The hedgehog signal transduction pathway

The hedgehog signal transduction pathway 1

Key components involved in Hedgehog signalling

-The Hedgehog ligand, Hedgehog (Hh)
Initiates signal transduction of the Hedgehog pathway
-The Hedgehog ligand receptor, Patched (PTCH)
Normally suppresses the activity of SMO 
-I-hog receptors
-The cell surface signal transducer, Smoothened (SMO)
Normally suppressed by PTCH, preventing its activation of the Hedgehog signalling cascade
-A microtubule-associated complex of Cos2/Kif7, Fused (Fu)
-Suppressor of Fused (Sufu)
-PKA
-GSK3 
-CK1
-Key effector Ci/Gli zink finger transcription factor
-The downstream effectors,the Gli transcription factors
[ltr]Cytosolic complex of proteins including Suppressor of Fused (SuFu) and the Gli family of transcription factors. Activation leads to expression of specific genes that promote cell proliferation and differentiation[/ltr]
-the transcription factor Cubitus interruptus (Ci).

All of these components are also present in the cnidarians. The ligands of the Hedgehog pathway are unique proteins which can auto-catalyse cleavage of the N-terminal signalling fragment from the C-terminal Intein domain. The N-terminal undergoes lipid modification, including covalent attachment of cholesterol; this modification is critical for Hedgehog’s ability to signal across long distances. A twelve-transmembrane domain protein, Patched, which belongs to a family of sterol-sensing proteins, is the core receptor of the cholesterol-linked Hedgehog molecule, and a single-transmembrane protein I-hog acts as a co-receptor.

Patched (Ptc) is a conserved 12-pass transmembrane protein receptor that plays an obligate negative regulatory role in the Hedgehog signaling pathway in insects and vertebrates. Patched is an essential gene in embryogenesis that is important for proper segmentation in the fly embryo, mutations in which may be embryonic lethal.

Formation of Hh-Patched-Ihog complex results in phosphorylation of a cytoplasmic tail of the key mediator of the pathway: a seven-transmembrane protein Smoothened (which is related to the Wnt receptors, Frizzled). 

Mechanisms and functions of Hedgehog signalling across the metazoa 1

Structure and properties of Hedgehog proteins 
Hedgehog proteins are synthesized as approximately 45 kDa pro-proteins that undergo autocleavage to yield two similarly sized fragments8 : an amino-terminal polypeptide (HH-N), which is characterized by a signal sequence and a highly conserved ‘Hedge’ domain, and a carboxy-terminal polypeptide (HH-C), which contains the highly conserved ‘Hog’ domain9 (FIG. 1a). 


Figure 1 | Structure of Hedgehog and Hedgehog-related proteins. 
a | The full-length Hedgehog (HH) protein is comprised of two distinct domains: the amino-terminal ‘Hedge’ domain (shown in dark green) and the carboxy-terminal ‘Hog’ domain (shown in blue), both of which are also found in proteins other than members of the HH family. The Hedge domain is preceded by a signal peptide sequence (SS; shown in brown). The Hog domain itself can be separated into two regions; the first two-thirds share similarity to self-splicing inteins, and this module has been named ‘Hint’, whereas the C-terminal one-third binds cholesterol in HH proteins and has been named the sterol-recognition region (SRR). In other Hog domain-containing proteins this region is referred to as the adduct recognition region (ARR), as the nature of the adduct is not known. The Hog domain promotes autocleavage to release the N-terminal Hedge domain (HH-N). 
b | Hedge domain-containing proteins predate HH and are found in protozoa and metazoa. The choanoflagellate Monosiga brevicollis has a large Hedge domain-containing transmembrane protein that also contains a von Willebrand A domain (vWA), two cadherin repeats (CA repeats), multiple tumour necrosis factor receptor repeats (TNFR repeats), as well as single immunoglobulin (Ig), immunoglobulin I-set (I-set) and epidermal growth factor (EGF)-like repeats14; the Hedge domain is designated Nhh. Proteins with a similar domain organization, though with an expansion of the CA repeats at the expense of the TNFR repeats, are encoded by the so-called hedgling gene in the basal metazoan, Amphimedon queenslandica (sponge)15 and the Cnidarian, Nematostella vectensis15. Interestingly, the hedgling structure resembles that of the atypical proto-cadherin family members, including the Fat and Dachsous proteins, which have important roles in planar cell polarity in Drosophila melanogaster154. LAG, Laminin A-G motif; SH2, SH2 motif.

All of the signalling activity of HH proteins is vested in the secreted HH-N fragment, which has the unusual property of being covalently coupled to cholesterol at its C-terminal end 3 . The only known function of the Hog domain is to promote the autocleavage reaction, a process that resembles the protein-splicing activity of inteins and requires the ‘Hint’ region, which forms part of the Hog domain 10. The cleavage reaction is driven by a nucleophilic attack on a highly conserved GCF motif in which cholesterol, recruited by the sterol recognition region (SRR) of the Hog domain, serves as the electron donor 3 . The Hedge and Hog domains have ancient origins. Although Hedgehog proteins are the only proteins known to be conjugated to cholesterol in this way, the role of the Hog domain in processing secreted proteins seems to be an ancient one: Hog domain proteins have been identified in a wide variety of organisms, including red algae, dinoflagellates and mosses, as well as throughout the metazoa (although not in higher plants) 11. In the choanoflagellate Monosiga ovata, the protist that is most closely related to the metazoa, the ‘Hoglet’ gene encodes a protein with a C-terminal Hog domain that is coupled to an N-terminal domain with sequence similarity to cellulose-binding proteins 12. However, in other organisms Hog domains have been found to be associated with an assortment of unrelated N-terminal domains. Only in the eumetazoa does the association of the Hedge and Hog domains in the form of Hedgehog proteins first appear 11 

The Hedge domain, which has a striking structural similarity to the Streptomyces albus metalloproteinase d,d-carboxypeptidase 13, is also found in Monosiga spp., in the N-terminal extracellular domain of a large transmembrane protein 14 (FIG. 1b). A protein with a similar domain organization is encoded by the so-called Hedgling gene in the basal metazoan Amphimedon queenslandica (Porifera)15. The Cnidarian, Nematostella vectensis (the sea anenome) also has a Hedgling gene, as well as two true Hedgehog genes16; by contrast, no Hedgling genes have been reported in any bilaterian species. Thus, it seems likely that Hedgehog proteins first arose in the common ancestor of the Cnidarians and the bilateria more than 650 million years ago through the combination of domains that were present in preexisting proteins, and that the Hedgling gene was subsequently lost from the bilateria 11. Most bilaterians have been shown to possess at least one Hedgehog gene, with the genome expansions in vertebrates giving rise to three genes in amniotes (Desert Hedgehog (Dhh), Indian Hedgehog (Ihh) and Sonic Hedgehog (Shh)) and four or five (Dhh, Ihha, Ihhb, Shha and Shhb) in different teleost species 17. A notable exception is C. elegans, which possesses multiple Hog domain-containing proteins but lacks a true Hedgehog gene2 . By contrast, some other nematode species have retained a Hedgehog gene, though, like C. elegans and its closer relatives, they have lost some of the components of the core signal transduction pathway 11 (described below).

Lipid modifications control the release and movement of HH. 
In addition to the covalent coupling of cholesterol to their C-termini, HH-N proteins also undergo palmitoylation at their N-termini, a modification that is promoted by an acyl transferase encoded in D. melanogaster by the skinny hedgehog (ski) gene18 and in vertebrates by its orthologue, HHAT19 (FIG. 2). 


Figure 2 | Lipid modification and release of the Hedgehog ligand. 
Following its translation, full-length Hedgehog (HH) undergoes autoproteolysis in the endoplasmic reticulum (ER)155, resulting in its covalent coupling to cholesterol. The amino-terminal ‘Hedge’ domain (HH-N) fragment is further modified through N-terminal palmitoylation that is promoted by the transmembrane acyl transferase Skinny hedgehog (SKI). Release of this doubly lipid-conjugated form of HH requires the activity of the multipass transmembrane protein Dispatched (DISP), which probably transports the protein across the plasma membrane. Once on the outer surface of the cell, HH remains associated with the lipid bilayer and interacts with the heparan sulphate moieties of the glypicans that are encoded by the dally and dally-like genes (in Drosophila melanogaster). These are also thought to recruit the apolipoprotein lipophorin, which, together with HH, becomes assembled into lipoprotein particles. Release of these particles might be mediated by the phospholipase C-like Notum, which cleaves the GPI anchors from the glypicans (indicated by scissors).

This dual lipid modification of the HH signalling protein has important effects on its properties, both enhancing its membrane association 20 and potentiating its secretion and range of action. The secretion of lipidated HH-N requires the activity of a large multipass transmembrane protein, Dispatched (DISP) 21. In mutant animals lacking DISP function, HH accumulates in producing cells and all HH-elicited responses are lost, except in cells that are immediately adjacent to signal producers 21–24. Truncated proteins that are engineered to mimic HH-N but which lack the cholesterol moiety can override this requirement for DISP; however, the range and potency of such cholesterol-free HH-N is severely compromised compared with the normal protein, suggesting that the modification is crucial for the extracellular movement of the signal following secretion 25,26. Consistent with this, the biochemical analysis of vertebrate SHH expressed in tissue culture cells indicates that lipid modification promotes the formation of freely diffusible multimeric complexes 27.

In D. melanogaster, studies of HH signalling in imaginal discs have shown that the cholesterol adduct is essential for the incorporation of HH-N into lipoprotein particles that seem to mediate its long-range transport across epithelia28 (FIG. 2). The assembly of these HH signalling entities is promoted by interaction with lipophorin, an apo-lipoprotein that circulates in the haemolymph of the fly 29. Lipophorin is recruited to HH-N-secreting cells by its interaction with the heparin sulphate moieties of the glypicans Dally and Dally-like29. These proteoglycans, which can also interact with HH30,31, localize to the apical surfaces of epithelial cells via GPI anchors, the cleavage of which seems to be required for effective long-range HH signalling32. Although the properties of the Dally and Dally-like mutants can been subject to differing interpretations29,32,33, one appealing possibility is that glypicans promote the assembly of HH-N–lipophorin particles at the plasma membrane and that cleavage of their GPI anchor facilitates the release and dispersal of HH from producing cells (FIG. 2). Notably, HH-N also localizes to the basolateral membrane of secreting and receiving cells in imaginal discs, leading to the proposal by some authors that this represents the major route of signal secretion and spread34,35. Experimental generation of HH-N ‘traps’ in groups of responding cells, however, suggests that the range of the basally secreted protein is fairly limited32: this raises the interesting possibility that basal HH-N principally acts as a short-range signal, whereas apically released HH-N acts as a long-range signal. In line with this, apically localized HH-N can be observed across the imaginal disc epithelium in a graded distribution that mirrors the functionally defined gradient of signalling activity32.


Heparin binding induces Ihog dimerization and is required to mediate high-affinity interactions between Ihog and Hh. 3  We also present crystal structures of a Hh-binding fragment of Ihog, both alone and complexed with Hh. Heparin is not well ordered in these structures, but a basic cleft in the first FNIII domain of Ihog (IhogFn1) is shown by mutagenesis to mediate heparin binding. These results establish that Hh directly binds Ihog and provide the first demonstration of a specific role for heparin in Hh responsiveness. Hh is secreted but undergoes two lipid modifications that restrict its free diffusion and facilitate transport to appropriate target sites. 

Phosphorylated Smoothened translocates from micro-vesicles, where it remained in the absence of Hh signal, to the plasma membrane (in vertebrates, to the plasma membrane of the primary cilium). From there, it promotes dissociation of the microtubule-associated complex of several proteins (including kinases PKA, GSK3 and CK1) which in the absence of signal phosphorylated the transcription factor Ci/Gli. Phosphorylated Ci/Gli undergoes proteolytic cleavage, which removes its C-terminal activator domain and generates a transcriptional repressor form (Ci/GliR). Presence of the Hedgehog signal, through dissociation of the kinases complex, results in accumulation of non-phosphorylated Ci/Gli and its subsequent (but not fully understood) processing resulting in formation of an activator form (Ci/GliA) and allowing strong activation of the target genes.

The hedgehogs were first identified because mutations of the gene in Drosophila disrupted the segmentation pattern and made the larvae look like hedgehogs. Sonic hedgehog is very important for the dorsoventral patterning of the neural tube and for anteroposterior patterning of the limbs. Indian hedgehog is important in skeletal development. The full-length hedgehog polypeptide is an autoprotease, cleaving itself into an active N-terminal and an inactive C-terminal part. The Nterminal fragment is normally modified by covalent addition of a fatty acyl chain and of cholesterol, which are needed for full activity. The hedgehog receptor is called patched, again named after the phenotype of the gene mutation in Drosophila. This is of the G-protein-linked class. It is constitutively active and is repressed by ligand binding. When active it represses the activity of another cell membrane protein, smoothened, which in turn represses the proteolytic cleavage of Gli-type transcription factors. Full-length Gli factors are transcriptional activators that can move to the nucleus and turn on target genes, but the constitutive removal of the C-terminal region makes them into repressors. In the absence of hedgehog, patched is active, smoothened inactive, and Gli inactive. In the presence of hedgehog, patched is inhibited, smoothened is active, and Gli is active (Fig. A.4d). Activation of protein kinase A also represses Gli and
hence antagonizes hedgehog signaling.

The Hedgehog (Hh) signaling pathway has numerous roles in the control of cell proliferation, tissue patterning, stem cell maintenance and development. The primary cilium is an important center for transduction of the Hedgehog signal in vertebrates. In Hh's absence, the Ptch receptor localizes to the cilium, where it inhibits Smo activation. Gli proteins are phosphorylated by PKA, CKI and GSK3B and partially degraded into truncated Gli repressor form (GliR) that suppresses Hh target gene transcription in the nucleus. In Hh's presence, Ptch disappears from the cilium, and activated Smo contributes to the translocation of the protein complex Gli, Sufu, Kif7 to ciliary tip, where Gli dissociates from the negative regulator Sufu. The production of Gli activator form (GliA) occurs and the increased nuclear accumulation of GliA results in activation transcription of Hh target genes.

Originally defined through genetic analysis in D. melanogaster 1 , the components of the HH signalling pathway have subsequently been functionally characterized in a number of vertebrate species — principally, mouse, zebrafish and human — and have also been identified through genome sequence analyses in species from a wide range of phyla (FIG. 3). These studies have revealed a high level of conservation of the ‘core’ components of the signal transduction pathway that is likely to extend across the eumetazoa, as well as some variation in their deployment that has arisen over the course of evolution.



Figure 3 | Conservation of individual molecules across species with phylogenetic representation.
Genomic inventory of Hedgehog (HH) pathway components in species representative of different phyla. The components are colour-coded to indicate their likely origin and are distributed between receiving cells (shaded beige, nuclei shown as ovals) and signalling cells (shaded purple, top of panels). Interactions established on the basis of genetic and/or biochemical data are indicated by the clustering of components. CKI, casein kinase 1; COS, Costal; DISP, Dispatched; FU, Fused; GSK3, glycogen synthase kinase 3; HHIP, Hedgehog-interacting protein; HLING, hedgling; IHOG, Interference hedgehog; PKA, protein kinase A; PTC, Patched; SKI, Skinny hedgehog; SMO, Smoothened; SUFU, Suppressor of fused


Hedgehog signaling in animal development: paradigms and principles 2

The last decade has seen extraordinary progress in deciphering the roles and mechanisms of action of Hedgehog proteins. From models in the early 1990s of a short-range signal regulating pattern in the ectoderm of the Drosophila embryo, Hh proteins are now recognized as acting both locally and at long range to regulate a plethora of processes in vertebrate as well as invertebrate development. At every step in the unraveling of the signaling pathway there have been surprises, a fact that bears ample testimony to the power of genetic analysis in uncovering novel paradigms and principles. The first of these is the unusual autoprocessing that generates the active Hh ligands, a process that simultaneously couples them to cholesterol. As we have discussed above, this unique lipid modification contributes to some key properties of the Hh signal, mediating its controlled release and movement from its source. The process of cell-to cell transport depends on two other components that appear to be dedicated to Hh signaling: Dispatch-mediated release of Hh-Np from the sending cell and Toutvelu-dependent trafficking across the target field. Cholesterol coupling may also ensure that Hh ligands are concentrated in membranes, increasing the likelihood of ligand/receptor interaction. Furthermore, the cholesterol anchor may target Hh ligands to membrane subdomains that also localize Ptc or Hip1, thereby facilitating either signaling or its termination by ligand sequestration. Robust negative-feedback mechanisms are a hallmark of most signaling pathways, and it is clear that in both the fly and the mouse, effective sequestration of Hh by Ptc is dependent on its cholesterol linkage. A second lipid modification, palmitoylation of the N terminus, also plays a key role, but most likely not in membrane retention or movement. Rather, increasing the overall hydrophobicity of this part of the protein some how enhances its ability to inactivate Ptc. Determining the structural basis of this effect will be of key importance in understanding the dose-dependent effects of Hh ligands. A further distinguishing feature of the Hedgehog pathway is its mechanism of receptor-mediated activation. In most cases, extracellular signals elicit their effects by binding to and activating a membrane-anchored receptor that, in turn, activates intracellular components of the pathway. Hh proteins, in contrast, act by repressing their receptor, Ptc, which, in turn, controls the expression of Hh target genes by repressing the activity of Smo. What is the logic of this unusual mechanism? Presently the answer is unclear, but most likely it relates to the peculiarities of Smo activation through some Ptc-dependent intracellular trafficking process, a feature that Ptc might share with SCAP, another SSD-containing regulatory factor. The recent discovery of the RABprotein encoded by the opb gene apparently dedicated to this process, strengthens this view. Future analysis of the subcellular behavior of Ptc and Smo should yield some important new insights into this enigmatic process.
 Finally, we have described the unusual way in which Hh signaling elicits its effects at the transcriptional level by altering the sign of a bifunctional transcriptional regulator. In Drosophila, the absence of Hh ligand allows the cleavage of the Ci protein, converting it to a repressor form that can bind target genes to block their transcription. Derepression of Smo, in contrast, inhibits this cleavage and promotes the nuclear import of activated full-length Ci, leading to the transcription of Hh target genes. This highly economic process is further exemplified by the finding that most, if not all, Hh signaling is mediated through Ci in Drosophila. Why, then, do vertebrates use three distinct Gli proteins as transcriptional effectors? One simple explanation could be that each operates similarly, but that gene duplication and the acquisition of new regulatory motifs have led to new tissues that incorporate Hedgehog signaling. Yet neither the expression patterns nor the activities of the different Gli proteins suggest this to be the case. Rather, there appears to have been a partial separation of repressor and activator activities into individual Gli proteins. At least one advantage of this elaboration would be to allow more complex responses within a target field; thus, the response of cells to Hh signaling would be dependent not only on the levels of ligand to which they are exposed but also on the particular repertoire of Gli genes that they express. Further analysis of the in vivo regulation of Gli proteins and of their binding specificities for different Hedgehog targets should help illuminate this aspect of the pathway. It is striking that so much of what is known about this fascinating signaling mechanism to date has been gleaned from genetic analysis, be it in flies or mice. Yet whereas genetics has provided an elaborate framework for our understanding, future progress will require a concerted effort to dissect the signaling process at the biochemical and cell biological levels. The great advances that have been made in identifying Hh-dependent processes and describing the consequences of their activities must now be matched by elucidating the ways in which Hh activities elicit these different cellular responses. Characterization of the multimeric complex that regulates Ci activity has provided a solid basis for this analysis, but many questions remain, not least how Ptc and Smo interact and how Hh binding modulates their interaction. The coming years promise to be at least as revealing as the last.

Hedgehog 4

Hedgehog function 
The hedgehog (hh) mutant and gene were originally characterized in Drosophila. Hh proteins are widely conserved within the animal kingdom. Hh signaling is involved in diverse developmental processes, and when misregulated, has been implicated in disease. Loss of Hh signaling in wing discs impedes growth and patterning in both A and P compartments and gives rise to severely reduced wings. Hh acts directly to pattern the central region of the wing. The long-range effects of reduced Hh are secondary consequences due to loss of Dpp expression along the AP compartment boundary in the wing and loss of Dpp and Wg in the leg. Ectopic expression of Hh in A cells at a distance from the AP boundary or activation of signaling by removing Hh pathway inhibitors such as patched (Ptc), protein kinase A (PKA), Costal- 2 (Cos-2), or Slimb (Slmb) causes dramatic reorganization of anterior pattern. Ectopic expression of Hh can lead to complete mirror image duplication of anterior structures. This shows the importance of localized Hh signaling during wing development. Asymmetry is critical to the function of the H patterning system. P cells, which express Hh, are not capable of transducing the Hh signal. They do not express the transcription factor Ci (due to repression by En). Anterior cells that do not receive Hh, process the full-length activator Ci protein (Ci155  or CiA) into a transcriptional repressor form Ci75 or CiR. Cells close to the boundary that receive Hh input stabilize Ci155, leading to the induction of Hh target genes. The distance from the Hh source determines which Hh target genes are activated. Hh can therefore be defined as a morphogen. Hh regulates dpp, wg, ptc, en, and collier (synonym: knot) expression in a concentrationdependent manner.

Hedgehog production 
Hh protein is produced as a precursor that undergoes autoproteolytic intramolecular cleavage by an intein-like mechanism. This generates a 20 kDa N terminal (Hh-N) and a 25 kDa C terminal fragment (Hh-C). The enzymatic activity required for the cleavage reaction is contained within the C terminal domain, while the N terminal domain accounts for all known signaling activity . During the cleavage
reaction, a cholesterol moiety is covalently attached to the C terminal part of Hh-N. Cholesterol modification may be responsible for the observed tight cell association of Hh-N to Hh producing
cells. The range over which Hh-N can move and signal is greatly extended when the cholesterol modification is prevented. In addition, Hh is palmitoylated at its N terminus. This lipid modification is also essential for Hh function. In the absence of the acyltransferase Skinny Hedgehog (Ski), Hh lacks the N terminal palmitate residue and cannot fulfill its embryonic and larval patterning activities.

Hedgehog movement 
How do these posttranslational modifications impact on Hh movement? The cholesterol and palmitate moieties presumably bind Hh to the cell surface and might be expected to preclude diffusion. Yet Hh protein and Hh activity can be detected many cell diameters away from the cells where it is produced. The release of cholesterol-modified Hh-N from the producing cells depends on the activity of the protein Dispatched (Disp) in Hh-producing cells
. The disp mutant cells appear to produce, process, and modify Hh normally but are unable to release Hh-N and instead accumulate the protein to high levels. Intriguingly, disp is predicted to encode a sterol-sensing domain
(SSD)-containing 12-pass transmembrane protein with sequence homology to the Hh-binding receptor protein Ptc. Ptc has been shown to limit Hh movement,in part, by targeting Hh for internalization and degradation. Thus, both the sending and the receiving cells require the activity of an SSD-containing protein to regulate the movement of Hh-N. Receiving cells need Ptc to sequester cholesterol modified Hh-N while sending cells need Disp to release it. How exactly Disp works in Hh release remains to be determined. It is also not known how Hh moves across tissues. This may be a case where exovesicle (argosome)-mediated movement may prove to be
important. Once Hh is released, its ability to move is influenced by heparan sulfate proteoglycans (HSPGs). The toutvelu (ttv) gene encodes an enzyme needed for HSPG biosynthesis and its activity is needed to allow movement of cholesterol-modified Hh-N in A cells. HSPGs are highly O-glycosylated proteins found abundantly at the cell surface and the extracellular matrix. HSPGs interact with a variety of extracellular proteins such as growth factors, proteases, protease inhibitors, and adhesion molecules. Through  these interactions, they participate in many events during cell adhesion, migration, proliferation, and differentiation. Biochemical analyses have indicated that Hh is a heparin-binding protein . How exactly Ttv and HSPGs affect the distribution of Hh-N is still unknown. Hh-N may require HSPGs for its stability in the extracellular space. Alternatively, binding of Hh-N to HSPGs could promote its release from producing cells, prevent its reinsertion into the membrane or its sequestration by Ptc. One could speculate that transport of lipid-modified Hh depends on a yet unidentified carrier protein able to mask the lipid moiety. The possibility of a connection between such a protein and the HSPGs remains to be explored.

Direct patterning activity of Hedgehog 
Although the largest morphological changes observed in wings lacking or ectopically activating Hh signaling are caused by changes in the expression of the Hh target gene Dpp, Hh also has a more direct effect on patterning. Hh acts directly to pattern the central region of the wing, more specifically the region between the veins 3 and 4. This short-range patterning activity of Hh is at least in part mediated through the local induction of En and the transcription factor Collier (Col). Another important function of Hh, mediated through a Ci-dependent but thus far unidentified target gene, is preventing A and P cells from mixing, thus maintaining the AP compartment boundary.



Hh is palmitoylated at its N terminus. This lipid modification is also essential for Hh function. In the absence of the acyltransferase Skinny Hedgehog (Ski), Hh lacks the N terminal palmitate residue and cannot fulfill its embryonic and larval patterning activities.

both the sending and the receiving cells require the activity of an SSD-containing protein to regulate the movement of Hh-N

The toutvelu (ttv) gene encodes an enzyme needed for HSPG biosynthesis and its activity is needed to allow movement of cholesterol-modified Hh-N in A cells

Heparan sulfate (HS) glycosaminoglycan (GAG) chains are synthesized on a core protein by the sequential action of individual glycosyltransferases and modification enzymes, in a three-step process involving chain initiation, polymerization and modification. HS chain synthesis begins with the assembly of a linkage tetrasaccharide on serine residues in the core polypeptide. This process is catalyzed by four enzymes (Xyl transferase, Gal transferase I-II and GlcA transferase I), which add individual sugar residues sequentially to the non-reducing end of the growing chain.

The core protein of Dly is crucially required for Hh signaling, whereas the attached HS chains are required for optimal Hh signaling activity.



1. http://zider.free.fr/papers/Paper%20(13).pdf
2. http://genesdev.cshlp.org/content/15/23/3059.full.pdf
3. http://www.pnas.org/content/103/46/17208.full.pdf
4. INSECT DEVELOPMENT MORPHOGENESIS, MOLTING AND METAMORPHOSIS, page 70

The hypothesis of front-loading continues to gather traction.  Consider this description of the Hedgehog signaling pathway:

In a growing embryo, cells develop differently in the head or tail end of the embryo, the left or right, and other positions. They also form segments which develop into different body parts. The hedgehog signaling pathway gives cells this information that they need to make the embryo develop properly. Different parts of the embryo have different concentrations of hedgehog signaling proteins. The pathway also has roles in the adult. When the pathway malfunctions, it can result in diseases like basal cell carcinoma. [1]
The hedgehog signaling pathway is one of the key regulators of animal development conserved from flies to humans. The pathway takes its name from its polypeptide ligand, an intercellular signaling molecule called Hedgehog (Hh) found in fruit flies of the genus Drosophila. Hh is one of Drosophila’s segment polarity gene products, involved in establishing the basis of the fly body plan. The molecule remains important during later stages of embryogenesis and metamorphosis.

So here we have a circuit that is essential to the development of metazoan body plans.  How in the world could we front-load this information into a single-celled organism?


Back in January 2009, Techne showed that many of the components of this circuit effectively existed long before the circuit was deployed:

Therefore, words like “pre-existing”, “latent” and “potential” seem apt in describing the hedghog signaling pathway and the unfolding of multicellular body plans in relation to the increase in atmospheric oxygen pressure.

Well, a recent paper came out in June that helps to extend and expand on this line of thinking.  Let me quote a couple of juicy excerpts:

Complex body plans require sophisticated cell–cell signaling pathways. How these pathways evolved is often not very well understood. Here, we argue that the Hedgehog (Hh) signaling pathway may have arisen from systems that were originally designed for the transport and homeostasis of certain bacterial sterol analogs—the hopanoids.

We assume that the original function of Ptc was simply to transport an unwanted lipid molecule out of the cell. Smo, on the other hand, derives from a protein family whose main function is to sense and to transduce extracellular signals (i.e., the GPCR family). Therefore, we propose the following scenario: let us imagine that, in primitive eukaryotes, Smo was initially a receptor sensing lipid molecules and was acting upstream of the primitive Ptc transporter (Figure 3). The two molecules would have formed a simple homeostasis system; Smo would sense the abundance of a certain lipid and would transcriptionally induce Ptc whenever this lipid was in excess and needed to be removed from the membrane (i.e., pumped away). We propose that when multicellular organisms arose, this system was available and was recruited for a new purpose: cell-to-cell signaling.

The intriguing homology between components of lipid homeostasis pathways and components of the Hh signaling pathway leads to the hypothesis that the central membrane–players of the Hh signaling cascade—Smo and Ptc—evolved from a pre-existing lipid-sensing/homeostasis pathway. We propose a model of simple evolutionary steps, which posits that Ptc acts by pumping an activator of Smo, rather than an inhibitor. This scenario is compatible with most experimental data so far. The step-wise construction of pathways from older, pre-existing modules is turning out to be a general theme in developmental biology [24].

This general theme of developmental biology is precisely what we would expect from front-loading and this particular example is most delicious.

The article about the evolutionary history of body size on Earth has raised some interest. Words like "latent evolutionary potential was realized", "realize preexisting evolutionary potential" and" a major innovation in organismal complexity—first the eukaryotic cell and later eukaryotic multicellularity" seem to have raised a few eye brows. Are "latent", "pre-existing", "innovation" and "potential" the appropriate words?

From the following figure, the earliest multicellular (Grypania spiralis) eukaryotic fossil dates back ±1.6 billion years ago (bya) and at present the earliest evidence for eukaryotic cells is posited to have existed 1.68-1.78 bya, (perhaps 1.8 bya or possibly even 2.1 bya) (Figure 1).


The following tree is adapted from discoverlife.org with the tentative dates for the origins of archaea and bacteria, eukaryotes, as well as the origins of multicellular body plans (>3 cell types) (Figure 2).*


As suggested by the paper, increases in cellular sizes roughly coincide with the alleviation of at least one environmental constraint, namely low atmospheric oxygen pressure. The origin of body plans (±0.6 bya) also seem to coincide with an increase in atmospheric pressure. Why could that be?

With about 6, 000 spines on their back, an excellent sense of smell, a running speed of 4.5 mph a normal heart rate of up to 19o bps and 10 bps during hibernation, hedgehogs are interesting little animals. Hedgehog (hh) genes are equally fascinating. The reason for the name of this gene is that a malfunctioning hh gene often results in the formation of small pointy projections on embryos, similar to that of a hedgehog. So what does it do?

The hh signaling pathway plays a fundamental role in cell pattrerning, cell proliferation and participates in the development of tissues and organs during the stages of animal development. It exerts its effect by influencing the transcription of many target genes in a concentration dependent manner.


The hh protein comprises of two domains, namely the hedge domain (hedgling) and the hog domain (hoglet). The hedge domain acts as a ligand after processing and binds to a set of conserved receptors to activate downstream signal transduction pathways [1]. After transcription, the hh-gene undergoes a post-translational autocatalyzing editing process initiated by the hoglet resulting in the formation of the hedgling protein. Further processing of the hedgling occur and include the palmitoylation and sterolation (addition of cholesterol) of the ligand (Figure 3). Interestingly, hh proteins are the only examples of sterolation in contempory biology (more on that later) [2]. After processing, the hedgling ligand is transported through the Dispatched receptor where it binds to a specific lipd transport molecule (different in invertebrates and vertabrates) and is transported and binds to the 12-transmembrane protein called Patched. Internalisation of Patched alleviates the inhibitory effect of Patched on the 7-transmembrane protein Smoothened. This in turn activates the hedghog-related transcription factors (Gli in vertebrates and Ci in invertabrates) (Figure 3) [2]. This relatively simple pathway plays a crucial role in the unfolding of the developmental program in vertebrates and invertebrates.


With the knowledge of some of the proteins that play a part in hh-signal control, let's look at the evolution and origin of some of the components. The following proteins can be used for BLAST.
Hedgling (Amphimedon Queenslanica)
Hoglet (Monosiga Ovata)
Patched (Ciona Intestinalis)
Dispatched (Ciona Intestinalis)
Suppresor of Fused (Sufu) (Ciona Intestinalis)
Smoothened (Ciona Intestinalis)
Fused (Drosophila)
Gli1 (Human) or Ci (Drosophila)
Kif27 (vertebrate) or Cos2 (Drosophila)

Using the InterProScan Tool with these sequences, the following results were obtained:
Hedgling: The oldest (phylogenetically) bona fide hedgeling found so far is in the genome of the sponge, Amphimedon Queenslanica. However, the structure of this domain is structurally homologous to the zinc-binding motif in bacterial D-alanyl-D-alanine carboxypeptidases (the same motif found in beta-lactamases and the various nylonase genes).
Hoglets: Hoglets are typical Intein (internal protein) proteins also known as HINTs (hedgehog inteins) [3]. Inteins are selfish DNA elements that are distributed accross all the domains of life [4].
Patched:"]Patched is a transmembrane protein with a sterol sensing domain (SSD) and is also distributed in all the domains of life.
Dispatched: Dispathed is also a transmembrane protein with a SSD and forms a subfamily of the sterol sensing receptors. Also present in all the domains of life.
Fused: Fused is kinase conserved in all the domains of life.
Suppresor of Fused (Sufu): Sufu yielded an interesting result. Acting as a suppressor of the hh-signaling pathway, it is limited to the bilaterians and cnidaria and bacteria. it seems to have been lost in other linages.
Smoothened (Frizzled domain, G-protein-coupled receptor (GPCR) domain): Smoothened contains a frizzled domain and a GPCR domain. The frizzled domain is limited to eukaryotes, while the GPCR domain is conserved in all the domains of life.
Gli1: This protein (and cos2) is transcription factor and hh-signaling converges to control the activity of this protein. It is a zinc-finger protein. While zinc-finger proteins are conserved in all domains of life, this particular protein seems to be limited to eukaryotes.
Kif27: Kif27 (and Cos2) is a kinesin-related protein (KRP). Kif27 appears to be functional molecular motor while Cos2 seems to have lost the ability to function as a motor protein. KRPs however are conserved accross all domains of life [5]. A conserved function of KRPs is to facilitate movement of vesicle along microtubules and one of the functions of Cos2 seems to be just that [6].

From the above, the following picture of the components of the hh-signaling toolkit can be drawn.

Note that many of the components of the signaling pathway are present in various bacterial and archaeal lineages. Also note that the origin of multicellular body plans roughly coincide with an increase in atmospheric oxygen pressure as well as the first bona fide hedgling. Remember, hedglings are the only examples of post-translational sterolation (addition of cholesterol) of proteins in contempory biology. Why is this interesting? Well, oxygen is needed for cholesterol synthesis, more importantly, oxygen is needed for placing the hydroxyl group in the 3-position of cholesterol which plays a crucial role in subsequent transformations (including sterolation). Thus, while large parts of the hh-signaling pathway was present, a little extra oxygen was needed to unlock multicellular signaling capabilities of hedglings.

Therefore, words like "pre-existing", "latent" and "potential" seem apt in describing the hedghog signaling pathway and the unfolding of multicellular body plans in relation to the increase in atmospheric oxygen pressure. "Innovation" perhaps not so much, seeing that only real innovation was bought on about by life itself namely the increase in atmospheric oxygen. This increase in atmospheric oxygen in turn seemed to have unlocked the pathways to multicellular body plans (>3 cell types).

Looking at the hh-signaling pathway, there seem to be very little innovation, and a lot of co-option of pre-existing information into new functions. Sufu was an interesting example of gene loss only to be co-opted later into a role in the hh-signaling pathway. With this in mind, what can one expect to find in the Last Universal Common Ancestor (LUCA)? Also consider the following. The Tetrahymena thermophila (alveolate) genome has been sequenced, and a number of genes that are absent in yeast (fungi), are found in amoeba, vertebrates, invertebrates as well as in the Tetrahymena genome. It paints the following picture (Figure 5) [7].


Intriguing questions can arise from these observations.
1) Why does an increase in atmospheric oxygen seem to have the effect of driving eukaryotic multilcellular life but not bacteria and archaea? Is an intrinsic and latent property present in this domain?
2) Gene loss vs innovation: How much gene loss and how much innovation (not just co-option) has occured from the LUCA? (Speculating)
3) Why did all the toolkit parts for the hh-pathway converge on a single sterolation pathway when so many other possibilities are available? Or is it the optimal possibility and random variation and selection processes used by life hit a global optimum?

References
1. Matus DQ, Magie CR, Pang K, Martindale MQ, Thomsen GH. The Hedgehog gene family of the cnidarian, Nematostella vectensis, and implications for understanding metazoan Hedgehog pathway evolution. Dev Biol 2008; 313: 501-518.
2. Bijlsma MF, Spek CA, Peppelenbosch MP. Hedgehog: an unusual signal transducer. Bioessays 2004; 26: 387-394.
3. Perler FB. Protein splicing of inteins and hedgehog autoproteolysis: structure, function, and evolution. Cell 1998; 92: 1-4.
4. Pietrokovski S. Intein spread and extinction in evolution. Trends Genet 2001; 17 465-472.
5. Varjosalo M, Taipale J. Hedgehog: functions and mechanisms. Genes Dev 2008; 22: 2454-2472.
6. Ogden SK, Ascano M Jr, Stegman MA, Robbins DJ. Regulation of Hedgehog signaling: a complex story. Biochem Pharmacol 2004; 67: 805-814.
7. Eisen JA, Coyne RS, Wu M, Wu D, Thiagarajan M, Wortman JR. et al. Macronuclear genome sequence of the ciliate Tetrahymena thermophila, a model eukaryote. PLoS Biol 2006; 4: e286.

http://www.4forums.com/political/showthread.php?t=12339

The Hedgehog gene family of the cnidarian, Nematostella vectensis, and implications for understanding metazoan Hedgehog pathway evolution .

Hedgehog signaling is an important component of cell–cell communication during bilaterian development, and abnormal Hedgehog signaling contributes to disease and birth defects. Hedgehog genes are composed of a ligand (“hedge”) domain and an autocatalytic intein (“hog”) domain. Hedgehog (hh) ligands bind to a conserved set of receptors and activate downstream signal transduction pathways terminating with Gli/Ci transcription factors. We have identified five intein-containing genes in the anthozoan cnidarian Starlet sea anemone, two of which (NvHh1 and NvHh2) contain definitive hedgehog ligand domains, suggesting that to date, cnidarians are the earliest branching metazoan phylum to possess definitive Hh orthologs. Expression analysis of NvHh1 andNvHh2, the receptor NvPatched, and a downstream transcription factor NvGli (a Gli3/Ci ortholog) indicate that these genes may have conserved roles in planar and trans-epithelial signaling during gut and germline development, while the three remaining intein-containing genes (NvHint1,2,3) are expressed in a cell-type-specific manner in putative neural precursors. Metazoan intein-containing genes that lack a hh ligand domain have previously only been identified within nematodes. However, we have identified intein-containing genes from both Nematostella and in two newly annotated lophotrochozoan genomes. Phylogenetic analyses suggest that while nematode inteins may be derived from an ancestral true hedgehog gene, the newly identified cnidarian and lophotrochozoan inteins may be orthologous, suggesting that both true hedgehog and hint genes may have been present in the cnidarian-bilaterian ancestor. Genomic surveys of N. vectensis suggest that most of the components of both protostome and deuterostome Hh signaling pathways are present in anthozoans and that some appear to have been lost in ecdysozoan lineages. Cnidarians possess many bilaterian cell–cell signaling pathways (Wnt, TGFβ, FGF, and Hh) that appear to act in concert to pattern tissues along the oral–aboral axis of the polyp. Cnidarians represent a diverse group of animals with a predominantly epithelial body plan, and perhaps selective pressures to pattern epithelia resulted in the ontogeny of the hedgehog pathway in the common ancestor of the Cnidaria and Bilateria.

Mechanism and evolution of cytosolic Hedgehog signal transduction 1

Hedgehog (Hh) signaling is required for embryonic patterning and postnatal physiology in invertebrates and vertebrates. With the revelation that the primary cilium is crucial for mammalian Hh signaling, the prevailing view that Hh signal transduction mechanisms are conserved across species has been challenged. However, more recent progress on elucidating the function of core Hh pathway cytosolic regulators in Drosophila, zebrafish and mice has confirmed that the essential logic of Hh transduction is similar between species. Here, we review Hh signaling events at the membrane and in the cytosol, and focus on parallel and divergent functions of cytosolic Hh regulators in Drosophila and mammals.

Introduction
In embryonic development and postnatal life, a limited number of signal transduction pathways are repeatedly used both to provide instruction to naïve fields of cells and to control differentiation and regeneration. The Hedgehog (Hh) signal transduction pathway is an evolutionarily conserved signaling cascade that is essential for the proper patterning and development of tissues in metazoan organisms . The misregulation or mutation of essential core components of the Hh pathway often result in congenital birth defects, such as polydactyly and holoprosencephaly . In adults, the inappropriate activation of Hh signaling leads to cancer, the most common type being basal cell carcinoma.

Hh ligands function as morphogens that signal both at short range and over many cell diameters. The interpretation of such Hh ligand concentration gradients requires sophisticated cytosolic and transcriptional transducers (Table 1) that can produce a proportionate response. The mutation of these effectors in the mouse neural tube, for example, is sufficient to drastically perturb graded specification of interneurons and motoneurons, and typically results in production of a more limited array of cell types.





1) http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2882129/

http://dev.biologists.org/content/143/3/367/F1.poster.jpg

Decoding the phosphorylation code in Hedgehog signal transduction 1

Introduction

The Hedgehog (Hh) signaling pathway plays crucial roles in the control of cell growth and patterning during embryonic development and adult tissue homeostasis1,2. Malfunction of this pathway has been linked to numerous human disorders including cancer1,3. hh was first identified as a segment polarity gene in Drosophila and the core pathway was delineated by fly geneticists2,4. Vertebrates contain multiple hh family members; e.g., mammals contain three hh genes: Sonic Hedgehog (Shh), Indian Hedgehog (Ihh) andDesert Hedgehog (Dhh), with Shh playing a prevalent role 3. Hh proteins are dual lipid modified and form soluble protein complexes that promote its long-range signaling3,5,6. Secretion of lipidated Hh is mediated by a twelve-transmembrane protein Dispatched (Disp) as well as a glycoprotein Scube/You (vertebrate only) 7,8,9,10, whereas Hh gradient formation is regulated by HSPGs and other cell surface molecules 6,11.
The Hh signal is transduced by a conserved core signaling pathway that culminates in the activation of a latent Zn-finger transcription factor Cubitus interruptus (Ci)/Gli (Figure 1). 




Hh signal transduction in Drosophila and mammalian systems. 
Hh protein is lipid-modified. Drosophila and mammalian HSPGs, Dally, Dally-like (Dlp), GPC3, GPC4 and GPC6 modulate Hh signaling. In the absence of Hh, Ptc inhibits Smo, allowing CiF/GliF to be phosphorylated by multiple kinases and targeted for Slimb/β-TRCP-mediated proteolysis to generate CiR/GliR. In Drosophila, the kinesin-like protein Cos2 acts as a molecular scaffold to bridge Ci to its kinases. In the presence of Hh, Ptc inhibition of Smo is released, which triggers Smo phosphorylation by PKA, CK1 and Gprk2/GRK2, leading to its cell surface accumulation and activation. Smo recruits Cos2-Fu complex to the cell surface, and dissociates Cos2-Ci-kinase complexes to inhibit Ci phosphorylation and processing. In the presence of high levels of Hh, Fu converts CiF into CiA by antagonizing Sufu inhibition. CiA is unstable and degraded by the HIB-mediated Ub/proteasome pathway. Fu-Cos2 also regulates Smo phosphorylation in a feedback loop mechanism. In mammals, Hh induces Smo phosphorylation by CK1 and GRK2, leading to its ciliary accumulation (not shown here) and activation. Sufu is a major whereas Kif7 a minor inhibitor of Gli proteins. The HIB homolog SPOP is responsible for degrading Gli proteins in the absence of Sufu. CiF/GliF: full length Ci/Gli; CiA/GliA: activator form of Ci/Gli; CiR/GliR: repressor form of Ci/Gli. Adapted from reference1.

Vertebrates contain three Gli proteins: Gli1, Gli2 and Gli3, with Gli2/3 as the primary mediators of Hh signaling and Gli1 as a target of the Hh pathway that acts in a positive feedback to reinforce the Gli activity12. In the absence of Hh, Ci/Gli (mainly Gli3 and to a lesser extent Gli2) is proteolytically processed into a truncated form (CiR/GliR) that functions as a transcriptional repressor to block the expression of a subset of Hh target genes. Hh signaling inhibits Ci/Gli processing and thus the production of CiR/GliR, and converts the accumulated full-length Ci/Gli (CiF/GliF) into an active form (CiA/GliA) that stimulates Hh target gene expression.







1. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3567827/

Hedgehog Secretion and Signal Transduction in Vertebrates 1

Originally discovered for its role in Drosophila embryonic patterning, the Hedgehog (Hh) pathway is among a handful of signaling pathways governing the development of multicellular organisms. Hh signaling is essential for the development of nearly every organ system in vertebrates, from patterning the neural tube and limbs to regulating lung morphogenesis and hair follicle formation (1). Although the Drosophila genome encodes a single hh gene, vertebrates harbor between three in birds and mammals) 

Sonic hedgehog (Shh)
Desert hedgehog (Dhh), 
Indian hedgehog (Ihh)

and six in fish) homologs

Shh
Dhh
Ihh  
Tiggywinkle hedgehog (Twhh)
Echidna hedgehog (Ehh) 
Qiqihar hedgehog (Qhh) 

differing primarily in tissue distribution (2). In vertebrates, Shh is expressed throughout the developing nervous system and in many epithelial tissues, Ihh functions primarily in bone development, and Dhh expression is limited to the peripheral nervous system and reproductive organs (1). As a result of its widespread expression, much of what is known about vertebrate Hh signaling stems from work on Shh. All Hh ligands undergo a similar series of processing events that result in the covalent attachment of two lipid moieties and are essential for proper signaling activity and tissue distribution (Fig. 1).




FIGURE 1.
Hh processing and release. Hh precursor peptides  undergo a cholesterol-dependent autocatalytic cleavage in the endoplasmic reticulum to generate a cholesterol-modified N-terminal fragment (Hh-N, denoted by N) and a  C-terminal fragment (Hh-C, denoted by C). Hh-C is recognized by the lectins OS-9 and XTP3 and ubiquitylated by the ubiquitin ligase Hrd1 and its partner Sel1. Ubiquitylated Hh-C is moved into the cytosol by the p97 ATPase and subsequently degraded by the proteasome. Cholesterol-modified Hh-N enters the secretory pathway, where the acyltransferase Hhat catalyzes the covalent attachment of palmitate to the N-terminal cysteine. Dually lipidated Hh is targeted to the cell membrane, where cholesterol facilitates the assembly of multimeric Hh complexes possibly by tethering Hh to the membrane and promoting interactions with HS proteoglycans (HSPG). Prior to its release, N- and C-terminal peptides may be cleaved by membrane-proximal proteases such as those belonging to the ADAM family, resulting in the removal of both lipid moieties. The 12-pass transmembrane protein Disp facilitates the release of Hh multimers into the extracellular environment, although the mechanistic details of this process are not well understood. Ub, ubiquitin.

Secreted Hh ligands interact with Patched (Ptc)-coreceptor complexes on the surface of responding cells, relieving Ptc-mediated inhibition of the signal transducer Smoothened (Smo) (see Fig. 4). Activated Smo prevents the processing of full-length Gli transcription factors (Gli-FL)² into transcriptional repressors (Gli-R) so as to allow Gli-FL to activate the transcription of Hh target genes. Thus, the relative abundance of Gli transcriptional activators and inhibitors ultimately regulates the transcription of Hh target genes.



FIGURE 4.
Vertebrate Hh signal transduction. 
a, in the absence of ligand, the 12-pass transmembrane protein Ptc localizes to the primary cilium base and maintains Smo in an inactive conformation. Gli-FL transcription factors complex with Sufu. Sufu sequesters Gli-FL in the cytosol and stabilizes the protein. Sufu and the kinesin-4 family member Kif7 promote the phosphorylation of C-terminal residues in Gli-FL by PKA, GSK3β, and CK1α, which may occur at the basal body of the primary cilium. Phosphorylated Gli-FL is recognized by the E3 ubiquitin ligase βTrCP, resulting in ubiquitylation and proteasomal degradation of C-terminal residues to generate a truncated N-terminal transcriptional repressor (Gli-R) that inhibits Hh target gene transcription. 
b, in the presence of ligand, Hh binding to Ptc causes Ptc to exit the cilium and relieves its inhibition of Smo. Smo is phosphorylated by CK1α and GRK2, inducing a conformational change and enabling β-arrestin (β-Arr)- and Kif3a-dependent transport into the cilium. Within the cilium, activated Smo promotes the disassembly of Sufu-Gli complexes. Kif7 also localizes to the cilium in the presence of Hh and likely assists Smo in this disassembly. Gli-FL accumulates in the tip of the cilium and is shuttled into the nucleus, perhaps on cytoplasmic microtubules. Within the nucleus, Gli-FL receives additional modifications that convert it to a labile transcriptional activator (Gli-A) that activates Hh target genes. Gli-A is subsequently degraded in a manner that requires the cullin-3-based adaptor Spop.

Hedgehog Processing and Release

FIGURE 2.
Regions of Shh important for receptor binding and multimerization. 
Shown is the structure of human SHH-N (non-cholesterol-modified N-terminal fragment; Protein Data Bank code 3M1N (99)). Residues in green (Glu-72, Arg-73, and Lys-75) mediate electrostatic interactions between Hh monomers and are required for multimerization (38). Arg-73 is the vertebrate equivalent of Drosophila Lys-132, the mutation of which results in decreased long-range signaling in the imaginal disc (26). Residues in yellow (His-133, His-134, His-140, His-180, and His-182) are important for Ptc binding (note that His-140 and His-182 coordinate with zinc). Residues in red (Lys-32, Arg-33, Arg-34, Lys-37, and Lys-38) form the Cardin-Weintraub motif and interact with HS. Note how the N terminus extends away from the globular domain of SHH-N; some of these residues may be cleaved in the formation of active Shh multimers (see text).

Thus, in the absence of palmitoylation (due to mutation of the N-terminal Cys), Shh maintains the capacity to multimerize, but these multimers have significantly reduced signaling activity due to their inability to properly interact with Ptc (38). Although these data provide insight into the role of palmitoylation in Hh signaling, they also raise a number of questions regarding the production and secretion of Hh. For instance, how is the cleavage of lipid moieties coupled to Disp-mediated release? Are the lipid moieties of Drosophila Hh also cleaved? Future studies are needed to address these questions and to determine whether lipid moieties are also cleaved in vivo.

Dual Roles of Patched in Hedgehog Reception and Pathway Inhibition

In addition to serving as the Hh receptor, Ptc functions as a potent negative regulator of the Hh pathway by inhibiting the seven-pass transmembrane protein Smo. In the absence of Hh, Ptc localizes to the primary cilium and maintains Smo in an inactive conformation, preventing Smo from entering the cilium (49). Although early studies suggested that Ptc could directly bind to and inhibit Smo (50), subsequent work revealed that Ptc-mediated inhibition is non-stoichiometric, making direct inhibition unlikely (51). The mechanism by which Ptc inhibits Smo remains enigmatic. Sequence similarities between Ptc and the RND family of bacterial transporter proteins have led many to hypothesize that Ptc may regulate the flux molecules that activate or inhibit Smo, a theory that is supported by the susceptibility of Smo to modulation by small molecules such as the steroidal alkaloid cyclopamine (52,–,54). Given that Ptc is enriched around the base of the primary cilium, where vertebrate Hh signaling likely occurs, Ptc might locally control the abundance of Smo inhibitors or activators (49). Although a number of Smo agonists and antagonists have been identified, to date, none have been shown to be regulated by Ptc. Recent work in Drosophila suggests that Ptc may inhibit Hh signaling by regulating the synthesis of phosphatidylinositol 4-phosphate (PI4P), revealing that increased and decreased levels PI4P lead to Hh pathway activation and repression, respectively (55). Importantly, by showing that cells deficient in Ptc have increased PI4P levels, this work provides the first evidence of an endogenous Hh activator that is regulated by Ptc. Nonetheless, future studies are needed to determine how Ptc regulates PI4P synthesis and to verify that PI4P activates the pathway at the level of Smo rather than acting farther downstream.



1. http://www.jbc.org/content/287/22/17905.full

Palmitoylation of Hedgehog Proteins1

I. Introduction to Protein Palmitoylation

Protein palmitoylation refers to the posttranslational modification of a protein with the 16-carbon fatty acid palmitate. In the majority of palmitoylation reactions, the palmitate donor is palmitoyl CoA (Resh, 2006;Smotrys and Linder, 2004). The term protein palmitoylation can also encompass posttranslational modification of proteins with other long chain fatty acids, as many palmitoylated proteins have been observed by mass spectrometry to incorporate heterogeneous mixtures of fatty acids at their modification site (Liang et al., 2001, 2004). In nearly all cases, palmitate is attached to proteins via thioester linkage to a cysteine residue; this is known as S-palmitoylation. The labile nature of the thioester linkage in S-palmitoylated proteins allows for consecutive rounds of palmitoylation/depalmitoylation/repalmitoylation in a fashion similar to phosphorylation (Goodwin et al., 2005; Loisel et al., 1999; Lorentzen et al., 2010;Yeh et al., 1999). A small subset of palmitoylated proteins, including the Drosophila epidermal growth factor (EGF) like ligand Spitz (Miura et al., 2006) and Hedgehog (Hh) family members (Chamoun et al., 2001; Pepinsky et al., 1998) are palmitoylated on a cysteine residue that is the N-terminal residue of the mature protein. N-Palmitoylation, in contrast to S-palmitoylation, is a stable modification. Palmitate attached via amide linkage is essentially as stable and long lived as the polypeptide backbone peptide bond.N-Palmitoylation can be readily distinguished from S-palmitoylation via its stability in neutral buffered hydroxylamine. The thioester linkage in S-palmitoylated proteins is hydrolyzed by hydroxylamine treatment while the amide linkage in N-palmitoylated proteins is resistant to hydrolysis.

Classes of proteins known to be modified with palmitate include cytoplasmic signaling molecules such as Src family tyrosine kinases (Alland et al., 1994), the Ras family of small GTPases (Hancock et al., 1989), heterotrimeric G-proteins (Kleuss and Krause, 2003), endothelial nitric oxide synthase (E-NOS) (Yeh et al., 1999), and scaffolding proteins (Zhang et al., 1998). Palmitoylation also occurs on several classes of membrane embedded proteins including ion channels (Gubitosi-Klug et al., 2005; Qin et al., 1998), transporters (Singaraja et al., 2009), receptors, and tetraspanins (Resh, 2006). Finally, in addition to intracellular and membrane embedded proteins, palmitate has also been shown to be attached to secreted signaling molecules including Spitz (Miura et al., 2006), members of the Wnt/wingless (Wg) family (Kurayoshi et al., 2007; Willert et al., 2003; Zhai et al., 2004), as well as Drosophila and mammalian Hh family members (Buglino and Resh, 2008; Chamoun et al., 2001; Pepinsky et al., 1998).

Modification with palmitate has been implicated in the regulation of protein trafficking and localization, signal transduction, and enzymatic function. In general, attachment of palmitate increases the hydrophobicity of the modified protein and promotes membrane binding. Palmitoylation also enhances the partitioning of many signaling molecules into lipid rafts. Rafts are liquid ordered microdomains within cellular membranes, and raft association is implicated in mediating efficient signal transduction (Arcaro et al., 2001; Fragoso et al., 2003; Zhang et al., 1998).

Palmitoylation of Hedgehog Proteins

The Hh family is the best studied example of palmitoylated, secreted signaling molecules. Drosophila express a single Hh protein, known simply as Hedgehog (Hh) (Nusslein-Volhard and Wieschaus, 1980). There are three Hh family members in mammals, Sonic Hedgehog (Shh), Indian Hedgehog (Ihh), and Desert Hedgehog (Dhh) (Bitgood and McMahon, 1995; Echelard et al., 1993). Signaling by Hh family members plays a major role in embryonic patterning in both flies and mammals (Echelard et al., 1993;Ericson et al., 1995; Heemskerk and DiNardo, 1994; Ma et al., 1993). All Hh family members are thought to be palmitoylated; however, direct incorporation of palmitate to hedgehog in cells has only been documented for Hh and Shh (Buglino and Resh, 2008; Pepinsky et al., 1998). Palmitoylation comprises one of a series of modifications that occur on Hh proteins, as detailed below.

A. Hedgehog biosynthesis, autoprocessing, and cholesterol incorporation

All Hh family members are initially synthesized as an  precursor protein (Fig. 10.1). The precursor contains an amino-terminal signal sequence that directs entry into the endoplasmic reticulum (Lee et al., 1992). Upon cleavage of the signal sequence, Hh is further processed in the ER by an autoproteolysis reaction catalyzed by the C-terminal half of the molecule (Chen et al., 2011; Lee et al., 1994). Hh autoprocessing occurs via a mechanism similar to that of intein processing in self-splicing proteins (Hall et al., 1997). Autoprocessing requires an intact C-terminal domain and can be blocked by mutation of the histidine residue at position 329 or mutation of the cleavage site cysteine (C258) (Porter et al., 1995,1996a). Shh autoprocessing can also be inhibited by depletion of cellular sterols (Guy, 2000).


Multiple processing events generate the mature Shh signaling protein. 
Signal peptidase removes the N-terminal signal sequence. The autoprocessing domain mediates autocleavage and attachment of cholesterol to the C-terminus of the Shh signaling domain, while Hhat catalyzes attachment of palmitate via amide linkage to the N-terminus of the Shh signaling domain.

The Shh cleavage reaction proceeds via a two-step mechanism. First, the sulfhydryl group of an invariant cysteine residue acts as a nucleophile to attack the carbonyl of the preceding glycine residue resulting in the formation of a thioester intermediate. This thioester linkage is then subject to nucleophilic attack by the 3β-hydroxyl group of a cholesterol molecule, resulting in the liberation of the C-terminal autoprocessing domain and the formation of an ester link between a cholesterol moiety and the carboxyl-terminal glycine residue of the  amino-terminal fragment (Porter et al., 1996a,b). Cholesterol is the only nucleophile whose incorporation into Hh has been directly observed in vivo. However, other related sterols can replace cholesterol in the autoprocessing reaction in vitro with varying degrees of efficiency (Cooper et al., 1998). From in vitro assays, it is clear that the most important structural feature for autoprocessing is the C3 hydroxyl moiety. This group must be free of esterified adducts and there is an absolute requirement for the β orientation of the alcohol (Cooper et al., 1998). The 19-kDa amino-terminal domain of Hh mediates all known signaling functions of Hh, while the C-terminal autoprocessing domain is primarily responsible for catalyzing autoprocessing and cholesterol incorporation (Fietz et al., 1995; Marti et al., 1995; Porter et al., 1995). Following autocleavage, the C-terminal Shh fragment is rapidly degraded in the ER lumen by the ERAD (ER-associated degradation) pathway (Chen et al., 2011).

Hedgehog palmitoylation

A molecule of palmitate is covalently attached via amide linkage to the amino-terminal cysteine residue of both Hh and Shh (Pepinsky et al., 1998). The 19-kDa amino-terminal fragment of Hh/Shh containing both a C-terminal cholesterol and a N-terminal palmitate represents the mature signaling molecule and is the predominant form of Hh/Shh secreted in vivo (Taipale et al., 2000). Shh palmitoylation is catalyzed by Hhat (Hedgehog acyltransferase 2), and this reaction can be recapitulated in cells and in vitro (Buglino and Resh, 2008, 2010). Palmitoylation of Shh in cells occurs following cleavage of the signal sequence. Cotransfection of mammalian cells with cDNAs encoding Shh and Hhat reveals several features of the Shh palmitoylation reaction. Shh and Hhat colocalize to the endoplasmic reticulum and the Golgi (Buglino and Resh, 2008). Transit through the secretory pathway is essential, as Shh constructs that lack the N-terminal signal sequence are not palmitoylated (Buglino and Resh, 2008). These findings suggest that palmitoylation of Shh by Hhat occurs intracellularly, in the lumen of secretory organelles. Once the signal sequence is cleaved, cysteine becomes the N-terminal residue and this is the site of modification (Fig. 10.2). Palmitoylation is thought to initially occur via thioester linkage to the cysteine residue. The thioester intermediate then rearranges to an amide linkage via an intramolecular S-to-N shift, producing an amide or N-linked palmitate (Fig. 10.2A) (Mann and Beachy, 2004; Pepinsky et al., 1998). However, in this scenario, the cysteine sulfhydryl group would be regenerated. Hhat could attach a second palmitate via a thioester bond, and a thioesterase would be needed to remove the second, thioester linked fatty acid. An alternative mechanism is direct attachment of the palmitate moiety to the N-terminal amide via amide linkage (Fig. 10.2B), analogous to N-myristoylation (Farazi et al., 2001). This model is supported by the findings that N-terminally blocked Shh proteins are not substrates for Hhat and that thioester linked palmitoylated intermediates of Shh cannot be detected (Buglino and Resh, 2008). Further studies will be required to define the exact reaction mechanism.



Potential mechanisms for Hhat-mediated N-Palmitoylation of Hedgehog proteins. 
(A) Formation of a thioester intermediate (1) is followed by an S-to-N intramolecular shift and generation of the amide-linked, palmitoylated hedgehog protein (2). 
(B) Alternatively, Hhat could catalyze direct attachment of palmitate via amide bond to the amine group of the N-terminal cysteine.

An N-terminal cysteine is required for Shh palmitoylation. Shh mutants with substitutions of either alanine or serine have vastly reduced levels of palmitate incorporation. Signal sequence removal by signal peptidase is therefore absolutely essential as this cleavage event generates the N-terminal cysteine. Attachment of palmitate has been documented on both the  Shh precursor protein as well as on the mature form of Shh. Moreover, a Shh mutant that is defective in autoprocessing and cholesterol attachment can still efficiently incorporate palmitate (Buglino and Resh, 2008). Thus, the two lipidation reactions occur independently.

C. Rasp and Hhat are Hh/Shh palmitoyl acyltransferases

Genetic studies in Drosophila melanogaster suggested that palmitoylation of Hh was catalyzed by a member of the membrane bound O-acyltransferase (MBOAT) family that was independently identified as Skinny Hedgehog, Sightless Hedgehog, Central missing, or Rasp (Amanai and Jiang, 2001; Chamoun et al., 2001; Lee and Treisman, 2001; Micchelli et al., 2002). Rasp is required for induction of Hh target genes and proper patterning of both the Drosophila wing and eye imaginal disks, as well as for proper segmentation of Drosophila larva (Chamoun et al., 2001; Lee and Treisman, 2001; Micchelli et al., 2002). In addition, the rasp null phenotype closely phenocopies mutation of the palmitate acceptor site cysteine within Hh in the wing imaginal disk. Rasp activity is essential in cells of the posterior compartment that produce Hh but is not required for Hh transcription or secretion, leading to the stipulation that Rasp functions instead in the maturation of Hh signal (Chamoun et al., 2001; Lee and Treisman, 2001; Micchelliet al., 2002). Rasp mutant organisms display defects in Hh signaling independent of both autoprocessing and cholesterol incorporation, implying that Rasp does not play a role in these processes (Amanai and Jiang, 2001). Additional evidence that Rasp regulates Hh palmitoylation stems from the observation that Hh is significantly less hydrophobic when isolated from rasp null cells than when isolated from WT cells (Chamoun et al., 2001).
The human homologue of Rasp, originally termed Skinny hedgehog, is known as Hhat (Hedgehog acyltransferase). Loss of Hhat function in the mouse closely phenocopies the mutant phenotype resulting from mutation of the palmitoylation site within Shh when assayed in either the limb or neural tube (Chen et al., 2004). In addition, [3H]-palmitate labeling of Shh is reduced when Shh is isolated from Hhat null murine embryonic fibroblasts (MEF)’s, consistent with Hhat’s putative role in Shh palmitoylation (Chen et al., 2004). Palmitoylation of Hh/Shh depends on the presence of a cysteine residue (position 85 inDrosophila, position 24 in human Shh, and position 25 in mouse Shh) immediately following the signal peptide cleavage site and on a functional form of Hhat or Rasp (Chamoun et al., 2001; Pepinsky et al., 1998). A Rasp construct with alanine substituted for both the aspartate at position 341 and the histidine at position 381 in tandem is unable to rescue the rasp mutant phenotype, implicating these residues in Rasp activity (Chamoun et al., 2001).
Definitive evidence that Hhat is a palmitoyl acyltransferase for Shh was achieved when Hhat was purified to homogeneity (Buglino and Resh, 2008). Incubation of purified Hhat with purified, recombinant Shh results in near-stoichiometric incorporation of palmitate onto the N-terminal cysteine via amide linkage, features that recapitulate Shh palmitoylation in cells. The reaction occurs catalytically, uses palmitoyl CoA as the palmitate donor, and exhibits optimal activity at pH 6.5. Hhat appears to be relatively specific for Shh, as other palmitoylated proteins (H-Ras, PSD-95, Wnt proteins) are not substrates for palmitoylation by Hhat in vitro. A peptide containing the first 11 amino acids of the mature Shh sequence is a substrate for Hhat-mediated palmitoylation in vitro, thereby defining a minimal sequence for Shh palmitoylation (Buglino and Resh, 2008). In addition, the Shh substrate must contain an N-terminal cysteine with a free amino terminus, as purified Hhat cannot palmitoylate Shh peptides or proteins if the N-terminus is blocked by acetylation or by a hexa-histidine tag.

Role of palmitoylation in Hh signaling

Palmitoylation of Hh is required for proper signaling in flies. Mutation of the acceptor site cysteine produces a protein that has little to no patterning activity in Drosophila (Dawber et al., 2005; Lee et al., 2001). Expression of Hh C85S is not sufficient for rescue of the Hh phenotype of Drosophila larva despite the fact that it is expressed at levels similar to WT Hh and is properly autoprocessed. Misexpression of WT Hh in the posterior compartment of the wing disk leads to expansion of the anterior compartment, expanded expression of Hh target genes Ptc and Dpp, and patterning defects in the adult wing. Misexpression of Hh C85A, however, does not result in expansion of the anterior compartment or expanded expression of Patched and dpp in the wing disk, indicating that it is severely attenuated in signaling capacity (Lee et al., 2001).
Mutation of the acceptor cysteine also results in a reduction of Shh signaling in mammalian tissues. However, nonpalmitoylated forms of Shh appear to be more active than their Drosophila counterparts. This is evidenced by the observation that ectopic overexpression of Shh C25S is still able to cause polydactyly in the mouse limb (Lee et al., 2001). However, the signaling activity of nonpalmitoylated forms of Shh is clearly reduced in both the mouse limb and neural tube (Chen et al., 2004). In addition, injection of retroviruses encoding WT Shh into the forebrains of E9.5 rats results in severe brain deformities, while retroviruses that encode nonpalmitoylated forms of Shh are unable to cause such defects (Kohtz et al., 2001).


Studies in the mouse embryonic fibroblast line, C3H10T1/2, have revealed that palmitoylation also affects Shh potency in vitro. C3H10T1/2 is a mesenchymal cell line that can be induced under defined conditions to differentiate into adipocytes, chondrocytes, or bone osteoblasts (Pepinsky et al., 1998). Upon differentiation into the bone lineage, there is a marked upregulation of alkaline phosphatase activity, which can be used as a marker for this process (Pepinsky et al., 1998). Treatment of C3H10T1/2 cells with Shh causes a dose-dependent increase in alkaline phosphatase activity and is frequently used as a readout of Shh activity in vitro. Palmitoylated forms of Shh are 40–160-fold more active compared to unmodified Shh in this assay (Pepinsky et al., 1998). The enhanced potency of palmitoylated forms of Shh does not correlate with enhanced receptor binding, as palmitoylated and nonpalmitoylated forms of Shh bind equally well to cells expressing Ptc (Pepinsky et al., 1998). The hydrophobic nature of palmitate appears to directly contribute to its ability to enhance Shh-signaling potency. Increasing the hydrophobic character of the amino terminus of Shh, either by introducing a stretch of hydrophobic amino acids or by chemical modification, results in increased potency over WT unmodified forms. By contrast, introduction of hydrophilic residues at the N-terminus of Shh results in reduced signaling in a cell-based differentiation assay (Taylor et al., 2001).
Release of Hh/Shh into the media requires the action of Dispatched, a 12-transmembrane (TM) domain containing protein (Burke et al., 1999). Active Hh/Shh is released from the producing cell as a multimeric protein, and this process is facilitated by multimerization of Hh proteins on the cell surface. Dual lipidation enables Hh proteins to form nanoscale oligomers that colocalize with heparin sulfate proteoglycans (HSPGs) (Vyas et al., 2008). Association with HSPGs promotes interaction of Hh proteins with ADAM17, a metalloprotease that has been implicated in Hh shedding from the cell surface (Dierker et al., 2009). A recent study suggests that palmitoylation helps to position the N-terminal region of Shh for ectodomain cleavage by ADAM17 (Ohlig et al., 2011). Proteolytic removal of the palmitoylated N-terminus is proposed to be required for binding of activated Shh to Patched.
After release from the cell, Hh family members act as morphogens that signal in a concentration-dependent manner (Fuccillo et al., 2006; Gritli-Linde et al., 2001; Heemskerk and DiNardo, 1994; Stamataki et al., 2005). Hh responsive cells adopt specific cell fates, or induce different transcriptional profiles, in part depending upon the level of Hh signal received (Gritli-Linde et al., 2001; Heemskerk and DiNardo, 1994). Hh protein levels and, therefore, signaling are highest at sites of Hh synthesis and decay as the distance between the source of Hh and the responding cell increases. Forming and maintaining the Hh-signaling gradient is essential for proper patterning of the cuticle in Drosophila, as well as the neural tube and distal limb elements during mammalian development (Gritli-Linde et al., 2001; Heemskerk and DiNardo, 1994;Lee et al., 2001). Posttranslational lipophilic modifications of the Hh ligand have important effects on the Hh-signaling gradient. Lipophilic modification influences partitioning of Hh proteins into lipoprotein particles, which have been implicated as playing an important role in long range Hh signaling (Callejo et al., 2008; Panakova et al., 2005). Modification of Hh with cholesterol and palmitate is also required for the formation of soluble multimeric forms of Hh that are freely diffusible, accumulate in a gradient, and enable the molecule to signal over long distances (Chen et al., 2004; Goetz et al., 2006; Zeng et al., 2001).

Role of cholesterol modification and autoprocessing in Hh signaling

Autoprocessing and cholesterol incorporation into Hh/Shh are essential for proper tissue distribution and patterning activity. This is evidenced by the observation that several point mutations linked to holoprosencephaly occur within regions of Shh that have been implicated in autoprocessing and cholesterol incorporation (Maity et al., 2005; Roessler et al., 2009). However, Hh/Shh constructs that do not incorporate cholesterol still retain significant signaling activity over both short and long distances (Dawberet al., 2005).
In the initial study characterizing Hh autoprocessing, ectopic overexpression of a cleavage defective form of Hh (H329A) still induced expanded Wg expression during Drosophila embryonic development, although to a lesser degree than when a WT construct was expressed (Lee et al., 1994). This finding suggests that unprocessed Hh is able to signal but in a reduced capacity. Unprocessed forms of Hh were also less active in patterning of dorsal cuticle structures, and in patterning of the wing and eye imaginal disks (Lee et al., 1994; Porter et al., 1995). More recent studies have found that full-length unprocessed Hh is trafficked to the plasma membrane and can participate in direct cell-to-cell signaling, both in vivo and in vitro, but is unable to act over longer distances (Tokhunts et al., 2009).
The reduction in signaling potential of unprocessed forms of Hh results from failure to liberate the amino-terminal signaling domain. Overexpression of Hh-N (the 19-kDa N-terminal fragment of Hh unmodified by cholesterol) alone is able to induce similar levels of Wg expression and causes nearly identical changes in dorsal cuticle patterning as full-length Hh (Burke et al., 1999; Porter et al., 1995). Hh-N is also able to rescue most Hh function in the wing imaginal disk (Burke et al., 1999; Dawber et al., 2005). Similarly, Shh-N still retains patterning activity in the mouse limb bud and chick neural tube (Caspary et al., 2002;Yang et al., 1997). In addition, purified recombinant Shh-N constructs lacking cholesterol are still able to bind to Ptc expressing cells and activate Shh signaling in vitro (Taylor et al., 2001). When tested in the C3H10T1/2 differentiation assay, Shh-N lacking cholesterol induced alkaline phosphate upregulation but to a lesser degree than WT Shh (Taylor et al., 2001). Taken together, these findings indicate that modification of Hh/Shh with cholesterol enhances signaling potency but is not strictly required for signaling activity in vitro or in vivo.
Incorporation of cholesterol into Hh/Shh regulates proper tissue distribution during development. Cholesterol incorporation into Hh/Shh restricts diffusion and promotes tethering of the molecule to membranes (Pepinsky et al., 1998). Restriction of Hh/Shh diffusion is essential for forming a steep concentration gradient. Regulated overexpression of Hh-N using the GAL4:UAS system results in higher levels of Wg expression and causes more severe defects in dorsal cuticle patterning when compared to full-length Hh (Porter et al., 1996a). This increased activity was correlated with a more diffuse staining pattern and reduced hydrophobic character of Hh-N, consistent with the cholesterol moiety acting to restrict the spread of Hh over long distances and promoting high levels of signaling near the site of synthesis. Similarly, reduced spread of cholesterol-modified forms of Hh has also been observed in the Drosophilawing disk (Dawber et al., 2005).
Several lines of evidence suggest that cholesterol incorporation also restricts Shh diffusion in higher eukaryotes. The interaction of Hh with both Dispatched and HSPGs is dependent on cholesterol modification of Hh (Bellaiche et al., 1998; Burke et al., 1999; Kawakami et al., 2002). Cholesterol incorporation has been shown to restrict the spread of Shh within the mouse limb bud (Li et al., 2006). Shh-N constructs were distributed over a broader range and displayed reduced signaling potency within the limb bud when compared to full-length Shh (Li et al., 2006). Similarly, when Shh-N expressed from COS-7 cells was grafted into the chick wing, it was able to diffuse further from the graft site compared to full-length Shh (Yang et al., 1997). Expression of full-length human Shh in high five insect cells produces a cholesterol modified amino-terminal signaling domain which is primarily associated with the cell membrane (Pepinsky et al., 1998). Mass spectrometry analysis of the minor soluble fraction of Shh remaining revealed it to be unmodified by cholesterol (Pepinsky et al., 1998). Taken together, these results indicate that modification of Hh/Shh with cholesterol promotes membrane binding and favors short-range signaling. However, it is clear that cholesterol modified forms of Shh are able to directly activate signaling at a distance, and in some cases cholesterol appears to enhance long-range signaling (Briscoe et al., 2001;Wang et al., 2000). Thus, the question arises: how can a hydrophobic modification be required for both short- and long-range signaling?
Two possible mechanisms have been proposed to explain the requirement of cholesterol for efficient long-range Hedgehog signaling. First, cholesterol incorporation into Shh has been implicated in the formation of soluble multimeric forms of Shh (Zeng et al., 2001). Second, cholesterol modification influences the partitioning of Hh into lipoprotein particles (Panakova et al., 2005). Both of these structures would be able to travel longer distances and mediate long-range signaling.

1. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4214369/
2. http://pubs.rsc.org/en/content/articlehtml/2014/sc/c4sc01600a#imgfig1