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International AIDS Vaccine Initiative, Targeted Genetics Corporation, and Children's Research Institute to Collaborate to Develop AIDS Vaccine

February 15, 2000

Targeted Genetics’ Adeno-Associated Viral Vectors to Deliver Genes Aimed at Protecting Against HIV; Goal is Affordable Vaccine for Developing Countries

NEW YORK—February 15, 2000--The International AIDS Vaccine Initiative (IAVI), Targeted Genetics Corporation (NASDAQ: TGEN), and Children’s Research Institute on the campus of Children’s Hospital in Columbus, Ohio (Children’s), today announced that they will collaborate to develop a vaccine to prevent AIDS.   The vaccine will utilize Targeted Genetics’ Adeno-Associated Viral Vectors (AAV) to deliver HIV genes as a novel form of genetic immunization.

Under terms of the public-private collaboration, IAVI will fund development, pre-clinical, and Phase I studies at Seattle-based Targeted Genetics and at Children’s. IAVI expects to invest more than $6 million during the first three years of the agreement, provided that certain milestones are achieved.  Vaccines will be constructed based on subtypes of the virus most prevalent in Southern and Eastern Africa and are expected 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 successful vaccine 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.  Targeted Genetics will have exclusive rights to commercialize the vaccine in industrialized countries.

IAVI’s “Social Venture Capital” Approach

“An AIDS vaccine for the world’s poorest countries is an international public good that isn’t likely to happen without innovative public-private collaborations,” said Seth Berkley, M.D., President of IAVI.  “IAVI seeks to maximize the number of promising vaccine

candidates in clinical trials.  AAV is the third AIDS vaccine candidate IAVI has selected for fast-track development under our ‘social venture capital’ model. Unlike traditional

venture capitalists, who seek equity in return for their investments, IAVI seeks a commitment that a successful vaccine will be provided to the poor in developing countries at a reasonable price.  This vaccine candidate holds particular promise for use in rural settings, because it appears to confer long-lasting immunity with just a single injection.  A vaccine is the world’s only hope for ending the epidemic, especially in developing countries where there is little access to treatment.”

First AAV-Based Vaccine

“We are pleased to be working with IAVI on the development of an AIDS vaccine,” said H. Stewart Parker, President and Chief Executive Officer of Targeted Genetics.  “IAVI was established with the sole intention of making an affordable AIDS vaccine a reality, and the organization is funding what it sees as one of the most promising technologies available to make that happen.  This represents the first time that an AAV-based vaccine has been brought into pre-clinical development.  We believe that vaccines are a logical application and extension of our AAV vector technology and we are committed to being part of the solution to the global HIV epidemic. AAV’s ability to express genes for long periods of time, coupled with Targeted Genetics’ expertise in making large quantities of pure AAV vector product, means that this vaccine could have a meaningful impact on the AIDS epidemic.”

Under the terms of the agreement, AAV vectors will be used to deliver selected HIV genes with the goal of eliciting a protective immune response against the virus.

Targeted Genetics expects to manufacture the vaccine and will retain worldwide exclusive commercialization rights to any product that may stem from the collaboration.  Under the terms of the agreement, should Targeted Genetics decline to produce the vaccine for developing countries in reasonable quantity at a reasonable price, IAVI will have certain rights to obtain licenses from Targeted Genetics in order to contract with other manufacturers to make the vaccine available in such countries.

Targeted Genetics' AAV manufacturing process is based on a cell line which was originally developed by Philip R. Johnson, M.D., Executive Director of the Children’s Research Institute on the campus of Children’s Hospital, Columbus, Ohio. The technology is covered by US patent #5,658,785, entitled "Adeno-Associated Virus Materials and Methods."  In June 1999, Targeted Genetics sub-licensed exclusive rights to this broad patent from Alkermes, Inc. (NASDAQ: ALKS) which had acquired the rights directly from Children’s.

In addition to developing the cell line, which serves as the basis of Targeted Genetics’ manufacturing process, Dr. Johnson's research interests include using AAV vectors to develop a vaccine for AIDS.  Dr. Johnson was instrumental in bringing Targeted Genetics and IAVI together based on his belief that the company is uniquely positioned to provide the large-scale manufacturing expertise required for a global immunization program of an AAV-based AIDS vaccine.

“I am extremely excited about this opportunity to work with IAVI and Targeted Genetics,” Johnson said.  “This innovative partnership will allow us to work towards a common goal: the development of a safe, effective and affordable AIDS vaccine.  When my group began this line of research over seven years ago, we envisioned using AAV vectors as a form of genetic immunization.  The goal was to elicit host immune responses similar to those engendered by live attenuated HIV vaccines, but without the risk of actually being infected with HIV.

Data Shows Significant Promise

“Our work to date in non-human primates suggests that AAV vector vaccines hold significant promise,” he continued.  “Monkeys immunized with AAV vectors carrying SIV genes, the primate equivalent of HIV, develop immune responses that are very similar to those found in monkeys infected with virulent SIV.  These data provide the basis for moving forward with further pre-clinical development that will support Phase I testing in humans.  The agreement involving Children’s, Targeted Genetics, and IAVI will allow us to fast-track this exciting approach.” Dr. Johnson also serves as the Henry C. Cramblett Chair in Medicine and Professor of Pediatrics at Children's Hospital and The Ohio State University in Columbus, Ohio.

“AIDS is the single greatest threat to the African Renaissance,” said William Makgoba, Ph.D., president of the Medical Research Council of South Africa. “We are especially gratified that IAVI and its partners have taken measures to ensure that a successful AIDS vaccine will be affordable in developing countries.”

According to the UNAIDS Joint United Nations Program on HIV/AIDS, over 33 million people were living with HIV/AIDS as of December 1999.  Sub-Saharan Africa bears the brunt of the epidemic, with close to 70% of the total of HIV-infected individuals.  Nearly six million new HIV infections occurred in 1999 and 16.3 million people have died in the HIV epidemic to date.

IAVI’s Approach: Fast Tracking Vaccines for Use in Developing Countries

The International AIDS Vaccine Initiative is nonprofit scientific and charitable organization founded in 1996 whose mission is to ensure the development of safe, effective, accessible, preventive HIV vaccines for use throughout the world.   IAVI's work focuses on three areas: accelerating scientific progress, mobilizing public support through issue advocacy and education, and encouraging industrial involvement in AIDS vaccine development.   IAVI draws most of its funding from governments, foundations and multilateral institutions.  Its major donors include the Bill and Melinda Gates Foundation, the Rockefeller Foundation, the Starr Foundation, the World Bank, and the governments of the United Kingdom and the Netherlands.

­IAVI’s research focuses on vaccines that would be most useful in developing countries. Such vaccines would be inexpensive to manufacture, easy to transport and administer, stable under field conditions and require few inoculations. IAVI has also negotiated agreements with its industry partners to ensure that vaccines will be made available in developing countries at just above the cost of manufacture.   IAVI calls this approach ‘social venture capitalism.”  Unlike traditional venture capitalists, who seek equity in return for their investments, IAVI seeks a commitment that the vaccine, if successful, will be provided to the poor in developing countries at a reasonable price.

At the heart of IAVI’s scientific program is the Vaccine Development Partnership, a collaborative model that links scientists in industrialized and developing countries with those in private industry. IAVI provides funding, expert support and guidance to move a promising vaccine approach from the idea stage into clinical trials as rapidly as possible.  IAVI’s first two Vaccine Development Partnerships link scientists in the U.K. and Kenya, and the United States and South Africa, respectively. IAVI is currently exploring new collaborations linking academic and biotech industry vaccine designers in the U.S. and the European Union with clinical researchers in India, China and Africa.  For more information about IAVI, please visit the organization’s web site at www.IAVI.org.

About Adeno-Associated Viral (AAV) Vectors

 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.  The naturally occurring form of the virus contains only two genes.  Both of these genes are completely removed in the process of developing AAV vectors for gene delivery.  The DNA sequence for the viral genes is replaced with DNA encoding genes with therapeutic/preventative potential.  The resulting vector retains the virus’ ability to enter cells, but cannot replicate.  Once the vector has entered a cell, the therapeutic gene can then be expressed.

Over the past several years, AAV vectors have become one of the most promising gene delivery systems for broad application in the treatment of disease due to many characteristics that give it particular utility for in vivo gene delivery:

  • AAV vectors contain no viral genes, thus minimizing the probability of undesirable host cellular immune response
  • AAV has never been known to cause disease
  • AAV cannot replicate
  • AAV can deliver genes to slowly- or non-dividing cells, targeting a broad array of cells and tissue types.  Researchers are now discovering that AAV vectors work efficiently in a number of organs, such as lung, brain, heart, liver, muscle, retina and spinal cord, making AAV a potentially valuable tool for the development of numerous gene-based therapeutic products 
  • AAV vectors can persist and express genes in human cells for a relatively long time, allowing for the development of patient-friendly treatment regimens 
  • AAV vectors are stable, enabling purification and production methods similar to those used for other typical biologic drugs

Targeted Genetics’ Efforts in Developing AAV as a Gene Delivery Vehicle

Targeted Genetics has become a leader in the development of AAV vectors because the company identified the promise of AAV early on, and then pragmatically went about solving the primary concern regarding AAV vectors – the lack of efficient manufacturing methods.  Targeted Genetics was the first company to initiate clinical trials with AAV-based products, and has treated nearly sixty patients with products based on this technology.  Trials in cystic fibrosis are ongoing and additional pre-clinical data are being generated in the areas of hemophilia, cardiovascular disease and rheumatoid arthritis.  The company has successfully dealt with all regulatory issues to date concerning the human testing of AAV-based products, and has developed efficient production methods that can be scaled-up to supply large clinical trials and commercial needs in a cost-effective manner, meeting all GMP requirements.  The company has, in the process, developed a strong proprietary position in the use of stable cell lines for AAV vector manufacturing.

Targeted Genetics Corporation develops gene therapy products for the treatment of acquired and inherited diseases.  The company has lead clinical product development programs targeting cystic fibrosis and cancer, and a promising preclinical pipeline of product candidates focused on hemophilia A, cardiovascular disease, and cancer.  The company has a broad platform of gene delivery technologies, as well as a promising body of technology for cellular therapy. For more information about Targeted Genetics Corporation please visit the Company’s web site at www.targetedgenetics.com.

NOTE:  This release contains forward-looking statements relating to the Company’s products under development, technologies and future operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.   The words “believes”, “expects”, “intends”, “anticipates”, variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking.  These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.  Factors that could affect the Company’s actual results include the need for additional capital, the early stage of product development, uncertainties related to clinical trials, and uncertainties related to patent position.  Reference is made to the Company’s latest Annual Report on Form 10-K filed with the SEC for a more detailed description of such factors.  Readers are cautioned not to place an undue reliance on these forward-looking statements, which speak only as of the date of this release.  The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.