PRESSRELEASE FROM THE EXTRAORDINARY GENERAL MEETING OF KARO BIO AB (PUBL)

STOCKHOLM, November 10, 2009. At the extraordinary general meeting of Karo Bio AB (publ) (Reuters: KARO.ST) on November 10, 2009 it was resolved to approve the Board of Director's resolution of October 23, 2009 on a preferential rights issue.

Resolution to approve the Board’s resolution on a preferential rights issue
The general meeting resolved to approve the Board of Director’s resolution on the new share issue with preferential rights for the shareholders, which can increase the share capital with an amount of not more than SEK 19,353,198.50 and the number of shares with no more than 38,706,397, or the higher amount and higher number of shares, respectively, that may follow from the exercise of outstanding warrants. The terms of the rights issue provide that for every existing share in Karo Bio, the holder is entitled to one (1) subscription right and three (3) subscription rights entitle the holder to subscribe for one (1) new share. The subscription price is SEK 4.30 per share, which means that the rights issue will raise a maximum of approx. SEK 166m before transaction costs.

The record date at the Swedish Central Securities Depository, Euroclear Sweden AB, for receipt of subscription rights is November 17, 2009. This means that the Karo Bio share will trade excluding subscription rights from and including November 13, 2009. The subscription period will run from and including November 18 up to and including December 2, 2009, or such later date as decided by the Board of Directors. For shareholders who choose not to participate in the rights issue, a dilution effect of up to approx. 25 percent will occur. However, shareholders can gain economic compensation for this dilution by selling their subscription rights.

Timetable for the rights issue

November 11, 2009
Publication of prospectus

November 13, 2009
First day of trading excluding subscription rights

November 17, 2009
Record date, i.e. shareholders registered in the share register as of this day will receive subscription rights which entail a right to participation in the rights issue

November 18 – November 27, 2009
Trading in subscription rights, i.e. shareholders who choose not to subscribe for new shares in the rights issue and do not want to lose the value of the subscription rights can sell their subscription rights during this period

November 18 – December 2, 2009
Subscription period

On or about December 7, 2009
Announcement of preliminary outcome of the rights issue

Subscription undertakings and underwriting agreements
The Board member and one of the single largest shareholders of Karo Bio, Bo Håkansson (through Farstorps Gård AB), together with certain other members of the board and the management team have undertaken to subscribe for shares in relation to their respective holdings in Karo Bio, which represent in aggregate approx. 3.1 percent of the rights issue. Furthermore, Bo Håkansson (through Farstorp Invest AB), AB Grenspecialisten, Fibonacci Growth Capital AB, Karl Perlhagen, Fårö Capital AB, Tedde Jeansson, Handels & Investment AB Venture as well as Dirbal AB have entered into underwriting agreements with Karo Bio and ABG Sundal Collier to subscribe for shares amounting to approx. SEK 161m, which means that 100 percent of the offering is covered by subscription undertakings and underwriting agreements.

Financial advisors
ABG Sundal Collier and Piper Jaffray are acting as financial advisors to Karo Bio in connection with the rights issue.

For more information please contact:
Per Olof Wallström, President
Tel: +46 8 608 60 20
E-mail: p.o.wallstrom@karobio.se

Erika Söderberg Johnson, CFO and responsible for Investor Relations
Tel: +46 8 608 60 52
E-mail: erika.soderberg.johnson@karobio.se

About Karo Bio
Karo Bio is a drug discovery and development company specializing in endocrinology and targeting nuclear receptors as target proteins for the development of novel pharmaceuticals. The company has a project portfolio with innovative molecules that primarily target dyslipidemia, CNS-disorders, inflammation, and women’s health. In these areas, there are significant market opportunities and a clear need for pharmaceuticals with new mechanisms of action. Karo Bio develops compounds aimed at treating broad patient populations up to clinical proof of concept before out-licensing. In therapeutic niche areas, Karo Bio has the capacity to bring selected compounds into late stage clinical development and, potentially, to the market. In addition to the proprietary projects, Karo Bio has three strategic collaborations with international pharmaceutical companies for development of innovative therapies for the treatment of common diseases. Karo Bio is listed on NASDAQ OMX Stockholm since 1998 (Reuters: KARO.ST).

Karo Bio publishes this information in accordance with the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was published on November 10, 2009 at 4:30pm CET.

This press release is also available online at: www.karobio.com and www.newsroom.cision.com