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Press release from Marketwire

Paladin Labs Announces Proposed Increased Offer to Acquire Afexa Life Sciences for $0.81 per Share

- Increased offer will be made upon cease-trade of Afexa Rights Plans - 14% premium to the Valeant bid - Choice of $0.81 in cash or 0.0217 of a Paladin share per Afexa share - Offer remains for any and all Afexa shares - Minimal and customary conditions

Sunday, September 25, 2011

Paladin Labs Announces Proposed Increased Offer to Acquire Afexa Life Sciences for $0.81 per Share19:02 EDT Sunday, September 25, 2011MONTREAL, CANADA--(Marketwire - Sept. 25, 2011) - Paladin Labs Inc. ("Paladin" or the "Company") (TSX:PLB), a leading Canadian diversified specialty pharmaceutical company, today announced that, subject to Afexa's two shareholder rights plans being cease-traded by the Alberta Securities Commission ("ASC"), it will increase its offer to acquire any and all of the issued and outstanding common shares of Afexa Life Sciences Inc. ("Afexa") (TSX:FXA) to $0.81 per share (the "Enhanced Offer"). The ASC held a hearing to consider Paladin's application for a cease-trade order in respect of Afexa's shareholder rights plans on September 23, 2011 and the commission is expected to submit its decision on September 26, 2011. If the decision of the ASC results in the rights plans being cease-traded on that day or within a reasonable period thereafter, Paladin will make the Enhanced Offer and file a Notice of Variation and Extension for the Enhanced Offer promptly after the announcement of the ASC's decision.Superior offer Based on the cash alternative of $0.81 per share, Paladin's Enhanced Offer represents a premium of more than 14% over the existing offer for Afexa from a subsidiary of Valeant Pharmaceuticals International, Inc. The financial advisors to the Afexa Board of Directors have previously stated that, from a financial point of view, Valeant's lower offer of $0.71 per Afexa share was fair to Afexa shareholders. Paladin's Enhanced Offer also represents a premium of 131% over the trading price of Afexa common shares on July 14, 2011, the last trading day prior to Paladin's announcement of market purchases of Afexa shares on July 15, 2011, and a 113% premium to the volume-weighted average price of Afexa shares over the 20 trading days up to and including July 14, 2011 on the Toronto Stock Exchange ("TSX"). Choice of consideration Under the Enhanced Offer, Afexa shareholders will be entitled to elect to tender their shares for either $0.81 per share in cash or 0.0217 of a Paladin share for each Afexa share, through a tax-free rollover for most Canadian residents. The share exchange ratio was calculated based on the closing price of Paladin shares on the TSX of $37.36 on September 23, 2011. "Paladin's Enhanced Offer is clearly superior for Afexa shareholders. The cash alternative is significantly higher and the share alternative gives Afexa shareholders the choice of continuing to have an interest in COLD-FX® and in the specialty pharmaceutical sector by accepting shares in Paladin, a diversified, profitable and rapidly growing company whose shares have significantly outperformed Afexa and the market generally over the past five years," said Mark Beaudet, interim President and Chief Executive Officer of Paladin. "The Valeant bid provides neither the value nor the choice of Paladin's Enhanced Offer."Minimal and customary conditions Paladin's Enhanced Offer also provides shareholders of Afexa with a greater degree of certainty of completion than the Valeant offer. It is for any and all Afexa shares not already owned by Paladin, has no minimum tender condition, and is not subject to due diligence or financing conditions. The remaining conditions to the Enhanced Offer are customary and minimal. They are described in detail in the takeover bid circular and will be supplemented by the Notice of Variation and Extension. Assuming the ASC cease-trade order is issued on September 26, the Paladin Enhanced Offer will be made on that day and be open until 8:00 p.m. Toronto time on October 7, 2011. The Enhanced Offer has a total value of $74.5 million, should all shares not already owned by Paladin be tendered. A Notice of Variation and Extension describing the Enhanced Offer will be sent to Afexa shareholders, filed on SEDAR and will be available at www.sedar.com as well as through the Company's website, www.paladinlabs.com and at www.afexaoffer.com.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. Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. More information is available at www.paladinlabs.com.This press release may contain forward-looking statements and predictions. These forward-looking statements, including any statements as to Afexa's acquisition by Paladin, 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, 2010. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and 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. The information in this announcement concerning Afexa and its assets and projects is based on publicly available information and has not been independently verified by Paladin. FOR FURTHER INFORMATION PLEASE CONTACT: John LuteMediaLute & Company416-929-5883jlute@luteco.comORInformation Agent for Paladin Labs Inc.Afexa ShareholdersPhoenix Advisory Partners1-800-591-8263 (toll free in North America)inquiries@phoenixadvisorypartners.com