February 15

Paladin is pleased to announce that it has received the Canadian distribution rights to Cystistat^Ž from Bioniche Inc. Cystistat has been developed to temporarily replenish the deficient GAG layer on the bladder epithelium. There is evidence that the GAG layer is deficient in conditions such as interstitial cystitis. Interstitial cystitis affects an estimated 50,000 Canadians, mostly women approaching middle age.

Effective immediately, Paladin will assume all Canadian marketing and sales responsibilities for Cystistat.

Jonathan Goodman, President of Paladin stated "We are pleased to have Bioniche choose us a Canadian distribution partner for this important product. Cystistat fits nicely in our Urology portfolio and we are confident that we will be able to significantly grow the sales of this product."

Paladin’s mission is to reach $50 million in sales by 2002 by understanding and serving the needs of Canadian health-care professionals in niche therapeutic areas through the development, licensing and commercialization of innovative products.

Bioniche Inc. is a Canadian biopharmaceutical company with two proprietary platform technologies – Mycobacterial Cell Wall Complex (MCC) and hyaluronic acid. The Company has successfully commercialized two proprietary products based on hyaluronic acid: Cystistat^Ž for interstitial cystitis, a painful debilitating bladder condition, and Suplasyn^Ž for osteoarthritis. When commenting on this Distribution Agreement, Graeme McRae, Executive Vice Chairman of Bioniche, remarked "Not only is Bioniche now able to focus on the development of its MCC platform technology but it has also found a capable Canadian marketing and selling organization. Bioniche can only benefit from Paladin’s strong franchise with Canadian Urologists."

Paladin Labs Inc. is a public company whose shares trade on the Vancouver Stock Exchange under the symbol PLB.

Bioniche’s common shares trade on the Toronto Stock Exchange and Montreal Exchange under the symbol BNC.

The Vancouver Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements relating to the future performance of Paladin. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially.