February 15

Paladin is pleased to announce that it has received the Canadian distribution rights to Suplasyn^Ž from Bioniche Inc. Suplasyn is a highly purified form of hyaluronic acid, specifically produced for use in viscosupplemenation therapy. Suplasyn is injected into the synovial cavity of a joint and extensive studies have shown that hyalauronic acid is effective in relieving the symptoms of osteoarthritis with few side effects.

The potential market in Canada for Suplasyn is estimated to be approximately $5 million dollars.

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

Jonathan Goodman, President of Paladin, stated, "Suplasyn competes in a large market that is dominated by a few players. Suplasyn will offer Canadian patients suffering from osteoarthritis a more cost-effective alternative to existing therapies. We are excited to enter the rheumatology market, as it is characterized by a small number of decision-makers driving a large volume of sales. We hope to add an additional rheumatology product to our portfolio by the end of the second quarter of 1999."

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, "Suplasyn has great sales potential in Canada. It is a cost-effective solution to the management of pain in osteoarthritis. With its national sales force and proven marketing ability, Paladin should rapidly capture a significant share of this large, growing market."

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.