Problem loan LumiraDx is proving to be a thorn in the side of life sciences debt fund BioPharma Credit (BPCR ) as its derating shares could trigger an unusual double continuation vote next year.

Shares in the £894m dollar-denominated trust have fallen to a 21% discount to net asset value, implying more than a full write off of the loan, which makes up 12.8% of assets, JPMorgan Cazenove analyst Alan Brierley calculated, using an estimated October valuation of 103.4 cents per share. 

The trust has a policy in place which triggers a continuation vote within two months if the the average discount is greater than 10% in any rolling 12-month period. Brierley said it hit that threshold last week. 

Usually the 8.6%-yielder would be able to buy back its own shares, and it has $223m in cash on the balance sheet to do so following the acquisition of Reata Pharmaceuticals in August. However, at present, the trust can’t because it has two observer seats on LumiraDx’s board, meaning it is privvy to information that markets are not. 

The continuation vote will be triggered within two months of the end of October, despite the trust being already scheduled to hold its triennial vote at the annual general meeting in May. BioPharma Credit’s manager Pharmakon Advisors made no comment to confirm they would both go ahead. 

Chief executive and co-founder of Pharmakon Advisors, Pedro Gonzalez de Cosio previously told Citywire BPCR has had four transactions where companies faced liquidity constraints. While in each of those cases it recovered all of their capital, he made no guarantees about Lumira.

He added that a special dividend was a certainty this year, as it has been every year since launch in 2017.

Earnings remain strong at the trust with 98% of the portfolio’s loans floating rate. Brierley estimated  that the 7 cents per share dividend is now 1.31 times covered from regular portfolio income, excluding the payment in kind on the LumiraDx loan.

Brierley anticipates upside from future share buybacks and some value recovery from the LumiraDx loan. 

He added that LumriaDX, a diagnostics platform, has a strategic collaboration with AstraZeneca (AZN) to establish a heart and lung screening hub due to go live next month in Liverpool was seemingly well received.

In the near term, uncertainty concerning the LumiraDx loan is likely to weigh on the BPCR share price.