Karo Bio ANNOUNCES EXTENSION OF EXISTING COLLABORATION WITH PFIZER TO DISCOVER AND DEVELOP DRUGS FOR AUTOIMMUNE DISEASES

STOCKHOLM, 26 June 2013 –Karo Bio AB (publ) announced today the extension of its
existing research collaboration with Pfizer Inc. on RORgamma modulators to the
end of 2014. Pfizer will continue to provide full funding for the research
costs.
The collaboration that started in December 2011, aims to discover and develop
novel small molecule RORgamma modulators for the treatment of autoimmune
diseases. Pfizer is responsible for all research costs of the project. Karo Bio
is eligible to receive over $200 million in milestone payments in addition to
any royalty fees.

“We are pleased that Pfizer has chosen to extend our partnership. The decision
illustrates the potential of the science behind RORgamma and its application to
the treatment of autoimmune diseases. It also reconfirms the potential of Karo
Bio’s technology and expertise in the development of drugs targeting nuclear
receptors,” says CEO Per Bengtsson.

The nuclear hormone receptor RORgamma is a novel attractive target for the
treatment of autoimmune diseases like rheumatoid arthritis, multiple sclerosis
and psoriasis. RORgamma directly controls the production and secretion of the
cytokine IL-17, a major contributor to inflammation. The receptor’s key role in
driving disease pathology has been implicated in clinical trials using
monoclonal antibodies that neutralize IL-17 activity. The agreement with Pfizer
was entered into after Karo Bio discovered novel, potent, and specific RORgamma
modulators.

For further information, please contact:
CEO Per Bengtsson: phone: +46 8 608 6020, +46 734 474 128 or by e-mail:
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 world-leading knowledge of nuclear
receptors as target proteins for the development of pharmaceuticals and the
related mechanisms of action, are utilized as a foundation for developing novel,
more effective and safer pharmaceuticals. The company runs drug development
projects mainly within the therapeutic areas neuropsychiatry, inflammation,
autoimmune diseases and cancer. The company has a number of strategic agreements
and collaborations with international pharmaceutical companies. Karo Bio is
based in Huddinge, Sweden, has 42 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 26 June, 2013, at 08:30 am CET.

This press release is also available online at www.karobio.com and
www.newsroom.cision.com