The objective of the study is to determine the safety and tolerability of two different formulations of BMP-7 for the treatment of osteoarthritis of the knee.

Inclusion Criteria

• Ambulatory with a diagnosis of OA of the knee with symptoms for at least 6 months and pain on the majority of days in the last 30 days.
• >40 years
• Radiographic evidence of at least one osteophyte in either knee at screening

Exclusion Criteria

• Concurrent medical or arthritis condition that could interfere with evaluation of index knee joint (including fibromyalgia)
• Unwilling to abstain from NSAIDs and/or other analgesic medications for 48 hrs prior to assessments. Subjects can remain on acetaminophen up to 3.0 g daily.
• Received arthroscopic or open surgery to the index knee within 6 months of screening
• History of joint replacement surgery (index knee).
• Corticosteroid, short acting hyaluronic acid, or other intraarticular injections of the index knee within 3 months of screening
• Long acting hyaluronic acid injection of the index knee within 6 months of screening
• History of Reiter's syndrome, rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, lymphoma, and arthritis associated with inflammatory bowel disease, sarcoidosis, amyloidosis or fibromyalgia.
• History of malignancy with the exception of resected basal cell, squamous cell of the skin, resected cervical atypia or carcinoma in situ.
• Female subject with reproductive capability.