uBiome; Yutong Yuan/Business Insider
- All three top leaders at microbiome-testing startup uBiome are leaving their posts.
- Founded in 2012, uBiome raised $105 million from investors on the promise of exploring the microbiome, a "forgotten organ."
- The FBI raided uBiome’s headquarters in April, reportedly related to the company’s billing practices.
- Then, uBiome cofounders and co-CEOs Zachary Apte and Jessica Richman were placed on administrative leave, and an independent investigation was launched.
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All three top execs at uBiome are out after a tumultuous few months at the poop-testing startup.
Jessica Richman and Zac Apte, the company’s cofounders and co-CEOs, resigned from the company’s board of directors, according to a memo sent to shareholders and obtained by Business Insider. Both Apte and Richman had previously been suspended from their positions as executives of the company and "will have no role in the company going forward," the memo read.
John Rakow, the company’s former general counsel who had been serving as interim CEO for the past two months, has also left the company, according to the memo.
It has been a hectic stretch for once-buzzy uBiome, which garnered a $600 million valuation on the promise of helping people understand the bacteria in their body, called the microbiome. In April, the FBI raided the company’s San Francisco headquarters, reportedly as part of an investigation into the company’s billing practices.
With Rakow at the helm, uBiome told investors it was launching an internal investigation to gain a better understanding of the billing problems that reportedly drew the FBI’s attention. The company hired former federal prosecutor George Canellos, a partner at the law firm Milbank, to lead the probe. Around the same time, management consulting firm Goldin Associates was brought in to review uBiome’s operations and strategy, the memo said.
The circumstances surrounding Rakow’s departure remain unclear.
Three new people will now serve as uBiome’s interim CEO, CFO, and COO, respectively: Curtis Solsvig, Robin Chiu, and Karthik Bhavaraju, the memo said. All three people are directors at Goldin.
Beyond the FBI, the US Attorney’s Office for the Northern District of California and "several other US and California governmental agencies" were involved in the FBI search, Rakow said in a letter he sent to investors on May 8.
Rakow also said in the letter that one of his top goals for uBiome included "restoring the company’s credibility, including restoring the integrity of uBiome’s leadership and billing practices." He told investors that the company’s key products still had value, and that uBiome had plans to "demonstrate this clinical utility and value at a time of growing demand in the market."
Most of uBiome’s tests work by having customers use a swab to take a sample of their poop from used toilet paper.
For five years, uBiome only sold tests that people could buy directly, without the involvement of a doctor. Those tests were portrayed as fun, personal experiments aimed at giving people the chance to learn more about the bacteria in their bodies. But starting in 2017, uBiome began selling two new tests. These tests, uBiome said, provided medical-grade health insights. As such, the tests required a doctor’s approval and would be covered by insurance, uBiome claimed.
It was around this time that uBiome began to attract the attention of several high-profile Silicon Valley investors. Signs of trouble also emerged. 8VC, known for backing successful biotechs including the cancer-testing company Guardant Health, led a $16 million funding round at the end of 2016. OS Fund, the firm created by Braintree founder Bryan Johnson, spearheaded an $83 million round in 2018.
Then in April, the FBI raided the company’s headquarters, reportedly as part of an investigation into how it was billing customers and insurance companies for the tests. Days later, co-CEOs and cofounders Apte and Richman were placed on leave.
Want to tell us about your experience with uBiome? Email ebrodwin@businessinsider.com.
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Source: Business Insider – ebrodwin@businessinsider.com (Erin Brodwin)