Labopharm enters into agreement for US$25 million debt financing

    - Proceeds Will Provide Flexibility to Support Advancement of Multiple
    Near-Term Opportunities in Product Pipeline -

    LAVAL, QC, Dec. 21 /CNW/ - Labopharm Inc. (TSX: DDS; NASDAQ:   DDSS) today
announced that, through its U.S. subsidiary, it has entered into an agreement
for a US$25 million debt financing with US-based Hercules Technology Growth
Capital, Inc. (NASDAQ:   HTGC). Proceeds from the financing will be used for the
advancement of the Company's product pipeline, general corporate purposes and
repayment of existing long-term debt. Under the terms of the financing,
Labopharm will draw down US$15 million at closing (Tranche A) with the
remaining US$10 million available beginning May 15, 2008 through November 15,
2008 (Tranche B).
    "We have a robust product pipeline with multiple near-term opportunities
and this debt financing will provide additional capital with minimal dilution
to fully support the advancement of our development programs as we continue
the roll out of our once-daily tramadol product in key markets around the
world," said James R. Howard-Tripp, President and Chief Executive Officer,
Labopharm Inc. "In recent months we have made significant progress across our
pipeline, highlighted by the completion of our Phase III clinical study for
our once-daily formulation of trazodone, for which we anticipate reporting
results by early in the second quarter of 2008. We look forward to the
continued advancement of our programs in the coming year, including the
potential filing of a New Drug Application for our once-daily trazodone
formulation, the initiation of a Phase III clinical study for our twice-daily
tramadol-acetaminophen combination formulation and further progress in the
programs for our twice-daily acetaminophen formulation and our
misuse-prevention platform. This debt facility will ensure that we have the
strength and flexibility in our balance sheet to rapidly advance these
programs toward our goal to bring additional products to the marketplace."
    The loan matures on December 1, 2011. Tranche A will bear interest at
10.95% per annum while Tranche B will bear interest at the higher of 10.95%
per annum or the Wall Street Journal Prime rate plus 3.2% and will be fixed if
and when there is a draw on Tranche B. As part of the financing, Labopharm
will grant HTGC the right to purchase 1,460,152 common shares of Labopharm
(the Warrant) at an exercise price of CAD$1.00 with 60% of the Warrant being
fully vested and earned upon execution of the loan agreement and the remaining
40% to be vested and exercisable only if there is a draw on Tranche B. The
exercise price may be reduced if and when the Company initially draws any part
of Tranche B and the volume-weighted average trading price of the Company's
common shares on the Toronto Stock Exchange for the five days preceding such
draw is less than CAD$1.00. The Warrant and the underlying common shares to
the Warrant will have to be held by HTGC for a period of four months from the
date of grant of the Warrant and the Warrant will expire five years after the
date of the grant. The grant of the Warrant and the issuance of common shares
upon exercise of the Warrant are conditional on the approval of Canadian
regulatory authorities and stock exchanges.

    About Labopharm Inc.

    Labopharm is an emerging leader in optimizing the performance of existing
small molecule drugs using its proprietary controlled-release technologies.
The Company's lead product, a unique once-daily formulation of tramadol, is
being commercially launched in key markets globally. The Company also has a
robust pipeline of follow-on products in both pre-clinical and clinical
development. Labopharm's vision is to become a fully integrated,
international, specialty pharmaceutical company with the capability to
internally develop and commercialize its own products. For more information,
please visit

    This press release contains forward-looking statements, which reflect the
Company's current expectations regarding future events. The forward-looking
statements involve risks and uncertainties. Actual events could differ
materially from those projected herein and depend on a number of factors,
including the price of the Company's shares, the uncertainties related to the
regulatory process for drug approval and the commercialization of the
Company's products, if they are approved. Investors should consult the
Company's ongoing quarterly filings and annual reports for additional
information on risks and uncertainties relating to these forward-looking
statements. The reader is cautioned not to rely on these forward-looking
statements. The Company disclaims any obligation to update these
forward-looking statements.

For further information:

For further information: At Labopharm, Mark D'Souza, Chief Financial
Officer, Tel: (450) 686-0207; At The Equicom Group, Jason Hogan, Media and
Investor Relations, Tel: (416) 815-0700,; French: Eric
Bouchard, Tel: (514) 844-7997,

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