The present invention is a peptide compound which stimulates the formation of hardtissues such as bone and cartilage. The invention is also related to a method totreat a defect in hard tissues such as bone and cartilage using the peptide. Themethod of the present invention may be used to treat or prevent the defects in bonesand cartilages which are caused by rheumatoid arthritis or osteoarthritis whichinvolves the regeneration of new bone or cartilage in or around the defects.