LONDON - There was another name change in UK biotechnology last week when Vanguard Medica Group plc announced the agreed takeover of central nervous system specialist Cerebrus plc, christening the new company Vernalis Group plc.

The all-share deal valued Cerebrus at #9.6 million (US$15.6 million), based on Vanguard's Dec. 2 closing price.

At the same time it was disclosed that Cerebrus signed a deal with F. Hoffmann-La Roche, of Basel, Switzerland, to license the pharmaceutical company its serotonin receptor program for the treatment of obesity and related disorders. This builds on an existing joint research program between the companies.

Acquiring Cerebrus marks a change in strategy for Vanguard, which was established as a development company. It has ambitions to expand further and intends to run its own discovery programs in addition to developing in-licensed compounds. In August it entered a collaboration with the technology transfer company Cancer Research Ventures Ltd. as a way to access publicly funded research in the cancer field.

CEO Robert Mansfield said, "This is an important strategic move for Vanguard. Combining our development experience with the specialist CNS expertise and emerging research pipeline of Cerebrus creates a new company with exciting potential and a complementary skills base."

Cerebrus, of Winnersh, Berkshire, was formed in 1995 by five neuroscientists from a former Wyeth-Ayerst research laboratory, led by Colin Dourish as research director. Schroder Ventures invested #2.4 million for 50 percent of the company, with the founders, together with the biotech entrepreneur Chris Evans, putting in #100,000. Since then the company has raised further money from Schroder, 3i plc and Equitable Life, but with the downturn in the biotechnology market was unable to attain its ambition of an initial public offering in 1998. In September Cerebrus had #930,000 cash.

Dourish is to join the board of Vernalis. George Poste, chairman of Cerebrus, is to leave the company.

Following the merger Vernalis will have #32 million in cash. It will be based at Vanguard's headquarters in Guildford, Surrey, but will keep Cerebrus' facilities in Winnersh. Over the next few months there will be a review of operations, with the aim of streamlining R&D expenditure of the combined businesses. It is expected that facilities in Guildford will be rationalized as a result.

The objective is to run research activities on a cash-neutral basis against revenues from out-licensing and collaborative agreements.

No financial details of the deal with Roche were given, but Roche will make up-front and milestone payments, and pay royalties on any resulting products. Cerebrus has discovered a series of serotonin receptor agonists that induce weight loss in animal models. A lead candidate should be selected in 2000.

The agreement, Mansfield said, "Provides a strong validation of the quality of the science at Cerebrus and the caliber of its research team."

In Parkinson's disease, Cerebrus has discovered selective adenosine A2A receptor agonists, which have the potential to treat the disease without causing the side effect of dyskinesia. The company also has projects in stroke, anxiety, cerebral malaria and chemotherapy-induced nausea.

Vanguard's lead compound is frovatriptan, for the treatment of migraine, which it licensed in from SmithKline Beecham. On Oct. 26, Vanguard said the approval of the NDA for frovatriptan, submitted in January 1999, will be delayed because the FDA required further toxicity data. The assessment of the European marketing authorization application is ongoing. Frovatriptan is to be marketed by Elan Corp. in the U.S., and by the Italian distributor, Menarini, in Europe.