Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard, Transfer of Listing
On November 20, 2008, Avalon Pharmaceuticals, Inc. (the "Company") received a letter from The NASDAQ Stock Market LLC ("NASDAQ") notifying the Company that based on the Company's stockholders' equity as reported in its Quarterly Report on Form 10-Q for the period ended September 30, 2008, the Company does not comply with the minimum stockholders' equity requirement of $10 million for continued listing on The NASDAQ Global Market as set forth in NASDAQ Marketplace Rule 4450(a)(3). The NASDAQ staff is reviewing the Company's eligibility for continued listing on The NASDAQ Global Market and has asked the Company to provide a specific plan to achieve and sustain compliance with all of the NASDAQ Global Market listing requirements, including a time frame for completion of the plan. The NASDAQ letter has no immediate effect on the listing of the Company's common stock. The Company is in the process of preparing a response to NASDAQ's request for a plan.
As previously reported, on September 24, 2008, the Company received a letter from NASDAQ notifying the Company that its common stock may be subject to delisting from the NASDAQ Global Market for failure to comply with the Minimum Bid Price Rule of Rule 4450(a)(5).
In the event that the Company receives notice that its common stock is being delisted from The NASDAQ Global Market, NASDAQ rules permit the Company to appeal any delisting determination by the NASDAQ staff to a NASDAQ Listing Qualifications Panel. Alternatively, NASDAQ may permit the Company to transfer its common stock to The NASDAQ Capital Market if it satisfies the requirements for inclusion on that market.
The Company issued a press release on November 25, 2008 that disclosed its receipt of the November 20th letter from NASDAQ. A copy of the press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits

(d) Exhibits

Exhibit No. Description

99.1 Press Release dated November 25, 2008

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