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An in vitro lipolysis model was utilized to study the effect of stigmastanol (lipophilic phytosterol) and disodium ascorbyl phytostanol phosphate (DAPP) (modified hydrophilic phytostanol) on intestinal processing of cholesterol to gain further understanding of their cholesterol lowering mechanism. Lipolysis results showed that stigmastanol, if given in powder alone, had no effect on cholesterol processing probably due to its poor solubility. Stigmastanol suspension formulation re-distributed cholesterol from aqueous phase to oil and sediment phases. The water soluble DAPP has changed cholesterol distribution even more significantly by transferring cholesterol from aqueous phase to sediment phase. Moreover, the results provided evidence that DAPP inhibited triglyceride digestion in vitro. Considering DAPP as a surfactant with the same lipophilic sterol ring as bile salt, its ability to inhibit triglyceride lipolysis may be due to its competition with bile salt for the substrate surface, thereby hindering the lipolysis of triglyceride and inhibiting cholesterol solubilization with the lipolysis products. It can be speculated that the cholesterol lowering mechanism of DAPP during intestinal digestion is related to its ability to act as a surfactant closely resembling bile salt.