key: cord-0761378-lxx5yiyp
authors: Katsura, Hiroaki; Sontake, Vishwaraj; Tata, Aleksandra; Kobayashi, Yoshihiko; Edwards, Caitlin E.; Heaton, Brook E.; Konkimalla, Arvind; Asakura, Takanori; Mikami, Yu; Fritch, Ethan J.; Lee, Patty J.; Heaton, Nicholas S.; Boucher, Richard C.; Randell, Scott H.; Baric, Ralph S.; Tata, Purushothama Rao
title: Human lung stem cell-based alveolospheres provide insights into SARS-CoV-2 mediated interferon responses and pneumocyte dysfunction
date: 2020-10-21
journal: Cell Stem Cell
DOI: 10.1016/j.stem.2020.10.005
sha: 1f7935add928513c1a23c58dc828de3b2e991c4b
doc_id: 761378
cord_uid: lxx5yiyp

Coronavirus infection causes diffuse alveolar damage leading to acute respiratory distress syndrome. The absence of ex vivo models of human alveolar epithelium is hindering an understanding of COVID-19 pathogenesis. We report a feeder-free, scalable, chemically-defined, and modular alveolosphere culture system for propagation and differentiation of human alveolar type 2 cells/pneumocytes derived from primary lung tissue. Cultured pneumocytes express the SARS-CoV-2 receptor ACE2 and can be infected with virus. Transcriptome and histological analysis of infected alveolospheres mirrors features of COVID-19 lungs, including emergence of interferon mediated inflammatory responses, loss of surfactant proteins, and apoptosis. Treatment of alveolospheres with interferons recapitulates features of virus infection, including cell death. In contrast, alveolospheres pretreated with low dose IFNs show a reduction in viral replication, suggesting the prophylactic effectiveness of IFNs against SARS-CoV-2. Human stem cell-based alveolospheres thus provide novel insights into COVID-19 pathogenesis and can serve as a model for understanding human respiratory diseases.

In COVID-19, lung disease is the primary cause for mortality. Histopathological analyses reveals widespread alveolar damage and pneumonia, which may eventually progress to acute respiratory distress syndrome (ARDS) (Bradley et al., 2020) . This clinically challenging manifestation is accompanied by the production of multiple cytokines ("cytokine storm"), loss of parenchyma, immune infiltration, and fluid filled J o u r n a l P r e -p r o o f alveoli, all of which contribute to acute respiratory failure and eventual death (Huang et al., 2020a; Zhu et al., 2020) . The causative agent of COVID-19 is the novel coronavirus, SARS-CoV-2. This virus uses the same receptor -ACE2 (angiotensin converting enzyme receptor type-2) -for entry into target cells as the closely related viruses, SARS-CoV (2003) and NL-63 (Hoffmann et al., 2020) . However, the unique clinical symptoms and increased transmissibility of SARS-CoV-2 suggest that it uses different mechanisms to both infect and evade host immune responses, including the production of Type I and Type III interferons (Hou et al., 2020; Huang et al., 2020a; Wu and McGoogan, 2020; Zhu et al., 2020) . To develop safe and effective therapies for COVID-19, it is critically important to understand the cell type specific innate immune mechanisms triggered in response to viral entry and how they orchestrate adaptive immune responses. One way to achieve this goal is to infect target cells of the adult human lung with virus ex vivo, and to follow molecular and cellular responses over time.

Ideally, this approach must be performed under well defined, modular conditions that can easily be adapted to high throughput pharmaco-genomic screens for therapeutic discovery. We report here the results of this approach using SARS-CoV-2 infection of 3D alveolosphere cultures of primary human alveolar epithelial type-2 cells (AT2s), the stem cells of the distal alveolar region.

Single cell transcriptome profiling and immunolocalization studies showed that AT2s exhibit the highest enrichment of SARS-CoV-2 receptor ACE2, and its associated protease TMPRSS2, in the human distal lung (Hou et al., 2020; Muus et al., 2020; Sungnak et al., 2020; Ziegler et al., 2020) . AT2s can both self-renew and differentiate into thin and flat gas exchanging alveolar epithelial type-1 cells (AT1s). In addition, they J o u r n a l P r e -p r o o f secrete surfactant proteins, SFTPA and SFTPD, that promote alveolar patency but also can directly bind many viruses and other microbial pathogens to facilitate opsonization and phagocytosis (Crouch and Wright, 2001; McCormack and Whitsett, 2002) .

Therefore, AT2s play a key role in providing a first line of defense against viruses and in restoring cell numbers after injury. However, currently we do not know the nature of the pathways that are dysregulated in human AT2s in response to SARS-CoV-2 infection and how these pathways intersect with other forms of defense mechanisms. It is also unclear whether and how AT2s maintain stem cell characteristics while activating antiviral defense mechanisms. Alveolosphere cultures derived from adult AT2s provide the opportunity to address these questions.

Numerous studies have demonstrated the potential of primary tissue-derived organoids to serve as models for disease pathogenesis, organogenesis, and tissue repair (Drost and Clevers, 2018; Jacob et al., 2017; Lancaster and Huch, 2019; Lancaster and Knoblich, 2014; Neal et al., 2018; Yamamoto et al., 2017) . For example, recent studies using intestinal organoids combined with SARS-CoV-2 infection revealed infectability of intestinal epithelium and associated cellular responses (Lamers et al., 2020; Yang et al., 2020) . In the case of the lung, AT2s have the ability to generate alveolospheres, which can proliferate and differentiate into AT1s (Barkauskas et al., 2013 (Barkauskas et al., , 2017 Chung et al., 2018; Dye et al., 2015; Hogan and Tata, 2019; Katsura et al., 2019; Lancaster and Knoblich, 2014; Lee et al., 2013; Nikolić et al., 2018; Shiraishi et al., 2019a) . However, current conditions require co-culture of AT2s with PDGFRα + fibroblasts isolated from the alveolar stem cell niche or lung endothelial cells isolated from fetal tissues (Barkauskas et al., 2017; Lancaster and Huch, 2019; McQualter et al., J o u r n a l P r e -p r o o f 2010). In addition, current culture media are poorly defined and contains unknown factors derived from fetal bovine or calf serum and bovine pituitary extracts (Barkauskas et al., 2017) . Such complex conditions do not provide a modular system in which AT2s can be either selectively expanded or differentiated into AT1 (Shiraishi et al., 2019b (Shiraishi et al., , 2019a Weiner et al., 2019) . Such defined conditions are needed to study cell typespecific effects and for high throughput pharmaco-genomic studies to discover drugs for treating diseases.

To overcome these challenges, we have developed chemically defined conditions for human AT2s expansion and differentiation in alveolosphere cultures. We demonstrate that SARS-CoV-2 infects and propagates in AT2s in these alveolospheres.

Complementary assays were used to assess the transcriptome-wide changes in response to SARS-CoV-2 infection and the results were directly compared with transcriptome data from COVID-19 patients. Furthermore, we show that viral infection induces the production of IFNs and that different types of IFN affect AT2s behavior in alveolosphere culture.

The cellular composition and properties of 3-dimensional culture models are highly dependent on culture conditions (Barkauskas et al., 2017; Drost and Clevers, 2018; Hu et al., 2018; Huch et al., 2013; Neal et al., 2018; Peng et al., 2018; Velasco et al., 2019) .

Purified, lineage-labeled mouse AT2s can be grown as alveolospheres (Barkauskas et al., 2013 (Barkauskas et al., , 2017 Katsura et al., 2019; Lee et al., 2013) . However, current culture J o u r n a l P r e -p r o o f conditions use a complex medium containing many variable components (serum and bovine pituitary extract) and require the addition of lung resident PDGFRα + fibroblasts to support AT2 growth. We therefore, established defined conditions for long-term propagation of AT2s. Initially we used mouse cells, and then subsequently similar conditions were adapted for human AT2 cultures. Briefly, we performed single-cell transcriptome analysis on AT2s grown in MTEC media ( Figure S1A , B) and then mined the scRNA-seq data for ligand-receptor pairs differentially expressed in epithelial cells and fibroblasts ( Figure S1C , D). Based on these data, we tested different combinations of ligands and small molecules, including IL1β a recently identified AT2 niche derived molecule, in a basal medium to generate a serum-free feeder-free medium (SFFF) ( Figure S1E -H, see Supplemental table-1 for the full composition of medium) (Katsura et al., 2019) . SFFF medium supports the growth of AT2s characterized by numerous mature lamellar bodies packed with surfactants ( Figure S1I ). Of note, although addition of IL1β enhanced alveolosphere size, it did not increase alveolosphere number. Recent studies identified that inhibition of BMP signaling prevents AT2s differentiation (Chung et al., 2018) . Therefore, to promote a higher proportion of AT2s in alveolospheres, we supplemented SFFF medium with inhibitors of BMP signaling (Noggin and DMH1), to generate AT2 maintenance medium (AMM) ( Figure S2A ). In this medium, pneumocytes maintain AT2s identity and can be sub-cultured for over six passages ( Figure S2B -F).

Furthermore, we formulated a medium (AT2 differentiation medium, or ADM) that contains 10% FBS and stimulated AT2 differentiation, leading to a dramatic induction of cells expressing markers of AT1s (see Table S1 for the full composition of the media) ( Figure S2G , H).

J o u r n a l P r e -p r o o f Defined culture conditions for human alveolosphere cultures Next, we sought to establish serum-free feeder-free culture conditions for human AT2s.

We purified AT2s from healthy lungs using HTII-280 antibody (Gonzalez et al., 2010) and established alveolosphere cultures using SFFF medium with human specific recombinant proteins in the absence of stromal cells (Table S2 ) ( Figure S3A ). Addition of IL-1β for the first 4-7 days of culture slightly enhanced the size and number of alveolospheres, although this effect varied in magnitude from donor to donor ( Figure   S3B -D). Therefore, we did not use IL1β treatment for further experiments. Long term sub-culture over 10 passages and sphere quantification (P6) confirmed the ability of SFFF medium to sustain long term human AT2 self-renewal and maintenance of morphology across passages ( Figure 1A -C and Figure S3E , F). Immunostaining for general lung epithelial cell (NKX2-1) and AT2s specific markers (SFTPC, SFTPB, HTII-280 and DC-LAMP) revealed that alveolospheres were composed solely of AT2s and that neither airway (SOX2, SCGB1A1 and TP63), nor AT1s (AGER) were present ( Figure 1D -F and Figure S3G ,H). Quantitative RT-PCR analyses for AT2 markers further corroborated these findings ( Figure S3F ).

To induce differentiation of AT2s we first tested differentiation medium containing 10% bovine serum but there were few or no AGER + (AT1) cells in alveolospheres ( Figure S3I ). We therefore, switched to human serum and found that this induced robust expression of AT1 marker, AGER, co-incident with a decrease in SFTPC ( Figure 1G , H and Figure S3J ). Significantly, the AGER + cells show the large, thin and flat morphology characteristic of type-1 pneumocytes in vivo ( Figure 1H ). Collectively, these data J o u r n a l P r e -p r o o f indicate that our newly developed SFFF culture conditions facilitated the long-term expansion of primary human AT2s in the absence of feeder cells and that addition of human serum stimulated the cells to differentiate into AT1s.

Recent studies have indicated that SARS-CoV-2 receptor, ACE2, and a key protease TMPRSS2, needed for proteolytic cleavage of viral spike protein, are expressed in AT2s (Hoffmann et al., 2020; Hou et al., 2020; Muus et al., 2020; Sungnak et al., 2020; Ziegler et al., 2020) . We, therefore, assessed the expression and localization of ACE2 and TMPRSS2 in pneumocytes derived from alveolospheres cultured in SFFF media or ADM that contain AT2s only, or a mixture of AT2 and AT1s, respectively.

Immunostaining in combination with a well-known apical marker of AT2 (HTII-280), polarity marker ZO1 and membrane marker EpCAM showed that ACE2 is localized at the apical surface (similar to HTII-280 and ZO1) whereas TMPRSS2 is enriched at the basal side of AT2s (Figure 2A -C). We then quantified the number of AT2s that express ACE2 and TMPRSS2 on single cell preparations of alveolospheres. Our data revealed that 40% of AT2s express ACE2 whereas about 80% are positive for TMPRSS2 ( Figure   2D -F). We did not find ACE2 and TMPRSS expression in differentiated (AGER + ) AT1s, a finding consistent with prior single cell transcriptome as well as immunolabeling assays on human lungs ( Figure 2G ) (Hou et al., 2020; Muus et al., 2020) .

To test whether SARS-CoV-2 can infect alveolosphere-derived AT2s, we utilized a recently developed reverse-engineered SARS-CoV-2 virus harboring a GFP-fusion J o u r n a l P r e -p r o o f protein (Hou et al., 2020) . Human alveolospheres were cultured on matrigel surface in SFFF media (lacking IL1β) for 10-12 days, incubated with SARS-CoV-2-GFP for 2h, washed with PBS to remove residual viral particles and then collected for analysis over 72h. GFP was detected as early as 48h post infection in virus exposed but not in control alveolospheres ( Figure 2H , I). Quantification of GFP expressing cells at 24, 48, and 72 hours post infection revealed a gradual decrease in the number of GFP+ cells ( Figure   2J ). Consistent with this, plaque forming assays using culture supernatants revealed that viral release peaks at 24h but later declined ( Figure 2K ). This observation was consistent across cells from three different donors. Of note, we observed a significant number of viral particles immediately after infection despite numerous washes with PBS. This result was likely due to the entrapment of virus in the Matrigel. Nevertheless, the viral titer increased at 24hpi demonstrating that SARS-CoV-2 productively replicates in AT2s ( Figure 2K ). Quantitative RT-PCR further revealed the presence of viral RNA in SARS-CoV-2 infected cells compared to controls ( Figure S4A ). To further confirm virus replication, we performed qRT-PCR using primer that specifically recognize minus strand of the virus. Indeed, we observed viral replication in alveolosphere cultures ( Figure 2L ).

To gain insights into the response of AT2s to SARS-CoV-2 (wild type), we performed unbiased genome-wide transcriptome profiling on alveolospheres cultures 48h after infection ( Figure 3A ). Of all the sequenced reads, viral transcripts accounted for 4.7%, J o u r n a l P r e -p r o o f indicating that virus was propagating in AT2s ( Figure S4B ). Previous studies have shown that in response to viral infection, target cells typically produce Type I (IFN-I) and

Type III (IFN-III) interferons (α/β and λ, respectively) which subsequently activate targets of transcription factors IRF, STAT1/2 and NF-κB including interferon stimulated genes (ISGs), inflammatory chemokines, and cytokines that go on to exert antiviral defense mechanisms (Barrat et al., 2019) . It was therefore significant that differential gene expression analysis of infected versus uninfected alveolospheres revealed enrichment of transcripts related to general viral response genes, including multiple interferons (IFNs) and their targets ( Figure 3A -F). Specifically, SARS-CoV-2 infected AT2s were enriched for transcripts of Type I IFNs (IFNA7, IFNB1 and IFNE) as well as Type III IFNs (IFNL1, IFNL2 and IFNL3) but not Type II IFNs (IFNG) ligands ( Figure 3B , C and Figure S4C ). Receptors for Type I (IFNAR1 and IFNAR2), Type II (IFNGR1 and IFNGR2) and Type III (IFNLR1 and IL10RB) IFN were expressed in control AT2s and a modest increase was found for IFNAR2 and IFNGR2 after SARS-CoV-2 infection ( Figure 3B , D) (Platanias, 2005; Syedbasha and Egli, 2017) . These data indicate that in response to SARS-CoV-2 infection, AT2s produce Type I and III IFN ligands, which can potentially act via either by autocrine or paracrine (neighboring AT2s) mechanisms to activate their cognate receptors. Indeed, a large number of IFN target genes including IFN-stimulated genes (ISGs), IFN-induced protein-coding genes (IFIs) and IFN-induced protein with tetratricopeptide repeats-coding genes (IFITs), were up-regulated in SARS-CoV-2 infected AT2s ( Figure 3B , E). Additionally, key transcription factors STAT1 and STAT2 that are known to be components of the signaling pathways downstream of IFN receptors were also upregulated in infected AT2s.

Pathway analysis revealed all three classes of IFN targets were upregulated, but the most prominent were type I and type II IFN signaling. Despite the absence of type II IFN ligands (IFNG) we observed a significant upregulation of canonical targets of IFNγresponse mediators in SARS-CoV-2 infected AT2s ( Figure 3B , E). This finding suggests that there is a significant overlap of downstream targets and cross-talk between different classes of IFN pathways, as described previously (Barrat et al., 2019; Bartee et al., 2008) . Other prominent upregulated genes include chemokines (CXCL10, CXCL11 and CXCL17) and programmed cell death-related genes (TNFSF10, CASP1, CASP4, CASP5 and CASP7) ( Figure 3B and Figure S4D -E). In contrast, we observed a significant downregulation of transcripts associated with DNA replication and cell cycle (PCNA, TOP2A, MCM2, and CCNB2) in infected AT2s ( Figure 3B and Figure S4F ).

Selected targets were validated using independent quantitative RT-PCR assays at early (48h) and late (120h) time points post infection ( Figure S5A ). Taken together, transcriptome analysis revealed a significant upregulation of interferon, inflammatory and cell death signaling, juxtaposed to downregulation of proliferation-related transcripts, in alveolosphere-derived AT2s in response to SARS-CoV-2.

To gain further insights into how primary AT2s respond early to SARS-CoV-2 infection, we analyzed cellular changes in alveolospheres using immunohistochemistry ( Figure   4A ). Quantification of infected alveolospheres revealed that 29.22% are SARS + ( Figure   4B ). Immunostaining revealed co-expression of GFP and SARS-CoV-2 spike protein in infected alveolospheres ( Figure 4C ). We found variation in the number of GFP + cells in J o u r n a l P r e -p r o o f each alveolosphere. Therefore, we broadly categorized alveolospheres into low (1-10 cells) and high (>10), depending on the number of SARS + cells in each alveolosphere ( Figure 4C , D). Next, analyses for AT2s markers, including SFTPC, SFTPB and HTII-280, revealed a dramatic loss or decrease in the expression of surfactant proteins SFTPC and SFTPB in infected cells (GFP + or SARS + ) but not in control alveolospheres ( Figure 4C , E and Figure S5B ). Of note, HTII-280 expression was unchanged ( Figure   S5C ). The loss of surfactant protein expression was more apparent in high infected alveolospheres ( Figure S5B ). Some of the GFP + cells showed a slightly elongated morphology, resembling that of AT1s but immunostaining for AT1 markers revealed that infected cells did not differentiate into AT1s ( Figure S5D ). These data are in accord with our scRNA-seq data that AT2s downregulate surfactants expression in response to SARS-CoV-2 infection.

Histopathological evidence suggests that there is a loss of alveolar parenchyma in COVID-19 lungs (Bradley et al., 2020; Huang et al., 2020a) . To test whether SARS-CoV-2 infection induces cell death, we performed immunostaining for active caspase 3, a marker for apoptotic cells. Apoptotic cells were found in alveolospheres exposed to virus but not in controls, suggesting that AT2s undergo cell death in response to SARS-CoV-2 infection ( Figure 4F ). Significantly, we observed cell death in both SARS + and SARScells suggesting a paracrine mechanism inducing cell death in uninfected neighboring cells ( Figure 4G ). Furthermore, immunostaining for Ki67, a marker for proliferating cells revealed no apparent difference in overall cell replication in virus exposed alveolospheres compared to controls ( Figure 4H ). Taken together, these data show that SARS-CoV-2 infection induces downregulation of surfactant proteins and an J o u r n a l P r e -p r o o f increase in cell death in AT2s via both cell autonomous and non-autonomous mechanisms.

To directly compare SARS-CoV-2 induced responses in AT2s in alveolospheres to changes seen in COVID-19 lungs, we utilized a publicly available scRNA-seq dataset from bronchoalveolar lavage fluid (BALF) obtained from six severe COVID-19 patients (Bost et al., 2020; Liao et al., 2020) . First, we compared the gene expression profiles of AT2s from COVID-19 patient lungs with AT2s from healthy lungs ( Figure AT2s, while changes in other AT2-cell markers were minimal and insignificant ( Figure   5A and B). Pathway analysis revealed a significant enrichment for type-I and type-II IFN signaling, inflammatory programs, and cell death pathways in COVID-19 AT2s ( Figure   5C , D). We then made a direct comparison of transcripts between AT2s from SARS-CoV-2 infected ex vivo cultures and COVID-19 patient lungs. This revealed a striking similarity in upregulated transcripts ( Figure S6E ). These include upregulation of chemokines and cytokines, including IFN ligands and their targets, indicating that AT2s J o u r n a l P r e -p r o o f derived from alveolospheres respond similarly to AT2s from human lungs after SARS-CoV-2 infection ( Figure S6E , F). We then extended these findings to COVID-19 lungs and uncovered that SFTPB but not other AT2s markers, NKX2-1 or ABCA3, were down regulated in SARS + cells ( Figure 5E -G). Similar to alveolospheres, we observed active CASP3 in SARS + cells in COVID-19 human lungs ( Figure 5H ).

Our transcriptome analysis revealed a striking similarity in interferon signatures in AT2s from alveolospheres and human lungs after SARS-CoV-2 infection. Previous studies have shown that IFNs induce cellular changes in a context dependent manner. For example, IFNα and IFNβ provide protective effects in response to influenza virus infection in the lungs, whereas IFNγ induces apoptosis in intestinal cells in response to chronic inflammation (Koerner et al., 2007; Takashima et al., 2019) . To test the direct effects of IFNs on AT2s, we treated alveolospheres with purified recombinant IFNα, IFNβ, and IFNγ in SFFF media and cultured them for 72h ( Figure 6A ). First, we observed detached cells in all treatments, with a maximal ~3-fold increased effect in IFNγ treated alveolospheres ( Figure 6B ). Immunostaining for active caspase 3 revealed a significant induction of cell death in response to all IFN treatments, with a maximal effect with IFNγ ( Figure 6C , D and Figure S7A ). In contrast, we observed a significant reduction in cell proliferation in IFNβ and IFNγ treatments as revealed by immunostaining for Ki67, a marker for cell proliferation ( Figure 6E 

Recent studies suggested that pre-treatment with IFNs reduced SARS-CoV-2 replication in Calu-3 and Vero-2 cells. We then tested the effect of pre-treatment of alveolospheres with IFNs before viral infection (Clementi et al., 2020; Felgenhauer et al., 2020) , since our above data from IFN treatments alone led to an increase in AT2s death. Therefore, we pre-treated alveolospheres with a lower dose of IFNα and IFNγ (10ng) for 18h prior to viral infection ( Figure 6G ). Subsequent plaque forming assays at 24h and 48h post infection revealed that pretreatment with IFNs significantly reduced the viral titers in alveolospheres ( Figure 6H ). In addition, we also tested the effect of IFN signaling inhibition on viral replication. For this, we pretreated alveolospheres with Ruxolitinib, an inhibitor of IFN signaling, for 18h and continued treatment following viral infection ( Figure 6G ). Plaque forming assays revealed an increase in the viral replication ( Figure 6H ). Taken together, these data suggest that pretreatment with IFNs gives a prophylactic effect whereas IFNs inhibition promotes viral replication. the host as surfactants are essential for preventing alveolar collapse and for controlling both innate and adaptive immune responses (Crouch and Wright, 2001; McCormack and Whitsett, 2002) . Our finding that the Type-II IFN pathway is activated in AT2s ex vivo is somewhat surprising as typically it is the Type-I and Type-III pathways that are activated in cells by viral infection (Barrat et al., 2019; Bartee et al., 2008) . Significantly, these unexpected findings from alveolosphere-derived AT2s mirror responses in AT2s from COVID-19 patient lungs, further supporting the relevance of alveolosphere-derived AT2 for SARS-CoV-2 studies. Our study further provided evidence that pre-treatment with IFNs shows prophylactic effectiveness in alveolospheres. Future studies will reveal whether such prophylactic effect can provide resistance to viral propagation in vivo.

There are several reasons why AT2s grown in alveolosphere cultures are preferred over the currently used cell lines such as Calu-3, A549, Vero, and H1299. For Other models, including AT2s derived from directed differentiation of induced pluripotent stem cells (iPSCs), can serve as alternative models for ex vivo studies (Jacob et al., 2017; Yamamoto et al., 2017) . Indeed, recent studies using primary stem cells and iPSC-derived 3-dimensional cultures from lung, brain, kidney, and intestine have provided insights into SARS-CoV-2 cell tropism, viral replication kinetics, factors that promote viral entry, and the associated cellular responses (Huang et al., 2020b; Jacob et al., 2020; Lamers et al., 2020; Monteil et al., 2020; Ramani et al., 2020; Yang et al., 2020) . Furthermore, such models have been useful for the discovery of anti-viral drugs as well as preclinical humanized ex vivo models to test the efficacy of existing therapeutically relevant molecules (Monteil et al., 2020; Yang et al., 2020) . Consistent with our data, a recent study using iPSC-derived alveolar epithelial type 2 cells (iAT2s) uncovered epithelial intrinsic inflammatory responses including IFN pathways after SARS-CoV-2 infection (Huang et al., 2020b) . Despite these similarities, both primary lung stem cell-derived and iPSC-derived models iAT2 models have their unique advantages and disadvantages. For example, while iPSC-derived models are more conducive to genetic modulation, they may not be suitable for studying age specific phenomena. This is particularly important in the case of severe COVID-19, as this disease is more severe in aged compared to younger populations and the cellular responses to infection may differ in adolescents compared to elderly (Muus et al., 2020; Ziegler et al., 2020) . Nevertheless, human stem cell-based models will be very valuable for rapid and scalable disease modeling and drug discovery.

One limitation of alveolosphere models in general is that they lack the complete cellular complexity of native tissues. However, such simplified models also offer several immune cell subsets, to study the interactions between AT2 and immune cells in the presence and absence of pathogens such as SARS-CoV-2. Indeed, such efforts were made in the context of tumor-immune cell interactions (Neal et al., 2018) .

In conclusion, we provide chemically defined and modular culture conditions for selective expansion and differentiation of AT2s that retain the cardinal features of AT2s,

including the ability to self-renew, produce surfactants, and differentiate into AT1s. 

A patent application (PCT/US20/53158) related to this work has been filed. H.K., P.R.T.

are listed as co-inventors on this application. P.R.T serves as a consultant for Cellarity

Inc. and Surrozen Inc. 

Further information and requests for resource/reagents should be directed to and will be fulfilled by the Lead Contact, Purushothama Rao Tata (pt93@duke.edu).

This study did not generate new unique materials.

RNA-seq data that support the findings of this study have been deposited in the Gene Expression Omnibus (GEO) under accession codes GSE141634 (MTEC alveolosphere J o u r n a l P r e -p r o o f scRNA-seq) and GSE152586 (Bulk RNA-seq from SARS-CoV-2 infected alveolospheres). Previously published sequencing data that were re-analyzed here are available under accession code GSE145926 (scRNA-seq data from severe COVID-19 patient lungs) and GSE135893 (scRNA-seq data from control lungs). All analysis code is available from corresponding author upon request.

Mouse strains used in this study were maintained in the C57BL/6 background, including Sftpctm1 (cre/ERT2)Blh (Sftpc-CreER) (Rock et al., 2011) and Rosa26R-CAG-lsl-tdTomato (Arenkiel et al., 2011) was positive for SARS-CoV-2. She was treated with high flow nasal canula, but died from acute pneumonia due to SARS-CoV-2 complicated by an acute hypoxic respiratory failure.

Lung dissociation and FACS were performed as described previously (Chung et al., 2018) . Briefly, lungs were intratracheally inflated with 1ml of enzyme solution containing Dispase (5 U/ml), DNase I (0.33U/ml) and Collagenase type I (450 U/ml) in DMEM/F12.

Separated lung lobes were diced and incubated with 3ml enzyme solution for 30min at 37ºC with rotation. The reaction was quenched with an equal amount of DMEM/F12+10% FBS medium and filtered through a 100µm strainer. The cell pellet was resuspended in red blood cell lysis buffer (100µM EDTA, 10mM KHCO3, 155mM

NH4Cl) for 5min, washed with DMEM/F12 containing 10% FBS and filtered through a 40µm strainer. Total cells were centrifuged at 450g for 5min at 4ºC and the cell pellet was processed for AT2 isolation by FACS.

Human lung dissociation was as described previously (Zacharias et al., 2018) . Briefly, pleura was removed and remaining human lung tissue (approximately 2g) washed with PBS containing 1% Antibiotic-Antimycotic and cut into small pieces. Visible small airways and blood vessels were carefully removed to avoid clogging. Then samples were digested with 30 ml of enzyme mixture (Collagenase type I: 1.68 mg/ml, Dispase:

J o u r n a l P r e -p r o o f 5U/ml, DNase: 10U/ml) at 37°C for 1h with rotation. The cells were filtered through a 100µm strainer and rinsed with 15ml DMEM/F12+10% FBS medium through the strainer. The supernatant was removed after centrifugation at 450g for 10min and the cell pellet was resuspended in red blood cell lysis buffer for 10min, washed with DMEM/F12 containing 10% FBS and filtered through a 40µm strainer. Total cells were centrifuged at 450g for 5 min at 4ºC and the cell pellet was processed for AT2 isolation.

AT2s were isolated by Magnetic-activated cell sorting ( LysoTracker at 37°C for 25min followed by secondary Alexa anti-mouse IgM-488 for 10min at 37°C. Sorting was performed using a FACS Vantage SE and SONY SH800S.

Mouse conventional Alveolosphere culture (using MTEC medium) was performed as described previously (Barkauskas et al., 2013) . Briefly, FACS sorted lineage labeled

AT2s ( Alveolospheres were passaged every 10-14 days.

For detailed mouse and human AT2-Differentiation medium (ADM) composition see Plaques were stained with crystal violet and counted.

To infect alveolosphere cultures, cells were washed with 1 ml PBS then virus was added to cells at a MOI of 1. Virus and cells were incubated for 3.5 hours at 37°C after which virus was removed and cell culture media was added. Infection proceeded for 48 or 120 hours and then alveolospheres were washed with PBS, dissociated as described above. Finally, alveolosphere derived cells were stored in Trizol and stored at -80°C.

Human alveolosphere cultures were briefly washed twice with 500µl 1X PBS. SARS-CoV-2-GFP (icSARS-CoV-2-GFP virus was described previously (Hou et al., 2020) .

Briefly, seven cDNA fragments covering the entire SARS-CoV-2 WA1 genome were amplified by RT-PCR using PrimeSTAR GXL HiFi DNA polymerase (TaKaRa). PFU/ml of icSARS-CoV-2-GFP virus (Hou et al., 2020) (Hou et al., 2020) . For histological analysis alveolospheres were fixed for 7 days in 10% formalin solution followed by 3 washes in PBS.

For interferon and cytokine treatment experiment, Human AT2s (2.5 × 10 4 ) from P2 or P3 passage were cultured on the surface of matrigel. Prior to the plating of cells 12 well plates were precoated with matrigel (1:1 matrigel and SFFFM mix) for 30min. AT2s

were grown in SFFFM without IL-1β for 7 to 10 days to allow the formation of alveolospheres. Alveolospheres were treated with 20ng/ml interferons (IFNα, IFNβ, IFNγ) for 12h or 72h for RNA isolation and quantitative PCR. For histological analysis, Alveolospheres were treated with indicated interferons for 72h. Human alveolosphere cultures were pretreated with 10ng IFNα or 10ng IFNγ for 18h prior to virus infection.

For IFN inhibition studies, alveolospheres were treated with 1µM Ruxolitinib throughout the culture time.

Alveolospheres were fixed with 4% paraformaldehyde (PFA) at 4ºC for 2h or at room temperature for 1h, respectively. Submersion cultures of alveolospheres were first immersed in 1% low melting agarose (Sigma) and fixed with 4% PFA at room temperature for 30 min. For OCT frozen blocks, alveolospheres were washed with PBS, embedded in OCT and cryosectioned (8-10µm). For paraffin blocks, samples were dehydrated, embedded in paraffin and sectioned at 7µm.

Immunohistochemical staining was performed on COVID-19 autopsy lung sections according to a protocol as previously described (Hou et al., 2020) . Briefly, paraffinembedded sections were baked at 60 °C for 2-4 hours and deparaffinized with xylene (2 changes × 5 min) and graded ethanol (100% 2 × 5 min, 95% 1 × 5 min, 70% 1 × 5 min).

After rehydration, quenching of endogenous peroxidase was performed with 0.5% hydrogen peroxide in methanol for 15 min. Antigen retrieval was performed by boiling the slides in 0.1 M sodium citrate pH 6.0 (3 cycles with microwave settings:

100% power for 6.5 min, 60% for 6 min, and 60% for 6 min, refilling the Coplin jars with distilled water after each cycle). After cooling and rinsing with distilled water, slides 

Paraffin sections were first dewaxed and rehydrated before antigen retrieval. OCT section were defrosted and washed with PBS. Antigen retrieval was performed using 10mM sodium citrate buffer in either an antigen retrieval system (Electron Microscopy Science) or water bath (90°C for 15 min), or 0.05% Trypsin (Sigma-Aldrich) treatment for 5 min at room temperature. Sections were washed with PBS, permeabilized in PBST (0.1% Triton X-100 in PBS), and incubated with 1% BSA and 0.1% Triton X-100 in PBS for 30 min at room temperature followed by primary antibodies at 4°C overnight. (1:500).

For quantifying the stainings on near single cell suspensions, Alveolosphere bubbles were dissociated using TrypLE™ Select Enzyme at 37°C for 15min. Matrigel was disrupted by vigorous pipetting. Alveolosphere derived cells were then plated on matrigel precoated (5-10% Matrigel for 30min) coverslips or chamber slides for 2-3h.

Cells were then fixed in 4% paraformaldehyde.

RNA-ISH was performed on paraffin-embedded 5 µm tissue sections of COVID-19 autopsy lungs according to the manufacturer's instructions (Advanced Cell Diagnostics).

Sections were deparaffinized with xylene (2 changes × 5 min) and 100% ethanol (2 changes × 1 min), and then incubated with hydrogen peroxide for 10 min, followed by target retrieval in boiling water for 15 min, and incubation with Protease Plus (Advanced Cell Diagnostics) for 15 min at 40 °C. Slides were hybridized with custom probes at 40 °C for 2 hours, and signals were amplified according to the manufacturer's instructions.

For Alveolosphere number and size quantitation images were obtained at 1.25x objective, all other phase contrast images were taken at 10x or 20x objective using Zeiss Axiovert 200 microscope. Alveolosphere numbers and sizes were quantified using J o u r n a l P r e -p r o o f FIJI ImageJ software. Human Alveolosphere numbers and sizes (>300 µm in perimeter)

were counted on day 15, except where stated otherwise. Microscope. Scale bar 1 mm, except where stated otherwise. Confocal images were collected using Olympus

Confocal Microscope FV3000 using a 20X or 40X or 60x objective.

Sample preparation for electron microscopy was performed as described previously (Jacob et al., 2017 (Martin, 2011) . Adaptor sequences were trimmed and reads shorter than 24 bp were trimmed using Trimmomatic (Bolger et al., 2014) . Reads were mapped to the reference genomes of human (hg38) and SARS-CoV-2 (wuhCor1) obtained from UCSC using Hisat2 (Kim et al., 2019) with default setting. Duplicate reads were removed using SAMtools (Li et al., 2009) . Fragment numbers were counted using the featureCounts option of SUBREAD (Liao et al., 2014) . Normalization and extraction of differentially expressed genes (DEGs) between control and treatments were performed using an R package, DESeq2 (Love et al., 2014) .

Alveolospheres embedded in Matrigel were incubated with Accutase at 37°C for 20min followed by incubation with 0.25% trypsin-EDTA at 37°C for 10min. Trypsin was inactivated using DMEM/F-12 Ham supplemented with 10% FBS and cells were then resuspended in PBS supplemented with 0.01% BSA. After filtration through 40µm strainer cells at a concentration of 100 cells/µl were run through microfluidic channels at 3,000 µl/h, together with mRNA capture beads at 3,000 µl/h and droplet-generation oil at 13,000 µl/h. DNA polymerase for pre-amplification step (1 cycle of 95°C for 3 min, 15-17 cycles of 98°C for 15 sec, 65°C for 30 sec, 68°C for 4 min and 1 cycle of 72°C for 10 min) was replaced by Terra PCR Direct Polymerase. The remaining steps were J o u r n a l P r e -p r o o f performed as described in the original Drop-seq protocol (Macosko et al., 2015) .

Libraries were sequenced (150-bp paired end) using HiSeq X.

The FASTQ files were processed using dropSeqPipe v0.3

(https://hoohm.github.io/dropSeqPipe) and mapped on the GRCm38 genome with annotation version 91. Unique molecular identifier (UMI) counts were then further analyzed using an R package Seurat v3.0.6 (Stuart et al., 2019) . UMI counts were normalized using SCTransform v0.2 . Principle components which are significant based on Jackstraw plots were used for generating t-SNE plots. After excluding duplets, specific cell clusters were identified based on enrichment for Sftpc, Sftpa1, Sftpa2, Sftpb, Lamp3, Abca3, Hopx, Ager, Akap5, Epcam, Vim, Pdgfra, Ptprc, Pecam1 and Mki67 in tSNE plot.

Publicly available single-cell RNA-seq dataset of six severe COVID-19 patient lungs (GSE145926 (Bost et al., 2020) ) and control lungs (GSE135893 (Habermann et al., 2019)) were obtained from Gene Expression Omnibus (GEO). EpCAM-positive epithelial cell cluster in the severe COVID-19 patient lungs was further clustered based on LAMP3, ABCA3, KRT5, KRT15, DNAH1, FOXJ1, SCGB3A1 and SCGB1A1. AT2s that have ≧ 1 UMI count of LAMP3, NKX2-1 and ABCA3 were utilized for comparison between severe COVID-19 patient lungs and control lungs. UMI counts were normalized and regressed to percentage of mitochondrial genes using SCTransform.

Enriched genes in severe COVID-19 patient and control lungs were extracted using FindMarkers and shown in volcano plot drawn by R package Enhanced Volcano v1.5.4

Genes that have ≧ 2 log2 fold change were used as input for Enrichr (Kuleshov et al., 2016) query to get enriched signaling pathways through database -BioPlanet.

Sample size was not predetermined. Data are presented as means with standard error (SEM) to indicate the variation within each experiment. Statistics analysis was performed in Excel, Prism and R. A two-tailed Student's t-test was used for the comparison between two experimental conditions. For experiments with more than two conditions, statistical significance was calculated by ANOVA followed by the Tukey-HSD, Steel-Dwass or Dunnett's test for multiple comparisons. We used Shapiro-Wilk test to test whether data are normally distributed and used Wilcoxon rank sum test for the comparison between two conditions that showed non-normal distributions.

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Tata and colleagues report defined conditions for long-term expansion and differentiation of adult human primary alveolar stem cells. Cultured AT2s are conducive to SARS-CoV-2 infection and elicit transcriptome-wide changes that mirror COVID-19 histopathology, including upregulation of inflammatory responses, cell death and down-regulation of surfactants expression leading to

We thank Brigid Hogan for advice and critical reading of the manuscript. We thank