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The development of clinically acceptable albumin-based nanoparticle formulations for use in pulmonary drug delivery has been hindered by concerns about the toxicity of nanomaterials in the lungs combined with a lack of information on albumin nanoparticle clearance kinetics and biodistribution. In this study, the in vivo biocompatibility of albumin nanoparticles was investigated following a single administration of 2, 20, and 390 μg/mouse, showing no inflammatory response (TNF-α and IL-6, cellular infiltration and protein concentration) compared to vehicle controls at the two lower doses, but elevated mononucleocytes and a mild inflammatory effect at the highest dose tested. The biodistribution and clearance of 111In labelled albumin solution and nanoparticles over 48 h following a single pulmonary administration to mice was investigated by single photon emission computed tomography and X-ray computed tomography imaging and terminal biodistribution studies. 111In labelled albumin nanoparticles were cleared more slowly from the mouse lung than 111In albumin solution (64.1 ± 8.5% vs 40.6 ± 3.3% at t = 48 h, respectively), with significantly higher (P < 0.001) levels of albumin nanoparticle-associated radioactivity located within the lung tissue (23.3 ± 4.7%) compared to the lung fluid (16.1 ± 4.4%). Low amounts of 111In activity were detected in the liver, kidneys, and intestine at time points > 24 h indicating that small amounts of activity were cleared from the lungs both by translocation across the lung mucosal barrier, as well as mucociliary clearance. This study provides important information on the fate of albumin vehicles in the lungs, which may be used to direct future formulation design of inhaled nanomedicines.