Targeted Genetics Extends Agreement to Develop HIV Vaccine with International Aids Vaccine Initiative; Initiation of Clinical Trial Expected in Second Half of 2003

SEATTLE -- Targeted Genetics Corp. today announced that it has extended its collaboration agreement with the International AIDS Vaccine Initiative (IAVI) and Columbus Children's Research Institute (CCRI) at Children's Hospital in Columbus, Ohio, to develop a vaccine to prevent HIV/AIDS in developing nations. The extended agreement will provide funding to Targeted Genetics up to US $5.6 million to support, among other milestones, regulatory filing and initiation of a Phase I clinical trial planned in the second half of 2003.

Targeted Genetics, IAVI and CCRI are collaborating on the development of a recombinant adeno-associated virus (rAAV)-based vaccine that would protect people who are uninfected with HIV from becoming infected or developing AIDS.

"We have enjoyed a productive partnership with IAVI and CCRI and look forward to

bringing our preventive AIDS vaccine program into the clinic this year," said H. Stewart Parker, president and CEO of Targeted Genetics Corporation. "This extended agreement represents the ongoing commitment of these organizations to realize the potential of rAAV-based gene delivery in the field of preventive HIV vaccines and the importance of a preventive solution to the growing AIDS epidemic worldwide. Targeted Genetics is a leader in the development of rAAV-based product candidates and plans to initiate the first-ever clinical program for a rAAV-based vaccine this year. rAAV's safety and its ability to enable persistent antigen expression, coupled with Targeted Genetics' expertise in making large quantities of rAAV vector product, may make it an ideal gene delivery vehicle for a cost effective HIV vaccine."

As outlined in the original terms of the collaboration agreement established in February 2000, vaccine candidates are constructed based on subtypes of the virus most prevalent in Southern and Eastern Africa and are expected ultimately to be field-tested in those regions. In return for its funding, and in keeping with its philanthropic mission, IAVI has secured rights to ensure that a vaccine, if successfully developed, will be distributed in developing countries at a reasonable price. The price will take a number of factors into consideration, including the income level of the country, and is expected to be substantially lower than prices in industrialized countries.

The current focus of the collaboration is the delivery of genes encoding proteins from the HIV genome, with the goal of eliciting protective immunity to the virus. Preclinical studies in the SIV (non-human primate form of HIV) macaque model have demonstrated that delivery of SIV genes with a rAAV vector leads to strong antibody and T-cell responses against SIV and results in decreased viral load when vaccinated animals are challenged with virulent SIV. Results provide support for the potential utility of rAAV-based gene delivery in the area of preventive vaccines and for the use of gene delivery as an alternative approach to protein delivery. More recent data on the preclinical evaluation of a rAAV-based Clade C HIV vaccine will be presented at the Keystone AIDS vaccine conference at end of March 2003 in Banff, Alberta.

AAV is a small, stable virus that is not known to cause disease in humans even though a majority of the population has been exposed to it. Recombinant AAV, or rAAV, retains the virus' ability to enter cells, but cannot replicate. The naturally occurring form of the virus contains only two genes. Both of these genes are removed in the process of developing rAAV vaccines. Genes encoding HIV proteins are inserted into the AAV backbone and administered to the patient as a vaccine. Once the vaccine has entered a cell and has been activated, the cell is capable of expressing HIV specific antigens and eliciting an immune response. The ability to elicit a protective response against SIV utilizing rAAV vaccines in non-human primates has been demonstrated in preclinical studies. Over the past several years, rAAV vectors have become one of the most promising gene delivery systems for broad application in the treatment of disease.

Targeted Genetics develops gene-based products for treating acquired and inherited diseases. IAVI is a global nonprofit organization working to speed the search for a vaccine to prevent HIV/AIDS. CCRI discovers novel approaches to childhood diseases through research that ranges from basic molecular biology to applied, patient-oriented research.

Source: Targeted Genetics Corporation