Essays on Market Microstructure: Price Discovery and Informed Trading

Market microstructure is “the study of the trading mechanisms used for financial securities” (Hasbrouck (2007)). It seeks to understand the sources of value and reasons for trade, in a setting with different types of traders, and different private and public information sets. The actual mechanisms of trade are a continually changing object of study. These include continuous markets, auctions, limit order books, dealer markets, or combinations of these operating as a hybrid market. Microstructure also has to allow for the possibility of multiple prices. At any given time an investor may be faced with a multitude of different prices, depending on whether he or she is buying or selling, the quantity he or she wishes to trade, and the required speed for the trade. The price may also depend on the relationship that the trader has with potential counterparties. In this research, I touch upon all of the above issues. I do this by studying three specific areas, all of which have both practical and policy implications. First, I study the role of information in trading and pricing securities in markets with a heterogeneous population of traders, some of whom are informed and some not, and who trade for different private or public reasons. Second, I study the price discovery of stocks in a setting where they are simultaneously traded in more than one market. Third, I make a contribution to the ongoing discussion about market design, i.e. the question of which trading systems and ways of organizing trading are most efficient. A common characteristic throughout my thesis is the use of high frequency datasets, i.e. tick data. These datasets include all trades and quotes in a given security, rather than just the daily closing prices, as in traditional asset pricing literature. This thesis consists of four separate essays. In the first essay I study price discovery for European companies cross-listed in the United States. I also study explanatory variables for differences in price discovery. In my second essay I contribute to earlier research on two issues of broad interest in market microstructure: market transparency and informed trading. I examine the effects of a change to an anonymous market at the OMX Helsinki Stock Exchange. I broaden my focus slightly in the third essay, to include releases of macroeconomic data in the United States. I analyze the effect of these releases on European cross-listed stocks. The fourth and last essay examines the uses of standard methodologies of price discovery analysis in a novel way. Specifically, I study price discovery within one market, between local and foreign traders.

Essays on the Role of Time in Price Discovery (summary section only)

The purpose of this thesis is to examine the role of trade durations in price discovery. The motivation to use trade durations in the study of price discovery is that durations are robust to many microstructure effects that introduce a bias in the measurement of returns volatility. Another motivation to use trade durations in the study of price discovery is that it is difficult to think of economic variables, which really are useful in the determination of the source of volatility at arbitrarily high frequencies. The dissertation contains three essays. In the first essay, the role of trade durations in price discovery is examined with respect to the volatility pattern of stock returns. The theory on volatility is associated with the theory on the information content of trade, dear to the market microstructure theory. The first essay documents that the volatility per transaction is related to the intensity of trade, and a strong relationship between the stochastic process of trade durations and trading variables. In the second essay, the role of trade durations in price discovery is examined with respect to the quantification of risk due to a trading volume of a certain size. The theory on volume is intrinsically associated with the stock volatility pattern. The essay documents that volatility increases, in general, when traders choose to trade with large transactions. In the third essay, the role of trade durations in price discovery is examined with respect to the information content of a trade. The theory on the information content of a trade is associated with the theory on the rate of price revisions in the market. The essay documents that short durations are associated with information. Thus, traders are compensated for responding quickly to information

New Solid State Forms of the Anti-HIV Drug Efavirenz. Conformational Flexibility and High Z ` Issues

Structural information on the solid forms of efavirenz, a non-nucleoside reverse transcriptase inhibitor, is limited, although various polymorphic forms of this drug have been patented. We report here structural studies of four new crystal forms a pure form, a cyclohexane solvate, and cocrystals with 1,4-cyclohexanedione and 4,4'-bipyridine. Temperature dependent single-crystal to single-crystal phase transitions are observed for the pure form and for the cyclohexane solvate with an increase in the number of symmetry independent molecules, Z', upon a lowering of temperature. Other issues related to these solid forms, such as thermal stability, conformational flexibility, and high Z' occurrences, are addressed by using a combined experimental and computational approach.

Expression of drug resistance markers by spheroplasts ofMycobacterium smegmatis after fusion

Mycobacterial spheroplasts were prepared by treatment of the glycinesensitized cells with a combination of lipase and lysozyme. They were stable for several hours at room temperature but were lysed on treatment with 0.1% sodium dodecyl sulfate. The spheroplasts could be regenerated on a suitable medium. Fusion and regeneration of the spheroplasts were attempted using drug resistant mutant strains ofM. smegmalis. Recombinants were obtained from spheroplast fusion mediated by polyethylene glycol and dimethyl sulfoxide. Simultaneous expression of rccombinant properties was observed only after an initial lag in the isolated clones. This has been explained as due to “chromosome inactivation” in the fused product.

Discovery of oxidative enzymes for food engineering : Tyrosinase and sulfhydryl oxidase

Enzymes offer many advantages in industrial processes, such as high specificity, mild treatment conditions and low energy requirements. Therefore, the industry has exploited them in many sectors including food processing. Enzymes can modify food properties by acting on small molecules or on polymers such as carbohydrates or proteins. Crosslinking enzymes such as tyrosinases and sulfhydryl oxidases catalyse the formation of novel covalent bonds between specific residues in proteins and/or peptides, thus forming or modifying the protein network of food. In this study, novel secreted fungal proteins with sequence features typical of tyrosinases and sulfhydryl oxidases were iden-tified through a genome mining study. Representatives of both of these enzyme families were selected for heterologous produc-tion in the filamentous fungus Trichoderma reesei and biochemical characterisation. Firstly, a novel family of putative tyrosinases carrying a shorter sequence than the previously characterised tyrosinases was discovered. These proteins lacked the whole linker and C-terminal domain that possibly play a role in cofactor incorporation, folding or protein activity. One of these proteins, AoCO4 from Aspergillus oryzae, was produced in T. reesei with a production level of about 1.5 g/l. The enzyme AoCO4 was correctly folded and bound the copper cofactors with a type-3 copper centre. However, the enzyme had only a low level of activity with the phenolic substrates tested. Highest activity was obtained with 4-tert-butylcatechol. Since tyrosine was not a substrate for AoCO4, the enzyme was classified as catechol oxidase. Secondly, the genome analysis for secreted proteins with sequence features typical of flavin-dependent sulfhydryl oxidases pinpointed two previously uncharacterised proteins AoSOX1 and AoSOX2 from A. oryzae. These two novel sulfhydryl oxidases were produced in T. reesei with production levels of 70 and 180 mg/l, respectively, in shake flask cultivations. AoSOX1 and AoSOX2 were FAD-dependent enzymes with a dimeric tertiary structure and they both showed activity on small sulfhydryl compounds such as glutathione and dithiothreitol, and were drastically inhibited by zinc sulphate. AoSOX2 showed good stabil-ity to thermal and chemical denaturation, being superior to AoSOX1 in this respect. Thirdly, the suitability of AoSOX1 as a possible baking improver was elucidated. The effect of AoSOX1, alone and in combi-nation with the widely used improver ascorbic acid was tested on yeasted wheat dough, both fresh and frozen, and on fresh water-flour dough. In all cases, AoSOX1 had no effect on the fermentation properties of fresh yeasted dough. AoSOX1 nega-tively affected the fermentation properties of frozen doughs and accelerated the damaging effects of the frozen storage, i.e. giving a softer dough with poorer gas retention abilities than the control. In combination with ascorbic acid, AoSOX1 gave harder doughs. In accordance, rheological studies in yeast-free dough showed that the presence of only AoSOX1 resulted in weaker and more extensible dough whereas a dough with opposite properties was obtained if ascorbic acid was also used. Doughs containing ascorbic acid and increasing amounts of AoSOX1 were harder in a dose-dependent manner. Sulfhydryl oxidase AoSOX1 had an enhancing effect on the dough hardening mechanism of ascorbic acid. This was ascribed mainly to the produc-tion of hydrogen peroxide in the SOX reaction which is able to convert the ascorbic acid to the actual improver dehydroascorbic acid. In addition, AoSOX1 could possibly oxidise the free glutathione in the dough and thus prevent the loss of dough strength caused by the spontaneous reduction of the disulfide bonds constituting the dough protein network. Sulfhydryl oxidase AoSOX1 is therefore able to enhance the action of ascorbic acid in wheat dough and could potentially be applied in wheat dough baking.

Mechanism of interaction of the antileukemic drug cytosine arabinoside with aromatic peptides : role of sugar conformation and peptide backbone

Interaction of the antileukemic drugs, cytosine-arabinoside (Ara-C) and adenosine-arabinoside (Ara-A) and a structural analogue, cytidine, with aromatic dipeptides has been studied by fluorescence and NMR spectroscopy. Ara-C and cytidine bind tryptophanyl and histidyl dipeptides but not tyrosyl dipeptides, while Ara-A does not bind to any of them. Both studies indicate association involving stacking of aromatic moieties. NMR spectra also indicate a protonation of the histidine moiety by Ara-C. In case of cytidine, the chemical shifts observed on binding to His-Phe imply that the backbone protons of the dipeptide participate in the binding. The conformation of the sugar and the base seem to play a very important role in the binding phenomenon as three similar molecules, Ara-C, Ara-A and cytidine bind in totally different ways.

Introduction of high-content screening method for studying drug-induced mitochondrial dysfunction in hepatocytes

Drug induced liver injury is one of the frequent reasons for the drug removal from the market. During the recent years there has been a pressure to develop more cost efficient, faster and easier ways to investigate drug-induced toxicity in order to recognize hepatotoxic drugs in the earlier phases of drug development. High Content Screening (HCS) instrument is an automated microscope equipped with image analysis software. It makes the image analysis faster and decreases the risk for an error caused by a person by analyzing the images always in the same way. Because the amount of drug and time needed in the analysis are smaller and multiple parameters can be analyzed from the same cells, the method should be more sensitive, effective and cheaper than the conventional assays in cytotoxicity testing. Liver cells are rich in mitochondria and many drugs target their toxicity to hepatocyte mitochondria. Mitochondria produce the majority of the ATP in the cell through oxidative phosphorylation. They maintain biochemical homeostasis in the cell and participate in cell death. Mitochondria is divided into two compartments by inner and outer mitochondrial membranes. The oxidative phosphorylation happens in the inner mitochondrial membrane. A part of the respiratory chain, a protein called cytochrome c, activates caspase cascades when released. This leads to apoptosis. The aim of this study was to implement, optimize and compare mitochondrial toxicity HCS assays in live cells and fixed cells in two cellular models: human HepG2 hepatoma cell line and rat primary hepatocytes. Three different hepato- and mitochondriatoxic drugs (staurosporine, rotenone and tolcapone) were used. Cells were treated with the drugs, incubated with the fluorescent probes and then the images were analyzed using Cellomics ArrayScan VTI reader. Finally the results obtained after optimizing methods were compared to each other and to the results of the conventional cytotoxicity assays, ATP and LDH measurements. After optimization the live cell method and rat primary hepatocytes were selected to be used in the experiments. Staurosporine was the most toxic of the three drugs and caused most damage to the cells most quickly. Rotenone was not that toxic, but the results were more reproducible and thus it would serve as a good positive control in the screening. Tolcapone was the least toxic. So far the conventional analysis of cytotoxicity worked better than the HCS methods. More optimization needs to be done to get the HCS method more sensitive. This was not possible in this study due to time limit.

Cyclin dependent protein kinases as drug targets – potential in cardiovascular diseases

Complications of atherosclerosis such as myocardial infarction and stroke are the primary cause of death in Western societies. The development of atherosclerotic lesions is a complex process, including endothelial cell dysfunction, inflammation, extracellular matrix alteration and vascular smooth muscle cell (VSMC) proliferation and migration. Various cell cycle regulatory proteins control VSMC proliferation. Protein kinases called cyclin dependent kinases (CDKs) play a major role in regulation of cell cycle progression. At specific phases of the cell cycle, CDKs pair with cyclins to become catalytically active and phosphorylate numerous substrates contributing to cell cycle progression. CDKs are also regulated by cyclin dependent kinase inhibitors, activating and inhibitory phosphorylation, proteolysis and transcription factors. This tight regulation of cell cycle is essential; thus its deregulation is connected to the development of cancer and other proliferative disorders such as atherosclerosis and restenosis as well as neurodegenerative diseases. Proteins of the cell cycle provide potential and attractive targets for drug development. Consequently, various low molecular weight CDK inhibitors have been identified and are in clinical development. Tylophorine is a phenanthroindolizidine alkaloid, which has been shown to inhibit the growth of several human cancer cell lines. It was used in Ayurvedic medicine to treat inflammatory disorders. The aim of this study was to investigate the effect of tylophorine on human umbilical vein smooth muscle cell (HUVSMC) proliferation, cell cycle progression and the expression of various cell cycle regulatory proteins in order to confirm the findings made with tylophorine in rat cells. We used several methods to determine our hypothesis, including cell proliferation assay, western blot and flow cytometric cell cycle distribution analysis. We demonstrated by cell proliferation assay that tylophorine inhibits HUVSMC proliferation dose-dependently with an IC50 value of 164 nM ± 50. Western blot analysis was used to determine the effect of tylophorine on expression of cell cycle regulatory proteins. Tylophorine downregulates cyclin D1 and p21 expression levels. The results of tylophorine’s effect on phosphorylation sites of p53 were not consistent. More sensitive methods are required in order to completely determine this effect. We used flow cytometric cell cycle analysis to investigate whether tylophorine interferes with cell cycle progression and arrests cells in a specific cell cycle phase. Tylophorine was shown to induce the accumulation of asynchronized HUVSMCs in S phase. Tylophorine has a significant effect on cell cycle, but its role as cell cycle regulator in treatment of vascular proliferative diseases and cancer requires more experiments in vitro and in vivo.

Drug epidemiology, interactions and pharmacogenetics : A post-mortem database study

Use of adverse drug combinations, abuse of medicinal drugs and substance abuse are considerable social problems that are difficult to study. Prescription database studies might fail to incorporate factors like use of over-the-counter drugs and patient compliance, and spontaneous reporting databases suffer from underreporting. Substance abuse and smoking studies might be impeded by poor participation activity and reliability. The Forensic Toxicology Unit at the University of Helsinki is the only laboratory in Finland that performs forensic toxicology related to cause-of-death investigations comprising the analysis of over 6000 medico-legal cases yearly. The analysis repertoire covers most commonly used drugs and drugs of abuse, and the ensuing database contains also background information and information extracted from the final death certificate. In this thesis, the data stored in this comprehensive post-mortem toxicology database was combined with additional metabolite and genotype analyses that were performed to complete the profile of selected cases. The incidence of drug combinations possessing serious adverse drug interactions was generally low (0.71%), but it was notable for the two individually studied drugs, a common anticoagulant warfarin (33%) and a new generation antidepressant venlafaxine (46%). Serotonin toxicity and adverse cardiovascular effects were the most prominent possible adverse outcomes. However, the specific role of the suspected adverse drug combinations was rarely recognized in the death certificates. The frequency of bleeds was observed to be elevated when paracetamol and warfarin were used concomitantly. Pharmacogenetic factors did not play a major role in fatalities related to venlafaxine, but the presence of interacting drugs was more common in cases showing high venlafaxine concentrations. Nicotine findings in deceased young adults were roughly three times more prevalent than the smoking frequency estimation of living population. Contrary to previous studies, no difference in the proportion of suicides was observed between nicotine users and non-nicotine users. However, findings of abused substances, including abused prescription drugs, were more common in the nicotine users group than in the non-nicotine users group. The results of the thesis are important for forensic and clinical medicine, as well as for public health. The possibility of drug interactions and pharmacogenetic issues should be taken into account in cause-of-death investigations, especially in unclear cases, medical malpractice suspicions and cases where toxicological findings are scarce. Post-mortem toxicological epidemiology is a new field of research that can help to reveal problems in drug use and prescription practises.

A Hub System for Cloud-Computing Based Business-Collaboration: Automating Ontology-Enabled Electronic Business-Service Discovery

The management and coordination of business-process collaboration experiences changes because of globalization, specialization, and innovation. Service-oriented computing (SOC) is a means towards businessprocess automation and recently, many industry standards emerged to become part of the service-oriented architecture (SOA) stack. In a globalized world, organizations face new challenges for setting up and carrying out collaborations in semi-automating ecosystems for business services. For being efficient and effective, many companies express their services electronically in what we term business-process as a service (BPaaS). Companies then source BPaaS on the fly from third parties if they are not able to create all service-value inhouse because of reasons such as lack of reasoures, lack of know-how, cost- and time-reduction needs. Thus, a need emerges for BPaaS-HUBs that not only store service offers and requests together with information about their issuing organizations and assigned owners, but that also allow an evaluation of trust and reputation in an anonymized electronic service marketplace. In this paper, we analyze the requirements, design architecture and system behavior of such a BPaaS-HUB to enable a fast setup and enactment of business-process collaboration. Moving into a cloud-computing setting, the results of this paper allow system designers to quickly evaluate which services they need for instantiationg the BPaaS-HUB architecture. Furthermore, the results also show what the protocol of a backbone service bus is that allows a communication between services that implement the BPaaS-HUB. Finally, the paper analyzes where an instantiation must assign additional computing resources vor the avoidance of performance bottlenecks.

Diastereomeric Drug Glucuronides: Enzymatic Glucuronidation and Analysis by Capillary Electrophoresis and Liquid Chromatography-Mass Spectrometry

Foreign compounds, such as drugs are metabolised in the body in numerous reactions. Metabolic reactions are divided into phase I (functionalisation) and phase II (conjugation) reactions. Uridine diphosphoglucuronosyltransferase enzymes (UGTs) are important catalysts of phase II metabolic system. They catalyse the transfer of glucuronic acid to small lipophilic molecules and convert them to hydrophilic and polar glucuronides that are readily excreted from the body. Liver is the main site of drug metabolism. Many drugs are racemic mixtures of two enantiomers. Glucuronidation of a racemic compound yields a pair of diastereomeric glucuronides. Stereoisomers are interesting substrates in glucuronidation studies since some UGTs display stereoselectivity. Diastereomeric glucuronides of O-desmethyltramadol (M1) and entacapone were selected as model compounds in this work. The investigations of the thesis deal with enzymatic glucuronidation and the development of analytical methods for drug metabolites, particularly diastereomeric glucuronides. The glucuronides were analysed from complex biological matrices, such as urine or from in vitro incubation matrices. Various pretreatment techniques were needed to purify, concentrate and isolate the analytes of interest. Analyses were carried out by liquid chromatography (LC) with ultraviolet (UV) or mass spectrometric (MS) detection or with capillary electromigration techniques. Commercial glucuronide standards were not available for the studies. Enzyme-assisted synthesis with rat liver microsomes was therefore used to produce M1 glucuronides as reference compounds. The glucuronides were isolated by LC/UV and ultra performance liquid chromatography (UPLC)/MS, while tandem mass spectrometry (MS/MS) and nuclear magnetic resonance (NMR) spectroscopy were employed in structural characterisation. The glucuronides were identified as phenolic O-glucuronides of M1. To identify the active UGT enzymes in (±)-M1 glucuronidation recombinant human UGTs and human tissue microsomes were incubated with (±)-M1. The study revealed that several UGTs can catalyse (±)-M1 glucuronidation. Glucuronidation in human liver microsomes like in rat liver microsomes is stereoselective. The results of the studies showed that UGT2B7, most probably, is the main UGT responsible for (±)-M1 glucuronidation in human liver. Large variation in stereoselectivity of UGTs toward (±)-M1 enantiomers was observed. Formation of M1 glucuronides was monitored with a fast and selective UPLC/MS method. Capillary electromigration techniques are known for their high resolution power. A method that relied on capillary electrophoresis (CE) with UV detection was developed for the separation of tramadol and its free and glucuronidated metabolites. The suitability of the method to identify tramadol metabolites in an authentic urine samples was tested. Unaltered tramadol and four of its main metabolites were detected in the electropherogram. A micellar electrokinetic chromatography (MEKC) /UV method was developed for the separation of the glucuronides of entacapone in human urine. The validated method was tested in the analysis of urine samples of patients. The glucuronides of entacapone could be quantified after oral entacapone dosing.

Steric and rotational constraints in the X-ray structure of the animalarial drug amodiaquine

In the crystal structure of the antimalarial drug amodiaquine, the bonds linking the quinoline and the phenyl groups show partial double-bond character. The partial double-bond character of the two exocyclic bonds, together with stereochemical constraints, reduce flexibility of the two ring systems of the molecule. The dihedral angle between the two ring planes is lowest compared to those in the antileukaemic drug amsacrine and its derivatives. CPK-modelling studies suggest the way amodiaquine can bind to DNA. Stacking interaction between the quinoline and phenyl groups of independent molecules and the hydrogen-bond network stabilize the crystal structure.

Poly propyl ether imine (PETIM) dendrimer: A novel non-toxic dendrimer for sustained drug delivery

In the present study, an attempt was made to study the acute and sub-acute toxicity profile of G3-COOH Poly (propyl ether imine) PETIM] dendrimer and its use as a carrier for sustained delivery of model drug ketoprofen. Drug-dendrimer complex was prepared and characterized by FTIR, solubility and in vitro drug release study. PETIM dendrimer was found to have significantly less toxicity in A541 cells compared to Poly amido amine (PAMAM) dendrimer. Further, acute and 28 days sub-acute toxicity measurement in mice showed no mortality, hematological, biochemical or histopathological changes up to 80 mg/kg dose of PETIM dendrimer. The results of study demonstrated that G3-COOH PETIM dendrimer can be used as a safe and efficient vehicle for sustained drug delivery. (C) 2010 Elsevier Masson SAS. All rights reserved.

Heat Shock Protein 90 as a Drug Target against Protozoan Infections Biochemical characterization of HSP90 From plasmodium falciparum and trypanosoma evansi and evaluation of its inhibitor as a candidate drug

Using a pharmacological inhibitor of Hsp90 in cultured malarial parasite, we have previously implicated Plasmodium falciparum Hsp90 (PfHsp90) as a drug target against malaria. In this study, we have biochemically characterized PfHsp90 in terms of its ATPase activity and interaction with its inhibitor geldanamycin (GA) and evaluated its potential as a drug target in a preclinical mouse model of malaria. In addition, we have explored the potential of Hsp90 inhibitors as drugs for the treatment of Trypanosoma infection in animals. Our studies with full-length PfHsp90 showed it to have the highest ATPase activity of all known Hsp90s; its ATPase activity was 6 times higher than that of human Hsp90. Also, GA brought about more robust inhibition of PfHsp90 ATPase activity as compared with human Hsp90. Mass spectrometric analysis of PfHsp90 expressed in P. falciparum identified a site of acetylation that overlapped with Aha1 and p23 binding domain, suggesting its role in modulating Hsp90 multichaperone complex assembly. Indeed, treatment of P. falciparum cultures with a histone deacetylase inhibitor resulted in a partial dissociation of PfHsp90 complex. Furthermore, we found a well known, semisynthetic Hsp90 inhibitor, namely 17-(allylamino)-17-demethoxygeldanamycin, to be effective in attenuating parasite growth and prolonging survival in a mouse model of malaria. We also characterized GA binding to Hsp90 from another protozoan parasite, namely Trypanosoma evansi. We found 17-(allylamino)-17-demethoxygeldanamycin to potently inhibit T. evansi growth in a mouse model of trypanosomiasis. In all, our biochemical characterization, drug interaction, and animal studies supported Hsp90 as a drug target and its inhibitor as a potential drug against protozoan diseases.

Literature Review: Investigating Drug Transport at the Blood-Brain Barrier and the Effects of P-glycoprotein on the Brain Distribution of Drugs.

The blood-brain barrier (BBB) is a unique barrier that strictly regulates the entry of endogenous substrates and xenobiotics into the brain. This is due to its tight junctions and the array of transporters and metabolic enzymes that are expressed. The determination of brain concentrations in vivo is difficult, laborious and expensive which means that there is interest in developing predictive tools of brain distribution. Predicting brain concentrations is important even in early drug development to ensure efficacy of central nervous system (CNS) targeted drugs and safety of non-CNS drugs. The literature review covers the most common current in vitro, in vivo and in silico methods of studying transport into the brain, concentrating on transporter effects. The consequences of efflux mediated by p-glycoprotein, the most widely characterized transporter expressed at the BBB, is also discussed. The aim of the experimental study was to build a pharmacokinetic (PK) model to describe p-glycoprotein substrate drug concentrations in the brain using commonly measured in vivo parameters of brain distribution. The possibility of replacing in vivo parameter values with their in vitro counterparts was also studied. All data for the study was taken from the literature. A simple 2-compartment PK model was built using the Stella™ software. Brain concentrations of morphine, loperamide and quinidine were simulated and compared with published studies. Correlation of in vitro measured efflux ratio (ER) from different studies was evaluated in addition to studying correlation between in vitro and in vivo measured ER. A Stella™ model was also constructed to simulate an in vitro transcellular monolayer experiment, to study the sensitivity of measured ER to changes in passive permeability and Michaelis-Menten kinetic parameter values. Interspecies differences in rats and mice were investigated with regards to brain permeability and drug binding in brain tissue. Although the PK brain model was able to capture the concentration-time profiles for all 3 compounds in both brain and plasma and performed fairly well for morphine, for quinidine it underestimated and for loperamide it overestimated brain concentrations. Because the ratio of concentrations in brain and blood is dependent on the ER, it is suggested that the variable values cited for this parameter and its inaccuracy could be one explanation for the failure of predictions. Validation of the model with more compounds is needed to draw further conclusions. In vitro ER showed variable correlation between studies, indicating variability due to experimental factors such as test concentration, but overall differences were small. Good correlation between in vitro and in vivo ER at low concentrations supports the possibility of using of in vitro ER in the PK model. The in vitro simulation illustrated that in the simulation setting, efflux is significant only with low passive permeability, which highlights the fact that the cell model used to measure ER must have low enough paracellular permeability to correctly mimic the in vivo situation.