KARO BIO UPDATES STATUS IN THE MERCK & CO., INC. COLLABORATION

KARO BIO UPDATES STATUS IN THE MERCK & CO., INC. COLLABORATION

Karo Bio announces today that Merck & Co., Inc. has decided to discontinue
development of the clinical candidate identified in the collaboration between
the two companies. The investigational compound entered phase I clinical
development in 2006 and, although generally well tolerated, was discontinued as
the product profile is unsuitable for further development.

A back up compound has been approved for entry into preclinical development.

The collaboration with Merck targets estrogen receptors with the aim to develop
new treatments in the field of women's health care. The collaboration is based
on the discovery of the estrogen receptor beta, which offers the potential for
the development of selective drugs that can target either the alpha-receptor or
the beta-receptor. The joint discovery phase concluded into 2002, with Merck
responsible for development of selected compounds. Merck covers all development
costs and has rights to marketing and sales. Karo Bio has rights to milestones
when the project reaches important development stages and to royalties on future
sales.

“It is unfortunate that the clinical candidate in the joint collaboration with
Merck has been discontinued. However, this is part of the drug development
process and we are pleased with Merck's commitment to the program and to the
fact that the set back is not related to the mechanism of action or the
treatment concept”, says Per Olof Wallström, President of Karo Bio.


KARO BIO AB


For further information, please contact:
Per Olof Wallström, President & Chief Executive Officer 
Telephone: +46 8 608 61 37

Per Otteskog, Senior Vice President 
Telephone: +46 8 608 60 18

Facts about Karo Bio 
Karo Bio is a drug discovery and development company specializing in nuclear
receptors for the development of novel pharmaceuticals with focus on metabolic
diseases. Karo Bio has three clinical and four preclinical projects. 

The company has expanded from being a drug discovery company by adding in-house
preclinical and clinical development resources and competence for development of
drugs to treat metabolic diseases. The company has a strong project portfolio
with innovative molecules that primarily targets diseases such as diabetes,
atherosclerosis and dyslipidemia. In all of these areas there are significant
market opportunities and a growing need for new pharmaceuticals with new
mechanisms of action. 

In addition to the proprietary projects Karo Bio has two strategic
collaborations with international pharmaceutical companies and one biotech
collaboration for development of innovative therapies for the treatment of
common diseases.

Karo Bio is listed on the OMX Nordic Exchange Stockholm AB since 1998 (Reuters:
KARO.ST).

This press release is also available online at: www.karobio.com and
www.waymaker.net.