London - Vanguard Medica Group plc has broken off the merger talks with CeNeS Pharmaceuticals plc that were disclosed two weeks ago.

The merger would have created a central nervous system discovery and development company with a market capitalization of around #175 million, but Vanguard, of Guildford, UK, said its board had concluded "that a merger with CeNeS would not realize appropriate value for Vanguard's shareholders."

CeNeS, based in Cambridge, UK, said it had put forward proposals for a takeover of Vanguard, but the board of Vanguard did not feel able to recommend the proposals to its shareholders. Alan Goodman, chairman of CeNeS, said, "We felt there were a number of commercial and financial benefits from putting the two companies together but were disappointed that . . . Vanguard was not able to come to the same view."

It was an up-and-down week for Vanguard's share price, which rose 15.5 pence to #2.65 on May 2 on the news that the company had received confirmation from the FDA that its migraine treatment frovatriptan is approvable. Final approval depends on review of data from an ongoing toxicology study requested by the FDA, and the submission of certain other data. Vanguard expects to submit this by the end of the third quarter.

At the same time, Vanguard said it is now discussing labeling with the authorities in France, the first European country where frovatriptan will be registered. It anticipates approval by the middle of 2000.

Vanguard released the news that the merger talks had failed after the markets closed last Thursday. The share price fell 17.5 pence on Friday to close at #2.45.