ANNUAL REPORT 2007

ANNUAL REPORT

2 0 0 7

CONTENTS

Nuclear receptors are the common denominator for all

activities within Karo Bio. Karo Bio in Brief

2

Lipoproteins, diabetes and female health. Karo Bio seeks to develop pharmaceuticals to make life easier for patients within

three large areas. Introduction

4

Success and setbacks. Focus and effi ciency.

Per Olof Wallström discusses the past twelve months. Statement by the President

10

Attractive risk balance, fl exibility

and multiple opportunities. Vision, Goals and Strategy

12

Karo Bio has innovative substances with the potential

to meet major clinical needs. Market Opportunities

14

Developing new pharmaceuticals is a long and expensive process.

Development of New Pharmaceuticals

15

Karo Bio’s research management discusses its

view of the Company’s challenges and opportunities. Research Managements View

16

2007 was a year of competence development

and organisational restructuring. Human Resources

18

Every project includes specifi c opportunities, risks and a unique competitive situation. Prioritized Karo Bio projects

are described in more detail here. Project Descriptions

20

Karo Bio Share and Ownership Structure

24

Corporate Governance

26

Board of Directors, Executive Management and Auditors

28

Administration Report

30

Income Statements

34

Balance Sheets

35

Cash Flow Statements

37

Statements of Changes in Shareholders’ Equity

38

Accounting and Valuation Principles

40

Notes to the Financial Statements

45

Five Year Summary (with defi nitions)

56

Audit Report

58

Glossary

59

Annual General Meeting and Futher Information

60

KARO BIO

– the joy of exploring

Karo Bio’s vision is to become a profi table and sustainable pharmaceutical company with products on the market and with a competitive product portfolio containing a mix of partner projects and proprietary projects in development.

LEGAL DISCLAIMER

This Annual 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 fl uctuations, and political risks.

1

2

Karo Bio in Brief

Innovative Medical

Concepts Based on Genuine Core Competences

Since Karo Bio was founded in 1987, the Company has specialized in novel drugs that target nuclear receptors.

Karo Bio’s current project pipeline leverages on the considerable expertise in the fi eld that the Company has generated over the years.

Nuclear receptors are also known as transcription factors

and may be regarded as on/off buttons regulating the

transcription of genes into proteins. The nuclear receptors

control biological processes at their core level, the genetic

level. By targeting nuclear receptors, Karo Bio utilizes

Karo Bio in Brief

3

the body’s own control systems, for instance to normalize the metabolism of lipids in patients with elevated blood cholesterol.

Tuning nuclear receptor activity in this way is very powerful.

To avoid unwanted side effects, the drug substances must be harnessed by either directing the drug to certain tissues or by using compounds that very selectively target a certain receptor subtype.

P RO JE C T EXPLORATORY

RESEARCH

DRUG DISCOVERY

PRECLINICAL

DEVELOPMENT PHASE I PHASE II PHASE III NDA

Eprotirome (KB2115), TR Dyslipidemia

KB3305, GR Type 2 diabetes

Selective ERbeta Agonists Depression, Cancer, Inflammation

Karo Bio/Wyeth, LXR Atherosclerosis

Karo Bio/Merck, ER Women’s Health

Karo Bio/Zydus Cadila, GR Inflammation

Karo Bio’s project pipeline for treatment of major disorders

4

Introduction

But when Jim reaches the age of 45, many of his playmates from play school will have developed dangerous levels of blood lipids. Every third person in Europe and the USA currently dies of heart and other cardio- vascular diseases, and the blood lipids problem is becoming increasingly serious around the world. None of this bothers three-year old Jim.

But it does bother us at Karo Bio.

In 2007 we have shown that our compound eprotirome is effi cacious in patients with high blood lipids.

Read more on pages 20–22

Blood Lipids

Jim knows nothing about cholesterol and blood lipids

Introduction

5

Vendela has no idea of how diet affects health

But when Vendela is 40 years old, several hundred million of her generation will have developed type 2 diabetes. Between 150 and 200 million people already suffer from diabetes. More than 90 percent have type 2 diabetes, and important contributing factors behind the disease are lifestyle and obesity. Although current treatment forms are inadequate, this does not worry Vendela. But it does worry us at Karo Bio.

In 2007 our compound KB3305 advanced into phase I/IIa clinical trials

Read more on pages 20–22

Diabetes

6

Introduction

Introduction

7

Fredrika has no idea of how estrogen affects women

But Fredrika’s mum has several friends who suffer from a variety of women’s health ailments. Fredrika sometimes wonders why her mum’s friend Monica is so often sad, but she never gets a good answer.

So Fredrika has stopped worrying about her mum’s ill friends.

But we at Karo Bio have not.

Read more on pages 20–23

8

Introduction

Women’s health

Introduction

9

10

Statement by the President

Dear Shareholder

We have been through a year with many news events for Karo Bio. Count- ing back, I add up to 24 press releases during 2007, most of them refl ect- ing positive events, but also announcing that three substances were ter- minated during the year, one by Karo Bio and two by our partners, Merck and Wyeth. However, we are pleased that both Merck and Wyeth are com- mitted to our ongoing joint projects and have the intention to bring new compounds forward in development.

IT IS PAINFUL when compounds do perish. Up to that point, considerable time, energy, enthusiasm and fi nancial resources have been invested. Every organization has to plan for success and dare to believe that we will be suc- cessful in every step on the way. One cannot develop complex drug projects with a defeatist attitude, it simply would not work. Therefore, when a clinical candidate is terminated, this is very visible, both internally and externally.

Karo Bio has over a short time suffered three such events, all of them for differ- ent reasons, and the results in terms of decreased investor confi dence and share price are obvious.

GOOD PROGRESS WITH EPROTIROME However, we have also had good news!

Our compound KB2115, for which the generic name eprotirome was ap- proved in late 2007, for treatment of dyslipidemia (high blood lipids), showed results in the fi rst phase II study which exceeded our expectations. There was always the risk that the therapeutic win- dow for eprotirome would be narrow or that tolerance in patients would be a an issue. As it shows, in spite of giving eprotirome in reasonably high dos- ages of to patients, tolerance was very good and the effi cacy profi le is exciting.

Our data show that eprotirome gives signifi cantly positive effects not only on

total cholesterol and the harmful LDL cholesterol, but also on triglycerides and lipoprotein (a), an independent risk fac- tor for development of coronary heart disease that has been very diffi cult to affect with other types of medications.

We now enlarge the clinical program in phase IIb for eprotirome with two criti- cal studies. In the fi rst, we have added eprotirome on top of statin therapy, and in the other we add eprotirome on top of the cholesterol uptake inhibitor ezetimibe. The studies are designed in a similar fashion and are intended to give defi nite Proof of Concept for eprotirome as an important new treat- ment for high blood lipids. The product profi le that we look for is good effi cacy (as described above) coupled with excel- lent safety, particularly regarding the liver and the heart.

GREAT MARKET POTENTIAL

The intended use of eprotirome is pri- marily as second line treatment, together with statins or ezetimibe, and potentially also as a third line option. There are some 16 million high risk patients in the US only who do not reach the choles- terol target levels, thus with increased risk for heart attacks. This market is very large and growing, with annual sales exceeding USD 5 billion. Therefore the continued development of eprotirome in phase III clinical trials and for market-

»We believe

the profi le of

eprotirome will

be of interest to

several big pharma

partners «

Statement by the President

11

ing and sales will require a partner. It is Karo Bio’s intention to negotiate a licence agreement for eprotirome based on the results of the two additional clinical studies performed in 2008. We believe the effi cacy and safety profi le of eprotirome will be of interest to several big pharma partners.

CONTINUED BUILD UP OF INTERNAL PIPELINE

We have also entered into clinical phase I studies with our diabetes compound, KB3305. The formulation has been challenging to make, but now we look forward to see what the molecule does to man, and what man does to the molecule. By the end of 2008, we expect to have the fi rst results in patients with type 2 diabetes.

Our third internal and preclinical project is to develop an orally active, highly selective ERbeta agonist. We are making good progress with competitive compound selectivity, but bioavailabil- ity needs to be futher improved. Our objective is to be able to tie everything together and select a drug candidate during 2008.

FOCUS RESOURCES ON PRIORITIZED PROJECTS

During the fall of 2007, we have reduced the number of employees by 14 and together with other initiatives to adapt the cost base, this will lead to a reduction of internally generated costs by some SEK 20 million on an annual basis. The intention is to prolong our runway while putting enough investment behind clini- cal projects like eprotirome and KB3305, thereby increasing the chances to negoti- ate a major partnership agreement. The action taken gives the company enough resources to drive the prioritized projects forward in accordance with our plan.

2008 is an exciting and challenging year for Karo Bio!

Huddinge, February 2008 Per Olof Wallström

■

We have advanced our two clinical projects, eprotirome and KB3305, in accordance with our plan. In fact, we have never been as far advanced in clinical development as we are with eprotirome.

■

We are well fi nanced, following the new share issue in the spring of 2007, in order to carry out our plan for the following two years.

■

During 2007, Karo Bio has suffered setbacks in three different projects; one internal and two partnered projects.

■

Our partners Merck and Wyeth continue their efforts and we expect new drug candidates to be advanced in development.

■

Early 2008, we signed a new partnership with Zydus Cadila.

■

In February 2008, Karo Bio re-acquired all rights to our SARM compounds from Radius.

■

It is our intention to produce factual and concrete results in the coming year, and thereby deliver value to our shareholders.

In summary

Statement by the President

11

12

Vision, Goals and Strategy

Our vision is to become a profi table

and sustainable pharmaceutical company with products on the market and with a

competitive project portfolio containing a mix of partner projects and proprietary projects in development.

KEY ACCOMPLISHMENTS 2007

✔ The fi rst phase IIa clinical study with eprotirome successfully completed

✔ Phase IIb clinical studies with eprotirome initiated

✔ Phase I/IIa clinical studies initiated with KB3305

✔ Collaboration with Wyeth Pharmaceuticals prolonged until August 2008

✔ Funding of project pipeline secured to 2010 through a rights issue genera- ting net proceeds of SEK 387 million

Vision, Goals and Strategy

13

Objectives 2008

Finalize the eprotirome phase IIb studies and prepare the product for start of phase III

➜

Based on eprotirome phase IIb data,

negotiate a new partnership for further development

➜

Finalize phase I/IIa study with KB3305 for type 2 diabetesand prepare for a clinical Proof of Concept study over three months

➜

Select a candidate drug from

the ERbeta platform and initiate preclinical development

➜

From our discovery research

- generate one new collaboration project - identify one additional internal project

- identify additional indication for ERbeta compounds

➜

Karo Bio’s strategy for developing the Company and building shareholder value is to:

License out

compounds intended for the treatment of broad patient populations

Bring selected projects

in niche areas to the market or late stage out- licensing

B p

a o l

Actively build

value in project portfolio through own research and development as well as partnering

A

v p o d w

Generate

new innovative drug discovery projects targeting nuclear receptors

Karo Bio actively seeks alternative ways of risk sharing through collaborations and partnering. With this strategy, Karo Bio can develop and maintain a broad competitive project pipeline that would not be feasible with internal resources only.

Karo Bio will bring selected compounds aimed at targeted patient populations to late stage clinical development and regulatory approval before outlicensing to partners. The Company will potentially also launch such niche products in selected markets. Projects targeting major patient populations in competitive market segments are outlicensed to partners in preclinical or early clinical stages of development.

This business model and strategy gives Karo Bio an attractive risk balance and fl exibility in deal making, and creates multiple opportunities for revenue generation over time.

Business Model

and Strategy

14

Market Opportunities

Market Opportunities

DYSLIPIDEMIA – HIGH BLOOD LIPIDS Global sales for treatment of dyslipi- demia are approaching USD 30 billion annually. The statin class of drugs dominate the market and account for USD 25 billion of total annual sales.

Statins down-regulate synthesis of LDL-cholesterol in the liver.

Need for New Drugs

However, only 50 percent of high risk patients and 18 percent of very high risk patients reach LDL target levels with statin treatment (Datamonitor, 2007). The need for new drugs that can be used alone or in combination with statins is therefore signifi cant.

Opportunities for Eprotirome

Karo Bio’s eprotirome represents a new therapeutic principle for treatment of high blood lipids and decreasing risk in cardiovascular disease. The likely posi- tion in the market is as add on to statins and as an alternative to other drugs such

as the cholesterol absorption inhibitor ezetimibe.

Karo Bio will seek a partner to bring eprotirome through phase III clinical trials and to the market. The aim is to initiate a collaboration after completion of Phase IIb clinical trials.

TYPE 2 DIABETES

Diabetes is the fourth or fi fth lead- ing cause of death in most developed countries. More than 90 percent of the diabetes patients have type 2 diabetes.

An Epidemic

The incidence of type 2 diabetes is increasing rapidly in the western world as well as in the developing countries.

The market for anti-diabetes drugs is substantial with annual sales in the order of USD 15 billion. Oral medicines are fi rst line treatment but as the disease progresses most patients will have to inject insulin to control blood sugar levels.

Karo Bio’s KB3305 is a new liver se- lective compound for treatment of type 2 diabetes, with the purpose to control blood sugar production in the liver. The mainstay oral treatment today is met- formin. However, prolonged treatment with metformin often shows inadequate effect. KB3305 will likely be given as an add on agent to metformin before introduction of injectable insulin.

ESTROGEN AND WOMEN’S HEALTH Estrogen has many positive effects in postmenopausal women but is also associated with side effects which limit its use.

New Clinical Opportunities Through ERbeta Discovery

The discovery of the ERbeta receptor has created a number of new clinical opportunities since ERbeta selective agonists may not induce the side effects mediated by the ERalpha receptor.

Typical ERalpha mediated side effects are proliferative responses that repre- sent a risk for development of cancer in various tissues such as the uterus.

These types of side effects should be avoided by targeting the ERbeta recep- tor and preclinical evidence suggest that ERbeta agonists, in addition to the opportunities within women’s health, can be useful for treatment of various cancers as well as infl ammatory and CNS disorders.

Need for new Anti-Depressive Drugs Karo Bio also continues to explore alternative clinical opportunities for ERbeta compounds.

Preclinical data suggest that ERbeta compounds have a potential in future treatment of depression. Depression is a major health problem and affects women more often than men. In the US there are about 20 million patients that suffer from clinical depression and WHO predicts that by 2020 depression will be the second-largest cause of the global health burden. A signifi cant part of the patients do not respond to cur- rent therapies or experience side effects such as sexual dysfunction, emotional numbing, insomnia and weight gain.

Cardiovascular disease, diabetes and depression are areas where there are great needs for new drugs. In these fi elds, Karo Bio has innovative compounds with profi les that have the potential to meet the signifi cant clinical needs.

»The need for new drugs

that can be used alone

or in combination

with statins is therefore

signifi cant «

Phase III

In phase III, a large number of patients are studied to confi rm therapeutic benefi t and to provide documentation needed for regulatory approval. Study designs are determined by the level of effi cacy seen in phase II studies. Indica- tion- or compound-specifi c issues may need to be addressed, such as head-to- head comparison with existing thera- pies, combined treatment or effi cacy in different disease stages. For safety and tolerability, regulatory demands defi ne the number of patients and the exposure time needed for approval.

Once all clinical documentation has been compiled and evaluated, a New Drug Application (NDA) is submitted to the regulatory authorities.

STATISTICS AND COSTS

On average, the time from project initiation to product launch is almost 12 years. The chance for a phase I compound to reach phase II is on average 46 per cent. Once phase II has been successfully completed the chance for reaching the market is around 60 per cent. If the costs of all failures are included, the cost for bringing a compound to the market is in the range of USD 500 million to USD 2 billion.

The range relates to different classes of compounds.

The development of new pharma- ceuticals is a complicated and costly process associated with high risk, but also high rewards for success- ful companies. The different steps involved are described below.

DRUG DISCOVERY

The exploratory research and drug discovery process includes the search for a new approach to treat a certain disease. Compounds are either searched for in existing compound collections or are de novo designed and synthe- sized. Evaluation is to a great extent performed with assays that determine binding to target proteins, effects on relevant markers in cultured cells and preclinical disease models. Once potent and selective compounds have been identifi ed these may need to be further optimized to ensure adequate pharma- ceutical properties.

PRECLINICAL DEVELOPMENT

Preclinical development is the process of taking a new compound through the stages necessary for testing in humans.

The goal is to determine biological effects, referred to as pharmacodynam- ics and pharmacokinetics, that is how a compound is absorbed, distributed, metabolized and excreted. The main

focus however is toxicological testing in accordance with regulatory guidelines in order to provide risk assessment be- fore entering clinical trials. The average time for the entire preclinical process is 1.5 years.

CLINICAL DEVELOPMENT

Clinical development is when a drug candidate is tested in humans before it can be approved on the market.

Phase I

In phase I, the compound is given to humans for the fi rst time. Healthy volunteers are involved in these studies.

The focus is on safety and tolerability, to defi ne a dose range and dose regimen for the following phase II studies and to determine the nature of adverse reac- tions if any.

Phase II

In phase II, patients are exposed to the compound. Phase IIa is aimed at Proof of Concept, showing that the compound has benefi cial effects in patients with a well defi ned diagnosis. In phase IIb, the aim is to prepare for pivotal phase III studies by confi rming the dose, admin- istration regimen, endpoints, and other information in a wider patient popula- tion. Study duration can be extended to several months to look at possible tolerance or rebound effects.

Development of New Pharmaceuticals

Development of New Pharmaceuticals

15

Phase I Phase II Phase III Exploratory

research

Drug discovery

Preclinical development

CLINICAL DEVELOPMENT Candidate

Drug

CD

Investigational New Drug application

IND

New Drug Application

NDA

16

Research Managements View

Karo Bio’s research is managed by the three heads of the functional units.

Carl-Magnus Andersson heads Chemical

& Pharmaceutical Science and Intellectual Property, Anneli Hällgren is responsible for the Pharmacology, ADME & Safety organi- zation and Jens Kristensen runs the Clinical Development department. Together, they manage the process of drug discovery and development.

The drug development process is complex and spans many specialized competences. Evaluating data, drawing the correct conclusions and initiat- ing the appropriate action takes experience.

Karo Bio fi nds that a team, working well together, supporting each other with complementary skills is a good way to secure project progress.

Carl-Magnus, Anneli and Jens constitute such a team.

Jens Kristensen

“ Of course, we see the greatest short-term opportunities with eprotirome, our most advanced product. Especially as an add- on to current standard treatments, such as the statins. Our patient data so far seems to indicate that this thyromimetic is unique in reducing several important risk factors for athero- sclerotic cardiovascular disease at doses with a benign safety profi le. While opportunities are obvious, a challenge for the team under limited resources is to get everything right clini- cally, and to design and manage the most decisive clinical studies. 2008 will present challenges in performing some critical phase II studies under very tight time constraints.

Still, we have managed similar situations before, and have great hope to have the compound ready for phase III by the end of 2008”

Anneli Hällgren

“ Our focus on nuclear receptors presents unique opportunities, but also brings distinct target-related challenges. Few will doubt that we can get impressive effi cacy. On the other hand, working with such potent compounds which interfere with central pathways leaves us in need of convincing preclinical safety studies. While it may be resource consuming to establish enough nonclinical data to confi dently advance compounds into man, most of our targets are nicely validated in areas of large medical needs.”

Carl-Magnus Andersson

“ We continue to rely heavily upon crystal structures and using detailed structural information for design and optimisation of compounds. Here, we certainly have some unique opportuni- ties if we make sure to tap our large collection of proprietary structures. Given the profound action we get with potent compounds at nuclear receptor targets, commanding selectiv- ity is a must. We continue to look at the whole spectrum of subtype-, cofactor- and tissue selectivity as well as receptor modulators, which in essence combine these former concepts.

We make sure to have the right tools for the job. It is key to maintain our reputation as one of the best picks for a partner in nuclear receptor drug discovery.”

New R&D Leadership

What do you see as the major challenges

and opportunities for Karo Bio?

Carl-Magnus Andersson

“ As our most exposed clinical projects continue to mature and call for increasing resource allocation, we must still make room for early projects. One of the most important objectives for us in R&D management in the short term is to identify and cultivate collaboration opportunities which broaden our early pipeline. There are plenty more innovative ideas than we can handle on our own, and we will need to be aggressive and professional in order to effi ciently pursue those through external collaborations. We do appreciate that a key asset is our people, not least experienced project managers and staff scientists, who will need to put serious hours into these collaboration projects.”

Anneli Hällgren

“ As a new R&D management team we sat down and had a look at our strategies. These have been somewhat revised along with some organisational adjustments, and we have defi ned how to assess and evaluate new ideas internally. It is vital to any biotech company to explore the frontiers of key areas, in our case nuclear receptor pharmacology. While we can only do so much internally, we also add expertise through academic collaborations and sponsor relevant aca- demic research through the Karo Bio Research Foundation.

This is one way of enabling quality exploratory research, independent but within our fi eld of interest which could cer- tainly create new clinical opportunities down the road.”

Jens Kristensen

“ Integrating business aspects is key to building a balanced portfolio and setting priorities. We work in close collabora- tion with business development in identifying new opportu- nities. It helps a great deal that our VP of business has a background in science – he contributes very importantly with his global perspective on drug development. An impor- tant aspect is to continuously cultivate our platform assets, for example, we spend quite some time thinking about addi- tional or alternative indications for existing projects. In this process business aspecs and unmet medical needs go hand- in-hand.”

Apart from the three partnerships, you are currently running three prioritized projects internally. How do you manage the pipeline and what are the plans and possibilities for development of new projects?

From left: Jens Kristensen, Carl-Magnus Andersson and Anneli Hällgren

Research Managements View

17

18

Human Resources

Creativity and Competence

Karo Bio continues to build an integrated research and development organization that interacts closely with industrial partners as well as academia.

CLOSE COLLABORATION with academia has been a corner stone in the develop- ment of Karo Bio. This process con- tinues, also with the Karo Bio Research Foundation as a tool to stimulate aca- demic research in the fi elds of particular interest to Karo Bio. During 2007, the fi rst two grants from this foundation have been awarded.

INTERACTION PHILOSOPHY

Karo Bio has established an integrated research and development organization to conduct the Company’s discovery, preclinical and clinical development projects in an effi cient and goal-oriented way. There is close interaction between the business development and research management teams.

Interaction is in fact a key element in the way we work. Each project and team of expertise has its own specifi c focus, but must also have good insight into the other links in the research and develop- ment chain.

DEVELOPING COMPETENCE

Competence development is key to at- tracting and maintaining qualifi ed staff.

Karo Bio has been building new areas of competence in preclinical and clinical development over the last few years, partly with externally recruited experts, but also through internal training.

Karo Bio has defi ned processes for competence and individual develop- ment. Goals are defi ned and plans for competence enhancement are formu- lated in our individual employee goal and development interviews. Based on these goals we identify needs in terms of competence development, which are then addressed during the year.

We believe that all employees con- tribute to the Company’s growth and development, that each and

everyone’s efforts make a difference.

We strongly believe in the importance of internal communication and inter- action so that the whole team strives for the same overall Company goals.

HEALTH AND WORK ENVIRONMENT The health and well-being of both the group and each individual are important competitive factors. Our employees are invited to undergo personal health pro- fi les and we promote active rehabilita- tion early on in the course of an illness.

Karo Bios’ gender equality plan in- cludes goals that must be reached and requirements that must be met within specifi c times, as set forth in the Swed- ish Equal Opportunities Act. Men and women must have the same opportuni- ties within the organization without discrimination.

Xiongyu Wu is a medicinal chemist. Xiongyu has been employed by Karo Bio since 2007.

SOCIAL RESPONSIBILITY

As an industrial Company, Karo Bio has an impact on the environment. Since we are a research and development Company with no in-house produc- tion, our consumption of energy and other natural resources and our air and water emissions are relatively limited.

Karo Bio’s daily activities involving chemical substances and genetically modifi ed cells and microorganisms entail strict requirements in terms of comprehensive environmental and safety efforts to minimize the risk of negative impact on the environment and human health.

Our environmental program is con- ducted as an integral part of our opera- tions, and is geared toward preventive measures and constant improvement, where the goal is to meet or exceed ap- plicable legal requirements, regulations and international agreements.

STAFF TURNOVER 2007

New employees 14%

Resigned 14%

Staff reduction 16%

GENDER DISTRIBUTION

■ Women 52%

■ Men 48%

EDUCATION LEVELS

■ PhD 47%

■ University degree 45%

■ Other 8%

0 1 2 3 4 5

2005 2006 2007

%

ABSENCE DUE TO SICKNESS

■ of wich long term absence

■ Total absence due to sickness

» Karo Bio has been building new areas of competence in preclinical and clinical development over the last few years, partly with externally recruited experts but also through internal training.«

Thomas Norin is a medicinal chemist who is engaged in synthesis of ERbeta agonists. Thomas has been employed by Karo Bio since 2000.

Magdalena Krajewska, Head of Process &

Pharmaceutical R&D.

Magdalena has been employed by Karo Bio since 2007.

DEVELOPMENT STAGE HISTORY POSSIBILITIES

Eprotirome

(KB2115) Dyslipidemia

Phase IIb clinical studies Developed as an obesity com- pound in collaboration with Bristol-Myers Squibb.

Repositioned by Karo Bio in 2004 for treatment of dyslipidemia.

Potential to become an important drug to treat dyslipidemia (high levels of blood lipids).

KB3305 Type 2 Diabetes

Phase I/IIa clinical studies Treatment concept developed in collaboration with Professor Suad Efendic.

Compound discovered in collaboration with Abbott Laboratories.

Karo Bio retained all rights in 2003.

KB3305 could become an important new compound for treatment of type 2 diabetes.

ERbeta Depression

Discovery/Lead Optimization ERbeta was discovered in 1996 by Professor Jan-Åke Gustafsson’s research group in collaboration with scientists at Karo Bio.

Several clinical opportunities such as depression, cancer and infl ammation are explored.

ERbeta agonists may avoid ERalpha mediated side effects.

DEVELOPMENT STAGE HISTORY POSSIBILITIES

The Merck

Collaboration Women’s health

Preclinical development The collaboration with Merck was initiated in 1997. The joint drug discovery program was concluded in 2002. Merck continues with development of joint compounds.

Development of new important pharmaceuticals in the fi eld of women’s health.

The Wyeth Collaboration Athero- sclerosis

Discovery Partnership initiated in 2001.

Active collaboration prolonged through August 2008.

Development of new therapy for atherosclerosis.

The Zydus Cadila Collaboration Infl ammatory diseases

Discovery The glucocorticoid receptor

(GR) is the target for anti infl am- matory steroids. Karo Bio has developed a competitive drug discovery technology and com- pounds targeting GR.

The collaboration with Zydus was initiated in February 2008.

New selective GR modulators have many potential uses for treatment of infl ammatory disorders.

EPROTIROME KB2115 TYPE 2 DIABETES KB3305 ERBETA SELECTIVE COM- POUNDS DEPRESSION CANCER INFLAMMATION ATHEROSCLEROSIS ESTRO- GEN RECEPTORS OSTEOPOROSIS EPROTIROME KB2115 TYPE 2 DIABETES Short Project Descriptions

20

Project Descriptions

THREATS COMPETITION COMPOUND PROFILE New treatment concept, not yet validated

in long-term treatment of patients.

Metabasis and QuatRx are US-based companies with thyroid hormone analogs in development for treatment of dyslipi- demia but at present, none of these com- panies have reported data from phase II clinical studies.

Signifi cantly reduces LDL and other harmful blood lipids with good safety.

To be used as single agent or in combination with statins or ezetimibe.

Effi cacy and safety in man remains to be confi rmed.

To the knowledge of Karo Bio, KB3305 is the only liver selective glucocorticoid antagonist in clinical development for treatment of type 2 diabetes but several other treatment principles are in development.

Liver selective glucocorticoid receptor antagonist.

Effi cacious and safe in preclinical models.

Lowers blood lipids in addition to glucose.

To be used as single agent or in combina- tion with metformin.

Early stage, candidate drug not yet selec- ted. Treatment concept not yet validated in man for several potential indications.

Several companies (Merck, Wyeth, Lilly) are involved in the development of ERbeta selective compounds.

Karo Bio’s compounds have competitive selectivity for the beta receptor.

THREATS COMPETITION COMPOUND PROFILE

Still early stage Clinical indication not disclosed. Not disclosed

New compound class, not yet validated in man.

Bristol-Myers Squibb has entered phase I clinical trials in collaboration with Exelixis.

Not disclosed

New compound class. Safety and effi cacy in man need to be established.

Several companies have programs in the fi eld.

Not disclosed

EPROTIROME KB2115 TYPE 2 DIABETES KB3305 ERBETA SELECTIVE COM- POUNDS DEPRESSION CANCER INFLAMMATION ATHEROSCLEROSIS ESTRO- GEN RECEPTORS OSTEOPOROSIS EPROTIROME KB2115 TYPE 2 DIABETES

Project Descriptions

21

Research and Development

EPROTIROME (KB2115) Dyslipidemia

Eprotirome, for treatment of dyslipi- demia, is an innovative and fi rst in class liver selective agonist for the thyroid hormone receptor (TR). Eprotirome induces pharmacological effects in the liver, while a normal thyroid state is preserved in the rest of the body. The compound is very potent and apart from liver selectivity it also has a relative selectivity for TRbeta over TRalpha.

PROMISING PHASE IIa DATA

So far more than 190 patients have been treated with eprotirome in phase I and phase II clinical studies and the data are consistent. The compound induces a signifi cant lowering of LDL cholesterol in the range of 25-30 per cent and is well tolerated. In addition to LDL lowering, eprotirome also has positive effects on other risk factors like total cholesterol, triglycerides and lipoprotein(a).

PHASE IIb ONGOING

Preclinical data indicate that epro- tirome will be effi cacious in combina- tion with statins. A phase IIb clinical study in patients undergoing statin treatment was initiated in the fourth quarter of 2007. The results will be available in the third quarter of 2008.

An additional phase IIb study in pa- tients on ezetimibe will be carried out during 2008.

KB3305 Type 2 Diabetes

Fasting blood glucose levels are elevated in type 2 diabetic patients due to excessive hepatic glucose production, among other factors. KB3305 is a liver selective glucocorticoid antagonist that suppresses hepatic glucose production, resulting in decreased fasting blood glucose levels. This novel mechanism of action for improvement of glyce- mic control can become an important contribution to the treatment of type 2 diabetes.

ATTRACTIVE COMPOUND PROFILE KB3305 has been shown to be both ef- fi cacious and safe in preclinical pharma- codynamic and toxicity studies. In addition to glucose lowering, KB3305 also lowers other important risk factors for type 2 diabetics like triglyceride and free fatty acid levels in plasma.

PHASE I CLINICAL TRIALS PROGRESSING New and improved pharmaceutical formulations have been developed and a phase I clinical study was initiated in December 2007. The study is conducted in three parts. First, single ascending doses are given to healthy volunteers followed by multiple ascending doses.

The third part of this study sequence is multiple doses given to patients with type 2 diabetes. This will ensure pre- liminary data on effi cacy and safety in the target population. The entire study is planned to be completed during 2008.

ERbeta SELECTIVE COMPOUNDS Depression • Cancer • Infl ammation

While current antidepressant drugs are effective for a great number of patients they are also associated with a delayed action and side effects which limit their use. New compounds are therefore needed. A number of clini- cal studies indicate that estrogen has antidepressive effects.

There is also evidence that suggest that estrogen has effects on a number of pathways in the brain which could lead to a signifi cant antidepressant effect.

The ERbeta receptor subtype appears to be mediating these effects.

SEVERAL CLINICAL OPPORTUNITIES Karo Bio has shown that ERbeta selective compounds are effective in preclinical depression models. There is also evidence for ERbeta effects in in- fl ammatory conditions and in preclini- cal models of cancer. Highly selective compounds have been developed and currently the aim is to improve oral bioavailability. The goal is to select a candidate drug in 2008. Karo Bio is also evaluating additional clinical applica- tions for its ERbeta compounds.

EPROTIROME KB2115 TYPE 2 DIABETES KB3305 ERBETA SELECTIVE COM- POUNDS DEPRESSION CANCER INFLAMMATION ATHEROSCLEROSIS ESTRO- GEN RECEPTORS OSTEOPOROSIS EPROTIROME KB2115 TYPE 2 DIABETES

22

Project Descriptions

ATHEROSCLEROSIS Wyeth Pharmaceuticals

The collaboration with Wyeth Pharma ceuticals, initiated in 2001, is aimed at new treatments of athero- s clerosis with the liver X receptor (LXR) as a target. Preclinical stud- ies have shown that compounds which stimulate LXR have antiatherogenic effects.

COLLABORATION EXTENDED

During 2007 it was discovered that the fi rst clinical candidate had an unfavour- able profi le for further development and was therefore discontinued in Septem- ber 2007.

Karo Bio and Wyeth remain com- mitted to the research partnership and to advancing a new lead compound under the terms of the collaboration, which in 2007 was extended until August 31, 2008.

Other clinical opportunities for LXR agonists are also being explored.

ESTROGEN RECEPTORS Merck & Co.

Estrogen receptors are important targets for treatment of several diseases in the fi eld of women’s health. The col- laboration with Merck was initiated in 1997. The joint drug discovery phase in the collaboration with Merck was con- cluded in 2002, with Merck responsible for development of selected compounds.

NEW COMPOUND IN DEVELOPMENT The candidate compound from the col- laboration that entered Phase I clinical development in 2006 was discontinued in 2007 due to an unsuitable profi le. A back-up compound has been selected for preclinical development with the inten- tion to resume clinical trials.

INFLAMMATION Zydus Cadila

Early 2008, Karo Bio and Zydus Cadila initiated a three year collabora- tion in the fi eld of infl ammatory dis- orders. The objective is to discover and develop new selective modulators of the glucocorticoid receptor.

SELECTIVE ANDROGEN

RECEPTOR MODULATORS (SARMs)

In 2006, Karo Bio announced a licens- ing agreement with Radius, a privately held US based company. Under the terms of the agreement Radius acquired the exclusive worldwide rights, exclud- ing the Nordic and Baltic countries, to a new class of Selective Androgen Recep- tor Modulators (SARMs) discovered by Karo Bio. In February 2008, Karo Bio re-acquired the rights to these SARM compounds and technology, along with relevant data produced by Radius.

Karo Bio Partner Projects

EPROTIROME KB2115 TYPE 2 DIABETES KB3305 ERBETA SELECTIVE COM- POUNDS DEPRESSION CANCER INFLAMMATION ATHEROSCLEROSIS ESTRO- GEN RECEPTORS OSTEOPOROSIS EPROTIROME KB2115 TYPE 2 DIABETES

Project Descriptions

23

24

Karo Bio Share and Ownership Structure

INVESTMENT BANKS COVERING THE KARO BIO SHARE

Investment bank Analyst

ABG Sundal Collier Alexander Lindström

Carnegie Camilla Oxhamre

Danske Market Mattias Häggblom

Handelsbanken Capital Markets Erik Hultgård

Kaupthing Bank Benjamin Nordin

Redeye Björn Andersson

Independent Stefan Wikholm

Karo Bio Share and Ownership Structure

Karo Bio has been traded on the OMX Nordic Exchange Stockholm since April 3, 1998, with the ticker KARO.

SHARE CAPITAL

Karo Bio’s share capital is SEK 58.1 million after an increase of SEK 19.4 million from the rights issue completed in 2007.

The number of shares is 116,119,192 with a ratio value of SEK 0.50. In addition, there are warrants outstanding representing 1,195,570 shares, of which 720,800 shares relate to the stock option program 2001 and 474,770 shares relate to the stock option program 2003.

WARRANTS

At the annual general meeting in April 2000, it was resolved to issue a subordinated debenture at a nominal value of SEK 1,000, with 88,064 detachable warrants. The warrants were issued in connection with the acquisition in 2000 of Karo Bio USA, formerly Novalon Pharmaceutical Corporation, to compensate for the existing stock option plan in Novalon.

The subordinated debenture was repaid during 2000. In May 2005, the remaining outstanding warrants were cancelled and no warrants are outstanding under this program.

At the annual general meeting in April 2001, it was re- solved to issue a subordinated debenture (series 2001/2008) at a nominal value of SEK 10,000, with 340,000 detachable war- rants now representing 720,800 shares. The warrants entitles to subscription of shares at a subscription price of SEK 151.40 during the period May 31, 2002 to April 30, 2008, provided the holder’s continued employment. The warrants, of which 70,000 representing 148,400 shares are to cover payroll taxes, are held by Karo Bio’s wholly-owned subsidiary Karo Bio Research AB. The subordinated debenture was repaid in June 2001. The warrants serve as a hedge for stock options, repre- senting 572,400 shares, of which 525,595 were issued by Karo Bio to employees of the Group at no cost. The exercise price for the stock options equals or exceeds the subscription price for the underlying warrants.

At the annual general meeting in April 2003, it was decided to issue four debentures (series 2003/2011:A–D), each with a nominal value of SEK 1,000, together with in total 241,000 detachable warrants for subscription of currently 474,770 shares. Each debenture has 60,250 such detachable warrants.

As of year-end 2007, Karo Bio’s price per share amounted to SEK 4.50 and the Company‘s market capitali- zation was SEK 523 million, a decrease with 57 per cent compared to the market capitalization of SEK 1,208 million at the end of 2006. During the same period, the OMX Nordic Exchange Stockholm All-Share index decreased with 6 per cent and the OMX Stockholm Biotechnology index decreased with 24 per cent. The number of shareholders was 7,969 at the beginning of 2007 and 10,100 by year-end.

No. of shares traded 1,000s Karo Bio

OMX Stockholm_PI

SX352010 Biotechnology_PI

8 10 12 14 16 18

4 6

JAN

2008 FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB

2007 © OMX AB

10,000 20,000 30,000 40,000 50,000

10,000 30,000 40,000 50,000

20,000 20

40 60 80 100 120

4

2003 2004 2005 2006 2007

© OMX AB 2008 SHARE PRICE AND TRADING VOLUME

Karo Bio Share and Ownership Structure

25

The warrants, of which 51,000 representing 100,470 shares are to cover payroll taxes, are held by the wholly-owned subsidiary Karo Bio Research AB. The warrants serve as a hedge for stock options representing 374,300 shares, of which 201,206 were issued at no cost to Karo Bio employees. The subordinated debentures were repaid in June 2003. The war- rants gives the holder the right to subscribe for new shares in Karo Bio during the period June 1, 2003 to April 30, 2011, provided the holder’s continued employment, at the exercise price SEK 17.00, 18.70, 20.40 and 22.10 for each respective series. The exercise prices for the stock options are identical to the subscription prices for underlying warrants.

Full utilization of all warrants outstanding will lead to an increase in the number of shares corresponding to 1.0 per cent and an increase of the share capital by KSEK 598. Full utilization of all stock options outstanding, including warrants required for payroll taxes, will lead to an increase in the num- ber of shares by 0.4 per cent.

DIVIDEND POLICY

Karo Bio has not distributed dividends since the Company was founded in 1987. The Board of Directors does not intend to propose the distribution of dividends until the Company receives signifi cant royalty revenues or generates signifi cant profi ts and cash fl ows by other means.

PRINCIPAL SHAREHOLDERS AS OF DECEMBER 31, 2007

Owner No.of Shares

Share of capital and votes%

Catella Funds 5,623,000 4.9

Nordea 5,154,822 4.5

4:th AP Fund 4,341,347 3.7

Staffan Rasjö 3,934,500 3.4

AMF 3,510,000 3.0

Consepio 3,409,852 2.9

6:th AP Fund 2,745,780 2.4

DNB Nor 2,050,400 1.8

SEB 2,000,000 1.7

Farstorps Gård 1,803,500 1.6

Others 81,545,991 70.1

Total 116,119,192 100.0%

Source: The swedish Securities Register Centre (VPC AB) and information from share- holders. Shareholdings include family members and shares held through companies.

CHANGES IN SHARE CAPITAL

Year Transaction

Increase in number of shares

Total number of shares

Total share capital (SEK)

Issue payment, net (SEK)¹⁾

Share capital structure as of January 1, 1998 - 3,943,586 39,435,860 -

1998 Stock split 2:1 3,943,586 7,887,172 39,435,860 -

1998 New issue – IPO 1,050,000 8,937,172 44,685,860 96,600,000

1998 New issue – IPO ²⁾ 240,000 9,177,172 45,885,860 22,080,000

2000 New issue in kind 2,206,198 11,383,370 56,916,850 699,759,830³⁾

2000 New Issue – directed placement 600,000 11,983,370 59,916,850 196,868,448

2000 Exercise of warrants 15,731 11,999,101 59,995,505 78,655

2001 Exercise of warrants 26,970 12,026,071 60,130,355 134,850

2002 Exercise of warrants 26,586 12,052,657 60,263,285 132,930

2003 New issue – rights issue 4,821,850 16,874,507 84,372,535 118,578,253

2003 Exercise of warrants 3,547 16,878,054 84,390,270 17,735

2004 Exercise of warrants 12,011 16,890,065 84,450,325 60,055

2004 New issue – rights issue 11,260,043 28,150,108 140,750,540 90,737,898

2004 New issue 2,815,010 30,965,118 154,825,590 22,684,468

2005 Reduction of share capital - 30,965,118 61,930,236 -

2005 New issue – rights issue 46,447,677 77,412,795 154,825,590 263,413,134

2006 Reduction of share capital - 77,412,795 38,706,398 -

2007 New issue – rights issue 38,706,397 116,119,192 58,059,596 387,160,784

1) Issue amount, net of any transaction costs.

2) Consequent to over-allotment option.

3) New issue in kind, no cash issue payment.

OWNERSHIP STRUCTURE AS OF DECEMBER 31, 2007

Shareholding No. of shares

No. of share- holders

Percentage of share-

holders No. of shares Percen-

tage of share capital

1–500 3,034 30.0 573,937 0.5

501–1,000 1,592 15.8 1,415,785 1.2

1,001–2,000 1,625 16.1 2,763,354 2.4

2,001–5,000 1,792 17.7 6,421,255 5.5

5,001–10,000 991 9.8 7,857,378 6.8

10,001–20,000 517 5.1 7,800,600 6.7

20,001–50,000 342 3.4 11,131,773 9.6

50,001–100,000 102 1.0 7,464,613 6.4

100,001–500,000 69 0.7 14,594,050 12.6

500,001–1 000,000 16 0.2 10,949,610 9.4

1,000,001–5,000,000 20 0.2 45,146,837 38.9

Total 10,100 100.0% 116,119,192 100.0%

26

Corporate Governance

INTRODUCTION

Karo Bio’s corporate governance is based on Swedish law, primarily the Swedish Companies Act, the listing agreement with the OMX Nordic Exchange Stock- holm and the rules and recommendations issued by relevant organizations. Accord- ing to the listing agreement all registered companies and other listed companies with market capitalization exceeding SEK 3 billion are to follow the Swedish Code of Corporate Governance (the Code). Since Karo Bio’s market capitalization does not exceed the threshold, Karo Bio has so far not explicitly followed the Code. Accord- ing to a suggested but not yet imple- mented alteration of the Code, presented in February 2008, all Swedish limited liability companies (sw. aktiebolag) who’s shares are traded on a regulated market in Sweden, shall follow the Code from July 1, 2008.

Narratives and documents in relation to corporate governance are to be found on the Karo Bio website, where the by- laws are also available.

ANNUAL GENERAL MEETING

The annual general meeting of sharehold- ers is Karo Bio’s highest decision-making body. The annual general meeting is to be held not more than six months after the close of the fi nancial year. The annual report is approved by the annual general meeting. The Board of Directors and auditors are elected at the annual general meeting and other statutory matters are addressed. Special general meetings can be held when deemed appropriate.

The right to participate and vote at general meetings rests with shareholders registered in the share register kept by the Swedish Securities Register Centre (VPC AB) on the date decided by the Board and that also notifi es the Company of their intention to participate in the meeting no later than the date decided by the Board.

Each share has one vote.

Corporate Governance

BOARD OF DIRECTORS

Between annual general meetings, the Board of Directors constitutes Karo Bio’s highest decision-making body.

During the period from the annual general meeting on April 11, 2007, till October 15, 2007, the Board consisted of eight Directors, whereof two women, elected by the annual general meeting, and two Directors with one deputy ap- pointed by employee organizations. On October 15, former Chairman Per-Olof Mårtensson announced his retirement from the Board for family reasons. The Board member Dr Leon E. Rosenberg was appointed interim Chairman until the next annual general meeting. Thus, from October 15, 2007, the Board consists of seven Directors elected by the annual general meeting and two Directors with one deputy appointed by employee organizations.

The work of the Board of Directors for the fi nancial year 2007

The work of the Board of Directors is dictated by a board policy, which sets standards for the frequency and agenda of board meetings, pre-circulation of material for meetings, and matters to be brought to the Board for information or decision. A section of the policy also regulates the division of responsibility between the Board, the Chairman of the Board and the President, as well as defi ning the President’s authority. The Chairman prepares the Board meetings together with the President. Presenta- tions are made by the President and executive management at each sche- duled board meeting on operational matters, including development and progress within research and develop- ment, business development, and fi nan- cial reports and forecasts. The Board makes decisions in important areas such as strategy; scientifi c, marketing and fi nancial plans; material agreements;

budget; fi nance policy and other signifi cant corporate policies as well as larger capital expenditures. In addition, the Board reviews the development and performance of the Company. The Board held six scheduled and six addi- tional Board meetings during 2007.

Board decisions are made after an open discussion lead by the Chairman.

Major initiatives taken by the Board in 2007 include matters regarding clinical projects, corporate strategy and fi nancing.

Compensation Committee

A compensation committee, consist- ing of three Board members including the Chairman of the Board, is hand- ling questions regarding the execu- tive management’s compensation and benefi ts, including that of the President.

The committee prepares remuneration matters for Board approval and makes decisions in compensation matters of lesser signifi cance. The Board makes all policy decisions regarding remunera- tion of executive management and the salary of the President.

Audit Committee

In 2005 the Board established an audit committee to handle certain matters regarding audit and internal control, as well as matters regarding fi nancial reporting. During 2007, the committee held four meetings, at which also the Chief Financial Offi cer participated as well as the auditor (three meetings) and the President (three meetings). Matters dealt with by the committee during 2007 comprised review of the earnings report and annual report for 2006, the memorandum on the audit for 2006 from the external auditor, the plan for the audit 2007, the half-year report for 2007, the prospectus in connection with the rights issue, the internal control structure, principles regarding purchase of non-audit services, fi nance policy and

Corporate Governance

27

investment strategy of surplus liquidity.

In addition, the committee has made a recommendation to the Board regard- ing the allotment of new shares in the rights issue, and regarding the strategic fi nancial planning. The audit commit- tee has also evaluated the work of the auditors.

PRESIDENT & EXECUTIVE MANAGEMENT The Board appoints a President with responsibility for the management of the Company. An executive manage- ment team consisting of seven persons supports the President. They are responsible for different functions. The management team together decides, under the leadership of the President and based on the strategy and corporate goals decided by the Board, on impor- tant matters to be implemented in the organization. Each respective function head ensures that decisions are imple- mented and monitored.

AUDIT

Independent auditor

Auditors are elected by the annual general meeting for a period of four years. The auditors are to audit the Company’s fi nancial statements and the Board’s and management’s administra- tion. PricewaterhouseCoopers AB were elected auditors at the general meeting

in April 2007 for the period until the annual general meeting 2011.

The Company’s independent auditor reports directly to the Board on selected Board meetings as well as to the audit committee.

NOMINATING COMMITTEE

The nominating committee prepares proposals to be presented to the an- nual general meeting for resolution as regards chairman at the annual general meeting, Chairman and other members of the Board of Directors, remuneration to the Board of Directors et cetera, fees to and election of auditor, and principles for appointment of a nominating com- mittee.

At the annual general meeting 2007 it was resolved to appoint a nominating committee as per the following.

The four largest shareholders as of August 31, 2007, not being represented in the Board of Directors, shall appoint one representative each, which together with the Chairman of the Board shall be members of the nominating commit- tee in respect of the 2008 annual gen- eral meeting. The representatives shall be appointed and announced no later than in conjunction with the Compa- ny’s interim report for the third quarter 2007. The nominating committee shall appoint chairman among themselves,

whereby the Chairman of the Board of Directors shall not be chairman. Should a shareholder decline to participate in the nominating committee or leave the nominating committee before its work is completed, the right to appoint a representative shall turn to the closest largest shareholder not represented in the nominating committee. Should the ownership structure signifi cantly change subsequent to the establishment of the nominating committee, the com- position of the nominating committee shall be changed in accordance with the above principles.

The term of offi ce of the nominating committee runs until a new nominating committee has been appointed in accor- dance with the resolution on appoint- ment of the nominating committee by the annual general meeting 2008.

If the nominating committee fi nds it necessary, it may utilize reasonable resources of external consultants at the account of the Company.

The members of the nominating committee in respect of the 2008 annu- al general meeting is Jörgen Vrenning, Catella Funds (Chairman), Bengt Bel- frage, Nordea Funds, Mats Guldbrand, AMF Pension, Ragnhild Wiborg, Con- sepio, and Leon E. Rosenberg, Chair- man of the Board of Karo Bio.

Annual General Meeting

Board of Directors

MANAGEMENT TEAM

Chemical and Pharmaceutical Sciences

and Intellectual Property Nominating Committee

Jörgen Vrenning, Catella Funds (chairman), Bengt Belfrage, Nordea Funds, Mats Guldbrand, AMF Pension, Ragnhild

Wiborg, Consepio, Leon E. Rosenberg, Chairman Karo Bio

Compensation Committee

Leon E. Rosenberg (chairman, replaced Per-Olof Mårtensson Oct. 15) Birgit Stattin Norinder, Laurent Leksell

Independent Auditor

PricewaterhouseCoopers Claes Dahlén

Audit Committee

Ulla Litzén, Chairman, Lars Ingelmark, Laurent Leksell (replaced Per-Olof Mårtensson Oct. 15)

Business Development

Lars Öhman

Human Resources

Berit Edlund

Finance & IT

Erika Johnson

Investor Relations

Per Otteskog

President

Per Olof Wallström

Carl-Magnus Andersson

Pharmacology, ADME and Safety

Anneli Hällgren

Clinical Development

Jens Kristensen