NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS OF KARO BIO

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS OF KARO BIO 

Stockholm, March 25, 2011 - The annual general meeting of Karo Bio AB
(publ) will be held on Wednesday April 27, 2011, at 5:00 pm CET in
Klarasalen, Klara Konferens, Vattugatan 6, Stockholm, Sweden.

Right to participate

A right to participate at the annual general meeting applies for those
who have been recorded in the share register kept by Euroclear Sweden AB
on April 19th, 2011, and who gives the Company notice of intent to
participate at the annual general meeting no later than April 19th,
2011, at 4.00 pm CET.

Shareholders whose shares are registered under the name of a nominee
must temporarily register their shares in their own names with Euroclear
Sweden AB to be entitled to participate in the meeting. Such
registration must be in effect no later than April 19th, 2011 and should
be requested with the nominee well in advance.

Notice of intent to participate

Notice of intent to participate should be made in writing to Karo Bio
AB, att: Eva Kruse, Novum, SE-141 57 Huddinge, Sweden, by fax + 46 8 774
52 80, by e-mail to agm@karobio.com (agm@karobio.com) or by Karo Bio's
website, www.karobio.com/agm (http://www.karobio.com/agm). When
notifying, the shareholders should state name, personal identity number
or registration number, daytime telephone number as well as the number
of shares. When applicable the number of advisors (maximum two) must
also be stated. Shareholders who wish to be represented by proxy should
attach power of attorney and any other authorization documents to the
notification. Such documents must be available in original for
presentation at the general meeting. Power of attorney forms are
available at the Company and will be sent upon request to any
shareholder who states his postal address. No later than three weeks
prior to the general meeting a power of attorney form will be available
on the Company's website, www.karobio.com.

Proposal of agenda

 1. Opening of the meeting
 2. Election of chairman of the meeting
 3. Preparation and approval of the voting list
 4. Approval of the agenda
 5. Election of one or two persons to confirm the minutes
 6. The determination as to whether the meeting has been duly convened
 7. Address by the CEO
 8. Presentation of the annual report and the audit report as well as
the group consolidated financial statement and the audit report thereon
 9. Adoption of the annual report and the audit report as well as the
consolidated income statement and the consolidated balance sheet
10. Allocation of profit or loss according to the adopted balance sheet
11. Resolution as to the board of directors' and the CEO's discharge
from liability
12. Resolution as to the number of board members and deputy board
members
13. Resolution on the remuneration to the board of directors and auditor
14. Election of board members and deputy board members
15. Election of chairman of the board
16. Election of auditor
17. Resolution on guidelines regarding the appointing of nominating
committee
18. Resolution as to principles for remuneration of executive management
19. Authorization of the board of directors to issue new shares
20. Closing of the meeting

Proposal of appropriation of earnings (item 10)

The board of directors proposes that no dividend be paid for the
financial year 2010 and that the statutory reserve amounting to SEK 11
341 050 will be carried forward.

Election of chairman of the meeting, board of directors, chairman of the
board, decision regarding remuneration and guidelines regarding
nominating committee (item 2, 12-17)

The nominating committee, consisting of Bengt Belfrage (Nordea Fonder),
chairman, Thomas Josefsson (Borås Postorder AB), Adam Bruce
(Carlbergssjön AB), Mikael Lönn (individual mandate) and Bo Håkansson
propose as follows

to re-elect Bo Håkansson as chairman of the meeting,

to choose six board members and no deputy members,

that the remuneration for the period until the next annual general
meeting shall be SEK 495 000 to the chairman and SEK 180 000 each to the
other directors. It is proposed SEK 30 000 in remuneration for work
within the audit committee to the chairman and SEK 20 000 each to the
other members. It is also proposed SEK 20 000 in remuneration for work
within the compensation committee to the chairman and SEK 15 000 each to
the other members,

that remuneration to the auditor as per approved invoice, 

to re-elect the board members Bo Håkansson, Johan Kördel and Birgit
Stattin Norinder and to elect Arne Ferstad, Jan Sandström and Meg Tivéus
as new directors,

to re-elect Bo Håkansson as chairman of the board,

to re-elect the registered accounting firm PricewaterhouseCoopers for
the period until the end of the annual general meeting 2012,

that the following principles should apply to the nominating committee:
The annual general meeting shall appoint members of the nominating
committee for the general meeting 2012. Shareholders with significant
holdings should be represented in the nominating committee and the
chairman of the board shall be a member of the same. The nominating
committee therefore proposes that Adam Bruce, Thomas Josefsson, Mikael
Lönn and the chairman of the board are appointed to the nominating
committee for the annual general meeting 2012. The nominating committee
shall appoint a chairman among themselves, where the chairman of the
board shall not be chairman of the committee.

If it, as a result of ownership changes, is deemed appropriate, the
nomination committee shall invite additional shareholders to the
committee, however, the total number of members shall not exceed six.
Should a member of the nominating committee leave the committee before
its work is completed, if the committee deems it appropriate, the
nominating committee shall request the same shareholder, or if this
shareholder is no longer one of the major shareholders, the next largest
shareholder to appoint a substitute. Any such changes will be announced
on the Company's website.

The nominating committee shall prepare proposals to be presented at the
annual general meeting 2012 for resolution as regards chairman of the
general meeting, number of directors and deputy members, remuneration to
the board of directors and auditor, electing of chairman of the board,
other members of the board and auditor and appointment of and
instructions for a nominating committee. 

The term of office of the nominating committee runs until a new
nominating committee has been appointed in accordance with the
resolution on appointment of the nominating committee by the annual
general meeting 2012. The nominating committee shall not receive
remuneration, but shall, to the extent it considers necessary, have the
right on the account of the Company to utilize reasonable resources,
such as external consultants. 

The board of directors proposes that the annual general meeting decides
that the remuneration for committee work of in total SEK 120 000
resolved by the 2010 annual general meeting shall be divided equally
among the current directors of the board with the exception of the
chairman who will no receive any remuneration for committee work. The
board further proposes that the annual general meeting decides that
consulting fees to the director Birgit Stattin Norinder and to Chori
Pars AB, which is owned by the director Johan Kördel, shall be paid with
SEK 160 000 each, in total SEK 320 000 excluding VAT, regarding
consultancy services outside normal board work, which includes data
analysis and advice regarding preclinical projects as well as services
provided in connection with recruitment of a new Chief Executive
Officer. The services have been performed by Birgit Stattin Norinder and
Johan Kördel, respectively, in 2010 on behalf of the Company.

Information about persons proposed for election as directors:

Arne Ferstad, born 1950

Education: Market economy and management

Primary experience: More than 30 years of experience in senior
international management positions in several pharmaceutical,
biotechnology and medical device companies. Previously, among other
things, business manager and vice president of Kabi Pharmacia Nutrition
and division director of Baxter (Asia and EMEA). President and owner of
Ankor Consultants, Brussels.

Other assignments: Board director of NeuroVive AB (publ), AroCell AB
(publ) and Aggancio Research AB

Jan Sandström, born 1938

Education: Pharmacist

Primary experience: 38 years at AstraZeneca within marketing, project
management and director of business development and licensing in one of
the research companies, board member for 12 years in the Swedish
Shareholders' Association.

Other assignments: Board director of Accelerator AB, GrippingHeart AB,
NovaSAID AB, PledPharma AB, TikoMed AB and JNS Consulting AB (chairman
of the board)

Meg Tivéus, born 1943

Education: M.Sc. in Economics and Business, studies in medicine,
psychology and sociology.

Primary experience: Division manager NK, Åhlens, Holmen, vice president
Posten, president Svenska Spel.

Other assignments: Board member of Arkitektkopia AB (chairman of the
board), Folktandvården i Stockholm AB (chairman of the board), Swedish
Match AB, Cloetta AB, Nordea Fonder AB, Apoteket Pharmaci AB and Paynova
AB

Resolution as to principles for remuneration of executive management
(item 18)

The board of directors proposes the following guidelines regarding
remuneration of executive management. Executives shall be offered
remuneration of competitive and market relevant rate. In addition to
fixed salary, executives should also receive variable remuneration, as a
reward for achieving targets in simple and transparent structures. The
executives' remuneration according to incentive programs should be based
on the extent to which stated operational goals are achieved. Karo Bio's
commitment under the incentive programs should be limited in relation to
the fixed salary and not exceed 40 per cent of the fixed annual salary,
before social costs, for each executive during the relevant period of
time, requiring the recipient to invest the net amount after tax that
succeeds 20 per cent of the annual salary in Karo Bio-shares on the
market. Remuneration under an incentive program shall be paid in the
form of salary and shall be regarded as pensionable income.

The executives' pension benefits shall be competitive in relation to
what's generally applicable to the corresponding executives on the
market, and shall be based upon defined benefit pension schemes, or be
connected to the ITP plan. Pension benefits are based on a retirement
age of 65.

The executives' non-monetary benefits (e.g. car and health) should
facilitate the execution of the work and be determined by what is
considered reasonable in relation to market custom and the benefit to
the Company.

Notice and severance pay shall not exceed 24 months salary for each
executive. The guidelines above shall include the CEO of Karo Bio and
the executive management that report directly to the CEO as well as
CEO's of Karo Bio's subsidiaries.

To the extent that a director of the board perform services on behalf of
the Company in addition to the board's work, consulting fees may be
payable.

The board may derogate from the guidelines in an individual case where
there are special reasons for doing so. 

Authorization of the board of directors to issue new shares (item 19)

The Board proposes that the annual general meeting authorizes the board
of directors to resolve to issue new shares with the right to subscribe
to Azimuth Opportunity Ltd, on one or more occasions prior to the next
annual general meeting, without regard to shareholders' pre-emption
rights. It shall be possible to make issues for cash payment or set-off.
The number of shares that should be possible to issue to the
authorization shall not be limited in a way other than as is prescribed
by the Articles of Association applicable from time to time concerning
limits on the number of shares and share capital. The reason for
deviating from the shareholders' pre-emption rights shall be that the
Company should be able to utilize the financing in accordance with the
financing agreement (Equity Credit Facility) that the Company has
entered into with Azimuth Opportunity Ltd. and that was approved by the
extraordinary general meeting on November 24th, 2010. The subscription
price shall be determined in accordance with what is stated in the
agreement, which shall not diverge from the market price of the
Company's shares by more than a market discount.

A decision according to paragraph 19 shall be valid only where supported
by shareholders holding at least two-thirds of both the votes cast and
the shares represented at the meeting.

Other information

When this notice to attend the annual general meeting was issued, the
total number of shares and votes in the Company was 387 063 972.

Accounting documents, audit report and complete supporting documents
will be available at the Company and on the Company's website during a
period of not less than three weeks prior to the annual general meeting.
The documents shall be sent upon request to any shareholder stating his
postal address. Upon request by any shareholder and where the board of
directors and the CEO believe that such may take place without
significant harm to the Company, the board of directors and CEO shall
provide information at the annual general meeting regarding any
circumstance which may affect the assessment of a matter on the agenda
and any circumstance which may affect the assessment of the Company's
financial position. The duty to provide information shall apply also to
the Company's relationship to other group companies and to the group
accounts.

Huddinge, March 2011

Karo Bio AB (publ)

The Board of Directors

For further information please contact:

Fredrik Lindgren, CEO
Phone: +46 70 561 61 77

Erika Söderberg Johnson, CFO
Phone: +46 8 608 60 52

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 25, 2011, at 11:30 am CET.

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