VaxGen, the biotech company developing an anthrax vaccine, says it may lose an $877 million federal contract if it cannot address U.S. concerns. Last week, the company halted a trial amid concerns the vaccine could lose potency. A meeting with the FDA is scheduled.

The Brisbane, California company insists there are no major scientific issues with a halted clinical trial. “The HHS letter to VaxGen, dated and received November 3, 2006, states that ‘unless this condition is cured within 10 days after receipt of this notice, the government may terminate for default under the terms and conditions,’ of the anthrax contract.  VaxGen is working to prepare a written response to HHS by November 13, 2006,” the company said in a statement.

Wall Street has given up, with the shares having plummeted.