SOFAMOR DANEK AND GENETICS INSTITUTE ENTER INTO CORPORATE ARRANGEMENTS FOR COMMERCIALIZING BONE MORPHOGENETIC PROTEIN IN SPINAL RECONSTRUCTION.

MEMPHIS, Tenn.--(BUSINESS WIRE)--Feb. 16, 1995--Sofamor Danek Group, Inc. (NYSE:SDG) today announced that the Company has agreed to enter into a strategic alliance with Genetics Institute, Inc. to provide biological products for use in spinal reconstruction. The products will use Genetics Institute's recombinant human bone morphogenetic protein (rhBMP-2) to induce bone growth in the treatment of spinal disorders.

In the alliance, Sofamor Danek will obtain the exclusive North American rights to these rhBMP-2 proprietary technologies and patents for spinal applications. Subject to the terms of the agreement, Sofamor Danek will pay Genetics Institute $50 million over four years for this exclusive agreement. Genetics Institute and Sofamor Danek will share in the profits resulting from this alliance for spinal reconstruction. The companies also reported they will jointly fund an independent medical education and research institute, from future profits, dedicated to increased development in the field of biological reconstruction. Effectiveness of the agreement is subject to regulatory approval.

Commenting on the announcement, Jim Gallogly, president and chief operating officer of Sofamor Danek Group, Inc., stated, "We are excited about entering into this alliance with Genetics Institute, which broadens our portfolio of technologies. Genetics Institute's rhBMP-2 expands our market to include the biological reconstruction and/or fixation of the spine. FDA clearance will be necessary which will require several years of clinical trials," concluded Mr. Gallogly.

Genetics Institute's Executive Vice President Tuan Ha-Ngoc stated, "This alliance significantly strengthens Genetics Institute's ability to address the fusion segment of the spinal market. The alliance is part of Genetics Institute's overall strategy to become the market leader in the biological reconstruction of bone and other connective tissue."

An estimated 200,000 spinal fusion procedures were performed in the U.S. last year. Fractures, degenerative conditions, deformity, cancer, and bone infection can lead to conditions of spinal instability making rigid fixation of the vertebral bones necessary. Most often, bone taken from the patient's own hip is transplanted in the spine to create the fusion of the vertebrae. The harvesting of this bone can cause pain at the harvest site, increased operative time, and increased blood loss. Sofamor Danek and Genetics Institute, in collaboration with leading orthopedic surgeons, have completed a number of preclinical studies of spinal fusion using rhBMP-2 in combination with a matrix carrier. These studies demonstrated that rhBMP-2 may eventually eliminate the need for this type of bone graft in achieving successful spinal fusion. Additional studies are underway to pursue regulatory clearance for treating patients requiring spinal fusion.

It is Sofamor Danek Group's management's opinion that the transaction is likely to result in a $50 million one-time charge to first quarter 1995 earnings. However, Company management, in association with its outside auditors, Coopers & Lybrand, is seeking an accounting ruling from the Securities and Exchange Commission that the $50 million payment be capitalized as an asset and amortized upon the commencement of commercial sales.

Genetics Institute, Inc. (Nasdaq:GENIZ) is a leading biopharmaceutical firm engaged in the discovery, development, and commercial manufacture of human pharmaceuticals through recombinant DNA and other technologies. American Home Products Corporation (NYSE:AHP) holds a majority interest in Genetics Institute.

Sofamor Danek Group, Inc. is primarily involved in developing, manufacturing, and marketing spinal devices used in the surgical treatment of spinal disorders. The Company's stock is traded on the New York Stock Exchange (NYSE) under the symbol SDG.

CONTACT: Sofamor Danek Group Inc., Memphis

James J. Gallogly or Laurence Y. Fairey, 901/396-2695