To prevent flickering on client load, set the "display: none" on the panel set as the DropDownControlID on the DropDownExtender.

<ajaxToolkit:DropDownExtender runat="server" ID="dropDownExtender" TargetControlID="dropDownLabel" DropDownControlID="dropDownPanel" />
<asp:Label ID="dropDownLabel" runat="server" Text="Label" Width="109"><a>{Drop Down Label goes here}</a></asp:Label>
<asp:Panel ID="dropDownPanel" runat="server" CssClass="modalDropdown" style="display: none">
   <ul>
       <li>DropDownListItem #1</li>
       <li>DropDownListItem #2</li>
   </ul>
</asp:Panel>