LONDON -- The U.K. government has cancelled an agreement to buy at least 100 million doses of COVID-19 vaccine from the French pharmaceutical startup Valneva after alleging that the company breached its contract obligations.
Valneva shares plummeted Monday on the news from Britain, the only country that had made a firm commitment to buy the company's vaccine. The stock was down 40% at 12.02 euros in afternoon trading in Europe, after falling as low as 11 euros.
Britain was an early backer of the Valneva project, agreeing to invest millions of pounds in a production facility in Scotland as part of deal announced last September. The U.K. also agreed to buy 100 million doses of the vaccine, with options for another 90 million. The vaccine is in late-stage human trials and not yet approved by regulators.
The British government "has alleged that the company is in breach of its obligations under the supply agreement, but the company strenuously denies this," . "Valneva has worked tirelessly, and to its best efforts, on the collaboration with (the government) including investing significant resources and effort to respond to (the government's) requests for variant-derived vaccines."
The prime minister's spokesman, Max Blain, said he couldn't comment on the government's decision because of its commercial sensitivity of the matter. Health authorities will comment in due course, he said.
Valneva began submitting data on its vaccine, known as VLA2001, to Britain's medicines regulator last month. The company, based outside of Nantes in western France, has said it expects to complete trials of the vaccine in the fourth quarter, with initial approval possible by the end of this year.
"Valneva continues to be committed to the development of VLA2001 and will increase its efforts with other potential customers to ensure that its inactivated vaccine can be used in the fight against the pandemic," the company said.
Before it raised $108 million in a share sale earlier this year, Valneva told investors it would have to rely on both the plant in Scotland and one in Sweden to meet its obligations under the UK agreement and any future agreements. As a result, any restrictions on the shipment of vaccines to or from the European Union could hamper its ability to fulfill those contracts.
The EU earlier this year threatened to restrict exports of vaccines amid a dispute with drugmaker AstraZeneca over deliveries of its COVID-19 shot.
The Valneva vaccine is based on a different technology than most of the shots approved by Western regulators and is the only vaccine based on chemically inactivated coronavirus currently undergoing clinically trials in Europe. The company has said this technology could offer benefits in terms of "safety, cost, ease of manufacture and distribution," and "could be adapted to offer protection against mutations of the virus."
Scotland's health secretary, Humza Yousaf, said the announcement was a "blow" for the Valneva production facility in Livingston, which began producing the vaccine in January. The U.K. government's investment in the plant was expected to created 100 new, highly paid jobs at the plant.
"We are very keen, and will be reaching out to the company, to try to get security and secure a future for that facility in Livingston; we hope that would be with Valneva," Yousaf told the BBC. "Clearly, when it comes to their supposed alleged failure to meet their contract obligations, we obviously are looking for more information from the U.K. government and would expect that shortly."
Termination of the agreement isn't expected to have an immediate impact on Britain's mass vaccination program. Even without the Valneva vaccine, the government has acquired more than enough doses to fully vaccinate the entire population.
Almost 81% of people 16 and over in Britain have already been fully vaccinated, according to the latest government figures.
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Ganley reported from Paris
