KARO BIO ANNOUNCES TERMS FOR THE RIGHTS ISSUE

KARO BIO ANNOUNCES TERMS FOR THE RIGHTS ISSUE

Stockholm, November 22, 2010. Karo Bio AB (publ) (Reuters: KARO.ST) has
set the terms of the rights issue that on October 25, 2010, was resolved
by the Board of Directors subject to approval by the Extraordinary
General Meeting.


  · Shareholders in Karo Bio who on the record date November 29, 2010,
are registered shareholders have preferential rights to subscribe for 3
new shares for every 2 shares held
  · The subscription price is SEK 1.40 per share, which represents total
rights issue proceeds of approximately SEK 325 million before
transaction costs
  · The subscription price corresponds to a “discount” of approximately
41 percent to the theoretical ex-rights price of SEK 2.38 based on the
closing price of Karo Bio's share on November 19, 2010 of SEK 3.86
  · The subscription period runs from and including December 2, 2010, up
to and including December 16, 2010
  · The rights issue is fully underwritten by Carnegie Investment Bank
AB (“Carnegie”) and other external underwriters
  · The rights issue is subject to approval by the Extraordinary General
Meeting, which will be held on November 24, 2010. Registration to
participate at the EGM can be made until 16.00 CET today; please refer
to Karo Bio's web site www.karobio.com/egm (http://www.karobio.com/egm) 

For every two (2) shares held in Karo Bio the holder is entitled to
three (3) subscription rights. One (1) subscription right entitles the
holder to subscribe for one (1) new share. The subscription price is SEK
1.40 per share which implies that the rights issue will raise a maximum
of approximately SEK 325 million for Karo Bio, before transaction costs,
through the issue of no more than 232,238,383 new shares. The share
capital may be increased by not more than SEK 116,119,192. The
subscription price is based on current market standards for similar
transactions.

The record date at the Swedish Central Securities Depository, Euroclear
Sweden AB, for participation in the rights offering is November 29,
2010. The subscription period will run from and including December 2,
2010, up to and including December 16, 2010, or such later date as
decided by the Board of Directors. Rights not subscribed by such date
will be void and have no value. Trading in subscription rights will take
place on NASDAQ OMX Stockholm from and including December 2, 2010 up to
and including December 13, 2010.

Indicative timetable for the rights offering

November 24, 2010    EGM to resolve upon the Board of Director's
decision regarding the rights issue
November 25, 2010    The first day of trading in Karo Bio's share
without preferential right to participate in the rights issue
November 25, 2010    Preliminary day for publication of the prospectus
November 29, 2010    Record date for participation in the rights issue,
i.e. shareholders that on this day are on Karo Bio's share register will
receive subscription rights and be able to participate in the rights
issue
December 2-13, 2010  Trading in subscription rights
December 2-16, 2010  Subscription period
December 22, 2010    Announcement of preliminary outcome

Background and reasons
Karo Bio views eprotirome as its most important project at present and
top priority is being given to make sure that this product is given the
best possibilities to reach the market. In July this year, Karo Bio
announced that the company has chosen to focus on heterozygous familial
hypercholesterolemia (HeFH) as the first indication for eprotirome. HeFH
is a hereditary condition that causes patients to suffer from very high
blood lipids already in their youth. At present, the direct target group
for eprotirome is close to 100,000 patients in the EU. Market research
indicates that eprotirome's annual sales potential for HeFH in the EU
can be estimated to approximately USD 100 million with the current
diagnosis rate.

The company's plan for eprotirome is to conduct a phase III program with
the objective of obtaining market approval for the indication HeFH in
the EU. The trials are planned to commence during 2011. Provided that
the development program progresses as planned, an application for market
approval is expected to be submitted to EMA in late 2013 or during 2014.

The cost of conducting the planned clinical phase III program for
eprotirome is estimated to approximately SEK 400 million. During the
coming 12-month period, the company will evaluate the strategy for
projects in earlier development phases, where focus will be on
development partnerships and cost efficiency with the purpose to limit
the capital need for these projects. Through an Equity Credit Facility
(ECF) of USD 35 million, corresponding to approximately SEK 230 million,
and the guaranteed rights issue of approximately SEK 300 million after
transaction costs, the company will have sufficient financial resources,
together with its existing liquid assets, to finance the phase III
program for eprotirome as well as the company's other operations and
other projects.

Guarantees and commitments
The rights issue is fully underwritten, subject to customary conditions.
Azimuth Opportunity Ltd., Storford Limited, Ponderus Invest AB and
Carnegie have guaranteed an amount totaling approximately SEK 330
million. In addition, Karo Bio's chairman Bo Håkansson and the company's
CEO Fredrik Lindgren have declared their intentions to subscribe for
their respective proportions of the rights issue.

Financial and legal advisors
Carnegie is Lead manager and Bookrunner in the rights issue. Carnegie
and HDR Partners are financial advisors to Karo Bio. Fredersen
Advokatbyrå acts as legal advisor to Karo Bio. Gernandt & Danielsson
acts as legal advisor to Carnegie and HDR Partners. 

 

For further information please contact:
Fredrik Lindgren, CEO
Phone: +46 70 561 61 77

Erika Söderberg Johnson, CFO and VP Investor Relations
Phone: +46 70 720 48 20

 

About Karo Bio
Karo Bio is a pharmaceutical company focused on the research and
development of innovative drugs for unmet medical needs. Karo Bio's
vision is to become a pharmaceutical company with sustainable
profitability, commercial products and a competitive project portfolio.

Karo Bio runs a number of development projects within the indication
areas cardiovascular and metabolic diseases, neuropsychiatry,
inflammation, cancer and women's health. An important foundation for the
company's activities is its unique knowledge of nuclear receptors as
target proteins for the development of novel pharmaceuticals, as well as
related mechanisms of action. Important processes and competencies
within the company include structurally based research, drug discovery,
preclinical and clinical development, and medical and regulatory
expertise.

Karo Bio has the capacity to process select compounds for niche
indications through the whole development chain, while compounds
addressing large patient groups require development collaborations or
outlicensing at some stage in the process. In addition to proprietary
projects, Karo Bio has three strategic collaborations with international
pharmaceutical companies.

Karo Bio, headquartered in Huddinge, has 70 employees, and is listed on
NASDAQ OMX Stockholm since 1998 (Reuters: KARO.ST).

Karo Bio publishes this information in accordance with the Swedish
Securities Markets Act and/or the Swedish Financial Instruments Trading
Act. The information was published on November 22, 2010, at 08:45 am
CET.