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The prolyl-4-hydroxylase domain (PHD) 1-3 enzymes have been identified based on their ability to regulate the stability of hypoxia-inducible factor α subunits and thus to modify hypoxia-inducible gene expression. Transgenic mouse models provided insights into the isoform-specific functions of these oxygen sensors with physiological implications for angiogenesis, erythropoiesis/oxygen transport, cardiovascular function, metabolism and tissue homeostasis. This knowledge is important for the ongoing development of small molecule PHD inhibitors that are currently tested in preclinical and clinical trials for the treatment of anaemia and for cytoprotection. This review aims at summarizing the insights obtained from key mouse knock-out models as well as first experiences in the therapeutic application of PHD inhibitors.