SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

         Mark One:

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 2001

                                       OR

           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                         Commission File Number 0-27324


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


                    Delaware                             22-2859704
          (State or other jurisdiction      (I.R.S. Employer Identification No.)
       of incorporation or organization)

                215 College Road                                      07652
                  Paramus, NJ                                      (Zip Code)
    (Address of principal executive offices)

                                 (201) 261-1331
              (Registrant's telephone number, including area code)


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


                                    Yes X No


     As of November 1, 2001,  there were 10,944,122  shares of the  registrant's
Common Stock outstanding.


<PAGE>



                       SYNAPTIC PHARMACEUTICAL CORPORATION

          INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
                               SEPTEMBER 30, 2001



                          PART I. FINANCIAL INFORMATION

                                                                           Page
                                                                           ----
Item  1.   Financial Statements (unaudited)..............................    1

           Balance Sheets at September 30, 2001 and December 31, 2000....    1

           Statements of Operations and Comprehensive Income (Loss)
            for the three months ended September 30, 2001 and 2000,
            and for the nine months ended September 30, 2001 and 2000....    2

           Statements of Cash Flows for the nine months ended
           September 30, 2001 and 2000...................................    3

           Notes to Financial Statements.................................    4

Item  2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations................    6

Item  3.   Quantitative and Qualitative Disclosures About Market Risk....   12



                           PART II. OTHER INFORMATION


Item  1.   Legal Proceedings.............................................   13

Item  2.   Changes in Securities.........................................   14

Item  4.   Submission of Matters to a Vote of Security Holders...........   15

Item  6.   Exhibits and Reports on Form 8-K..............................   16



           Signatures....................................................   17





                                       (i)

<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                       SYNAPTIC PHARMACEUTICAL CORPORATION
                                 BALANCE SHEETS
             (in thousands, except share and per share information)


                                                      September 30, December 31,
Assets                                                       2001         2000
--------------------------------------------------------------------------------
                                                         (Unaudited)   (Audited)
Current assets:
Cash and cash equivalents                                   $49,281     $ 2,037
Marketable securities--current maturities                     7,640      20,627
Other current assets                                            714         814
--------------------------------------------------------------------------------
Total current assets                                         57,635      23,478

Property and equipment, net                                   4,495       4,781

Marketable securities                                         1,557       8,938

Patent and patent application costs, net                          -         227

Other assets                                                    233         147
--------------------------------------------------------------------------------
                                                           $ 63,920    $ 37,571
================================================================================


Liabilities and Stockholders' Equity
--------------------------------------------------------------------------------
Current liabilities:
Accounts payable                                            $   974     $ 1,128
Accrued liabilities                                           4,213         648
Accrued compensation                                            261         348
Deferred revenue                                                398         354
--------------------------------------------------------------------------------
Total current liabilities                                     5,846       2,478

Deferred rent obligation                                        775         564

Series B senior redeemable convertible preferred stock;
authorized, issued and outstanding-11,056 shares in 2001,
liquidation preference-$11,056,000                            6,039           -

Series C senior redeemable convertible preferred stock;
authorized, issued and outstanding-29,944 shares in 2001,
liquidation preference-$29,944,000                           27,570           -

Stockholders' equity:
Series A preferred stock, $.01 par value;
authorized--1,000,000 shares                                      -           -
Common Stock, $.01 par value; authorized-25,000,000 shares
issued and outstanding--10,944,022 shares in 2001 and
10,935,772 shares in 2000                                      109          109
Additional paid-in capital                                 103,566       99,392
Accumulated other comprehensive income--net unrealized
 gains (losses) on securities                                  151         (183)
Accumulated deficit                                        (80,136 )    (64,789)
--------------------------------------------------------------------------------
Total stockholders' equity                                  23,690       34,529
--------------------------------------------------------------------------------
                                                          $ 63,920     $ 37,571
================================================================================

                         See notes to financial statements.

                                       1

<PAGE>


                       SYNAPTIC PHARMACEUTICAL CORPORATION
            STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

             (in thousands, except share and per share information)
                                   (Unaudited)



                               For the three months       For the nine months
                                ended September 30,        ended September 30,
                                 2001         2000         2001         2000
--------------------------------------------------------------------------------
Revenues:
 Contract revenue              $   290      $   319      $   867      $   804
 License revenue                    84        2,584          250        2,667
--------------------------------------------------------------------------------
  Total revenues                   374        2,903        1,117        3,471

Expenses:
 Research and development        4,677        3,866       12,777       10,545
 General and administrative      1,605        1,440        5,152        4,278
--------------------------------------------------------------------------------
  Total expenses                 6,282        5,306       17,929       14,823
--------------------------------------------------------------------------------
Loss from operations            (5,908)      (2,403)     (16,812)     (11,352)

Other income, net:
 Interest income                   315          489        1,093        1,623
 Other                             118          (84)         372          (67)
--------------------------------------------------------------------------------
  Other income, net                433          405        1,465        1,556
--------------------------------------------------------------------------------
Net loss                        (5,475)      (1,998)     (15,347)      (9,796)

Beneficial conversion feature
 and accretion of redemption
 value of mandatorily redeemable
 convertible preferred stock    (4,316)           -       (4,316)           -
--------------------------------------------------------------------------------
Net loss applicable to
common stockholders            $(9,791)     $(1,998)    $(19,663)     $(9,796)
================================================================================

Comprehensive loss:

Net loss                       $(5,475)     $(1,998)    $(15,347)     $(9,796)

Unrealized gains
 arising during period              75          310          334          380
--------------------------------------------------------------------------------
Comprehensive loss             $(5,400)     $(1,688)    $(15,013)     $(9,416)
================================================================================

Basic and diluted net loss
 per share applicable to
 common stockholders            $(0.89)      $(0.18)      $(1.80)      $(0.90)
================================================================================
Shares used in computation
 of net loss per share
 applicable to
 common stockholders        10,942,755   10,848,045   10,939,822   10,825,552
================================================================================





                       See notes to financial statements.

                                        2

<PAGE>


                       SYNAPTIC PHARMACEUTICAL CORPORATION
                            STATEMENTS OF CASH FLOWS

                                 (in thousands)
                                   (Unaudited)


For the nine months ended September 30, 2001 and 2000

                                                       2001            2000
--------------------------------------------------------------------------------
Operating activities:
Net loss                                           $ (15,347)       $ (9,796)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and patent amortization                   1,037           1,143
Amortization of premiums (discounts) on
securities                                               262             351
Deferred rent, net                                       125             242
Loss on sale of fixed asset                                -             100
Changes in operating assets and liabilties:
Decrease (increase) in other current assets              100            (191)
Increase (decrease) in accounts payable,
accrued liabilities and accrued compensation           3,324            (125)
Increase in revenue receivable under
license agreement                                          -          (2,500)
Increase in deferred revenue                              44             719
--------------------------------------------------------------------------------
Net cash (used in) operating activities              (10,455)        (10,057)

Investing activities:
Proceeds from sale or maturity of investments         22,440           5,987
Purchases of investments                              (2,000)              -
Purchases of property and equipment                     (540)           (826)
Proceeds from sale of equipment                           16              70
--------------------------------------------------------------------------------
Net cash provided by investing activities             19,916           5,231

Financing activities:
Issuance of common stock                                  38             520
Issuance of preferred stock                           37,745               -
--------------------------------------------------------------------------------
Net cash provided by financing activities             37,783             520
--------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents  47,244          (4,306)
Cash and cash equivalents at beginning of period       2,037           6,236
--------------------------------------------------------------------------------
Cash and cash equivalents at end of period           $49,281         $ 1,930
================================================================================




                        See notes to financial statement.

                                        3

<PAGE>




                       SYNAPTIC PHARMACEUTICAL CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

                               September 30, 2001

Note 1 -- Basis of Presentation

     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance  with  the  instructions  to  Form  10-Q  and  may  not  include  all
information  and  footnotes  required  for a  presentation  in  accordance  with
generally accepted  accounting  principles.  In the opinion of the management of
Synaptic Pharmaceutical Corporation (the "company"),  these financial statements
include all normal and recurring  adjustments  necessary for a fair presentation
of the financial  position and the results of  operations  and cash flows of the
company  for  the  interim  periods  presented.   For  more  complete  financial
information,  these financial  statements should be read in conjunction with the
audited  financial  statements  for the fiscal year ended December 31, 2000, and
notes  thereto  included in the company's  2000 Annual Report on Form 10-K.  The
results of operations for the fiscal  quarter ended  September 30, 2001, are not
necessarily  indicative of the results of operations to be expected for the full
year.

Note 2 - Senior Redeemable Convertible Preferred Stock

     On August 3, 2001, the company sold to investors (the "purchasers"),  9,438
shares of Series B senior redeemable  Convertible Preferred Stock (the "Series B
Preferred Stock") in a private placement for $9,438,000.  On September 26, 2001,
the company sold 1,618 shares of Series B Preferred  Stock and 29,944  shares of
Series C senior redeemable  Convertible Preferred Stock (the "Series C Preferred
Stock" and together with the Series B Preferred  Stock,  the "Preferred  Stock")
for $31,562,000. Net proceeds, after giving effect to underwriting discounts and
estimated offering expenses, were approximately $37,745,000. The Preferred Stock
may be converted into 7,564,584 shares of common stock.

     The terms of the Series B Preferred  Stock and the Series C Preferred Stock
are  identical,  except  that  the  Series  B  Preferred  Stock  has an  initial
conversion  price of  $4.3358  and the Series C  Preferred  Stock has an initial
conversion price of $5.9713. The purchasers also acquired certain  anti-dilution
and registration rights.

     Holders of  Preferred  Stock are  entitled to receive  dividends  on a pari
passu  basis,  if and when  dividends  are declared on the common  stock,  in an
amount equal to the dividends that would have been payable had their shares been
converted to common stock immediately prior to the record date for the dividend.

     Upon any  liquidation  of the company,  each holder of  Preferred  Stock is
entitled to receive $1,000, plus declared but unpaid dividends, if any, for each
share held,  prior to the holders of any common stock or junior  preferred stock
receiving any assets of the company available for distribution.

     Holders of Preferred  Stock,  voting together as a separate class,  will be
entitled to elect two members of the board of  directors,  as long as 60% of the
Preferred  Stock  issued  and  outstanding  as of  September  26,  2001  remains
outstanding.

     The holders of the  Preferred  Stock are entitled to vote together with the
holders of the common  stock on all matters  presented to our  stockholders  for
consideration,  except  that as long as the holders of the  Preferred  Stock are
entitled to vote as a separate class to elect members of the board of directors,
they will not be entitled  to vote for the  remaining  directors.  Each share of
Preferred  Stock has a number of votes  equal to the  number of shares of common
stock into which it may then be converted.

     Each share of Preferred stock may be converted at any time at the option of
the  holder  thereof  into a number  of shares of  common  stock  determined  by
dividing $1,000 by the conversion price, as

                                       4

<PAGE>



appropriately  adjusted for any stock splits,  stock dividends,  combinations or
similar events.  All shares of Preferred Stock shall  automatically be converted
into  common  stock upon the vote to so convert of a majority  of the  Preferred
Stock then outstanding, voting together as a separate class.

     The company may redeem all  outstanding  shares of  Preferred  Stock at any
time after  August 3, 2003,  provided  that the company can redeem  these shares
prior to August 3,  2009,  only if the market  price of the  common  stock is at
least 200% of the conversion price then in effect for any 20 consecutive trading
days ending  within 10 trading  days of the  redemption  date.  The company must
redeem all  outstanding  shares of  Preferred  Stock in two annual  installments
beginning on August 3, 2009. On any  redemption,  the  redemption  price will be
$1,000  per  share,  as  appropriately  adjusted  for any  stock  splits,  stock
dividends, combinations or similar events, plus declared but unpaid dividends.

     The  company  recorded  an  adjustment  to net loss  applicable  to  common
stockholders  of  $4,226,000  relating  to  the  beneficial  conversion  feature
inherent  in the  issuances  of the Series B  Preferred  Stock.  This amount was
determined based upon the excess of the fair value of the Company's common stock
into which the Series B Preferred  Stock was  immediately  convertible  less the
initial conversion price of $4.3358 per share in accordance with Emerging Issues
Task Force No. 98-5,  "Accounting  for  Convertible  Securities  with Beneficial
Conversion Features or Contingently  Adjustable  Conversion Ratios." The company
also  recorded an adjustment to net loss  applicable to common  stockholders  of
approximately $90,000 representing the accretion of the Series B Preferred Stock
and Series C Preferred Stock to their respective redemption values.






























                                       5

<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
           of Operations

Overview

     Synaptic  Pharmaceutical  Corporation (the "company,"  "Synaptic," "we," or
"us")  is  a  drug  discovery  company  utilizing  G  protein-coupled  receptors
("GPCRs") as targets for novel  therapeutics.  GPCRs are an  important  class of
drug targets that exist on the surface  membrane of all cells and are associated
with a wide  range of  therapeutic  categories.  We use our large  portfolio  of
patented  GPCR  targets as a basis for the  creation of improved  drugs that act
through these  targets.  We, and our  licensees,  are evaluating the function of
receptor targets in the body to identify specific  physiological  disorders with
which they may be associated.  We are using this information to design compounds
that act at these  GPCRs and to  determine  the  efficacy of such  compounds  in
clinical trials.

     We currently  collaborate  with Grunenthal GmbH  ("Grunenthal")  and Kissei
Pharmaceutical  Co.,  Ltd.  ("Kissei").  In  connection  with our  collaborative
arrangement with Grunenthal,  we have licensed some of our technology and patent
rights to them.  We have also  granted  licenses to some of our  technology  and
patent rights to other pharmaceutical companies.

     Since our inception,  we have financed our operations primarily through the
sale  of  our  stock,   through  contract  and  license  revenue  under  license
agreements,  and through  interest  income and capital gains  resulting from the
investment  of the  proceeds of our  financing  activities  pending use of these
funds for operational activities. We have also received funds through government
grants under the Small  Business  Innovative  Research  ("SBIR")  program of the
National  Institutes  of Health and through the sale of our New Jersey state tax
net operating loss ("NOL") carryforwards.

     To date, our  expenditures  have been for research and development  related
expenses, general and administrative related expenses, fixed asset purchases and
various patent  related  expenditures  incurred in protecting our  technologies.
Historically,  we have not been profitable,  and at September 30, 2001 we had an
accumulated  deficit of  $80,136,000.  We  incurred  net  losses of  $6,493,000,
$15,121,000  and  $13,859,000  for the fiscal  years ended 1998,  1999 and 2000,
respectively.  We expect to continue to incur  operating  losses for a number of
years and may not become profitable, unless and until we receive royalty revenue
or  revenue  from  sales of  drugs  that  may be  developed  with the use of our
technology or patent rights.

Revenue

     We may  generate  revenue  from  license  grants,  royalties,  research and
development   contracts   or  sales  of  drugs.   License   revenue   represents
non-refundable  payments  for a license to one or more of our  patents  and/or a
license to our  technology.  Payments for licenses  are  recognized  as they are
received  or,  if  earlier,  when  they  become  guaranteed,  provided  they are
independent of any continuing research activity.  Otherwise, they are recognized
pro-rata  during the term of the related  research  agreement in accordance with
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements."

     Under each of our license agreements (other than the Grunenthal agreement),
we are entitled to receive  royalty  payments based upon the sales of drugs that
may be  developed  using the  technology  or the  patent  rights  that have been
licensed.  Under the Grunenthal  agreement,  we have  development  and marketing
rights in certain  geographical areas with respect to any drugs that are jointly
identified as part of the  collaboration  with Grunenthal.  Accordingly,  we may
receive revenue from sales of drugs in our designated  geographical  areas if we
market them independently,  or we may receive royalty payments if we license our
marketing rights to a third party. To date, we have not received either

                                       6

<PAGE>

royalty  revenue  or  revenue  from the sales of drugs  and we do not  expect to
receive such revenues for a number of years, if at all.

     Contract revenue includes research funding to support a specified number of
our  scientists  and payments  upon the  achievement  of specified  research and
development milestones.  Research funding revenue is recognized ratably over the
period of the collaboration to which it relates and is based upon  predetermined
funding  requirements.  Research and  development  milestone  payment revenue is
recognized when the related research or development milestone is achieved.

Research and Development

     The company performs research for itself and for its current collaborators,
Kissei and  Grunenthal.  In addition to this  research,  the company  designates
certain projects for preclinical and clinical development.  Until such time as a
lead compound is chosen for development, all costs are considered to be research
expense.   Costs   incurred   during  the  research  phase  are  not  separately
identifiable by project. At this preliminary or investigational  stage, research
is  performed  within  a  broad  family  of  receptors  with  the  objective  of
identifying   lead  compounds. Once  a  lead  compound  enters  the  preclinical
development stage,  costs are accumulated for each specific project.  Currently,
the only  project for which a lead  compound  has been  chosen is the  company's
Depression  Program.  The lead compound in this program was selected  during the
second quarter of 2000. Costs incurred on the project for the three months, nine
months and  inception-to-date  periods  ended  September  30, 2001  approximated
$600,000, $1,500,000 and $1,700,000,  respectively. Total research costs for the
three and nine-month periods ended September 30, 2001 amounted to $4,677,000 and
$12,777,000, respectively.

     In general,  from the time a lead  compound is chosen  until that  compound
reaches the market,  many years may elapse.  During this time, the compound must
undergo clinical trials that include Phase I, Phase II and Phase III trials, the
results  of which are  subject to review and  approval  by the U.S.  Food & Drug
Administration. Successful completion of each trial carries its own set of risks
and may cost many millions of dollars. At this stage of preclinical  development
of the depression program, completion costs and dates cannot be estimated.

Net Loss Applicable to Common Stockholders

     During  the third  quarter of 2001,  the  company  sold  shares of Series B
senior redeemable  Convertible  Preferred Stock (the "Series B Preferred Stock")
and  Series C senior  redeemable  Convertible  Preferred  Stock  (the  "Series C
Preferred  Stock" and  together  with the  Series B  Preferred,  the  "Preferred
Stock") in a private equity  placement.  In connection with these issuances,  we
recorded  an  adjustment  to net  loss  applicable  to  common  stockholders  of
approximately  $4,226,000 relating to the beneficial conversion feature inherent
in the  issuances of the Series B Preferred  Stock.  This amount was  determined
based upon the excess of the fair value of the company's common stock into which
the Series B Preferred was immediately  convertible less the initial  conversion
price of $4.3358 per share in  accordance  with  Emerging  Issues Task Force No.
98-5 "Accounting for Convertible  Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios." We also recorded an adjustment to
net loss applicable to common stockholders of approximately $90,000 representing
the  accretion of the Series B Preferred  Stock and Series C Preferred  Stock to
their respective redemption values.




                                       7

<PAGE>

Results of Operations

Comparison of the Three Months Ended September 30, 2001 and 2000

     Revenues.  We recognized  revenue of $374,000 and  $2,903,000 for the three
months ended September 30, 2001 and 2000, respectively.  The decrease in revenue
of $2,529,000  resulted  primarily from a decrease in license revenue  resulting
from the grant of a  non-exclusive  license  to certain  of our  technology  and
patent rights in the third quarter of 2000.

     Research and  Development  Expenses.  We incurred  research and development
expenses of $4,677,000,  and $3,866,000 for the three months ended September 30,
2001 and 2000, respectively.  The increase of $811,000, or 21%, was attributable
primarily to increases in preclinical  related testing costs of $557,000 related
to our Depression Program,  $352,000 in research costs associated with advancing
additional projects to the stage at which a lead compound can be chosen,  offset
by a reduction in supply costs of $190,000.

     General and Administrative Expenses. We incurred general and administrative
expenses of $1,605,000 and  $1,440,000 for the three months ended  September 30,
2001 and 2000, respectively.  The increase of $165,000, or 11%, was attributable
primarily  to an  increase  of  $74,000  in legal  expenses  related to a patent
infringement  lawsuit,  $48,000 in other patent related expenditures and $45,000
in rent related expenses.

     Other  Income,  Net. We recorded  other income of $433,000 and $405,000 for
the three months ended September 30, 2001 and 2000,  respectively.  The increase
of $28,000 was primarily due to an increase in rental income from our sublessees
partially offset by lower  weighted-average cash, cash equivalent and marketable
securities balances during 2001.

     Net  loss  applicable  to  common  stockholders.  We  incurred  a net  loss
applicable  to  common   stockholders  of  $9,791,000  ($0.89  per  share),  and
$1,998,000  ($0.18 per share) for the three months ended  September 30, 2001 and
2000,  respectively.  The increase of $0.71  resulted  primarily  from the items
described above in the sections  entitled  "Results of Operations" and "Net Loss
Applicable to Common Stockholders."

Comparison of the Nine Months Ended September 30, 2001 and 2000

     Revenues.  We recognized  revenue of $1,117,000 and $3,471,000 for the nine
months ended September 30, 2001 and 2000, respectively.  The decrease in revenue
of $2,354,000  resulted  primarily from a decrease in license revenue  resulting
from the grant of a  non-exclusive  license  to certain  of our  technology  and
patent rights in the third quarter of 2000.

     Research and  Development  Expenses.  We incurred  research and development
expenses of $12,777,000, and $10,545,000 for the nine months ended September 30,
2001  and  2000,  respectively.   The  increase  of  $2,232,000,   or  21%,  was
attributable  primarily to increases in  preclinical  related  testing  costs of
$1,427,000  related  to our  Depression  Program,  $947,000  in  research  costs
associated  with  advancing  additional  projects  to the  stage at which a lead
compound can be chosen, offset by a reduction in supply costs of $193,000.

     General and Administrative Expenses. We incurred general and administrative
expenses of $5,152,000 and  $4,278,000  for the nine months ended  September 30,
2001 and 2000, respectively.  The increase of $874,000, or 20%, was attributable
primarily  to  $688,000  in legal  expenses  related  to a  patent  infringement
lawsuit,  $70,000 in other  patent  related  expenditures  and an  increase of $
104,000 in rent related expenses.

                                       8

<PAGE>

     Other Income,  Net. We recorded  other income of $1,465,000  and $1,556,000
for the nine  months  ended  September  30,  2001 and  2000,  respectively.  The
decrease of $91,000 was  primarily  due to lower  weighted  average  cash,  cash
equivalent and  marketable  securities  balances  during 2001 as a result of the
utilization  of  these  resources  to fund  operations  partially  offset  by an
increase in rental income from our sublessees.

     Net  loss  applicable  to  common  stockholders.  We  incurred  a net  loss
applicable  to  common  stockholders  of  $19,663,000  ($1.80  per  share),  and
$9,796,000  ($0.90 per share) for the nine months ended  September  30, 2001 and
2000,  respectively.  The increase of $0.90  resulted  primarily  from the items
described above in the sections  entitled  "Results of Operations" and "Net Loss
Applicable to Common Stockholders."

Operating Trends

     Our revenues may vary from period to period depending on numerous  factors,
including the timing of revenue earned under license agreements and revenue that
may be earned under future collaborative and/or license agreements.  During 2001
we recognized  revenue under our research and  licensing  agreement  with Kissei
Pharmaceutical Co., Ltd. and expect to recognize  additional revenues under this
agreement  during  2002.  Under  the  terms of some of our  license  agreements,
revenues may be recognized if specified milestones are achieved.  We continue to
assess the opportunity for obtaining  additional funding under new collaborative
and/or license  agreements.  During the third quarter 2001, we sold to investors
$41  million  in  preferred  stock.   Net  proceeds,   after  giving  effect  to
underwriting  discounts  and estimated  offering  expenses,  were  approximately
$37,745,000.  We continue to monitor our spending  level in order to ensure that
we have enough cash to last at least through the year 2003.

     Since  late  2000,  we  have  been  pursuing  a new  business  strategy  of
increasing our internal drug development efforts.  This new strategy requires us
to hire  additional  employees  with  drug  development  expertise  and to incur
additional  preclinical  expenses as well as expenses  associated  with clinical
trials.

     Legal  expenses are expected to continue to be a  significant  expense as a
result of a suit filed by the company.  See "Legal Proceedings" in PART II, Item
1, hereof.

     Other income, net is expected to increase over the remainder of 2001 and in
2002 as funds  received  from the sale of  preferred  stock are  invested.  This
increase will be supplemented by rental income that we expect to recognize under
our existing sublease agreements.

     We are pursuing  further sales of our state tax NOL  carryforwards  and our
state  research  and  development  credits  under  the  State  of  New  Jersey's
Technology  Business  Tax  Certificate  Transfer  Program  (the  "Program").  No
assurance can be given,  however, as to the amount of NOL carryforwards that may
be sold under the  Program in any one year.  External  factors  that may have an
effect  on  future  NOL  sales  include  limitations  imposed  by State  law and
availability of buyers and related demand.

     Property and equipment spending may vary from period to period depending on
numerous factors, including the level of drug development efforts, the number of
collaborations  in which we are involved at any given time, and  replacement due
to normal  wear and  obsolescence.  Equipment  spending  in 2001 is  expected to
decline from that of 2000.

     At September 30, 2001, we held marketable securities with an estimated fair
value of $9,197,000.  Our primary interest rate exposure results from changes in
short-term interest rates. We do not purchase financial  instruments for trading
or speculative purposes. All of the marketable

                                       9

<PAGE>

securities  we  hold  are  classified  as  available-for-sale   securities.  The
following table provides information about marketable securities that we held at
September 30, 2001:

  Principal Amount and Weighted Average Stated Rate             Estimated
                  by Expected Maturity                          Fair Value
-----------------------------------------------------         ------------
(000's)        2001      2002     2003       Total               (000's)
-----------------------------------------------------         ------------

Principal     $5,000    $2,500   $1,500     $9,000               $9,197

Weighted
Average
Stated Rates   9.05%     6.50%    6.20%     7.87%                   --
-----------------------------------------------------         ------------

     The  stated  rates  of  interest  expressed  in the  above  table  may  not
approximate the actual yield of the securities  which we currently hold since we
have purchased some of these securities at other than face value.  Additionally,
some of the securities represented in the above table may be called or redeemed,
at the option of the issuer,  prior to their  expected due dates.  If such early
redemptions  occur,  we may reinvest the proceeds  that we realize in marketable
securities  with stated rates of interest or yields that are lower than those of
current  holdings,  affecting  both  future  cash  interest  streams  and future
earnings.

     In addition to investments in marketable  securities,  we place some of our
cash in money  market funds in order to keep cash  available to fund  operations
and to hold cash pending investments in marketable  securities.  Fluctuations in
short term interest rates will affect the yield on monies invested in such money
market  funds.  Such  fluctuations  can have an impact on future  cash  interest
streams  and  future  earnings,  but the  impact  of such  fluctuations  are not
expected to be material.

     We do not believe that  inflation has had a material  impact on our results
of operations.

Liquidity and Capital Resources

     At September 30, 2001 and December 31, 2000,  cash,  cash  equivalents  and
marketable securities aggregated $58,478,000 and $31,602,000, respectively. This
increase was primarily the result of the sale of $41 million of preferred  stock
sold  to  investors  in the  third  quarter  of  2001  partially  offset  by the
utilization of these resources to fund our operations.

     To date, we have met our cash  requirements  through the sale of our stock,
through  contract  and  license  revenue,  through  interest  income  and  gains
resulting  from our  investments,  through SBIR grants and through the sale of a
portion of our state tax NOL carryforwards.

     At September 30, 2001, we had  $58,478,000 in cash,  cash  equivalents  and
marketable securities.  We intend to utilize these funds primarily for research,
preclinical and clinical development costs, for patent related expenditures, for
general corporate purposes, for leasehold improvements to our facilities and for
the purchase  property and equipment.  We expect to continue to incur  operating
losses  for a number of years.  We  believe  that  cash,  cash  equivalents  and
marketable  securities  on hand,  and cash  that we expect  to  receive  through
existing  license  arrangements  and interest  payments on investments,  will be
sufficient  to fund  operations,  as well as to  support  our  share of  certain
development costs under the Grunenthal  Agreement,  if any, at least through the
end of the year 2003.

     As of  December  31,  2000,  we  had  NOL  carryforwards  of  approximately
$57,000,000 for Federal income tax purposes that will expire  principally in the
years 2002 through 2020.  In addition,  we had research and  development  credit
carryforwards of approximately $1,610,000, which will expire

                                       10

<PAGE>

     principally  in 2002 through  2018.  Also at December 31, 2000,  we had NOL
carryforwards  of  approximately  $41,637,000  for state income tax purposes and
state research and development credit  carryforwards of $475,000.  For financial
reporting  purposes,  a valuation  allowance  has been  recognized to offset the
deferred  tax assets  related  to these  carryforwards.  Due to the  limitations
imposed by the Tax Reform Act of 1986, and as a result of significant changes in
our ownership in 1993 and 1997,  the  utilization  of $25,000,000 of Federal NOL
carryforwards is subject to annual  limitation.  The utilization of the research
and development credits is similarly limited.

     We lease laboratory and office  facilities  under an agreement  expiring on
December  31,  2015.  The minimum  annual  payment  under the lease is currently
$2,249,000.  The lease  provides for fixed  escalations  in rent payments in the
years 2005 and 2010.








































                                       11

<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Quantitative and qualitative disclosures about market risk (i.e.,
interest rate risk) are included in Item 2 of this Report.















































                                       12


<PAGE>



                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     On June 5, 2000, the company filed suit in the United States District Court
for the  District of New Jersey  against  M.D.S.  Panlabs,  Inc.,  a  Washington
corporation,  and Panlabs  Taiwan Ltd., a Taiwanese  corporation  (collectively,
"Panlabs").  The suit  alleges that Panlabs has  infringed  several  issued U.S.
Patents owned by the company,  which relate to cloned human  receptors and their
use in binding  assays.  The suit also alleges that Panlabs has been  importing,
selling and offering to sell  products of the company's  patented  binding assay
processes  to  pharmaceutical  companies  and  others in the  United  States and
particularly in New Jersey.

     On October 31, 2001, the company filed an amended suit in the United States
District  Court for the  District  of New Jersey  against  Euroscreen,  S.A.,  a
Belgian  corporation  ("Euroscreen").  The  suit  alleges  that  Euroscreen  has
infringed  numerous  issued U.S.  Patents owned by the company,  which relate to
cloned human receptors and their use in binding assays.  The suit is part of the
already  pending  lawsuit  against  Panlabs.   The  amended  suit  alleges  that
Euroscreen  has been  importing,  selling and  offering to sell  products of the
company's  patented  binding  assay  processes to  pharmaceutical  companies and
others in the United States and  particularly  in New Jersey and that Euroscreen
has conspired with Panlabs to infringe the company's patents.

     In the amended suit, the company seeks an injunction against the infringing
activities of Euroscreen and Panlabs, an award of damages for the company's lost
profits,  the  destruction of data obtained by the  infringement of its patents,
and other relief.

     Management  believes that its complaint  against  Panlabs and Euroscreen is
well  founded and  necessary to protect the value of its  intellectual  property
assets.

     Management believes that the ultimate resolution of the above matters could
have  a  material  impact  on  the  company's  financial  position,  results  of
operations and cash flows.




















                                       13


<PAGE>



Item 2.  Sales of Unregistered Securities

     On August 3, 2001, the company sold to investors (the "purchasers"),  9,438
shares of Series B senior redeemable  Convertible Preferred Stock (the "Series B
Preferred Stock") in a private placement for $9,438,000.  On September 26, 2001,
the company sold 1,618 shares of Series B Preferred  Stock and 29,944  shares of
Series C senior redeemable  Convertible Preferred Stock (the "Series C Preferred
Stock and together with the Series B Preferred Stock, the "Preferred Stock") for
$31,562,000.  Net proceeds,  after giving effect to  underwriting  discounts and
estimated offering expenses, were approximately $37,745,000. The Preferred Stock
may be converted into 7,564,584 shares of common stock.

     General.  The  terms  of the  Series B  Preferred  Stock  and the  Series C
Preferred  Stock are identical,  except that the Series B Preferred Stock has an
initial  conversion  price of $4.3358  and the Series C  Preferred  Stock has an
initial conversion price of $5.9713.

     Dividends.  Holders of Preferred Stock are entitled to receive dividends on
a pari passu basis,  if and when dividends are declared on the common stock,  in
an amount equal to the  dividends  that would have been payable had their shares
been  converted  to common  stock  immediately  prior to the record date for the
dividend.

     Liquidation Preference. Upon any liquidation of the company, each holder of
Preferred  Stock is  entitled  to  receive  $1,000,  plus  declared  but  unpaid
dividends, if any, for each share held, prior to the holders of any common stock
or junior  preferred  stock  receiving  any assets of the company  available for
distribution.

     Election of Directors.  Holders of Preferred  Stock,  voting  together as a
separate class, will be entitled to elect two members of the board of directors,
as long as 60% of the Preferred Stock issued and outstanding as of September 26,
2001 remains outstanding.

     Voting  Generally.  The holders of the Preferred Stock are entitled to vote
together  with the holders of the common  stock on all matters  presented to our
stockholders  for  consideration,  except  that as long  as the  holders  of the
Preferred Stock are entitled to vote as a separate class to elect members of the
board  of  directors,  they  will  not be  entitled  to vote  for the  remaining
directors.  Each  share of  Preferred  Stock has a number of votes  equal to the
number of shares of common stock into which it may then be converted.

     Conversion to Common Stock.  Each share of Preferred stock may be converted
at any time at the  option  of the  holder  thereof  into a number  of shares of
common  stock  determined  by  dividing  $1,000  by  the  conversion  price,  as
appropriately  adjusted for any stock splits,  stock dividends,  combinations or
similar events.  All shares of Preferred Stock shall  automatically be converted
into  common  stock upon the vote to so convert of a majority  of the  Preferred
Stock then outstanding, voting together as a separate class.

     Redemption.  The company  may redeem all  outstanding  shares of  Preferred
Stock at any time after  August 3, 2003,  provided  that the  company can redeem
these  shares  prior to August 3, 2009,  only if the market  price of the common
stock  is at  least  200% of the  conversion  price  then in  effect  for any 20
consecutive  trading days ending within 10 trading days of the redemption  date.
The company must redeem all outstanding  shares of Preferred Stock in two annual
installments  beginning on August 3, 2009.  On any  redemption,  the  redemption
price will be $1,000 per share, as appropriately  adjusted for any stock splits,
stock  dividends,  combinations  or similar  events,  plus  declared  but unpaid
dividends.

                                       14


<PAGE>



Item 4.  Submission of Matters to a Vote of Security Holders

     On September 26, 2001, the company held a special  meeting of  stockholders
for the  following  purposes:  (i) to approve the  issuance  of 1,618  shares of
Series B Convertible  Preferred  Stock and 29,944 shares of Series C Convertible
Preferred   Stock   (Proposal   No.  1);  and  (ii)  to  approve  the   Synaptic
Pharmaceutical Corporation 1996 Incentive Pan, as Amended and Restated (Proposal
No. 2).

         The stockholders approved Proposal No. 1 as follows:

                  VOTES FOR             VOTES AGAINST    VOTES ABSTAINED
                  4,570,308                 676,925           709,629


         The stockholders approved Proposal No. 2 as follows:

                  VOTES FOR             VOTES AGAINST    VOTES ABSTAINED
                  6,379,619                 1,035,360         709,418


































                                       15


<PAGE>



Item 6.  Exhibits and Reports on Form 8-K

(a)       Exhibits

         None

(b)      Reports on Form 8-K

     On August 3, 2001,  the company filed a Current  Report on Form 8-K stating
that it had  issued  a press  release  announcing  that it will  raise up to $41
million in a private financing led by Warburg Pincus, LLC.

     On  September  26,  2001,  the company  filed a Current  Report on Form 8-K
stating that it had issued a press release  announcing that it had closed on the
second stage of its $41 million private financing led by Warburg Pincus, LLC.

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









Safe Harbor Statement

     This Report on Form 10-Q contains "forward looking  statements"  within the
meaning of Section  27A of the  Securities  Act of 1933,  and Section 21E of the
Securities  Exchange Act of 1934. Such statements  include,  but are not limited
to, those relating to future cash and spending plans, amounts of future research
funding,  and any other statements  regarding future growth,  future cash needs,
future  operations,   business  plans  and  financial  results,  and  any  other
statements which are not historical facts. When used in this document, the words
"expects," "may,"  "believes," and similar  expressions are intended to be among
the words that identify  forward-looking  statements.  Such  statements  involve
risks  and  uncertainties,  including,  but not  limited  to,  those  risks  and
uncertainties  detailed  in the  company's  Annual  Report  on Form 10-K for the
fiscal year ended December 31, 2000 (the "2000 Form 10-K"),  including in Item 1
of the 2000 Form 10-K under the captions  "Patents,  Proprietary  Technology and
Trade  Secrets,"  "Competition"  and  "Government  Regulation" as well as in the
section entitled  "Disclosure  Regarding  Forward-Looking  Statements" under the
captions  "Early  Stage  of  Product  Development;  Technological  Uncertainty,"
"Dependence on Collaborative Partners and Licensees for Development,  Regulatory
Approvals,  Manufacturing,  Marketing and Other  Resources"  and  "Uncertainties
Related to Clinical Trials" or detailed from time to time in filings the company
makes  with  the  SEC.  Should  one or  more of  these  risks  or  uncertainties
materialize,  or should underlying assumptions prove incorrect,  actual outcomes
may vary materially from those indicated. Although the company believes that the
expectations  reflected in the forward-looking  statements  contained herein are
reasonable,  it can give no assurance  that such  expectations  will prove to be
correct.



                                       16


<PAGE>



                                 SIGNATURE PAGE


     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.

                                    SYNAPTIC PHARMACEUTICAL CORPORATION

Date: November 13, 2001             By:   /s/ Kathleen P. Mullinix
                                          -----------------------------------
                                          Name: Kathleen P. Mullinix
                                          Title: Chairman, President and
                                                  Chief Executive Officer



                                    By:   /s/ Robert L. Spence
                                          -----------------------------------
                                          Name: Robert L. Spence
                                          Title: Senior Vice President,
                                                  Chief Financial Officer &
                                                   Treasurer
































                                       17