Three founding directors at BioPharma Credit’s (BPCR ) distressed borrower LumiraDx have resigned, a move that could be ‘value destructive’ for the diagnostics company facing suspension from the Nasdaq stock exchange. 

Chief executive and chair Ron Zwanziger, chief technology officer and director David Scott and Jerry McAleer, LumiraDx’s chief scientist and a director, all handed in their resignations yesterday effective immediately, according to a stock exchange announcement.

Veronique Ameye will remain LumiraDx’s deputy chief executive officer and general counsel.

In their resignation letters the directors said it was important for the company’s leadership to be free of potential conflicts of interest, which could arise as they are also significant shareholders.

The announcement said the resignations would provide ‘flexibility’ in the company’s search for a ‘viable long-term solution’ to its financial difficulties.

LumiraDX, on whose board BPCR has two observer seats, also faces delisting from Nasdaq. On October 27 the company was informed by the technology exchange that it was in breach of its listing rules because the shares had traded below $1 for over 30 business days. 

The shares have plunged 43% over the last five days to 8.2 cents, down from a peak of $10.35 two years ago. LumiraDx is appealing the decision, which would see its shares delist on Thursday, and will present a plan to return it to compliance.

Stifel’s Sachin Saggar said things seem to be going from bad to worse at the company.

‘Reading through the lines, it seems that the founder directors are potentially looking to create a solution by themselves (perhaps a buyout at a fraction of the enterprise value),’ he said, adding that a resolution is likely no closer, given selling the story of the company would be difficult without senior management. 

‘’These resignations are on the face of it, value destructive. It also creates a period of heightened staff turnover at the borrower,’ the analyst commented. 

He added that the company might get round the delisting by doing a reverse stock split to push the share price back above $1. 

LumiraDX has outstanding debts of $350m and an equity valuation of just $26m. Having faced liquidity issues for several months, the company had to amend its $173m loan with BPCR for a fifteenth time yesterday.

Shares in the £1.1bn dollar-denominated portfolio held steady at 83 cents this morning. They stand 20% below their estimated net asset value of $1.05, a wide discount that reflects investors’ concerns that BPCR may have to write off its biggest loan accounting for 15% of assets. 

A continuation vote has been triggered after the 12-month rolling average discount surpassed 10%. It will be held by the end of 2023. The company also faces a second continuation vote at its annual general meeting in 2025 in line with its articles of association.