DEVELOPMENT OF CLINICAL CANDIDATE LXR-623 DISCONTINUED

Karo Bio and Wyeth to Continue Research Collaboration

Karo Bio announced today that it has been informed by its research partner,
Wyeth Pharmaceuticals, a division of Wyeth, that development of LXR-623 has been
discontinued. The compound had been in phase 1 testing for the treatment of
atherosclerosis. While LXR-623 demonstrated efficacy on biomarkers for
atherosclerosis, it had an unfavorable profile for further development.

Karo Bio and Wyeth remain committed to the research partnership and to advancing
a new lead compound under the terms of the collaboration, which was recently
extended until August 31, 2008.

The collaboration between Karo Bio and Wyeth targets the Liver X Receptor (LXR),
with the aim to develop new treatments for atherosclerosis. LXR regulates
transport proteins, including ABCA1 and ABCG1, which promote reverse cholesterol
transport (transport of cholesterol from peripheral tissues to the liver).
Furthermore, it has been demonstrated that small molecular compounds that
activate LXR have anti-atherogenic properties. "Unfortunately compounds do fail in the process but this is part of the
development of pharmaceuticals. We remain optimistic about LXR as a target for
treatment of atherosclerosis and for the prospects for new molecules for
development. The learnings generated from the LXR-623 program will be valuable
as additional potential compounds move forward. We have recently extended our
collaboration with Wyeth and we are pleased with Wyeth's commitment to the
program", says Per Olof Wallström, President of Karo Bio.

For further information, please contact:

Per Olof Wallström, President & Chief Executive Officer
Telephone: +46 8 608 60 20

Per Otteskog, Senior Vice President
Telephone: +46 8 608 60 18

Facts about Karo Bio
Karo Bio is a drug discovery and development company specializing in nuclear
receptors for the development of novel pharmaceuticals with focus on metabolic
diseases.

The company has expanded from being a drug discovery company by adding in-house
preclinical and clinical development resources and competence for development of
drugs to treat metabolic diseases. The company has a strong project portfolio
with innovative molecules that primarily targets diseases such as diabetes,
atherosclerosis and dyslipidemia. In all of these areas there are significant
market opportunities and a growing need for new pharmaceuticals with new
mechanisms of action.

In addition to the proprietary projects Karo Bio has two strategic
collaborations with international pharmaceutical companies and one biotech
collaboration for development of innovative therapies for the treatment of
common diseases.

Karo Bio is listed on the OMX Nordic Exchange Stockholm AB since 1998 (Reuters:
KARO.ST).

This press release is also available online at: www.karobio.com and
www.waymaker.net.

DEVELOPMENT OF CLINICAL CANDIDATE LXR-623 DISCONTINUED

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