*Purpose: Vascularized composite allotransplantation (VCA) allows tissue replacement after devastating loss but is currently limited in application and may be more widely performed if maintenance immunosuppression was not essential for graft acceptance.

*Methods: We tested if peri-transplant costimulation blockade could prolong VCA survival in murine models.

*Results: Peritransplant CD154 mAb/rapamycin (RPM) or CTLA4Ig/RPM induced long-term orthotopic hindlimb VCA survival (BALB/c->C57BL/6). Success of either protocol required a bone-associated, radiation-sensitive cell population, as long-bone removal or pre-Tx donor irradiation prevented long-term engraftment. Rejection also occurred using Rag1-/- donors or if donors were treated with a CXCR4 inhibitor (CXCR4i) to mobilize donor BM cells pre-Tx. Donor BM contained a large population of Foxp3+ T-regulatory (Treg) cells, and donor Foxp3+ Treg depletion, by diphtheria toxin (DT) administration to DEREG donor mice whose Foxp3+ Treg cells expressed DT receptors, restored rejection with either protocol. Rejection also occurred if CXCR4 was deleted from donor Tregs pre-transplant. Additional mechanistic studies showed CXCR4i exposure or Tregs with conditional deletion of CXCR4 had impaired suppressive function and produced IL-2 and IFN-g. Treg homeostasis and stability are regulated by expression of phosphatase and tensin homolog (PTEN), which suppresses phosphoinositide 3-kinase and Akt signaling, including Foxo1 phosphorylation by Akt. Western blots showed PTEN levels were maintained upon activation of WT Tregs but were impaired by treatment with CXCR4i and similarly, CXCR4-/- Tregs had less PTEN expression than WT Tregs. Consistent with decreased PTEN expression by CXCR4 targeted Tregs, phospho-Foxo1 levels were increased by CXCR4i treatment of Tregs undergoing activation, and levels were increased in CXCR4-/- vs. WT Tregs. These data suggest that without tonic CXCR4 signaling, Tregs downregulate PTEN and increase Akt-mediated pFoxo1 generation. Lastly, use of an adenosine receptor antagonist disrupted the effects of CD154 mAb/RPM and led to acute rejection.

*Conclusions: Hence, long-term VCA survival is possible across a full MHC disparity using peritransplant costimulation blockade-based approaches, but surprisingly, the efficacy of costimulation blockade requires the presence of a radiation-sensitive, CXCR4+ Foxp3+ Treg population resident within donor BM. The CXCL12/CXCR4 pathway promotes bone accumulation of Tregs and their expression of PTEN, leading to a site of immune privilege that is dependent upon on the local generation of adenosine by BM Tregs, with consequent impairment of recipient effector T cell activation and functions post-VCA.

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