Targeted Genetics Named as Subcontractor to NIAID Contract to Expand AAV-Based HIV Vaccine Program; NIAID Funding to Total Approximately $22 Million

Targeted Genetics Corporation (Nasdaq:TGEN) and its scientificcollaborators at The Children's Hospital of Philadelphia and ColumbusChildren's Research Institute (CCRI) today announced that the NationalInstitute of Allergy and Infectious Disease (NIAID) has awarded a$21.75 million contract to expand AAV-based HIV vaccine development.This contract is being supported by the HIV Vaccine Design andDevelopment Teams (HVDDT) program from the NIAID Division of AIDS.Under the terms of this agreement, Targeted Genetics as asubcontractor is eligible to receive up to $18 million of the totalover 5 years to be used to advance AAV-based vaccines against HIV.

"This program underscores the commitment and collaboration withinthe HIV vaccine community toward the potential for AAV-basedvaccines," said H. Stewart Parker, President and Chief ExecutiveOfficer of Targeted Genetics. "Funding provided by this subcontractwill enable us to expand our HIV vaccine program beyond the scope ofour important collaboration with the International AIDS VaccineInitiative (IAVI), which is focused on developing an AAV-based vaccinefor use in developing nations. We believe that a safe and effectivevaccine against HIV is the best way to slow the growth of the AIDSpandemic. The focus of the program funded by this contract is todevelop an AAV-based HIV vaccine for worldwide use, and may representa significant future product opportunity."

"Our research to date in animal models of HIV infection suggestthat AAV-based vaccines can stimulate robust B-cell and T-cellresponses, reduce viral load, and ultimately improve survival invaccinated animals subsequently challenged with a virulent strain ofSIV," said Philip R. Johnson Jr., M.D., Chief Scientific Officer atChildren's Hospital of Philadelphia and the Principal Investigator forthe contract. Johnson noted that the HVDDT will test a prime-boostvaccination protocol using rAAV vectors based on two differentserotypes of the AAV capsid. "If we are successful, this strategy caneasily be applied to HIV vaccines representing all clades of thisgenetically diverse human pathogen," Johnson added.

"We are pleased that the NIAID recognizes the potential of thiscoordinated approach to HIV vaccine, prevention, and treatmentresearch and are looking forward to continuing to advance thedevelopment of AAV-based vaccines against HIV," said K. Reed Clark,Ph.D., Director, Viral Vector Core Facility and investigator in theCenter for Gene Therapy at Columbus Children's Research Institute(CCRI) and Associate Professor of Pediatrics at The Ohio StateUniversity College of Medicine and Public Health.

The contract is designed to provide funding to optimize themanufacturing process for AAV-based vaccines and support preclinicaland clinical development of a vaccine against HIV. Clinical trials ofa candidate vaccine will be coordinated through the NIH-sponsoredHIV/AIDS Vaccine Trials Network (HVTN).

Federal funding will be provided for this project by the NationalInstitute of Allergy and Infectious Diseases, National Institutes ofHealth, Department of Health and Human Services, under Contract No.HHSN266200500008C, ADB No. N01-AI-50008. The project will be 100%federally funded in the amount of $21,752,051.

The Targeted Genetics-IAVI-CCRI-Children's Hospital ofPhiladelphia collaboration has an ongoing Phase I HIV Vaccine clinicalstudy in Belgium, Germany, and India. The study is designed to assesssafety and immune responses following immunization with tgAAC09, itsAAV-based HIV/AIDS vaccine, in healthy volunteers who are uninfectedwith HIV. In early 2005, the collaborative group reported preliminaryPhase I results demonstrating that the vaccine candidate met thesafety endpoint and was well tolerated.

In November, 2005, the collaborative group announced the start ofa Phase II trial in South Africa to test the safety and immunogenicityof tgAAC09, a preventive HIV vaccine candidate that is based on HIVsubtype C, the subtype of the virus most prevalent in southern andeastern Africa. This is the first Phase II HIV vaccine trial to beheld in South Africa. The trial is being conducted in three sites inSouth Africa, anticipated to take about 18 months to complete anddesigned to enroll 78 volunteers who are in good health. tgAAC09 isdesigned to elicit two different types of immune responses, anantibody response and a cell mediated response, which is thought to becritical for an effective vaccine to prevent AIDS.

About Targeted Genetics Corporation

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.

Contact: Stacie D. Byars, 206-521-7392

About The Children's Hospital of Philadelphia

The Children's Hospital of Philadelphia was founded in 1855 as thenation's first pediatric hospital. Through its long-standingcommitment to providing exceptional patient care, training newgenerations of pediatric healthcare professionals, and pioneeringmajor research initiatives, The Children's Hospital of Philadelphiahas fostered many discoveries that have benefited children worldwide.Its pediatric research program is among the largest in the country,ranking second in National Institutes of Health funding. In addition,its unique family-centered care and public service programs havebrought the 430-bed hospital recognition as a leading advocate forchildren and adolescents. For more information about The Children'sHospital of Philadelphia, visit www.chop.edu.

Contact: Peggy Flynn, 267-426-6080

About Columbus Children's Research Institute

Columbus Children's Hospital ranks among the top 10 in NationalInstitutes of Health research awards and grants to freestandingchildren's hospitals in the country and houses the Department ofPediatrics of The Ohio State University College of Medicine and PublicHealth. The Columbus Children's Research Institute (CCRI) conductsmore than 400 research projects annually and is the home of Centers ofEmphasis encompassing gene therapy; molecular and human genetics;vaccines and immunity; childhood cancer; cell and vascular biology;developmental pharmacology and toxicology; injury research and policy;microbial pathogenesis; cardiovascular medicine; and biobehavioralhealth. Pediatric Clinical Trials International (PCTI), a sitemanagement organization affiliated with the hospital, also coordinatesmore than 50 clinical trials annually. More information aboutChildren's Hospital of Columbus or CCRI is available by calling (614)722-KIDS or through the hospital's web site atwww.columbuschildrens.org.

Contact: Pam Barber, 614-722-4595

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

This release contains forward-looking statements regardingTargeted Genetics' anticipated revenues, regulatory filings, researchprograms, clinical trials, product development and potential relatedto Targeted Genetics' AAV based vaccine initiatives. These statements,involve current expectations, forecasts of future events and otherstatements that are not historical facts. Inaccurate assumptions andknown and unknown risks and uncertainties can affect the accuracy offorward-looking statements. Factors that could affect its actualresults include, but are not limited to, Targeted Genetics' ability torecruit and enroll suitable trial participants, the timing, nature andresults of research and clinical trials, Targeted Genetics' ability toraise capital when needed, Targeted Genetics' ability to obtain andmaintain regulatory or institutional approvals, and, TargetedGenetics' ability to protect its intellectual property, as well asother risk factors described in the section entitled "FactorsAffecting Our Operating Results, Our Business and Our Stock Price" inTargeted Genetics' Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2005. You should not rely unduly on theseforward-looking statements, which apply only as of the date of thisrelease. Targeted Genetics' undertakes no duty to publicly announce orreport revisions to these statements as new information becomesavailable that may change expectations.