Karo Bio’s Rights Issue Fully Subscribed

KARO BIO’S RIGHTS ISSUE FULLY SUBSCRIBED

Karo Bio AB (publ) has performed a new share issue with preferential
right for existing shareholders, which has generated approximately SEK
120 million to the Company after transaction costs.

Karo Bio’s rights issue has now been completed. The subscription period
was extended to allow the Company’s shareholders to consider the
recently disclosed information about a significant milestone achieved in
a strategic research collaboration.

The issue generated approximately SEK 120 million after transaction
costs to the Company, and 98.5 percent were subscribed with preferential
right by shareholders. Remaining shares will be allocated by the Karo
Bio Board of Directors.

“We are very pleased that the shareholders are supporting our rights
issue. The SEK 120 million from the rights issue allows us to continue
to run our top-priority projects”, says Björn Nilsson, President & CEO
of Karo Bio.

The new shares are expected to become available for trading on the O-
list of the Stockholm Stock Exchange in early June 2003.

The total number of shares amounts to 16 876 478 shares after the new
share issue, representing a share capital amounting to kSEK 84 382.

Carnegie is financial advisor to Karo Bio in this transaction.

Huddinge, May 16, 2003

KARO BIO AB

For further information, please contact
Björn 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 Sweden and the United States. The Company has
124 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 368 patent cases
including 120 granted patents.

Karo Bio has drug discovery programs in several therapeutic areas
including men and women’s health care, metabolic disorders such as
obesity, cardiovascular disease, diabetes, dermatology and
ophthalmology.

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
Abbott Laboratories, Bristol-Myers Squibb, Merck & Co., Inc. and Wyeth
Pharmaceuticals.

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

Not for distribution in the US, Australia, Japan, New Zealand or Canada.
The Offer does not apply to persons whose participation requires further
prospectuses, filings or other measures in excess of those implied by
Swedish law.

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The following files are available for download:
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https://www.waymaker.net/bitonline/2003/05/16/20030516BIT00010/wkr0002.pdf