Recombinetics, which engineered hornless dairy bulls, files for bankruptcy

Recombinetics, whose hornless dairy bulls garnered national attention for the Eagan-based gene-editing company, has filed for Chapter 11 bankruptcy after it faced a net loss of more than $2.6 million between January and August.

The company said it faces $7.7 million in total liabilities as of Aug. 31 in a petition filed Monday with in U.S. Bankruptcy Court in Delaware. The 18-person company edits animal cells and embryos for commercial applications in agriculture and health care.

Unlike a liquidation bankruptcy, a Chapter 11 bankruptcy allows companies to operate as they reorganize and make plans to pay off creditors.

Trans Ova Genetics, an Iowa-based company specializing in reproductive technology for animals, has proposed to acquire all of Recombinetics’ assets for $4.1 million, Recombinetics CEO Rocco Morelli said in a court filing. Without the bid, the company would have filed for liquidation bankruptcy, which would have shuttered the business, the filing said.

Morelli did not respond to requests for comment.

Recombinetics is one of only a few companies that have successfully produced animals, such as pigs, cattle and fish, through gene editing, the bankruptcy filing says. The company has several lines of business, including producing pig models for researchers studying gene therapy, creating gene-edited animal cells and offering preclinical research services. An animal model is a live animal that has a disease similar to humans for scientific research.

Magazines such as Bloomberg Businessweek and Wired featured Recombinetics’ hornless dairy bull in the late 2010s as the biotech startup raised millions of dollars and became a commercial enterprise.

Scientists at the Food and Drug Administration, however, discovered an editing glitch in the hornless animal‘s DNA in 2019. A shipment of the bull‘s sperm planned to land in Brazil for experimentation purposes was cancelled.

In 2020, Recombinetics purchased a controlling stake in Makana Therapeutics, which develops gene-edited pigs, and sold the stake in the fall of 2023, generating $47.4 million to try to keep the business running. That sum included $3.5 million in cash.

While the sale provided some capital, the company was still short on assets it could turn into cash, Morelli said in the court filing. Recombinetics tried to raise additional capital, but failed, he said.

Between January and August, the company lost more than $2 million in cash, and was left with roughly $353,700 on hand as of Aug. 31, according to financial documents. The company has roughly $1.7 million in total assets and $6 million in equity.

Now the company is seeking millions in financing packages as it quickly loses money and tries to stay afloat and pay employees. Trans Ova Genetics’ parent company has agreed to make $3.7 million available to Recombinetics through two financing packages, pending court approval.

Recombinetics owes money to more than 200 creditors, including the College of Veterinary Medicine in St. Paul and the Minnesota Department of Employment and Economic Development. It said funds will be available for its unsecured creditors.