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Bone morphogenetic proteins (BMPs) are well known for their osteoinductive activity, yet harnessing this capacity remains a high-priority research focus. We present a novel technology that delivers high BMP-2 levels at targeted locations for rapid endochondral bone formation, enhancing our preexisting cell-based gene therapy system by microencapsulating adenovirus-transduced cells in nondegradable poly(ethylene glycol) diacrylate (PEGDA) hydrogels before intramuscular delivery. This study evaluates the in vitro and in vivo viability, gene expression, and bone formation from transgenic fibroblasts encapsulated in PEGDA microspheres. Fluorescent viability and cytotoxicity assays demonstrated >95% viability in microencapsulated cells. ELISA and alkaline phosphatase assays established that BMP-2 secretion and specific activity from microencapsulated AdBMP2-transduced fibroblasts were not statistically different from monolayer. Longitudinal transgene expression studies of AdDsRed-transduced fibroblasts, followed through live animal optical fluorescent imaging, showed that microencapsulated cells expressed longer than unencapsulated cells. When comparable numbers of microencapsulated AdBMP2-transduced cells were intramuscularly injected into mice, microcomputed tomography evaluation demonstrated that the resultant heterotopic bone formation was approximately twice the volume of unencapsulated cells. The data suggest that microencapsulation protects cells and prolongs and spatially distributes transgene expression. Thus, incorporation of PEGDA hydrogels significantly advances current gene therapy bone repair approaches.

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