QUARTERLY REPORT JULY – SEPTEMBER 2006

•Karo Bio received a milestone payment from Wyeth for initiation of phase I clinical studies and the collaboration was extended for an additional year until August 31, 2007
•Merck initiated phase I clinical studies in the field of estrogen receptors and women’s health with a collaboration compound
•Karo Bio outlicensed a class of selective androgen receptor modulators (SARMs) for treatment of osteoporosis to Radius
•Net sales for the nine month period amounted to MSEK 42.0 (49.9)
•The loss for the nine month period amounted to MSEK 73.1 (73.7)
•Cash flows from operating activities for the nine month period amounted to
MSEK -74.3 (-61.0)
•Liquid assets and other short-term investments amounted to MSEK 268.1 (114.0) at the end of the period
•Loss per share for the nine month period amounted to SEK 0.94 (1.68).


For further information, please contact
Per Olof Wallström, President, tel. +46 8 608 60 20,
Per Otteskog, Senior Vice President Investor Relations, 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 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.

This report has not been subject to review by the Company’s independent auditor.

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