Stellar Pharmaceuticals Announces 2006 First Quarter Financial Results

Stellar Pharmaceuticals Inc. (TSX VENTURE:SLX)(OTCBB: SLXCF) -

Company to Hold Conference Call Today at 10:30 AM ET

Stellar Pharmaceuticals Inc. (TSX VENTURE:SLX)(OTCBB: SLXCF)("Stellar" or "the Company"), a Canadian pharmaceutical developer and marketer of high quality, cost-effective products for select health care markets, today announced financial results for the first quarter ended March 31, 2006. All amounts in this press release are in Canadian dollars, have been rounded to the nearest thousand, and are the result of the use of U.S. GAAP.

First Quarter 2006 Review

Total revenues, which include product sales and royalty and licensing revenues, for the three months ended March 31, 2006 increased 4.9% to $446,000 from $425,000 in the same period last year. This growth was negatively impacted by a decline in Canadian NeoVisc sales for the first quarter, down 8.5% compared to the same quarter in 2005. The Company attributes this decline to unusually strong Canadian viscosupplement sales for the first quarter in 2005 compared to a slower market for the first quarter of 2006. Stellar expects a return to stronger sales in the next quarter.

Canadian Uracyst sales grew 42.9% for the 2006 first quarter compared to the same period in 2005, largely due to more concentrated sales and marketing efforts. Sales of Uracyst in Europe increased 35.6% in the first quarter of 2006 as a result of solid in market growth and the commencement of sales in the United Kingdom. Royalty and licensing revenue increased to $89,000 in the first quarter of 2006 versus $66,000 for the same period last year.

Stellar is actively seeking out potential new partners for NeoVisc® and Uracyst® in a number of international markets, including the United States. The Company has approached, and has been approached by, a number of companies and hopes to continue reaching distribution and licensing agreements that will help to accelerate the growth of these products globally. During the fourth quarter of 2005, the sale of Uracyst commenced in the United Kingdom. The Company currently has out-licensing distribution partners in 28 countries. Stellar expects to commence sales in each of these territories as regulatory approvals are granted.

The Company also increased in-license sales of NMP22® BladderChek® ("BladderChek") by 17.7% for the first quarter of 2006 compared to the same period in 2005. Stellar commenced sales of BladderChek in Canada in October 2004 under an exclusive licensing agreement with Matritech Inc. (AMEX: MZT), which runs until December 31, 2008. Stellar has continued to implement a number of sales initiatives to ease the process for physicians to prescribe BladderChek to their patients, which have helped with the adoption of this product. These initiatives include acting as a conduit between physicians and Stellar's designated pharmacists across Canada. In addition to the Company's sales initiatives, it is also anticipated that a study published in the Journal of the American Medical Association (JAMA) in January 2006 which demonstrated that BladderChek, when used in combination with cystoscopy (a visual examination of the interior of the bladder), detected 99% of bladder malignancies, will be an asset to the Company in marketing this product.

Cost of sales as a percentage of product sales was 36.7% in the first quarter of 2006, up from 26.2% in the first quarter of 2005, largely due to stability testing for the new higher modular weight of NeoVisc. Selling, general and administrative ("SG&A") expenses in the first quarter of 2006 decreased to $586,000 from $613,000 in the first quarter of 2005; SG&A in the first quarter of fiscal 2006 also declined from $630,000 in the fourth quarter of 2005. This decrease came despite increased costs associated with obtaining a European CE mark for NeoVisc and consulting fees related to finding new opportunities for its products in the United States market. Lower research and development expenses of $56,000 for the quarter ended March 31, 2006 compared to $193,000 during the same period in 2005 were mainly attributable to activities related to engineering a higher molecular weight for NeoVisc which were completed in 2005.

Stellar reported a net loss in the first quarter of 2006 of $354,000, or $0.02 per share, on 23.5 million weighted average common shares outstanding ("shares outstanding"), versus a net loss of $455,000, or $0.02 per share, on 23.0 million shares outstanding in the same prior year period.

Stellar's balance sheet at March 31, 2006 was highlighted by $1.6 million in cash and cash equivalents, $1.8 million in working capital and no long-term debt.

Conference Call

Management will conduct a conference call today at 10:30 a.m. Eastern Time to discuss these results. Interested parties may participate in the call by dialing 888-789-0150 (in the United States) or 416-695-6622 (in Canada) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Stellar Pharmaceuticals Conference Call. A recorded replay of the call will be available until 11:59 pm Eastern Time on Thursday, May 18, 2006. Listeners may dial 888-509-0081 (in the United States) or 416-695-5275 (in Canada) for the replay and enter the pass code 621633. The call will also be simultaneously broadcast over the Internet. Those interested in listening to the live web cast may do so by going to the Company's website at www.stellarpharma.com or by going to www.ccnmatthews.com/StellarPharmaceuticalsQ12006. Web participants are encouraged to go to either website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. The online archive will be available immediately after the live call and continue for approximately 30 days.

About Stellar Pharmaceuticals Inc.

Stellar has developed and is marketing direct in Canada, and in countries around the world through out-license agreements, three products based on its core polysaccharide technology: NeoVisc®, for the treatment of osteoarthritis; and Uracyst® and the Uracyst® Test Kit, its patented technology for the diagnosis and treatment of interstitial cystitis (IC), an inflammatory disease of the urinary bladder wall. Stellar also has an in-licensing agreement for NMP22® BladderChek®, a proteomics-based diagnostic test for the diagnosis and monitoring of bladder cancer.

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including increased competition; the ability of the Company to expand its operations, to attract and retain qualified professionals, technological obsolescence; general economic conditions; and other risks detailed from time to time in the Company's filings.

                    Stellar Pharmaceuticals Inc.
                      Statement of Operations
                     (Canadian Funds; US GAAP)
                             (Unaudited)

                                         For the Three Month Periods
                                                    Ended March 31

                                                  2006          2005
                                                  ----          ----

PRODUCT SALES                                $ 356,652     $ 359,455
COST OF GOODS SOLD                             130,770        94,033
                                            ----------    ----------
MARGIN ON PRODUCT SOLD                         225,882       265,422

ROYALTY AND LICENSING REVENUES                  89,265        65,843
                                            ----------    ----------

GROSS PROFIT                                   315,147       331,265
                                            ----------    ----------

EXPENSES
Selling, general, and administrative         $ 586,228     $ 613,004
Research and development                        55,777       193,235
Amortization                                    39,397        33,001
                                            ----------    ----------
                                               681,402       839,240
                                            ----------    ----------

LOSS FROM OPERATIONS                          (366,255)     (507,975)

INTEREST AND OTHER INCOME                       12,211        53,320
                                            ----------    ----------

NET LOSS FOR THE PERIOD                       (354,044)     (454,655)

DEFICIT, beginning of period                (5,684,405)   (3,943,911)
                                            ----------    ----------

DEFICIT, end of period                    $ (6,038,449) $ (4,398,566)
                                            ----------    ----------
                                            ----------    ----------

LOSS PER SHARE                                 $ (0.02)      $ (0.02)
                                            ----------    ----------
                                            ----------    ----------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 OUTSTANDING                                23,472,329    23,019,240
                                            ----------    ----------
                                            ----------    ----------



                    Stellar Pharmaceuticals Inc.

                           Balance Sheets
                     (Canadian Funds; US GAAP)

                           ASSETS

                                                 As at         As at
                                             31-Mar-06     31-Dec-05
                                           -----------   -----------
CURRENT                                     (Unaudited)     (Audited)
Cash and cash equivalents                  $ 1,595,824   $ 2,108,755
Accounts receivable                            179,226       157,749
Inventories                                    329,968       288,337
Tax recoverable                                  7,941             -
Prepaid, deposits, and sundry receivables      134,404       152,514
                                           -----------   -----------
                                             2,247,363     2,707,355

PROPERTY, PLANT, AND EQUIPMENT                 928,941       959,999

OTHER ASSETS                                    45,848        46,187
                                           -----------   -----------
                                           $ 3,222,152   $ 3,713,541
                                           -----------   -----------
                                           -----------   -----------

                      LIABILITIES

CURRENT
Accounts payable                             $ 411,882     $ 487,359
Accrued liabilities                             64,772       122,999
Deferred revenues                                  600        43,397
                                           -----------   -----------
                                               477,254       653,755
                                           -----------   -----------

             SHAREHOLDERS' EQUITY

CAPITAL STOCK
AUTHORIZED
Unlimited   Non-voting, convertible,
             redeemable, and retractable
             preferred shares with no par
             value
Unlimited   Common shares with no par value

ISSUED
23,472,690   Common shares (2005
              - 23,470,190)                  8,102,528     8,100,253

             Paid-in capital options and
              warrants - outstanding           581,906       545,025
                       - expired                98,913        98,913
DEFICIT                                     (6,038,449)   (5,684,405)
                                           -----------   -----------
                                             2,744,898     3,059,786
                                           -----------   -----------
                                           $ 3,222,152   $ 3,713,541
                                           -----------   -----------
                                           -----------   -----------

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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