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 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2004/02/06/20040206BIT00020/wkr0001.doc The full report http://www.waymaker.net/bitonline/2004/02/06/20040206BIT00020/wkr0002.pdf The full report

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Karo Pharma is a specialty pharma company that develops and markets products to pharmacies and directly to healthcare providers. The share is listed on Nasdaq Stockholm in the Mid Cap segment.