KARO BIO TERMINATES THE EPROTIROME PROGRAM

KARO BIO TERMINATES THE EPROTIROME PROGRAM

STOCKHOLM, February 14, 2012 - Karo Bio AB (publ) has decided to discontinue the
development program for eprotirome after an animal study has demonstrated
unwanted effects following long-term exposure. The planned spin-off of the
preclinical part of operations will not proceed.

The animal study is a toxicology study in which damage to cartilage was seen in
dogs that were given eprotirome for up to 12 months. The cartilage damage was
apparent only after 12 months exposure and occurred in all animals treated with
high doses but was also seen in the lower dose groups. The control animals
displayed no damage.

These unexpected findings mean that it cannot be excluded that also humans may
suffer from similar cartilage damage. Chronic treatment with eprotirome must
therefore be considered as too risky in relation to the lipid-lowering effect
that the current study intends to demonstrate.

Eprotirome’s steering committee decided yesterday to recommend Karo Bio to
terminate the ongoing phase III study. The findings also mean that the
regulatory prerequisites to continue the study as planned are not in place.
In a six-month toxicology study in dogs these findings were not observed and
patients included in the phase III study have been given eprotirome during a
considerable shorter period of time.

"Eprotirome has been a project with great potential, but also a project with
risks. Unfortunately, the risks associated with long term use do not outweigh
the benefits, why we are forced to make this difficult decision,” says CEO Per
Bengtsson.
The total cost of eprotirome’s phase III program that was scheduled to run until
2014, has previously been estimated to approximately SEK 300 million. The cost
of the program through 2011 totalled approximately SEK 100 million. Karo Bio
will take wind-up charges in the first quarter of 2012 totalling approximately
SEK 55 million. This includes costs for terminating the phase III program, and
all wind-up costs. It is the company’s assessment that financing of the
operations is secured for at least 12 months from today.
Karo Bio has previously announced a streamlining of operations with the sale of
the preclinical operations, which would result in two companies: one focused on
eprotirome and the other organized around Karo Bio’s unique knowledge in nuclear
receptors. The preclinical part was intended to be sold to new owners and
strengthen Karo Bio’s financial position. The decision to terminate the
eprotirome program changes the motives for such a transaction. The Board will
therefore halt preparations to split the company and focus operations on the
preclinical projects
In preclinical operations, Karo Bio has several development programs built on
its knowledge of drug development based on nuclear receptors. For one of these
programs (RORgamma) a collaboration and licensing agreement was signed with
Pfizer in December 2011, which during the first two years will provide Karo Bio
USD 10-14 million and during long time potential revenue of up to USD 217
million, and furthermore royalty revenue. Karo Bio is also engaged in project
development in the areas of the receptors ERbeta and GR. Commercial discussions
are ongoing regarding ERbeta.

For further information, please contact:
CEO Per Bengtsson: phone: +46 8 608 6020, cell: +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 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 February 14, 2012, at 08:30 am CET.

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