NOTICE OF ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF KARO BIO

The annual general meeting of the shareholders of Karo Bio Aktiebolag (publ) will be held on Wednesday April 11, 2007 at 4.00 p.m. in Strindbergsalen, Berns, Berzelii Park, Stockholm, Sweden.

I. RIGHT TO PARTICIPATE, NOTIFICATION
Shareholders who wish to participate in the general meeting must be recorded in the share register kept by the Swedish Securities Register Center (VPC AB) by Tuesday April 3, 2007 and, further, must notify the company of their intention to participate in the meeting by no later than Wednesday April 4, 2007 at 4.00 p.m.

Notification should be made in writing to Karo Bio AB, att: Eva Kruse, Novum, SE-141 57 Huddinge, Sweden, by fax + 46 8 774 52 80, or by e-mail to agm@karobio.com. Notification can also be made on the company’s web site www.karobio.com/agm. When notifying, the shareholders should state name, personal/corporate identity number (where applicable), address, telephone number, and e-mail address. In the case of representatives participating in the meeting, proof of due authorization should be forwarded to the company in conjunction with the notification. One or two advisors may accompany a shareholder to the meeting, provided that the shareholder gives notice as to the number of such advisors.

Shareholders whose shares are registered under the name of a nominee must temporarily register their shares in their own names to be entitled to participate in the meeting. Such registration must be in effect at Swedish Securities Register Center (VPC AB) no later than Tuesday April 3, 2007, which means that shareholders must notify their nominee well in advance of that date.

II. PROPOSED AGENDA
1. Opening of the meeting;
2. Election of chairman at the meeting;
3. Preparation and approval of the voting list;
4. Approval of the agenda;
5. Election of persons to confirm the minutes;
6. The determination as to whether the meeting has been duly convened;
7. Presentation of the annual report and the audit report as well as the group consolidated financial statement and the audit report thereon;
8. Resolution to adopt the income statement and the balance sheet as well as the consolidated income statement and the consolidated balance sheet;
9. Resolution as to the treatment of the loss in accordance with the adopted balance sheet involving a reduction of the statutory reserve to cover the loss;
10. Resolution as to the board of directors’ and the president’s discharge from liability;
11. Resolution as to the number of board directors and deputy board directors;
12. Resolution on the remuneration to the board of directors and auditor;
13. Election of board of directors and the chairman of the board;
14. Election of auditor;
15. Resolution on a nominating committee;
16. Resolution as to principles for remuneration of executive management
17. Closing of the meeting.

III. PROPOSED RESOLUTIONS
Item 2: Election of chairman at the meeting;
The nominating committee, consisting of Thomas Ehlin, chairman and appointed by Nordea funds; Björn Franzon, Fourth Swedish National Pension Fund; Pernilla Klein, Third Swedish National Pension Fund; and Ragnhild Wiborg, Pecunia; as well as Per-Olof Mårtensson, chairman of the Karo Bio board of directors, and Jörgen Vrenning, representing Catella Funds, adjunct to the nominating committee from February 6, 2007, proposes Sven Unger as chairman at the meeting.

Item 9: The board of directors’ proposal as to the treatment of the company’s loss in accordance with the adopted balance sheet involving a reduction of the statutory reserve to cover the loss
The board of directors proposes that no dividend be paid for the financial year 2006 and that the parent company’s aggregate deficit SEK 138,978,484 be covered by SEK 138,978,484 from the statutory reserve. The statutory reserve will amount to SEK 172 167 633 after the reduction.

Item 11, 12 and 13: Resolution as to the number of board directors and deputy board directors, remuneration, and election of board of directors and chairman
The work in the nominating committee that is preparing proposals as to number of board directors and deputy directors to be elected by the general meeting, remuneration to the board of directors and auditors as well as composition of the board of directors is ongoing. Proposals will be announced as soon as the company has received information in this respect. The nominating committee proposes remuneration to the auditor to be as per approved invoice.

Item 14: Election of auditor
The nominating committee proposes re-election of the registered audit firm PricewaterhouseCoopers AB for the time until the end of the annual general meeting 2011.

Item 15: Resolution on a nominating committee
The nominating committee proposes that the four largest shareholders as of August 31, 2007, not being represented in the board of directors, shall appoint one representative each, which together with the chairman of the board shall be members of the nominating committee in respect of the 2008 annual general meeting. The representatives shall be appointed and announced no later than in conjunction with the company’s quarterly report for the third quarter 2007. The nominating committee shall appoint a chairman among themselves, whereby the chairman of the board of directors shall not be chairman. Should a shareholder decline to participate in the nominating committee or leave the nominating committee before its work is completed, the right to appoint a representative shall turn to the closest largest shareholder not represented in the nominating committee. Should the ownership structure significantly change subsequent to the establishment of the nominating committee, the composition of the nominating committee shall be changed in accordance with the above principles.

The nominating committee shall prepare proposals to be presented at the annual general meeting 2008 for resolution as regards chairman at the general meeting, chairman and other members of the board of directors, remuneration to the board of directors etc., and principles for appointment of nominating committee. The term of office of the nominating committee runs until a new nominating committee has been appointed in accordance with the resolution on appointment of the nominating committee by the annual general meeting 2008.

If the nominating committee finds it necessary, it may utilize reasonable resources of external consultants at the account of the company.

Item 16: The board of directors’ proposal to principles for remuneration of executive management
The board of director’s proposal on guidelines for remuneration of executive management entails the following major items. Executive management consists of the president of Karo Bio AB and executives that report directly to the president as well as presidents of Karo Bio’s subsidiaries. Remuneration and other employment terms for executive management shall be competitive. In addition to fixed salary, executive management shall receive variable remuneration, which shall be linked to the fixed salary, not exceed one-half of the fixed annual salary and be based on the achievement of determined business goals. Dismissal and severance pay shall not exceed 24 months salary in total for each executive. Pension benefits shall be based on defined benefit pension schemes or accede to the Swedish ITP-plan. The board may derogate from the guidelines where there are special reasons for doing so.

IV. DOCUMENTS
The annual report and the audit report as well as the board of directors’ complete proposals will be available at the company’s offices in Huddinge and on the company’s web site www.karobio.com/agm from Wednesday March 28, 2007. Copies of all documents will be sent to shareholders that so request and state their address or e-mail address. Copies of all documents will be available at the general meeting.

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Huddinge in March 2007
Karo Bio Aktiebolag (publ)
The Board of Directors



For further information, please contact:
Per Olof Wallström, President & Chief Executive Officer
Telephone: +46 8 608 60 20

Bertil Jungmar, Chief Financial Officer
Telephone: +46 8 608 60 52.

Facts about Karo Bio
Karo Bio is an innovative drug discovery and development company specializing in nuclear receptors for the development of novel pharmaceuticals with focus on metabolic diseases. Karo Bio is listed on the Stockholm stock exchange (Reuters: KARO.ST) since 1998.

The Company has expanded from being a drug discovery company by adding in-house preclinical development resources and competence for development of drugs to treat metabolic diseases. The Company has a strong project portfolio primarily targeting diseases such as diabetes, obesity, atherosclerosis and dyslipidemia.

In addition, Karo Bio has two strategic collaborations with international pharmaceutical companies for development of innovative therapies for the treatment of common diseases.

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