Executive Summary

CAL BIO WILL HAVE 30% STAKE IN SWEDISH R&D FIRM KARO BIO under an agreement announced by the biotechnology company in a Sept. 3 release. Karo Bio will be based at the Huddinge University Hospital in Stockholm, an affiliate of the Karolinska Institute and will operate in collaboration with Karolinska's Center for Biotechnology. A Swedish investor group will control 70% of the R&D venture. Karo Bio will start with $35 mil. in seed money. The capital will go towards staffing the research facilities and R&D work, Cal Bio said. Proposed drug research at Karo Bio may overlap with some of Cal Bio's therapeutic development projects, such as the firm's studies of bone and calcium metabolism, and steriod antagonists. Possible therapeutic areas for these steriod antagonists include heart failure, glaucoma and contraception, Cal Bio noted. Another research area for Karo Bio may be infectious diseases. Cal Bio members of the new R&D firm's board of directors will be: Myron Wick, III, chief operating officer and John Baxter, MD, co-founder and a Cal Bio director. Cal Bio representatives on the scientific advisory board will include Baxter, who will act as chairman; John Shine, PhD, chairman of Pacific Biotechnology; and Barbara Cordell, PhD, VP research. Per Batelson, will be the managing director of Karo Bio. Batelson previously held management positions with technology units of Sweden's Nobel Group and Alfa Laval and founded a DuPont-Nobel Group joint venture in the U.S. Director of Karolinska's Center for Biotechnology Jan-Ake Gustafsson, MD, has been named chief scientific officer of Karo Bio. Members of the Swedish investor group include the National Pension Fund, SPP and AMF Insurance Company, and the Swedish Investment Bank. The Karo Bio venture is Cal Bio's second agreement to provide an equity position in a start-up R&D company. The first agreement was Cal Bio's subsidiary Cal Bio International's arrangement with the Garvan Institute of Medical Research, Sydney, Australia to form the joint venture Pacific Biotechnology. Pacific Biotechnolgy is headed by Cal Bio's former president and chief scientific officer John Shine. Cal Bio said that Karo Bio's research activities are expected to begin by year-end and that further expansion into the new Novum Research Center in Huddinge Hospital is planned. Huddinge Hospital is a 1,400-bed teaching and research facility that houses, along with the Center for Biotechnology, the Center for Life Sciences.