Dpp signaling events in the endoderm. Diffusion of Dpp from the visceral mesoderm (VM) activates its receptor, Tkv, in the underlying endoderm (EN), which leads to the formation of transcriptionally active Mad–Med complexes (1). Mad and Med then regulate the expression of FoxK and Dfos, which are critical for the initiation of lab expression by binding to its promoter (2, large boxes). Mad may contribute to lab activation, whereas Mad and Lab are necessary for lab maintenance. Finally, Lab controls the expression of target genes critical for copper cell differentiation (3).