INTERIM REPORT JANUARY-JUNE 2014

The January–June period and the second quarter 2014 in brief

  · Net sales amounted to MSEK 13.2 (16.2), whereof the second quarter amounted
MSEK 6.8 (8.1)
  · Net loss for the group was MSEK 27.6 (25.3), whereof the second quarter MSEK
14.2 (14.6)
  · Loss per share was SEK 0.04 (0.04), whereof the second quarter SEK 0.02
(0.03)
  · Cash flow from operating activities was MSEK -26.3 (-24.2), whereof the
second quarter MSEK -13.1 (-14.3)
  · Cash and cash equivalents and other short-term investments totaled MSEK 71.9
(33.8) at the end of the period

Significant events after the end of the reporting period

  · Karo Bio was granted MSEK 3.8 from Vinnova for the development of ERbeta
cancer

Conference call / audiocast today at 9.30 a.m. CET
CEO Per Bengtsson will present the report today at 9.30 a.m. in an audiocast,
held in Swedish. The audiocast and slides are available through the corporate
website http://www.karobio.se/ or by telephone +468 51 999 351. Questions may be
submitted over the internet or by telephone.

CEO COMMENTARY
Maintained Revenue focus

The first half of 2014 has resulted in a strengthening of Karo Bio in a number
of respects. Activities in our three main projects have progressed well. The
collaboration with Pfizer in the RORgamma project is in an exciting phase with a
number of important tests. Continued positive development of the project may
also trigger further milestone payments from Pfizer to Karo Bio.

Our position in the two ERbeta projects has also strengthened. In order to reach
a deal in ERbeta MS, we have now taken measures to intensify discussions with
companies that have shown interest in the project. In our other project, ERbeta
cancer, we are now entering the phase in which the safety of the substance we
have chosen to advance into clinical trials is documented.

In the first half of the year, we strengthened our finances through the rights
issue that raised net proceeds of MSEK 77. We have created revenue through the
collaboration with Pfizer and implemented cost reductions. Moreover, we have
been granted a total of more than MSEK 8 in “soft money” since last fall. In
addition to our current operations, we will actively seek additional business
opportunities in the form of attractive late projects or products.

In summary, we face an exciting period with the potential in our current
projects and that which additional business opportunities may bring.

CEO Per Bengtsson

For further information, please contact
Per Bengtsson, CEO
Telephone: +46 8 608 6020
E-mail: per.bengtsson@karobio.se

Henrik Palm, CFO
Telephone: +46 8 608 6076 or +46 70 540 40 14
E-mail: henrik.palm@karobio.se

Karo Bio AB (publ)
Novum
141 57 Huddinge
Sweden
Telephone: +46 8 608 60 00
Corp.reg.nr. 556309-3359
Website: www.karobio.com

The information in this report is such that Karo Bio is required to disclose
under the Swedish Securities Market Act. The information was disclosed on July
11, 2014 at 8.30 a.m. CET.