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Note from the author: I hope you find the following interesting. I've trawled through a lot of stuff and brought it together especially for this site, in a fashion that I've not found anywhere else. I've tried to pick out horse related information from research that has been done on various animals, including humans.

Coat pigmentation is determined by the presence, absence or relative proportions of the melanin pigments eumelanin and phaeomelanin.
The melanins are high molecular weight (i.e. relatively large), light absorbing biopolymers that occur in various similar forms. Eumelanin is either brown or black in color, but is thought to always be black in horses. Phaeomelanin is either a reddish or yellowish brown.
 Light absorption by melanins causes skin, hair and eye colors which, biologically speaking, are important for camouflage and display. Melanins also function to protect against the sun and are involved in thermoregulation (black horses, for example, are more common in breeds of colder countries). They seem to help protect the body against some harmful chemicals, including free radicals and might also have anti-melanoma properties (Riley, 1997).
Light absorption by melanins causes skin, hair and eye colors which, biologically speaking, are important for camouflage and display. Melanins also function to protect against the sun and are involved in thermoregulation (black horses, for example, are more common in breeds of colder countries). They seem to help protect the body against some harmful chemicals, including free radicals and might also have anti-melanoma properties (Riley, 1997).
The biosynthesis of melanins (melanogenesis) is illustrated in figure 1. Use the link if you want to open this diagram in a new page, to refer to during your reading.

It used to be thought that after the first two steps (in which L-tyrosine is converted to dihydroxyphenylalanine (DOPA) and then dopaquinone) melanin biosynthesis could proceed spontaneously. Tyrosinase was therefore thought to be the only essential enzyme in the biosynthesis of melanin (Hearing and Tsukamoto, 1991). However it is now known that other enzymes are involved at various stages of melanogenesis. Some of these enzymes probably have other jobs in addition to their roles in melanin production (Oetting et al, Tabibian, 2001).
Tyrosinase is involved in at least three stages of melanin production and is therefore an important enzyme in the process. The tyrosinase gene is most probably the ancestral gene from which genes for similar enzymes have been derived by mutation: the gene is part of a family of at least three homologous (genetically similar) genes (King et al, 1995). Besides tyrosinase, the family contains DHICA oxidase (encoded by the B locus) and dopachrome tautomerase (I don’t think that mutations at this locus have been identified in horses). DHICA oxidase is discussed later.
 It is possible that one of the other coat dilutions was in some way due to reduced tyrosinase activity. Both black and red pigments are diluted by the action of the dun dilution. Nevertheless, dun is caused by an uneven distribution of pigment granules in the hair shafts that is most probably isn’t associated with a mutation in the tyrosinase protein. I note, however, that champagne causes a dilution of all coat pigments and gives a pink skin and paler (but not pink or blue) eyes. One could imagine that this could conceivably be due to reduced tyrosinase activity causing reduced pigment in the skin, coat and eyes. Maybe it is the champagne gene rather than the cream gene that is actually homologous to the mouse and human C genes.
It is possible that one of the other coat dilutions was in some way due to reduced tyrosinase activity. Both black and red pigments are diluted by the action of the dun dilution. Nevertheless, dun is caused by an uneven distribution of pigment granules in the hair shafts that is most probably isn’t associated with a mutation in the tyrosinase protein. I note, however, that champagne causes a dilution of all coat pigments and gives a pink skin and paler (but not pink or blue) eyes. One could imagine that this could conceivably be due to reduced tyrosinase activity causing reduced pigment in the skin, coat and eyes. Maybe it is the champagne gene rather than the cream gene that is actually homologous to the mouse and human C genes.
 The extension locus encodes a receptor molecule called the melanocortin 1 receptor (MC1R) that occurs on the surface of the melanocyte. The switch between eumelanin and phaeomelanin production is regulated by the interaction of the MC1R with either alpha-melanocyte stimulating hormone (alpha-MSH) or the agouti signalling protein (encoded by the agouti locus).
The extension locus encodes a receptor molecule called the melanocortin 1 receptor (MC1R) that occurs on the surface of the melanocyte. The switch between eumelanin and phaeomelanin production is regulated by the interaction of the MC1R with either alpha-melanocyte stimulating hormone (alpha-MSH) or the agouti signalling protein (encoded by the agouti locus).
 
 

 MATP protein transports other molecules across melanocyte membranes, including, but not exclusively, tyrosinase. Melanocytes of mice with the underwhite mutation are markedly different from wild-type melanocytes. Tyrosinase processing and transport to the melanosomes (the intracellular organelles where melanin production takes place) is disrupted and the enzyme is abnormally secreted from the cell. This disrupts the normal maturation process of these organelles (Costin et al, 2003). Normal levels of tyrosinase are produced but only part of it is delivered and active in the right place for melanin biosynthesis, resulting in reduced pigment production. Why this affects phaeomelanin production so much more than eumelanin production isn’t entirely clear. However it is known that the melanosomes where the two types of pigment are produced are structurally and bio-chemically different. Certainly eumelanin melanosomes have another (and possibly similar) transport protein called p protein, which doesn’t occur in phaeomelanin melanosomes. Perhaps melanosomes producing phaeomelanin have more MATP protein in their membrane, instead of p protein. However this is pure conjecture on my part and perhaps there’s another reason altogether. I will keep an eye out for any emerging answer.
MATP protein transports other molecules across melanocyte membranes, including, but not exclusively, tyrosinase. Melanocytes of mice with the underwhite mutation are markedly different from wild-type melanocytes. Tyrosinase processing and transport to the melanosomes (the intracellular organelles where melanin production takes place) is disrupted and the enzyme is abnormally secreted from the cell. This disrupts the normal maturation process of these organelles (Costin et al, 2003). Normal levels of tyrosinase are produced but only part of it is delivered and active in the right place for melanin biosynthesis, resulting in reduced pigment production. Why this affects phaeomelanin production so much more than eumelanin production isn’t entirely clear. However it is known that the melanosomes where the two types of pigment are produced are structurally and bio-chemically different. Certainly eumelanin melanosomes have another (and possibly similar) transport protein called p protein, which doesn’t occur in phaeomelanin melanosomes. Perhaps melanosomes producing phaeomelanin have more MATP protein in their membrane, instead of p protein. However this is pure conjecture on my part and perhaps there’s another reason altogether. I will keep an eye out for any emerging answer.
 Melanocytes originate in the neural crest region of a developing foetus and migrate throughout the foetus during its development. The migration pattern is genetically controlled and can result in some dramatic coat patterns, such as that seen on the zebra. It would also appear to affect the coat pattern known as overo. Overo paint horses are heterozygous for the overo allele (Oo). Homozygous foals (OoOo) are all-white with blue eyes and die of complications from intestinal tract abnormalities. These all-white foals lack both pigmentation and nerve cells in the intestinal tract (aganglionosis). Ganglia (nerve cells) are also migratory cells that originate in the neural crest region. The overo gene is for the endotheline-B receptor (Metalinos et al). It would seem that this is involved with both the migration of pigment and nerve cells.
Melanocytes originate in the neural crest region of a developing foetus and migrate throughout the foetus during its development. The migration pattern is genetically controlled and can result in some dramatic coat patterns, such as that seen on the zebra. It would also appear to affect the coat pattern known as overo. Overo paint horses are heterozygous for the overo allele (Oo). Homozygous foals (OoOo) are all-white with blue eyes and die of complications from intestinal tract abnormalities. These all-white foals lack both pigmentation and nerve cells in the intestinal tract (aganglionosis). Ganglia (nerve cells) are also migratory cells that originate in the neural crest region. The overo gene is for the endotheline-B receptor (Metalinos et al). It would seem that this is involved with both the migration of pigment and nerve cells.
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Zalfa, A. Abdel-Malek, M. Cathy Scott, Minao Furumura, M. Lynn Lamoreux, Michael Ollmann, Greg S. Barsh and Vincent J. Hearing. 2001. The melanocortin 1 receptor is the principal mediator of the effects of agouti signaling protein on mammalian melanocytes. Journal of Cell Science 114, 1019-1024.