Genetics Institute Inc. could receive up to $50 million in acollaboration with Sofamor Danek Group Inc. to developrecombinant human bone morphogenetic protein (BMP-2) forspurring bone growth in spinal disorders.

The companies are targeting BMP-2, which is classified by the FDAas a device, as an alternative to bone grafts in spinal fusions.

Under the agreement, Sofamor will pay Genetics Institute, ofCambridge, Mass., $12.5 million annually for four years.

Dennis Harp, Genetics Institute's director of corporatecommunications, said that following the initial payment, Sofamorwill have the option of renewing the licensing deal in eachsucceeding year.

The collaboration gives Sofamor rights to develop and market BMP-2 in North America only for spinal applications. Sofamor, ofMemphis, Tenn., makes and sells devices for surgery in spinalreconstruction.

In 1990, Genetics Institute entered an agreement with Tokyo-basedYamanouchi Pharmaceuticals Co. Ltd. for worldwide developmentand marketing of BMP-2. The two companies have pilot clinicaltrials under way in the U.S., Europe and Japan in various indications,such as repair of facial bones, tibias and femoral heads.

Harp said BMP-2 induces bone precursor cells to become bone-forming cells. The protein is used with a carrier matrix, which isimplanted in the area targeted for bone reconstruction.

Genetics Institute and Sofamor expect to be able to file for marketapproval of BMP-2 within the four-year life of the agreement. Harpadded that Genetics Institute's first market opportunity under itscollaboration with Yamanouchi could come within three years.

Genetics Institute and Sofamor also intend to allocate a portion of theprofits from sales of BMP-2 to set up a medical institute foreducation in biological reconstruction, primarily in orthopedic uses.

BMP-2, Harp said, is one of Genetics Institute's top researchprograms. The protein not only may eliminate the need for bonegrafts, he noted, but also may help assure greater frequency andacceleration of bone healing.

BMP-2 is part of a family of transforming growth factor-a proteins.Creative Biomolecules Inc., of Hopkinton, Mass., also is developinga BMP product for bone reconstruction under a collaboration withStryker Corp., of Kalamazoo, Mich.

Genetics Institute (NASDAQ:GENIZ) closed Thursday at $35,unchanged. Sofamor (NYSE:SDG) lost 75 cents to finish at $19. n

-- Charles Craig

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

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