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Industrial Collaboration Agreement

Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. The omitted portions of this exhibit have been filed separately with the Securities and Exchange Commission.

INDUSTRIAL COLLABORATION AGREEMENT

COLLABORATION AGREEMENT effective as of February 1, 2000 (the ?Effective Date?), by and among INTERNATIONAL AIDS VACCINE INITIATIVE, a not-for-profit corporation with its principal offices at 810 Seventh Avenue, New York, New York 10019 (hereinafter referred to as ?IAVI?), CHILDREN?S RESEARCH INSTITUTE, a not-for-profit corporation with its principal offices at 700 Children?s Drive, Columbus, Ohio 43205 (hereinafter referred to as ?Children?s?), and TARGETED GENETICS CORPORATION, a Washington corporation with its principal offices at 1100 Olive Way, Suite 100, Seattle, WA 98101 (hereinafter referred to as ?TGC?).

WHEREAS, IAVI has, as one of its principal objectives, the acceleration of development of vaccines against HIV for use and distribution in Developing Countries (as defined below); and

WHEREAS, Children?s and its personnel have certain skills and own rights to certain technology, primarily relating to vaccine design, and TGC possesses certain skills and owns or has license rights to certain technology, primarily relating to vaccine development, which can aid IAVI in its objectives; and

WHEREAS, the Research and Development Program (as defined below) contemplated by this Agreement is of mutual interest and benefit to Children?s, TGC and IAVI, and will further the objectives of IAVI in a manner consistent with its status as a not-for-profit, tax-exempt, institution;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS. For purposes hereof, the following terms shall have the meanings specified below:

(a) ?Affiliate? of a party means the entities that, directly or indirectly, own or control the voting of at least 50% of the voting capital interests of such party (?Parent?), or at least 50% of the voting capital interests (or equivalent control) of which are, directly or indirectly, owned, or the voting of which are controlled, by such party, its Parent, or an Affiliate of such party.

(b) ?Background Technology? shall mean: (i) the rights to make, use, sell, offer for sale, and import the TGC-Controlled Inventions; (ii) all inventions (whether or not patented or patentable), know-how, techniques, cell lines, data, studies and results of studies and other proprietary information in the possession or control of Children?s at the Effective Date and at any time thereafter during the period in which Children?s remains a direct participant in the Research and Development Program, to the extent bearing upon the Program Vaccines, the TGC-Controlled Inventions, the Program Inventions, or any of them within the Program Field

(as and to the extent the Program Field exists during the period of such direct participation by Children?s); and (iii) know-how and other proprietary information in the possession or control of TGC at the Effective Date and at any time thereafter during the period in which TGC remains a direct participant in the Research and Development Program, to the extent useful for the practice of the TGC-Controlled Inventions within the Program Field (as and to the extent the Program Field exists during the period of such direct participation by TGC).

(c) ?Collaboration Payments? shall mean the cash payments to be made (subject to Sections 6(b) and 6(e)(i)) by IAVI to Children?s and by Children?s to TGC under this Agreement as awards in support of the Research and Development Program.

(d) ?Developing Countries? shall mean those countries defined from time to time by the World Bank on a mutually-acceptable public listing as having ?low-income economies? or ?middle-income economies? (whether lower-middle or upper-middle) (or a mutually acceptable equivalent list of countries, if such World Bank country lists are discontinued). A list of all such Developing Countries as of the Effective Date is set forth in Attachment A annexed hereto. Notwithstanding the foregoing, no country which is at the relevant time under a trade embargo imposed by U.S. law or regulation or any other applicable export restriction imposed by law or regulation affecting the Program Vaccines, any Background Technology or any Program Inventions will be considered part of the Developing Countries for purposes of the section(s) of this Agreement that would constitute, call for, or facilitate any violation of such embargo or restriction, unless and to the extent that IAVI establishes to TGC?s reasonable satisfaction in each instance that IAVI has at its own risk and expense received (for itself and for TGC, to the extent applicable to the transactions under this Agreement) an exemption, export license, or other governmental authorization removing all such embargoes and restrictions as to that country, as applicable to such section(s) hereof. If IAVI so requests, Children?s and TGC will make available reasonable assistance to IAVI in support of its application for any such exemption, license or authorization.