Annual Report 2012.pdf - Karo Bio

CEO commentary
Greater flexibility
For greater flexibility and financial stability, we conducted a
rights issue at the end of the year, which raised 28.3 million
SEK for Karo Bio. A stronger financing benefits our business
and helps us to act commercially. A good signal to shareholders
was that the Board increased its ownership in the
company in conjunction with the rights issue.
Better risk management
Finally, I want to highlight another key component of our
strategy and that is the right risk management. Today we
look carefully at the risks associated with the projects we
start. We still take risks, but we have better awareness of
them, we value them and we share them with others. Before
we start a project we analyze a number of factors that affect
the risk profile, such as the knowledge base regarding the
specific receptor, the competitive situation for the indication,
any regulatory issues, the clinical development path, and if
there is any type of clinical validation such as evidence that
the mechanism in question actually affects the disease. This
approach helps us prioritize the right projects, and in later
stages create business opportunities.
Good development in projects
Through the transformation of Karo Bio, our projects continued
to perform well, apart from eprotirome which we shut
down at the beginning of 2012 as I described extensively in
the previous annual report. The RORgamma project where
we collaborate with Pfizer progressed at the expected rate and
the collaboration went very well. With continued success, the
project’s licensing revenue will contribute to financing Karo
Bio. RORgamma is a relatively new field where studies with
antibodies in patients have demonstrated the importance of
the mechanism, creating an attractive risk profile of a small
molecule project focused on the RORgamma receptor.
We worked for years to develop this project for ERbeta
that is focused on MS. There is evidence to suggest that
ERbeta can protect and maybe even repair the enclosures,
myelin sheaths, surrounding nerve fibers in the brain, and
which lack of function underlies many of the symptoms in
MS patients. In that case it would be a groundbreaking type
of treatment, since current therapy is intent on reducing
inflammation.
Great interest for early projects
We continued to develop the project in GR inflammation inhouse
after completing the work we were doing along with
our Indian partner, Zydus Cadila. We have again achieved
some progress in this case, and encounter plenty of interest
when we showcase the project to potential partners. The
work started this year for the NURR1 receptor also appears
to have the potential to quickly become commercially
attractive. NURR1 is a receptor that regulates the amount of
so called regulatory T-cells. There are both different types of
animal experiments as well as tests on humans with antibodies,
showing that it can affect activity in autoimmune diseases
by altering the number of regulatory T-cells. We are looking
at developing a small molecule, which of course provides
a more cost-effective medication that is more comfortable
for the patient. Several major pharmaceutical companies are
showing interest in the work we are doing here.
If I sum up the past year, we have reformed Karo Bio into
a more dynamic and business oriented champion. Today we
are more cost effective and have the potential to, in time,
reach a neutral cash flow. My ambition for 2013 is that we
will generate enough new revenue to continue to build value
in our projects, which will also benefit our shareholders.
Huddinge in April 2013
Per Bengtsson
CEO
KARO BIO Annual Report 2012 7