Once standing at a valuation of $600mm, biomedical startup uBiome has officially filed for Chapter 11 bankruptcy following a thorough FBI raid in April related to the company's billing practices.
The FBI investigation was succeeded by a slew of troubles for the company, including the departure of co-founders Jessica Richman and Zac Apte in July and the termination of half of its employees soon after. There were also concerns regarding the core science behind uBiome's business, with some claiming its research was flawed. This has garnered attention from the medical community as well, with a leading medical journal conducting an investigation into the matter.
As per the filing, "issues included improper insurance provider billing practices, improper use of a telemedicine physician network (known as the External Clinical Care Network), overly aggressive and potentially misleading marketing tactics, manipulation of customer upgrade testing, and improper use of customer inducements."
uBiome's bankruptcy filing lists over $7 million, mainly owed as "refund claims" to a plethora of health insurance companies.
"Our Chapter 11 filing allows us to preserve the value of these assets for all stakeholders and continue to serve current and new customers, while we evaluate potential buyers. This step builds on the decisive actions the board and new management team have recently taken to stabilize the company and leverage the substantive value of our advanced microbiome testing and analysis assets," said uBiome acting Chief Executive Officer Curtis G. Solsvig III.
uBiome began its journey in 2012 as a Kickstarter venture, advertising itself as an at-home test kit people could conveniently use to extract genomic sequences of gut microbes. This led to an initial $100mm being raised in VC, involving established venture capital firms like 8VC and notable investors like Andreessen Horowitz.
The medical company has four primary products: SmartGut, SmartJane, Explorer and Explorer Plus. However, a report released in August suggests that uBiome may have utilized samples from babies and pets that may have tarnished its data sets.
"We have taken significant action to put the company on stronger footing and believe in the strength and potential of uBiome's scientific achievements and IP," said an 8VC partner Kimmy Scotti.
