Nuvo Research Inc. Licenses Canadian Pennsaid Plus Rights To Subsidiary Of Paladin Labs Inc. Squire Pharmaceuticals Inc.

MISSISSAUGA, ON, Dec. 22 - Nuvo Research Inc. (TSX: NRI) today announced that Squire Pharmaceuticals Inc., a subsidiary of Paladin Labs Inc. (TSX: PLB), has exercised its right to enter into a license with Nuvo to market and sell Pennsaid(R) Plus in Canada. Squire obtained an option to license Pennsaid Plus as part of a previously announced transaction in January 2006 when Nuvo sold a portion of its Canadian Pennsaid revenue stream to Squire. Pennsaid Plus is a follow-on product to Nuvo's Pennsaid, a topical NSAID for the treatment of osteoarthritis, and is designed to provide users with the efficacy of existing Pennsaid, but with less frequent dosing and increased ease of application. Patent applications for Pennsaid have been filed and a pivotal phase III trial for the product is expected to begin in 2007. Squire currently markets and sells Pennsaid in Canada under license from Nuvo.

The Pennsaid Plus License includes an up-front payment to Nuvo and royalties on future Canadian sales of Pennsaid Plus. As part of the licensing arrangement, Squire has also invested $500,000 in Nuvo through a three year debenture convertible into Nuvo shares at a conversion price of $0.60, which is based on the prior ten-day average weighted closing price of Nuvo common shares.

"We are pleased to expand our relationship with Paladin, a firm with the proven ability to successfully build leading brands in Canada," said John London, Nuvo's Vice Chairman. "This transaction solidifies our long-term Canadian strategy for Pennsaid and Pennsaid Plus and affirms Paladin's commitment to expansion of the Canadian market for our lead products." "Pennsaid sales in Canada grew 22% in 2006 to $10.5 million. This growth is driven by clinical evidence that indicates that Pennsaid is as effective as oral diclofenac, considered the "gold standard" treatment for osteoarthritis, but with significantly fewer adverse events," said Jonathan Ross Goodman, President and CEO of Paladin. "We believe that Pennsaid Plus, with fewer applications required per day coupled with a more convenient formulation, will be well received by the four million Canadians living with osteoarthritis."

About Pennsaid

Pennsaid is a topical non-steroidal anti-inflammatory (NSAID) used for the treatment of osteoarthritis and is currently approved for sale in Canada and several European countries. Pennsaid allows a diclofenac solution to be delivered to a specific site via the surface of the skin and thus avoids complications associated with systemic delivery. According to published clinical trials, Pennsaid is as effective as the maximum daily dose of comparable oral medication at relieving pain and stiffness associated with osteoarthritis of the knee, as well as improving overall well-being. There is currently no topical NSAID product approved in the approximately $4 billion U.S. osteoarthritis pain relief market. In July, 2006, the U.S. Food and Drug Administration advised that their Prescription Drug User Fee Act (PDUFA) goal date to complete the review of the resubmission in respect of Pennsaid and respond to Nuvo is December 28, 2006.

About Paladin Labs Inc.

Paladin Labs Inc., headquartered in Montreal, Canada, is a leading specialty pharmaceutical company focused on developing, 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. Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. For more information about Paladin, please visit the Paladin web site at www.paladinlabs.com.

About Nuvo Research Inc.

Nuvo is focused on developing innovative site-specific therapeutics that are delivered topically using the Company's skin-penetrating technologies. Nuvo's lead product is Pennsaid(R), a topical non-steroidal anti-inflammatory (NSAID) used for the treatment of osteoarthritis. Nuvo intends to leverage its skin-penetrating technologies to create a portfolio of transdermal products targeting a variety of indications.

Nuvo Research Inc. is a publicly traded, Canadian pharmaceutical company headquartered in Mississauga, Ontario, with manufacturing facilities in Varennes, Québec and Wanzleben, Germany and a research and development Center in San Diego California. For more information, please visit www.nuvoresearch.com.

This release may contain forward-looking statements, subject to risks and uncertainties beyond management's control. Actual results could differ materially from those expressed here. Risk factors are discussed in the Company's annual information form filed with the securities commissions in each of the provinces of Canada. The Company undertakes no obligation to revise forward-looking statements in light of future events.

For further information: about Paladin, please contact: Samira Sakhia, Chief Financial Officer, Paladin Labs Inc., Tel: (514) 340-5067, email: info@paladin-labs.com; For more information about Nuvo, please contact: Investor Relations, Christina Bessant, Equicom Group Inc., Tel: (416) 815-0700 x269, email: cbessant@equicomgroup.com

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