Karo Bio: Interim Report January-September 2014

Regulatory News:

Karo Bio (STO:KARO)

The January–September period and the third quarter 2014 in brief

· Net sales amounted to MSEK 22.0 (37.4), whereof the third quarter amounted MSEK 8.8 (21.2)

· Net loss for the group was MSEK 37.5 (18.7), whereof the third quarter MSEK 9.9 (net profit 6.5)

· Loss per share was SEK 0.06 (0.04), whereof the third quarter SEK 0.01 (EPS 0.01)

· Cash flow from operating activities was MSEK -35.7 (-25.5), whereof the third quarter MSEK -9.4 (-1.4)

· Cash and cash equivalents and other short-term investments totaled MSEK 62.3 (32.1) at the end of the period

· GLP toxicity studies commenced in the ERbeta cancer project

· In ERbeta MS, preclinical studies for the selection of a drug candidate financed by MS Society were completed with positive outcome

Significant events after the end of the reporting period

· At the end of the fourth quarter, the research collaboration on RORgamma will according to plan enter a new phase in which Pfizer will carry out continued development efforts on its own. Consequently, Karo Bio plans to adjust its organization.

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 51 999 358. Questions may be submitted over the internet or by telephone.

CEO COMMENTARY

In our three main projects, activities have reached key stages in several respects. The collaboration with Pfizer in the RORgamma project is entering a new phase at year-end in which Pfizer will carry out the development work on its own. Work is proceeding on a broad front within Pfizer and payments to Karo Bio will be triggered when the project reaches specific milestones. Since Pfizer’s need for our research resources diminishes considerably going forward, Karo Bio plans to implement an adjustment of its organization.

In the project ERbeta cancer, we currently perform GLP toxicity studies and some other activities that are part of the final stage of preclinical development. So far it looks good and when all results are available, we are in a position to inform about the project status.

In the fall, we have intensified our efforts in our ER-beta MS project to find a partner. We are talking with several of the leading MS companies that want to develop new forms of MS therapy to meet the large needs that are not fulfilled by the anti-inflammatory drugs that are currently the only available option on the market. We continue to maintain a dialogue with interested companies and await certain requested and supplementing results which illustrate the balance between efficacy and risk in the project.

Summing-up, we have an interesting portfolio of early projects. We now direct the company towards projects in a more advanced phase, closer to the market.

CEO Per Bengtsson

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 October 29, 2014 at 8.30 a.m. CET.

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