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Advances in medical therapy have increased survival of extremely premature infants and changed the pathology of bronchopulmonary dysplasia (BPD) from one of acute lung injury to a disease of disrupted lung development. With this evolution, new questions emerge regarding the molecular mechanisms that control postnatal lung development, the effect of early disruptions of postnatal lung development on long-term lung function, and the existence of endogenous mechanisms that permit lung regeneration after injury.Recent data demonstrate that a significant component of alveolarization, the final stage of lung development, occurs postnatally. Further, clinical and experimental studies demonstrate that premature birth disrupts alveolarization, decreasing the gas exchange surface area of the lung and causing BPD. BPD is associated with significant short-term morbidity, and new longitudinal, clinical data demonstrate that survivors of BPD have long-standing deficits in lung function and may be at risk for the development of additional lung disease as adults. Unfortunately, current care is mainly supportive with few effective therapies that prevent or treat established BPD. These studies underscore the need to further elucidate the mechanisms that direct postnatal lung growth and develop innovative strategies to stimulate lung regeneration.Despite significant improvements in the care and survival of extremely premature infants, BPD remains a major clinical problem. Although efforts should remain focused on the prevention of preterm labor and BPD, novel research aimed at promoting postnatal alveolarization offers a unique opportunity to develop effective strategies to treat established BPD.