Paladin is pleased to announce the purchase of Ridaura from Pharmascience Inc. for $1,506,784 payable by way of the issuance of 116,804 shares in the capital stock of the Company at a deemed price of $4.30 per share plus $1,004,512 in cash. In 1998, Ridaura had sales of approximately CDN$400,000 in Canada. The Company wishes to purchase the Product in order to expand its product offering to Canadian Rheumatologists.

Ridaura (auranofin) is an oral formulation of a gold salt indicated for the management of rheumatoid arthritis. Ridaura belongs in the group of products known as disease-modifying antirheumatic drugs (DMARDs). Therapeutic effects with Ridaura may been seen after 3-4 months of treatment. The greatest potential benefit occurs in patients with active synovitis, particularly in early stages, because damage has already occurred to cartilage and bone and cannot be reversed by gold therapy.

Pharmascience acquired the Product from Connetics on December 19, 1997 for total consideration of US$1.381 million. Pharmascience entered into two separate agreements with Connetics – a Canadian Asset Purchase Agreement and a Supply Agreement.

Under the Canadian Asset Purchase Agreement, Pharmascience purchased all the intellectual property related to Ridaura for Canada for a consideration of US$1,000. Such intellectual property includes the ownership of the trademark, customer list, trade dress, manufacturing process and Canadian regulatory approval of Ridaura. Pursuant to the Supply Agreement, Pharmascience also purchased an inventory of 1,286,000 capsules from Connetics at a price of US$1.38 million. At the time Pharmascience acquired Ridaura in late 1997, the Company did not have sufficient funds to purchase Ridaura or the sales infrastructure to promote the product. Furthermore, the Company did not carry another rheumatology product which can share the high direct sales expenses and that can render the promotion of Ridaura financially attractive.

With the transfer of Pharmascience’s product sales force to the Company and the completion of a $6 million financing in July 1998, the Company believes it has the sales infrastructure as well as the funds to purchase the Assets from Pharmascience. Furthermore, the Company has successfully broadened its rheumatology portfolio through obtaining a license from Bioniche Inc. in respect of an innovative product for osteoarthritis treatment called Suplasyn. The Company perceives the Acquisition as desirable because the Acquisition is consistent with the Company’s strategy of acquiring niche therapeutic products. Given that there are approximately 250 rheumatologists who use rheumatology products in Canada, the Company intends to build the sales of Ridaura and Suplasyn to target at the needs of these physicians.

Pursuant to an asset purchase agreement between the Company and Pharmascience dated May 25 , 1999, the Company has agreed to purchase the intellectual property of Ridaura for a consideration of Cdn.$1,000 and an inventory of 948,305 capsules of Ridaura for Cdn.$1,505.784 (Cdn.$1.59 per capsule). One third of the aggregate purchase price for Ridaura will be payable by way of issuance of 116,804 Common Shares to Pharmascience at a deemed price of Cdn.$4.30 per share. The remainder of the aggregate purchase price of Cdn.$1,004,512 will be payable in cash by the Company to Pharmascience.

The acquisition of Ridaura from Pharmascience for the consideration and on the terms and conditions described above is subject to regulatory approval.

Jonathan Goodman, President of Paladin, stated, "We are pleased to add Ridaura to our growing portfolio of rheumatology products. With the addition of Ridaura, Paladin will have the critical mass to begin to profitably promote our products to the Canadian rheumatology community. With over $10 million of current assets, Paladin is well positioned to continue to acquire niche therapeutic products."

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.

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

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.