INTERIM REPORT JULY - SEPTEMBER 2007

INTERIM REPORT JULY - SEPTEMBER 2007

•In the collaboration with Karo Bio, Merck discontinued phase I clinical
development and selected a new compound for preclinical development 
•KB5359, intended for treatment of dyslipidemia, was discontinued due to
toxicological findings in 28 day toxicology studies
•Wyeth discontinued phase I development of a lead compound. The collaboration
agreement with Karo Bio has been prolonged with the intention to identify new
candidate drugs
•A phase I clinical trials application for the type 2 diabetes compound KB3305
has been filed
•Phase II proof of concept data for the dyslipidemia compound KB2115 has
recently been presented at international conferences
•Karo Bio is focusing its internal operations on three prioritized projects. A
reduction in staff with 14 people and other savings will, on an annual basis,
lead to a reduction of costs by 20 MSEK. The cost for the restructuring is
approximately 7 MSEK and will be taken in the fourth quarter this year.
•Net sales for the nine month period amounted to MSEK 5.7 (42.0) 
•The loss for the nine month period amounted to MSEK 148.8 (73.1) 
•Cash flow from operating activities for the nine month period amounted to 
MSEK -139.2 (-74.3) 
•Liquid assets and other short-term investments amounted to MSEK 471.4 (268.1)
at the end of the period 
•Loss per share for the nine month period amounted to SEK 1.45 (0.80) 
•Today, Karo Bio announced that the chairman of the board, Per-Olof Mårtensson,
has resigned from the board due to family reasons. The board has elected Leon E.
Rosenberg as new chairman until the annual shareholders meeting in April 2008.

For further information, please contact 
Per Olof Wallström, President, phone: +46 8 608 60 20, 
Per Otteskog, Senior Vice President Investor Relations, phone: +46 8 608 60 18,
or
Erika Johnson, Chief Financial Officer, phone: +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