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Phosphorylation and dephosphorylation of structural and regulatory proteins are major intracellular control mechanisms in eukaryotes. Protein Kinases transfer a phosphate from ATP to a specific protein, typically at serine, threonine, or tyrosine residues. The covalent attachment of a phosphoryl group changes the conformation of the protein and alters its ability to interact with a ligand. Phosphatases remove the phosphoryl group and restore the protein to its original dephosphorylated state. Hence, the phosphorylation-dephosphorylation cycle can be regarded as a molecular “on-off” switch. In contrast to the large number of protein kinases that have been discovered and studied in detail, relatively few protein phosphatases have received similar attention.

Protein phosphatases (PPs) have been classified into three distinct classes: serine/threonine (Ser/Thr)-specific, tyrosine-specific, and dual-specificity phosphatases. Based on biochemical parameters, substrate specificity, and sensitivity to various inhibitors, Ser/Thr protein phosphatases are divided into two major classes. Type I phosphatases, which include PP1, can be inhibited by two heat-stable proteins known as Inhibitor-1 (I-1) and Inhibitor-2 (I-2). They preferentially dephosphorylate the b-subunit of phosphorylase kinase. Type II phosphatases are insensitive to heat-stable inhibitors and preferentially dephosphorylate the a-subunit of phosphorylase kinase. Type II phosphatases are subdivided into spontaneously active (PP2A), Ca²⁺-dependent (PP2B), and Mg²⁺-dependent (PP2C) classes of phosphatases. PP1 and PP2A share about 43% overall sequence identity, whereas PP2C is structurally distinct and belongs to a completely different gene family.

Both PP1 and PP2A have a complex holoenzyme structure and their catalytic subunits (PP1c and PP2Ac) share about 50% sequence homologies. Their catalytic subunits associate with a variety of regulatory units that assure the substrate specificity of these enzymes. In rat, cDNA cloning has shown the existence of at least four isoforms of PP1, termed a, g1, g2, and d. It is shown that bacterially expressed PP1c differs in some aspects from native PP1c. The native structure of PP1 is a 1:1 complex between the catalytic and a number of different regulatory subunits that are involved in targeting the catalytic subunit towards specific subcellular locations in order to increase its activity towards particular substrates. High levels of PP1 activity are found in the nuclei of eukaryotic cells. Over 90% of this activity is located in the chromatin fraction. Part of the nuclear PP1 is present in a latent form (PP1Na) where PP1c is complexed to an inhibitory (NIPP-1) polypeptide. The latent PP1Na can be activated in vitro through phosphorylation of NIPP-1 by either PKA or casein kinase II. This activation process can be reversed by the action of PP2A. A cytosolic form of PP1, termed PP1s, consists of PP1c complexed to I-2. In vitro studies have shown that during purification PP1s gradually switches to an inactive conformation. Even after proteolysis of I-2 in this complex, PP1c remains in the inactive conformation. In vitro, phosphorylation of I-2 on Thr 72 by GSK3 initiates a reactivation process. Hence, it is suggested PP1s serves as a pool of inactive phosphatase, from which the catalytic subunit can be recruited into other subcellular compartments.

PP2A consists of a 36 kDa catalytic subunit (PP2Ac), which is complexed with a regulatory subunit of 65 kDa (PR65). This dimer associates with variable regulatory subunits of 55 kDa (PR55), 72 kDa (PR72), or 130 kDa (PR130). The various regulatory subunits are believed to affect substrate specificity and the subcellular distribution of PP2A. The PR72 unit contains a potential nuclear localization signal in its primary sequence, which may help PP2A to translocate to the nucleus. The catalytic subunit of PP2A can be phosphorylated in vitro at the C-terminus Tyr³⁰⁷ by the tyrosine kinases p60 ^v-src, p^{56 lck}, and by EGFR-kinase, which reduces enzyme activity by over 90%. Dephosphorylation restores the catalytic activity of PP2A. Two isoforms of the catalytic subunit (a, b), two isoforms of PR65 (a, b), three isoforms of PR55 (a, b, g), and two isoforms of PR72 are reported to be present in cells. Most PP2A subunits are ubiquitously expressed, however, PR55 b and g are mainly expressed in neuronal tissue and PR72 is found only in muscle tissue.

PP2B (calcineurin, Ca²⁺/calmodulin dependent protein phosphatase) was first identified as a major calmodulin-binding protein from brain, where it may account for up to 1% of the total protein. It is a heterodimer consisting of a 60 kDa catalytic A-subunit and a 19 kDa regulatory B-subunit. The catalytic subunit of PP2B shares about 40% sequence homology with catalytic subunits of PP1 and PP2A. However, it contains an additional 170-amino acid C-terminal region, which functions as the calmodulin-binding domain. The regulatory subunit contains four Ca²⁺ -binding sites. The activity of PP2B is modulated by Ca²⁺, calmodulin, and by FK506-binding proteins and cyclophilins. Although the activity of purified PP2B is shown to be dependent on Ca²⁺ and calmodulin, it also requires bivalent Mn²⁺or Mg²⁺ for optimal activity. Interestingly, PP2B is activated at much lower Ca²⁺ concentrations (K_d = 100 pM) than CaM kinase II (K_d = 45 nM). A partial proteolysis of PP2B, which removes the auto-inhibitory domain from the C-terminus region of the enzyme, can eliminate the Ca²⁺ requirement for its activity. In the brain, PP2B is believed to play a major role in memory by modulating long-term potentiation. It is abundantly expressed in areas of the brain that are vulnerable to stroke, epilepsy, and neurodegenerative diseases. PP2B also plays a significant role in inflammation and immunosuppression. Inhibition of PP2B by cyclosporin A and FK506 suppresses the production of IL-2 and other cytokines in activated T cells.

PP2C is a monomeric Mg²⁺/Mn²⁺-dependent enzyme that does not exhibit any significant homology with other protein phosphatases. However, it displays some degree of overlapping substrate specificity with PP1 and PP2A. Multiple isoforms of PP2C have been recognized in humans, yeast, and mice. PP2C is widely expressed is mammalian tissues, however, it is most abundant in heart and skeletal muscle. PP2C has also been shown to negatively regulate the cell cycle in a manner similar to that of PP1 and PP2A via the dephosphorylation and inactivation of Cdks. It has also been implicated in cystic fibrosis due to its role in the dephosphorylation and inactivation of cystic fibrosis transmembrane conductance regulator (CFTR).

Relatively recent additions to the phosphatase family are protein tyrosine phosphatases (PTPs), which remove phosphate groups from phosphorylated tyrosine residues of proteins. PTPs can be classified as either tyrosine-specific or dual-specific phosphatases based on their phosphatase activity. They display diverse structural features and play important roles in the regulation of cell proliferation, differentiation, cell adhesion and motility, and cytoskeletal function. They are either transmembrane receptor-like PTPs or cytosolic enzymes. Each PTP contains a highly conserved catalytic domain of about 240 residues that exhibits high sequence homology throughout the family. Highly conserved arginine and cysteine residues at the catalytic domain are considered to be essential for enzyme activity. The diversity of PTPs is primarily due to the variety of non-catalytic regulatory sequences and targeting domains attached to both N- and C-terminals.

PTP-1B, a 37 kDa enzyme, is one of the most-studied non-receptor PTPs. It was the first PTP to be isolated in the homogeneous form. It consists of a single domain organized into 8 a-helices and 12 b-sheets. Situated on loop 15, which connects b-12 and a-4, is Cys²¹⁵, which is critical to the catalytic function of PP1B. The base of the catalytic site is formed by the residues His²¹⁴ through Arg²²¹. A structural feature that is highly conserved in PTP-1B is the catalytic or PTP loop, which consists of 11 residues: (I/V)HCXAGXXR(S/T)G. In this sequence, Cys²¹⁵ and Arg²²¹ are critical for catalysis to proceed. Another highly conserved region is the recognition pocket, which plays a role in substrate recognition. Tyr⁴⁶ and Val⁴⁹ assist the substrate's insertion into the catalytic site. Ser²¹⁶ of the PTP loop forms a hydrogen bond with the recognition loop, which stabilizes the active site cleft. When a phosphorylated tyrosine residue comes in contact with the active site cleft, Tyr⁴⁶ and Val⁴⁹ of the recognition loop facilitate its entry into the site. It is interesting to note that the phosphorylated end of the tyrosine is polar and the phenol ring is non-polar. Normally, phospho-tyrosine should be repelled from a polar catalytic site. However, Tyr⁴⁶ and Val⁴⁹ provide a non-polar pocket for the phenol ring of the phospho-tyrosine substrate while the phosphorylated end is firmly attached to the catalytic cleft. The phosphorylated tyrosine residue gets situated in such a manner that the phosphorus atom and the sulfur atom of Cys²¹⁵ become juxtaposed. This is an important feature in the catalytic scheme because the Cys²¹⁵ residue of the PTP loop removes the phosphate from tyrosine and stores it briefly as an intermediate. In this reaction scheme, Asp¹⁸¹ adds a proton (H⁺) to the oxygen of tyrosine, which neutralizes the tyrosine allowing it to diffuse away from the catalytic cleft. The phosphate then binds to the sulfur on Cys²¹⁵ and forms the cysteinyl-phosphate intermediate. The phosphate is removed from the cysteine via a nucleophilic attack of a water molecule.

CD45 represents a family of catalytically active, receptor-linked protein tyrosine phosphatases that are located in the leukocyte plasma membrane. They are considered to be essential for antigen-receptor-mediated activation of T and B cells. CD45 is a long, single chain, type I transmembrane molecule consisting of 1120 to 1281 amino acids residues. Of these about 391 to 552 amino acids reside in the extracellular domain. The size variability is reported to be due to differential splicing of 3 exons near the amino-terminus of the molecule. It contains a long cytoplasmic tail of about 707 amino acids, which contains a direct repeat of two phosphatase domains. However, only the first domain has significant phosphatase activity. CD45 is expressed at high levels on all hematopoietic cells, however, higher density expression occurs on lymphocytes where about 10% of the surface area may be CD45. It has been proposed that spatial and temporal controls allow CD45 to promote B cell antigen receptor signal transduction by constitutively maintaining the activity of Src kinases in a partially active state. This helps B cells to effectively respond to any antigenic challenge.

Another important member of the PTP family is the LAR (Leukocyte Antigen Related) PTP, which is a receptor-type PTP. It is involved in neuronal development, regulation of cell adhesion, and modulation of insulin signaling. It plays a major role in dephosphorylation of phospho-tyrosines in the regulatory domain of the insulin receptor. LAR PTP contains a soluble catalytic domain of about 350 amino acids. It also contains an extracellular domain, consisting of a combination of immunoglobulin and fibronectin type III domains, which is linked via a transmembrane region to two tandem PTP domains.

Another class of protein phosphatases is the dual-specificity phosphatases (DSP), which play a key role in the dephosphorylation of MAP kinases. Hence, they are also termed as MAP kinase phosphatases (MKPs). Thus far about 10 genes encoding members of the classical MKP family have been isolated and characterized in mammals. On the basis of structures, predicted from genomic sequence, MKPs have been divided into three subgroups. Group I contains DSP1, DSP2, DSP4, and DSP5; group II enzymes are DSP6, DSP7, DSP9, and DSP10; and group III consists of DSP8 and DSP16. All the DSPs share strong amino-acid sequence homology in their catalytic domains. The catalytic domain contains a highly conserved consensus sequence DX 26(V/L)X(V/I)H CXAG(I/V)S RSXT(I/V)XXAY(L/I)M, where X could be any amino acid. The three amino acids (bold underlined) are reported to be essential for the catalytic activity of DSPs. The cysteine is required for the nucleophilic attack on the phosphorus of the substrate and the formation of the thiol-phosphate intermediate. The conserved arginine binds the phosphate group of the phospho-tyrosine or phospho-threonine, enabling transition-state stabilization; and the aspartate enhances catalysis by protonating oxygen on the departing group (tyrosine or threonine).

All DSPs contain two conserved regions, known as the CH2 domains, at their amino-terminus, which are believed to be involved in substrate binding. In addition, all DSPs contain a MAP kinase-docking site at their amino-terminus, which consists of a cluster of positively charged amino acids. The corresponding docking site on the MAP kinases is shown to consist of negatively charged residues indicating that electrostatic interactions are important for the binding of MAP kinases and MKPs. The group three DSPs also have an extended carboxyl terminus containing PEST sequences [abundant in proline (P), glutamate (E), serine (S) and threonine (T) residues] that are normally found in rapidly degrading proteins. Removal of the PEST sequences from these proteins can result in their stabilization. Most DSPs display wide tissue distribution, however, some exhibit a tissue-specific expression pattern. For example, DSP2 is predominantly expressed in hematopoietic tissues; DSP8 is expressed mainly in brain, heart, and lung; DSP9 is expressed in placenta and kidney; and DSP10 is seen only in liver and skeletal muscle. The intracellular distribution of DSPs is also variable. DSP1, 2, 4, and 5 are located exclusively in the nucleus whereas DSP6, 7, and 16 are predominantly expressed in the cytoplasm. DSP8, 9, and 10 exhibit both cytosolic and nuclear expression.

The brief discussion presented above, although neither comprehensive and nor all-inclusive, does indicate that protein phosphatases play a significant role in signal transduction during cell proliferation and cell death. Hence, protein phosphatase inhibitors and activators could be of great therapeutic importance in the treatment of cancer and stimulation of cell death. Several serine/threonine phosphatases are known to alter the phosphorylation state of anti-apoptotic molecules, such as Bcl-2 and Bcl-xL, and of pro-apoptotic molecules, such as BAD and Bid. Dephosphorylation of BAD by PP1, PP2A, and PP2B allows it to interact with Bcl-xL and initiate cell death. PTP-1B is considered as a negative regulator of insulin signaling. Hence, PTP-1B inhibitors have been studied as possible therapeutic candidates in the treatment of obesity and type II diabetes. Recent genetic studies support the association between PTP-1B and insulin resistance. PTP-1B has also been shown to negatively regulate leptin signaling. Mice deficient in PTP-1B are resistant to diabetes and diet-induced obesity. Another area of clinical importance is Alzheimer’s disease where abnormal deposits of highly phosphorylated tau proteins have been linked to higher levels of phosphorylation and defective PP2A and PP2B activities.