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The MGSA/GRO protein is endogenously expressed in almost 70% of the melanoma cell lines and tumors, but not in normal melanocytes. We have previously demonstrated that over-expression of human MGSA/GROalpha, beta or gamma in immortalized murine melanocytes (melan-a cells) enables these cells to form tumors in SCID and nude mice. To examine the possibility that the MGSA/GRO effect on melanocyte transformation requires expression of other genes, differential display was performed. One of the mRNA's identified in the screen as overexpressed in MGSA/GRO transformed melan-a clones was the newly described M-Ras or R-Ras3 gene, a member of the Ras gene superfamily. Over-expression of MGSA/GRO upregulates M-Ras expression at both the mRNA and protein levels, and this induction requires an intact glutamine-leucine-arginine (ELR)-motif in the MGSA/GRO protein. Western blot examination of Ras expression revealed that K- and N-Ras proteins are also elevated in MGSA/GRO-expressing melan-a clones, leading to an overall increase in the amount of activated Ras. MGSA/GRO-expressing melan-a clones exhibited enhanced AP-1 activity. The effects of MGSA/GRO on AP-1 activation could be mimicked by over-expression of wild-type M-Ras or a constitutively activated M-Ras mutant in control melan-a cells as monitored by an AP-1-luciferase reporter, while expression of a dominant negative M-Ras blocked AP-1-luciferase activity in MGSA/GRO-transformed melan-a clones. In the in vitro transformation assay, over-expression of M-Ras mimicked the effects of MGSA/GRO by inducing cellular transformation in control melan-a cells, while over-expression of dominant negative M-Ras in MGSA/GROalpha-expressing melan-a-6 cells blocked transformation. These data suggest that MGSA/GRO-mediated transformation requires Ras activation in melanocytes.