Genetics Institute Inc. and Johns Hopkins University School ofMedicine are setting up a new company to develop drugs based onthe broad family of transforming growth factor-beta (TGF-B) genes,which regulate the formation of hard and soft tissues.

The start-up company, MetaMorphix Inc., will be funded with $3.6million from Genetics Institute, of Cambridge, Mass., giving it 58percent ownership. Johns Hopkins, of Baltimore, will own the other42 percent and grant commercial rights to MetaMorphix andGenetics Institute for nine growth and differentiation factors (GDF),which are proteins expressed by TGF-B genes.

The establishment of MetaMorphix creates a funding mechanism forGenetics Institute and Johns Hopkins to continue ongoing researchwith TGF-B genes. Genetics Institute will manage the drugdevelopment programs and scientists from both Johns Hopkins andGenetics Institute will participate.

Gina Brazier, Genetics Institute's spokeswoman, said MetaMorphix'sseed money will support the company for about three years.

"The funding should get us through the research stage and we willneed additional financing to start clinical trials," she said.

Thomas Kelly, chairman of Johns Hopkins' department of molecularbiology and genetics, said MetaMorphix initially will focus on GDFsthat promote growth of neurons in the brain. He said it was too earlyto determine what diseases may be targeted.

Genetics Institute's work with TGF-B genes has concentrated onthose expressing bone morphogenetic proteins (BMP), which affectgrowth of bone, cartilage and connective tissues.

Through a collaboration with Yamanouchi Pharmaceutical Co. Ltd.,of Tokyo, Genetics Institute has initiated clinical trials with onecompound, BMP-2, for repair of facial bones, tibias and femoralheads. In February, Genetics Institute signed a deal with SofamorDanek Group Inc., of Nashville, Tenn., to develop recombinantBMP-2 as a substitute for bone grafts in spinal fusions. Those dealswill not be affected by Genetics Institutes' agreement with JohnsHopkins.

Kelly said TGF-B genes comprise a super family of genes thatencode proteins that affect growth and development of a broadvariety of cells. Of the nine GDFs licensed in the collaboration withGenetics Institute, three were granted to MetaMorphix, three went toGenetics Institute and three will be held by both companies. Rights toany new discoveries will be held by MetaMorphix and GeneticsInstitute.

Genetics Institute's stock (NASDAQ:GENIZ) closed Mondayunchanged at $37.25. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.