Mission Pharmacal and Paladin Complete Agreement for Urocit-K

MONTREAL, CANADA (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 website 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 filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com

For further information:
Paladin Labs
Samira Sakhia
Chief Financial Officer
(514) 340-5067, (514) 344-4675 (FAX)
info@paladin-labs.com

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Important Safety Information

Contraindications

Patients with hyperkalemia, peptic ulcer disease, active urinary tract infection, and renal insufficiency
Conditions predisposing patients to hyperkalemia, including chronic renal failure, uncontrolled diabetes mellitus, acute dehydration, strenuous physical exercise in unconditioned individuals, adrenal insufficiency, and extensive tissue breakdown

Warnings and Precautions

Hyperkalemia: In patients with impaired mechanisms for excreting potassium, Urocit-K administration can produce hyperkalemia and cardiac arrest. Potentially fatal hyperkalemia can develop rapidly and be asymptomatic. The use of Urocit-K in patients with chronic renal failure, or any other condition which impairs potassium excretion such as severe myocardial damage or heart failure, should be avoided
Gastrointestinal lesions: If there is severe vomiting, abdominal pain or gastrointestinal bleeding, Urocit-K should be discontinued immediately and the possibility of bowel perforation or obstruction investigated

Patient Counseling Information

Administration of Drug

Patients should be told to take Urocit-K 15 mEq without crushing, chewing, or sucking the tablet
Patients should be told to take Urocit-K 15 mEq only as directed, especially if the patient is also taking both diuretics and digitalis preparations
Patients should be told to check with the doctor if they experience difficulty swallowing the tablet or it seems to stick in the throat
Patients should be told to check with the doctor at once if they notice tarry stools or other signs of gastrointestinal bleeding
Patients should be advised that regular blood tests and electrocardiograms will be performed to ensure safety

Patient Monitoring Information

Hyperkalemia

Patients with impaired mechanisms for excreting potassium should be closely monitored for signs of hyperkalemia with periodic blood tests and ECGs

This material is intended to provide basic information. Patients should discuss all medical advice, diagnosis, and treatment with their healthcare provider.

Please see full Prescribing Information