KARO BIO PREPARES SPIN-OFF OF PRECLINICAL DEVELOPMENT

KARO BIO PREPARES SPIN-OFF OF PRECLINICAL DEVELOPMENT

STOCKHOLM, 25 October 2011 - Karo Bio AB (publ) is preparing a better
allocation of resources and competences by spinning off the company's
preclinical activities. This part will therefore be transferred into a
subsidiary that is intended to become autonomous in operations as well
as by ownership. The subsidiary will be proposed to assume the name Karo
Bio.

Karo Bio is currently dominated by the eprotirome project which has very
large potential. At the same time, it is among the world leaders in drug
development of pharmaceuticals that act through nuclear receptors. This
drug class represents 10-15 per cent of the global pharmaceutical market
and is expected to continue to grow.
Most of Karo Bio's operations that are currently conducted at the
Huddinge campus are pre-clinical research and development along with
several projects. Before these operations are transferred into a
separate subsidiary, a cost efficiency program will be implemented. In
order to do so, Karo Bio immediately initiates negotiations with labor
unions about organizational changes. An independent management will be
appointed in the subsidiary ahead of the spin-off.

The purpose of the spin-off is that, in both operations, sharpen the
business focus, highlight values and create a platform for rational use
of both companies' expertise and resources. The goal is to create two
attractive investment options, a clear resource allocation and better
business opportunities.
Karo Bio's financing is deemed sufficient to implement eprotirome's
Phase III program, after which an application for marketing approval
will be submitted. Karo Bio aims to finance the subsidiary under a
transition period, but intends to seek new owners to the subsidiary for
its future funding.
"We want to create two attractive companies with clear objectives and
the right resources. In the stock market, Karo Bio is today synonymous
with eprotirome which overshadows our other operations. Through the
spin-off, we want to create increased value for shareholders and protect
their interests,” says CEO Per Bengtsson. “The name Karo Bio is a strong
brand name in the field of nuclear receptors, both in academic and
industrial circles. It makes sense from a business perspective that this
name follows the pre-clinical activities.”
The Board intends to, within six months, present a detailed plan on how
the spin-off will take place. A proposal for change of name will be
submitted to the general meeting.

For further information, please contact:
CEO Per Bengtsson: phone: +46 8 608 6027, +46 734 474 128 or by e-mail:
per.bengtsson@karobio.se (per.bengtsson@karobio.se)

About Karo Bio
Karo Bio is a pharmaceutical company focused on the research and
development of innovative drugs for large medical needs. The company
runs a number of drug development projects within the indication areas
cardiovascular and metabolic diseases, neuropsychiatry, inflammation,
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. Karo Bio is
based in Huddinge, Sweden, has around 70 employees and is listed on
NASDAQ OMX Stockholm.

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 24 October, 2011, at 08:30 am CET.

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