By Lisa Seachrist

Washington Editor

WASHINGTON - EntreMed Inc. received orphan drug status from the FDA for thalidomide for the treatment of the AIDS-related skin cancer Kaposi's sarcoma (KS) - marking the second time EntreMed has gained an orphan drug designation for the infamous thalidomide, now recognized as an angiogenesis inhibitor, to treat cancer.

In March, the FDA granted orphan status to the drug for the treatment of primary brain malignancies.

Should thalidomide win FDA approval for either indication, Rockville, Md.-based EntreMed will have exclusive marketing rights for the drug's use in that indication for seven years. In addition, the designation will exempt the company from certain fees associated with filing a new drug application and may provide research tax credits.

"We are actively teaching thalidomide new tricks," said John Holaday, president, chairman and CEO of EntreMed. "As 'the angiogenesis company,' we see thalidomide as the clinical product that will pave the way for our products in preclinical research."

A Phase II study conducted as part of the company's research collaboration with the National Cancer Institute (NCI), in Bethesda, Md., showed oral thalidomide in doses of up to 1,000 milligrams per day provided a 50 percent reduction in the number of nodular KS lesions in six out of 13 patients.

"We are very proud of the fact that our collaboration with NCI has brought us to this point," Holaday said. "We will be expanding on the [current] studies as well as looking at other cancers."

Holaday said the company, in collaboration with NCI, is testing thalidomide's ability to combat prostate and breast cancer as well.

Thalidomide works by inhibiting the growth of new blood vessels and shutting off the blood supply to tumors. He noted EntreMed is planning "approvable Phase II studies," as well as Phase III studies in KS, brain and prostate cancers.

The FDA granted approval to Celgene Corp., of Warren, N.J., for thalidomide as a treatment for complications associated with Hansen's disease, or leprosy, on July 16. Because of the drug's ability to cause severe birth defects, the agency specifically stated that thalidomide couldn't be used in an off-label manner. Each indication for thalidomide must gain approval. Celgene is developing the drug to treat the wasting associated with AIDS.

In addition to the cancer indications, EntreMed is looking at thalidomide treatment for macular degeneration.

Edward Gubish, EntreMed's senior vice president for research and development, said the company is exploring the combination of thalidomide and other agents. For example, the company may employ alpha interferon to boost thalidomide's ability to fight KS.

EntreMed's stock (NASDAQ:ENMD) closed Thursday at $23.375, down $0.125. *