dHIP14-dependent palmitoylation promotes secretion of the BMP antagonist Sog

Analysis of diverse signaling systems has revealed that one important level of control is regulation of membrane trafficking of ligands and receptors. The activities of some ligands are also regulated by whether they are membrane bound or secreted. In Drosophila, several morphogenetic signals that play critical roles in development have been found to be subject to such regulation. For example, activity of the Hedgehog (Hh) is regulated by Raspberry, which palmitoylates Hh. Similarly, the palmitoylases Porcupine and Raspberry increase the activities of Wingless (Wg) and the EGF-ligand Spitz (Spi), respectively. In contrast to its vertebrate homologues, which have typical N-terminal signal sequences, the precursor form of Drosophila Hh contains an internal type-II secretory signal motif. The Short Gastrulation (Sog) protein is another secreted Drosophila protein that contains a type-II signal and differs from its vertebrate ortholog Chordin which contains a standard signal peptide. In this study, we examine the regulation of Sog secretion and regulation by dHIP14, the ortholog of a mammalian palmitoylase first identified as Huntington Interacting Protein (HIP). We show that dHIP14 binds to Sog and that Sog is palmitoylated. In S2 cells, dHIP14 promotes secretion of Sog as well as stabilizing a membrane associated form of Sog. We examined the requirement for candidate cysteine residues in the N-terminal predicted cytoplasmic domain of Sog and find that Cys27, one of two adjacent cysteines (Cys27 and Cys28), is essential for the full activity of dHIP14 and its effect on Sog. Finally, we find that dHIP14 promotes the activity of Sog in vivo. These studies highlight the growing importance of lipid modification in regulating signaling at the level of ligand production and localization.