Five Months After FBI Raid, uBiome Files for Bankruptcy
Bay Area microbiome company uBiome has filed for Chapter 11 bankruptcy five months after it came under scrutiny from the Federal Bureau of Investigation (FBI). Late Wednesday, the company said it is looking to facilitate the sale of its business products in development, as well as its technology.
Acting Chief Executive Officer Curtis G. Solsvig III, who took over after interim CEO John Rakow stepped down two months into the job, said the company’s board of directors determined that uBiome “will be better positioned for success under new ownership.” uBiome said it is in discussion with several interested parties and is working to finalize terms and announce asset purchase agreement within 75 days.
“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,” Solsvig said in a statement.
In April, uBiome became the subject of an FBI investigation over allegations of illegal billing practices. The FBI raided the offices of uBiome following intense scrutiny of the lab-testing company’s billings involving Medicare. After the FBI raid, the company’s co-founders and co-chief executive officers were placed on administrative leave and Rakow, who had been serving as general counsel, was placed at the helm of the company. However, he resigned from uBiome in July, as did the company’s two co-founders who had been on administrative leave.
Founded in 2012, uBiome uses advanced technology to analyze the microbiomes on the human body. The company has four primary consumer products, SmartGut, SmartJane, Explorer and Explorer Plus. As uBiome goes through Chapter 11, the company said it will continue to offer its Explorer product throughout the sale process. Explorer is a consumer product that helps people understand the role that food and lifestyle can play in gut wellness. The company added that it intends to maintain “appropriate staffing and supply levels” to support the product for customer needs. The company did not indicate what it could do with its other product lines during this transition. In addition to the Explorer product, uBiome said it will continue to grow its commercial, academic, and research partnerships throughout the Chapter 11 process.
In its announcement, uBiome did not name any of the potential new owners but stressed that any offers will be evaluated to ensure that the company’s shareholders, as well as its creditors, receive maximum benefit. While it undergoes the Chapter 11 procedure, uBiome said it obtained financing from 8VC and Silicon Valley Bank to support its ongoing operations during the sale process.
Earlier this year, uBiome was named one of the top five companies to emerge from incubators in the Bay Area. The company came out of StartX, Y Combination and 500 Startups. As of January, it had raised more than $109 million to support its technology. Last year alone, the company raised $83 million in Series C financing.