US Dept of Defense Ends Vaccine Supply Pact With Valneva For Viral Brain Infection

The U.S. Department of Defense (DoD) has decided not to exercise the second option year of the contract to supply Valneva SE's VALN Japanese encephalitis (JE) vaccine IXIARO.
Due to the past and ongoing impact of the COVID-19 pandemic on its operations, the DoD considers its current IXIARO supply levels sufficient to meet current needs.
The DoD has expressed interest in negotiating a new supply contract in 2023.
Related: Valneva Cuts FY22 COVID-19 Vaccine Sales Outlook, Needs Funding To Invest In Next-Gen COVID-19 Shot.
Due to this decision, the company expects no impact on its 2022 financial guidance. It will continue deliveries of IXIARO under the terms of the first option year, which the DoD exercised with amended terms, through the fourth quarter of 2022.
The total minimum value of the existing supply contract was approximately $118 million, assuming the exercise of the second option year, which had a minimum value of approximately $36 million for 250,000 doses.
The DoD has relied on IXIARO since 2010 to help protect personnel deployed to JE endemic areas.
Japanese encephalitis is a viral brain infection that's spread through mosquito bites. It's most common in rural areas in southeast Asia, the Pacific islands, and the Far East.
About 70,000 cases of JE are estimated to occur in Asia annually.
Price Action: VALN shares are down 5.15% at $19.72 during the premarket session on the last check Thursday.