INTERIM REPORT JANUARY–MARCH 2012

The January–March 2012 period in brief

Net sales amounted to MSEK 8.3 (0.0)
Net loss was MSEK 54.0 (47.7)
Loss per share was SEK 0.14 (0.12)
Cash flow from operating activities was MSEK -41.6 (-47.5)
Cash and cash equivalents and other short-term investments totaled MSEK 117.0 (312.1) at the end of the period, which is deemed to suffice to finance operations for more than 12 months
Closure costs for the eprotirome program amounted to MSEK 31.6 in the first quarter
Operations will be adjusted to shrink negative cash flow to 50-60 MSEK annually
Discussions on ERbeta and MS indication has continued during the period
The collaboration with Pfizer on RORgamma and autoimmune diseases commenced
Karo Bio continues the development program on GR Inflammation on its own

Conference call today at 9.30 CET

CEO Per Bengtsson presents the report today at 9.30 CET in an audiocast, held in Swedish, available via a link on www.karobio.se and telephone: +46 8 505 598 09 or +44 20 153 9156.

For more information, please contact: Per Bengtsson, Chief Executive Officer Telephone:+46 8 608 6020 or +46 734 474 128 E-mail: [email protected]

Karo Bio AB (publ) Novum, 141 57 Huddinge, Sweden Telephone: +46 8 608 60 00 Facsimile: +46 8 774 82 61 Corp. reg. no. 556309-3359 Website: www.karobio.com

The information in this report is such that Karo Bio is required to disclose under the Swedish Securities Market Act. The information was disclosed on April 27, 2012, 08:30 CET.

Summary of key financial information

(MSEK)		January-March	January -December
	2012	2011	2011
Net sales	8.3	-	-
Operating expenses	-62.1	-49.6	-231.2
- of which R&D expenses	-53.6	-40.4	-189.3
Net earnings/loss for the period	-53.0	-47.7	-226.6
Earnings/loss per share (SEK)	-0.14	-0.12	-0.59
Cash flow from operating activities	-41.6	-47.5	-198.3
Cash and cash equivalents and other short term investments at the period end	117.0	312.1	158.5

About Karo Bio

Karo Bio is a research and development company focused on innovative drugs for large medical needs. The foundation for operations is a unique knowledge of nuclear receptors as target proteins for the development of novel pharmaceuticals and the related mechanisms of action, as well as experience and expertise in preclinical and clinical development.

Karo Bio is active in preclinical development in the areas of neuropsychiatry, inflammation, autoimmune diseases, cancer and women's health. The company has a number of strategic collaborations with big pharma.

Karo Bio is based in Huddinge, Sweden. The company has around 55 employees and is listed on NASDAQ OMX Stockholm (Reuters: KARO.ST).

CEO COMMENTARY

On February 14, news that Karo Bio terminates the phase III study with eprotirome reached the stock market. The reaction was immediate and the share price fell sharply. The cause was a supplementary pre-clinical long-term study in dogs showing that eprotirome causes cartilage damage, which means that the risk of similar damage in humans is unacceptably large. Dosing of the nearly patients enrolled in the study seized and

no patient was given eprotirome for longer than has previously been shown to be safe. The net cost of terminating eprotirome's phase III program is estimated to about 40 million kronor. The termination of the study means that Karo Bio's budgeted costs decrease with a total of 160 million kronor.

Even before the termination of the project, the Board had initiated a review of Karo Bio's strategy. Savings totaling 17 million had been implemented, including the redundancy of 16 employees. Together with research funding through the Pfizer agreement, the assessment is that Karo Bio is funded for well over a year. We are not through, and will continue to adjust operations that operations will be organized in the most cost efficient way. Karo Bio will also make far better use of public research and development grants. The company's objective is to limit the negative cash flow to an annual rate of 50- 60 million kronor. To achieve this, we will present a new cost cutting program before the annual general meeting.

The main conclusion from the strategy review is that the business must be imbued with a more commercial mindset and that risk must be taken into account much more clearly when prioritizing projects. To achieve this we have altered the way we organize and conduct the work. The Pfizer agreement shows that we have the ability to do business when we prioritize right. It also shows that we have commercially valuable projects in the field of nuclear receptors.

In order to achieve better resource utilization in our organization, we will openly and without prejudice evaluate opportunities to complement our current operations. This means that we will consider options outside the field of nuclear receptors. Although, to come into effect, such additions must help create value for shareholders.

The agreement with Pfizer on RORgamma concluded in December 2011 is for the development of a new class of drugs for treating autoimmune diseases, such as rheumatoid arthritis and psoriasis. The agreement provides us with at least 10 million dollars during this year and next. The total value of future milestone payments may exceed 1 billion dollars and Karo Bio is also entitled to royalties on future product sales. The agreement is good for Karo Bio in several ways. It allows us to continue to develop our world-leading expertise in the nuclear receptor field RORgamma. Apart from cost cover and opportunities for significant income, it shows that Karo Bio's skills and knowledge are attractive to one of the world's largest companies.

Karo Bio is now working to conclude similar agreements in other areas. The most current opportunity available is within the ERbeta receptor in the field of multiple sclerosis (MS). With additional animal studies that we are conducting in the near future, a few more pieces in the puzzle may fall into place which confirms the potential in the MS indication. Successful results may lead to another development and license agreement.

Another option we are actively pursuing is the ERbeta project in cancer that we are considering locating to Texas, USA. The state is investing significant resources to create a life science center in Houston, which already has one of America's most renowned cancer clusters centering around the MD Anderson

Cancer Center and The Methodist Hospital. There are several opportunities for financing that would allow us to advance ERbeta in the cancer field. Today we have a compound, KB9520, which has showed good preclinical results in some cancers. Our current assessment is that Karo Bio may establish such a cooperation towards the end of the year.

Furthermore, our anti-inflammatory project around the glucocorticoid receptor is worth mentioning. Since it is modeled on the well-established drug class corticosteroids, the project arguably has lower risk in the clinical phase than the average drug development project. When the joint development with Zydus Cadila expired, we chose to follow the development path we consider most attractive. In addition to our assessment that the development risk decreases with the selected route, we do not have to share future revenues with Zydus Cadila. The project is in early stages and it is a challenge for us to finance it until a commercial agreement can be reached. The time has not yet come, but we think this is a project that will be licensed out at a relatively early stage.

All in all, there are several bright spots after eprotirome. The Pfizer deal inspires and indicates opportunities for us to do new business. At the same time, we must adapt to new ways of doing business. We face this situation with an open attitude and an unbiased approach to opportunities.

Per Bengtsson CEO

KARO BIO'S PROJECTS

							Clinical Development
Program	Partner	Compound	Indication	Discovery	Preclinical	Phase 1	Phase 2	Phase 3
ER	Merck & Co	MK6913	Womens' health
		KB9520	Cancer
		KB9520	Urology
			Multiple sclerosis (MS)
RORgamma	Pfizer		Autoimmune disease
GR Inflammation			Inflammation
LXR	Pfizer		Inflammation

TR / eprotirome – dyslipidemia (Bo longer active)

Eprotirome is a liver-selective thyroid hormone receptor (TR) agonist for the treatment of dyslipidemia that was developed for treatment of high blood lipids. The development program was terminated in February after an animal study had showed adverse effects at long term exposure. The study showed cartilage damage in dogs that were dosed with eprotirome for up until 12 months. The damage was shown first after 12 months exposure, and not in control animals. This means that it is not possible to rule out similar damage in man. Chronic treatment with eprotirome was therefore considered too risky in relation to the benefits of the lipid lowering effect that the phase III study was to show. The findings also meant that regulatory conditions to continue the program as planned were no longer in place.

Total costs for eprotirome's phase III program, which was planned to last until 2014, was estimated at around 300 million SEK. Costs for the program until 2011 amounted to around 100 million SEK. The first quarter results include closure costs of a total of 31,6 million SEK for the project. In total, closure costs are estimated to amount to around 40 million SEK, which is lower than the initial estimation of around 55 million SEK.

ERbeta selective compounds – a platform with many opportunities

The estrogen receptor (ER) is activated by estrogen and regulates a number of functions in the body. Estrogen has several positive effects but its use as a medical treatment has been limited by the associated increased risk for uterine and breast cancer as well as thrombosis. These risks are mainly linked to the estrogen receptor's ERalpha subtype, while ERbeta seems to mediate many of the positive effects of estrogen without these side effects. For ERbeta selective compounds there are clinical opportunities within a number of fields, including neuropsychiatry, certain forms of cancer, women's health and urology.

Karo Bio's efforts in the field have resulted in an exciting platform of many promising ERbeta selective compounds. These have slightly different properties and may thus be suitable for different indications. The first drug candidate within the program KB9520 has shown good efficacy in preclinical models for certain forms of cancers. Other compounds are documented for CNS indications.

In 2011 Karo Bio decided to focus primarily on the auto immune disease multiple sclerosis (MS). In preclinical models, ERbeta agonists have demonstrated high efficacy in the repair processes and reconstruction of the myelin sheaths that surround and insulate nerves and are necessary for efficient conduction of nerve impulses. If treatment with ERbeta agonists proves capable of repairing damaged myelin also in patients this will represent a significant breakthrough in the treatment of MS patients,

where damaged myelin leads to symptoms of the illness and disability. Karo Bio is currently focusing on conducting supplementary animal studies to confirm the opportunity within the MS indication.

One of Karo Bio's main priorities is to enter into commercial research collaborations around the company's ERbeta selective agonists. Karo Bio has entered into Material Transfer Agreements (MTAs) with a number of international pharmaceutical companies under which the partner companies are evaluating substances for several different indications. This has resulted in commercial discussions.

ER Women's Health / MK-6913 – collaboration with Merck & Co., Inc.

A collaboration with Merck (known as MSD outside the US and Canada) regarding estrogen receptors was initiated in 1997 and the joint drug discovery phase was concluded in 2002. In 2010, Merck terminated the development of MK-6913 for hot flashes in postmenopausal women due to lack of efficacy. Merck is evaluating options for future studies involving MK-6913.

GR inflammation – collaboration with Zydus Cadila

Glucocorticoids are used to treat various inflammatory diseases such as rheumatoid arthritis, inflammatory bowel disease, psoriasis and asthma. Glucocorticoids are powerful anti-inflammatory drugs but side effects on for example metabolism and bone have restricted their use. The separation of the beneficial effects from the other side effects of glucocorticoids has long been regarded as medically important but at the same time hard to achieve. Hence there is a large need for safer treatments and a significant commercial market.

Karo Bio's project aims to design novel selective glucocorticoids that have as powerful antiinflammatory properties as conventional glucocorticoid steroids, such as cortisone and other similar substances, but with significantly lower side effects and thereby the potential for broader use. Karo Bio has discovered a previously undescribed mechanism of glucocorticoid regulation. Compounds based on this discovery are expected to have a significantly improved side effect profile compared to conventional steroidal therapy while maintaining the desired anti-inflammatory effect. Preclinical evaluation is ongoing to identify which compounds are best suited for further development as candidate drugs.

Between 2008 and the first quarter 2012, the project was conducted in collaboration with the Indian pharmaceutical company Zydus Cadila, under which the parties assumed their own costs and share potential revenue. The parties preferred different paths in the continued development and therefore decided to terminate their joint research and development. Karo Bio continues to develop the project on its own.

RORgamma – a new means to treat autoimmune diseases

Recent research reveals that the nuclear receptor RORgamma may play a decisive role in the development of autoimmune disease, such as rheumatoid arthritis, inflammatory bowel disease and psoriasis. In 2010, Karo Bio initiated an early stage research effort to develop and evaluate compounds that inhibit RORgamma activity, which may prove to be a novel concept for a potential new treatment alternative for autoimmune diseases since RORgamma has been shown to control the maturation of, and activity in, a certain type of immune cell, believed to drive inflammatory and debilitating processes in such diseases.

In December 2011 Karo Bio entered into a research collaboration with Pfizer for RORgamma to discover and develop new compounds for the treatment of autoimmune diseases. Pfizer takes on full responsibility for all research costs and will have exclusive rights for products developed as a result of the collaboration, Karo Bio can receive up to USD 217 million (approx. MSEK 1,500) at signing and when specific development and sales milestones are met as well as royalties on future drug sales.

LXR inflammation – collaboration with Pfizer

The collaboration with Wyeth LCC, today a wholly owned subsidiary of Pfizer Inc., was initiated in 2001 and targets the liver X receptor (LXR) for the treatment of inflammatory disorders. From September

2009, Wyeth took on full responsibility for all research and development activities under the collaboration.

FINANCIAL REPORT

Consolidated earnings

Net sales for the quarter were 8.3 (0.0). Operating expenses for the period increased by MSEK 13.6 to MSEK 63.2 (49.6) of which MSEK 31.6 are directly contributable to the termination of the eprotirome program. Research and development expenses accounted for 86 per cent of the costs in the quarter, after an increase to MSEK 54.7 (40.4). Since a large portion of the research and development expenses are external project related expenses, variations between reporting periods may be significant.

Administrative expenses for the quarter amounted to MSEK 8.5 (9.2). The consolidated operating loss for the quarter increased to MSEK 54.9 (49.6). Financial net for the quarter amounted to MSEK 0.8 (1.9). Net loss for the period was MSEK 54.0 (47.7).

Capital investments and consolidated cash flow

Capital investments for the period amounted to MSEK 0.1 (0.5) and comprise mainly investments in laboratory and IT equipment.

Cash flow from operating activities was MSEK -41.6 (-47.5).

Financial position

Consolidated cash and cash equivalents amounted to MSEK 46.4 (110.0) at the end of the period. Including other short-term investments with durations exceeding 90 days, liquid assets amounted to MSEK 117.0 (312.1), which corresponds to a change in total cash position of MSEK -41.5 (-82.9) during the quarter. As stipulated in the company's finance policy, Karo Bio's funds are invested solely in low risk, interest-bearing assets.

The equity credit facility entered into in connection with the rights issue 2010/2011 was adjusted during the third quarter 2011 so that it can be utilized at a lower share price than previously. At current share price, the equity credit facility cannot be utilized. The mandate to use the credit facility will be submitted to the General Meeting for approval on an annual basis.

Share capital at the period end amounted to MSEK 193.5. In total, there were 387,063,972 shares outstanding, each with a par value of SEK 0.50.

Total consolidated shareholders' equity amounted to MSEK 62.9 (294.9), taking into account the period's earnings. Shareholder's equity hence is less than one-half of the registered share capital. In light of the current nature, scope and risks of the business, the Board has proposed to reduce the share capital to 7.7 million SEK. An Extraordinary General Meeting will resolve on the issue today, April 27-At the meeting, a balance sheet for liquidation purposes will be presented.

Loss per share amounted to SEK 0.14 (0.12). The Group's equity ratio at the end of the period was 46.0 (90.8) per cent and equity per share, based on fully diluted number of shares at the end of the period, was SEK 0.16 (0.75).

Employees

At the end of the period, Karo Bio had 54 (71) employees, of whom 44 (62) are engaged in research and development, 3 (3) in business development and intellectual property rights and 7 (6) in administrative roles.

CONSOLIDATED INCOME STATEMENT SUMMARY (KSEK)

		January-March	January-December
	2012	2011	2011
Net sales	8,309	-	-
Operating expenses
Administration	-8,495	-9,213	-40,797
Research and development	-53,601	-40,420	-189,321
Other operating income/expenses	-17	51	-1,041
	-62,113	-49,582	-231,159
Operating profit/loss	-53,804	-49,582	-231,159
Financial net	823	1,885	4,533
Earnings/loss after financial items	-52,981	-47,697	-226,626
Tax	-	-	-
RESULTS FOR THE PERIOD	-52,981	-47,697	-226,626
Net earnings/loss for the period attributable to:
Shareholders of the parent company	-52,981	-47,697	-226,626
Depreciation included in operating expenses	-557	-601	-2,409
Earnings/loss per share (SEK) 1)
- based on weighted average number of shares outstanding, basic and diluted	-0.14	-0.12	-0.59
Number of shares outstanding (000)
- weighted average during the period	387,064	387,064	387,064
- at end of period, basic	387,064	387,064	387,064
- at end of period, fully diluted	387,064	387,797	387,064

1) Last day for exercising the stock options from the latest program was in April 2011. Consequently there is no longer any dilution of loss per share.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (KSEK)

		January-March	January-December
	2012	2011	2011
RESULTS FOR THE PERIOD	-52,981	-47,697	-226,626

Other comprehensive income/loss for the year, net of tax	-	-	-

TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD	-52,981	-47,697	-226,626

Total comprehensive income/loss attributable to:
Shareholders of the parent company	-52,981	-47,697	-226,626

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (KSEK)

	March 31		December 31
	2012	2011	2011
Assets
Equipment	4,539	4,441	5,558
Other current assets	13,066	8,099	7,409
Financial assets at fair value through profit or loss	70,610	202,111	114,780
Cash and cash equivalents	46,351	110,024	43,753
TOTAL ASSETS	134,566	324,675	171,500

Shareholders' equity and liabilities
Shareholders' equity	61,880	294,851	115,922
Non-current liabilities	-	261	-
Current liabilities	72,686	29,563	55,578
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	134,566	324,675	171,500

CONSOLIDATED STATEMENT OF CASH FLOWS (KSEK)

	January-March		January-December
	2012	2011	2011
Operating activities
Operating income/loss before financial items	-54,865	-49,582	-231,159
Depreciation	557	601	2,409
Other items not affecting cash flows	-	19	19
	-54,308	-48,962	-228,731

Financial items received and paid	1,081	2,580	4,550
Cash flow from operating activities before changes in working capital	-53,227	-46,382	-224,181

Changes in working capital	11,612	-1,083	25,898
Cash flow from operating activities	-41,615	-47,465	-198,283
Investing activities
Net investment in equipment	313	-686	-4,262
Net investment in other short-term investments	43,900	-133,371	-45,248
Cash flow from investing activities	44,213	-134,057	-49,510
Financing activities
Net proceeds from rights issue	-	-	-
Transaction costs rights issue 1)	-	-33,940	-33,940
Cash flow from financing activities	-	-33,940	-33,940

Cash flow for the period	2,598	-215,462	-281,733
Cash and cash equivalents at the beginning
of the period	43,753	325,486	325,486
Cash and cash equivalents at the end of the period	46,351	110,024	43,753

1) Comprises the portion of transaction related costs that have been paid in the period.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (KSEK)

Attributable to shareholders of the parent company	Share capital	Other contributed capital	Accumulated losses	Total
Amount at January 1, 2011	191,593	982,686	-831,731	342,548
Loss for the period	-	-	-47,697	-47,697
Share issue	1,939	-1,939	-	0
Amount at March 31, 2011	193,532	980,747	-879,428	294,851

Amount at January 1, 2012	193,532	980,747	-1,058,357	115,922
Loss for the period	-	-	-54,042	-52,981
Amount at March 31, 2012	193,532	980,747	-1,112,399	61,880

KEY EQUITY DATA

	March 31		December 31
	2012	2011	2011
Equity ratio	46.0%	90.8%	67.6%
Equity per share at the end of period – basic, SEK	0.16	0.76	0.30
Equity per share at the end of period - diluted,
SEK	0.16	0.75	0.30

The Parent Company

Net sales for the Parent Company for the quarter amounted to MSEK 8.3 (0.0). Loss after financial items for the period was MSEK 54.0 (47.7).

The Parent Company's capital investments in equipment for the quarter amounted to MSEK 0.1 (0.5). Cash, cash equivalents and other short-term investments amounted to MSEK 116.9 (312.1) at the end of the period.

PARENT COMPANY INCOME STATEMENT SUMMARY (KSEK)

		January-March	January-December
	2012	2011	2011
Net sales	8,309	-	-
Operating expenses
Administration	-8,495	-9,213	-40,797
Research and development	-54,662	-40,420	-189,321
Other operating income/expenses	-17	51	-1,041
	-63,174	-49,582	-231,159
Operating income/loss	-54,865	-49,582	-231,159
Financial net	820	1,894	4,547
Earnings/loss after financial items	-54,045	-47,688	-226,612
Tax	-	-	-
NET EARNINGS/LOSS FOR THE PERIOD	-52,984	-47,688	-226,612

Depreciation included in operating expenses	-411	-382	-1,535

PARENT COMPANY BALANCE SHEET SUMMARY (KSEK)

	March 31		December 31
	2012	2011	2011
Assets
Equipment	4,539	3,639	5,412
Shares in group companies	150	100	100
Other current assets	13,066	8,099	7,409
Financial assets at fair value through profit or loss	70,610	202,111	114,780
Cash and cash equivalents	46,291	110,014	43,743
TOTAL ASSETS	134,656	323,963	171,444

Shareholders' equity and liabilities
Total restricted equity	193,532	331,547	331,547
Total non-restricted equity	-131,302	-36,348	-215,272
Current liabilities	72,427	28,764	55,169
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	134,656	323,963	171,444

Karo Bio AB Novum, 141 57 Huddinge, Sweden Telephone +46 8 608 60 00 Fax: +48 8 774 82 61 www.karobio.com

OTHER INFORMATION

Spin-off of the preclinical operations

Preparations for the previously announced spin-off of the preclinical part of the company, seized in conjunction with the termination of the eprotirome project.

Cost reductions of 17 million SEK

In order to lower costs, 16 employees were made redundant in February. Together with previously announced and performed reductions, cost savings will amount to 17 million SEK annually. The savings will take effect gradually in 2012.

New date for AGM

Due to the termination of the eprotirome project, the Board decided to postpone the Annual General Meeting to May 12, 2012, in order to give the Board of Directors and the executive management the opportunity for a new planning and renewed description of the business. Notice will be issued no later than four weeks before the general meeting. The annual report is expected to be published no later than May 22, 2012.

Reduction of share capital

According to the balance sheet for liquidation purposes, shareholders' equity amounted to less than one-half of the registered share capital. The registered share capital is considerably higher than what the current nature, scope and risks of the business require. The Board has therefore proposed to reduce the share capital to 7.7 million SEK, which would restore the deficiency. The General Meeting will be presented with the balance sheet for liquidation purposes and resolve on the proposal today, April 27.

The consolidated cash is estimated to covers the total funding of planned operations for more than twelve months. In order to finance its operations the company may in the future need to turn to capital markets for further fund raising.

Significant events after the end of the reporting period

No significant events have occurred after the end of the reporting period.

Risk factors

There is no guarantee that Karo Bio's research and development will result in commercial success. There can be no guarantee that Karo Bio will develop products that can be patented, that granted patents can be retained, that future inventions will lead to patents, or that granted patents will be sufficient to protect Karo Bio's rights.

There is no guarantee that Karo Bio will obtain approvals on its clinical trials applications or that the clinical trials conducted by Karo Bio, whether independently or in collaboration with its partners, can demonstrate sufficient safety and efficacy to obtain the necessary approvals from regulatory authorities, or that they will result in marketable products. It cannot be excluded that the approval process at regulatory level will involve requirements for increased documentation and thereby increased costs and delays in the projects or even discontinuation of projects. Increased total development costs and development time of a project could result in an increased project risk and reduce the product's potential to successfully reach the commercial stage or reduce the time from product launch to patent expiry.

There may be a need to turn to the capital market for additional funding in the future. Both the size and the timing of the company's potential future capital requirements are dependent on a number of factors, including opportunities to enter into collaboration or licensing agreements and the progress made in

research and development projects undertaken. There is a risk that the required funding of the operations will not be available when needed or at a reasonable cost.

Accounting and valuation principles

This interim report has been prepared in accordance with International Accounting Standards (IAS) 34 for interim reports and International Financial Reporting Standards IFRS as adopted by the EU. The accounting and valuation principles applied are unchanged compared to those applied in the Annual Report for 2010. A number of new or updated accounting standards and interpretations are applicable for financial years beginning January 1, 2011 or later. These accounting standards and interpretations are deemed not to have a significant impact on the consolidated financial statements other than presentational or disclosures presented in the reports. In addition, there are certain accounting standards and interpretations that are not relevant to Karo Bio. Compensation received for research collaborations, and for commitments in the agreement that Karo Bio has not yet carried out, are amortized over the duration, in accordance with the agreement, of which Karo Bio fulfills the commitments. Milestone payments are recognized when all conditions for entitlement to compensation under the agreement are met. Revenues from research funding of RORgamma are accrued from January 1st , 2012.

For the Parent Company this interim report has been prepared in accordance with the Swedish Annual Accounts Act and compliance with RFR 2 Accounting for legal entities. The accounting principles applied for the parent company differ from those applied for the Group only regarding accounting of leasing agreements.

Amounts are expressed in KSEK, an abbreviation for thousands of Swedish Kronor, unless otherwise indicated. MSEK is an abbreviation for millions of Swedish Kronor. Amounts or figures in parentheses indicate comparative figures for the corresponding period last year.

The auditors' review

This report has not been subject to review by Karo Bio's auditors.

Scheduled releases of financial information

Interim report April-June 2012	July 13, 2012
Interim report July-September 2012	October 24, 2012
Year-end report 2012	February 12, 2013

Financial reports, press releases and other information are available on Karo Bio's web site www.karobio.com. It is also possible to download and subscribe to Karo Bio's financial reports and press releases on the web site.

Legal disclaimer

This financial report includes statements that are forward looking and actual future results may differ materially from those stated. In addition to the factors discussed, among other factors that may affect results are development 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.

Huddinge, April 27, 2012

Göran Wessman	Per Bengtsson
Chairman	CEO and Board member

Christer Fåhraeus	Elisabeth Lindner	Jan N. Sandström
Board member	Board member	Board member

Anders Waas	Bo Carlsson	Johnny Sandberg
Board member	Board member	Board member
	Employee representative	Employee representative