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The S.cerevisiae gene deletion collection is widely used for functional gene annotation and genetic interaction analyses. However, the standard G418-resistance cassette used to produce knockout mutants delivers strong regulatory elements into the target genetic loci. To date, their side effects on the expression of neighboring genes have never been systematically assessed. Here, using ribosome profiling and RNA-Seq data for several S.cerevisiae knockout strains, we analyzed transcriptional and translational perturbations induced by the KanMX cassette within the modified genomic loci. In many cases, we discovered significant alterations in gene expression, including severe impairment of translation. These changes could be attributed to shifted transcriptional start sites or activation of alternative polyadenylation signals. The most dramatic changes were observed when a deleted gene was arranged “head-to-head” with the neighboring gene, where a shift of transcription start site of the latter expanded the 5’ untranslated region (UTR), and the appearance of upstream AUG codons, inhibited translation of its main open reading frame. In some cases, these events caused false genetic interactions of the deleted genes, the so-called neighboring gene effect (NGE). Our observations report on the interactions of the KanMX cassette with neighboring genes and provide an understanding of the molecular mechanisms involved. They also suggest that caution is needed in interpreting the results of deletion screens.