Mission Pharmacal Company And Paladin Labs Inc. Complete Agreement for Urocit-K(R) for the treatment of Kidney Stones

MONTREAL, CANADA--(Marketwire - January 14, 2009) - Paladin Labs Inc. (TSX: PLB), a leading Canadian specialty pharmaceutical company, today announced that it has entered into a distribution agreement under which Mission Pharmacal Company has granted Paladin the exclusive Canadian rights to market and sell Urocit-K®. Urocit-K® 540 mg strength is approved for sale in Canada and is indicated for the treatment of calcium and uric acid kidney stones. Financial terms of the deal were not disclosed.

According to the Canadian Urological Association, approximately one in ten Canadians develop kidney stones. Data suggests that 50% of stone formers will develop a second stone within 10 years and 75% of stone formers will develop a second stone within 20 years. Urocit-K® is a slow-release formulation of potassium citrate clinically proven to inhibit the formation of most kidney stones in over 90% of patients. In the United States, Urocit-K® is available in 540 mg and 1080 mg strengths. The U.S. potassium citrate market for 2008 is estimated to be USD$30 million.

“We intend to launch Urocit-K® 540 mg and submit the 1080 mg formulation for approval in 2009. Urocit-K® complements our broad urology franchise which includes Testim® for the treatment of male hypogonadism and Trelstar® for the treatment of prostate cancer,” said Jonathan Ross Goodman, President and Chief Executive Officer of Paladin Labs Inc. “We expect Urocit-K® to fulfill an unmet need for kidney stone patients in Canada.”

“Paladin’s dynamic portfolio in the urology space and their demonstrated success introducing specialty pharmaceutical products in Canada makes them the ideal partner for Urocit-K® and Mission” said Neill B. Walsdorf Jr. President, Mission Pharmacal. “We look forward to building a long and successful relationship with Paladin that will benefit Canadian patients and their healthcare providers.”

About Urocit-K® and Nephrolithiasis

Urocit-K® is a slow release formulation of potassium citrate for treatment of nephrolithiasis in patients with renal tubular acidosis (RTA) with calcium stones, hypocitraturic calcium oxalate of any etiology, and uric acid lithiasis, with and without uric acid stones. Urocit-K® corrects the pH of the urine and elevates a naturally occurring urinary inhibitor. In addition, Urocit-K® lowers saturation of calcium oxalate. This helps control the formation of new stones.

About Paladin Labs Inc.

Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian market. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada’s leading specialty pharmaceutical companies. For more information, please visit the Company’s web site at www.paladinlabs.com.

Forward-Looking Statements

This news release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Paladin Labs Inc. (the “Company”) considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company’s Annual Information Form for the year ended December 31, 2007. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether a result of new information, future events, or except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company’s ongoing quarterly fillings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.