Targeted Genetics Enters into New Agreement with the International Aids Vaccine Initiative to Support Its Ongoing HIV/AIDS Vaccine Development Program

Targeted Genetics Corporation (Nasdaq:TGEN) announcedtoday that it has entered into a collaboration and license agreementwith the International Aids Vaccine Initiative (IAVI), ColumbusChildren's Research Institute (CCRI) at Columbus Children's Hospitaland The Children's Hospital of Philadelphia (CHOP) in support of thedevelopment and commercialization of HIV/AIDS vaccines. The newagreement addresses development and commercialization issuesconsistent with the significant progress made in the HIV/AIDS vaccinedevelopment program. The new agreement supersedes a previouscollaboration agreement entered into by Targeted Genetics, IAVI andCCRI in 2000, when the parties started working together on thedevelopment of an HIV/AIDS vaccine for the developing world.

The first HIV/AIDS vaccine candidate developed under thiscollaboration has advanced to human clinical trials. This HIV/AIDSvaccine candidate is being evaluated in clinical trials in Belgium,Germany, India, South Africa, Uganda and Zambia. Data from certain ofthese trials is expected to be announced in the third quarter of 2006.

"We believe the elements of our new agreement represent analignment of interests of all the parties and provide incentive forall parties to share common goals related to the development andcommercialization of HIV/AIDS vaccines in all parts of the world,"said H. Stewart Parker, President and Chief Executive Officer ofTargeted Genetics Corporation. "IAVI is a leader in support of thedevelopment of HIV/AIDS vaccines for the developing world and a greatpartner. To date, IAVI has substantially funded Targeted Genetics'HIV/AIDS vaccine program efforts, significantly exceeding IAVI'sinitial funding commitment made to the program in 2000. IAVI has alsoprovided funding to CCRI, CHOP and to conduct human clinical trials."

Under this new agreement, Targeted Genetics expects to continue toreceive significant funding from IAVI for the continued development ofHIV/AIDS vaccines for the developing world. Targeted Genetics alsoreceived the rights to utilize the findings from the IAVI fundedprogram to develop and commercialize HIV/AIDS vaccines for both thedeveloped world and for any additional vaccine candidates. Among otherrights granted under this agreement, IAVI retains the exclusive rightsfor commercialization in the developing world of any HIV/AIDS vaccinethat is developed under the collaboration, and will receive a royaltyon income received by Targeted Genetics from the development andcommercialization of vaccines. Targeted Genetics will also issue IAVIa small number of shares of its common stock. The agreement willgovern the collaboration for as long as there is a vaccine candidatein development or commercialized as a result of the program funded byIAVI. In addition, Philip R. Johnson, M.D., who has been instrumentalto the program since its inception in 2000, joined CHOP in 2005 fromCCRI, and as a result, this new agreement now includes CHOP.

About the Vaccine Candidates

The vaccine candidate, tgAAC09, utilizes a recombinantadeno-associated viral vector (AAV) that was developed with andmanufactured by Targeted Genetics. IAVI is funding development,pre-clinical and clinical studies to test the vaccine. The TargetedGenetics' AAV manufacturing process utilized for this candidate isbased on a cell line which was designed by Dr. Philip R. Johnson. Aspart of a comprehensive development strategy, a second HIV/AIDScandidate developed in this program is slated to go into clinicaldevelopment. This candidate contains a different AAV serotype than isutilized in tgAAC09. Preclinical studies of this AAV serotype havedemonstrated an ability to elicit an immune response at lower doselevels.

About the International AIDS Vaccine Initiative

IAVI is a global not-for-profit organization working to acceleratethe development of a vaccine to prevent HIV infection and AIDS.Founded in 1996 and operational in 23 countries, IAVI and its networkof collaborators research and develop vaccine candidates. IAVI alsoadvocates for a vaccine to be a global priority and works to ensurethat a future vaccine will be accessible to all who need it. IAVI'sfinancial and in-kind supporters include the Bill & Melinda GatesFoundation, the New York Community Trust, the Rockefeller Foundation,the Starr Foundation, the Governments of the Basque Country, Canada,Denmark, the European Union, Ireland, the Netherlands, Norway, Sweden,the United Kingdom, and the United States; multilateral organizationssuch as the World Bank; corporate donors including BD (Becton,Dickinson & Co.), Continental Airlines, DHL and Pfizer; leading AIDScharities such as Broadway Cares/Equity Fights AIDS, Crusaid, DeutscheAIDS-Stiftung, and the Until There's A Cure Foundation; other privatedonors such as the Haas Charitable Trusts; and many generousindividuals from around the world. For more information, seewww.iavi.org.

About Columbus Children's Research Institute

Columbus Children's Hospital is a 114-year-old pediatrichealthcare network which houses the Department of Pediatrics of TheOhio State University College of Medicine. Columbus Children'sResearch Institute (CCRI) at Columbus Children's Hospital ranks amongthe top 10 in National Institutes of Health research awards tofreestanding children's hospitals in the United States. CCRI hasnearly 300,000 square feet of dedicated research space and isorganized into 11 research Centers of Emphasis encompassing genetherapy; molecular and human genetics; vaccines and immunity;childhood cancer; cell and vascular biology; developmentalpharmacology and toxicology; injury research and policy; microbialpathogenesis; cardiovascular medicine; innovation in pediatricpractice and biobehavioral health. More information is available bycalling 614-722-KIDS or through www.columbuschildrens.com.

About The Children's Hospital of Philadelphia

The Children's Hospital of Philadelphia (CHOP) was founded in 1855as the nation's first pediatric hospital. Through its long-standingcommitment to providing exceptional patient care, training newgenerations of pediatric healthcare professionals and pioneering majorresearch initiatives, CHOP has fostered many discoveries that havebenefited children worldwide. Its pediatric research program is amongthe largest in the country, ranking second in National Institutes ofHealth funding. In addition, its unique family-centered care andpublic service programs have brought the 430-bed hospital recognitionas a leading advocate for children and adolescents. For moreinformation, visit http://www.chop.edu.

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 regardinganticipated scientific progress on our research programs, our abilityto develop, manufacture, accurately interpret clinical results, obtainregulatory approvals and commercialize any vaccines under thecollaboration, the market prospects for any vaccine, our benefits,including royalties, that we expect to derive as a result of thiscollaboration and other statements about our plans, objectives,intentions and expectations. These statements, involve currentexpectations, forecasts of future events and other statements that arenot historical facts. Inaccurate assumptions and known and unknownrisks and uncertainties can affect the accuracy of forward-lookingstatements. Factors that could affect our actual results include, butare not limited to, our ability to obtain, maintain and protect ourintellectual property, our ability to raise capital when needed, ourability to recruit and enroll suitable trial participants, the timing,nature and results of research and clinical trials, potentialdevelopment of alternative technologies or more effective processes bycompetitors, and, our ability to obtain and maintain regulatory orinstitutional approvals, as well as other risk factors described inItem 1A. Risk Factors in our report on Form 10-K for the year endedDecember 31, 2005 and updated in our Form 10-Q for the quarter endedMarch 31, 2006. You should not rely unduly on these forward-lookingstatements, which apply only as of the date of this release. Weundertake no duty to publicly announce or report revisions to thesestatements as new information becomes available that may change ourexpectations.