KARO BIO UPDATES STATUS OF COMPOUND FROM MERCK COLLABORATION

Karo Bio announces today that Merck & Co, Inc. has decided to discontinue development of the clinical stage candidate identified in the collaboration between the two companies. Development of the compound was discontinued due to adverse findings in on-going animal studies. Merck continues to study a back-up compound in preclinical testing. In addition, other estrogen receptor compounds arising from the Karo Bio and Merck collaboration continue to be evaluated.

The collaboration with Merck was initiated in November 1997 with the objective of developing new treatments in the field of estrogen receptors, which is particularly relevant in women’s health care. The collaboration is based on the discovery of the estrogen receptor beta, which offers the potential for the development of selective drugs that can target either the alpha-receptor or the beta-receptor. Such selective compounds may have the potential to address unmet clinical needs. In January 2005, Karo Bio announced a significant milestone payment received from Merck for the initiation of clinical trials on the most advanced compound. It is this compound that has now been discontinued. “We are pleased that Merck remains committed to our joint program and that a back-up compound to this program is being studied in preclinical development. We are also encouraged by the fact that additional compounds continue to be evaluated for further study." ”says Per Olof Wallström, President of Karo Bio. “Karo Bio’s other programs have made good progress lately and recently a clinical trials application (CTA) was filed with the Swedish Medical Products Agency (MPA) for initiation of clinical trials with the KB2115 compound for obesity. The KB3305 diabetes compound is also moving towards clinical studies and our joint collaboration with Wyeth in the atherosclerosis field is making good progress” says Per Olof Wallström. KARO BIO AB For further information, please contact Per Olof Wallström, President, +46 8 608 6020 Per Otteskog, Senior Vice President, +46 8 608 6018 Facts about Karo Bio Karo Bio has operations in Huddinge, Sweden, and 78 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 drug discovery programs in several therapeutic areas including women’s health care, cancer, cardiovascular disease, atherosclerosis and diabetes. 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 Merck & Co., Inc. and Wyeth Pharmaceuticals. This press release is also available online at www.karobio.com and at www.waymaker.net.