Paladin Labs Inc.
TSX : PLB

Paladin Labs Inc.
Nuvo Research Inc.
TSX VENTURE : NRI

Nuvo Research Inc.

December 22, 2006 13:49 ET

Paladin Licenses Pennsaid 'R' Plus Rights From Nuvo

MONTREAL, QUEBEC--(CCNMatthews - Dec. 22, 2006) - Paladin Labs Inc.(TSX:PLB) today announced that Squire Pharmaceuticals Inc., a subsidiary of Paladin Labs Inc., has exercised its right to enter into a license with Nuvo Research Inc. (TSX:NRI) to market and sell Pennsaid® 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®, 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, Quebec and Wanzleben, Germany and a research and development Center in San Diego California. For more information, please visit www.nuvoresearch.com.

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. 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, 2005. 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

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