Targeted Genetics receives milestone payments from Genzyme and Amsterdam Molecular Therapeutics

Targeted Genetics Corporation (Pink Sheets:TGEN) (the “Company”) today announced that it has completed the technology transfer portion of the September 2009 asset sale transaction executed between the Company and Genzyme Corporation (“Genzyme”) and has received the full $7.0 million provided for in the asset purchase agreement.

As previously announced, the Company received $3.5 million from Genzyme at the closing of the transaction and was eligible to receive up to an additional $3.5 million upon the achievement of seven technology transfer milestones. The Company completed all seven technology transfer milestones and received aggregate payments from Genzyme of $2.5 million in the fourth quarter of 2009 and $1.0 million in the first quarter of 2010 for a total of $3.5 million.

“As a result of our significant expense reduction efforts, resolution of liabilities and payments received from partners, the Company has a stable financial footing as we continue to work to maximize the value of existing assets and consider alternatives for advancing the Company”

In addition, the Company reported today that it received a $750,000 milestone payment from Amsterdam Molecular Therapeutics B.V. (“AMT”). This milestone payment was received pursuant to a patent license agreement between the Company and AMT and was triggered by AMT’s filing for marketing approval of Glybera®, a product candidate for the treatment of lipoprotein lipase deficient patients. AMT announced the regulatory filing with the European Medicines Agency on January 11, 2010.

The Company estimates it finished 2009 with cash and cash equivalents of approximately $4.9 million. The Company intends over the next year to utilize its resources to support continued efforts to monetize certain assets, to realize value from milestone and royalty licensing relationships, and to support product development programs currently underway with commercial and academic partners. Accordingly, based on its current business plans the Company expects its net use of cash during 2010 will not exceed $2 million. The Company’s use of cash in 2010 could be greater if the Company decides to increase spending during the year on new or current programs or other operating activities.

Under the September 2009 asset purchase agreement, the Company sold manufacturing technologies and other adeno-associated viral (AAV) vector technology to Genzyme. Under the agreement, Genzyme agreed to pay up to $7 million for the assets and the successful transfer of the technology and also agreed to pay a portion of sublicensing revenue received during a specified timeframe and royalties on net product sales of products if Genzyme successfully commercializes products utilizing the acquired Targeted Genetics technology. The Company entered into a non-exclusive patent license agreement with AMT in 2006 which covers Glybera®. The license agreement provides for AMT to pay royalties on net product sales, milestone payments upon the achievement of certain product development targets and annual maintenance payments.

“As a result of our significant expense reduction efforts, resolution of liabilities and payments received from partners, the Company has a stable financial footing as we continue to work to maximize the value of existing assets and consider alternatives for advancing the Company,” said B.G. Susan Robinson, President and Chief Executive Officer.