MONTREAL, QUEBEC -- (MARKET WIRE) -- 11/01/07 -- Paladin Labs Inc. (TSX: PLB), a leading Canadian specialty pharmaceutical company, today reported its 2007 third quarter financial results.

Third Quarter Highlights

- Revenues reached $16.9 million, an increase of 33% versus last year

- EBITDA1 reached a record $5.1 million, a 7% increase over the same period last year

- Obtained Health Canada's approval for Seasonale(TM), an extended-cycle oral contraceptive

- Licensed and launched Tridural(TM), a once-daily tramadol product in Canada

- Expanded distribution agreement with Shire Human Genetic Therapies, Inc. to include Elaprase(TM)

- Entered into an exclusive license and distribution agreement with Glide Pharmaceutical Technologies Limited

"We are pleased with our results and are on target to achieve our 12th consecutive year of record revenues. We extended considerable effort in a 10-week period to be able to license and launch Tridural(TM), a once-daily tramadol product in Canada. We are confident that Tridural(TM) will become a flagship product in our pain portfolio and we look forward to watching this product gain momentum in the pain market. We also obtained Canadian regulatory approval for Seasonale(TM), Canada's only approved extended-cycle oral contraceptive, which we will be launching in the fourth quarter. These are exciting and significant product opportunities for Paladin and form the foundation for solid organic growth."

Financial Results

Revenue for the third quarter of 2007 increased 33% or $4.2 million to $16.9 million, compared to $12.7 million in the third quarter of 2006. These increases are due primarily to strong performance from the Company's key promoted products, including Twinject®, Oxytrol®, Testim®, Plan B®, Trelstar®, Pennsaid® and Metadol® which increased by 36% in the third quarter of 2007 compared to the corresponding period a year ago. For the nine-month period ended September 30, 2007, revenue reached $45.3 million, an increase of 33% from $34.1 million for the same period last year.

Paladin's 2007 third quarter earnings before interest expense, taxes, depreciation, amortization, and unusual items (EBITDA1) increased 7% to $5.1 million, compared to EBITDA1 of $ 4.7 million in the third quarter of 2006. For the nine months ended September 30, 2007, EBITDA1 increased 34% to $15.0 million from $11.1 million.

Net income for the quarter was $0.8 million or $0.05 per fully diluted share, compared to net income of $1.9 million or $0.13 per fully diluted share in the third quarter a year ago. For the nine months ending September 30, 2007, net income before extraordinary gain was $3.1 million or $0.20 per fully diluted share. Net income for the nine months ended September 30, 2007 was $8.0 million or $0.52 per fully diluted share, compared to $4.2 million or $ 0.28 per fully diluted share for the same period last year. This increase in net income includes non-cash extraordinary gain of $4.9 million related to the accounting treatment of the BioEnvelop acquisition.

Selling and marketing expense for the third quarter of 2007 increased 39% to $5.3 million from $3.8 million in the third quarter of 2006. For the nine months ended September 30, 2007, selling and marketing expenses were $14.4 million an increase of 32% from $11.0 million for the same period last year. This increase was primarily attributed to increased promotion activities relating to Paladin's launch of Pennsaid®, Testim®, Metadol®, Trelstar®, PravASA®, Tridural(TM), Seasonale(TM) and continuing promotion activities behind for Twinject®, Plan B® and Oxytrol®.

At September 30, 2007, Paladin's cash, cash equivalents and investments in marketable securities totalled $32.7 million. From this strong cash position, Paladin continues to pursue product acquisition and development opportunities.

Product Developments

During the quarter Paladin licensed and launched Tridural(TM), a once-daily tramadol product in Canada. Tridural(TM) is indicated for the management of pain of moderate severity in adults who require treatment for several days or more. Tramadol avoids potentially serious side effects such as gastrointestinal bleeding that may be caused by NSAIDs and the potential cardiovascular events recently attributed to COX-2 inhibitors.

In addition, Paladin received approval by Health Canada for Seasonale(TM), the first and only extended-cycle oral contraceptive available in Canada. With Seasonale(TM), Canadian woman now have contraceptive options that will allow them to have just four periods per year. Seasonale(TM), (levonorgestrel and ethinyl estradiol 0.15mg/0.03 mg tablets), is a safe and effective contraceptive option for woman, striking a balance between the benefits of having fewer periods with the reassurance of still having some periods.

Paladin expanded its current exclusive Canadian distribution agreement with Shire Human Genetic Therapies, Inc., to include Elaprase(TM), indicated for enzyme replacement therapy in patients with Hunter syndrome (Mucopolysaccharidosis II, MPS II). Hunter syndrome is one of a group of extremely rare hereditary metabolic diseases known collectively as lysosomal storage disorders. This X-linked recessive disorder is caused by a deficiency or absence of iduronate-2-sulfatase (12S). Its absence results in a deleterious accumulation of cellular waste products (GAG) in cells throughout the body.

Lastly, Paladin entered into an exclusive license and distribution agreement with Glide Pharmaceutical Technologies Limited (Glide Pharma) to develop and market Glide Pharma's innovative Glide SDI (Solid Dose Injector) needle-free drug delivery products in Canada. Under the terms of this agreement, Paladin will assume responsibility for local clinical trials, registration, marketing, sales and distribution of at least three of Glide Pharma's pipeline products which include: needle-free versions of sumatriptan, a leading migraine drug; octreotide, a peptide used in the treatment of acromegaly and neuroendocrine tumours; and, fentanyl, a widely-used pain medication used for breakthrough pain. According to IMS Canada, the combined markets for these 3 products exceeded $50 million in 2006.

Corporate Developments

Paladin received regulatory approval from the Toronto Stock Exchange to carry out a normal course issuer bid effective February 27, 2007 to purchase up to 810,000 of its common shares by February 26, 2008. To date, Paladin has repurchased 342,400 common shares at an average price of $10.56.

(1) EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under Canadian Generally Accepted Accounting Principles ("GAAP") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, taxes, amortization, and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statement of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of depreciation and amortization expenses. The Company excludes depreciation and amortization expenses because their level depends substantially on non-operating factors such as the historical cost of capital assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers.

Conference Call Notice

Paladin will host a conference call to discuss its third quarter results on Thursday, November 1st, 2007, at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-732-6179 or 416-644-3414. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.

About Paladin Labs

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. Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. For more information about Paladin, please visit the Company's web site at www.paladinlabs.com.

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. 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, 2006. 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

CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)


                                  September 30         December 31
                                          2007                2006
                                             $                   $
------------------------------------------------------------------
                                    (unaudited)
ASSETS
Current
Cash and cash equivalents                9,389               2,769
Marketable securities                   23,328              33,305
Accounts receivable                     12,676               9,495
Inventory                                6,206               3,635
Other current assets                     2,423               1,306
Investment tax credits receivable          323                 831
Future income tax asset                  5,057               2,550
------------------------------------------------------------------
Total current assets                    59,402              53,891

Property, plant and equipment              206                 151
Pharmaceutical product licenses
 and rights                             26,971              21,482
Deferred charges                         1,990               3,476
Investments                              4,054               3,217
Future income tax asset                  4,617               3,634
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Total assets                            97,240              85,851
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------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS'
 EQUITY
Current
Accounts payable and accrued
 liabilities                            10,538               8,208
Accounts payable to related parties      3,137               1,274
Deferred revenue                           230                   -
Balance of sale payable                    149                 227
Income taxes payable                       409                 279
Balance of license agreements payable        -                 231
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Total current liabilities               14,463              10,219
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Long-term
Balance of sale payable                    512                 494
Future income tax liability                763               1,397
------------------------------------------------------------------
Total liabilities                       15,738              12,110

Shareholders' equity
Capital stock                           59,703              58,807
Other paid-in capital                    1,823               1,223
Retained earnings                       19,487              13,711
Accumulated other comprehensive
 income                                    489                   -
------------------------------------------------------------------
Total shareholders' equity              81,502              73,741
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Total liabilities and shareholders'
 equity                                 97,240              85,851
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------------------------------------------------------------------



CONSOLIDATED STATEMENTS OF INCOME
(In thousands of Canadian dollars except for share and per share amounts)
(unaudited)


                          Three-month period             Nine-month period
                          ended September 30            ended September 30
                          2007          2006            2007          2006
                             $             $               $             $
--------------------------------------------------------------------------

Revenues                16,935        12,702          45,264        34,075
Cost of sales            4,230         2,992          10,436         8,253
--------------------------------------------------------------------------
Gross profit            12,705         9,710          34,828        25,822
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Expenses (income)
Selling and marketing    5,316         3,838          14,487        10,984
General and adminis-
 trative                 1,458         1,223           4,120         3,594
Research and development 1,216           342           2,331         1,130
Interest income, net      (359)         (435)         (1,098)       (1,035)
--------------------------------------------------------------------------
Earnings before under
 -noted items            5,074         4,742          14,988        11,149
--------------------------------------------------------------------------

Amortization of
 intangible assets and
 deferred charges        3,437         1,603           9,329         5,214
Net unrealized loss on
 derivative instruments     31             -             275             -
Gain on disposal of
 investment                  -             -             (74)            -
Other income                 -             -               -          (724)
--------------------------------------------------------------------------
Income before income
 taxes                   1,606         3,139           5,458         6,659
--------------------------------------------------------------------------

Provision for income
 taxes
Current                   (545)          284             129           284
Future                   1,323           947           2,200         2,103
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                           778         1,231           2,329         2,387
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Net income before
 extraordinary gain        828         1,908           3,129         4,272
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Extraordinary gain
 (net of $nil taxes)         -             -           4,874             -
--------------------------------------------------------------------------
Net income for the period  828         1,908           8,003         4,272
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Earnings per share
 before extraordinary
 gain
Basic                     0.06          0.13            0.21          0.29
Diluted                   0.05          0.13            0.20          0.28

Earnings per share
Basic                     0.06          0.13            0.53          0.29
Diluted                   0.05          0.13            0.52          0.28
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Weighted average
 number of shares
 outstanding
Basic               15,046,392    14,927,913      15,050,191    14,863,445
Diluted             15,342,890    15,152,341      15,374,831    15,074,139
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
(unaudited)


                          Three-month period             Nine-month period
                          ended September 30            ended September 30
                          2007          2006            2007          2006
                             $             $               $             $
--------------------------------------------------------------------------

Operating activities
Net income                 828         1,908           8,003         4,272
Add items not affecting
 cash
  Amortization           3,463         1,619           9,393         5,263
  Future income taxes    1,323           947          (3,570)        2,103
  Stock based
   compensation expense    229           105             749           451
  Net unrealized loss on
   derivative instruments   31             -             275             -
  Accreted interest        (21)            -             (57)            -
  Gain on disposal of
   investment                -             -             (74)            -
  Imputed interest on
   balance of sale           6             6              18            18
  Unrealized foreign
   exchange gain            (3)            1              (5)            1
  Stock dividends            -             -               -          (724)
--------------------------------------------------------------------------
                         5,856         4,586          14,732        11,384
--------------------------------------------------------------------------
Net change in non-cash
 balances relating to
 operations               (222)         (256)           (972)       (2,097)
--------------------------------------------------------------------------
Cash flows from
 operating activities    5,634         4,330          13,760         9,287
--------------------------------------------------------------------------

Investing activities
Additions to
 pharmaceutical product
 licenses and rights,
 and deferred charges   (1,533)         (203)        (13,291)       (3,857)
Acquisition of property,
 plant and equipment       (51)           (1)           (122)          (40)
Purchases of short-term
 marketable securities       -       (19,703)        (25,986)      (49,415)
Maturities of short-term
 marketable securities   5,472        14,869          46,534        44,924
Purchases of long-term
 marketable securities       -             -         (10,378)         (500)

Investment in portfolio
 company                  (801)            -            (801)            -
Business acquisition         -             -            (650)            -
Proceeds from disposal

 of investment               -             -             232             -
--------------------------------------------------------------------------
Cash flows from (used in)
 investing activities    3,087        (5,038)         (4,462)       (8,888)
--------------------------------------------------------------------------

Financing activities
Repurchase of shares    (3,242)          (67)         (3,615)          (67)
Common shares issued
 for cash                   57           155             937         1,002
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Cash flows (used in)
 from from financing
 activities             (3,185)           88          (2,678)          935
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Net change in cash
 and cash equivalents
 during the period       5,536          (620)          6,620         1,334

Cash and cash
 equivalents,
 beginning of period     3,853         4,789           2,769         2,835

--------------------------------------------------------------------------
Cash and cash
 equivalents,
 end of period           9,389         4,169           9,389         4,169
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Cash and cash
 equivalents             9,389         4,169
Short-term marketable
 securities             23,328        43,975
--------------------------------------------------------------------------
                        32,717        48,144
--------------------------------------------------------------------------
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Contacts:
Paladin Labs Inc.
Samira Sakhia
Chief Financial Officer
514-340-5067
514-344-4675 (FAX)
info@paladin-labs.com
www.paladinlabs.com