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This study aimed to identify pathways and cellular processes that are modulated by exposure of normal esophageal cells to bile and acid.Barrett's esophagus most likely develops as a response of esophageal stem cells to the abnormal reflux environment. Although insights into the underlying molecular mechanisms are slowly emerging, much of the metaplastic process remains unknown.We performed a global analysis of gene expression in normal squamous esophageal cells in response to bile or acid exposure. Differentially expressed genes were classified into major biological functions using pathway analysis and interaction network software. Array data were verified by quantitative PCR and western blot both in vitro and in human esophageal biopsies.Bile modulated expression of 202 genes, and acid modulated expression of 103 genes. Genes involved in squamous differentiation formed the largest functional group (n = 45) all of which were downregulated by bile exposure. This included genes such as involucrin (IVL), keratinocyte differentiation-associated protein (KRTDAP), grainyhead-like 1 (GRHL1), and desmoglein1 (DSG1) the downregulation of which was confirmed by quantitative PCR and western blot. Bile also caused expression changes in genes involved in cell adhesion, DNA repair, oxidative stress, cell cycle, Wnt signaling, and lipid metabolism. Analysis of human esophageal biopsies demonstrated greatly reduced expression of IVL, KRTDAP, DSG1, and GRHL1 in metaplastic compared to squamous epithelia.We report for the first time that bile inhibits the squamous differentiation program of esophageal epithelial cells. This, coordinated with induction of genes driving intestinal differentiation, may be required for the development of Barrett's esophagus.