Full Year Report 2003 Quarterly Report October-December 2003

FULL YEAR REPORT 2003
QUARTERLY REPORT OCTOBER-DECEMBER 2003

· A preclinical milestone for a second compound was reached and a
milestone payment was received in May in the Merck & Co., Inc.
collaboration.

· In August Merck & Co., Inc. decided to discontinue the development
of the first drug candidate selected in 2002.

· Karo Bio obtained all rights to compounds and technologies,
including the A-348441 lead compound, in the collaboration with
Abbott Laboratories in November. Karo Bio has selected the A-348441
compound from the Abbott collaboration as a candidate drug for
type 2 diabetes.

· A reorganization and consolidation of research operations to Sweden
was carried out in January and November, resulting in lower cost-base
and increased efficiency.

· A fully subscribed new share issue was successfully completed in
May, generating MSEK 118.6

· Net sales for the full year amounted to MSEK 85.1 (177.7) and to
MSEK 11.0 (24.6) for the fourth quarter.

· The loss for the year, including goodwill expenses, decreased to
MSEK 208.7 (284.4) and decreased to MSEK 56.0 (87.8) for the fourth
quarter. Operating loss excluding goodwill expenses amounted to MSEK
124.8 (58.8) for the full year and MSEK 46.5 (32.5) for the fourth
quarter.

· Cash flows from operating activities for the full year amounted to
MSEK -128.6 (-70.9) and MSEK -50.2 (-32.6) for the fourth quarter. Cash
and cash equivalents and short-term investments amounted to MSEK 184.0
(201.2) at the end of the year.

· Loss per share for the full year amounted to SEK 13.76 (22.19) and
SEK 3.32 (6.84) for the fourth quarter.

Huddinge, February 6, 2004

Björn Nilsson
President & CEO

For further information, please contact
Björn Nilsson, President & CEO tel. +46 8 608 60 20,
Per Otteskog, Senior Vice President, tel. +46 8 608 60 18, or
Bertil Jungmar, Chief Financial Officer, tel. +46 8 608 60 52.

Legal disclaimer
This financial report includes statements that are forward looking and
actual results may differ materially from those stated. In addition to
the factors discussed, among other factors that may affect results are
developments within research programs, including development in pre-
clinical and clinical trials, the impact of competing research programs,
the effect of economic conditions, the effectiveness of the Company’s
intellectual property rights and preclusions of potential third party’s
intellectual property rights, technological development, exchange rate
and interest rate fluctuations, and political risks.

Karo Bio AB (publ.), Novum, SE-141 57 Huddinge, Sweden.
Telephone: +46-8-608 60 00.
Fax: +46-8-774 82 61
Corporate identity number: 556309-3359
Website: www.karobio.com

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