The cDNA encodes a protein sharing 41% amino acid identity with Drosophila Tsg, 89% identity with the partial human Tsg sequence, and 94% identity with a mouse EST. The Tsg sequence contains a signal peptide, as expected for a secreted protein, and 2 conserved domains containing multiple cysteines at its amino and carboxy termini. At the late gastrula stage, maternal transcripts decrease and zygotic transcripts appear, specifically in the ventral region of the embryo. Tsg has ventralizing activity and is a bone morphogenetic protein (BMP) binding protein. The N-terminal domain of Tsg is sufficient to interact with BMP4 but not with chordin. Tsg competes for binding of BMP4 with the first cysteine-rich domain of chordin (CR1) but not with full-length chordin. Endogenous Tsg antagonizes CR1 activity.
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