Investor and Media Contact: Stacie D. Byars Director, Communications Targeted Genetics Corporation (206) 521-7392 TARGETED GENETICS REPORTS SECOND QUARTER FINANCIAL RESULTS Seattle, WA

Investor and Media Contact:

Director, Communications

Targeted Genetics Corporation

TARGETED GENETICS REPORTS SECOND QUARTER FINANCIAL RESULTS

Seattle, WA July 28, 2005 Targeted Genetics Corporation (NASDAQ: TGEN) today announced its

financial results for its second quarter ended June 30, 2005. As previously announced, the Company

will hold a conference call with analysts at 10:30 AM EDT today. The call will be broadcast live

over the Internet and can be accessed, along with replay information, at www.targetedgenetics.com.

For the second quarter of 2005, the Company reported a net loss of $5.3 million, or $0.06 per

share, compared to $4.5 million, or $0.05 per share for the second quarter of 2004. For the six

months ended June 30, 2005, the Company reported a net loss of $10.0 million, or $0.12 per share,

compared to $9.3 million, or $0.12 per share for the same period in 2004.

Revenue for the three months ended June 30, 2005 was $1.5 million, compared to $2.8 million for the

second quarter of 2004, and was $3.5 million for the six months ended June 30, 2005, compared to

$4.1 million for the same period in 2004. Revenue in 2005 and 2004 consisted primarily of

development revenue earned under the HIV/AIDS vaccine collaboration with the International AIDS

Vaccine Initiative (IAVI) and reflect decreased activity levels as planned compared to 2004.

We ve continued to make good progress during the first half of the year by both advancing our

clinical programs and leveraging value from our leadership position in AAV development

infrastructure and capabilities through new collaborations. In our inflammatory arthritis program,

we met our goal of providing data mid-year, and based on having met the primary endpoints in the

study, we are now positioned to move the program forward and begin the next clinical trial in the

third quarter. said H. Stewart Parker, president and chief executive officer of Targeted Genetics.

Our HIV/AIDS vaccine program is the initial step in a comprehensive development strategy and we

are moving the program forward with the goal of presenting additional clinical trial data at the

end of the year. We also continue to make progress in our preclinical programs and are excited

about the breakthrough work of our collaborators in congestive heart failure and Huntington s

Operating expenses were $6.6 million for the second quarter of 2005, down from $7.1 million for the

second quarter of 2004. This decrease reflects a decrease in general and administrative cost from

$2.1 million in 2004 to $1.7 million in 2005, primarily as a result of the sale of the Company s

cell therapy subsidiary in July 2004. Operating expenses remained relatively flat at $13.2

million for the six months ended June 30, 2005, compared $13.3 million for the same period in 2004.

Year to date operating expenses reflect a decrease in general and administrative expenses and an

increase in research and development expenses associated with the Company s arthritis and AIDS

vaccine clinical programs, and its preclinical programs in congestive heart failure and

Huntington s disease.

Second quarter highlights include:

About Targeted Genetics

Targeted Genetics Corporation develops molecular medicines for the prevention and treatment of

acquired and inherited diseases. The Company has clinical product development programs targeting

inflammatory arthritis and AIDS prophylaxis. The Company also has a promising pipeline of

preclinical product development programs focused on, congestive heart failure, Huntington s

disease, and hyperlipidemia. For more information about Targeted Genetics, visit its website at

www.targetedgenetics.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This release contains forward-looking statements regarding our intellectual property, research

programs and clinical trials, our product development and our potential development platforms

including AAV vectors and other statements about our plans, objectives, intentions and

expectations. In particular, the statements regarding the Company s pipeline and potential

application of the research to any future product candidates are forward-looking statements. These

statements, involve current expectations, forecasts of future events and other statements that are

not historical facts. Inaccurate assumptions and known and unknown risks and uncertainties can

affect the accuracy of forward-looking statements. Factors that could affect our actual results

include, but are not limited to, results of animal research are not necessarily indicative of

results in humans, the timing, nature and results of our research, potential development of

alternative technologies or more effective products by competitors, our ability to obtain and

maintain regulatory or institutional approvals, our ability to obtain, maintain and protect our

intellectual property and our ability to raise capital when needed, as well as other risk factors

described in the section entitled Factors Affecting Our Operating Results, Our Business and Our

Stock Price in our Quarterly Report on Form 10-Q for the period ended March 31, 2005. You should

not rely unduly on these forward-looking statements, which apply only as of the date of this

release. We undertake no duty to publicly announce or report revisions to these statements as new

information becomes available that may change our expectations.

TARGETED GENETICS CORPORATION

(unaudited, in thousands, except per share information)

GENETICS CORPORATION