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In Gram-negative bacteria, alkaline phosphatase is located in the periplasmic space, external to the cell membrane. Since this space is much more subject to environmental variation than the actual interior of the cell, bacterial alkaline phosphatase is resistant to inactivation, denaturation, and degradation, and contains a higher rate of activity. The permeable outer membrane have porins which form channels that allow phosphorylated compounds to enter the cell. Although the purpose of the enzyme is not fully resolved, the simple hypothesis is that it serves to cleave phosphate groups from phosphorylated compounds facilitating transport across membranes and providing the cell with a source of inorganic phosphate at times of phosphate starvation.The main purpose of dephosphorylation by alkaline phosphatase is to increase the rate of diffusion of the molecules into the cells and inhibit them from diffusing out. However, other possibilities exist. For instance, the presence of phosphate groups usually prevents organic molecules from passing through the membrane; therefore, dephosphorylating them may be important for bacterial uptake of organic compounds.

Alkaline phosphatase is a zinc-containing dimeric enzyme with the MW: 86,000 Da. It is heat stable and its function is to remove phosphate groups from phosphorylated compounds facilitating transport across membranes and providing the cell with a source of inorganic phosphate. Alkaline phosphatase in E. coli is located in the periplasmic space and can thus be released using techniques that weaken the cell wall and release the protein. Due to the location of the enzyme, and the protein layout of the enzyme the enzyme is in solution with a small amount of proteins than there are in another portion of the cell. Some complexities of bacterial regulation and metabolism suggest that other, more subtle, purposes for the enzyme may also play a role for the cell. In the laboratory, however, mutant Escherichia coli lacking alkaline phosphatase survive quite well, as do mutants unable to shut off alkaline phosphatase production.

The optimal pH for the activity of the E. coli enzyme is 8.0 while the bovine enzyme optimum pH is slightly higher at 8.5.