SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~March~~May 301, 2009

AVALON PHARMACEUTICALS, INC.

Delaware		001-32629		52-2209310
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

(Exact name of registrant as specified in its charter)


Delaware	001-32629	52-2209310

(State or other	(Commission File	(I.R.S. Employer
jurisdiction of	Number)	Identification No.)
incorporation or
organization)


20358 Seneca Meadows Parkway,
Germantown, Maryland		20876

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (301) 556-9900

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Section 1 — Registrant’s Business and Operations

Item 1.0102. ~~Entry~~Termination ~~into~~of a Material Definitive Agreement.

On ~~March~~May 301, 2009, Avalon Pharmaceuticals, Inc. (“Avalon”), ~~Clinical~~or ~~Data,~~the ~~Inc. (~~“~~Clinical Data~~Company”), and ~~API~~Merck ~~Acquisition~~& ~~Sub II~~Co., ~~LLC, an indirect wholly-owned subsidiary of Clinical Data~~ Inc. (“~~Merger Sub~~Merck”), ~~entered~~agreed ~~into a second amendment~~ to terminate the ~~Agreement~~Exclusive License and ~~Plan~~Research ofCollaboration ~~Merger and Reorganization~~Agreement, ~~dated~~ ~~October~~dated March 275, ~~2008~~2007, asby ~~amended,~~and between Avalon, ~~Clinical Data~~ and ~~Merger~~Merck ~~Sub~~ (the “~~Merger~~ Merck Agreement,”) ~~and~~pursuant ~~such amendment~~ to the ~~Merger~~terms ~~Agreement,~~of the Merck ~~“Second Merger~~ Agreement ~~Amendment”)~~. As ~~previously~~The ~~announced,~~termination of the ~~Merger~~Merck Agreement ~~provides~~was ~~that,~~effective ~~upon~~on ~~the~~May 1, ~~terms~~2009. ~~and~~As ~~subject~~part ~~to the~~of ~~conditions~~the ~~set~~termination ~~forth~~of in the ~~Merger~~Merck Agreement, ~~Merger~~Merck ~~Sub~~has ~~will~~agreed beto ~~merged~~pay ~~with~~Avalon ~~and~~a ~~into~~termination ~~Avalon,~~payment ~~with~~of $4 ~~Avalon~~million ~~continuing~~on asor ~~the~~before ~~surviving~~May 8, ~~corporation~~2009, ~~and~~which aAvalon ~~subsidiary~~expects ofto ~~Clinical~~receive ~~Data~~by ~~(the~~that ~~“Merger”)~~date.

The ~~Second~~Merck ~~Merger~~ Agreement ~~Amendment~~was ~~amends~~terminated ~~the~~by ~~Merger Agreement to extend from April 30, 2009 to May 31, 2009 the outside closing date for the Merger, after which date either~~ Avalon orand ~~Clinical Data~~Merck ~~may terminate the Merger Agreement, as provided~~ in ~~the~~response ~~Merger Agreement. The Second Merger Agreement Amendment also amends the Merger Agreement~~ to ~~require~~changes ~~that Avalon use the proceeds of any “milestone payment” (as defined~~ in ~~the form of Contingent Value Rights Agreement attached as an~~research ~~exhibit~~priorities ~~to the Merger Agreement) received~~ by ~~Avalon~~Merck ~~prior~~relating to the ~~closing~~subject ofmatter ~~the Merger to repay the outstanding balance~~ of ~~any additional loans made by Clinical Data to Avalon prior to~~ the ~~closing~~research of the Merger, in addition to being used to repay the $3 million short-term loan originally provided by Clinical Data to Avalon in connection with signing the Merger Agreement in October 2008 (the “Term Loan”), as already required under the terms of the Merger Agreementprogram.

~~Also~~Prior onto ~~March 30,~~its ~~2009~~termination, ~~Clinical~~the ~~Data~~Merck ~~and~~Agreement ~~Avalon~~provided ~~amended~~that ~~the~~both ~~note~~parties ~~purchase~~would ~~agreement~~work ~~and~~exclusively with ~~term~~one ~~note relating~~another toduring the ~~Term~~term ~~Loan~~of toa ~~extend~~research ~~the~~program ~~maturity~~related ofto the ~~original~~discovery ~~$3 million~~and ~~loan from April 30,~~possible ~~2009~~development toof ~~May 31,~~selective ~~2009.~~small Inmolecule ~~addition,~~inhibitors ~~Clinical~~for ~~Data~~a ~~and~~target ~~Avalon~~important ~~increased~~in the ~~amount~~development ~~borrowed by~~of ~~Avalon~~cancer. In addition, under the ~~Term~~Merck ~~Loan~~Agreement, ~~from~~Merck ~~$3 million~~agreed to ~~$4 million~~pay ~~through the issuance by~~ Avalon ofup ~~an additional~~to approximately $1200 million ~~term~~in ~~note. As~~milestone ~~with~~payments ~~the~~if ~~original~~Avalon ~~$3 million~~were ~~loan~~to ~~from~~achieve ~~Clinical~~all ~~Data,~~of the ~~additional~~milestones ~~$1 million~~under ~~loan from~~the ~~Clinical~~agreement. ~~Data~~The ~~bears~~Merck ~~interest~~Agreement atalso aprovided ~~fixed~~for ~~rate~~the ofpayment ~~seven~~to ~~percent~~Avalon ~~per~~by ~~annum~~Merck ~~and~~of ~~matures~~royalties on ~~May 31,~~net ~~2009,~~sales ~~unless~~of ~~accelerated~~products ~~pursuant~~marketed toin ~~its~~the ~~terms,~~collaboration. ~~may~~The beMerck ~~prepaid~~Agreement atdid ~~any~~not ~~time~~provide ~~without~~for ~~penalty, and is~~any ~~secured~~minimum byguaranteed ~~collateral~~payments ~~consisting~~to ~~of certain of~~ Avalon’s ~~intellectual~~by ~~property rights~~Merck.

~~The~~As ~~foregoing~~a ~~descriptions~~result of the ~~Second~~termination ~~Merger~~of the Merck Agreement, ~~Amendment~~Avalon will not receive any further payments from Merck under the Merck Agreement, and the ~~amendment~~research ofprogram between the ~~Term~~parties has been ~~Loan~~terminated. doIn ~~not~~addition, ~~purport~~neither party has any further obligation to bework ~~complete~~exclusively with the other regarding the subject matter of the research program, and ~~are~~Avalon ~~qualified~~has inagreed ~~their~~to ~~entirety~~destroy certain materials delivered or provided to it by ~~reference~~Merck and certain compounds relating to the ~~Second~~ ~~Merger~~research ~~Agreement~~program ~~Amendment~~in ~~filed~~Avalon’s aspossession ~~Exhibit 2~~or control.1 ~~hereto~~Further, toAvalon ~~the~~has ~~amendments~~agreed tothat ~~the~~it ~~note~~shall have ~~purchase~~no ~~agreement~~license ~~and~~rights ~~related~~to ~~$3 million~~any ~~term~~Merck ~~note~~patent ~~filed~~rights, asMerck ~~Exhibits~~know-how ~~10.1~~or ~~and~~to ~~10.2~~Merck’s interest in any joint ~~hereto,~~information ~~respectively,~~or ~~and~~inventions toresulting from the ~~$1 million~~research ~~term~~program ~~note,~~following ~~filed~~the astermination ~~Exhibit 10.3~~of ~~hereto~~the Merck Agreement.

Avalon does not have any other material relationship with Merck.

Section 2 — Financial Information

Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

The disclosure contained in Items 1.02 and 8.01 is incorporated herein by reference.

Section 8 — Other Events

Item 8.01. Other Events

Under the terms of the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), dated October 27, 2008, as amended, between Avalon, Clinical Data, Inc. (“Clinical Data”) and API Acquisition Sub II, LLC, an indirect wholly-owned subsidiary of Clinical Data (“Merger Sub”), the $4 million payment to be received by Avalon from Merck is required to be used to pay down the outstanding balance of $4 million in short-term loans provided by Clinical Data to Avalon in connection with the

anticipated merger of Avalon and Merger Sub contemplated by the Merger Agreement. As of April 30, 2009, a total of approximately $4.1 million in principal and accrued interest remained outstanding under these loans. Avalon intends to make loan payments totaling $4 million to Clinical Data promptly upon its receipt of the anticipated $4 million payment from Merck, which would reduce the outstanding balance of the Clinical Data loans by that amount.

Important Information for Investors and Stockholders

Avalon and Clinical Data ~~will~~have ~~file~~filed a joint definitive proxy statement/prospectus with the Securities and Exchange Commission (“SEC”) in connection with the proposed merger. ~~Investors~~The ~~and stockholders are urged to read the~~ joint definitive proxy statement/ prospectus ~~when~~was itfirst ~~becomes~~mailed ~~available~~to ~~and~~Avalon ~~any~~stockholders ~~other~~on ~~relevant~~or ~~documents~~about April ~~filed~~28, by2009. ~~either~~Investors ~~party~~and ~~with~~stockholders are urged to read the ~~SEC~~joint ~~because~~definitive ~~they~~proxy statement/prospectus ~~will~~because ~~contain~~it contains important information about the proposed merger.

Investors and stockholders ~~will~~are be able to obtain the joint definitive proxy statement/prospectus ~~and~~ and other documents filed with the SEC free of charge at the website maintained by the SEC at www.sec.gov. In addition, documents filed with the SEC by Avalon ~~will~~are be available free of charge on on the portion of the Avalon website titled “Investors” at www.avalonrx.com. Documents filed with the SEC by Clinical Data are available free of charge on the portion of the Clinical Data website titled “Investors” at www.clda.com.

~~SEC by~~ Clinical Data, ~~will~~Avalon and their directors and executive officers may be deemed to be participants in the solicitation of proxies from Avalon stockholders. Information regarding Clinical Data’s participants is available ~~free~~in Clinical Data’s Annual Report on Form 10-K for the year ended March 31, 2008 and its proxy statement for its 2008 Annual Meeting of ~~charge~~Stockholders, which are filed with the SEC. Information regarding Avalon’s participants is available in Avalon’s Annual Report on Form 10-K for the ~~portion~~year ended December 31, 2008, which is filed with the SEC. Additional information regarding interests of such participants is included in the joint definitive proxy statement/prospectus filed with the SEC. You can obtain free copies of these documents from Clinical Data ~~website titled~~and ~~“Investors”~~Avalon atas ~~www~~indicated above.~~clda.com.~~

Clinical Data, Avalon and their directors and executive officers may be deemed to be participants in the solicitation of proxies from Avalon stockholders. Information regarding Clinical Data’s participants is available in Clinical Data’s Annual Report on Form 10Forward-KLooking ~~for~~Statements ~~the year ended March~~ 31, 2008 and its proxy statement for its 2008 Annual Meeting of stockholders, which are filed with the SEC. Information regarding Avalon’s participants is available in Avalon’s Annual Report on Form 10-K for the year ended December 31, 2008, which is filed with the SEC. Additional information regarding interests of such participants will be included in the joint definitive proxy statement/prospectus that will be filed with the SEC. You can obtain free copies of these documents from Clinical Data and Avalon as indicated above.

~~Section 9~~This —report ~~Financial~~contains ~~Statements~~forward-looking statements that involve risks and ~~Exhibits~~uncertainties. Such statements are based on certain assumptions and actual results could differ materially from those currently anticipated as a result of a number of factors, risks and uncertainties. The information in this report should be read in conjunction with the Risk Factors set forth in Avalon’s 2008 Annual Report on Form 10-K and updates contained in subsequent filings Avalon makes with the SEC.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

2.1		Second Amendment, dated March 30, 2009, to Agreement and Plan of Merger and Reorganization, dated as of October 27, 2008, by and among Avalon Pharmaceuticals, Inc., Clinical Data, Inc. and API Acquisition Sub II, LLC.
10.1		First Amendment, dated March 30, 2009, to Note Purchase Agreement, dated October 27, 2008, by and among Clinical Data, Inc. and Avalon Pharmaceuticals, Inc.
10.2		Amendment No. 2, dated March 30, 2009, to Term Note, dated as of October 27, 2008, by and among Avalon Pharmaceuticals, Inc. and Clinical Data, Inc.
10.3		Term Note, dated March 30, 2009, issued by Avalon Pharmaceuticals, Inc. to Clinical Data, Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Avalon Pharmaceuticals, Inc.
Date: April 2, 2009	By:	/s/ C. Eric Winzer
Date: May 6, 2009	By:	/s/ Kenneth C. Carter
		C. Eric Winzer
		Kenneth C. Carter
		Executive Vice President and Chief Financial Officer
		President and Chief Executive Officer

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