Washington, DC 20549

                                    FORM 10-Q

         Mark One:

                                    SECURITIES EXCHANGE ACT OF 1934

                      For the quarter ended March 31, 2001


                       THE SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 0-27324

             (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 May 1, 2001, there were 10,938,497 shares of the registrant's  Common
Stock outstanding.


                                 MARCH 31, 2001

                          PART I. FINANCIAL INFORMATION

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

                  Balance Sheets at March 31, 2001 and
                  December 31, 2000.................................        1

                  Statements of Operations and Comprehensive
                  Income (Loss) for the three months ended
                  March 31, 2001 and 2000...........................        2

                  Statements of Cash Flows for the three months
                  ended March 31, 2001 and 2000.....................        3

                  Note to Financial Statements. ....................        4

Item  2.          Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.....        5

Item 3.           Quantitative and Qualitative Disclosures
                  About Market Risk.................................       10

                           PART II. OTHER INFORMATION

Item  1.          Legal Proceedings................................       11

Item 6.           Exhibits and Reports on Form 8-K.................       12

                  Signatures.......................................       13


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                 BALANCE SHEETS
                    (in thousands, except share information)

                                                          March 31, December 31,
Assets                                                       2001         2000
                                                          (Unaudited)  (Audited)
Current assets:
Cash and cash equivalents                                   $ 4,143     $ 2,037
Marketable securities--current maturities                    14,638      20,627
Other current assets                                          1,097         814
Total current assets                                         19,878      23,478

Property and equipment, net                                   4,757       4,781

Marketable securities                                         9,059       8,938

Patent and patent application costs, net of                     151         227
      accumulated amortization

Other assets                                                    217         147
                                                           $ 34,062    $ 37,571

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                            $ 1,247     $ 1,128
Accrued liabilities                                             959         648
Accrued compensation                                             87         348
Deferred revenue                                              1,144         354
Total current liabilities                                     3,437       2,478

Deferred rent obligation                                        634         564

Stockholders' equity:
Preferred Stock, $.01 par value; authorized--1,000,000 shares    -            -
Common Stock, $.01 par value; authorized--25,000,000 shares
issued and outstanding--10,938,497 shares in 2001 and
10,935,772 shares in 2000                                      109          109
Additional paid-in capital                                  99,405       99,392
Accumulated other comprehensive income--net unrealized
      gains (losses) on securities                             146        (183)
Accumulated deficit                                        (69,669)    (64,789)
Total stockholders' equity                                  29,991      34,529
                                                          $ 34,062    $ 37,571

                           See note to financial statements.



             (in thousands, except share and per share information)

For the three months ended March 31, 2001 and 2000

                                                       2001              2000

Contract revenue                                      $ 287             $ 214
License revenue                                          83                 -
Total revenues                                          370               214

Research and development                              4,013             3,139
General and administrative                            1,790             1,364
Total expenses                                        5,803             4,503
Loss from operations                                 (5,433)           (4,289)

Other income, net:
Interest income                                         422               578
Other                                                   131                 7
Other income, net                                       553               585
Net loss                                           $ (4,880)         $ (3,704)

Comprehensive loss:

Net loss                                           $ (4,880)         $ (3,704)

Unrealized gains arising during period                  329                24
Comprehensive loss                                 $ (4,551)         $ (3,680)

Basic and diluted net loss per share               $ (0.45)          $ (0.34)

Shares used in computation of net loss per share  10,937,713        10,784,718

                            See note to financial statements.


                            STATEMENTS OF CASH FLOWS

                                  (in thousands)

For the three months ended March 31, 2001 and 2000

                                                       2001            2000
Operating activities:
Net loss                                            $ (4,880)       $ (3,704)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and patent amortization                     346             399
Amortization of premiums (discounts) on
securities                                               107             121
Deferred rent, net                                         -              82
Changes in operating assets and liabilties:
Increase in other current assets                        (283)           (352)
Increase in accounts payable,
accrued liabilities and accrued compensation             169             198
Increase in deferred revenue                             790             938
Net cash (used in) operating activities               (3,751)         (2,318)

Investing activities:
Proceeds from sale or maturity of investments          6,090           2,187
Purchases of property and equipment                     (246)           (532)
Net cash provided by investing activities              5,844           1,655

Financing activities:
Issuance of common stock                                  13             511
Net cash provided by financing activities                 13             511
Net increase (decrease) in cash and cash equivalents   2,106            (152)
Cash and cash equivalents at beginning of period       2,037           6,236
Cash and cash equivalents at end of period           $ 4,143         $ 6,084

                        See note to financial statements.


                           NOTE TO FINANCIAL STATEMENTS

                                 March 31, 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 March 31,  2001,  are not
necessarily  indicative of the results of operations to be expected for the full


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


     Synaptic Pharmaceutical Corporation ("Synaptic" or the "Company") is a drug
discovery company utilizing G protein-coupled receptors ("GPCRs") as targets for
novel  therapeutics.  The Company is utilizing  its large  portfolio of patented
GPCR  targets as a basis for the  creation  of  improved  drugs that act through
these targets.  The Company and its licensees are first utilizing these receptor
targets to discover their  function in the body and thus specific  physiological
disorders with which they may be associated,  and secondly,  to design compounds
that can potentially be developed as drugs.

     The Company is currently collaborating with Grunenthal GmbH ("Grunenthal ")
and  Kissei   Pharmaceutical  Co.,  Ltd.   ("Kissei").   Concurrently  with  the
establishment of the  collaborative  arrangement  with  Grunenthal,  the Company
granted a license to certain of its technology and patent rights.

     In addition to its ongoing collaborative arrangements, other pharmaceutical
companies  have licenses to certain of our  technology  and patent  rights.  For
convenience of reference, the agreements pursuant to which the licenses referred
to in  this  paragraph  and  the  preceding  paragraph  have  been  granted  are
collectively referred to as the "License Agreements."

     Since inception,  the Company has financed its operations primarily through
the sale of its stock, through contract and license revenue under certain of its
License Agreements, and through interest income and capital gains resulting from
its investments.  We also have received monies through  government  grants under
the  Small  Business  Innovative  Research  ("SBIR")  program  of  the  National
Institutes  of Health and through the sale of a portion of New Jersey  State net
operating losses carryforwards.

     Under the  License  Agreements,  the Company may receive one or more of the
following types of revenue:  license revenue,  contract revenue, royalty revenue
or revenue from the 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". Contract revenue
includes research funding to support a specified number of Synaptic's 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.  Under each of
the 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 our technology or that may be covered by our patents. Under the Grunenthal
Agreement, Synaptic has development and marketing rights in certain geographical
areas with respect to drugs, if any, that are jointly  identified as part of the
collaboration with Grunenthal. Accordingly, we may receive revenue from sales in
our geographical areas (as defined) of drugs 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 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.


     To date, the Company's  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. Synaptic has been historically unprofitable and had an accumulated
deficit  of  $69,669,000  at March 31,  2001.  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.

Results of Operations

Comparison of the Three Months Ended March 31, 2001 and 2000

     Revenues.  The Company  recognized revenue of $370,000 and $214,000 for the
three  months  ended  March 31,  2001 and 2000,  respectively.  The  increase in
revenue of $156,000 resulted from revenue derived under the Company's  agreement
with Kissei.

     Research  and  Development  Expenses.  The Company  incurred  research  and
development  expenses of  $4,013,000,  and $3,139,000 for the three months ended
March 31, 2001 and 2000,  respectively.  The increase of  $874,000,  or 28%, was
attributable  primarily to increases in preclinical  testing costs, supply costs
and temporary staffing costs.

     General  and  Administrative  Expenses.  The Company  incurred  general and
administrative  expenses of $1,790,000 and $1,364,000 for the three months ended
March 31, 2001 and 2000,  respectively.  The increase of  $426,000,  or 31%, was
attributable primarily to legal expenses related to the Company's lawsuit and an
increase in fringe  benefit  expenses  resulting  from an increase in healthcare

     Other  Income,  Net.  The Company  recorded  other  income of $553,000  and
$585,000 for the three months ended March 31, 2001 and 2000,  respectively.  The
decrease  of $32,000  was  primarily  due to lower  cash,  cash  equivalent  and
marketable  securities  balances  during 2001 as a result of the  utilization of
these resources to fund the Company's operations offset by an increase in rental
income from the Company's sublessees.

     Net Loss and Basic and Diluted Net Loss Per Share. The net loss incurred by
the Company was $4,880,000  ($0.45 per share),  and $3,704,000 ($0.34 per share)
for the three months ended March 31, 2001 and 2000,  respectively.  The increase
in net loss per share of $0.11 resulted primarily from higher expenses partially
offset by higher  revenues and other income  during the first quarter of 2001 as
described above.

Operating Trends

     Revenues  may vary from  period to period  depending  on  numerous  factors
including the timing of revenue earned under the License  Agreements and revenue
that  may be  earned  under  future  collaborative  and/or  license  agreements.
Synaptic will recognize revenue under its research and licensing  agreement with
Kissei  Pharmaceutical Co., Ltd. during 2001 and expects to recognize additional
revenues  under this  agreement  during 2002.  Under the terms of certain of the
License  Agreements,  revenues  may be  recognized  if  certain  milestones  are
achieved. We continue to assess the


opportunity  for obtaining  additional  funding under new  collaborative  and/or
license agreements as well as obtaining  financing through equity  transactions.
We continue to monitor our spending level in order to insure that we have enough
cash to last through the year 2002.

     Preclinical  expenses  are  expected to increase as Synaptic  moves its own
drug discovery projects forward.

     Legal  expenses are expected to increase 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 decline in 2001 and 2002 as existing funds
are utilized to support the Company's operations. This decline will be partially
offset  by  rental  income  that we  expect  to  recognize  under  our  sublease

     The  Company is  pursuing  further  sales of its State net  operating  loss
("NOL")  carryforwards and its 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  are  such  items  as:
limitations imposed by State law, the availability of buyers and related demand.

     Property and equipment spending may vary from period to period depending on
numerous  factors,  including  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 March 31, 2001, the Company held marketable securities with an estimated
fair value of $23,697,000.  The Company's primary interest rate exposure results
from  changes in  short-term  interest  rates.  The  Company  does not  purchase
financial instruments for trading or speculative purposes. All of the marketable
securities held by the Company are classified as available-for-sale  securities.
The following table provides information about marketable securities held by the
Company at March 31, 2001:

             Principal Amount and Weighted Average
                       Stated Rate by                            Estimated Fair
                     Expected Maturity                               Value
---------------------------------------------------------       ----------------
         (000's)       2001    2002    2003      Total                (000's)
------------------- -------- -------- -------- ----------       ----------------
Principal           $14,350  $2,500   $6,500   $23,350                $23,697
Weighted  Average
 Stated Rates         8.85%    6.50%    5.77%    7.74%                     --
---------------------------------------------------------       ----------------

     The  stated  rates  of  interest  expressed  in the  above  table  may  not
approximate the actual yield of the securities which the Company currently holds
since the Company has purchased some of its marketable  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,  the  Company  may  reinvest  the
proceeds  realized on such calls or


redemptions  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,  the Company places
some of its 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 of the Company,  but the impact
of such fluctuations are not expected to be material.

     The Company does not believe that  inflation  has had a material  impact on
its results of operations.

Liquidity and Capital Resources

     At March 31,  2001 and  December  31,  2000,  cash,  cash  equivalents  and
marketable securities aggregated $27,840,000 and $31,602,000, respectively. This
decrease  was a  result  of the  utilization  of  these  resources  to fund  the
Company's operations.

     To date,  Synaptic  has met its cash  requirements  through the sale of its
stock,  through contract and license revenue,  through interest income and gains
resulting  from its  investments,  through SBIR grants and through the sale of a
portion of its State NOL carryforwards.  If the current biotechnology  financing
environment remains unfavorable, raising additional capital may be difficult.

     Synaptic  leases  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.

     At March 31, 2001, the Company had  $27,840,000 in cash,  cash  equivalents
and marketable securities.  The Company currently intends to utilize these funds
primarily  to  conduct  certain of its  research  programs,  for patent  related
expenditures,  for general corporate purposes, to make leasehold improvements to
its facilities and to purchase property and equipment.  We expect to continue to
incur  operating  losses for a number of years. We believe that cash on hand and
cash that we expect to receive through interest payments on investments, will be
sufficient to fund operations, as well as our share of certain development costs
under the Grunenthal Agreement, through the year 2002.

     As of December 31, 2000, the Company 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,  the Company had research and  development
credit carryforwards of approximately $1,610,000,  which will expire principally
in 2002 through 2018. Also at December 31, 2000,  Synaptic 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 the  Company's
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.


Recent Accounting Pronouncements

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities" ("SFAS 133"), which establishes  accounting and reporting  standards
for derivative instruments, including certain derivative instruments embedded in
other  contracts  (collectively  referred  to as  derivatives)  and for  hedging
activities. SFAS 133, as amended, is effective for all fiscal quarters of fiscal
years  beginning  after June 15, 2000. The adoption of SFAS 133 had no effect on
Synaptic's results of operations, financial position or cash flows.

     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.  The Company  expressly  disclaims  any  obligation or  undertaking  to
disseminate any updates or revisions to any forward-looking  statement contained
herein to reflect any change in the Company's  expectations  with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.


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.


                           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.

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

     Company  management  believes  that its complaint  against  Panlabs is well
founded  and  necessary  to  protect  the  value  of its  intellectual  property

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


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits


(b)      Reports on Form 8-K



                                 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: May 11, 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