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Myotonic dystrophy type 1 (DM1) is a dominant neuromuscular disorder caused by a trinucleotide (CTG) repeat expansion. Mutant DMPK 3′-untranslated region (3′-UTR) transcripts aggregate in nuclear foci and are thought to impose dominant-negative effects by interacting with RNA binding proteins. We demonstrated previously that the mutant 3′-UTR RNA disrupted C2C12 myoblast differentiation, and that the CUG expansion was necessary for this effect. Several proteins are known to interact with the CUG tract or the region 3′ (distal) to it. Here, using a library of transfected C2C12 clones, we show that although transcripts containing a CUG expansion alone or a CUG expansion plus the distal region of the DMPK 3′-UTR accumulate into RNA foci, neither of these RNAs affect C2C12 myogenesis. Thus, RNA foci formation, and perturbation of any RNA binding factors involved in this process, are not sufficient to block myoblast differentiation. Interestingly, we found that transcripts containing expanded CUG tracts can form both nuclear and cytoplasmic RNA foci, demonstrating that factors involved in foci formation are present in the nucleus and cytoplasm. RNA analysis of myogenic markers revealed that the mutant DMPK 3′-UTR mRNA does not affect myoblast determination factors MyoD or Myf5, but significantly impedes upregulation of the differentiation factors myogenin and p21. C2C12 provide a good model to study adult muscle regeneration. Our observations in this system may be relevant to the lack of a regenerative response to continued muscle wasting in DM, and point to defects in early events in the myogenic response to muscle damage.