Some 100 million doses of the company’s vaccine were put on order after the UK increased its request by 40 million in February.
The Government served notice over allegations of a breach of the agreement, but the firm, which is manufacturing the jab at its site in Livingston, West Lothian, said it “strenuously” denies the allegations.
On Monday morning, Valneva refused to comment on the future of its Livingston plant, which was expanded as part of its deal with Downing Street.
Last month, the pharmaceutical giant advertised 200 new jobs at the facility, which is still under construction. The status of those jobs is now unclear.
Scotland’s Health Secretary Humza Yousaf said the announcement is a “blow” for the facility in Livingston.
He told BBC Good Morning Scotland: “We are very keen, and will be reaching out to the company, to try to get security and secure a future for that facility in Livingston; we hope that would be with Valneva.
“Clearly, when it comes to their supposed alleged failure to meet their contract obligations, we obviously are looking for more information from the UK Government and would expect that shortly.”
He added that there is enough vaccine supply for a potential booster campaign, despite the termination of the contract.
In a statement, Valneva said: “Valneva SE, a specialty vaccine company, today announced that it has received a termination notice from the UK Government (HMG) in relation to the Supply Agreement for its Covid-19 vaccine candidate, VLA2001.
“The contract provides HMG with the right to terminate. HMG has alleged that the company is in breach of its obligations under the supply agreement, but the company strenuously denies this.”
The vaccine candidate is currently in Phase 3 trials, the firm said, with results due in the fourth quarter.
“Subject to these data and MHRA (Medicines and Healthcare products Regulatory Agency) approval, Valneva believes that initial approval for VLA2001 could be granted in late 2021”, the company added.
It added: “Valneva has worked tirelessly, and to its best efforts, on the collaboration with HMG including investing significant resources and effort to respond to HMG’s requests for variant-derived vaccines.
“Valneva continues to be committed to the development of VLA2001 and will increase its efforts with other potential customers to ensure that its inactivated vaccine can be used in the fight against the pandemic.”