Montreal, PQ- March 8, 2000 - Paladin Labs, Inc. ("Paladin") (TSE: PLB) announced today its results for fiscal year 1999. Paladin has experienced sustained growth with revenues increasing from $830,167 in fiscal 1997 to $11.2 million in fiscal 1999. The compound annual growth rate for that period was in excess of 265% in terms of revenues. In terms of net income, Paladin has evolved from incurring a loss of approximately $1.0 million in 1997 to generating a profit of over $2.8 million in 1999, on a pre-tax basis. This growth is attributable mainly to Paladin's ongoing success with respect to acquiring and licensing new products on a continuous basis.

Paladin intends to use the net proceeds of this offering principally to license, acquire and develop product opportunities which have already been identified, to hire additional sales and marketing personnel and to fund new product launch costs. Paladin currently has 9,466,338 common shares outstanding.
In order to ensure continuous growth, the Corporation has acquired and invested in excess of $14 million worth of product acquisitions and licensing agreements over the last 3 fiscal years.

Fiscal 1999 compared to Fiscal 1998

Revenues for the year ended December 31, 1999 were $11.2 million, representing an increase of approximately 87% over revenues of $6.0 million for fiscal 1998. This increase resulted mainly from the benefit of a full year's contribution from the specialty product line acquired from Pharmascience in July 1998 and the acquisition and licensing of 15 new products over the last fiscal year. Paladin's sales of products such as Statex, Histofreezer and Canthacur more than doubled during fiscal 1999. Revenues for fiscal 1999 also included, for the first time, sales of such products as Ridaura, for rheumatoid arthritis, Cystistat, for interstitial cystitis, and Pacis, which is a first line therapy for bladder cancer.

Over the same period, the cost of sales as a percentage of revenues increased from 27% in fiscal 1998 to 34% in fiscal 1999. The increase is attributable mainly to price increases related to raw materials used in the production of Urispas, which accounts for approximately one third of Paladin's specialty sales revenue, and the initial inventory cost relating to the Corporation's purchase of Ridaura. As the existing inventory of Ridaura purchased is turned over, the gross profit realized on sales of this product is expected to improve.

Selling and administrative expenses increased to $4.4 million in 1999 from $1.4 million in 1998. This increase resulted from the increased infrastructure necessitated by the full year's effect relating to the specialty product line and the launching of 10 new products in 1999, bringing Paladin's product offerings to 19, in comparison to 9 marketed products in 1998. Marketing expenditures increased by approximately $1.3 million due to the expenses surrounding 10 new product launches, the recruitment of additional personnel and a general increase in brand support activity. Direct sales support expenditures increased by approximately $700,000 to reflect the wider range of products being supported, increased training costs for Paladin's growing sales force, and increased distribution costs associated with revenue growth of 87%. Administrative expense increases are attributable to various factors including the recruitment of senior management personnel as well as the launching of an investor relations program.

Research and development expenses, net of investment tax credits, of the Corporation remained fairly constant during the 1999 fiscal year, experiencing a decrease of approximately 6%, with a number of products reaching the commercialization level and therefore exiting the Corporation's pipeline, and a number of new products entering the development stage.

Amortization decreased by approximately 85% from $118,027 to $17,362 in fiscal 1999. The significant reduction results from the fact that the Corporation wrote down pharmaceutical product rights and licenses during the 1998 fiscal year. This write-down was implemented as a result of management's belief that changing conditions in the generic drug market may have impaired the value of the subject assets.

Income before income taxes increased from $1,019,816 in fiscal 1998 to $2,856,140 in fiscal 1999, an increase of 180% principally because of increased revenues. Net income before taxes, as a percentage of revenues, was 25% in fiscal 1999 compared to 17% in fiscal 1998.

Acquisition of NPI

Late in fiscal 1999, the Corporation acquired all of the issued and outstanding shares of NPI. NPI had previously been engaged in research and development activities involving neurosteroids, principally DHEA.

NPI was a non?revenue generating entity, which used various resources to advance DHEA research, including the use of various CROs. During NPI's four-year corporate history, up until its acquisition by Paladin, NPI expended in excess of $17 million on clinical trials and research and development.

Paladin believes that the research and development activities of NPI, and the related technology and know?how for the development of DHEA neurosteroids for human indications, as well as the data resulting from pre?clinical and clinical work, will be an integral part of the Corporation's own neurosteroid program. Paladin also believes that the most expensive part of the research and development program for DHEA has already been completed by NPI and the Corporation will not continue the level of expenditures incurred by NPI.

Liquidity and Capital Resources

As Paladin's business grows, its liquidity requirements will increase in order to fund product acquisitions and licensing agreements in order to expand its product offerings. Paladin's current operations, including research and development, are financed through cash provided from operations and funds raised through private placements of the Common Shares. To date, the Corporation has not utilized any bank borrowings or other institutional debt.

For the fiscal year ended December 31, 1999, the Corporation generated approximately $2.9 million in cash flow from operations. Part of this amount was used to finance the acquisition of pharmaceutical product rights and licenses. During fiscal 1999, Paladin spent in excess of $2.8 million in cash on pharmaceutical product rights, license agreements, intellectual property and related investments.

Based on its current operating plan, management believes that cash required to fund existing product acquisition and license agreements, research and development and working capital will be approximately $30 million in fiscal years 2000 through 2002. Management believes that its available cash, together with cash flow from operations and net proceeds from the recently announced public offering will be sufficient to meet its foreseeable cash needs.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (Acrobat Reader file)

Lennie Ryer, Chief Financial Officer of Paladin, commented "Fiscal 1999 represents a milestone in the evolution of Paladin. The corporation experienced a cumulative average revenue growth rate of approximately 265% over the last three fiscal years while maintaining an EBIT, in 1999, of approximately 25% of revenue. This significant revenue and profit growth was generated despite having incurred initial expenses related to the launch of 10 new products in 1999."

Click here for the financial statements in PDF format.

About Paladin Labs Inc.
Paladin Labs, headquartered in Montreal, Quebec is a Canadian developer, marketer and distributor of innovative pharmaceuticals, currently offering products in urology, dermatology, rheumatology and other specialty markets. For more information about Paladin, please visit the Paladin Web Site at www.paladin-labs.com or send e-mail to info@paladin-labs.com.

Paladin Labs Inc. is a public company whose shares trade on the Toronto Stock Exchange and the Canadian Venture Exchange under the symbol PLB.

For more information, please contact:

 

Lennie Ryer	Jason Hogan
CFO	Investor Relations
Paladin Labs Inc.	The Equicom Group Inc.
514-340-5067	416-815-0700 ext. 222
Fax:514-344-4675	Fax:416-815-0080
Email:lryer@paladin-labs.com	Email:jhogan@equicomgroup.com
Internet: www.paladin-labs.com	Internet: www.equicomgroup.com

The Toronto 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 or predictions. These statements represent our judgement as of this date and are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, future revenues and profitability, and obtaining marketing approval