KARO BIO AND ZYDUS CADILA extend RESEARCH AGREEMENT

KARO BIO AND ZYDUS CADILA extend RESEARCH AGREEMENT

Stockholm, March 21, 2011 - Karo Bio AB (publ) (Reuters: KARO.ST) and
Zydus Cadila have agreed to extend their research collaboration with the
purpose to discover and develop novel anti-inflammatory drug compounds
which affect glucocorticoid receptors in a selective manner.

In early 2008, Karo Bio and the Indian pharmaceutical company Zydus
Cadila initiated a three-year collaboration. The parties have now agreed
to extend the collaboration for one year. The aim of the collaboration
is to design novel, selective glucocorticoids for the treatment of
inflammatory diseases that have as powerful anti-inflammatory properties
as conventional glucocorticoid steroids, such as cortisone and similar
compounds, but with significantly reduced side effects and thereby the
potential for a broader use. Both parties carry their own costs within
the collaboration program and share potential rewards.

The separation of the beneficial effects from the side effects of
glucocorticoids has been referred to as the holy grail of
anti-inflammatory therapy and has been pursued by many. Promising
results, generated under the collaboration between Zydus Cadila and Karo
Bio by using a new and unique approach, indicate that such separation
may be achievable. Preclinical evaluation is ongoing for the
identification of the most suitable compounds for further development
into drug candidates.

Glucocorticoids are used to treat many different inflammatory conditions
such as rheumatoid arthritis, inflammatory bowels disease, psoriasis and
asthma which together represent a market of over USD 10 billion. These
anti-inflammatory agents for long term use could, however, lead to the
development of unwanted side effects like e.g. diabetes and
osteoporosis. The collaboration between Karo Bio and Zydus Cadila aims
to develop drugs that improve treatments by lowering side effects.

“To date, the collaboration has generated several novel compounds that
may have potential as drug candidates. We have decided to extend our
collaboration for another year to allow us to continue to combine the
strengths of Karo Bio and Zydus Cadila to jointly study these further”,
says Karo Bio's CEO Mr Fredrik Lindgren.

For further information please contact:
Fredrik Lindgren, CEO
Mobile: +46 705 616 177

Erika Söderberg Johnson, CFO
Mobile: +46 70 720 48 20

About Zydus Cadila
Zydus Cadila is an innovative global pharmaceutical company that
discovers, develops, manufactures and markets a broad range of
healthcare products. The group's operations range from API to
formulations, animal health products and cosmeceuticals. Headquartered
in the city of Ahmedabad in India, the group has global operations in
four continents spread across USA, Europe, Japan, Brazil, South Africa
and 25 other emerging markets.
In its mission to create healthier communities globally, Zydus Cadila
delivers wide ranging healthcare solutions and value to its customers.
With over 10,000 employees worldwide, a world-class research and
development centre dedicated to discovery research and eight
state-of-the-art manufacturing plants, the group is dedicated to
improving people's lives.
(www.zyduscadila.com (http://www.zyduscadila.com/))

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,
inflammatory conditions, autoimmune diseases, 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
out-licensing 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 March 21, 2011, at 08:30 CET.

This press release is also available online at:
www.karobio.se (http://www.karobio.se/) and www.newsroom.cision.com