGNITION IN
FINANCIAL STATEMENTS. SAB No. 101, as amended by SAB No. 101A and 101B, provides
guidance  on the  measurement  and timing of revenue  recognition  in  financial
statements of public companies.  SAB No. 101 permits application of its guidance
to be treated as a change in accounting principle in accordance with APB Opinion
No. 20,  Accounting  Changes.  Accordingly the cumulative effect of applying SAB
No. 101 on the amount of  accumulated  deficit at January 1, 2000 is included as
an adjustment to net loss for the year ended December 31, 2000.

     The Company  adopted the  guidance of SAB No. 101 in the fourth  quarter of
2000,  retroactive  to January 1, 2000 and reflected a cumulative  effect of the
change in accounting principle on prior years of $500,000,  related to timing of
revenue on nonrefundable  up-front payments  previously  recognized on a license
and technology  transfer  agreement.  The full amount of the cumulative catch-up
has been recognized in 2000 under the Company's new revenue  recognition policy.
Previously reported financial  information for the years ended December 31, 1999
and 1998 has not been  restated to give the pro forma  effect of the adoption of
SAB No. 101 as the effect could not be reasonably determined.

     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--Statement  of Financial Accounting Standards No. 131,
Disclosures  about Segments of an Enterprise and Related  Information  (SFAS No.
131),  requires that an enterprise report financial and descriptive  information
about  each  of its  reportable  operating  segments.  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.

     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.

     RECENT  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 and SFAS No. 138, 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 instruments or hedging activities.  As a result, management
believes  adoption  of SFAS  No.  133 will not  have a  material  impact  on the
financial statements.

     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--Basic  EPS is calculated by dividing income or
loss  attributable to common  stockholders by the weighted average common shares
outstanding.  Diluted EPS is calculated  by adjusting  weighted  average  common
shares outstanding by assuming conversion of all potentially dilutive shares. In
periods  of net loss as  recorded,  no effect is given to  potentially  dilutive
securities, since the effect would be antidilutive.

     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.

     RECLASSIFICATIONS--Certain reclassifications have been made to the 1999 and
1998 financial statements in order to conform to the 2000 presentation.

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  $41,005,000
for research and development  funding of the Company's  anxiolytic and cognition
enhancement  projects and $500,000 for the  achievement of clinical  development
milestones.  Neurogen could also receive additional  milestone payments totaling
$12,000,000  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 2000,  1999 and  1998,  Neurogen  received  and  recognized  in  revenue
approximately  $4,680,000 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
$13,388,000 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 2000,  1999 and 1998,  the Company
received  research  funding of approximately  $1,560,000 which  approximates the
research costs incurred in such years under the 1994 Pfizer Agreement.

     In December  1996,  December  1998, and again in December 2000 Neurogen and
Pfizer extended and combined Neurogen's research efforts under the 1992 and 1994
Agreements  through  December 31, 2001.  Pursuant to the  extension  agreements,
Neurogen received approximately $6,240,000 in each of 2000, 1999 and 1998 (which
amount is included in the  above-described  cumulative  totals  received for the
1992 and 1994 agreements).  Neurogen also expects to receive research funding of
$2,880,000 in the year 2001.  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.  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,
2000,  Pfizer had provided  $14,000,000 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  thereby  pay
Neurogen an  additional  $3,120,000 to fund  Neurogen's  research for this fifth
year.  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 October 2000,  Neurogen and Pfizer concluded the research phase of their
NPY-based  collaboration according to schedule.  Therefore,  the annual research
funding  formerly  received  from Pfizer  came to its  scheduled  conclusion  on
October 31, 2000.  Should Pfizer in the future elect to continue the development
of any drug  candidates  subject to  collaboration,  Neurogen could also receive
development  and  regulatory  milestone  payments  and would be  entitled to the
royalty, profit-sharing and the manufacturing rights described above.

     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 $27,000,000 over a
three  year  period  for the  licensing  and  transfer  to Pfizer of  certain of
Neurogen's AIDD  (Accelerated  Intelligent Drug Discovery)  technologies for the
discovery  of new drugs,  along with the  installation  of an  AIDD(TM)  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,  2000,  the  company  had  received
$19,500,000  in license  fees  pursuant  to the Pfizer AIDD  agreement  of which
$11,208,000  has been  recognized.  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.

3.   INVESTMENTS

     The following tables summarize the company's investments (in thousands).

December 31, 2000
                                        Gross           Gross
                      Amortized       Unrealized      Unrealized      Fair Value
                        Cost            Gains           Loss
                     -----------      ----------      ----------     -----------
U.S. Government
notes................  $23,586           $126            $(42)         $23,670
Corporate notes
and bonds............   36,809            203             (12)          37,000
                     -----------      ----------      ----------     -----------
Total                  $60,395           $329            $(54)         $60,670
                     ===========      ==========      ==========     ===========

December 31, 1999
                                        Gross           Gross
                      Amortized       Unrealized      Unrealized      Fair Value
                        Cost            Gains           Loss
                      ----------      ----------      ----------     -----------
U.S. Government
notes................  $18,507           $ -            $(251)         $18,256
Corporate notes
and bonds............   15,185             -               -            15,185
                     -----------      ----------       ---------     -----------
Total                  $33,692           $ -            $(251)         $33,441
                     ===========      ==========      ==========     ===========

     The following table summarizes investment maturities at December 31, 2000 (in thousands).

                                Amortized Cost          Fair Value
                                --------------         -----------
Less than one year..............   $36,304               $36,445
Due in 1 to 4 years.............    24,091                24,225
                                --------------          ----------
                                   $60,395               $60,670
                                ==============         ===========

4.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts  payable and accrued  expenses  at December 31 are  summarized  as
follows (in thousands):
                            2000   1999
                           ------ ------
Accounts payable...........$3,822 $1,951
Accrued compensation....... 1,141    753
Other......................    51     -
                           ------ ------
                           $5,014 $2,704
                           ====== ======

5.   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 had an option to purchase the building
after  the  fifth  year of the  lease  which  it did on  January  11,  2001  for
$2,437,500,  thereby  terminating the lease. The improvements made to the leased
facility for laboratory and office space were completed in the fourth quarter of
1996 and were to be  amortized  over the life of the lease,  or ten years.  Rent
expense approximated $140,000 in 2000, 1999 and 1998.

     In October 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 loan 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, 2000,  CII had advanced  Neurogen  $1,912,280 for the
purchase of the  building in October  1999.  The  remainder  of the loan will be
advanced as construction progresses.  The renovation was substantially completed
in March 2001. The loan will be repayable in monthly installments over 10 years,
bearing  interest  at an annual  rate of 7.5%,  beginning  upon the  substantial
completion of renovation  construction and the closing of the construction loan.
As of December  31,  2000,  total  interest  payments  on the loan  approximated
$155,000  in 2000 and  $28,000  in 1999  and were  recorded  as  capital  on the
building construction.

6.   COMMON STOCK

     On June 30, 2000, the Company  entered into a private  placement  agreement
with  certain  institutional  investors,  pursuant to which the  Company  issued
1,638,000  shares of its common stock for net proceeds of $38,698,000.

7.   STOCK  OPTIONS,  WARRANTS AND  RESTRICTED STOCK

     The Company has various  stock  incentive  plans,  under which it can award
incentive and non-qualified stock options, stock appreciation rights, restricted
shares and performance units. Stock options are generally granted at fair market
value at the date of grant,  vest generally over five years and expire generally
ten years after a date of grant.  Certain  option  holders have varying  vesting
schedules from immediate vesting up to annual vesting over five years. Under all
plans,  there were 4,373,636 shares of common stock reserved for future issuance
(of which  3,705,588  are for  options  outstanding  and 668,048 are for options
available for future grant) as of December 31, 2000.

Options
-------

     The  following  table  presents the  combined  activity of its stock option
plans for the years ended December 31, as follows:

                                             2000               1999               1998
                                     ------------------- ------------------- -------------------
                                                Weighted            Weighted            Weighted
                                                 Average             Average             Average
                                                Exercise            Exercise            Exercise
                                      Options     Price   Options     Price   Options     Price
                                     ---------- -------- ---------- -------- ---------- --------
Outstanding at January 1............ 3,940,844   $14.91  3,680,880    $14.55 3,389,576    $14.11
Granted.............................   755,540    33.22    491,712     15.75   519,788     16.91
Exercised...........................  (901,377)   11.18   (147,492)     6.44  ( 97,645)     5.80
Canceled............................   (89,419)   17.09    (84,256)    18.69  (130,839)    18.95
                                     ---------- -------- ---------- -------- ---------- --------
Outstanding at December 31.......... 3,705,588   $19.50  3,940,844    $14.91 3,680,880    $14.56
                                     ========== ======== ========== ======== ========== ========
Options exercisable at December 31.. 2,086,033   $15.98  2,419,722    $13.60 2,006,784    $12.21

     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, 2000, the Company had recorded deferred compensation totaling
$2,327,000.  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,  2000  was  $1,683,000.  The  Company
recognized  stock  compensation  expense of $356,000,  $128,000 and $159,000 for
2000, 1999 and 1998, respectively, relating to these options.

     In June 2000, the Company  recorded  $57,000 of deferred  compensation  and
compensation  expense of $34,000 was  recognized for grants of options that were
issued  below  market  value.   At  December  31,  2000,   $23,000  of  deferred
compensation  was  remaining  for  these  options.   Additionally,  the  Company
recognized $200,000 of expense relating to option grants to consultants.

     The Company has adopted the  disclosure  only  provisions  of  Statement of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation"  ("FAS 123").  The Company  accounts 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, 2000:

                               Weighted
                                Average   Weighted             Weighted
                               Remaining   Average              Average
     Range of        Number   Contractual Exercise    Number   Exercise
 Exercise Prices  Outstanding Life (Yrs.)   Price  Exercisable   Price
----------------- ----------- ----------- -------- ----------- --------
Less than $9.99..     592,934         3.3   $6.56      592,934    $6.56
$10.00-$19.99...... 1,797,082         7.0   16.21      937,965    16.42
$20.00-$29.99....     696,232         5.9   25.12      538,044    25.02
$30.00-$38.75....     619,340         7.9   35.13       17,090    33.87
                  -----------                      -----------
                    3,705,588                        2,086,033
                  ===========                      ===========

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

     As of December 31, 1999,  137,625  shares of restricted  stock were held by
certain  employees.  The  December  31,  1998  grant  of this  restricted  stock
stipulated  that if the stock price  closed at or above  $45.00 per share within
four years from the date of grant the restriction would be removed and the stock
would fully vest to the employee with no  restriction.  If the  Company's  stock
price did not reach $45.00 the shares would be forfeited.  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 of $6,503,000 was recorded
in the first quarter of 2000.

Warrants
--------
     In 2000,  36,266  warrants to purchase common stock were exercised at $2.55
per share.  Such warrants were issued in 1991 to a prior lessor of furniture and
equipment. At December 31, 2000, there were no outstanding warrants.

     As of December 31, 2000  compensation  expense has not been  recognized for
the stock option plans, except as noted above. Had compensation  expense for the
Company's  stock  option  plans been  determined  based on the fair value at the
grant date for awards in 2000,  1999 and 1998  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, except per share data):

                                                 2000       1999       1998
                                               --------  ---------   --------
Net loss as reported......................... $(15,471)  $(14,618)   $(9,458)
Net loss pro forma...........................  (21,730)   (20,384)   (15,971)
Diluted loss per share as reported...........     (.94)     (1.00)      (.66)
Diluted loss per share-pro forma.............    (1.32)     (1.40)     (1.11)

     The estimated fair value at the date of grant for options  granted in 2000,
1999  and  1998  was  $21.87,   $9.09  and  $10.15,   respectively,   using  the
Black-Scholes model with the following weighted average assumptions:

                                2000     1999    1998
                              -------  ------  -------
Expected life...............       5       5        5
Interest rate...............     5.2%    6.2%     4.6%
Volatility..................      77%     68%      66%

     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.

8.   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):

                                                                 2000      1999      1998
                                                               --------- --------- ---------
Expected tax benefit at 34%................................... $(5,260)  $(4,919)  $(3,216)
State tax benefit net of federal benefit......................    (766)     (762)     (593)
R & D credit..................................................  (1,613)   (1,421)       -
Expiring loss carry forward...................................     -         346       148
State tax rate change ........................................     -         240        -
Other.........................................................      15         2        10
Change in valuation allowance.................................   7,624     6,514     3,651
                                                               --------- --------- ---------
                                                                 $  -      $  -      $  -
                                                               ========= ========= =========

     The tax  effect of  temporary  differences  that  give rise to  significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2000 and 1999 are presented below (in thousands):

                                                    2000       1999
                                                  ---------  ---------
DEFERRED TAX ASSETS:
Federal tax operating loss carryforwards.......   $21,285    $12,618
State tax operating loss carryforwards.........     2,531      1,270
Research & development credit carryforwards....     5,102      3,503
Alternative minimum tax credit carryforwards...       362        362
Deferred revenue...............................     3,615        974
Other .........................................       459        317
                                                  ---------  ---------
Gross deferred asset...........................    33,354     19,044
Valuation allowance............................   (32,468)   (18,165)
                                                  ---------  ---------
Net deferred asset.............................       886        879
DEFERRED TAX LIABILITY:
Depreciation...................................      (886)      (879)
                                                  ---------  ---------
Net asset/liability............................     $   -     $   -
                                                  =========  =========

     The  valuation  allowance  increased by  $14,310,000  during 2000.  Of this
change,  $6,679,000 is attributable to certain stock option  transactions and is
charged  directly to equity.  The remaining amount of $7,624,000 is attributable
to the current year tax  provision  and is 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, 2000.

     Any  subsequently   recognized  tax  benefits  relating  to  the  valuation
allowance  for  deferred  tax assets as of  December  31, 2000 and 1999 would be
allocated as follows (in thousands):

                               2000        1999
                             -------     -------
Income tax provision........ $21,123     $13,499
Additional paid-in-capital..  11,345       4,666
                             -------     -------
                             $32,468     $18,165
                             =======     =======

     As of December  31, 2000,  the Company had  approximately  $62,603,000  and
$3,672,000  of net operating  loss  carryforwards  and research and  development
credits, respectively, available for federal income tax purposes which expire in
the years 2004 through 2020. The Company also had approximately  $51,137,000 and
$2,166,000 of Connecticut  state tax operating loss  carryforwards  and research
and development credits,  respectively,  as of December 31, 2000 which expire in
the years 2001 through 2020. 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.

9.   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.

10.   BENEFIT PLANS AND RELATED PARTIES

     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. The Company
currently  matches 100% of employee  contributions  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
$600,000 in 2000, $531,000 in 1999 and $432,000 in 1998.

     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 defined  service  periods for each  employee
ranging from five to seven years.  The amount of loans  outstanding  at December
31, 2000 was $361,000, of which $142,000 was short-term.

11.   SUPPLEMENTAL CASH FLOW INFORMATION

     The  Company  made  interest  payments  of  approximately $155,000 in 2000,
$30,000 in 1999, and $17,000 in 1998. The Company made no income tax payments in
2000, 1999 and 1998.

12.   QUARTERLY FINANCIAL DATA(UNAUDITED)
      (in thousands except per share data)

                                First           Second          Third           Fourth
2000*                          Quarter          Quarter        Quarter          Quarter
-----                          -------          -------        -------          -------
Total revenue..................  2,591            4,620          7,731            5,471
Total expenses................. 14,438            8,241          8,349            9,830
Other income, net..............    928            1,079          1,796            1,671
Cumulative effect of change
 in accounting principle.......   (500)             -              -                -
Net loss.......................(11,419)          (2,542)         1,178           (2,688)
Basic earnings per share.......  (0.75)           (0.16)          0.07            (0.15)
Diluted earnings per share.....  (0.75)           (0.16)          0.06            (0.15)

1999
-----
Total revenue..................  2,636            2,343          2,630            2,600
Total expenses.................  6,955            6,944          7,114            7,452
Other income, net..............    913              886            819            1.020
Net loss....................... (3,406)          (3,715)        (3,665)          (3,832)
Basic and diluted earnings
  per share....................  (0.23)           (0.26)         (0.25)           (0.26)

*  The  2000  quarterly  financial  data, as reported in the Company's Quarterly
Reports on Form 10-Q has been adjusted to reflect the adoption of SAB No. 101 in
the fourth quarter of 2000, retroactive to January 1, 2000, as discussed in Note
1.

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of Neurogen Corporation

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated 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, 2000 and December 31, 1999 and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2000 in conformity with  accounting  principles
generally accepted in the United States of America.  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  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted in the United States of America,  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 audits provide a reasonable basis for our opinion.

As discussed in Note 1 to  the  financial  statements,  the Company  changed its
method of accounting for revenue recognition in 2000.

PRICEWATERHOUSECOOPERS LLP

Hartford, Connecticut
February 12, 2001

                                   SIGNATURES

     Pursuant to the requirements of Rule 12b-15 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: June 21, 2001

                                                                    EXHIBIT 23.1

                         Consent of Independent Accountants

     We hereby  consent to the  incorporation  by reference in the  Registration
Statements on Form S-8 (Nos. 33-43441,  33-43541,  33-81266 and 33-46324) of the
Neurogen  Stock  Option  Plan,  the  1993  Omnibus   Incentive  Plan,  the  1993
Non-Employee Directors Plan of Neurogen Corporation and the Neurogen Corporation
2000 Non-Employee  Directors Plan of our report dated February 12, 2001 relating
to the  consolidated  financial  statements,  which  appears in the 2000  Annual
Report to Shareholders, which is incorporated by reference in this Form 10-K/A.

PRICEWATERHOUSECOOPERS LLP

Hartford, Connecticut
June 18, 2001
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