Targeted Genetics Corporation Terminates Bothell Facility Lease Agreement

SEATTLE, WA, Jul 06 (MARKET WIRE) --
Targeted Genetics Corporation (NASDAQ: TGEN) today announced the
termination of the lease for its facility in Bothell, Washington. The
facility was originally leased in 2000 to establish a clinical and
commercial manufacturing facility, but the Company never occupied or
commenced construction of the facility. The lease covered 76,000 square
feet of space and, under its terms, would have expired in September 2015.

Under the terms of the lease termination agreement, the Company will be
released from up to approximately $12 million in estimated payment
obligations and other liabilities under the lease in exchange for a
termination fee of $500,000, to be paid in installments beginning at the
execution of the agreement and continuing through July 2010. The
termination agreement includes obligations to accelerate payments, in
whole or in part, upon the occurrence of certain events that generate
cash for the Company.

"This settlement reduces our monthly expenses and, more importantly,
enables us to record a non-cash entry that reverses approximately $7
million of restructuring charge liabilities from our balance sheet," said
B.G. Susan Robinson, president and chief executive officer of the Company.
"This significantly increases our net worth and removes a considerable
impediment to charting our path forward."

The Company continues to pursue additional capital through strategic
transactions, licensing or selling technology, product development
collaborations, and sales of stock. The Company also continues its
negotiations to reduce or eliminate its other facility costs.

Ms. Robinson added, "The settlement of our Bothell lease obligations is
another important step in our restructuring efforts, adding to those
accomplished over the last six months that have significantly reduced our
estimated quarterly cash expenditures going forward. With this said, it is
imperative that we execute on one or more cash-generating transactions in
order to either continue our operations or enable continued development of
AAV-based gene therapeutic products through another entity. We continue to
evaluate the best way to maximize value for our shareholders."

As previously reported, the Company finished the first quarter ended March
31, 2009 with $3.9 million in cash and cash equivalents and a working
capital balance of $185,000. The Company believes that its current
financial resources, together with the revenue it expects to receive from
collaborators, will only be adequate to fund its operations into August
2009. If the Company is not successful in securing additional capital
sufficient to support ongoing operations, it will wind down its business
or otherwise cease its operations.

About Targeted Genetics Corporation

Targeted Genetics Corporation is a biotechnology company committed to the
development of innovative therapies for the prevention and treatment of
diseases with significant unmet medical need. A key area of focus for
Targeted Genetics is applying its proprietary adeno-associated virus (AAV)
technology platform to deliver genetic constructs to increase gene
function or silence gene function. Targeted Genetics' lead product
development efforts target ocular and neurological indications, two
therapeutic areas where AAV delivery may have competitive advantages over
other therapeutic modalities. To learn more 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 the Company's
liquidity and financial resources, its ability to fund ongoing and future
operations, and its product development and business strategies, including
statements regarding the Company's settlement of lease obligations for its
Bothell facility and other facilities, the Company's ability to continue
its operations, raise additional capital or secure other financial
resources in the near term, the extent of the Company's cash horizon, the
possibility that the Company may cease its operations or otherwise wind up
its business and other statements about the Company's plans, objectives,
intentions and expectations. 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 actual future events or results include, but
are not limited to, the Company's actual expenses, the risk that the
Company will run out of cash earlier than expected, the risk that the
Company will not be able to raise capital or secure other financial
resources in the very near term, the risk that the Company will not be
able to enter into one or more strategic transactions and/or to sell or
otherwise monetize its assets, the risk that the Company will not be able
to maintain its listing on the NASDAQ Capital Market or that an
over-the-counter market will not trade the Company's shares if the NASDAQ
Capital Market delists the Company, the risk that the Company will be
unable to meet its obligations under the Bothell lease termination
agreement, which would result in the Company not being released from its
obligations under the Bothell lease, and the risk that the Company does
not successfully settle or otherwise reduce its lease obligations for its
other facilities, as well as other risk factors described in the section
entitled "Item 1A. Risk Factors" in Part II, Item 1A of the Company's
quarterly report on Form 10-Q for the period ended March 31, 2009, filed
with the Securities and Exchange Commission on May 7, 2009, and in other
filings with the SEC. You should not rely unduly on these forward-looking
statements, which apply only as of the date of this release. The Company
undertakes no duty to publicly announce or report revisions to these
statements as new information becomes available that may change the
Company's expectations.

Investor and Media Contact:
Stacie D. Byars
206.660.2588
Email Contact

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