All of uBiome's top execs are out at the embattled poop-testing startup that's at the center of an FBI investigation
All of uBiome's top execs are out at the embattled poop-testing startup that's at the center of an FBI investigation
Erin Brodwin and Lydia Ramsey
21h
uBiome's founders and former co-CEOs, Zac Apte and Jessica Richman.
uBiome; Yutong Yuan/Business Insider
Jessica Richman and Zac Apte, the company's cofounders and co-CEOs, resigned from the board of directors last week, according to an internal memo obtained by Business Insider on Sunday. John Rakow, uBiome's general counsel and interim CEO as of May 1, has also left the company, the memo said.
Both Apte and Richman had been suspended from their positions as executives of the company. The pair "will have no role in the company going forward," said the memo, sent to investors by uBiome's board.
In a message sent to Business Insider, Rakow said he resigned to spend more time with his family.
It has been a hectic stretch for the 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.
Read more:uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here's the inside story.
uBiome's new executives
Three new people will now serve as uBiome's interim CEO, CFO, and chief operating officer, according to the memo: Curtis Solsvig, Robin Chiu, and Karthik Bhavaraju. All three are directors at the consulting firm Goldin Associates, which was brought in to review uBiome's operations and strategy, according to the memo.
Solsvig, a managing director at Goldin, has previously served as interim CEO at companies going through turnarounds and restructurings. For instance in 2015, he served as CEO of PTC Group Holdings, a steel products company that was going through a refinancing and bankruptcy, according to his LinkedIn profile.
Chiu, who will be coming in as uBiome's CFO, is a managing director at Goldin, where she's worked for a decade. According to her profile on Goldin's website, Chiu has worked with companies and creditors during restructurings.
Bhavaraju, a senior director at Goldin, will serve as uBiome's chief operating officer. He has a background in engineering, and according to his bio, "he has played a key role in Goldin engagements involving debtor and creditor advisory, interim management, forensic financial review, solvency analysis and calculation of damages."
The internal investigation
In May with Rakow at the helm, uBiome told investors it was launching an internal investigation into the billing problems that reportedly drew the FBI's attention. To lead the investigation, the company hired the former federal prosecutor George Canellos, a partner at the law firm Milbank.
Canellos has now finished the initial stage of his probe and provided information to the Justice Department, according to Sunday's memo. The memo doesn't say what Canellos found.
The FBI's April search involved "several other US and California governmental agencies," including the US Attorney's Office for the Northern District of California, Rakow said in a letter he sent investors on May 8.
One of Rakow's top goals for uBiome included "restoring the company's credibility, including restoring the integrity of uBiome's leadership and billing practices," he said in the letter.
Rakow also 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."
High-profile Silicon Valley investors bet on uBiome
For five years, uBiome only sold tests that people could buy directly. These tests didn't involve a doctor and were portrayed as fun, personal experiments. Most of the tests worked by having customers use a swab to take a sample of their poop from used toilet paper.
But starting in 2017, uBiome began selling two new tests. These tests provided medical-grade health insights, uBiome said. They required a doctor's approval and would be covered by insurance, the company said.
It was about 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 the 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, the co-CEOs and cofounders, Apte and Richman, were placed on leave.
With Richman and Apte's departure from uBiome's board, 8VC partner Kimmy Scotti is uBiome's sole remaining board member.
In the letter to investors, the board said that it plans to bring on two new board members, who have "deep experience guiding companies in complex situations." Their names will be released this week, according to the letter.
uBiome's board had six members as recently as April. In May, two board members resigned, while in April, former Novartis CEO Joe Jimenez left the board as well.
Read more: uBiome's independent directors are ditching the healthcare startup following an FBI raid, and now there's only 1 left
pdated.
All of uBiome's top execs are out at the embattled poop-testing startup that's at the center of an FBI investigation
Erin Brodwin and Lydia Ramsey
21h
uBiome's founders and former co-CEOs, Zac Apte and Jessica Richman.
uBiome; Yutong Yuan/Business Insider
- All three top leaders at microbiome-testing startup uBiome have left their posts, according to an internal memo obtained by Business Insider on Sunday.
- The company's cofounders and co-CEOs, Jessica Richman and Zac Apte, resigned from the company's board of directors. They had been suspended from their CEO roles.
- John Rakow, uBiome's general counsel and interim CEO as of May 1, has also departed.
- Founded in 2012, uBiome raised $105 million from investors on the promise of exploring the "forgotten organ" that is the microbiome.
- In April the FBI raided uBiome's headquarters, reportedly related to the company's billing practices.
- Three new people will now serve as uBiome's interim CEO, CFO, and chief operating officer, according to the memo: Curtis Solsvig, Robin Chiu, and Karthik Bhavaraju.
- All three hold director positions at the consulting firm Goldin Associates.
- Click here for more BI Prime stories.
Jessica Richman and Zac Apte, the company's cofounders and co-CEOs, resigned from the board of directors last week, according to an internal memo obtained by Business Insider on Sunday. John Rakow, uBiome's general counsel and interim CEO as of May 1, has also left the company, the memo said.
Both Apte and Richman had been suspended from their positions as executives of the company. The pair "will have no role in the company going forward," said the memo, sent to investors by uBiome's board.
In a message sent to Business Insider, Rakow said he resigned to spend more time with his family.
It has been a hectic stretch for the 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.
Read more:uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here's the inside story.
uBiome's new executives
Three new people will now serve as uBiome's interim CEO, CFO, and chief operating officer, according to the memo: Curtis Solsvig, Robin Chiu, and Karthik Bhavaraju. All three are directors at the consulting firm Goldin Associates, which was brought in to review uBiome's operations and strategy, according to the memo.
Solsvig, a managing director at Goldin, has previously served as interim CEO at companies going through turnarounds and restructurings. For instance in 2015, he served as CEO of PTC Group Holdings, a steel products company that was going through a refinancing and bankruptcy, according to his LinkedIn profile.
Chiu, who will be coming in as uBiome's CFO, is a managing director at Goldin, where she's worked for a decade. According to her profile on Goldin's website, Chiu has worked with companies and creditors during restructurings.
Bhavaraju, a senior director at Goldin, will serve as uBiome's chief operating officer. He has a background in engineering, and according to his bio, "he has played a key role in Goldin engagements involving debtor and creditor advisory, interim management, forensic financial review, solvency analysis and calculation of damages."
The internal investigation
In May with Rakow at the helm, uBiome told investors it was launching an internal investigation into the billing problems that reportedly drew the FBI's attention. To lead the investigation, the company hired the former federal prosecutor George Canellos, a partner at the law firm Milbank.
Canellos has now finished the initial stage of his probe and provided information to the Justice Department, according to Sunday's memo. The memo doesn't say what Canellos found.
The FBI's April search involved "several other US and California governmental agencies," including the US Attorney's Office for the Northern District of California, Rakow said in a letter he sent investors on May 8.
One of Rakow's top goals for uBiome included "restoring the company's credibility, including restoring the integrity of uBiome's leadership and billing practices," he said in the letter.
Rakow also 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."
High-profile Silicon Valley investors bet on uBiome
For five years, uBiome only sold tests that people could buy directly. These tests didn't involve a doctor and were portrayed as fun, personal experiments. Most of the tests worked by having customers use a swab to take a sample of their poop from used toilet paper.
But starting in 2017, uBiome began selling two new tests. These tests provided medical-grade health insights, uBiome said. They required a doctor's approval and would be covered by insurance, the company said.
It was about 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 the 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, the co-CEOs and cofounders, Apte and Richman, were placed on leave.
With Richman and Apte's departure from uBiome's board, 8VC partner Kimmy Scotti is uBiome's sole remaining board member.
In the letter to investors, the board said that it plans to bring on two new board members, who have "deep experience guiding companies in complex situations." Their names will be released this week, according to the letter.
uBiome's board had six members as recently as April. In May, two board members resigned, while in April, former Novartis CEO Joe Jimenez left the board as well.
Read more: uBiome's independent directors are ditching the healthcare startup following an FBI raid, and now there's only 1 left
pdated.
