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(Adds French government source saying Valneva is still talking with the EU)
LONDON, Sept 14 (Reuters) - Britain cancelled its contract for about 100 million doses of a COVID-19 vaccine being developed by France's Valneva in part because it was clear it would not be approved for use in the country, UK Health Secretary Sajid Javid said on Tuesday.
"There are commercial reasons that we have cancelled the contract, but what I can tell her is that it was also clear to us that the vaccine in question that the company was developing would not get approval by the MHRA here in the UK," he said in response to a question from a Scottish lawmaker.
Shares in Valneva plunged 35% on Monday after it said the British government had ended a COVID-19 vaccine supply deal that could have been worth up to 1.4 billion euros ($1.65 billion).
The shares made up some of the lost ground on Tuesday, regaining more than 8%, to close at 12.60 euros. At that level, they're still up 62.6% since the start of 2021.
A French government source told Reuters discussions between Valneva and the European Commission were ongoing and advanced.
"The EU is still interested in this vaccine", the source said, adding Valneva was also being positioned, in France at least, as a booster shot, same as would be Sanofi, which has yet to have COVID-19 shot authorised.
Valneva's COVID-19 vaccine candidate, VLA 2001, relies on an inactivated virus, similar to flu vaccines, and is seen by some as having the potential to win over people wary of vaccines that use new mRNA technology.
The company said on Monday that the British government had alleged it was in breach of its obligations under the supply agreement. It said it strenuously denied the charge.
The vaccine is being produced in Livingston, Scotland, using an adjuvant made by U.S. company Dynavax. The facility has capacity to produce around 200 million doses in 2022.
Valneva has said the UK government had options that could have brought the order to 190 million doses by 2025.
Javid said the British and Scottish governments would be working together to see what they could do to secure the future of the facility. (Reporting by Paul Sandle; Additional reporting by Sarah White in Paris, Editing by Alistair Smout and Steve Orlofsky)