
<PAGE>
 
                       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


       Date of report (Date of earliest event reported):  APRIL 17, 1998


                         TARGETED GENETICS CORPORATION
              (Exact name of registrant as specified in charter)
 
        WASHINGTON                 0-23930                   91-1549568
(State or other jurisdiction     (Commission               (IRS Employer 
     of incorporation)           File Number)            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)


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ITEM 5.  OTHER EVENTS

     On April 17, 1998, Targeted Genetics Corporation (the "Company") sold and
issued 8,666,667 shares of common stock (the "Common Stock") to four
institutional investors.  The Common Stock was issued and sold pursuant to the
provisions of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act").  The
aggregate offering price of the Common Stock was $13,000,000, based on a per
share price of $1.50.  In addition, for every two shares of Common Stock
purchased, each investor received one five-year warrant to purchase one share of
Common Stock for $2.00 (together with the Common Stock, the "Shares").  Pursuant
to an Investor Rights Agreement between the Company and the investors, the
Company is required by May 1, 1998, to file a registration statement on Form S-3
for the public resale of the Shares.  The Investor Rights Agreement is attached
hereto as Exhibit 4.1 and the form of Common Stock Purchase Warrant is attached
hereto as Exhibit 4.2.

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

     (c)  Exhibits.

     EXHIBIT NO.   DESCRIPTION
     -----------   ----------------------------------------------------------
        4.1        Investor Rights Agreement dated as of April 17, 1998 among
                   Targeted Genetics Corporation and the investors.

        4.2        Form of Common Stock Purchase Warrant between Targeted
                   Genetics Corporation and each of the investors.

                                      -2-
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                                   SIGNATURE

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


                                          TARGETED GENETICS CORPORATION


                                           By:       /s/ James A. Johnson
                                               ---------------------------------
                                               James A. Johnson
                                               Chief Financial Officer
                                               (Authorized Officer and Principal
                                               Financial Officer)

Dated:  April 27, 1998

                                      -3-
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                                 EXHIBIT INDEX

EXHIBIT NO.   DESCRIPTION
-----------   ---------------------------------------------------------------
   4.1        Investor Rights Agreement dated as of April 17, 1998 among
              Targeted Genetics Corporation and the investors.

   4.2        Form of Common Stock Purchase Warrant between Targeted Genetics
              Corporation and each of the investors.

                                      -4-
