Targeted Genetics Announces Strategic Restructuring to Reduce Expenses and Advance Lead Inflammatory Arthritis Product Candidate

Going forward, the company is deploying the majority of itsresources to identify the clinical utility of tgAAC94 and will alsocontinue to utilize its development and manufacturing capabilities inmoving its collaborations forward. As part of this restructuring,Targeted Genetics reduced its workforce by approximately 27% or 26employees, primarily in early-stage research and development groupsand in operations and general and administrative functions.

"The decision to restructure the company has been extremelydifficult for everyone involved. We sincerely appreciate thecontributions from all of our employees and are providing outplacementservices to those affected by this realignment," said H. StewartParker, President and CEO of Targeted Genetics. "As a result of thisrestructuring, we anticipate our cash burn for 2006 to be at least 20%to 25% less than 2005 results, giving us a better opportunity toachieve our goals for 2006 and position the company for the future."

Targeted Genetics' key goals for 2006 are as follows:

-- Report preliminary tgAAC94 Phase I data in patients with inflammatory arthritis;

-- Complete follow-up and present preliminary data of HIV/AIDS Vaccine Phase I European "boost" and India trials;

-- Complete enrollment of South African HIV/AIDS Vaccine Phase II Study;

-- Initiate Phase I clinical study in Congestive Heart Failure;

-- Seek additional strategic collaborations; and

-- Secure additional funding.

"We believe that our targeted, localized approach to treatinginflammatory disease has significant clinical and commercialpotential, and these changes give us more time and resources necessaryto implement the tgAAC94 clinical studies and strategic initiativesaimed at moving us closer to commercialization," adds Parker.

Anti-TNF-a therapies are now widely used in the treatment ofinflammatory arthritis. However, a large percentage of patients beingtreated with systemic anti-TNF-a therapies do not fully respond.Targeted Genetics has gathered initial positive data pertaining to thesafety of intra-articular delivery of tgAAC94, and clinical trials areongoing, targeting those patients who are on concurrent systemicanti-TNF protein therapies, but still have residual disease in one orseveral affected joints.

Targeted Genetics plans to release its financial results for thefourth quarter and year-ended 2005 before the open of the NasdaqNational Market System on Wednesday, March 1, 2006. Management willhost a conference call with investors and financial analysts todiscuss these results and to provide an update to its productdevelopment initiatives at 10:30 a.m. Eastern Time (7:30 a.m. PacificTime).

About Targeted Genetics

Targeted Genetics Corporation is a biotechnology company committedto the development and commercialization of innovative targetedmolecular therapies for the prevention and treatment of inflammatoryarthritis, HIV/AIDS and other acquired and inherited diseases withsignificant unmet medical need. Targeted Genetics uses itsconsiderable knowledge and capabilities in the development andmanufacturing of gene delivery technologies to advance a diverseproduct development pipeline. Its product development efforts targetinflammatory arthritis, HIV/AIDS, congestive heart failure,Huntington's disease, and hyperlipidemia. To learn more about TargetedGenetics, visit its website at www.targetedgenetics.com.

Safe Harbor Statement under the Private Securities LitigationReform Act of 1995:

This release contains forward-looking statements regarding ourbusiness strategy, our cash resources and future financial condition,our ability to obtain additional funding or enter into additionalstrategic collaborations, our product development, our clinicaltrials, our personnel and other statements about our plans,objectives, intentions and expectations. In particular, the statementsregarding the Company's future plans are forward-looking statements.These statements, involve current expectations, forecasts of futureevents and other statements that are not historical facts. Inaccurateassumptions and known and unknown risks and uncertainties can affectthe accuracy of forward-looking statements. Factors that could affectour actual results include, but are not limited to, our ability toobtain additional funding or enter into additional strategiccollaborations, our ability to attract and retain qualified personnel,the timing, nature and results of our clinical trials, potentialdevelopment of alternative technologies or more effective products bycompetitors, our ability to obtain and maintain regulatory orinstitutional approvals, our ability to obtain, maintain and protectour intellectual property and our ability to raise capital whenneeded, as well as other risk factors described in the sectionentitled "Factors Affecting Our Operating Results, Our Business andOur Stock Price" in our Quarterly Report on Form 10-Q for the periodended September 30, 2005. You should not rely unduly on theseforward-looking statements, which apply only as of the date of thisrelease. We undertake no duty to publicly announce or report revisionsto these statements as new information becomes available that maychange our expectations.