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The NF-kappa B transcription factor family plays a central role in innate immunity and inflammation processes and is frequently dysregulated in cancer. We developed an NF-kappa B functional assay in yeast to investigate the following issues: transactivation specificity of NF-kappa B proteins acting as homodimers or heterodimers; correlation between transactivation capacity and in vitro DNA binding measurements; impact of co-expressed interacting proteins or of small molecule inhibitors on NF-kappa B-dependent transactivation. Full-length p65 and p50 cDNAs were cloned into centromeric expression vectors under inducible GAL1 promoter in order to vary their expression levels. Since p50 lacks a transactivation domain (TAD), a chimeric construct containing the TAD derived from p65 was also generated (p50TAD) to address its binding and transactivation potential. The p50TAD and p65 had distinct transactivation specificities towards seventeen different kappa B response elements (kappa B-REs) where single nucleotide changes could greatly impact transactivation. For four kappa B-REs, results in yeast were predictive of transactivation potential measured in the human MCF7 cell lines treated with the NF-kappa B activator TNF alpha. Transactivation results in yeast correlated only partially with in vitro measured DNA binding affinities, suggesting that features other than strength of interaction with naked DNA affect transactivation, although factors such as chromatin context are kept constant in our isogenic yeast assay. The small molecules BAY11-7082 and ethyl-pyruvate as well as expressed IkB alpha protein acted as NF-kappa B inhibitors in yeast, more strongly towards p65. Thus, the yeast-based system can recapitulate NF-kappa B features found in human cells, thereby providing opportunities to address various NF-kappa B functions, interactions and chemical modulators.