1. NEUROGEN CORPORATION Alliance Management: View from the Smaller Side of the Alliance Thomas A. Pitler, Ph.D. VP Business Development

2. Alliances often fail because partners are unable to work together effectively 30% 6%6% 64% Foremost Cause of Alliance Failure Poor or Damaged Relationships Between Firms Bad Legal and Financial Terms and Conditions Poor Strategy and Business Planning

3. Common Causes for Relationship Issues › Breakdowns in trust › Build-up of negative partisan perceptions › Questioning of one another’s motives › Festering conflicts › Little joint problem solving › Feelings of disrespect/coercion › Missed milestones › Lack of learning/innovation › Project delays › Dissatisfaction with partner’s performance › Unresponsiveness to changes in the market place › Perception that alliance is not adding value “Absent Facts People Make up Stories”

4. Launching Alliance Relationships: Key Objectives Enabling Skills and Mindset A common set of experiences and mindset for effectively working together Building personal relationships through face-to-face interaction and fun activities Alliance Work plan Defining a joint work plan for scientific and commercial activities Clearly understood roles and responsibilities, timelines and priorities Relationship Challenges and protocols A common understanding of key challenges A set of procedural agreements that define the basic operating assumptions for working together Collaborative conflict resolution methods and escalation procedures Standard relationship audit Contractual Commitment A clear understanding of the negotiated agreement A shared picture of all parties’ scientific and business goals for the arrangement

5. Launching Alliance Relationships: Key Objectives Enabling Skills and Mindset A common set of experiences and mindset for effectively working together Building personal relationships through face-to-face interaction and fun activities Alliance Work plan Defining a joint work plan for scientific and commercial activities Clearly understood roles and responsibilities, timelines and priorities Relationship Challenges and protocols A common understanding of key challenges A set of procedural agreements that define the basic operating assumptions for working together Collaborative conflict resolution methods and escalation procedures Standard relationship audit Contractual Commitment A clear understanding of the negotiated agreement A shared picture of all parties’ scientific and business goals for the arrangement

6. RACI matrices provide a useful tool to ensure that all stakeholders are aware of their role in any decision Responsible: The individual(s) who performs a task. The doer, responsible for recommendation, action and implementation. Accountable: The individual (s) who is accountable for ensuring alignment with the overall plans and ensures the quality/ performance/ outcome of the activity. C onsulted: The individual(s) who are asked to provide input and/or insight prior to an action being taken or a recommendation being made. I nformed: The individual(s) who need to be informed when an action is taken or a decision is made but does not need to be consulted.

7. ALLIANCE MANAGEMENT WORKING GROUP Decision making roles and responsibilities DecisionResponsibleAccountableConsultedInformed Financial reporting - unanticipated funding (e.g. FTE #, 3rd party exp.)  Project leaders  JRC  P-Functional heads  N-EMC  P- Functional heads  Project team  Finance Communication of structural changes to the organization (e.g. reorganization which could materially impact project)  JRC  Committee Chairs  N-Rep  P-Head of Licensing  N-CEO  P-Corp. Licensing  N- Bus Dev  Other party Filing patents for new inventions (e.g. timing, competitive strategy, etc.)  Patent attorneys  JRC  Patent dept  Project leaders  P- Corp. Licensing  N- Bus Dev Press releases (e.g. milestone achieved, compound failed, compound progression)  N- Bus. Dev.  P-Corp. Licensing, Public Affairs  N-CEO  P- Legal  N- EMC  P- Public Affairs  Project Leaders  JRC  ROW  N- Board

8. Relationship Survey: Quantitative Results QuestionsAverage Responses NeurogenPartner Operational Metrics 1 - Roles and responsibilities are clearly defined5.314.80 2 - The work plan is well defined5.314.93 3 - We have a clear understanding of what needs to get done and by when5.084.80 4 - We are coordinating effectively across multiple functions, sites and geographies5.254.47 5 - Decision making is efficient5.254.38 6 - Decision making is effective5.174.79 7 - All necessary information for decision making is communicated from the project team to the governance committee5.334.75 8 - Decisions are well communicated from the governance committee to the project team5.104.60 9 - We are focusing our attention on those things that will help us meet our overall goals5.175.07 10 - We have met all contract and work plan objectives on time5.304.58 11 - We are on track to meet future contract, work plan objectives on time5.204.83 12 - Each party is resourcing the collaboration appropriately for effective execution of work plan5.094.40

9. Quantitative Results con’t Relationship Metrics 14 - We have a positive, successful working relationship5.585.29 15 - We are working together in accordance with operating protocols5.365.00 16 - When we disagree, we discuss and resolve the issue based on relevant, objective criteria5.114.91 17 - My ideas, input are welcomed and considered by our partner5.255.15 18 - We have access to info, data, updates as needed4.673.85 19 - Information and data are volunteered, shared in open and transparent manner5.274.79 20 - When we have specific questions, we are able to contact and get a timely, appropriate answer from our direct counterpart(s)5.275.00 21 - Our meetings are a good use of my time - we are clear about purposes, participation and outcomes5.184.17

10. Quantitative Question Results – Radar Chart Operational Relationship 654321 0 Strongly Agree Strongly Disagree No Opinion Rating Scale Neurogen-Partner Alliance Health 0 1 2 3 4 5 6 Roles Planning Team Coordination Decision Making Performance ManagementResources Relationship Strength Conflict Management Communication / Openness Neurogen Partner

11. NEUROGEN CORPORATION DRUG DISCOVERY PRODUCT DEVELOPMENT NEUROLOGICAL DISORDERS PAIN METABOLIC DISEASES INFLAMMATION