Alveolar Type II Cell-derived MMP1 high basal cells promote destructive microcysts in idiopathic pulmonary fibrosis

Idiopathic Pulmonary Fibrosis (IPF) is a fatal lung disease characterized by progressive epithelial metaplasia and widespread fibrosis. Alveolar microcysts develop near terminal airways in IPF and are linked to poor outcome. Using HTII-280 as a short-term lineage marker of AT2-derived AT0 (SFTPC + /SCGB3A2 + ) and basaloid (KRT17⁺) cells, together with organoids and spatial transcriptomics (Xenium), we highlight epithelial similarities between respiratory bronchioles (RBs) and alveolar microcysts both having AT0, SCGB3A2+, and basaloid/basal cells (BCs), albeit with expanded BCs in IPF microcysts. The AT0- and AT2-derived BCs strongly express the collagenase, matrix metalloproteinase protein-1, MMP1 in organoids — mirroring in situ BCs lining IPF microcysts, but distinct from MMP1 low BCs in large airways or normal lungs. Expression of MMP1 correlates with basal cell hypoxia pathway activity. MMP1 high AT2-derived BCs and IPF BCs promoted type 1 collagen degradation ex vivo and in vivo after xenotransplantation, forming microcystic structures that were abrogated by concurrent MMP inhibitor treatment. Notably, a Frizzled 5 WNT agonist antibody reversed the MMP1 high state of AT2-derived BCs, raising a possible therapeutic approach. These findings suggest AT2 transdifferentiation to basaloid/basal cells is uncommon in normal lungs but can expand as a potential source of alveolar destruction, likely contributing to the pernicious course of IPF.