The UK has terminated a €1.4bn agreement with French biotech Valneva for the supply of at least 100m doses of a Covid-19 vaccine, saying the group was in breach of its obligations under the deal.
Manufacture of the vaccine, which is in late-stage trials and still awaiting regulatory approval, was planned to take place in Scotland and deliveries were set to start next year.
The disclosure of the termination by Valneva sent shares in the Paris-listed company down by 42 per cent on Monday. The group added that it “strenuously” denied breaching its obligations, but declined to comment further.
The vaccine performed less well than rivals in a recent UK trial, named Cov-Boost, that explored the effectiveness of various potential booster jabs, according to people familiar with the results, which are yet to be published. Valneva did not respond to a request for comment.
Competition for vaccines has proved politically explosive, with the EU this month settling an acrimonious dispute with AstraZeneca over delayed supplies. The French government came under fire last year when the UK first struck a supply deal with Valneva.
Downing Street said on Monday that the dispute with Valneva was an “ongoing commercial issue”.
The government had announced in August last year that it was investing a multimillion-pound sum in Valneva’s manufacturing plant in Livingston, Scotland, supporting 100 skilled jobs. At the time, Kwasi Kwarteng, the business secretary, hailed the plant as a potential “vaccine production powerhouse”.
The termination comes as the UK prepares to become the first big country to administer mix and match” coronavirus vaccines for its booster programme.
Results of Valneva’s late-stage trials are expected in the fourth quarter, with UK approval possible before the end of the year, the company said.
Given the timeline, it is unlikely the shot would have played an immediate role in the booster campaign in which patients will be given a third shot that is different from the two they received earlier in the vaccination drive.
“The MHRA (regulator) has not approved the vaccine,” Downing Street said. “It does not form any part of our vaccine rollout in autumn and winter.”
Humza Yousaf, the SNP health secretary for Scotland, told the BBC that the cancellation of the contract was a “blow for the facility in Livingston”.
“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,” he said.
Headquartered outside the French city of Nantes, Valneva is not a newcomer to vaccines. Its jabs for cholera and Japanese encephalitis have received approval from regulators either in the US or EU, and it has several others under development.
The company had warned in April that exporting vaccines between the EU and the UK could be a “substantial risk” to its operations. Although the vaccine was due to be manufactured in Scotland, the company said it would be put into vials and packaged in the EU.
Its vaccine candidate uses a whole inactivated virus to elicit an immune response against coronavirus, a technique that can prolong the manufacturing process but provides greater coverage against all variants. Most other shots are designed to target the spike protein of the virus.
Addressing the termination, Valneva said it had worked “tirelessly, and to its best efforts” on its collaboration with the UK, adding that it would “increase its efforts with other potential customers to ensure that its inactivated vaccine can be used in the fight against the pandemic”.
In late August, a French official said the country still planned to use Valneva’s vaccine as part of its autumn booster campaign, if the company secured European regulatory approval.
It is unclear if those plans have since changed, and France has let the company negotiate its potential contract with the EU instead of directly with France.
“We are one of the countries who have signalled interest in the Valneva vaccine, but we are prioritising a collective approach,” said a French government spokesman on Monday.
Frédérique Vidal, France’s minister in charge of higher education, research and innovation, declined to comment on the UK’s decision.
“Discussions are still under way with the European Union,” she told TV station BFM Business. “This case shows the challenges in biotech where when you try to do innovation you cannot succeed every time.”