Home Business BREAKING: All of uBiome’s top execs are out at the embattled poop-testing startup that’s at the center of an FBI investigation

BREAKING: All of uBiome’s top execs are out at the embattled poop-testing startup that’s at the center of an FBI investigation

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BREAKING: All of uBiome’s top execs are out at the embattled poop-testing startup that’s at the center of an FBI investigation

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 an internal memo 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. The memo was sent to investors by uBiome’s board.

John Rakow, the company’s general counsel who had been serving as interim CEO for the past two months, has also left uBiome, 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.

uBiome’s new executives

Three new people will now serve as uBiome’s interim CEO, CFO, and COO: Curtis Solsvig, Robin Chiu, and Karthik Bhavaraju, the memo said. All three are directors at consulting firm Goldin Associates.

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, Goldin was brought in to review uBiome’s operations and strategy, the memo said.

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.

High-profile Silicon Valley investors bet on uBiome

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.

Read the full memo below

Here’s the full memo uBiome’s board sent to shareholders on Sunday:

Dear uBiome Shareholder:

Thank you for your patience during a challenging period for the company. Despite recent events, we believe uBiome has a strong foundation upon which to build a successful global business. We are committed to doing everything we can to make uBiome successful in an effort to drive shareholder value. Toward that end, we are sharing with you the following company updates and important actions we are taking to enable necessary reforms and restructuring that will serve the interests of all of uBiome’s stakeholders.

Jessica Richman and Zac Apte, the company’s founders, have resigned from the company’s board of directors. They had previously been suspended from their positions as executives of the company. They will have no role in the company going forward. John Rakow, the company’s former general counsel who has been serving as interim CEO, has left the company, as well.

In May, the Special Committee, led by Kimmy Scotti, engaged Goldin Associates, a leading management consulting firm, to conduct a rigorous review of uBiome’s business operations and strategy. Goldin Associates is assisting in the implementation of a go-forward plan to position the company for sustainable growth and profitability. Curtis Solsvig, Robin Chiu and Karthik Bhavaraju, directors at Goldin who have been embedded with the company for the past month, will serve as interim CEO, CFO and COO, respectively.

The Board has also identified and recruited two highly skilled executives with deep experience guiding companies in complex situations to join the company’s board of directors. They are welcomed independent voices, and their expertise and talent will be helpful to guide the company as it prepares for its next chapter. Their names and bios will be released in the coming week.

Finally, as you know, George Canellos, a partner at Milbank, former senior federal prosecutor and co-director of the SEC’s Division of Enforcement, has been leading an independent review into the company’s past billing practices. Milbank has concluded the first phase of its investigation and provided a preliminary report of its findings to the Department of Justice to assist the government with its own investigation. The company will continue to actively cooperate with the government. As the investigation is ongoing, it would be inappropriate to comment in detail about Milbank’s findings.

We believe that uBiome’s new leadership and independent board members will not only add exceptional operational and industry-specific expertise to the company, but will also lead and guide with integrity as they execute the company’s new long-term growth strategy. In the coming weeks, we look forward to providing additional details on this long-term strategic growth plan.

Though the developments of the past few months have been unexpected and disappointing, we continue to believe in the underlying value of uBiome’s technology at a time of growing demand in the market. We are also confident that uBiome now has the right team and ethical footing in place to move forward as a stronger company.

Best,

The Special Committee of the Board of Directors of uBiome

Want to tell us about your experience with uBiome? Email ebrodwin@businessinsider.com.

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