Gundersen Health is lead investor in gene-editing firm Recombinetics

Gundersen Health System of La Crosse, Wis., is the lead investor in the $34 million equity-capital round announced this week by St. Paul-based Recombinetics, which uses gene editing to help breed better livestock and find cures to human diseases.

Gundersen, which operates in Wisconsin, southeastern Minnesota and Iowa, has taken three seats on the reconstituted board of Recombinetics.

"Gundersen is the perfect strategic partner for Recombinetics because they are at the leading edge of health care delivery and medical innovation and share our commitment to investing in breakthroughs to improve human health," Recombinetics CEO Tammy Lee said in a statement.

"With significant investment capital now focused on new human therapies, we can also allocate resources to our precision-breeding business, Acceligen, to create new partnerships and expand existing contracts with global genetics companies to improve animal health and welfare."

Gundersen's CEO, Dr. Scott Rathgaber, said the investment fits its mission "to ensure we are prepared for future medical advances, like regenerative medicine, while maintaining our reputation as an industry leader in patient care and experience."

Recombinetics founder Scott Fahrenkrug, the largest individual shareholder and a former University of Minnesota genomics professor, will remain on the board. No one owns more than 50 percent of the stock following the most recent round of equity financing.

Gundersen is the single-largest institutional investor in Recombinetics. Rathgaber will join the Recombinetics board.

Gundersen has made similar, multimillion-dollar investments in Logistics Health, Quartz Health Solutions Inc., clean energy projects, critical-access hospitals and the Ashley Wellness Center.

Recombinetics calls itself an "oinkubator" because it uses pigs to produce therapeutic cells, tissues and organs for animals and, eventually, humans. The fresh capital should help Recombinetics bring its products to market.

The company has three businesses: Acceligen, which uses breeding to enhance health and productivity in animals and aquaculture; Surrogen, which produces gene-edited "swine models" of human diseases for biomedical research; and Regenevida, which develops human regenerative products, such as cells and organs for transplantation to humans.

The 37-employee company previously had raised $27 million from individual investors dating to its founding in 2008.

Lee said Recombinetics is "forecasting several million in revenue for 2018, a combination of pig sales, development contracts and grants."

Neal St. Anthony • 612-673-7144