Valneva stock slumps after Britain ends COVID vaccine deal

By Sudip Kar-Gupta and Kylie MacLellan

PARIS (Reuters) -Valneva shares plunged 35% on Monday after the French drugmaker said the British government had ended a 1.4 billion euro ($1.65 billion) COVID-19 vaccine supply deal.

The British government "alleged that the company is in breach of its obligations under the supply agreement, but the company strenuously denies this," Valneva said in a statement.

Valneva's COVID-19 vaccine candidate VLA 2001 relies on inactivated virus, similar to flu vaccines, and is seen by some as having the potential to win over people wary of some which use new mRNA technology.

It had signed a deal with Britain for up to 190 million doses by 2025 in a transaction worth potentially up to 1.4 billion euros.

"Valneva has worked tirelessly, and to its best efforts, on the collaboration ... including investing significant resources and effort," the company added.

A spokesman for Prime Minister Boris Johnson said ending the Valneva deal would have no impact on vaccine supply in Britain.

"This is an ongoing commercial issue so I am slightly restricted in what I can say," the spokesman said, when asked why the deal had been cancelled.

"MHRA (Medicines and Healthcare products Regulatory Agency) have not approved the Valneva vaccine. The comments from the company will not have any impact on our vaccine supply and did not form any part of our vaccine rollout in autumn and winter," the spokesman told reporters.

Valneva, whose shares are still up by around 50% since the start of 2021, said it was still continuing its development plan for VLA 2001.

"Valneva believes that initial approval for VLA2001 could be granted in late 2021", it added.

This is not the first COVID-19 setback for Valneva after the European Commission said in April it had not met conditions to supply the bloc with its vaccine candidate.

In July, however, Valneva said talks with Brussels were still ongoing.

The French government has come under fire, particularly when shots were rare, for failing to secure doses from a domestic producer, after other French groups such as Sanofi or the Pasteur Institute ran into difficulties in producing a vaccine.

($1 = 0.8487 euros)

(Reporting by Sudip Kar-Gupta, Benoit Van Overstraeten, Sarah White in Paris and Kylie MacLellan in London;Writing by Sudip Kar-Gupta and Ingrid Melander; Editing by Ana Nicolaci da Costa, Mark Potter and Alexander Smith)