KARO BIO'S RIGHTS ISSUE SUBSTANTIALLY OVERSUBSCRIBED

KARO BIO'S RIGHTS ISSUE SUBSTANTIALLY OVERSUBSCRIBED

Not for release, publication or distribution in Australia, Canada, Japan or the
United States. This announcement does not constitute an offer to sell or the
solicitation of an offer to buy the securities of Karo Bio AB (publ) (the
“Securities”) in Australia, Canada, Japan or the United States or in any other
jurisdiction. Securities may not be offered or sold in the United States absent
registration or an exemption from registration under the U.S. Securities Act of
1933, as amended. The issuer of the Securities has not registered, and does not
intend to register, any portion of the offering in the United States, and does
not intend to conduct a public offering of the Securities in the United States.

STOCKHOLM, December 9, 2009. Karo Bio AB (publ) (Reuters: KARO.ST) today
announced that the company's rights issue of approx. SEK 166 million has been
substantially oversubscribed. Adding up, the issue was oversubscribed by 73
percent and 98 percent of the shares offered were subscribed for with the
exercise of subscription rights.

37,904,128 shares have been subscribed for with the exercise of subscription
rights, meaning that 98 percent of the subscription rights have been exercised.
Persons who have exercised their subscription rights have received paid
subscribed shares (BTAs) on their securities account (VP account). Trading in
paid subscribed shares (BTAs) (ticker: KARO BTA) will take place on NASDAQ OMX
up to and including the date when the rights issue is registered with the
Swedish Companies Registration Office, which is expected to be on or about
December 16, 2009.

Subscriptions for an additional 28,922,888 shares, corresponding to SEK
124,368,418, without the exercise of subscription rights have also been
received. The Board of Directors of Karo Bio has decided on the allocation of
802,269 shares that have not been subscribed for with subscription rights,
according to the principles described in the prospectus. Persons who have
received such allocation will be notified through a payment notice which will be
dispatched today. As a consequence of the rights issue, the number of shares and
votes in the company increases with 38,706,397 to 154,825,589 and the share
capital increases with approx. SEK 19,353,198.50 to SEK 77,412,794.50.

The newly issued shares are expected to be converted from BTA to shares on or
about 22 December, 2009 meaning that trading in the newly issued shares is
expected to commence on or about 17 December, 2009.


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 December 9, 2009 at 8:30 am CET.

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

Notice to UK residents. This announcement is only being distributed to, and is
only directed at, persons in the United Kingdom that are qualified investors as
that term is defined in the Prospectus Directive that are also (i) “investment
professionals” falling within article 19(5) of the Financial Service and Markets
Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii)“high net worth
entities” and other persons to whom it may lawfully be communicated, falling
within the meaning of Article 49(2)(a) to (d) of the Order (all such persons
being “relevant persons”). The offered shares of Karo Bio AB are only available
to relevant persons and any invitation, offer or agreement to subscribe,
purchase or otherwise acquire such offered shares will be engaged in only with
relevant persons. Any person who is not a relevant person should not act or rely
on this document or any of its content.