The secreted signaling protein Wingless acts as a morphogen to pattern the imaginal discs of Drosophila. A secreted repressor of Wingless activity, called Notum, is described. Loss of Notum function leads to increased Wingless activity by altering the shape of the Wingless protein gradient. When overexpressed, Notum blocks Wingless activity. Notum encodes a member of the alpha/ß-hydrolase superfamily, with similarity to pectin acetylesterases. Evidence is presented that Notum influences Wingless protein distribution by modifying the heparan sulfate proteoglycans Dally-like and Dally. High levels of Wingless signaling induce Notum expression. Thus, Wingless contributes to shaping its own gradient by regulating expression of a protein that modifies its interaction with cell surface proteoglycans (Giráldez, 2002).

The Notum gene was identified in a gain-of-function genetic screen that caused loss of the wing and duplication of the dorsal thorax when expressed under sd^Gal4. Replacement of the wing by a duplicated dorsal thorax resembles the defect caused by the wg¹ mutant, and can also be produced by Gal4-driven overexpression of the GSK3 homolog, shaggy/ZW3, an intracellular repressor of Wg signaling. Expression of Notum throughout the embryo under tubulin^Gal4 control causes expansion of the denticle-producing zone at the expense of naked cuticle. Similar phenotypes can also be obtained by overactivation of the Egf receptor. The balance between Wg and Egfr activity determines the domain in which naked cuticle forms by regulating expression of shavenbaby in the embryonic ectoderm. Likewise, subdivision of the wing disc into wing and thorax territories occurs during the second larval instar and depends on the balance between Wg and Egfr signaling. Ventral expression of either Notum or an activated Egfr under wg^Gal4 control produces similar leg axis duplications. Thus, Notum might act as a repressor of the Wg pathway or as an activator of Egfr signaling when overexpressed. To distinguish between these possibilities, the effects of Notum expression were examined on wing vein formation, where the effects of Wg and Egfr signals differ. During third instar, ectopic Egfr signaling leads to formation of extra vein tissue in the wing blade. In contrast, Notum expression produces scalloping of the wing but has no effect on vein formation. This phenotype resembles late loss of Wg activity. Thus, it is concluded that overexpression of Notum does not work by activation of the Egfr pathway, but rather interferes with Wg activity (Giráldez, 2002).

A number of genes that modulate Wg activity are spatially regulated by Wg signaling in the embryo, including Dfz2, Dally, and naked. It was therefore asked whether Wg regulates Notum expression. In situ hybridization showed that Notum is expressed in a segmentally repeated pattern in two rows of cells anteriorly adjacent to the Engrailed-expressing cells. This corresponds to the Wg stripe in the embryo. Notum expression also mirrors Wg expression in the wing disc. Ectopic activation of the Wg pathway by expression of a constitutively active form of Armadillo induces ectopic Notum expression. Thus, high levels of Wg activity induce Notum expression, which in turn serves as a Wg antagonist (Giráldez, 2002).

To isolate loss-of-function mutations in the Notum gene, a chemical mutagenesis screen was performed for reversion of the thorax duplication caused by expression of EP-Notum. EP-Notum males were treated with EMS and crossed to sd^Gal4 females. Among 15,000 progeny, three flies were recovered that had normal wings despite overexpressing the endogenous Notum gene. These three alleles formed a single complementation group. l(3)72Da and l(3)72CDf were subsequently identified as Notum alleles and have been renamed Notum⁴ and Notum⁵. Sequence analysis revealed an alteration of the splice donor site of exon 1 in Notum¹ and alterations in the coding sequence for the other alleles analyzed (Giráldez, 2002).

Notum zygotic mutant embryos produced a variable naked cuticle phenotype, typical of excess Wg activity. The embryonic phenotype is weak, perhaps due to maternal contribution, wing discs from Notum mutant larvae were used to examine the effects of removing Notum activity. The primordia of the adult wing and thoracic body wall can be visualized in the wing disc by expression of Nubbin and Teashirt proteins. Nubbin is a POU homeodomain protein expressed in the presumptive wing blade and wing hinge. Tsh is a zinc finger protein expressed in the presumptive thorax. Ectopic Wg activity can lead to duplication of wing structures at the expense of thorax. Notum mutant discs showed this phenotype. The severity of these defects ranged from duplication of the wing pouch and hinge associated with a reduced thorax to almost complete loss of thorax associated with a severely abnormal wing duplication. The same range of phenotypes was obtained by activation of the Wg pathway in the early wing disc using Arm^S10 (Giráldez, 2002).

Wg forms a long-range protein gradient and regulates several target genes in different spatial domains in the wing disc. Achaete-Scute is a high-threshold Wg target, expressed in cells close to the DV boundary. Achaete-Scute expression specifies the proneural region in the anterior wing margin in which the single row of sense organ precursor (SOP) cells will form. In wild-type discs, a single row of SOPs forms on each side of the Wg stripe in the anterior compartment. Large clones of cells mutant for Notum³ form additional rows of SOPs and produce extra mechanosensory bristles. Thus, the region in which cells show a high-threshold response to Wg is broadened in the Notum mutant tissue. This defect occurs only when large clones affect both sides of the DV boundary. The defect is rescued when cells on one side of the boundary are able to produce Notum. This suggests that Notum can act nonautonomously. In addition, it was noted that some of the ectopic bristles derived from wild-type cells. This indicates that loss of Notum activity in a mutant clone can lead to increased Wg signaling in nearby wild-type cells. These observations suggest that Notum acts nonautonomously to affect the range of Wg action (Giráldez, 2002).

To examine the effect of large clones of Notum mutant cells on Wg, clones were produced using engrailed^Gal4 to drive Flp recombinase in posterior cells. The mutant posterior compartment was overgrown and the size of the Distal-less (Dll) expression domain increased, suggesting an increased range of Wg action. Antibody labeling showed that the level of Wg protein is elevated in the posterior compartment. The number and brightness of Wg protein vesicles was used to visualize the Wg gradient. Both were increased in the Notum mutant tissue. Thus, reducing Notum activity increases the level of Wg protein and broadens its distribution. The effects on Wg distribution do not make an abrupt transition at the AP compartment boundary. Instead, it increases with distance from the boundary, suggesting that the mutant phenotype may be partially rescued by Notum protein produced by the wild-type anterior cells (Giráldez, 2002).

The results of the clonal analyses suggest that Notum acts nonautonomously. The predicted Notum protein contains a hydrophobic sequence near its amino terminus that might function as a signal peptide. To determine whether Notum is secreted, S2 cells were transfected with expression constructs for wild-type Notum, the Notum² mutant, and a Golgi-tethered form of Notum, in which the signal peptide was replaced with the transmembrane domain from a Golgi-resident enzyme (Notum-GT). Secretion was assayed by immunoprecipitation from cell lysates and from the medium in which the cells were grown. Wild-type Notum protein was recovered from the conditioned medium. Notum-GT was not recovered from conditioned medium. The Notum² mutant protein was recovered at low levels from the medium, suggesting impaired secretion (Giráldez, 2002).

The activities of wild-type and Golgi-tethered Notum were compared in vivo to verify that Notum can act nonautonomously. In wild-type discs, Dll and Hnt are expressed symmetrically in D and V compartments in response to Wg. When overexpressed in the D compartment under apterous^GAL4 control, Notum protein is seen at elevated levels throughout the disc, indicating that it is secreted in vivo. Hnt expression is lost and Dll expression is reduced, symmetrically, in both D and V compartments. This leads to scalloping of the wing. In contrast, expression of Notum-GT affects only the D compartment. The reduced size of the Dll domain can be attributed to a reduced level and range of Wg in the D compartment. This leads to a small D compartment and loss of dorsal wing margin, without any effect on the ventral margin. Thus, overexpression of Notum-GT in the D compartment produces an asymmetric Wg gradient, whereas overexpression of the wild-type protein in the D compartment reduces the Wg gradient symmetrically in both compartments. These observations indicate that wild-type Notum can act as a secreted protein to reduce the effective range of the Wg gradient. However, Notum can also act when retained in the Golgi (Giráldez, 2002).

Pectin acetylesterases from plant pathogens act as secreted enzymes to deacetylate pectins in plant cell walls. Pectins are composed mainly of galacturonic acid residues, some of which are methylated or acetylated. Pectin acetylesterases hydrolyze the ester bond linking acetyl groups to galacturonic acid. Glycosaminoglycans consist of repeated glucuronic acid and GlcNAc disaccharide units. Although GAGs are different in structure from pectins, the similarity to pectin acetylesterases raised the possibility that Notum might act on the GAG side chains of HSPGs. As a first step toward addressing this possibility, it was asked whether Notum could modify Dally and Dlp when coexpressed in S2 cells. Coexpression of Dally-HA with Notum reduced the amount of Dally-HA recovered in S2 cell lysates. In sulfateless mutants, which lack N-deacetylase/N-sulfotransferase (NDST) activity, the level of Dally and Dlp proteins are also strongly reduced, perhaps indicating altered stability of the immature protein. Coexpression of HA-tagged Dlp with Notum altered the electrophoretic mobility of Dlp-HA, without causing substantial loss of the protein. Dlp-HA migrates as a broad band at ~115 kDa, with minor bands at 97 and 105 kDa. Coexpression with wild-type Notum increases the amount of the 97 kDa form (Dlp*), apparently at the expense of the 115 kDa form. The small amount of this band present in S2 cells expressing Dlp-HA may reflect activity of endogenous Notum protein, which was detected on longer exposures (Giráldez, 2002).

The GAG side chains of HSPGs consist mainly of repeated dimers of N-acetylglucosamine (GlcNAc) and glucuronic acid. The first step in modification of the side chains involves replacement of the acetyl moiety on GlcNAc with a sulfate moiety by N-deacetylase/N-sulfotransferase. NDST modifies ~50% of the GlcNAc residues, in blocks along the GAG side chain. The structural similarity between pectins and GAGs raised the possibility that Notum might act by removing acetyl groups from GlcNAc residues of GAGs. If this is the case, GlcNAc residues modified by NDST should not be a good substrate for Notum in cells. To address this possibility, S2 cells were transfected to express a constant amount of Notum and increasing amounts of NDST and the ability of Notum to modify Dlp was assayed. Increasing the ratio of NDST to Notum reduces the amount of Dlp*. These observations support the proposal that NDST and Notum could act on the same substrate. NDST is a Golgi-resident enzyme. In cells where the two proteins are coexpressed, NDST and Notum might compete for modification of GAG side chains, as illustrated by the activity of Notum-GT when expressed in the wing disc. Since there are few cells in the disc where Notum is expressed, it is suggested that secreted Notum may act on HSPGs at the cell surface to deacetylate the blocks of GlcNAc residues that were not modified by NDST during GAG biosynthesis (Giráldez, 2002).

The glypicans Dally and Dlp have been shown to bind and stabilize extracellular Wg, although Dlp is considerably more effective. To ask whether Notum modifies the ability of Dlp to bind Wg, Wg protein was examined in discs expressing Dlp-HA and Notum. Expression of Dlp-HA in a broad band of cells in the center of the wing disc under spalt^Gal4 control causes accumulation of Wg protein, mainly outlining the cell surface. Under these conditions, scalloping of the wing margin was observed, suggesting that Wg is partially sequestered by binding to Dlp and is less available for binding to its receptor. The distribution of Wg differs in discs expressing Dlp-HA and Notum. The total level of Wg accumulation is considerably lower, although Dlp is expressed at a comparable level. In addition, much of the Wg protein appears in intracellular vesicles, instead of outlining the cell surface. These findings support the proposal that Notum modifies Dlp to render it less able to bind and stabilize Wg. Thus, Notum contributes to shaping the Wg gradient by altering the ability of the cell surface glypican Dlp to stabilize extracellular Wg (Giráldez, 2002).

During the wing development Wingless acts as a morphogen whose concentration gradient provides positional cues for wing patterning. The molecular mechanism(s) of Wg gradient formation is not fully understood. This study systematically analyzes the roles of glypicans Dally and Dally-like protein (Dlp), the Wg receptors Frizzled (Fz) and Fz2, and the Wg co-receptor Arrow (Arr) in Wg gradient formation in the wing disc. Both Dally and Dlp are essential and have different roles in Wg gradient formation. The specificities of Dally and Dlp in Wg gradient formation are at least partially achieved by their distinct expression patterns. Surprisingly, although Fz2 has been suggested to play an essential role in Wg gradient formation by ectopic expression studies, removal of Fz2 activity does not alter the extracellular Wg gradient. Interestingly, removal of both Fz and Fz2, or Arr causes enhanced extracellular Wg levels, which mainly result from upregulated Dlp levels. It is further shown that Notum, a negative regulator of Wg signaling, downregulates Wg signaling mainly by modifying Dally. Last, it is demonstrated that Wg movement is impeded by cells mutant for both dally and dlp. Together, these new findings suggest that the Wg morphogen gradient in the wing disc is mainly controlled by combined actions of Dally and Dlp. It is proposed that Wg establishes its concentration gradient by a restricted diffusion mechanism involving Dally and Dlp in the wing disc (Han, 2005).

One important finding in this work is that Dally and Dlp are required for Wg gradient formation. Several recent studies have shown that extracellular Wg distribution is compromised in clones mutant for HS biosynthesis enzymes, including sfl, slalom and members of the Drosophila EXT gene. However, it is unclear which HSPG cores are involved in this process. This study shows that Wg morphogen distribution is defective in either dally or dlp mutant clones. These new findings clearly establish the requirement of Dally and Dlp in Wg morphogen gradient formation. Thus, as in the case of Hh and Dpp, the glypican members Dally and Dlp, rather than Drosophila syndecan or perlecan, are the main HSPGs involved in Wg gradient formation (Han, 2005).

Interestingly, Dally and Dlp differentially regulate the Wg extracellular gradient in distinct regions of the wing disc. Both Dally and Dlp are glypican members of HSPG family. One would expect that differences in the structure of Dally and Dlp, and their attached HS GAG chains may determine their abilities to interact with Wg, thereby leading to their specificities. This is probably one of the factors, since overexpression of Dally and Dlp has very different effects on extracellular Wg gradient. Consistent with the data in this work, previous studies have shown that Dlp is much more potent in accumulating Wg protein than Dally when overexpressed. However, the regional effects of Dally and Dlp on extracellular Wg gradient correspond well to their expression patterns. The regions with higher expression levels of Dally or Dlp have stronger extracellular Wg defects when Dally or Dlp is removed, respectively. Based on these data, it is suggested that the differential roles of Dally and Dlp in extracellular Wg distribution are at least partially determined by their restricted expression (Han, 2005).

What exact roles do Dally and Dlp play in shaping the extracellular Wg gradient? Loss-of-function results suggest that removal of Dally or Dlp leads to reduced extracellular Wg levels on the cell membrane. Furthermore, extracellular Wg levels are reduced in wild-type cells behind sfl or dally-dlp clones. These data suggest that the primary function of Dally and Dlp in Wg gradient formation is to maintain extracellular Wg proteins so that locally concentrated Wg proteins can further move to more distal cells through diffusion (Han, 2005).

Despite a positive role of Dlp in extracellular Wg distribution, surprisingly, Dlp negatively regulates Wg signaling at the DV boundary. However, ectopic Wg signaling at the DV boundary of the dlp mutant is not as great as expected. This relatively weak effect is most probably due to the low level expression of Dlp, which is downregulated by Wg signaling. The results are consistent with a previous observation that overexpression of Dlp in the wing disc leads to a blockage of Wg signaling. Dlp may compete with Fz proteins for available Wg protein at the DV boundary, thereby inhibiting Wg signaling. However, the extract mechanism of Dlp-mediated Wg inhibition needs to be further determined (Han, 2005).

Previous studies have identified Notum as a secreted inhibitor for Wg signaling. Notum is expressed at the DV boundary and has been proposed to downregulate Wg signaling by modulating Dlp activity (Giraldez, 2002). Kreuger (2004) and Selleck (Kirkpatrick, 2004) proposed that Notum negatively regulates Wg signaling by shedding of Dlp, which converts Dlp from a membrane-tethered co-receptor to a secreted antagonist. Their conclusions are mainly based on two lines of experimental data: (1) biochemical experiments clearly demonstrated that Notum can modify Dlp in a manner that resembles cleavage of the GPI anchor (Kreuger, 2004); (2) Kirkpatrick (2004) showed that transheterozygous dlp/notum flies produced ectopic mechanosensory bristles which are not seen in dlp^+/- or notum^+/- alone, indicating that Dlp and Notum genetically collaborate in downregulating Wg signaling (Han, 2005).

However, on the basis of the current data, it is suggested that Notum inhibits Wg signaling mainly by modifying Dally in the wing disc. (1) Genetic interaction data shown by Kirkpatrick (2004) cannot distinguish whether Dlp and Notum work in the same pathway or in two independent pathways to downregulate Wg signaling at the DV boundary (Kirkpatrick, 2004). If Dlp is indeed the main substrate for Notum, it would be expected that ectopic Wg signaling activity in dlp-notum should be similar to that in dlp mutant. However, loss-of-function analysis demonstrates that ectopic Wg signaling in dlp-notum is similar to that in notum mutant, but much stronger than that in dlp mutant. However, dally-notum clones exhibit loss of Wg signaling activity that is similar to dally mutant. (2) Dlp expression is strikingly repressed by Wg signaling and this reduction is independent of Notum. Low/absent expression of Dlp is not consistent with the view that Dlp is the main substrate for Notum. (3) It is important to mention that Notum can reduce the amount of Dally when they are co-expressed in Drosophila S2 cells (Giraldez, 2002), suggesting that Notum can modify Dally as well. Although Notum can shed Dlp, whether shed Dlp acts as a Wg inhibitor needs to be further determined. Therefore, further experiments are necessary to define the mechanism(s) of Notum-mediated Wg inhibition (Han, 2005).

One important finding of this study is that removal of the Wg receptors (Fz and Fz2) and the co-receptor Arr does not lead to a loss of extracellular Wg. Fz2 has been proposed to play a major role in Wg gradient formation in the wing disc by ectopic expression studies. Although the high capacity of Fz2 in stabilizing Wg has been demonstrated, loss-of-function results clearly show that extracellular Wg levels are not reduced in clones mutant for fz2. This is apparently not due to the overlapping function of Fz, since the extracellular Wg level is enhanced, rather than reduced, in the absence of both Fz and Fz2 functions. The results argue that Fz2 is not essential for extracellular Wg gradient formation in vivo. It is important to note that in addition to Fz and Fz2, Fz3 is also expressed in the wing disc and its expression is upregulated by Wg signaling. Although Fz3 has lower affinity than Fz2 in Wg binding and acts as an attenuator of Wg signaling, its role in Wg distribution needs to be determined (Han, 2005).

It is further demonstrated that extracellular Wg is enhanced in cells mutant for fz-fz2 or arr, suggesting that Wg receptors (Fz and Fz2) and Arr shape extracellular Wg gradient by downregulating extracellular Wg levels. The data argue that this mainly results from upregulation of Dlp. Consistent with this view, the accumulated extracellular Wg can be eliminated by loss of HSPGs in sfl-fz-fz2 or arr-botv mutant clones. Importantly, it is shown that both extracellular Wg and Dlp levels are upregulated on the cell surface of clones mutant for dsh. These data provide compelling evidence that though a feedback mechanism, Wg signaling can control the Dlp levels to regulate the extracellular Wg gradient (Han, 2005).

Another alternative possibility is that enhanced Wg levels in fz-fz2 or arr clones may be caused by impaired Wg internalization. Although a significant amount of internalized Wg vesicles has been demonstrated in fz-fz2 or arr mutant clones, this possibility cannot be ruled out, since a quantitative comparison of Wg internalization between wild-type cells and fz-fz2 or arr mutant cells is difficult. Furthermore, as mentioned above, Fz3 is expressed in the wing disc and its expression is upregulated by Wg signaling. It is possible that Fz3 may mediate the internalization of Wg in the absence of Fz and Fz2 (Han, 2005).

Evidence has been presented that Wg morphogen movement is regulated by a diffusion mechanism(s) in the wing disc. Does Wg diffuse freely in the extracellular matrix/space? In this work, it is shown that Wg fails to move across a strip of cells mutant for the HSPGs Dally and Dlp. This result suggests that Wg cannot freely diffuse in the extracellular matrix. Instead, the findings are consistent with a model in which Wg movement is mediated by the HSPGs Dally and Dlp through a restricted diffusion along the cell surface. Similar mechanisms have been proposed for Hh and Dpp. In biological systems such as imaginal discs, the restraint of Wg spreading to the surface of the epithelial cell layer is important since the folding of imaginal discs, such as the leg disc, poses a problem if the Wg gradient formation were to occur out of the plane of the epithelial cell layer through free diffusion. In agreement with this view, the model proposes that Wg gradient formation depends on Wg movement through the cell surface of the disc epithelium (Han, 2005).

The glypican family of heparan sulfate proteoglycans has been implicated in formation of morphogen gradients. The role of the glypican Dally-like protein (Dlp) in shaping the Wingless gradient was studied in the Drosophila wing disc. Surprisingly, Dlp has opposite effects at high and low levels of Wingless. Dlp promotes low-level Wingless activity but reduces high-level Wingless activity. Evidence is presented that the Wg antagonist Notum acts to induce cleavage of the Dlp glypican at the level of its GPI anchor, which leads to shedding of Dlp. Thus, spatially regulated modification of Dlp by Notum employs the ligand binding activity of Dlp to promote or inhibit signaling in a context-dependent manner. Notum-induced shedding of Dlp could convert Dlp from a membrane-tethered coreceptor to a secreted antagonist (Kreuger, 2004).

Notum encodes a secreted member of the alpha-hydrolase superfamily, which includes serine proteases, lipases, and other enzymes in which a Ser-Asp-His catalytic triad comprises the active site. Mutation of Ser237 to Ala was shown to remove Notum activity in vivo and in vitro (Giraldez, 2002). On the basis of its similarity to pectin acetylesterase enzymes from plants and plant pathogens and on the basis of its ability to compete with the N-deacetylase-N-sulfotransferase enzyme for use of Dlp as a substrate, it has been proposed that Notum might function as a GAG deacetylase. If this were the case, it would be expected that Notum would be unable to modify a form of Dlp lacking GAG side chains (Kreuger, 2004).

Dally and Dlp each contain five putative GAG addition sites and have been shown to carry predominantly heparan sulfate (HS, as shown for vertebrate glypicans). GAG biosynthesis is initiated by addition of a xylose residue to the hydroxyl group of a serine in a serine-glycine (SG) motif in the stem region of the glypican (Lindahl, 1998). Mutant forms of Dally and Dlp proteins were prepared in which all the putative GAG-addition sites were mutated. For Dally, the serine residues in the five SG motifs were mutated to alanine. For Dlp, four SG motifs were deleted by removing a block of 25 residues, and the fifth was mutated to AG (Kreuger, 2004).

The glycosylation states of epitope-tagged Dally and Dlp and the GAG addition site mutants were compared by anion exchange chromatography. Glypicans isolated from mammalian cells in culture are highly negatively charged and are typically retained on a strong anion exchange matrix up to 1 M NaCl. When expressed in Schneider S2 cells, a considerable fraction of Dally bound to Q-Sepharose in 0.3 M salt and some was able to bind in up to 1 M salt. Dally migrated as a broad band in SDS-PAGE. The more negatively charged forms that were bound to Q-Sepharose at higher salt exhibited a higher apparent molecular weight. This may reflect the presence of more and longer HS side chains as well as differences in charge due to sulfation. Dally behaves like a conventional glypican. In contrast, most of the Dlp protein bound to Q-Sepharose in 0.15 M salt, but none bound at higher salt concentrations. Dlp migrated as a more tightly resolved band in SDS-PAGE. These observations suggest that Dally and Dlp differ in the extent or quality of GAG modification. Removal of the GAG addition sites considerably reduced retention of both mutant proteins on Q-Sepharose. The proportion of the mutant form of Dally that bound was reduced at all salt levels and none was bound above 0.3 M salt. Very little of the mutant form of Dlp was able to bind to Q-Sepharose, even in physiological salt (Kreuger, 2004).

To further evaluate their GAG content, lysates of S2 cells transfected to express wild-type or mutant Dally or Dlp were digested with heparitinase, and the remaining glycan stub was detected with 3G10 antibody. Dally-expressing cells showed elevated GAG labeling in a broad band that comigrated with the major form of endogenous glypican in untransfected cells. Although the level of expression of the mutant form of Dally was comparable, GAG labeling was not detectable above background. The level of GAG modification on overexpressed Dlp was lower than that seen on the endogenous glypicans. This indicates that Dlp has a lower GAG content than Dally, consistent with its poor retention on Q sepharose. The mutant form of Dlp showed much reduced GAG labeling, barely distinguishable from background levels (Kreuger, 2004).

Dally resembles a conventional glypican, being extensively modified by GAG side chains. Dlp appears to have less heterogeneous and less extensive GAG modification than Dally. The mutant form of Dlp has low levels of residual GAG and would be expected to be a poor substrate for Notum, if Notum acts directly on the GAG side chains. Coexpression of Notum and HA-tagged Dlp in S2 cells caused a large shift in the electrophoretic mobility of Dlp in SDS-PAGE to a faster migrating species, and the Notum S237A mutant had no effect. S2 cells contain endogenous Notum, so there is always a background level of Dlp processing. Interestingly, Notum caused a shift in the mobility of the low-GAG form Dlp comparable in magnitude to the shift in the wild-type protein, though the processing efficiency was lower. This would be difficult to explain if the shift were due to alteration in the amount or in the negative charge of the remaining GAG due to deacetylation. Further, no increase in deacetylase activity was detected in lysates of S2 cells overexpressing Notum, nor was there any detectable decrease in the degree of HS acetylation in larvae overexpressing Notum. These observations suggest that Notum does not act as a GAG-modifying enzyme (Kreuger, 2004).

The mobility shift of Dlp caused by Notum is ~15 kDa. Proteolytic cleavage at the N or C termini of Dlp could cause the apparent size reduction, although other modifications such as removal or attachment of lipids, sugars, or phosphate groups also could cause anomalous migration in SDS-PAGE. To test the possibility of proteolytic processing, forms of Dlp were prepared with epitope tags close to the two ends. For Dlp-HA-C, an HA epitope tag was inserted at serine 732, just before the putative cleavage site for addition of the GPI anchor (S733). To produce GFP-Dlp-HA-C, the HA tag was placed at the corresponding position in GFP-Dlp, which contains a GFP moiety inserted in place of residue G68, close to the N terminus of the protein following removal of the signal peptide at residue 41. S2 cells were transfected with Dlp-HA, Dlp-HA-C, or GFP-Dlp-HA-C together with normal or mutant forms of Notum. Notum induced comparable mobility shifts in all three forms of Dlp. The C-terminally HA-tagged forms of Dlp were processed more efficiently than Dlp-HA, so that more of the faster migrating from was observed without addition of wild-type Notum (Notum is expressed in S2 cells). These observations are difficult to reconcile with Notum acting as a protease (Kreuger, 2004).

The possibility was considered that the shift in Dlp mobility could be due to cleavage of the GPI anchor. Lysates were prepared from S2 cells transfected with Dlp-HA with or without Notum, and half of each was treated with phospholipase-C (PI-PLC) to cleave the GPI anchor of Dlp. Interestingly, PI-PLC cleavage caused a mobility shift in Dlp comparable to that caused by Notum. Notum had no additional effect on PI-PLC-treated Dlp. Although the magnitude of this shift in apparent molecular weight is larger than would be expected from the mass of the GPI anchor alone, anomalous migration of proteins in SDS-PAGE has been observed following removal of GPI anchors (Kreuger, 2004).

To further evaluate the possibility that the mobility shift caused by Notum might be due to cleavage of the GPI anchor, a Triton X-114 phase separation analysis was performed. Following phase separation, integral membrane proteins and GPI-anchored proteins are recovered mainly in the detergent phase, while other proteins are mainly in the aqueous phase. In cells cotransfected to express Dlp and Notum, processing of Dlp was efficient and the faster migrating form of Dlp was mainly recovered in the aqueous phase. In cells transfected to express Dlp, the slower migrating form was mainly recovered in the detergent phase, consistent with it having a GPI anchor. The faster migrating form partitioned between aqueous and detergent phases. These observations are consistent with the suggestion that the faster migrating form of Dlp produced by Notum lacks a GPI anchor (Kreuger, 2004).

It was next asked if Notum could act on forms of Dlp that lack a GPI anchor. The predicted GPI anchor site of Dlp consists of the sequence SDA (at S733) followed by a characteristic hydrophobic motif. Mutation of any of the three residues of the GPI anchor site to proline has been shown to reduce GPI addition in other glypicans. The SDA motif was mutated to PDA in GFP-Dlp-S988P (residue numbers are for GFP-Dlp). A truncated version of GFP-Dlp was also prepared in which a stop codon was inserted after S987 to mimic the effects of cleavage of the protein chain at this position without addition of GPI. Coexpression with Notum had little or no effect on these forms of GFP-Dlp. GFP-Dlp-S988P migrated predominantly at an intermediate position, faster than the GPI-anchored form but slower than the Notum-processed form. This presumably reflects the full-length protein that has not been cleaved for GPI addition (this form appears as a minor band in most preparations). The major band of GFP-Dlp-S988P is unaffected by Notum, though a small amount of the protein does appear to have had GPI added (perhaps at S987) and was subject to Notum activity. The truncated GFP-Dlp-S987Z protein did not produce any of the slower migrating GPI anchored form and was not affected by Notum. GFP-Dlp-S987Z migrated slightly faster than the Notum-modified form of GFP-Dlp. In Triton X-114 phase separation analysis, GFP-Dlp-S987Z partitioned into the aqueous phase, also consistent with the lack of a GPI anchor. The form of Dlp cleaved by PI-PLC comigrated more closely with the Notum-processed form, consistent with the possibility that Notum cleavage was in the GPI moiety (Kreuger, 2004).

Next a version of Dlp was prepared that was not GPI anchored, in order to ask if it would be a substrate for Notum. GFP-Dlp was fused at residue S975 to residue R23 of the transmembrane protein CD2 and expressed in S2 cells. This protein contains the entire ectodomain (CRD and stem) of Dlp, but lacks the GPI addition signals (the fusion is at the equivalent position in Dlp to the S987Z construct; numbering differs because the HA tag was removed). GFP-Dlp-CD2 was not cleaved by PI-PLC, verifying that it does not contain a GPI anchor. GFP-Dlp-CD2 was also not a substrate for Notum. If Notum acted as a protease to cleave in the Dlp protein, it would be expected that GFP-Dlp-CD2 fusion would be a substrate for Notum. Likewise, if Notum acted on the GAG side chains or on another posttranslational modification, it would be expected that GFP-Dlp-CD2 would be affected. Taken together, these observations indicate that Notum can induce modification of Dlp in a manner that resembles cleavage of the GPI anchor. Given that the alpha-hydrolases includes lipases, it is possible that Notum might act directly to cleave within the GPI anchor. Alternatively, Notum could induce the activity of an endogenous phospholipase (Kreuger, 2004).

Can cleavage at the GPI anchor cause Dlp to be shed from the cell surface? The faster and slower migrating forms of Dlp-HA were efficiently recovered from the cell lysates. In addition, the faster migrating cleaved form of Dlp-HA was recovered from the culture medium of cells overexpressing Notum. The slower migrating GPI-anchored form of Dlp-HA was not recovered from the medium. Very little Dlp-HA was recovered from medium conditioned by cells transfected with Dlp alone or with the Notum mutant. This indicates that Notum can release Dlp from the cell surface, causing it to be shed into the medium. Notum does not induce detectable shedding of HA-tagged Dally (Kreuger, 2004).

Dlp-HA or Dally-HA were expressed under en-Gal4 control in the wing disc to compare the effects of the endogenous Notum protein on Dlp and Dally. Notum is expressed at the dorsoventral boundary under control of Wg. En-Gal4 produced a uniform level of Dally-HA across the wing pouch. In contrast, Dlp-HA protein levels were lower at the dorsoventral boundary. Notum caused loss of Dlp, but had little effect on Dally. This presumably reflects shedding of Dlp protein from cells in the disc in the region where Wg levels are highest (Kreuger, 2004).

The finding that Notum can cleave and release Dlp from cells raised the possibility that Dlp might be released together with bound Wg. This could explain how Dlp acts to reduce Wg activity where Wg and Notum levels are high. Therefore the possibility was tested of synergistic action of Notum and Dlp on Wg function. Overexpressed Dlp binds and sequesters Wg at the cell surface, leading to reduced Wg activity. Coexpression of Notum with Dlp reduced the ability of Dlp to bind and retain Wg (Giraldez, 2002). To examine the effects of Notum on Dlp activity, transgenes expressing Notum or Dlp were selected at levels that were on the threshold for altering wing morphology. When expressed under en-Gal4 control, each transgene caused loss of some of the posterior wing margin bristles, indicating mild reduction of Wg activity. Expression of the two transgenes together caused scalloping of the wing, a typical defect caused by more severe reduction of Wg activity. This observation suggests that expression of Notum enhanced the ability of Dlp to reduce Wg activity. In view of the finding that Notum can cause Dlp to be released from the cell surface, it is suggested that coexpression of Notum causes Dlp to be released together with bound Wg (Notum reduced the level of Wg bound in the disc; Giraldez, 2002). Release of Wg bound to Dlp could reduce the level of Wg available for signaling and cause the observed wing scalloping phenotype. Notum causes release of Dlp from cells at the DV boundary, where Wg levels are highest (Kreuger, 2004).

Therefore, Notum can induce cleavage of Dlp in a manner that resembles PI-PLC cleavage of the GPI anchor. Notum and PI-PLC produce comparable shifts in the electrophoretic mobility of Dlp. Although the magnitude of this shift is larger than would be expected from the mass of the GPI anchor, other studies have shown that the effects of removing GPI anchors are not predictable. Examples of increased or decreased mobility have been reported, and the magnitude of the shifts can be large. Notum-induced processing also renders Dlp soluble in the aqueous phase following detergent phase separation of soluble and membrane-associated proteins, consistent with removal of the GPI anchor. Also, a Dlp-CD2 fusion protein that is not GPI anchored, and is therefore not a substrate for PI-PLC, is insensitive to Notum. This would not be expected if Notum acted on the GAG side chains or if Notum was a protease cutting within the Dlp core protein. These observations are consistent with two modes of Notum action. Notum might act directly to cleave the GPI anchor or it might modify Dlp in some way that makes Dlp a substrate for an endogenous phospholipase. The exact nature of the Notum-induced cleavage remains to be determined; however, one intriguing possibility is that Notum might cleave within the glycan linker of the GPI anchor (Kreuger, 2004).

Can the effects of Notum on Dlp provide an explanation for the apparently opposing activities of Dlp at high and low levels of Wg? How could Notum-induced cleavage of Dlp lead to reduced Wg activity, whereas removal of Dlp by RNAi increases Wg activity? If Wg remains bound to Dlp when Dlp is cleaved and shed from the cell, bound Wg would also be shed and so become unavailable for signaling. Shedding of Dlp as a consequence of Notum-induced cleavage could reduce peak levels of available Wg. Notum is expressed at the source of Wg and so would be expected to shed Dlp and reduce Wg activity where Wg levels are highest. In this way, removal of Dlp protein as a consequence of Notum-induced cleavage could have a different effect than failure to express Dlp. In the absence of Dlp, Wg would not bind Dlp and be shed with it, so that more Wg might be available to interact with Dally and/or the Wg receptor complex. This could increase the effective concentration of Wg locally near the site of Wg production (Kreuger, 2004).

This model is consistent with the observed synergy between low-level expression of Dlp and Notum. Overexpression of Dlp is thought to increase the number of Wg binding sites and shift the equilibrium toward more Wg bound to Dlp. At high levels of Dlp, this can reduce the amount of Wg available for signaling and produce a Wg loss-of-function phenotype. A level of Dlp overexpression was chosen that produces a mild defect due to reduced availability of Wg. Coexpression of Notum would lead to shedding of the Dlp bound Wg and thus remove this fraction of Wg from the pool on the cell surface so that it would no longer be able to contribute to the pool of Wg in equilibrium with the receptor. This would be expected to further reduce Wg activity and increase the severity of the defect, as observed (Kreuger, 2004).

Wingless is a morphogen required for the patterning of many Drosophila tissues. Several lines of evidence implicate heparan sulfate-modified proteoglycans (HSPGs) such as Dally-like protein (Dlp) in the control of Wg distribution and signaling. dlp is required to limit Wg levels in the matrix, contrary to the expectation from overexpression studies. dlp mutants show ectopic activation of Wg signaling at the presumptive wing margin and a local increase in extracellular Wg levels. dlp somatic cell clones disrupt the gradient of extracellular Wg, producing ectopic activation of high threshold Wg targets but reducing the expression of lower threshold Wg targets where Wg is limiting. Notum encodes a secreted protein that also limits Wg distribution, and genetic interaction studies show that dlp and Notum cooperate to restrict Wg signaling. These findings suggest that modification of an HSPG by a secreted hydrolase can control morphogen levels in the matrix (Kirkpatrick, 2004).

By a number of cellular and molecular markers, compromising dlp function produced ectopic activation of high-threshold Wg target genes in the wing imaginal disc. dlp adult escapers have ectopic mechanosensory bristles and dlp third instar larvae show expanded expression of Ac, a marker for sensory organ precursor cells. Wg signaling was abnormally elevated along the DV boundary of dlp mutant discs by a number of other measures, including expansion of the zone of nonproliferating cells (ZNC) and ectopic expression of Cyclin A. These findings are consistent with the expansion of sensory organ precursor cells produced by RNAi inhibition of dlp function. These phenotypes show that Dlp serves to limit activation of high-threshold target genes near the DV boundary (Kirkpatrick, 2004).

The expansion of Wg signaling found in dlp mutants is accompanied by locally elevated levels of extracellular Wg. The increase in Wg in the matrix of dlp mutant wing discs is not associated with increases in Wg production or altered expression of D-fz2, a known regulator of Wg levels. These findings argue against the model that dlp controls Wg levels indirectly via control of Wg expression or other regulatory genes. It is well established that Wg binds heparan sulfate, and therefore it is likely that Dlp controls Wg levels through a direct interaction (Kirkpatrick, 2004).

The expansion of Wg-directed patterning in the wing disc of dlp mutants was a surprising finding on a number of counts: (1) mutations in genes encoding heparan sulfate biosynthetic enzymes compromise rather than increase the levels of Wg in the matrix; (2) ectopic expression of Dlp results in higher levels of Wg in the matrix. These findings suggest that loss of Dlp would destabilize Wg on cell surfaces and in the matrix, thereby reducing Wg signaling. However, exactly the opposite result was obtained in dlp mutants: loss of Dlp increases extracellular Wg and signaling. These findings emphasize that while mutations compromising synthesis of all HSPGs might destabilize Wg in the matrix, loss of any one proteoglycan can have very different effects (Kirkpatrick, 2004).

The phenotypes of dlp mutants suggest that Dlp serves to limit Wg distribution and/or alter Wg stability, thus affecting the Wg gradient in the wing disc. Genetic mosaic analysis of dlp clearly demonstrates that the ectopic activation of Wg signaling, as measured by Arm, Cyclin A, and Ac expression, occurs non-cell autonomously, providing support for this model. Recent mathematical modeling of morphogen gradients demonstrates that binding of morphogens to receptors or coreceptors on cell surfaces or in the matrix can have profound effects on diffusion and subsequently limit morphogen activity. Consistent with such modeling, it has been demonstrated experimentally that a nonheparin binding isoform of the secreted growth factor VEGF adopts a broader, shallower distribution than heparin binding forms and the differential localization of VEGF-A isoforms in the matrix controls the vascular branching pattern. It is also well established that heparan sulfate proteoglycans mediate endocytosis of extracellular ligands, and the findings suggest the possibility that Dlp might mediate endocytic control of Wg levels in the matrix. dlp mutants display locally elevated levels of extracellular Wg without an increase in production, and therefore Wg turnover must be affected in some way (Kirkpatrick, 2004).

In contrast to the higher levels of extracellular Wg found near the DV boundary in dlp mutant wing discs, there is no apparent change in the low level of Wg at the edges of the gradient. However, genetic mosaic analysis of dlp in wing development shows that loss of dlp can modestly reduce the activation of a low-threshold Wg target gene in those regions where Wg levels are low. Since this effect on Wg signaling is not a consequence of reduced levels of Wg in the matrix, it must result from an alteration of cell responsiveness or the bioactivity of the Wg that is present. The findings are consistent with studies showing that RNAi of dlp in the wing disc also inhibits transcriptional activation of Wg target genes in regions where Wg is low. It is interesting to note that dlp expression, like that of the Wg receptor D-fz2, is highest outside the presumptive wing margin. Perhaps the high level of dlp expression in this region serves, in part, to enhance cellular responses to Wg. The ability of Dlp to enhance Wg signaling as well as limit Wg distribution is not unprecedented: the other glypican in Drosophila, Dally, enhances Dpp signaling in regions of the wing disc where Dpp levels are modest in addition to regulating the distribution of Dpp protein (Kirkpatrick, 2004).

Mutations in Notum produce ectopic activation of Wg signaling and alter the Wg gradient, similar to what was observed in dlp mutants. Notum encodes a protein with homology to plant hydrolases and has been proposed to alter the structure of Dlp, thus affecting its affinity for Wg. Coexpression of Notum with Dlp decreases Dlp-mediated stabilization of Wg protein in the wing pouch. dlp and Notum mutants fail to complement: this is strong genetic evidence that Dlp and Notum cooperate to control Wg-mediated patterning. Biochemical studies show that Notum can cleave Dlp from the cell surface. The finding that heterozygosity for dlp ameliorates patterning abnormalities produced by ectopic Notum suggests that Dlp is a principal substrate for Notum activity. The results suggest that Notum-mediated release of Dlp from the cell surface is required for Dlp to limit Wg signaling (Kirkpatrick, 2004).

Notum and dlp are expressed in complementary patterns in the wing disc, with Notum levels highest near the DV boundary and dlp levels highest elsewhere. Thus, a gradient of Dlp cleavage may be established across the disc, with some Dlp remaining on cell surfaces in regions distant from the DV boundary, enhancing cellular responses to Wg. Cleavage of Dlp would remove this coreceptor activity, but shed Dlp-Wg complexes also could limit Wg signaling by promoting Wg clearance or could serve as dominant-negative inhibitors of signaling. Coexpression of Notum and Dlp in the wing disc produced more intracellular vesicles compared to expression of Dlp alone: this is consistent with a role for shed Dlp in promoting endocytosis and clearance of Wg from the matrix (Giraldez, 2002). Such a role is also consistent with the non-cell-autonomous effects of dlp somatic cell clones on extracellular Wg distribution. Loss of dlp in clones might locally reduce Wg turnover as well as reducing cell surface binding sites for Wg, permitting increased diffusion of Wg and accumulation on wild-type cells at clone boundaries. Spatial regulation of Dlp activity by Notum can explain how Dlp primarily limits Wg signaling near the DV boundary and enhances signaling away from the boundary, but other Wg-dependent factors may also influence the ability of Dlp and Notum to downregulate Wg levels. Notably, recent mathematical modeling suggests that elevated degradation of Wg close to its source is necessary to enhance the robustness of the morphogen gradient. Together, Dlp and Notum may provide this locally increased turnover and hence stabilize the Wg gradient. Enzymatic modification of a proteoglycan to influence its cell surface localization may enable it to play both positive and negative roles in signaling and provides another potential mechanism for regulating morphogen distribution in tissues (Kirkpatrick, 2004).

The respective contribution of Heparan Sulfate Proteoglycans (HSPGs) and Frizzled (Fz) proteins in the establishment of the Wingless (Wg) morphogen gradient has been examined. From the analysis of mutant clones of sulfateless/N-deacetylase-sulphotransferase in the wing imaginal disc, it was found that lack of Heparan Sulfate (HS) causes a dramatic reduction of both extracellular and intracellular Wg in receiving cells. These studies reveal that the Glypican molecule Dally-like Protein (Dlp) is associated with both negative and positive roles in Wg short- and long-range signaling, respectively. In addition, analyses of the two Fz proteins indicate that the Fz and DFz2 receptors, in addition to transducing the signal, modulate the slope of the Wg gradient by regulating the amount of extracellular Wg. Taken together, this analysis illustrates how the coordinated activities of HSPGs and Fz/DFz2 shape the Wg morphogen gradient (Baeg, 2004).

Sfl encodes a homolog of the Golgi enzyme HS N-deacetylase/N-sulfotransferase that is required for the modification of HS. It was of interest to determine whether the retention of Wg at the cell surface involves HSPGs in receiving cells, since it has been proposed that HSPGs are unlikely to be required in Wg-receiving cells. In the wing blade, Wg, originating from the D/V border, is detected in an irregular pattern of puncta in receiving cells; these puncta correspond to the internalized Wg protein. The intensity and number of puncta decreases from the source of Wg. Furthermore, using an extracellular labeling method, a gradient of Wg protein that appears broader, shallower, and with less puncta is observed. Both in sfl mutant wing discs and in large sfl mutant clones, a striking decrease in the number of Wg puncta was observed. This decrease is not due to a change in wg transcription because it is not affected in sfl mutant cells. Further, lack of Sfl activity does not appear to disrupt the overall amount of Wg produced by wg-expressing cells but is associated with a dramatic decrease in extracellular Wg. These results suggest that HSPGs are required for sequestering extracellular Wg in receiving cells (Baeg, 2004).

To gain further insights into the role of HSPGs in receiving cells to shape the Wg gradient, an examination has been made of the distribution of Wg in patches of WT cells located within a large sfl mutant territory. In such cases, bright spots of Wg were be detected within the patch of WT cells, indicating that sfl-expressing cells are able to sequester extracellular Wg, unlike neighboring cells that lack sfl. This result is consistent through an analysis of more than 10 clones. Further, clones of cells that overexpress Notum-GT (Golgi-tethered), which acts cell autonomously in receiving cells, were generated. Notum, which encodes a member of the α/β-hydrolase superfamily, antagonizes Wg signaling and it has been proposed that Notum acts by altering the ability of the cell surface glypican molecules Dally and Dlp to stabilize extracellular Wg (Giraldez, 2002). Consistent with the conclusion that HSPGs are required in receiving cells to capture extracellular Wg, a decrease in the formation of Wg puncta was observed in cells overexpressing Notum-GT. These results are consistent with at least two nonexclusive models: (1) HSPGs could be required for Wg stability and/or trapping of Wg at the cell surface such that it does not diffuse away; (2) HSPGs could be involved in promoting Wg movement throughout tissues. The role of HSPGs in sequestering and/or stabilizing the ligand is supported by previous observations that overexpression of either Dlp or Dally results in the accumulation of extracellular Wg (Baeg, 2004).

Because HSPGs have been implicated in endocytosis of ligands such as FGF, possibly HSPGs also play a role in Wg internalization. A role for HSPG in Wg endocytosis would be consistent with the absence of puncta in sfl clones, and also the observed accumulation of extracellular Wg following overexpression of Dlp-HA (Giraldez, 2002). However, much of Wg proteins appeared in intracellular vesicles, instead of outlining the cell surface, in discs overexpressing both Dlp-HA and Notum. If HSPGs were directly involved in Wg internalization, fewer intracellular vesicles would be detected in discs overexpressing Dlp-HA and Notum since Notum acts to decease the affinity of Dlp for Wg. Furthermore, if the primary function of HSPGs were to internalize Wg, then extracellular Wg accumulation in cells lacking HSPGs activity would be expected, which is not the case. However, the data does not rule out the possibility that HSPGs play a direct role in Wg endocytosis, and, thus, further analysis will be required to clarify this issue. Taken together, these results suggest that the primary role of HSPGs is to trap and/or stabilize extracellular Wg in receiving cells where it is then able to interact with its signaling receptor as well as other factors that are responsible for its internalization, and thus contributes to shaping the Wg gradient (Baeg, 2004).

Previous ectopic expression studies have shown that Dlp can trap extracellular Wg and prevent activation of the Wg signaling pathway. Because Dlp appears to be a major HSPG required to regulate Wg signaling, its endogenous distribution was examined in the wing imaginal disc using a polyclonal antibody against Dlp and a staining method that primarily detects extracellular proteins. The specificity of the Dlp antibody was confirmed by misexpressing dlp using the ap-Gal4 driver. In the third instar wing imaginal disc, Dlp was detected throughout the disc; however, a significant decrease in the level of Dlp was detectable at the D/V border. This domain of low Dlp expression correlates with the region where high level of Wg signaling is required to induce the expression of short-range target genes. It is noted that since dlp mRNA expression is uniform throughout the disc, the down-regulation of Dlp at the D/V border must occur post-translationally. Interestingly, an optical cross section of the disc has revealed that endogenous Dlp localizes mostly on the basolateral surface of the cell where extracellular Wg is detected. The subcellular localization of Dlp protein was also examined using a GFP-dlp expressed under the control of a Gal4 driver. Consistent with the Dlp antibody result, it was found that GFP-Dlp localizes predominantly to the basolateral membrane. Altogether, these observations suggest that Dlp can bind to extracellular Wg and that Dlp levels need to be reduced for high-level Wg activity in cells near the D/V boundary (Baeg, 2004).

In a genome-wide RNAi screen in S2R+ cells to identify genes that either up- or down-regulate Wg signaling, Dlp was identified as both a negative and positive regulator of Wg signaling under stimulated and nonstimulated conditions, respectively. The cell-based assay devised consists of the activation of a Tcf/Arm-dependent Wg-reporter gene upon induction of S2R+ cells by expressing a wg cDNA by transient transfection. The activity of the Wg pathway and the effect of the addition of various dsRNAs on the pathway were assayed by monitoring Luciferase-reporter activity using a luminescence-based plate reader. Using this assay, the addition of dsRNAs of positive transducers of Wg signaling, such as arm, decrease the Top12X-HS-Luciferase reporter activity, while dsRNAs to negative Wg regulators, such as Daxin, increase its activity. Interestingly, under condition of Wg induction, dlp was found to act as a negative regulator of Wg signaling, since dlp dsRNA led to a twofold increase in luciferase activity. This increase is significant since it is comparable to that of daxin dsRNA. In the absence of Wg induction, dlp was found to positively regulate Wg signaling, since dlp dsRNA leads to a fivefold decrease in luciferase activity, a decrease that is similar to that observed by the addition of arm dsRNA. These results suggest Dlp acts as a positive regulator of the Wg pathway when Wg level is low and negatively influences signaling when Wg is abundant. These results are consistent with in vivo results that demonstrate that Dlp has both a positive and negative role in Wg signaling (Kirkpatrick, 2004). The observations in S2R+ are consistent with the hypothesis that low Dlp levels at the D/V boundary supports high-level Wg signaling, while further away from the D/V boundary where the Wg concentration is lower, Dlp positively influences Wg signaling. Overall, the result from the S2R+ RNAi experiments indicates that (1) Dlp is not an essential component of the Wg signal transduction pathway; and (2) Dlp can either have a negative or positive impact on Wg signaling depending on the level of Wg available. The negative effect of Dlp is consistent with previous in vivo studies that have shown ectopic Dlp expression can trap extracellular Wg and prevent activation of the Wg signaling pathway. Therefore, a reduction of Dlp levels at the D/V border would be expected to contribute to high-level Wg signaling. The positive effect of Dlp in Wg signaling needs to be understood in the context of the previous findings that loss of HSPG activity results in wg loss-of-function phenotypes, as shown by a decrease in dll expression in clones mutant for enzymes involved in GAG biosynthesis. One attractive model is that Dlp would act as a co-receptor that traps/stabilizes extracellular Wg and facilitates its association with the signal transducing Fz receptors in cells located at a distance from the D/V boundary where low level of Wg is available. Finally, these observations are consistent with a recent study (Kirkpatrick, 2004) that showed that (1) ectopic activation of Wg signaling at the wing margin occurs in dlp mutant tissues, and (2) a cell autonomous reduction in Wg signaling in dlp clones located distal to the Wg-producing cells (Baeg, 2004).

The distribution of Dlp protein is reminiscent of the down-regulation of Dfz2 transcription near the D/V border. Wg-mediated repression of DFz2 expression has been shown to affect the shape of the Wg gradient, resulting in a gradual decrease in Wg concentration. Because these results indicate that HSPGs affect Wg distribution, the functions of the two seven transmembrane Wg receptors, Fz and DFz2, were examined to evaluate how the signal transducing receptors cooperate with HSPGs in shaping the Wg gradient. To determine the role of Fz and DFz2 in Wg movement, the distribution of Wg in fz DFz2 double-mutant clones was examined. In these clones, an expansion of wg expression was observed, which is consistent with the previously described Wg 'self-refinement' process, by which Wg signaling represses wg expression in cells adjacent to wg-expressing cells. Unexpectedly, within these clones, Wg puncta are still present, indicating that Fz/DFz2 receptor activities are not required for Wg spreading (Baeg, 2004).

To determine whether Wg is present in endosomes in the absence of Fz/DFz2 activities, wing discs were labeled with the endosomal marker Texas-red dextran. More than 50% of Wg puncta co-localize with red dextran, indicating that Wg is internalized in the absence of Fz/DFz2 activities. These observations are consistent with results in the embryo, and altogether suggest that internalization of Wg can be accomplished by proteins other than Fz/DFz2. Interestingly, this observation contrasts with the role of HSPGs in Wg distribution, since wing discs lacking GAGs show alteration in Wg puncta in receiving cells. The extracellular distribution of Wg was examined in fz DFz2 mutant clones. Interestingly, accumulation of extracellular Wg was detected throughout these clones, thus revealing that Wg can bind to the cell surface and that Fz/DFz2 receptors are required somehow for Wg degradation. To exclude the possibility that accumulation of extracellular Wg results from increased wg expression or secretion in fz DFz2 clones that cross D/V boundary, small clones that do not include the D/V boundary were generated. Accumulation of extracellular Wg was detected in these clones, which is reminiscent of the finding that overexpression of a dominant-negative form of DFz2 (ΔDFz2-GPI) driven by en-Gal4 in embryonic tissue prevents Wg decay within the en domain. It has been proposed that endocytosis of a Wg/receptor complex is responsible for down-regulating Wg levels. Further, because Wg is still organized in a graded manner in these clones, as shown by the distribution of the Wg puncta, it indicates that Wg movement can occur in the absence of Fz/DFz2 (Baeg, 2004).

There is a third member of the Frizzled family encoded by DFz3 that could influence the distribution of Wg in tissues. DFz3 expression is similar to that of wg, and a constitutively activated form of Arm up-regulates its expression in the wing disc, suggesting that DFz3 is transcriptionally regulated by Wg signaling. Based on these observations, little or no DFz3 protein would be expected to be present in cells that lack Fz/DFz2 activity, suggesting that internalization of Wg in Fz/DFz2 mutant cells is unlikely to be mediated by DFz3. Another candidate that could affect Wg distribution is Arrow, which is a Drosophila homolog of a low-density lipoprotein (LDL)-receptor-related protein (LRP) and has been shown to be essential in cells receiving the Wg signal. However, because a soluble form of the Arrow fails to bind Wg and Fz receptors in vitro, and because Arrow functions after DFz2 engages Wg, it is unlikely that Wg internalization in Fz/DFz2 mutant cells is mediated by Arrow. Finally, as is case for FGF endocytosis, HSPGs themselves possibly play a role in Wg internalization (Baeg, 2004).

In summary, there is a Fz/DFz2 receptor-independent mechanism that organizes Wg distribution, and Fz/DFz2 proteins play a role in Wg gradient formation by decreasing the level of extracellular Wg. Regulation of extracellular Wg levels by Fz/DFz2 may occur through receptor-mediated endocytosis, or by some other mechanisms. If Wg degradation occurs by receptor-mediated endocytosis, it indicates that there may exist more than one way to generate Wg puncta since these are still present in the absence of Fz/DFz2 receptor activity. These findings also emphasize that the amount of Fz/DFz2 receptors at the cell surface must be precisely regulated to achieve the proper spreading of Wg, an observation that is underscored by the transcriptional down-regulation of DFz2 expression near the source of Wg (Baeg, 2004).

To further examine the role of Fz/DFz2 receptors in Wg gradient formation, DFz2 was overexpressed at the D/V boundary using the C96-Gal4 driver, and the effect on Wg distribution and wing patterning was examined. Analysis was focused on DFz2 since DFz2 has been shown to bind Wg with high affinity and to stabilize it. Further, DFz2 expression is down-regulated by Wg signaling, and this regulation has been shown to play a critical role in the overall shape of the Wg gradient. Interestingly, ectopic expression of DFz2 results in wing notching and ectopic bristles at the wing margin of adult wing. Previous studies have shown that wing nick phenotypes result from an inhibition in Wg signaling activity while the presence of ectopic bristles on the wing blade corresponds to an increase in Wg signaling. Thus, based on the wing phenotypes, it appears that overexpression of DFz2 paradoxically both increases and decreases Wg signaling (Baeg, 2004).

Overexpression of the DFz2 could interfere with Wg signaling and its distribution in a number of ways. For example, an increase in DFz2 could increase the efficiency of Wg signaling, if the amount of receptor is limiting. Further, since wg expression in the wing disc is restricted to the D/V margin, and Wg diffuses from it, trapping of Wg near these cells most likely will have an effect on Wg short- and long-range activity since the shape of the Wg gradient will be disrupted. To distinguish between these possibilities, Wg distribution was examined in discs with clones of cells that overexpress DFz2 at the D/V boundary. These clones were associated with two effects on Wg distribution. (1) The level of Wg was increased in the clones of cells where DFz2 was overexpressed, indicating that an increase in the level of DFz2 in receiving cells leads to an increase in trapping extracellular Wg. This observation is consistent with the occurrence of extra bristles on the wing blade since they reflect high levels of Wg signaling activity. (2) A dramatic reduction in Wg puncta was detected in WT cells located adjacent to the cells overexpressing DFz2, suggesting that Wg movement from the D/V margin into the wing blade is impaired as a result of the excess trapping of Wg by cells that overexpress DFz2. To demonstrate that Wg accumulation correlates with an increase in Wg signaling and that the absence of Wg puncta correlate with an absence of Wg signaling, the effect of DFz2 overexpression on the expression of senseless was examined. sen expression is expanded in cells overexpressing DFz2, yet sen is not expressed in WT cells near a clone of cells overexpressing DFz2. This is consistent with the observation that more Wg can be detected in cells overexpressing DFz2 and that less Wg puncta are present in WT cells near a clone of cells overexpressing DFz2 (Baeg, 2004).

It has been proposed that Fz proteins contribute to Wg turnover. Thus, it is intriguing to note that overexpression of DFz2 leads to an accumulation of extracellular Wg. This may reflect saturation of the endocytotic pathway when DFz2 is overexpressed or an inability of the regulatory pathways that normally control Dfz2 endocytosis in the wing disc to appropriately respond under this overexpressed condition. Another possibility is HSPGs themselves might play an important role. Wg endocytosis and the stoichiometry of Fz to HSPGs is essential to promote proper Wg internalization. Detailed biochemical and cell biological studies are now required to clarify the role(s) of these receptors in Wg movement (Baeg, 2004).

Finally, whether overexpression of DFz2 at the D/V boundary could affect long-range activity of Wg was examined, using wing disc overexpressing DFz2 driven by C96-Gal4 driver. Interestingly, Dll expression is dramatically shortened in wing disc overexpressing DFz2 at the D/V boundary when compared to that of WT disc. It is concluded that DFz2 has multiple roles in Wg signaling: First, it transduces Wg signaling and its level is limiting in amount; and second, it affects Wg short- and long-range activity by modulating the availability of extracellular ligand (Baeg, 2004).

In this study, the respective roles of HSPGs and Fz/DFz2 receptors in Wg distribution and gradient formation were examined. Interestingly, it was found that loss of Dlp activity significantly increases the level of Wg activity in S2R+ cells upon Wg induction, indicating that Dlp acts as a negative regulator in Wg signaling and that it is not required for transducing the Wg signal. Interestingly, the in vivo results show that Dlp protein levels are low near the D/V boundary. Thus, low levels of Dlp near the source of Wg production may allow for activation of high threshold Wg target gene. It is of interest to note that Notum is highly expressed along the D/V boundary (Giralez, 2002), which would be predicted to further diminish HSPGs activity. In addition, it was found that Dlp positively influences Wg signaling in S2R+ cells when Wg is not induced, suggesting that it is required for Wg signaling in cells where Wg level is low. A possible explanation for this result is that Dlp may act as a co-receptor that traps/stabilizes extracellular Wg and facilitates its association with signal transducing Fz receptors. In the wing imaginal disc, given that Dlp is required for Wg signaling in cells where Wg levels are low, HSPG activity is possibly required for Wg signaling by somehow facilitating Wg movement. The binding of extracellular Wg to the low-affinity HSPG receptors in receiving cells may result in the association of Wg to cell membranes. Ligand movement could then occur by a mechanism that directly involves HPSGs where subsequent cycles of Wg dissociation/reassociation with HSPGs might promote the movement or require other yet to be identified extracellular molecules. To distinguish these possibilities, the role of HSPGs in Wg movement will require further detailed analysis. Regardless, these results clearly indicate that the primary role of HSPGs is to sequester and/or stabilize extracellular Wg in receiving cells. The imposition of the HSPG-mediated Wg accumulation and the Fz-dependent degradation mechanism would thus contribute to the Wg morphogen gradient. It is important to note that the expression levels of some of the critical components of each systems (i.e., dally, DFz2) are also regulated by the Wg pathway itself, indicating that the slope of the Wg gradient is established by the delicate balance between these two systems (Baeg, 2004).

The periphery of the fly eye contains a number of concentrically arranged cellular specializations that are induced by Wingless (Wg) signaling from the surrounding head capsule (HC). One of these is the pigment rim (PR), which is a thick layer of pigment cells that lies directly adjacent to the HC and completely circumscribes the rest of the retina. Many of the cells of the PR are derived from presumptive pigment cells that previously surrounded peripheral ommatidia that subsequently died. This study describes the Wg-elicited expression of Snail family transcription factors in the eye periphery that directs the ommatidial death and subsequent PR formation. These transcription factors are expressed only in a subset of the ommatidial cells not including the photoreceptors. Yet, the photoreceptors die and, thus, a non-autonomous death signal is released from the Snail-family-expressing cells that direct the death of the photoreceptors. In addition, Wg also elicits a similar peripheral expression of Notum, an enzyme that limits the extent of Wg signaling. Furthermore, a later requirement is described for Snail family proteins in the 2^o and 3^o pigment cells throughout the main body of the eye (Lim, 2006).

At the periphery of the developing fly retina, Wg emanating from the surrounding HC organizes a series of circumferentially arranged morphological specializations. This study tries to understand how different levels of Wg signaling can direct the formation of the different specializations. The role of Snail group proteins and their specific role in mediating one aspect of the Wg patterning mechanism is described: the death of the peripheral ommatidia and the formation of the PR. The manipulations of Snail group proteins affected only the peripheral death mechanism; for example, no aberrations occurred in the specification of the dorsal rim ommatidia or bald ommatidia. However, the RNAi construct probably only reduces rather than removes wor function, and residual activity of this Snail family protein may hide any effects on these other aspects of peripheral patterning (Lim, 2006).

Wg signaling regulates the expression of the Snail family genes, and a number of TCF-binding sites have been identified in the region of the three Snail genes, which is consistent with, but not proof of a direct regulation by the Wg transduction pathway. In mammalian systems, it had been shown that Snail transcription is elicited by the inhibition of glycogen synthase kinase-3 (GSK-3) which represses Snail expression by inhibiting the transcriptional activity of NFkappaB on the Snail promoter. In addition, GSK-3 can phosphorylate Snail at two consensus motifs, one for protein degradation (site I) and the other for subcellular localization (site II). Thus, in mammalian systems, Wnt signaling regulates Snail gene activity both at the level of the transcript and the protein (Lim, 2006 and references therein).

The apoptotic removal of the most peripheral ring of developing ommatidia releases the surviving surrounding pigment cells to join and thicken the PR. Ectopic expression of Snail family proteins mimics the ommatidial death that is engendered by Wg expression, and loss of these proteins prevents the normal Wg-dependent removal of the peripheral ommatidia and consequently disrupts the PR. The Snail family transcription factors thus appear to direct the death of the peripheral ommatidia and development of the PR. However, within the peripheral ommatidia these proteins are expressed only in the cone cells - they are absent from the photoreceptors (R cells) and the 1° pigment cells. They are also present in the pigment cells surrounding the ommatidia. This expression profile raises a number of points: (1) since the Snail family proteins are transcription factors, then the death signal is probably under their transcription control, but the molecular nature of the signal remains unknown; (2) since the R cells and 1° pigment cells are directed to apoptosis by the expression of Snail family proteins in other cells, then there is non-autonomous death induction. The non-autonomous initiation of death is envisaged in two possible forms. In the first model, the Snail-expressing cells sequester a survival factor that is thereby denied to other cells. Given that the cone cells express the Snail proteins but still die, this seems unlikely. The second model is that there is a factor released by Snail-expressing cells that directs the death of the ommatidial cells. The cells expressing the death factor may be the peripheral cone cells, the surrounding pigment cells or both. The second model is favored and the remainder of this discussion assumes this to be correct with appropriate reservation. (3) The pigment cells surrounding the peripheral ommatidia are impervious to the death signal. One possibility is that the death signal is presented exclusively by the peripheral cone cells and only to the cells of the ommatidia (including themselves, and R cells and 1° cells) -- not to the surrounding pigment cells. The cone cells die before the R cells, and if the cone cells were the source of the death signal then they would probably receive the signal first. Alternatively, the pigment cells may release the death signal (secreted by themselves or the cone cells) but are programmed not to respond. (4) Only the cone cells of the peripheral ommatidia express Snail family proteins (and Wg and Notum) in response to Wg signaling from the HC -- the R cells and 1° cells do not. This probably represents a predisposition of the cone cells to respond to the Wg signal resulting from the selective expression of cone cell specific factors; Cut, for example, is a homeodomain transcription factor restricted to the cone cells at this stage (Lim, 2006).

The finding that Snail transcription factors promote death in Drosophila eye periphery is in contrast to their anti-apoptotic roles in other systems. For example in C. elegans, the Snail-like CES-1 (cell death specification) protein blocks death of the NSM sister cells during embryogenesis. In vertebrates, Slug (Snail2) is aberrantly upregulated by the E2F-HLF oncoprotein in some leukemias, leading to increased cell survival. Mammalian Snail has also been shown to confer resistance to cell death induced by the withdrawal of survival factors in cell cultures (Vega, 2004). However, in the fly eye a non-autonomous effect of Snail transcription family members in apoptosis is describing, suggesting that a different molecular pathway is regulated from those of the autonomous examples above (Lim, 2006).

The death of the peripheral ommatidia appears to serve two functions -- it removes these degenerate optical units and it supplies cells for the PR that optically insulate the entire eye. With regard to the PR, there are two sources of cells. First there is the thin layer of pigment cells that circumscribes the entire pupal eye and second there are the later cells, originally associated with the moribund ommatidia, that eventually incorporate into the existing PR to thicken it. Both aspects of PR formation appear to be under Wg signaling control. During the larval phase, the Hedgehog (Hh) morphogenetic wave sweeps the presumptive retina, triggering the ommatidial differentiation process. However, Wg is expressed in the flanking HC which inhibits the inductive mechanism. Thus, the larval retinal tissue directly adjacent to the HC does not undergo ommatidial differentiation. The 2° and 3° pigment cell fate appears to be the ground state of the retinal tissue, and thus the cells directly adjacent to the HC are destined to the pigment cell fate. Later in the pupa, Wg signaling triggers the death of the peripheral ommatidia and releases their pigment cells to join the PR and increase its thickness (Lim, 2006).

The expression of both Wg and Notum (its antagonist) by the cone cells of the peripheral ommatidia is interesting. It may suggest that high levels of Wg expression are required in the peripheral cone cells, but that the diffusion of this cone-cell derived Wg needs to be tightly contained. For example, in the model above where the death signal is provided by the peripheral cone cells, high levels of Wg may be needed to trigger sufficient levels of the apoptotic signal but any diffusion of the high levels of Wg would disturb other aspects of the peripheral patterning (Lim, 2006).

In the absence of Notum, the effects of Wg signaling spread approximately one more ommatidial row into the eye periphery. This relatively mild phenotype suggests that there could be redundant mechanisms restricting the movement of Wg gradient at the eye margin. In Drosophila wing disc, the Wg receptor Drosophila Frizzled2 (Fz2) stabilizes Wg and allows it to reach cells far from its site of synthesis. Wg signaling represses Fz2 expression, creating a gradient of decreasing Wg stability towards the D/V boundary. This might also be the case in the eye periphery, where Wg signaling, in addition to activating Notum, might also represses Fz2 to limit the extent of Wg diffusion (Lim, 2006).

Snail family gene expression in the 2° and 3° pigment cells appears to be under two different control mechanisms; in the peripheral regions it is activated by Wg signaling, but in the main body of the eye it is not. Furthermore, the genes of the Snail complex appear functionally redundant in the periphery but not in the main body of the eye. Here, the phenotypes of esg clones are as strong as those of the mutations in all three genes. This may be explained by differential regulation of the gene promoters in the two positions. For example, in the main body of the eye, Esg expression in the 2° and 3° pigment cells may activate expression of the two other genes, but in the periphery, Wg signaling directly activates each of the genes, with no cross-regulation between them. The majority of studies on the specification of the main body 2° and 3° pigment cells have focused on the mechanism of weeding out the surplus interommatidial cells which occurs between 18 hours and 36 hours APF, but little is known about their subsequent maturation. The current data showed that Esg is expressed in the interommatidial pigment cells after the cell pruning mechanism, but before any sign of morphological differentiation. In the esg mutants, the 2° and 3° pigment cells do not undergo correct apical constriction, indicating that these cells are either developmentally delayed compared with their wild-type counterparts or are blocked in their maturation. If the cells are simply developmentally delayed, they should mature over time, but esg mutant clones in the adult eye show degenerate or lost 2° and 3° pigment cells. Thus, Esg appears required for the appropriate maturation/survival of the 2° and 3° pigment cells. What happens to the esg mutant pigment cells after the point when they fail to undergo apical restriction (whether they delaminate or die/degenerate in place) remains to be investigated (Lim, 2006).

Glypicans are heparan sulfate proteoglycans that are attached to the cell surface by a glycosylphosphatidylinositol (GPI) anchor. Glypicans regulate the activity of Wnts, Hedgehogs, bone morphogentic proteins, and fibroblast growth factors. In the particular case of Wnts, it has been proposed that GPI-anchored glypicans stimulate Wnt signaling by facilitating and/or stabilizing the interaction between Wnts and their cell surface receptors. In contrast, when glypicans are secreted to the extracellular environment they can act as competitive inhibitors of Wnt. Genetic screens in Drosophila have recently identified a novel inhibitor of Wnt signaling named Notum. The Wnt-inhibiting activity of Notum was associated with its ability to release dally-like protein (a Drosophila glypican) from the cell surface by cleaving the GPI anchor. Because these studies showed that the other Drosophila glypican Dally was not released from the cell surface by Notum, it remains unclear whether this enzyme is able to cleave glypicans from mammalian cells. Furthermore, whether Notum cleaves GPI-anchored proteins that are not members of the glypican family is also unknown. This study shows that mammalian Notum can cleave several mammalian glypicans. Moreover, Notum is able to release GPI-anchored proteins other than glypicans. Another important finding of this study is that, unlike GPI-Phospholipase D, the other mammalian enzyme that cleaves GPI-anchored proteins, Notum is active in the extracellular environment. Finally, by using a cellular system in which glypican-3 stimulates Wnt signaling it was shown that Notum can act as a negative regulator of this growth factor (Traister, 2008).

Dally-like (Dlp) is a glypican-type heparan sulfate proteoglycan (HSPG), containing a protein core and attached glycosaminoglycan (GAG) chains. In Drosophila wing discs, Dlp represses short-range Wingless (Wg) signaling, but activates long-range Wg signaling. This study shows that Dlp core protein has similar biphasic activity as wild-type Dlp. Dlp core protein can interact with Wg; the GAG chains enhance this interaction. Importantly, it was found that Dlp exhibits a biphasic response, regardless of whether its glycosylphosphatidylinositol linkage to the membrane can be cleaved. Rather, the transition from signaling activator to repressor is determined by the relative expression levels of Dlp and the Wg receptor, Frizzled (Fz) 2. Based on these data, it is proposed that the principal function of Dlp is to retain Wg on the cell surface. As such, it can either compete with the receptor or provide ligands to the receptor, depending on the ratios of Wg, Fz2, and Dlp (Yan, 2009).

The mechanisms controlling Wg signaling and its gradient formation are highly complex. This study provides two lines of findings for the mechanistic roles of Dlp in Wg signaling. First, it is shown that the core protein of Dlp has similar biphasic activity to wild-type Dlp in Wg signaling. Consistent with this, the Dlp core protein can interact with Wg, while the attached HS chains can enhance Dlp's affinity for Wg binding. Second, it is demonstrated that Dlp can get a biphasic response without Notum cleavage, and the ratio of Dlp:Fz2 determines its biphasic activity in cell culture and in the wing disc. While a low ratio of Dlp:Fz2 can help Fz2 obtain more Wg, a high ratio of Dlp:Fz2 prevents Fz2 from capturing Wg. It is proposed that the main activity of Dlp in Wg signaling is to retain Wg on the cell membrane rather than to act as a classic coreceptor. Dlp can mediate the exchange of Wg between receptors and itself; the net flow of the ligand depends on the ratios of the ligand, receptor, and Dlp. In support of this model, it was found that Fz2-GPI also has biphasic activity in Wg signaling (Yan, 2009).

Previous studies have demonstrated that Dlp acts as a biphasic modulator for Wg signaling in the wing disc; however, the mechanism underlying this biphasic response is not clear. One model suggests that Notum expressed at the D/V boundary can cleave Dlp and release it together with bound Wg, converting Dlp from a membrane coreceptor to a secreted antagonist. The current data suggest that this model needs to be revised. First, it was shown that expression of a GPI-deleted secreted form of Dlp (similar to the form cleaved by Notum) does not inhibit Wg signaling in the wing discs. Second, expression of CD2 forms of Dlp, which cannot be cleaved by Notum, can also inhibit sens expression similar to GPI versions of Dlp. An alternative model is that Dlp competes with Wg receptors on the cell surface, locally inhibiting signaling, but it also promotes long-range Wg gradient formation, and thus provides more Wg in the distal part of the wing disc. However, this model cannot explain how Dlp has biphasic effects in vitro, where Wg gradients do not form (Yan, 2009).

On the basis of these results, an exchange factor model is favored to explain the biphasic activity of Dlp in Wg signaling. The model is very similar to a recently published mathematical model for biphasic activity of CV-2 in BMP signaling (Serpe, 2008). In this model, Dlp might either compete with the receptor or provide ligands for the receptor, its role changing depending on the relative levels of ligand, receptor, and exchange factor. This study has shown that, in the wing discs, raising the levels of Fz2 can convert Dlp from a repressor to an activator. In S2 cells, the biphasic activity of Dlp also depends on the Dlp:Fz2 ratio, with a low level of Dlp increasing Wg signaling reporter activity and a high level of Dlp reducing its activity. Using Co-IP experiments, it was directly shown that a small amount of Dlp provides Wg for Fz2 receptor, while a large amount of Dlp sequesters the Wg ligand. Moreover, it was found that, for a constant amount of Dlp, it is more likely to repress Wg signaling at high Wg concentration, but to promote signaling at low Wg concentration. In contrast, Dlp is more likely to promote Wg signaling at high Fz2 concentration, but to repress signaling at low Fz2 concentration. Thus, this model could explain the situation in wing disc, where Dlp inhibits Wg signaling in regions close to the D/V border (high Wg and low Fz2), and promotes signaling in regions far from the D/V border (low Wg and high Fz2). These data are consistent with a previous reports showing that in vitro Dlp promotes Wg signaling when the Wg level is low, but reduces signaling when the Wg level is high. This result also fits well with the theoretical modeling data of Serpe (2008) for different ligand levels, suggesting Dlp acts similarly to CV-2 in different systems. In order to work, their model contains a tripartite complex between CV-2, BMP, and the receptor. No Dlp coprecipitated with Fz2 is detected; however, as the Serpe study proposed, the intermediate is a transient complex with very rapid on-off kinetics, and it is difficult to demonstrate the tripartite intermediate directly. Finally, in further support of the current model, it was found that Fz2-GPI, which can stabilize Wg on the cell surface and compete with Fz2 for Wg binding, also has biphasic activity in Wg signaling (Yan, 2009).

Previous studies reported that secreted Fz-related protein (sFRP), another family of Wnt-interacting proteins, can also exhibit biphasic activity in Wnt signaling, enhancing Wnt signaling at low concentration, but inhibiting it at high concentration. As mentioned above, the BMP-binding protein, CV-2, can act as a concentration-dependent, biphasic regulator for BMP signaling in the wing disc (Serpe, 2008). It is interesting to note that both sFRP and CV-2 can interact with HSPGs, and are likely to exert their function on the cell surface. In addition, another HSPG member, Xenopus Syndecan-1, shows a level-dependent activation or inhibition of BMP signaling during dorsoventral patterning of the embryonic ectoderm (Olivares, 2009). Moreover, it was found that Ihog, a recently identified Hh coreceptor (Yao, 2006), has biphasic activity in Hh morphogen signaling. Overexpression of Ihog represses high-threshold Hh target, and extends low-threshold Hh target gene expression. Together, other cell surface ligand-interacting proteins might regulate signaling by a similar mechanism. Traditionally, all cell surface ligand-binding receptors that cannot signal independently are equivocally called coreceptors, despite their diverse functions. On the basis of current results, it is proposed that some of the coreceptors may function as the exchange factors rather than the classical coreceptors, which only enhance signaling by providing ligand to the receptor (Yan, 2009).

Another important finding of this work is the demonstration that Dlp's major activity in Wg signaling depends on its core protein. Previous studies have shown that different HSPG proteins play very distinct roles in Wg signaling and distribution. However, the mechanism underlying this specificity is unknown. This study presents evidence that the specificity of Dlp in Wg signaling results from its core protein. First, the Dlp core protein has biphasic activity for short- and long-range signaling similar to that of wild-type Dlp. Second, the Dlp core protein interacts with Wg in co-IP experiment, cell-binding assay, as well as in the wing discs. Third, it is shown that the N-terminal domain of Dlp is essential for Wg binding, and that fusion of the N-terminal domain of Dlp to the Fz2 membrane and cytoplasmic domain can recapitulate Fz2 activity. These data are consistent with previous results indicating that Xenopus glypican-4 interacts with Wnt11 through its N-terminal domain. It is interesting to note that, similar to Fz2 CRD domain, the N-terminal domain of Dlp protein has 14 highly conserved cysteines, a shared feature of all glypican members (Yan, 2009).

Previously, Capurro (2005) has shown that vertebrate glypican-3 core protein is directly involved in Wnt signaling, whereas the GAG chains of glypican-3 are not required for the stimulatory effect in Wnt signaling . Moreover, recent data has shown that the glypican-3 core protein also binds to Sonic Hedgehog (Shh), but inhibits its signaling by competing with the receptor, Patched (Capurro, 2008). The opposite effects of the same glypican core protein on Wnt and Hh signaling are intriguing. Interestingly, it has also been observed that the Dlp core protein positively regulates Hh signaling in both Drosophila embryos and wing discs. Thus, the core proteins of glypican-3 and Dlp appear to have opposite roles in Wnt and Hh signaling. It is likely that different glypican cores may bear distinctive motifs to interact with Wnt and Hh proteins (Yan, 2009).

Although the Dlp core protein is able to bind Wg, it was found that the attached HS GAG chains are also important for the binding affinity between Dlp and Wg. Wild-type Dlp shows significantly stronger binding for Wg than the core protein alone. This result is consistent with previous genetic experiments showing that Wg signaling is compromised in HS-deficient mutants. In addition, biochemical studies also suggest that Wg is a heparin-binding protein. One possibility is that the Dlp core protein might have different membrane distribution than wild-type Dlp. However, this study did not observe obvious difference in the subcellular localizations between Dlp-GFP and Dlp(−HS)-GFP. It remains to be determined how the presence of HS GAG chains can enhance Dlp's ability to bind Wg (Yan, 2009).

All glypicans anchor to the cell membrane via a GPI anchor. GPI proteins are enriched in specific membrane subdomains called lipid rafts, which are suggested to promote the signaling activities of GPI-anchored proteins. Thus, one important issue is whether the GPI anchor is required for Dlp's activity in Wg signaling. The results suggest that the GPI anchor of Dlp is not essential for its activity in Wg signaling. Several lines of evidence support this view. First, Dlp(−HS)-CD2, a transmembrane form of Dlp core protein, has similar biphasic activity to that of Dlp(−HS). Second, the subcellular localizations of different forms of Dlp was analyzed, and it was found that Dlp's major activity is to bind Wg at the cell surface. Dlp-GFP, which has the strongest binding affinity for Wg, accumulates more Wg on the cell surface. In Dlp(−HS)-GFP and Dlp(−HS)-CD2-GFP-expressing discs, less Wg was found accumulated on the cell membrane and more internalized Wg vesicles were found. These results are consistent with a recent work showing that accumulating Wg on Dlp-expressing cells is less accessible to internalization. Although Dlp-GFP and Dlp(−HS)-GFP, but not Dlp(−HS)-CD2-GFP, form many endocytic vesicles due to a role of the GPI anchor in trafficking, based on these functional data, it is suggested that the GPI anchor of Dlp is not essential for Wg signaling (Yan, 2009).

Recently, it has been proposed that the GPI anchor of Dlp is required for Wg internalization and long-range signaling (Gallet, 2008). This conclusion is mainly based on the evidence that expression of GFP-Dlp-CD2 can reduce the expression of Wg long-range target gene dll. This result is apparently different from the current data showing that expression of Dlp(−HS)-CD2-GFP construct leads to expanded dll expression. To resolve this issue, the GFP-Dlp-CD2 transgenic flies used by Gallet were obtained, and the activity of GFP-Dlp-CD2 in the wing discs was examined. Different results were observed from the previous study. It was found that their GFP-Dlp-CD2 has very similar biphasic activity to Dlp-GFP when it is expressed by en-Gal4 or ap-Gal4, and the effects on dll expression were examined. One possibility for the difference is that the previous study used only ap-Gal4, which will cause expression of Dlp to reduce the size of the compartment; this may complicate comparisons of the effect of GFP-Dlp-CD2 in long-range signaling. Therefore en-Gal4, which allows the use of the A compartment as an internal control, was used. Furthermore, while the previous showed that GFP-Dlp-CD2 induces a more severe wing defect than the GFP-Dlp construct, this study found that GFP-Dlp-CD2 does not generate a more severe wing defect than than the Dlp-GFP construct. In this regard, it is important to note that the GFP-Dlp-CD2 and GFP-Dlp constructs used by Gallet employed GFP inserted at two different sites in Dlp, and that the insertion in the GFP-Dlp construct leads to reduced activity. In conclusion, the current data demonstrate that CD2 forms of Dlp have similar activity to the GPI forms of Dlp, suggesting that the GPI anchor of Dlp is not essential for its activity in Wg signaling (Yan, 2009).

Cell fate determination during developmental patterning is often controlled by concentration gradients of morphogens. In the epithelial field, morphogens like the Hedgehog (Hh) peptides diffuse both apically and basolaterally; however, whether both pools of Hh are sensed at the cellular level is unclear. This study shows that interfering with the amount of apical Hh causes a dramatic change in the long-range activation of low-threshold Hh target genes, without similar effect on short-range, high-threshold targets. Genetic evidence is provided that the glypican Dally upregulates apical Hh levels, and that the release of Dally by the hydrolase Notum promotes apical Hh long-range activity. The data suggest that several pools of Hh are perceived in epithelial tissues. Thus, it is proposed that the overall gradient of Hh is a composite of pools secreted by different routes (apical and basolateral), and that a cellular summation of these components is required for appropriate developmental patterning (Ayers, 2010).

Morphogens form long-range concentration gradients to signal positional information to cells within a complex tissue. Within an epithelium, the exact apicobasal cellular position of long-range gradient formation is not well understood. The morphogen Hh appears to be released both apically and basolaterally; however, which pool of Hh represents the functional long-range Hh was previously unknown. These studies have provided firm evidence that the wing imaginal disc uses its apical space to form a long-range gradient of Hh responsible for target gene activation. These data also suggest that short-range activity of Hh may be regulated by Hh released into the basolateral space. This implies that morphogen-receiving cells must integrate the apicobasal value of the extracellular Hh gradient present at different planes (Ayers, 2010).

In addition, it was found that morphogenic long-range gradients are shaped by extracellular matrix proteins. In the case of Hh, the glypican Dally positively regulates apical Hh levels in the producing cells, and Dally release promotes long-range spreading in this plane. Finallywe show direct genetic evidence is shown that the enzyme Notum regulates Dally release, thereby controlling the formation of a functional long-range gradient of Hh. A model is therefore proposed in which Dally controls the apical accumulation of Hh in the Hh-producing cells, and cleavage of Dally by Notum helps to shape the long-range gradient (Ayers, 2010).

It is believed, based on various observations in other organisms, that apical release and formation of a functional long-range Hh gradient may be a conserved mechanism. First, studies in Caenorhabditis elegans and Drosophila embryos have hinted at a role of apical secretion for Hh. Indeed, active apical secretion of exosomes containing Hh-like peptides in C. elegans epithelial cells has been demonstrated. In accordance, this study shows that the protein Dispatched (Disp), which is essential for Hh release in invertebrates and vertebrates, regulates apical Hh release in Drosophila embryos. Moreover, the formation of C. elegans cuticle requires the apical secretion of exosomes by Che14, the homolog of Disp. Shh aggregates in the apical lumen of the chick neural tube have been described, whereas an endogenously tagged Shh:GFP has been used that enabled visualization of the Hh gradient in mouse embryos. At embryonic day 8.5 (E8.5), when Shh is produced solely in the notochord, Shh:GFP (in Nodal Vesicular Particles [NVPs]) was found mostly apically in the neural tube (although the notochord has direct contact with the basal membrane of the neural tube). This apically concentrated Shh:GFP forms a gradient that drops exponentially along the dorsal-ventral axis (i.e., farther from the source). Similar observations have been seen when using antibodies against Shh. Thus, although apical gradients have been described in several organisms, these gradients need to be functionally challenged, something that was developed in this study (Ayers, 2010).

A tradeoff has often been observed between the long-range and the short-range Hh pathway targets; for example, increased range of dpp is often coupled with a decreased En range. Several different explanations for this could be suggested. First, increasing the spreading of Hh apically (for example, in overexpression of Sec:Dally) may result in a lower level of apical Hh close to the source, perhaps below the level required for En expression, while increasing the range of the low level needed for dpp expression farther from the Hh source. However, other data presented in this study do not fit this model. Indeed, a secreted form of Dally (Sec:Dally) did not reduce Hh apical levels at or close to the source, but seemed to just increase and elongate the levels of spreading Hh, especially far in the A compartment, whereas basolateral levels of Hh were reduced. Also, when levels of lumenal Hh were reduced (by blocking Hh on the PPM with Ptc^1130x), only a reduction in expression of long-range targets (dpp) was observed, not a change in En or Ptc expression. Furthermore, along with short-range signaling, the basolateral Hh gradient was unchanged in this genotype. Thus, two different secretion/signaling mechanisms of Hh are thought to occur from the Hh-secreting cells to the receiving cells. This tradeoff is often observed between increased dpp expression and decreased En expression when trafficking of Hh in its secreting cells is perturbed (e.g., in Shi^DN expression), suggesting that apical and basolateral pools of Hh in the producing cells are not independent. Furthermore, because this tradeoff is also observed when Dally in the P compartment is modified, it seems that Dally partially controls the balance between apical and basolateral Hh gradient formation. The data also indicate that basolateral Hh activity is formed independently of Notum, as short-range signaling is not affected in mutants of this protein. Having said this, it is not ruled out that transcription of short-range targets, such as En, may be a response to reception of both apical and basolateral Hh pools (Ayers, 2010).

Although often decreased, En expression was never lost completely; it is often unaffected in the first row of cells. Therefore, it is proposed that Hh may be secreted to the basolateral membrane, and here may signal to the adjacent receiving cells by both cell-cell contact (resulting in high En expression in the first row of receiving cells) and very limited diffusion (to activate En in up to three cells away from the A-P boundary) (Ayers, 2010).

This study suggests that the Hh that forms a basolateral gradient may be loaded in a different form to that released into the apical lumen. This is because at the lateral position, the Hh trapped by expression of Ptc^1130X in the disc proper illustrated a very different staining (highly membranous and nonpunctuate) than that found apically (which was highly punctuate). Also, the presence of basolateral Hh was found in only up to 2-3 cells away from the source, indicating a very limited ability to disperse; this could also be due to a different extracellular environment compared with the apical lumen, where Hh dispersal is higher. Although it may be basolaterally targeted, poorly diffusing Hh that is responsible for En expression in the three rows of cells, this is extremely difficult to prove. Indeed, little is known about polarized trafficking in wing imaginal discs. Although several methods have been described with which it was possible to modify apical Hh levels, no way has been found to specifically enrich or block basolateral Hh in the P compartment without affecting the apical Hh pool. Therefore, it has not been possible to directly test whether it is this gradient of Hh responsible for the pathway activation in the first row of cells in the A compartment (Ayers, 2010).

Evidence has been found for the involvement of the glypican Dally and the hydrolase Notum in the long-range apical spreading of Hh. Reduction of either of these proteins in Hh-producing cells reduces the range within which dpp is expressed, whereas short-range target En is untouched. Furthermore, Dally has been found to positively regulate apical Hh levels, and Dally release aids in long-range spreading of Hh, whereas Notum appears to be essential just for the latter. But what could the exact role of GPI-tethered Dally be in the Hh-secreting cells? It has been shown that the Heparan Sulfate of Glycosaminoglycan chains can bind and sequester both Hh and Lipophorins, which are thought to carry Hh. Therefore, GAG chain binding of Hh at the apical surface may work as a platform by which to stabilize and associate Hh with components necessary for its release and long-range spreading (Ayers, 2010).

In addition to regulating apical Hh accumulation, secretion of Dally appears to play a role in the long-range spreading and activity of Hh. It has been suggested that the secreted form of Dally increased dpp expression due to its mediation of Hh binding to the receptor complex. It cannot be ruled out that secreted Dally could have a role in stabilizing the Hh-receptor complex interaction and signaling, but it is believed that Dally shed from the P compartment is mainly involved in the formation of a long-range Hh gradient, due to changes seen in the apical Hh gradient profile. In addition, if secreted Dally was necessary for Hh-receptor interaction and signaling, then the absence of Dally in the P compartment should affect all Hh target genes. On the contrary, it was found that dally mutant clones in the P cells only affect the expression of the long-range target dpp. If promotion of ligand-receptor interaction was the only role of Dally released from the P compartment, then one would expect expression of secreted Dally to induce a higher level of signaling in the A compartment close to the Hh source, as Hh would be more highly sequestered to its receptors. On the contrary, a decrease is seen in En expression. Therefore, it is proposed that secreted Dally augments movement and extension of the Hh gradient, as opposed to solely increasing signaling (Ayers, 2010).

Lastly, analysis of Notum, a protein described as a GPI anchor cleaver (Traister, 2008), indicates that Notum in the P compartment promotes Hh long movement through its regulation of Dally. Therefore, it is proposed that after apical accumulation and clustering of Hh by GPI-anchored Dally, Notum cleaves and releases Dally, preparing Hh for its long apical voyage (Ayers, 2010).