Although the capacity of BRE element to monitor BMP mediated transcriptional activation in-vivo has been demonstrated previously [33, 39, 41] , additional studies were undertaken to further increase confidence with respect to transgene expression in the lung. The kinetics of mRNA expression for eGFP and the BMP target gene Id1 were analyzed by quantitative PCR. EGFP and Id1 mRNA levels followed similar kinetics to eGFP protein expression, reaching maximum levels around birth ( Figure 2A ). P1 lungs were therefore enzymatically digested and lung cells were separated by cell sorting on the basis of eGFP expression into eGFP negative (eGFP neg ), eGFPlow (eGFP low ) and eGFP high (eGFP high ) cells ( Figure 2B ). Western blot analysis of protein extracts from the isolated population demonstrated good correlation between expression of eGFP and levels of pSmad1/5/8 ( Figure 2C , D). Analysis of the mRNA levels for eGFP and BMPregulated target genes such as Smad6, Id1 and Id3 demonstrated very good correlation between the level of eGFP expression and the activation of known BMP targets ( Figure 2E ). Interestingly, expression of Id2 mRNA did not correlate with levels of eGFP expression. Furthermore, treatment of embryonic lung explants exvivo with either BMP-or TGFb-receptor inhibitors resulted in either suppression or augmentation of BRE-eGFP transgene expression, respectively (see below Figure 3B ). Moreover, treatment of embryonic lung explants with FGF10, a known inducer of BMP4 production by distal endodermal cells, or recombinant BMP4 resulted in substantial up-regulation of eGFP expression ( Figure S3 ). Treatment of the lung explants with purmorphamin, a Shh agonist, resulted in redistribution of the eGFP staining pattern that involved a small increase of eGFP expression in a narrow zone of sub-mesothelial cells and a reduction of eGFP expression in the more central parts of the mesenchyme. This pattern of expression could stem from a Shh mediated reduction in FGF10 synthesis by mesenchymal cells [35] that in turn leads to a more confined BMP expression zone.