Development of Karo Bio towards Clinical Trials

Development of Karo Bio towards clinical trials

Karo Bio’s research operations have been re-engineered in 2004 by
strengthening of the efforts in pharmacology and chemistry. With Karo
Bio’s expressed strategy to continue to evolve the Company by taking
individual projects into clinical trials, re-engineering of the
operational activities will continue. Special competence and key
individuals with expertise regarding clinical trials will be recruited.
Certain development activities will be performed by external parties.
The intention is to conduct these development efforts within the current
cost level also in 2005 and 2006.

As a consequence of that, Karo Bio has today announced to immediately
take measures to reduce its current cost base to provide for the
increased costs for taking selected projects towards clinical trials
internally. The savings initiative includes the reduction of the current
organization by 20 persons. The reduction affects primarily staff in the
early phase of drug discovery, but also in the organization outside the
research operations.

“It is sad that many talented and appreciated employees now have to
leave Karo Bio”, says Björn O. Nilsson, President and CEO. “However,
this is necessary to provide for the resources required to invest in
taking own projects into man, particularly relevant for the two
interesting and promising projects that we have received from Bristol-
Myers Squibb and Abbott Laboratories.”

Due to the ongoing new share issue with preferential rights for the
Company’s shareholders, reference is made to the prospectus prepared for
the issue. The prospectus is available on Karo Bio’s website at
www.karobio.com/newissue

Huddinge, September 13, 2004

KARO BIO AB

For further information, please contact
Björn O. Nilsson, President & Chief Executive Officer,
phone +46 8 608 60 20

Bertil Jungmar, Chief Financial Officer,
phone +46 8 608 60 52

Facts about Karo Bio

Karo Bio has operations in Huddinge, Sweden, and 95 employees.

Karo Bio has been listed on the Stockholm stock exchange (Reuters:
KARO.ST) since 1998 and maintains a leading position in the field of
drug discovery focused on nuclear receptors. Nuclear receptors are
validated drug targets for a number of clinical indications and the
Company uses proprietary technologies for the development of novel and
improved therapies for major markets.

Karo Bio has drug discovery programs in several therapeutic areas
including women’s health care, cancer, cardiovascular disease,
atherosclerosis and diabetes.

Karo Bio collaborates with major pharmaceutical companies for the
development of products and marketing. In these collaborations Karo Bio
receives upfront payments, R&D funding and milestone payments, as well
as royalties on net sales when products reach the market.

Karo Bio has strategic pharmaceutical drug discovery collaborations with
Merck & Co., Inc. and Wyeth Pharmaceuticals.

This press release is also available online at www.karobio.com and at
www.waymaker.net.

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