8-K

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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            -------------------------



                                    FORM 8-K

                                 CURRENT REPORT



                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



                                OCTOBER 18, 1996
                                (Date of Report)



                          TARGETED GENETICS CORPORATION
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
                                                                               
            WASHINGTON                           0-23930                           91-1549568
   (State or Other Jurisdiction           (Commission File No.)                  (IRS Employer
        of Incorporation)                                                     Identification No.)




   1100 OLIVE WAY, SUITE 100, SEATTLE, WASHINGTON              98101
     (Address of Principal Executive Offices)                (Zip Code)

                                 (206) 623-7612
              (Registrant's Telephone Number, Including Area Code)

                                      NONE
          (Former Name or Former Address, if Changed Since Last Report)
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ITEM 5.  OTHER EVENTS

         On October 17, 1996, the Board of Directors (the "Board of Directors")
of Targeted Genetics Corporation (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $.01 per share (the "Common Shares"), of the Company. The
dividend was payable on October 18, 1996 (the "Record Date") to the Company's
shareholders of record on that date. In addition, the Board of Directors has
authorized the issuance of one Right with respect to each additional Common
Share that becomes outstanding between the Record Date and the earliest of the
Distribution Date, the Expiration Date (as such terms are hereinafter defined),
and the date, if any, on which the Rights are redeemed. Each Right entitles its
registered holder to purchase from the Company one one-hundredth (1/100th) of a
share of Series A Participating Cumulative Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Shares"), at a price of $40 per one
one-hundredth (1/100th) of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, as Rights Agent.

         Until the earlier of (i) the close of business on the tenth business
day after a public announcement that a person or group (including any affiliate
or associate of such person or group) has acquired beneficial ownership of 15%
or more of the outstanding Common Shares (such person or group being an
"Acquiring Person") and (ii) such date, if any, as may be designated by the
Board of Directors following the commencement of, or first public disclosure of
an intent to commence, a tender or exchange offer for outstanding Common Shares
which could result in the offeror becoming the beneficial owner of 15% or more
of the outstanding Common Shares (the earlier of such dates being the
"Distribution Date"), the Rights will be evidenced by the certificates for the
Common Shares registered in the names of the holders thereof (which certificates
for Common Shares will also be deemed to be Right Certificates, as defined
below) and not by separate Right Certificates. Therefore, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares.

         As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Shares
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.


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         The Rights are not exercisable until the Distribution Date and will
expire on October 18, 2006 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.

         In order to preserve the actual or potential economic value of the
Rights, the number of Preferred Shares or other securities issuable upon
exercise of a Right, the Purchase Price, the Redemption Price (as hereinafter
defined) and the number of Rights associated with each outstanding Common Share
are all subject to adjustment by the Board of Directors in the event of any
change in the Common Shares or the Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations, 
combinations or exchanges of securities, split-ups, split-offs, spin-offs, 
liquidations, other similar changes in capitalization, any distribution or 
issuance of cash, assets, evidences of indebtedness or subscription rights, 
options or warrants to holders of Common Shares or Preferred Shares, as the 
case may be, or otherwise.

         In the event a person becomes an Acquiring Person, the Rights will
entitle each holder of a Right (other than an Acquiring Person (or any affiliate
or associate of such Acquiring Person)) to purchase, for the Purchase Price,
that number of Common Shares equivalent to the number of Common Shares which at
the time of the transaction would have a market value of twice the Purchase
Price. Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will be null and void and
nontransferable and any holder of any such Right (including any purported
transferee or subsequent holder) will be unable to exercise or transfer any such
Right.

         After there is an Acquiring Person, the Board of Directors may elect to
exchange each Right (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the number of Common Shares that would be issuable at such time upon
the exercise of one Right pursuant to the terms of the Rights Agreement, and
without payment of the Purchase Price.

         If the Company is acquired in a merger by, or other business
combination with, or 50% or more of its assets or assets accounting for 50% or
more of its net income or revenues are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to, a publicly traded corporation,
each Right will entitle its holder (subject to the next paragraph) to purchase,
for the Purchase Price, that number of shares of common stock of such
corporation which at the time of the transaction would have a market value of
twice the Purchase Price. If the Company is acquired in a merger by, or other
business combination with, or 50% or more of its assets or assets accounting for
50% or more of its net income or revenues are sold, leased, 


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exchanged or otherwise transferred (in one or more transactions) to, an entity
that is not a publicly traded corporation, each Right will entitle its holder
(subject to the next paragraph) to purchase, for the Purchase Price, at such
holder's option (i) that number of shares of the surviving corporation in the
transaction (which surviving corporation could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price, (ii)
that number of shares of the ultimate parent entity of the surviving corporation
which at the time of the transaction would have a book value of twice the
Purchase Price, or (iii) if the acquiring entity has an affiliate which has
publicly traded common shares, that number of common shares of such affiliate
which at the time of the transaction would have a market value of twice the
Purchase Price.

         At any time prior to any person or group becoming an Acquiring Person,
the Board of Directors may redeem the Rights in whole, but not in part, at a
price (in cash or Common Shares or other securities of the Company deemed by the
Board of Directors to be at least equivalent in value) of $.01 per Right,
subject to adjustment as provided in the Rights Agreement (the "Redemption
Price").

         At any time prior to the Distribution Date the Company may, without the
approval of any holder of the Rights, supplement or amend any provision of the
Rights Agreement (including the date on which the Distribution Date would occur,
the time during which the Rights may be redeemed or the terms of the Preferred
Shares).

         The Preferred Shares issuable upon exercise of the Rights will not be
redeemable. The holders of the Preferred Shares will be entitled to a
preferential quarterly dividend payment equal to the greater of (a) $.01 per
share and (b) 100 times the dividend declared per Common Share, if any. In the
event of dissolution, liquidation or winding up of the Company, whether
voluntary or involuntary, the holders of Preferred Shares will be entitled to a
preferential payment per share of all accrued and unpaid dividends and
distributions per share, plus 100 times the distribution to be made per Common
Share. Each Preferred Share will entitle its holder to 100 votes, voting
together with the Common Shares. Finally, in the event of any merger, business
combination, consolidation or other transaction in which the Common Shares are
exchanged, the holders of the Preferred Shares will be entitled to receive per
share 100 times the amount received per Common Share. Because of the nature of
the Preferred Shares' dividend liquidation and voting rights, the value of the
one one-hundredth (1/100th) interest in a Preferred Share issuable upon exercise
of each Right should approximate the value of one Common Share. Customary
antidilution provisions are designed to protect that relationship in the event
of certain changes in the Common Shares and the Preferred Shares. The Preferred
Shares are authorized to be issued in fractions which are an integral multiple
of one one-hundredth (1/100th) of a Preferred Share. The Company may, but is not
required to, 


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issue fractional shares upon the exercise of Rights and, in lieu of
fractional shares, the Company may utilize a depository arrangement as provided
by the terms of the Preferred Shares and, in the case of fractions other than
one one-hundredth (1/100th) of a Preferred Share or integral multiples thereof,
may make a cash payment based on the market price of such shares.

         Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or receive dividends.


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ITEM 7.  EXHIBITS

4.1      Rights Agreement, dated as of October 17, 1996, between Targeted
         Genetics Corporation and ChaseMellon Shareholder Services,
         incorporated herein by reference to Exhibit 2.1 to the Company's
         Registration Statement on Form 8-A, dated October 22, 1996.

99.1     Press release issued October 17, 1996.


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                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                      TARGETED GENETICS CORPORATION



Dated:  October 22, 1996               By    /s/ James A. Johnson
                                             --------------------
                                             James A. Johnson,
                                             Vice President - Finance, Secretary
                                                and Treasurer



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                                  EXHIBIT INDEX

Exhibit Number           Description
- --------------           -----------

          4.1            Rights Agreement, dated as of October 17, 1996, between
                         Targeted Genetics Corporation and ChaseMellon
                         Shareholder Services, incorporated herein by reference
                         to Exhibit 2.1 to the Company's Registration Statement
                         on Form 8-A, dated October 22, 1996.

         99.1            Press release issued October 17, 1996.



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EX-99.1

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                                                                    Exhibit 99.1

                                     Contact:   James A. Johnson
                                                Alberta L. Garvin
                                                Targeted Genetics Corporation
                                                (206) 521-7824

PRESS RELEASE
                                                Lucy L. Morrison
                                                Feinstein Partners Inc.
                                                (617) 577-8110

                TARGETED GENETICS ADOPTS SHAREHOLDER RIGHTS PLAN

         SEATTLE -- Oct. 17, 1996 -- Targeted Genetics Corporation (Nasdaq:TGEN)
today announced that its Board of Directors has adopted a Shareholder Rights
Plan and declared a dividend distribution of one Preferred Share Purchase Right
on each outstanding share of Targeted Genetics' common stock.

         "The Rights are designed to ensure that all of Targeted Genetics'
shareholders receive fair and equal treatment in the event of any takeover of
the company," said H. Stewart Parker, Targeted Genetics' president and chief
executive officer. "This common step of instituting a Shareholder Rights Plan is
to protect the rights of our shareholders, and to guard against attempts to gain
control of the company without paying all shareholders the fair value of their
shares. We are not aware of any effort to acquire Targeted Genetics, but it is
prudent to be prepared."

         The Rights will not become exercisable, and will continue to trade with
the common stock, unless a person or group acquires 15 percent or more of
Targeted Genetics' common stock or announces a tender offer, the consummation of
which would result in ownership by a person or group of 15 percent or more of
the company's common stock. Each Right will entitle shareholders to buy
one-hundredth of a share of a new series of junior participating preferred stock
at an exercise price of $40.00.

         If a person or group acquires 15 percent or more of Targeted Genetics'
outstanding common stock, each Right will entitle its holder (other than the
acquiring person or group) to purchase, at the Right's then-current exercise
price, a number of Targeted Genetics' common shares having a market value of
twice that price. In addition, if Targeted Genetics is acquired in a merger or
other business combination transaction after a person has acquired 


                                   - more -
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15 percent or more of Targeted Genetics' outstanding common stock, each Right
will entitle its holder to purchase, at the Right's then-current exercise price,
a number of the acquiring company's common shares having a market value of twice
that price.

         Following the acquisition by a person or group of 15 percent or more of
Targeted Genetics' common stock and prior to an acquisition of 50 percent or
more of the common stock, the Board of Directors may exchange the Rights (other
than Rights owned by such person or group), in whole or in part, for
consideration per Right consisting of one-half of the Common Stock that would be
issuable upon exercise of one Right. Alternatively, the Rights may be redeemed
for one cent per Right at the option of the Board of Directors prior to the
acquisition by a person or group of beneficial ownership of 15 percent or more
of Targeted Genetics' common stock.

         The non-taxable dividend distribution will be made on October 18, 1996,
payable to shareholders of record on that date. The Rights will expire on
October 18, 2006.

         Targeted Genetics Corporation develops gene and cell therapies for the
treatment of certain acquired and inherited diseases. The company has three lead
product development programs targeting cystic fibrosis, breast and ovarian
cancer, and HIV cell therapy, as well as an extensive technology platform.

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