By Charles Craig

Ariad Pharmaceuticals Inc., with its technology for regulating gene expression, and Genovo Inc., with its expertise in gene delivery, formed a joint venture to develop therapies for controlled, long-term in vivo production of therapeutic proteins.

The two companies, expected to announce their alliance today, will focus on developing their gene therapies to compete in the $11 billion-a-year market for therapeutic proteins, such as growth hormone, which require frequent injections.

Charles Cabot, Ariad's chief operations officer, said his Cambridge, Mass.-based company and Genovo, a start-up Philadelphia firm, will share equally in research and development costs. Financial details were not disclosed.

Ariad's technology involves creating synthetic copies of two fragments of a transcription factor protein * the DNA-binding domain and activation domain * responsible for turning on and off genes. The fragments are delivered to cells along with the gene for the therapeutic protein.

To generate the therapy, a patient would swallow a small molecule drug, such as rapamycin, which brings the transcription factor fragments together and touches off expression of the gene for the desired protein.

Michael Gilman, Ariad's vice president of research for gene therapy, said the transcription factor fragments and the therapeutic gene will be delivered to muscle or skin cells with vectors developed by Genovo.

Once activated by rapamycin, the cells are expected to produce the therapeutic protein for an extended period.

Gilman estimated Ariad and Genovo may be ready for clinical trials within two years.

In addition to turning on gene expression, Ariad has developed a companion strategy for switching genes off if production of therapeutic proteins is causing adverse side effects.

Genovo is developing gene therapy with vectors based on the work of co-founder James Wilson, director of the Institute for Human Gene Therapy at the University of Pennsylvania, in Philadelphia. Wilson serves as scientific consultant to Genovo.

His research has focused on modifying viral vectors, such as adenoviruses, adeno-associated viruses and retroviruses, to enable them to avoid attack by patients' immune systems.

Genovo, founded in 1992, began operations in earnest in 1995 with a $35 million investment from Biogen Inc., of Cambridge, Mass.

Ariad's stock (NASDAQ:ARIA) closed Tuesday at $7.375, down $0.187. *