KARO BIO ANNOUNCES PROSPECTUS FOR THE RIGHTS ISSUE

Not for release, publication or distribution, directly or indirectly, in or into
the United States, Australia, Canada, Hong Kong, Japan, New Zeeland, Singapore,
South Africa or Switzerland, or within any other jurisdiction in which the
distribution of this press release would not comply with applicable laws and
regulations.

STOCKHOLM, 26 November 2012 – Karo Bio AB (publ). Karo Bio hereby announces the
publication of the prospectus for the rights issue. The prospectus has today
been approved and registered by the Swedish Financial Supervisory Authority.
Karo Bio has today published the prospectus for the rights issue.

All shareholders with share holdings directly registered in Euroclear Sweden AB
(”Euroclear”) on the record date November 26, 2012 will receive a prospectus, a
pre-printed issue account statement and an application form by post to the
address registered in Euroclear. Shareholders whose holdings of shares are
registered with a nominee bank or other nominee will receive information and
instructions directly from their bank or nominee. The prospectus will be
available on Karo Bio’s website www.karobio.com/prospectus and on Aktieinvest
FK’s website www.aktieinvest.se The printed prospectus will also be available at
Karo Bio’s offices at Hälsovägen 7, in Huddinge, Sweden after November 28, 2012.

For further information, please contact:
Per Bengtsson, CEO, mobile phone +46 734 474 128 or e-mail
per.bengtsson@karobio.se
Henrik Palm, CFO, mobile phone +46 70/540 40 14 or e-mail henrik.palm@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 neuropsychiatry, inflammation,
autoimmune diseases and cancer. 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 44 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 November 26, 2012, at 4:45pm CET.

IMPORTANT INFORMATION
This press release is not an offer or solicitation to acquire shares in Karo
Bio. A prospectus relating to the rights issue referred to in this press release
has been filed with the Swedish Financial Supervisory Authority. The prospectus
is published and available on Karo Bio’s website.

This press release does not constitute or form part of an offer or solicitation
to purchase or subscribe for securities in the United States. The securities
referred to herein may not be sold in the United States absent registration or
an exemption from registration under the US Securities Act of 1933, as amended.
Karo Bio does not intend to register any portion of the offering of the
securities in the United States or to conduct a public offering of the
securities in the United States. The information in this press release may not
be announced, published or distributed, directly or indirectly, to the United
States, Australia, Canada, Hong Kong, Japan, New Zeeland, Singapore, South
Africa or Switzerland, or in any other jurisdiction where the announcement,
publication or distribution of the information would not comply with applicable
laws and regulations.

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