San Francisco-based microbiome testing company uBiome filed for Chapter 11 bankruptcy protection in Delaware on Wednesday. The filing comes as a series of allegations about the company’s practices has come to light, which resulted in its cofounders resigning from the company and an interim executive team being put in place.
Founded in 2012, uBiome began with a Kickstarter campaign for an at-home test kit that would enable customers to get the genomic sequences of the microbes found in their gut, the combination of which is commonly referred to as a microbiome. Its success in marketing the kit led to it raising over $100 million in venture capital, with firms 8VC and Andreessen Horowitz having the largest shares. After its last funding round, its valuation was estimated to be $600 million, according to Pitchbook.
The capital enabled the company to expand to other products such as a test for irritable bowel syndrome and a test for vaginal health, both of which required a physician’s order.
In April 2019, the company’s offices in San Francisco were reportedly searched by the FBI. According to reports in The Wall Street Journal and elsewhere, the searches were related to a criminal investigation into the company’s billing practices for those tests. The company’s bankruptcy filing lists over $7 million owed to a variety of health insurance company’s as “refund claims.”
The company’s cofounders and co-CEOs, Jessica Richman and Zac Apte, resigned their positions in July and were replaced by interim executives from New York-based Goldin Associates, a management consulting firm. Curtis Solsvig, a long-time restructuring expert, is currently serving as interim CEO, and part of the bankruptcy filing indicates the company is pursuing a sale.
Potentially confounding the pursuit of a sale is an investigative report on the company that Business Insider published in August. That report indicated that the company may have dismissed concerns from its scientists that that datasets that its microbiome tests depended on may have been tainted with samples from babies and pets.