In another shakeup, uBiome brings in outside help to revamp a microbiome testing operation under FBI scrutiny
Soon after word got out about an FBI probe into uBiome’s billing practices, the microbiome testing startup put its general counsel in charge as the co-founders stepped aside from their roles as co-CEOs. John Rakow, the interim CEO, vowed to “cooperate fully with government authorities and private payors to satisfactorily resolve the questions that have been raised.”
Turns out that was not good enough.
The San Francisco-based company is now installing new leadership from the consulting firm Goldin Associates to replace Rakow two months after he was first appointed, the Wall Street Journal reported. The new, interim management team consists of CEO Curtis Solsvig, CFO Robin Chu and COO Karthik Bhavaraju. The turnaround experts from Goldin have been working with uBiome for the last month.
In addition, Jessica Richman and Zach Apte — the co-founders — are turning their suspension to a full-on resignation from the company’s board, according to an investor letter reviewed by the Journal.
Richman and Apte launched uBiome 6 years ago after raising $350,000 from a crowdfunding campaign. It has since scored VC backing totaling $83 million from Y Combinator, Andreessen Horowitz, 8VC and others as well as academic partnerships with the likes of UCSF and Harvard. The biotech also boosted its profile by recruiting star directors to its board, including ex-Novartis CEO Joe Jiminez, whom it said would contribute expertise for a pivot to the drug business.
The execs followed up their initial consumer test, Explorer, with more targeted tests designed to evaluate gut health, vaginal health and the microbes that may be implicated in patients’ flu symptoms. SmartGut and SmartJane were pulled from the market in May after the FBI searched uBiome’s office — though the company didn’t specify the reason.
Insiders later told the Journal that insurers had largely stopped paying for the tests as uBiome was suspected of using improper billing codes and charging for unnecessary tests.
The decision to put new leaders in place reportedly came from a special board committee that was formed in the wake of the FDA raid to conduct an internal investigation.