Targeted Genetics Corporation Recommended for up to $2.4 Million in Funding by Department of Defense

Market Wire, July, 2008

Targeted Genetics Corporation (NASDAQ: TGEN) announced today that the Department of Defense Amyotrophic Lateral Sclerosis Research Program of the Office of the Congressionally Directed Medical Research Programs has recommended grant funding to Targeted Genetics of up to $2.4 million, to be applied towards preclinical development of new therapies for amyotrophic lateral sclerosis (ALS).

Targeted Genetics plans to develop a small-molecule for an investigational new drug (IND) submission. This is based on the observations, by Targeted Genetics collaborator Dr. John Engelhardt at the University of Iowa, that genetic mutations known to be associated with ALS, lead to over-activation of NADPH oxidase which is associated with pathogenesis of ALS. The work proposed under this grant includes formulation development and preclinical pharmacokinetic and safety studies.

"Our candidate product has shown a potential to delay the onset and progression of disease in animal models of ALS and, if this ability translates to human subjects, the molecule could have a dramatic impact on survival and quality of life," said Principal Investigator, Barrie J. Carter, Ph.D., Executive Vice President and Chief Scientific Officer of Targeted Genetics.

Grant funding is subject to Targeted Genetics completing documentation and negotiations typical for government contract award processes.

About Amyotrophic Lateral Sclerosis

Amyotrophic lateral sclerosis (ALS), commonly known as Lou Gehrig's disease, is a progressive neurodegenerative disease affecting neurons in the brain and spinal cord. The degeneration of these motor neurons limits communication from the brain and spinal cord to muscle fibers throughout the body, leading to the inability of the brain to initiate and control muscle movement. Early symptoms of ALS often include muscle weakness, resulting in loss of control in arms and legs, speech, swallowing or breathing. There is no cure for ALS.

About Targeted Genetics Corporation

Targeted Genetics Corporation is a biotechnology company committed to the development of innovative targeted molecular therapies for the prevention and treatment of acquired and inherited diseases with significant unmet medical need. Targeted Genetics' proprietary Adeno-Associated Virus (AAV) technology platform allows it to deliver genes that encode proteins to increase gene function or RNAi to decrease or silence gene function. Targeted Genetics' product development efforts target inflammatory arthritis, AIDS prophylaxis, Leber's congenital amaurosis, congestive heart failure and Huntington's disease. To learn more about Targeted Genetics, visit Targeted Genetics' website at http://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 business strategy and product development, including statements regarding the amyotrophic lateral sclerosis (ALS) research program, our ability to obtain the grant funding for the ALS research program, the potential impact of the ALS research program on our results of operations 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 ability to obtain the grant funding for the ALS research program, payments anticipated by the Company under product development collaborations and contracts, the Company's actual expenses, the Company's ability to raise capital when needed, the timing, nature and results of the Company's clinical trials, potential development of alternative technologies or more effective products by competitors, the Company's ability to obtain and maintain regulatory or institutional approvals, the Company's ability to maintain its listing on the NASDAQ Capital Market and the Company's ability to obtain, maintain and protect its intellectual property, as well as other risk factors described in its filings with the Securities and Exchange Commission (SEC), including in "Item 1A. Risk Factors" in the Company's most recent quarterly report on Form 10-Q for the quarter ended March 31, 2008 filed 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 WeissComm Partners 206.660.2588 Email Contact