Early observations of larval diseases led to the isolation of some bacterial strains that are used today as microbial insecticides. In 1901, S. Ishiwata was studying flacherie disease in silkworm larvae when he isolated the causative bacteria which he named Bacillus sotto. Hence, he is credited with the discovery of Bacillus thuringiensis although it was actually isolated by E. Berliner who was studying the Mediterranean flour moth in 1911. Till 1976, only Bt strains that were pathogenic to moths and butterflies were known. They were not as effective against other larvae. But, with the discovery of the Bacillus thuringiensis var. israelensis in 1975, effective mosquito control was possible. Various strains have been found to be effective against a range of other larvae.

B. thuringiensis is basically a soil bacterium that has a saprophytic metabolism- it consumes decaying organic matter and a parasitic metabolism- it can colonize an insect's body and derive its nutrients from it. The Bt strains are of five types depending on their specificity- lepidopteran specific, coleopteran specific, Lepidopteran and Dipteran specific, Dipteran specific and no toxicity strains.

It was observed early on that Bt cultures that had undergone sporulation were the only ones that were toxic to larvae. Hence, it was concluded that the sporulation process was producing some toxin although the importance of this conclusion was not fully appreciated for almost half a century.

In the 1950s, it was observed that the Bt strains produced some crystalline inclusion bodies during sporulation, which was uncharacteristic of bacteria in general. They included a bi-pyramidal crystal and a smaller cuboidal crystal, produced only in the sporulating cell. The active cells were found to be lacking these crystals. It was shown that these crystals possess insecticidal activity.

The crystals are proteinaceous in nature and consist of inactive protoxin molecules called δ-endotoxins. When ingested by insects, the crystal is digested by the insect's midgut and the protoxins are then cleaved by the proteases present in the gut. This activates the crystal protein toxins which bind to some specific receptors in the plasma membrane of the gut epithelial cells and then form cation conducting pores. The permeability barrier to the protons and ions is lost and there is an influx of water into the gut cells, causing their lysis. Another effect of loss of ion regulation is the paralysis of the mouth and the gut which puts an end to feeding. Ultimately, the insect dies.

Some Bt strains produce a heat stable toxin called β-exotoxin which has some polymerase inhibiting properties. However, it can also inhibit the DNA dependant RNA polymerase activity of mammals and hence is not as widely used and is banned in some countries.

The genes that are responsible for the production of the crystal proteins are called cry genes. They are classified based on the similarity of their nucleotide sequences and their insecticidal activity, as:

Cry I- Lepidoptera specific
CryII- Lepidoptera and Diptera specific
Cry III- Coleoptera specific
Cry IV- Diptera specific

The effectiveness of a particular crystal protein toxin on an insect pest is dependent on the presence of the appropriate cell receptors in the larval midgut and the concentration of these receptors. Also, there is a strong possibility of resistant mutants arising. To avoid this, a mixture of toxins may be used that recognize different receptors on the cell, as the chances of the insects becoming resistant to all the toxins are very low.

Microbial insecticides can be expensive to produce, especially when compared to chemical pesticides, however, this may decrease with an increase in demand. A large quantity of the microbial preparation may be required to be applied to ensure lethality of the larval pests.
While the specificity of the Bt strains helps target specific pests, it can also be inconvenient for some crops that need to be treated for a variety of pests. The action of the insecticide is such that it is a couple of days before the larvae are killed. This can be perceived as a weakness or ineffectiveness. However, it lacks the ability to spread as an infection from insect to insect. So, in essence, it functions acts like a chemical insecticide. It is found to be stable in storage and on application. More importantly, no toxicity to mammals or other animals has been found.

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