KARO BIO’S RIGHTS ISSUE SUBSTANTIALLY OVERSUBSCRIBED

Not for release, publication or distribution in Australia, Canada, Japan or the United States. This announcement does not constitute an offer to sell or the solicitation of an offer to buy the securities of Karo Bio AB (publ) (the “Securities”) in Australia, Canada, Japan or the United States or in any other jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The issuer of the Securities has not registered, and does not intend to register, any portion of the offering in the United States, and does not intend to conduct a public offering of the Securities in the United States. STOCKHOLM, December 9, 2009. Karo Bio AB (publ) (Reuters: KARO.ST) today announced that the company’s rights issue of approx. SEK 166 million has been substantially oversubscribed. Adding up, the issue was oversubscribed by 73 percent and 98 percent of the shares offered were subscribed for with the exercise of subscription rights.

37,904,128 shares have been subscribed for with the exercise of subscription rights, meaning that 98 percent of the subscription rights have been exercised. Persons who have exercised their subscription rights have received paid subscribed shares (BTAs) on their securities account (VP account). Trading in paid subscribed shares (BTAs) (ticker: KARO BTA) will take place on NASDAQ OMX up to and including the date when the rights issue is registered with the Swedish Companies Registration Office, which is expected to be on or about December 16, 2009.

Subscriptions for an additional 28,922,888 shares, corresponding to SEK 124,368,418, without the exercise of subscription rights have also been received. The Board of Directors of Karo Bio has decided on the allocation of 802,269 shares that have not been subscribed for with subscription rights, according to the principles described in the prospectus. Persons who have received such allocation will be notified through a payment notice which will be dispatched today. As a consequence of the rights issue, the number of shares and votes in the company increases with 38,706,397 to 154,825,589 and the share capital increases with approx. SEK 19,353,198.50 to SEK 77,412,794.50.

The newly issued shares are expected to be converted from BTA to shares on or about 22 December, 2009 meaning that trading in the newly issued shares is expected to commence on or about 17 December, 2009.

For more information please contact:
Per Olof Wallström, President
Tel: +46 8 608 60 20
E-mail: p.o.wallstrom@karobio.se

Erika Söderberg Johnson, CFO and responsible for Investor Relations
Tel: +46 8 608 60 52
E-mail: erika.soderberg.johnson@karobio.se

About Karo Bio
Karo Bio is a drug discovery and development company specializing in endocrinology and targeting nuclear receptors as target proteins for the development of novel pharmaceuticals. The company has a project portfolio with innovative molecules that primarily target dyslipidemia, CNS-disorders, inflammation, and women’s health. In these areas, there are significant market opportunities and a clear need for pharmaceuticals with new mechanisms of action. Karo Bio develops compounds aimed at treating broad patient populations up to clinical proof of concept before out-licensing. In therapeutic niche areas, Karo Bio has the capacity to bring selected compounds into late stage clinical development and, potentially, to the market. In addition to the proprietary projects, Karo Bio has three strategic collaborations with international pharmaceutical companies for development of innovative therapies for the treatment of common diseases. Karo Bio 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 December 9, 2009 at 8:30 am CET.

This press release is also available online at: www.karobio.com and www.newsroom.cision.com

Notice to UK residents. This announcement is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors as that term is defined in the Prospectus Directive that are also (i) “investment professionals” falling within article 19(5) of the Financial Service and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii)“high net worth entities” and other persons to whom it may lawfully be communicated, falling within the meaning of Article 49(2)(a) to (d) of the Order (all such persons being “relevant persons”). The offered shares of Karo Bio AB are only available to relevant persons and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such offered shares will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its content.