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In the actinorhodin type II polyketide synthase, the first polyketide modification is a regiospecific C9-carbonyl reduction, catalyzed by the ketoreductase (actKR). Our previous studies identified the actKR 94-PGG-96 motif as a determinant of stereospecificity. The molecular basis for reduction regiospecificity is, however, not well understood. In this study, we examined the activities of 20 actKR mutants through a combination of kinetic studies, PKS reconstitution, and structural analyses. Residues have been identified that are necessary for substrate interaction, and these observations have suggested a structural model for this reaction. Polyketides dock at the KR surface and are steered into the enzyme pocket where C7-C12 cyclization is mediated by the KR before C9-ketoreduction can occur. These molecular features can potentially serve as engineering targets for the biosynthesis of novel, reduced polyketides.