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Vertebrate SoxE genes (Sox8, 9, and 10) are key regulators of neural crest cell (NCC) development. These genes arose by duplication from a single SoxE gene in the vertebrate ancestor. Although SoxE paralogs are coexpressed early in NCC development, later, Sox9 is restricted to skeletogenic lineages in the head, and Sox10 to non-skeletogenic NCC in the trunk and head. When this subfunctionalization evolved and its possible role in the evolution of the neural crest are unknown. Sea lampreys are basal vertebrates that also possess three SoxE genes, while only a single SoxE is present in the cephalochordate amphioxus. In order to address the functional divergence of SoxE genes, and to determine if differences in their biochemical functions may be linked to changes in neural crest developmental potential, we examined the ability of lamprey and amphioxus SoxE genes to regulate differentiation of NCC derivatives in zebrafish colourless (cls) mutants lacking expression of sox10. Our findings suggest that the proto-vertebrate SoxE gene possessed both melanogenic and neurogenic capabilities prior to SoxE gene duplication. Following the agnathan-gnathostome split, lamprey SoxE1 and SoxE3 largely lost their melanogenic and/or enteric neurogenic properties, while gnathostome SoxE paralogs have retained functional conservation. We posit that this difference in protein subfunctionalization is a direct consequence of the independent regulation of SoxE paralog expression between the two lineages. Specifically, we propose that the overlapping expression of gnathostome SoxE paralogs in early neural crest largely constrained the function of gnathostome SoxE proteins. In contrast, the largely non-overlapping expression of lamprey SoxE paralogs allowed them to specialize with regard to their DNA-binding and/or protein interaction properties. Restriction of developmental potential among cranial and trunk neural crest in lampreys may be related to constraints on SoxE activity among duplicates, but such specialization does not appear to have occurred in gnathostomes. This highlights an important difference in the evolution of SoxE activity between these two divergent vertebrate lineages and provides insights for understanding how cell fate restriction in different NCC populations may be dependent on subfunctionalization among SoxE duplicates.