The tumor suppressor PTPRK promotes ZNRF3 internalization and is required for Wnt inhibition in the Spemann organizer

A hallmark of Spemann organizer function is its expression of Wnt antagonists that regulate axial embryonic patterning. Here we identify the tumor suppressor Protein tyrosine phosphatase receptor-type kappa (Ptprk), as a Wnt inhibitor of the Spemann organizer. We show that PTPRK acts via the transmembrane E3 ubiquitin ligase ZNRF3, a negative regulator of Wnt signaling promoting Wnt receptor degradation, which is also expressed in the organizer. Deficiency of ptprk increases Wnt signaling, leading to reduced expression of Spemann organizer effector genes and inducing head and axial defects. We identify a '4Y' endocytic signal in ZNRF3, which Ptprk maintains unphosphorylated to promote Wnt receptor depletion. Our discovery of PTPRK as a negative regulator of Wnt receptor turnover provides a rationale for its tumor suppressive function and reveals that in PTPRK-RSPO3 recurrent cancer fusions both fusion partners, in fact, encode ZNRF3 regulators.