Targeted Genetics Initiates Next Clinical Trial of tgAAC94 in Inflammatory Arthritis

Targeted Genetics Corporation (Nasdaq:TGEN) todayannounced the initiation of a Phase I clinical trial of tgAAC94administered directly to affected joints of patients with inflammatoryarthritis. tgAAC94 utilizes Targeted Genetics' Adeno-Associated Viral(AAV) vector technology to deliver a DNA sequence encoding aninhibitor of TNF-alpha, a potent proinflammatory cytokine that plays amajor role in inflammatory arthritis. This double-blinded,placebo-controlled study is designed to enroll up to 40 subjects andwill evaluate tgAAC94 at two dose levels in patients with rheumatoidarthritis, psoriatic arthritis or ankylosing spondylitis, who may bereceiving concomitant treatments of anti-TNF-alpha therapy, but whocontinue to experience inflammation in one or more joints.

"Initiation of this trial is supported by the positive clinicaldata from the first Phase I trial in arthritis patients who were nottaking TNF-alpha inhibitors and which demonstrated that tgAAC94 waswell tolerated and could safely be administered directly to joints.This new trial will evaluate tgAAC94 in patients already receivinganti-TNF-alpha therapies and expands the patient population to includeour intended treatment group," said H. Stewart Parker, president andchief executive officer of Targeted Genetics. "tgAAC94 is beingdeveloped initially as a complementary therapy for patients who maynot achieve adequate relief with existing arthritis treatments orothers who have disease limited to a few joints and therefore, may notneed systemic protein therapies. This targeted, localized approach totreatment is intended to provide therapeutic benefit that will enablepatients to achieve better control and relief of the signs andsymptoms of their disease."

In the first segment of the double-blinded, placebo controlledstudy, subjects will receive a single intra-articular injection oftgAAC94 or placebo in the affected joint and be monitored untilswelling in the target joint reaches pre-determined criteria forre-injection. At that time, both tgAAC94-injected subjects and thoseinitially injected with placebo will receive a second injection oftgAAC94 in the affected joint as part of the open-label segment of thestudy. The primary endpoint of the study is to establish the safety ofa higher dose and of repeat administration of tgAAC94 into the jointsof subjects with and without concomitant TNF-alpha inhibitor therapy.Secondary endpoints include evaluation of pain, swelling, duration ofresponse, and overall disease activity following intra-articularadministration of tgAAC94 to affected joints, as well as molecularmarkers of disease. Additionally, changes in joint inflammation andjoint damage will be assessed in a subset of patients using magneticresonance imaging.

"In addition to dosing subjects at a level higher than previousstudies, this trial will evaluate safety of a second administration oftgAAC94 and is designed to significantly expand our clinical knowledgeof this drug candidate," said Philip Mease, M.D., Chief, RheumatologyClinical Research Division of Swedish Hospital Medical Center, Head ofSeattle Rheumatology Associates, and a lead investigator in thisclinical trial. "I am excited to be working in partnership withTargeted Genetics to move this important program forward."

"The clean safety profile that we saw in the first tgAAC94clinical trial is very encouraging and we are delighted to be thefirst clinical site to dose a subject on this new study," said KathrynF. Hobbs, M.D., Associate Clinical Professor of Medicine, Universityof Colorado Health Sciences Center, Denver Arthritis Research Center,Denver, Colorado, and an investigator in this clinical trial. "Ibelieve tgAAC94 may come to play an important role in helping patientsliving with arthritis who need an effective therapy with manageableside effects."

In July 2005, the Company announced preliminary results from itsfirst Phase I safety trial of tgAAC94 in patients with inflammatoryarthritis. The data demonstrate that tgAAC94 was well-tolerated atdoses up to 1x1011 DRP per mL of joint volume. Data was also collectedon secondary parameters including improvements in arthritis signs andsymptoms in the injected joint as measured by changes in jointswelling and tenderness using standardized arthritis index scores. Inthose treated with tgAAC94 and followed for four weeks, there was anindication of sustained improvement in signs and symptoms in nine ofthe eleven subjects. From continued follow up, the preliminary dataalso indicate that seven out of nine patients who received tgAAC94,and who had been evaluated through week eight following treatment,experienced sustained improvement in signs and symptoms of disease. Inthose subjects receiving placebo, improvements in arthritis signs werenoted in two out of four subjects. Additional data on this Phase Istudy will be presented at the upcoming European Society of GeneTherapy meeting, October 29 - November 1, 2005, in Prague, The CzechRepublic.

About tgAAC94 and AAV technology

tgAAC94 uses Targeted Genetics' recombinant AAV (rAAV) vectortechnology and contains a gene that encodes a soluble form of theTNF-alpha receptor (TNFR). Soluble TNFR inhibits the immunestimulating activity of TNF-alpha. Direct injection of tgAAC94 intoaffected joints leads to the localized production of soluble TNFR bythe patient's joint cells. Localized production of TNFR reduces theactivity of TNF-alpha within the joint, leading to a decrease in thesigns and symptoms of inflammatory disease. Preclinical studies havedemonstrated the efficacy of tgAAC94 in reducing inflammation andjoint damage. Data from preclinical studies conducted in an animalmodel of inflammatory arthritis demonstrated that a single injectionof rAAV encoding a soluble form of the rat TNFR (TNFR:Fc) vector intothe ankles of arthritic rats resulted in a significant reduction inankle and hind paw swelling as measured by arthritis index scores.

tgAAC94 is being developed as a potential supplement to systemicanti-TNF-alpha protein therapy for use in patients with inflammatoryarthritis who have one or more joints that do not respond to systemicprotein therapy. Local administration of a DNA sequence encoding asoluble TNFR potentially may supplement currently used drugs in anumber of inflammatory conditions. In addition, a locally administeredanti-TNF-alpha therapy could also be useful in patients who have alimited number of joints affected by inflammatory arthritis that areat a risk for progressive joint damage but who may not requiresystemic therapy. The characteristics of AAV vectors make them wellsuited for delivery of genetic material to joints and other localenvironments. The Company's rAAV technology platform is used todeliver genes and is based on AAV, a naturally-occurring virus thathas not been associated with any disease in humans.

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 and other acquired and inherited diseases with significantunmet medical need. We use our considerable knowledge and capabilitiesin the development and manufacturing of gene delivery technologies toadvance a diverse product development pipeline. Our productdevelopment efforts target inflammatory arthritis, AIDS prophylaxis,congestive heart failure, Huntington's disease and hyperlipidemia. Tolearn more about Targeted Genetics, visit our 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 product development and other statements aboutour plans, objectives, intentions and expectations. In particular, thestatements regarding the Company's future plans are forward-lookingstatements. These statements involve current expectations, forecastsof future events and other statements that are not historical facts.Inaccurate assumptions and known and unknown risks and uncertaintiescan affect the accuracy of forward-looking statements. Factors thatcould affect our actual results include, but are not limited to, thetiming, enrollment of patients, nature and results of our clinicaltrials, potential development of alternative technologies or moreeffective products by competitors, our ability to obtain and maintainregulatory or institutional approvals, our ability to obtain, maintainand protect our intellectual property and our ability to raise capitalwhen needed, 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 June 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.