By Natalie Grover

(Reuters] -Valneva’s value fell nearly a fifth Monday, after Valneva announced that the COVID-19 vaccine deal with the European Commission had been scrapped. The French drugmaker might need to rethink their financial guidance.

Valneva stated that the European Commission had informed Valneva of its intention to end an advance purchase contract for the COVID vaccine.

The final decision regarding the deal is still to be made by Commission officials, according to spokespersons on Monday.

Valneva shares fell by 19.5% in 1455 GMT

CEO Thomas Lingelbach expressed regret at the EC’s decision, particularly as he continues to receive messages form Europeans seeking a traditional solution for their vaccine needs.

Valneva’s vaccine is based on decades-old technology, which has also been used in shots against influenza, polio and hepatitis.

Last November, Valneva entered into a contract with the EC to provide up to 60,000,000 doses of vaccine in two years. This includes 24.3 Million doses by 2022.

Lingelbach noted that 30% of the pre-payments received by the company from the EC were already paid under the contract. However, Valneva does not have to return the payments if the contract is cancelled.

The supply agreement gave the EC the power to cancel if it was not approved by the European Medicines Agency by April 31. Lingelbach stated that the vaccine has yet to be approved by the European Medicines Agency (EMA), but he is confident it will in June.

The deal gives Valneva 30 days to either win marketing authorization or offer a satisfactory remediation plan.

Valneva has been working closely with the EC to develop a plan for remediation and plans to make vaccines available to EU members who still desire them.

Lingelbach stated that certain member countries, such as “very large European countries”, have expressed an interest.

The Valneva COVID-19 vaccination supply contract was cancelled by Britain in 2021.

Valneva was approved in Bahrain, and the company has been deploying its vaccine since then. Also Monday was the day that the emergency approval of the United Arab Emirates was granted to Valneva.

FINANCIAL HIT

Valneva stated that the company may review its financial outlook for 2022. In the past, Valneva stated that it expected to earn revenue between 430 and 590 million euro ($448.58 to $615.49million) in this year.

Samir Devani from Rx Securities had foreseen more than 400 million euro in Valneva CoVID vaccine sales this fiscal year. The majority of that was due to EU contracts.

In a note, he stated that “Should it be terminated,” he said.

A raft of vaccine makers, including AstraZeneca (NASDAQ:) and Johnson & Johnson (NYSE:), have recently warned of a global COVID vaccine glut.

Devani stated to Reuters, that while the EC has already paid 30% upfront, it may seek to re-negotiate its deal because it does not require more vaccines.

One possibility is the potential use of Valneva vaccination as a booster.

Valneva plans to publish data regarding the booster use of the COVID vaccine in the third quarter.

($1 = 0.9586 euros)