FULL YEAR REPORT 2006 QUARTERLY REPORT OCTOBER – DECEMBER 2006

•Karo Bio completed phase I clinical trials with KB2115 and phase II is ongoing
•Karo Bio received a milestone payment from Wyeth for selection of a candidate drug and an additional milestone payment for initiation of phase I clinical studies. The collaboration was extended for an additional year until August 31, 2007
•KB5359 was selected as a candidate drug for treatment of dyslipidemia and preclinical development was initiated
•The clinical development of KB3305 is delayed due to technical issues with the pharmaceutical formulation
•Merck initiated phase I clinical studies in the field of estrogen receptors and women’s health with a collaboration compound
•Karo Bio outlicensed a class of selective androgen receptor modulators (SARMs) for treatment of osteoporosis to Radius
•Net sales for the full year amounted to MSEK 44.0 (51.9)
•The loss for the full year amounted to MSEK 126.1 (111.0)
•Cash flows from operating activities for the full year amounted to MSEK -110.4 (-90.0)
•Liquid assets and other short-term investments amounted to MSEK 231.0 (346.9) at the end of the year
•Loss per share for the full year amounted to SEK 1.63 (2.37).

For further information, please contact
Per Olof Wallström, President, tel. +46 8 608 60 20,
Per Otteskog, Senior Vice President Investor Relations, 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 preclinical 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