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The mechanisms of cytotoxicity, cellular drug uptake, intracellular drug distribution, cellular pharmacokinetics, formation of arabinofuranosylcytosine triphosphate (ara-CTP), and DNA incorporation of N4-hexadecyl-1-beta-D-arabinofuranosylcytosine (NHAC), a new lipophilic derivative of arabinofuranosylcytosine (ara-C) formulated in small unilamellar liposomes, were determined in vitro in the human leukemic cell lines K-562 and U-937. Furthermore, the induction of erythroid differentiation by NHAC was tested in K-562 cells. The cytotoxicity of NHAC in both cell lines was not influenced by the deoxycytidine (dCyd) concentration or the presence of the nucleoside-transport-blocking agent dipyridamole as demonstrated in coincubations with dCyd and/or dipyridamole, whereas in contrast, the cytotoxicity of ara-C was decreased additively by both drugs. As compared with ara-C, the uptake of NHAC displayed up to 16- and 5-fold increases in K-562 and U-937 cells, respectively, depending on the drug concentration. Studies of the drug distribution and pharmacokinetics of NHAC revealed a depot effect for NHAC in the cell membranes, resulting in half-lives 2.6 and 1.4 times longer than those of ara-C in the two cell lines. The ara-CTP concentrations derived from NHAC were 150- and 75-fold lower at a drug concentration of 1 microM in K-562 and U-937 cells, respectively. The DNA incorporation of the drugs observed after incubation with 2 microM NHAC was 60- and 30-fold lower as compared with that seen at 2 microM ara-C in the two cell lines. Furthermore, NHAC was capable of inducing irreversible erythroid differentiation to a maximum of only 22% of K-562 cells, whereas ara-C induced differentiation at a drug concentration 100-fold lower in 50% of the cells. These results indicate a mechanism of cytotoxicity for NHAC that is independent of the nucleoside transport mechanism and the phosphorylation pathway and suggest that the mechanisms of action of NHAC are significantly different from those of ara-C. Therefore, NHAC might be used for the treatment of ara-C-resistant malignancies.