Proove Biosciences, a formerly high-flying genetic testing firm whose science and business practices have been challenged by experts and former employees, has been placed into court-ordered receivership for “restructuring and asset sale,” according to the company’s founder and former CEO.
Proove’s founder, Brian Meshkin, said in an interview on Thursday that he no longer works at Proove, which rang up $28 million in revenue last year. Meshkin blamed the company’s fall on investigative articles published by STAT last December and February. Those articles quoted experts who expressed deep doubts about the company’s scientific claims that it could predict a patient’s likelihood of becoming addicted to opioids. “Hogwash” was the assessment of Dr. Mary Jeanne Kreek, a leading researcher on genetic links to addiction at Rockefeller University.
STAT’s investigations also described business practices — including coercing patients to take unnecessary genetic tests — that former Proove employees and outside experts described as unethical and possibly illegal.
In June, agents from the FBI and Department of Health and Human Services agents raided Proove’s offices in Irvine, Calif., to collect truckloads of documents as part of a criminal investigation. According to legal experts, Proove and many of its affiliated doctors operated in ways that could violate federal and state anti-kickback laws, which are meant to prevent unneeded testing. FBI spokeswoman Davene Butler declined to comment Thursday about the ongoing case.
Meshkin said “erroneous and damaging” reports about Proove were based on “false allegations” from disgruntled employees. He blamed the federal actions on STAT’s reports, which quoted many who worked with Proove as doctors or employees, including two who had been approached by federal investigators. And he expressed confidence that Proove’s underlying vision would endure.
“In some form or fashion, [Proove’s] technology will continue to get out there, and will continue to save lives,” Meshkin said.
Michael Thatcher of Atlanta-based GlassRatner Advisory & Capital Group was appointed receiver Aug. 7, Meshkin said. Thatcher did not respond to requests for comment.
The restructuring was apparently ordered by high-profile Proove backer Mike Leavitt, who served both as governor of Utah and as secretary of the Department of Health and Human Services. Leavitt previously sat on Proove’s board, although it’s not known if he still holds that position; board members are no longer listed on the company’s website. His investment firm, Leavitt Equity Partners, provided about $7 million to Proove, according to Meshkin.
As Proove’s main creditor, Meshkin said, Leavitt’s firm was behind the restructuring. Susan Winckler, a former FDA official who directs risk management at Leavitt’s consulting firm, Leavitt Partners, provided a brief statement via email. “Leavitt Equity Partners is not a shareholder of Proove. It is the holder of a secured debt owed by Proove,” she said.
“It sucked the life out of me, on an integrity level. It got more and more corrupt.”
Rhonda Frantz-Smith, former senior manager at Proove
Proove’s genetic tests were ordered by hundreds of doctors, many of whom were promised “research fees” in exchange for participating in the company’s clinical studies. Many doctors enrolled their patients in studies, but were never paid.
Former employees have told STAT that Proove representatives working in private doctors’ offices coerced patients to take unneeded tests for sensitivity to opioids or opioid abuse in an effort to boost company revenues. The former employees also said test results were routinely falsified to make it appear that patients benefited from the testing.
Rhonda Frantz-Smith, a former senior Proove manager who left the company in 2016, oversaw relationships with doctor offices and supervised the research assistants who worked directly with physicians.
“I went into Proove feeling really good about who I was and what I was doing with a test that could change people’s lives,” she said in an interview Thursday. “I felt almost heroic” about promoting a tool that could help patients deal with terrible pain, she said.
But gradually, Meshkin pushed to “test every patient,” regardless of need, Frantz-Smith said. She also began to doubt the validity of Proove tests, which provided contradictory results, and worried about possible falsification of data, as well as billing methods that seemed misleading.
“It sucked the life out of me, on an integrity level,” she said. “It got more and more corrupt.”
In the interview on Thursday, Meshkin cited several recently published papers that appeared in peer-reviewed journals as support for the validity of Proove’s testing and research — which he called an important tool to combat the opioid abuse crisis.
“We are the only ones who have any clinically proven solution to not only reduce pain,” he said, “but also with a high level of accuracy identify people who were at risk for opioid abuse.”
But the data those papers were based on are suspect, several former employees previously said. The DNA tests, conducted from cells obtained via cheek swabs, were unreliable and ignored by many doctors, both doctors and employees said. The tests were previously disavowed by Dr. Eric Fung, Proove’s former chief scientific officer, and Dr. Daniel A. Schwarz, Proove’s former research and development director.