U.K. Threw Covid Vaccine Maker Under Bus Over Contract, Valneva CEO Says
(Bloomberg) -- The U.K. government threw Valneva SE “under the bus” when it terminated a $1.6 billion Covid-19 vaccine agreement after championing the French drugmaker’s shot, according to its chief executive officer.
The U.K.’s decision to cancel its order over an alleged breach of contract blindsided the company in September and came after Valneva had spent months renegotiating its agreement with Britain’s Vaccines Taskforce, Thomas Lingelbach said in an interview.
The reversal, which left Valneva in the lurch at a financially difficult juncture, took investors by surprise and caused the stock to take a 42% plunge. The shares traded 2% higher Thursday after an unexplained dive Monday. They’ve more than tripled over the past 12 months.
The U.K. acted because the company wouldn’t be able to meet 2021 supply targets -- in part because of Brexit-related difficulties, according to Lingelbach.
The expansion of a factory in Livingston, Scotland, is running about six months behind because of delays in sourcing building materials as a result of the U.K.’s departure from the European Union. The government knew about the problems, which were one reason the contract was being amended, he said.
“They threw us under the bus at I would say the most difficult point in time” due to financial commitments that were already made, said Lingelbach. “We continue to believe that there is some level of accountability that the U.K. government has to take.”
The U.K. canceled the order one month before the company reported results of a key trial of its Covid shot. The government had previously praised Valneva and the vaccine and invested millions of pounds to expand manufacturing capacity in Scotland. U.K. Health Minister Sajid Javid said at the time that the vaccine wouldn’t get approval from Britain’s drug regulator in comments that he later amended.
A spokesperson for the U.K. Department of Health and Social Care declined to comment on commercial decisions. “Our vaccination program is continuing to make phenomenal progress,” they said, “with over 80% of the U.K. population now double-vaccinated against Covid-19.”
Kate Bingham, former head of the Vaccines Taskforce, called the government’s decision to cancel the Valneva contract “inexplicable.”
“Instead of an amicable wind-down with a company that had massively extended itself to help during the pandemic crisis, the government alleged a breach of contract,” Bingham said Tuesday in a lecture at the University of Oxford.
The U.K. had ordered 100 million doses of the Valneva shot last year for delivery in 2021 and 2022, with an option to purchase another 90 million through 2025. The deal was one of a number Britain made to secure more than 500 million vaccine doses from multiple drugmakers, leaving the country with a surplus.
Prime Minister Boris Johnson told Parliament that he hopes Valneva will play a role in the U.K.’s preparations for future pandemics.
The Valneva shot uses an inactivated version of the virus to stimulate an immune response. It’s the only Covid vaccine using that tried-and-true technology to reach advanced trials in the U.S. and Europe. Study results last month found it elicited better immunity than AstraZeneca Plc’s shot, with fewer side effects.
The company is trying to retain the U.K. factory and avoid layoffs even though it no longer needs the capacity, and is in discussions with other countries about potential deals, he said. Results for trials in children, older adults and use of the shot as a booster are planned for next year.
“I am convinced that our product can still make a change to people’s lives,” said Lingelbach.
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