(Reuters) -Global vaccine alliance Gavi on Tuesday rejected Novavax's claim that the group had breached an advance purchase agreement to procure 350 million doses of the company's COVID-19 vaccine.
Novavax said on Monday that it had issued a notice to Gavi for terminating the agreement with immediate effect, citing the alliance's failure to procure the doses it had agreed to buy in May last year for the COVAX facility, a global vaccine distribution program.
The company's shares were down 12% in afternoon trade.
"It is clear that Novavax will not be able to meet its commitment to manufacture" the doses under the agreement for COVAX before the end of 2022, a Gavi spokesperson told Reuters.
More than 18 months after signing the agreement, Novavax has not been able to make a single dose available to COVAX from the contractually stipulated sites to-date, Gavi said.
Novavax received a non-refundable advance payment of $350 million from Gavi last year and an additional $350 million this year after the vaccine got the World Health Organization's emergency use listing.
Gavi said that it reserved all rights, including recovery of advance payments to the company.
"We think a legal battle will ensue and that this will ultimately get determined by the lawyers," said CFRA analyst Stewart Glickman.
In response to Gavi's statement, Novavax reiterated that it has been ready to meet its commitment to manufacture and deliver doses for the COVAX facility.
Novavax also has a pact with Serum Institute of India for manufacturing a version of the vaccine under the brand Covovax, which would also be supplied to the COVAX facility.
Gavi's spokesperson said Serum Institute had a 300 million dose commitment for Covovax, with options for 750 million more doses if needed.
A Serum Institute spokesperson declined to comment.
Novavax recently cut its full-year forecast yet again, hurt by late authorizations of its COVID vaccine globally amid a waning demand for shots.
(Reporting by Raghav Mahobe and Leroy Leo in Bengaluru; Editing by Anil D'Silva)