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Thiodiglycol (2,2′-bis-hydroxyethylsulfide, TDG), the hydrolysis product of the chemical warfare agent sulfur mustard, has been implicated in the toxicity of sulfur mustard through the inhibition of protein phosphatases in mouse liver cytosol. The absence of any inhibitory activity when TDG was present in assays of pure enzymes, however, led us to investigate the possibility for metabolic activation of TDG to inhibitory compound(s) by cytosolic enzymes. We have successfully shown that mammalian alcohol dehydrogenases (ADH) rapidly oxidize TDG in vitro, but the classic spectrophotometric techniques for following this reaction provided no information on the identity of TDG intermediates and products. The use of proton NMR to monitor the oxidative reaction with structural confirmation by independent synthesis allowed us to establish the ultimate product, 2-hydroxyethylthioacetic acid, and to identify an intermediate equilibrium mixture consisting of 2-hydroxyethylthioacetaldehyde, 2-hydroxyethylthioacetaldehyde hydrate and the cyclic 1,4-oxathian-2-ol. The intermediate nature of this mixture was determined spectrophotometrically when it was shown to drive the production of NADH when added to ADH and NAD.