AVN944 inhibits IMPDH and induces apoptosis-related biomarkers in patients with hematologic cancers

December 11, 2006

Germantown, Md., December 11, 2006 -- Avalon Pharmaceuticals, Inc. (NASDAQ and NYSE Arca: AVRX), presented a poster detailing the effect of AVN944 on a comprehensive set of genetic and biochemical biomarkers at the American Society of Hematology 48th Annual Meeting. AVN944 demonstrated a statistically meaningful impact on IMPDH and other proteins that are critical to activities in cancer cells, including nucleotide biosynthesis, energy and metabolism, DNA replication, apoptosis and cell cycle control. The data were collected in an ongoing Phase I open-label, repeat dose-escalation study designed to evaluate the safety and tolerability of AVN944 in patients with advanced hematologic malignancies and to determine the optimal dose for Phase II efficacy trials. Further data from an interim analysis of the trial is expected to be available shortly.

"IMPDH is highly upregulated in most hematological cancers and in many solid tumors," said Beverly S. Mitchell, M.D., Deputy Director of the Stanford Comprehensive Cancer Center and George E. Becker Professor of Medicine at Stanford University. "IMPDH plays an essential role in cancer cell synthesis of DNA and RNA, and the inhibition of IMPDH represents a new and potentially important approach to the treatment of cancer."

Analysis of the selected markers in patient samples from the Phase I trial showed a correlation of changes in the expression of these genes to dose level and duration of exposure. Importantly, several of these markers have been shown to reflect a durable, sustained stress response indicative of cancer cell death, particularly in cancer cells from AML patients. Specifically, it was found that the gene HspA1A, a marker of stress response found to correlate with depleted GTP pools in cancer cell lines, is induced within hours upon the first treatment of the drug in patients, even at the trial's lowest doses. Following continued dosing of AVN944, this marker of disease cell stress was elevated even in the absence of circulating levels of the drug between doses. Other genes directly related to IMPDH inhibition showed similar response characteristics.

"AvalonRx®, our proprietary gene expression platform, enabled us to identify a set of 34 genes that reflect the mechanism-based activity of AVN944," said David Bol, Ph.D., Senior Vice President of Product and Pharmaceutical Development at Avalon. "These gene markers correlate with the biochemical effects of AVN944 on protein function, which we believe will result in tumor cell apoptosis at the right doses. Our goal for the current Phase I study is to achieve those dose levels in patients. It is very encouraging that we have not seen any drug related adverse events even though we are already seeing biomarker movements consistent with significant inhibition of the IMPDH enzyme. This indicates the potential for a good therapeutic window. Additionally, these data showcase the power of the AvalonRx® technology in understanding the pharmacologic, pharmacodynamic and biologic activity of a drug on patients in early clinical studies."

This analysis of the trial data was intended to describe how these biomarkers correlate with biologic activity of the drug in patients as the doses escalate. When comparing patients with different hematologic cancers, examination of the complete set of markers clearly demonstrated the utility of comprehensive gene expression analysis in clinical trials by distinguishing individuals with similar diseases, as well as patients with different malignancies, based on the makeup of their disease prior to drug administration as well as the different nature of the cellular response following drug administration.
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An abstract of the Presentation, entitled, "Genetic and Biochemical Biomarkers of IMPDH Inhibition in Phase I Dose Escalation of AVN944 for Hematological Malignancies," is now available on the ASH website, www.hematology.org.

Conference Call and Webcast

The Company will host a conference call on Thursday, December 14, 2006 at 8 a.m. Eastern Time to provide a full update on the interim results of the AVN944 Phase I trial. Interested investors, analysts, members of the media and the general public can listen to the call live over the Internet from the investor section of the Company's Web site or by dialing the numbers listed below.

Conference Call Details:

Dial-In: (866) 202-4367, (617) 213-8845 (International)
Passcode: 78269925

Webcast: Please go to www.avalonrx.com, Investors, within 15 minutes prior to the call and select the webcast link. The conference call replay will be available through June 1, 2007 on Avalon's website (www.avalonrx.com).

About AVN-944

AVN944 is an oral small molecule drug candidate that inhibits inosine monosphospate dehydrogenase (IMPDH), an enzyme that is critical for cells to be able to synthesize guanosine triphosphate (GTP), a molecule required for DNA synthesis and cellular signaling. IMPDH is over expressed in some cancer cells, especially in the case of hematological malignancies. In laboratory experiments, AVN944 has been shown to inhibit IMPDH activity in cells, and suppress pools of GTP. Anticancer activities of IMPDH inhibitors correlate with sustained depletion of GTP pools both in cellular models and in human subjects. AVN944 appears to have a selective effect on cancer cells in that deprivation of GTP in normal cells results in a temporary slowing of cell growth, while GTP deprivation in cancer cells induces cell death, or apoptosis.

Results from preclinical studies of AVN944 indicate that AVN944 inhibited the proliferation of lymphoid and myeloid cells, the principal cells involved in the most common types of human leukemias. In a single-dose, dose-escalation Phase I clinical trial of AVN944 conducted in the United Kingdom in healthy volunteers, AVN944: (1) was well tolerated at all tested doses with no notable side effects; (2) demonstrated good pharmacokinetic properties; and (3) had a significant inhibitory effect on IMPDH enzyme activity. Avalon filed an IND with the FDA in August 2005 and initiated U.S. Phase I clinical trials in January 2006 for the treatment of hematological cancers.

About AvalonRx®

AvalonRx® is a comprehensive, innovative and proprietary suite of technologies based upon large-scale gene expression analysis. This platform facilitates drug discovery by expanding the range of therapeutic targets for drug intervention, including targets and target pathways frequently considered intractable using conventional HTS approaches, allows more informed decisions about which compounds to advance towards clinical trials and facilitates drug development through identification of biomarkers of efficacy that can stratify patients or provide early indicators of response.

About Avalon Pharmaceuticals

Avalon Pharmaceuticals is a biopharmaceutical company using its proprietary technology, AvalonRx®, to discover and develop cancer therapeutics. Avalon has a lead product in Phase I clinical development (AVN944 - IMPDH inhibitor), preclinical programs to discover inhibitors for the Beta-catenin, Aurora and Survivin pathways and drug discovery collaborations with MedImmune, Novartis, ChemDiv and Medarex. Avalon Pharmaceuticals was established in 1999 and is headquartered in Germantown, Md.

Safe Harbor Statement

This announcement contains, in addition to historical information, certain forward-looking statements that involve risks and uncertainties, in particular, related to clinical progress in the development of AVN944. Such statements reflect the current views of Avalon management and are based on certain assumptions. Actual results could differ materially from those currently anticipated as a result of a number of factors, risks and uncertainties including the risk that AVN944 will not progress successfully in its clinical trials, and other risks described in our SEC filings. There can be no assurance that our development efforts will succeed, that AVN944 will receive required regulatory clearance or, even if such regulatory clearance is received, that any subsequent products will ultimately achieve commercial success. The information in this Release should be read in conjunction with the Risk Factors set forth in our 2005 Annual Report on Form 10-K and updates contained in subsequent filings we make with the SEC.

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