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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001144204-07-005862.txt : 20070208
<SEC-HEADER>0001144204-07-005862.hdr.sgml : 20070208
<ACCEPTANCE-DATETIME>20070208140724
ACCESSION NUMBER:		0001144204-07-005862
CONFORMED SUBMISSION TYPE:	S-3/A
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20070208
DATE AS OF CHANGE:		20070208

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TARGETED GENETICS CORP /WA/
		CENTRAL INDEX KEY:			0000921114
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				911549568
		STATE OF INCORPORATION:			WA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-3/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-140187
		FILM NUMBER:		07591790

	BUSINESS ADDRESS:	
		STREET 1:		1100 OLIVE WAY
		STREET 2:		STE 100
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98101
		BUSINESS PHONE:		2066237612

	MAIL ADDRESS:	
		STREET 1:		1100 OLIVE WAY
		STREET 2:		STE 100
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98101
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3/A
<SEQUENCE>1
<FILENAME>v064717_s3a.htm
<TEXT>
<html>
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    <title>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>As
        filed with the Securities and Exchange Commission on&#160;February 8,
        2007</strong></font></div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Registration
        No.&#160;333-140187</strong></font></div>

    <div>
      <hr style="COLOR: black" align="left" noshade size="1" width="100%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE COMMISSION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington,
      D.C. 20549</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>______________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">

        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AMENDMENT
          NO. 1</strong></font></div>


        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TO</strong></font></div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM&#160;S-3</strong></font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REGISTRATION
      STATEMENT UNDER</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      SECURITIES ACT OF 1933</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>______________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TARGETED
      GENETICS CORPORATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      Name of Registrant as Specified in Its Charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="43%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington</strong></font></div>
            </td>
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>91-1549568</strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="43%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or Other Jurisdiction of Incorporation or Organization)</font></div>
            </td>
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(I.R.S.
                Employer Identification No.)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1100
      Olive Way, Suite 100</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Seattle,
      Washington 98101</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(206)
      623-7612</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address,
      Including Zip Code, and Telephone Number, Including Area Code, of</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
      Principal Executive Offices)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>______________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>H.
      Stewart Parker</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>President
      and Chief Executive Officer</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Targeted
      Genetics Corporation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1100
      Olive Way, Suite&#160;100</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Seattle,
      Washington 98101</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(206)
      623-7612</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Name,
      Address, Including Zip Code, and Telephone Number, Including Area Code, of
      Agent
      for Service)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>______________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Copies
      to:</strong></font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stephen
                M. Graham</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Orrick,
                Herrington &amp; Sutcliffe LLP</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>719
                Second Avenue, Suite&#160;900</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Seattle,
                Washington 98104</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(206)
                839-4300</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>______________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Approximate
      date of commencement of proposed sale to the public: </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>From
      time to time after this Registration Statement becomes
      effective.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      the
      only securities being registered on this Form are being offered pursuant to
      dividend or interest reinvestment plans, please check the following box. <font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      any of
      the securities being registered on this Form are to be offered on a delayed
      or
      continuous basis pursuant to Rule&#160;415 under the Securities Act of 1933,
      other than securities offered only in connection with dividend or interest
      reinvestment plans, check the following box. <font style="DISPLAY: inline; FONT-FAMILY: Wingdings">x</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      this
      Form is filed to register additional securities for an offering pursuant to
      Rule&#160;462(b) under the Securities Act of 1933, please check the following
      box and list the Securities Act registration statement number of the earlier
      effective registration statement for the same offering. <font style="FONT-FAMILY: Wingdings">o</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      this
      Form is a post-effective amendment filed pursuant to Rule&#160;462(c) under the
      Securities Act of 1933, check the following box and list the Securities Act
      registration statement number of the earlier effective registration statement
      for the same offering. <font style="FONT-FAMILY: Wingdings">o</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      this
      Form is a registration statement pursuant to General Instruction I.D. or a
      post-effective amendment thereto that shall become effective upon filing with
      the Commission pursuant to Rule 462(e) under the Securities Act, check the
      following box. <font style="FONT-FAMILY: Wingdings">o</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      this
      Form is a post-effective amendment to a registration statement filed pursuant
      to
      General Instruction I.D. filed to register additional securities or additional
      classes of securities pursuant to Rule 413(b) under the Securities Act, check
      the following box. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>______________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Targeted
      Genetics Corporation hereby undertakes to amend this registration statement
      on
      such date or dates as may be necessary to delay its effective date until
      Targeted Genetics Corporation shall file a further amendment that specifically
      states that this registration statement shall thereafter become effective in
      accordance with Section&#160;8(a) of the Securities Act of 1933, as amended, or
      until this registration statement shall become effective on such date as the
      Commission, acting pursuant to Section&#160;8(a), may
      determine.</strong></font></div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
        information in this preliminary prospectus is not complete and may be changed.
        The selling shareholders named in this preliminary prospectus may not sell
        these
        securities until the Registration Statement filed with the Securities and
        Exchange Commission is effective. This preliminary prospectus is not an offer
        to
        sell these securities and the selling shareholders named in this preliminary
        prospectus are not soliciting offers to buy these securities in any jurisdiction
        where the offer or sale is not permitted.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SUBJECT
        TO COMPLETION, DATED FEBRUARY 8, 2007</strong></font></div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;<img src="v064717_logo.jpg" alt=""></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>2,943,000&#160;Shares</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>TARGETED
      GENETICS CORPORATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>___________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>Common
      Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>___________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      January 11, 2007, the selling shareholders listed on page 15, or the Selling
      Shareholders, acquired 2,180,000 shares of our common stock and warrants to
      purchase up to 763,000 shares of our common stock directly from us in a private
      placement that was exempt from the registration requirements of the federal
      securities laws. Under this prospectus, the Selling Shareholders and their
      transferees may offer and resell up to 2,943,000&#160;shares of our common stock
      for their own accounts. We will not receive any of the proceeds from the sale
      of
      these shares by the Selling Shareholders, but we will receive proceeds from
      the
      exercise of warrants, if exercised for cash.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
        common stock is quoted on the NASDAQ Capital Market under the symbol &#8220;TGEN.&#8221; On
        February 7, 2007, the last reported sale price of our common stock was
        $4.01&#160;per share.</font></div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders may sell their shares from time to time on the NASDAQ
      Capital Market or otherwise. They may sell the shares at prevailing market
      prices or at prices negotiated with purchasers. The Selling Shareholders will
      be
      responsible for any commissions or discounts due to brokers or dealers. The
      amount of these commissions or discounts cannot be known now because they will
      be negotiated at the time of the sales. We will pay certain of the other
      offering expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should read this prospectus carefully before you invest.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Investing
      in this stock involves a high degree of risk.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>See
      &#8220;Risk Factors&#8221; beginning on page 4.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Neither
      the Securities and Exchange Commission nor any state securities commission
      has
      approved or disapproved of these securities or determined if this prospectus
      is
      truthful or complete. Any representation to the contrary is a criminal
      offense.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>_____________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      date
      of this prospectus is ___, 2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TABLE
      OF CONTENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><u><font size="2">Page</font></u></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;"><a name="mpTableOfContents"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prospectus
              Summary</font></a></td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">3</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: white;"><font size="2">Risk
              Factors</font></td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">4</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;"><font size="2">Use
              of Proceeds</font></td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">14</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: white;"><font size="2">Selling
              Shareholders</font></td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">14</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;"><font size="2">Plan
              of Distribution</font></td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">16</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: white;"><font size="2">Legal
              Matters</font></td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">18</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;"><font size="2">Experts</font></td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">18</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: white;"><font size="2">Special
              Note Regarding Forward-Looking
              Statements</font></td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">18</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;"><font size="2">Where
              You Can Find More Information</font></td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">19</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><a name="mpTableOfContents"/>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>You
      should rely only on the information provided or incorporated by reference in
      this prospectus. Neither we nor the Selling Shareholders have authorized anyone
      to provide you with additional or different information or representations.
      You
      should not assume that the information in this prospectus is accurate as of
      any
      date other than its date, regardless of the time of delivery of this prospectus
      or any sale of common stock. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>This
      prospectus is an offer to sell and a solicitation of an offer to buy the
      securities offered by this prospectus only in jurisdictions where the offer
      or
      sale is permitted.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      this
      prospectus, &#8220;Targeted Genetics,&#8221; &#8220;we,&#8221; &#8220;us&#8221; and &#8220;our&#8221; refer to Targeted Genetics
      Corporation and its subsidiaries. References to the &#8220;Securities Act,&#8221; refer to
      the Securities Act of 1933, as amended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>P</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>rospectus
      Summary</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following summary is qualified in its entirety by, and should be read in
      conjunction with, the more detailed information appearing elsewhere in this
      prospectus and incorporated by reference herein. Before you decide to invest
      in
      our common stock, you should read the entire prospectus carefully.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong>About
      This Prospectus</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus is part of a registration statement on Form S-3 filed by us with
      the
      Securities and Exchange Commission, or SEC, to register 2,943,000&#160;shares of
      our common stock, consisting of 2,180,000&#160;shares of common stock currently
      issued and outstanding, or the Common Shares, as well as up to
      763,000&#160;shares of common stock, or the Warrant Shares, issuable upon
      exercise of warrants, or the Warrants. Together the Common Shares and the
      Warrant Shares are referred to in this prospectus as the &#8220;Shares.&#8221; The Common
      Shares and Warrants were sold to the Selling Shareholders in connection with
      our
      private placement, which closed on January 11, 2007, as described in Current
      Reports on Form 8-K filed by us with the SEC on January 8, 2007 and January
      11,
      2007. The Shares are being registered for resale or other disposition by the
      Selling Shareholders. We will not receive any proceeds from the sale or other
      disposition of the Common Shares registered hereunder, or interests therein.
      We
      will, however, receive proceeds from the exercise of any Warrants, if the
      exercise price is paid in cash. If all of the Warrants are exercised for cash,
      we will receive proceeds of approximately $4.1 million, which we currently
      intend to use for general corporate purposes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong>About
      Targeted Genetics Corporation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      summary does not contain all the information about us that may be important
      to
      you. You should read the more detailed information and consolidated financial
      statements and related notes that are incorporated by reference and are
      considered to be a part of this prospectus. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are a
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">clinical-stage
      biotechnology company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      focused
      on the development of targeted molecular therapies for the prevention and
      treatment of acquired and inherited diseases with unmet medical need. Our
      product development efforts target inflammatory arthritis, AIDS prophylaxis,
      congestive heart failure and Huntington's disease. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      develop gene therapy products and technologies for treating both acquired and
      inherited diseases. Our gene therapy product candidates are designed to treat
      disease by appropriately modifying cellular function at a genetic level. This
      involves introducing genetic material into target cells and expressing it in
      a
      manner that provides the desired effect. We have assembled a broad base of
      proprietary intellectual property that we believe gives us the potential to
      address the significant diseases that are the primary focus of our business.
      Our
      proprietary intellectual property includes gene therapy uses of certain genes,
      methods of transferring genetic material into cells, processes to manufacture
      our AAV-based product candidates and other proprietary technologies and
      processes. In addition, we have established expertise and development
      capabilities focused in the areas of preclinical research and development,
      manufacturing and manufacturing process scale-up, quality control, quality
      assurance, regulatory affairs and clinical trial design and implementation.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      two product candidates in clinical trials. The first, tgAAC94, is an AAV-based
      product candidate being developed for the treatment of inflammatory arthritis.
      The second is an AAV-based prophylactic vaccine candidate for high-risk
      populations in developing nations to protect against HIV-AIDS. We are developing
      this program in collaboration with the International AIDS Vaccine Initiative,
      or
      IAVI, a non-profit organization, the Columbus Children&#8217;s Research Institute at
      Children&#8217;s Hospital in Columbus, Ohio, or CCRI, and The Children&#8217;s Hospital of
      Philadelphia, or CHOP. The National Institute of Allergy and Infectious Disease,
      or NIAID,&#160;has awarded a $21.75&#160;million contract to us and our
      scientific collaborators at CHOP and CCRI. We have a subcontract with CHOP
      to
      complete work related to the NIAID contract, under which we may receive up
      to
      $18.2&#160;million over the five-year period of the contract. As of December 31,
      2006, we have earned approximately $1.5 million under this subcontract. The
      purpose of the NIAID award is to develop AAV-based vaccines against HIV strains
      most prevalent in North America and Europe. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2004, we formed a collaboration with Celladon Corporation, or Celladon,
      to evaluate AAV-based delivery of the SERCA2a gene and phospholamban gene
      variants, which may have a therapeutic benefit in the treatment of congestive
      heart failure. We are also partnered with Sirna Therapeutics, Inc., or Sirna,
      a
      wholly-owned subsidiary of Merck &amp; Co., Inc., in a collaboration formed in
      January 2005, to develop short interfering RNA, AAV-based therapies for the
      treatment of Huntington&#8217;s disease. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      The development of pharmaceutical products, including our potential inflammatory
      arthritis, prophylactic AIDS vaccine, congestive heart failure, and Huntington&#8217;s
      disease product candidates discussed above, involves extensive preclinical
      development followed by human clinical trials that take several years or more
      to
      complete. The length of time required to completely develop any product
      candidate varies substantially according to the type, complexity and novelty
      of
      the product candidate, the degree of involvement by a development partner and
      the intended use of the product candidate. Our commencement and rate of
      completion of clinical trials may vary or be delayed for many reasons, including
      those discussed in the section entitled &#8220;Risk Factors&#8221; presented below.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      We were incorporated in the state of Washington in 1989. Our executive offices
      are located at 1100 Olive Way, Suite&#160;100, Seattle, Washington 98101, and
      our telephone number is (206)&#160;623-7612. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      For more information about us, you should read this prospectus, including the
      information described in the section of this prospectus entitled &#8220;Where You Can
      Find More Information,&#8221; together with our consolidated financial statements and
      related notes. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      An investment in our common stock involves a high degree of risk. You should
      carefully consider the following risk factors related to the Shares offered
      by
      this prospectus and to our business. You should also carefully consider the
      other information in this prospectus and in the documents incorporated by
      reference herein. If any of the following risks actually occurs, our business,
      financial condition or results of operations may suffer. As a result, the
      trading price of our common stock could decline, and you could lose all or
      a
      substantial portion of your investment in our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong>Risks
      Related to Our Business</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we are unable to raise additional capital when needed, we will be unable to
      conduct our operations and develop our potential
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      internally generated cash flow will not fund development and commercialization
      of our product candidates, we will require substantial additional financial
      resources. Our future capital requirements will depend on many factors,
      including: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                rate and extent of scientific progress in our research and development
                programs; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                timing, costs and scope of, and our success in, conducting clinical
                trials, obtaining regulatory approvals and pursuing patent
                prosecutions;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">competing
                  technological and market developments;
</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                timing and costs of, and our success in, any product commercialization
                activities and facility expansions, if and as required;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                  existence and outcome of any litigation or administrative proceedings
                  involving intellectual
                  property.</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      estimate that our cash and cash equivalents on hand, which includes the net
      proceeds of approximately $8.1 million received from the Selling Shareholders
      in
      the January 11, 2007 private placement of the Shares, plus the expected funding
      from our partners, will be sufficient to fund our operations into the fourth
      quarter of 2007. Prior to that time, we will need to raise additional capital
      to
      continue to fund operations at their current level. This estimate is based
      on
      our ability to perform planned research and development activities and the
      receipt of expected funding from our partners. In addition, as of December
      31,
      2006, we owed to Biogen Idec Inc., or Biogen Idec, approximately $1.5 million
      in
      aggregate principal amount pursuant to a note. The terms of the note require
      us
      to make annual interest payments and scheduled principal payments of $1.0
      million in August 2007 and $0.5 million in August&#160;2008. We will need to
      raise additional capital to perform planned research and development activities
      and make these scheduled payments. Additional sources of financing could involve
      one or more of the following: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

              <tr valign="top" style="line-height: 1.25;">
                <td style="width: 36pt;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entering
                    into additional product development
                    collaborations;</font></div>
                </td>
              </tr>

          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div>
            <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

                <tr valign="top" style="line-height: 1.25;">
                  <td style="width: 36pt;">
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">mergers
                      and acquisitions;</font></div>
                  </td>
                </tr>

            </table>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            <div>
              <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

                  <tr valign="top" style="line-height: 1.25;">
                    <td style="width: 36pt;">
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">issuing
                        equity in the public or private markets;
</font></div>
                    </td>
                  </tr>

              </table>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div>
                <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

                    <tr valign="top" style="line-height: 1.25;">
                      <td style="width: 36pt;">
                        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                      </td>
                      <td>
                        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">extending
                          or expanding our current
                          collaborations;</font></div>
                      </td>
                    </tr>

                </table>
              </div>
            </div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                <div>
                  <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

                      <tr valign="top" style="line-height: 1.25;">
                        <td style="width: 36pt;">
                          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                        </td>
                        <td>
                          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">selling
                            or licensing our technology or product candidates;
                            </font></div>
                        </td>
                      </tr>

                  </table>
                </div>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                  <div>
                    <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

                        <tr valign="top" style="line-height: 1.25;">
                          <td style="width: 36pt;">
                            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                          </td>
                          <td>
                            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">borrowing
                              under loan or equipment financing arrangements;
                              or</font></div>
                          </td>
                        </tr>

                    </table>
                  </div>
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                    <div>
                      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

                          <tr valign="top" style="line-height: 1.25;">
                            <td style="width: 36pt;">
                              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font></div>
                            </td>
                            <td>
                              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">issuing
                                debt.</font></div>
                            </td>
                          </tr>

                      </table>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additional
      funding may not be available to us on reasonable terms, if at all. Our ability
      to issue equity, and our ability to issue it at the current market price, may
      be
      adversely affected by the fact that we are presently ineligible under SEC rules
      to utilize Form S-3 for primary offerings of our securities because the
      aggregate market value of our outstanding common stock held by non-affiliates
      is
      less than $75.0 million.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      perceived risk associated with the possible sale of a large number of shares
      of
      our common stock could cause some of our shareholders to sell their stock,
      thus
      causing the price of our stock to decline. In addition, actual or anticipated
      downward pressure on our stock price due to actual or anticipated sales of
      stock
      could cause some institutions or individuals to engage in short sales of our
      common stock, which may itself cause the price of our stock to decline.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      our
      stock price declines, we may be unable to raise additional capital. A sustained
      inability to raise capital could force us to go out of business. Significant
      declines in the price of our common stock could also impair our ability to
      attract and retain qualified employees, reduce the liquidity of our common
      stock
      and result in the delisting of our common stock from the NASDAQ Capital
      Market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;The
      funding that we expect to receive from our collaborations depends on continued
      scientific progress under the collaborations and our collaborators&#8217; ability and
      willingness to continue or extend the collaboration. If we are unable to
      successfully access additional capital, we may need to scale back, delay or
      terminate one or more of our development programs, curtail capital expenditures
      or reduce other operating activities. We may also be required to relinquish
      some
      rights to our technology or product candidates or grant or take licenses on
      unfavorable terms, either of which would reduce the ultimate value to us of
      our
      technology or product candidates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      expect to continue to operate at a loss and may never become
      profitable.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
      Substantially all of our revenue has been derived under collaborative research
      and development agreements relating to the development of our potential product
      candidates. We have incurred, and will continue to incur for the foreseeable
      future, significant expense to develop our research and development programs,
      conduct preclinical studies and clinical trials, seek regulatory approval for
      our product candidates and provide general and administrative support for these
      activities. As a result, we have incurred significant net losses since
      inception, and we expect to continue to incur substantial additional losses
      in
      the future.&#160;As of September 30, 2006, we had an accumulated deficit of
      $284.8&#160;million. We may never generate profits and, if we do become
      profitable, we may be unable to sustain or increase profitability. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>All
      of our product candidates are in early-stage clinical trials or preclinical
      development, and if we are unable to successfully develop and commercialize
      our
      product candidates we will be unable to generate sufficient capital to maintain
      our business.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;In
      November 2005, IAVI initiated a Phase&#160;II trial for our HIV/AIDS vaccine
      product candidate in South Africa. In March 2006, we initiated a Phase&#160;I/II
      trial for our inflammatory arthritis product candidate in the United States
      and
      Canada. We will not generate any product revenue for at least several years
      and
      then only if we can successfully develop and commercialize our product
      candidates. Commercializing our potential products depends on successful
      completion of additional research and development and testing, in both
      preclinical development and clinical trials. Clinical trials may take several
      years or more to complete. The commencement, cost and rate of completion of
      our
      clinical trials may vary or be delayed for many reasons. If we are unable to
      successfully complete preclinical and clinical development of some or all of
      our
      product candidates in a timely manner, we may be unable to generate sufficient
      product revenue to maintain our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
      Even if our potential products succeed in clinical trials and are approved
      for
      marketing, these products may never achieve market acceptance. If we are
      unsuccessful in commercializing our product candidates for any reason, including
      greater effectiveness or economic feasibility of competing products or
      treatments, the failure of the medical community or the public to accept or
      use
      any products based on gene delivery, inadequate marketing and distribution
      capabilities or other reasons discussed elsewhere in this section, we will
      be
      unable to generate sufficient product revenue to maintain our business.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Failure
      to recruit subjects could delay or prevent clinical trials of our potential
      products, which could delay or prevent the development of potential
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Identifying and qualifying subjects to participate in clinical trials of our
      potential products is critically important to our success. The timing of our
      clinical trials depends on the speed at which we can recruit subjects to
      participate in testing our product candidates. We have experienced delays in
      some of our clinical trials, and we may experience similar delays in the future.
      If subjects are unwilling to participate in our gene therapy trials because
      of
      negative publicity from adverse events in the biotechnology or gene therapy
      industries or for other reasons, including competitive clinical trials for
      similar patient populations, the timeline for recruiting subjects, conducting
      trials and obtaining regulatory approval of potential products will be delayed.
      These delays could result in increased costs, delays in advancing our product
      development, delays in testing the effectiveness of our technology or
      termination of the clinical trials altogether. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>The
      regulatory approval process for our product candidates is costly, time-consuming
      and subject to unpredictable changes and delays, and our product candidates
      may
      never receive regulatory approval.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      No gene therapy products have received regulatory approval for marketing from
      the U.S.&#160;Food and Drug Administration, or FDA. Because our product
      candidates involve new and unproven technologies, we believe that the regulatory
      approval process may proceed more slowly compared to clinical trials involving
      traditional drugs. The FDA and applicable state and foreign regulators must
      conclude at each stage of clinical testing that our clinical data suggest
      acceptable levels of safety in order for us to proceed to the next stage of
      clinical trials. In addition, gene therapy clinical trials conducted at
      institutions that receive funding for recombinant DNA research from the National
      Institutes of Health, or NIH, are subject to review by the NIH&#8217;s Office of
      Biotechnology Activities Recombinant DNA Advisory Committee, or RAC. Although
      NIH guidelines do not have regulatory status, the RAC review process can impede
      the initiation of the trial, even if the FDA has reviewed the trial and approved
      its initiation. Moreover, before a clinical trial can begin at an NIH-funded
      institution, that institution&#8217;s Institutional Biosafety Committee must review
      the proposed clinical trial to assess the safety of the trial. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      The regulatory process for our product candidates is costly, time-consuming
      and
      subject to unpredictable delays. The clinical trial requirements of the FDA,
      NIH
      and other agencies and the criteria these regulators use to determine the safety
      and efficacy of a product candidate vary substantially according to the type,
      complexity, novelty and intended use of the potential products. In addition,
      regulatory requirements governing gene therapy products have changed frequently
      and may change in the future. Accordingly, we cannot predict how long it will
      take or how much it will cost to obtain regulatory approvals for clinical trials
      or for manufacturing or marketing our potential products. Some or all of our
      product candidates may never receive regulatory approval. A product candidate
      that appears promising at an early stage of research or development may not
      result in a commercially successful product. Our clinical trials may fail to
      demonstrate the safety and efficacy of a product candidate or a product
      candidate may generate unacceptable side effects or other problems during or
      after clinical trials. Should this occur, we may have to delay or discontinue
      development of the product candidate, and the partner, if any, that supports
      development of such product candidate may terminate its support. Delay or
      failure to obtain, or unexpected costs in obtaining, the regulatory approval
      necessary to bring a potential product to market will decrease our ability
      to
      generate sufficient product revenue to maintain our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>If
      we are unable to obtain or maintain licenses for necessary third-party
      technology on acceptable terms or to develop alternative technology, we may
      be
      unable to develop and commercialize our product
      candidates.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      We have entered into exclusive and nonexclusive license agreements that give
      us
      and our partners rights to use technologies owned or licensed by commercial
      and
      academic organizations in the research, development and commercialization of
      our
      potential products. For example, we have a gene therapy technology license
      agreement with Amgen Inc., or Amgen, as the successor to Immunex Corporation,
      or
      Immunex, under which we have licensed rights to certain Immunex proprietary
      technology specifically applicable to gene therapy applications. In a February
      2004 letter, Amgen took the position that we are not licensed, either
      exclusively or nonexclusively, to use Immunex intellectual property covering
      TNFR:Fc or therapeutic uses for TNFR:Fc. We have responded with a letter
      confirming our confidence that the gene therapy technology license agreement
      provides us with an exclusive worldwide license to use the gene construct coding
      for TNFR:Fc for gene therapy applications. We have had and continue to have
      further communications with Amgen regarding our differences. Notwithstanding
      our
      confidence, it is possible that a resolution of those differences, through
      litigation or otherwise, could cause delay or discontinuation of our development
      of tgAAC94 or our inability to commercialize any resulting product.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      We believe that we will need to obtain additional licenses to use patents and
      unpatented technology owned or licensed by others for use, compositions,
      methods, processes to manufacture compositions, processes to manufacture and
      purify gene delivery product candidates and other technologies and processes
      for
      our present and potential product candidates. If we are unable to maintain
      our
      current licenses for third-party technology or obtain additional licenses on
      acceptable terms, we may be required to expend significant time and resources
      to
      develop or license replacement technology. If we are unable to do so, we may
      be
      unable to develop or commercialize the affected product candidates. In addition,
      the license agreements for technology for which we hold exclusive licenses
      typically contain provisions that require us to meet minimum development
      milestones in order to maintain the license on an exclusive basis for some
      or
      all fields of the license. We also have license agreements for some of our
      technologies, which may require us to sublicense certain of our rights. If
      we do
      not meet these requirements, our licensor may convert all or a portion of the
      license to a nonexclusive license or, in some cases, terminate the license.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      In many cases, patent prosecution of our licensed technology is controlled
      solely by the licensor. If our licensors fail to obtain and maintain patent
      or
      other protection for the proprietary intellectual property we license from
      them,
      we could lose our rights to the intellectual property or our exclusivity with
      respect to those rights, and our competitors could market competing products
      using the intellectual property. Licensing of intellectual property is of
      critical importance to our business and involves complex legal, business and
      scientific issues and is complicated by the rapid pace of scientific discovery
      in our industry. Disputes may arise regarding intellectual property subject
      to a
      licensing agreement, including: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">&#8226;</font></td>
              <td width="95%"><font size="2">the scope of rights granted under
                the license
                agreement and other interpretation-related issues;</font></td>
            </tr>
            <tr bgcolor="white">
              <td width="5%">&#160;</td>
              <td width="95%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">&#8226;</font></td>
              <td width="95%"><font size="2">the extent to which our technology
                and
                processes infringe on intellectual property of the licensor that
                is not
                subject to the licensing agreement;</font></td>
            </tr>
            <tr bgcolor="white">
              <td width="5%">&#160;</td>
              <td width="95%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">&#8226;</font></td>
              <td width="95%"><font size="2">the sublicensing of patent and other
                rights
                under our collaborative development relationships;</font></td>
            </tr>
            <tr bgcolor="white">
              <td width="5%">&#160;</td>
              <td width="95%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">&#8226;</font></td>
              <td width="95%"><font size="2">the ownership of inventions and know-how
                resulting from the joint creation or use of intellectual property
                by our
                licensors and us and our partners;&#160;and</font></td>
            </tr>
            <tr bgcolor="white">
              <td width="5%">&#160;</td>
              <td width="95%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">&#8226;</font></td>
              <td width="95%"><font size="2">the priority of invention of patented
                technology.</font></td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      If disputes over intellectual property that we have licensed prevent or impair
      our ability to maintain our current licensing arrangements on acceptable terms,
      we may be unable to successfully develop and commercialize the affected product
      candidates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Litigation
      involving intellectual property, product liability or other claims and product
      recalls could strain our resources, subject us to significant liability, damage
      our reputation or result in the invalidation of our proprietary
      rights.</em></strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      As our product development efforts progress, most particularly in potentially
      significant markets such as HIV/ AIDS, congestive heart failure or inflammatory
      arthritis therapies, the risk increases that others may claim that our processes
      and product candidates infringe on their intellectual property rights. In
      addition, administrative proceedings, litigation or both may be necessary to
      enforce our intellectual property rights or determine the rights of others.
      Defending or pursuing these claims, regardless of their merit, would be costly
      and would likely divert management&#8217;s attention and resources away from our
      operations. If there were to be an adverse outcome in litigation or an
      interference proceeding, we could face potential liability for significant
      damages or be required to obtain a license to the patented process or technology
      at issue, or both. If we are unable to obtain a license on acceptable terms,
      or
      to develop or obtain alternative technology or processes, we may be unable
      to
      manufacture or market any product or potential product that uses the affected
      process or technology. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Clinical trials and the marketing of any potential products may expose us to
      liability claims resulting from the testing or use of our products. Gene therapy
      treatments are new and unproven, and potential known and unknown side effects
      of
      gene therapy may be serious and potentially life-threatening. Product liability
      claims may be made by clinical trial participants, consumers, healthcare
      providers or other sellers or users of our products. Although we currently
      maintain liability insurance, the costs of product liability and other claims
      against us may exceed our insurance coverage. In addition, we may require
      increased liability coverage as additional product candidates are used in
      clinical trials or commercialized. Liability insurance is expensive and may
      not
      continue to be available on acceptable terms. A product liability or other
      claim
      or product recall not covered by or exceeding our insurance coverage could
      significantly harm our financial condition. In addition, adverse publicity
      resulting from a product recall or a liability claim against us, one of our
      partners or another gene therapy company could significantly harm our reputation
      and make it more difficult to obtain the funding and collaborative partnerships
      necessary to maintain our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we lose our collaborative partners, we may be unable to develop our potential
      products. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
      A portion of our operating expenses are funded through our collaborative
      agreements with third parties. We currently have strategic partnerships with
      two
      biotechnology companies, Sirna and Celladon, one public health organization,
      IAVI, and through a contract with a U.S. government agency, NIAID, that provide
      for funding, collaborative development, intellectual property rights or
      expertise to develop certain of our product candidates. With limited exceptions,
      each collaborator has the right to terminate its obligation to provide research
      funding at any time for scientific or business reasons. In addition, to the
      extent that funding is provided by a collaborator for non-program-specific
      uses,
      the loss of significant amounts of collaborative funding&#160;could result in
      the delay, reduction or termination of additional research and development
      programs, a reduction in capital expenditures or business development and other
      operating activities, or any combination of these measures. For example, we
      have
      a collaboration and license agreement with Celladon that may be terminated
      at
      will by Celladon subject to a notice provision in the agreement. We expect
      Celladon to provide us with funding to reimburse research and development and
      manufacturing expenses that we incur in connection with the collaboration.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>If
      we do not attract and retain qualified personnel, we may be unable to develop
      and commercialize some of our potential products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Our future success depends in large part on our ability to attract and retain
      key technical and management personnel. All of our employees, including our
      executive officers, can terminate their employment with us at any time. We
      have
      programs in place designed to retain personnel, including competitive
      compensation packages and programs to create a positive work environment. Other
      companies, research and academic institutions and other organizations in our
      field compete intensely for employees, however, and we may be unable to retain
      our existing personnel or attract additional qualified employees and
      consultants. If we experience significant turnover or difficulty in recruiting
      new personnel, our research and development of product candidates could be
      delayed and we could experience difficulty in generating sufficient revenue
      to
      maintain our business. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>If
      our partners or scientific consultants terminate, reduce or delay our
      relationships with them, we may be unable to develop our potential
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Our partners provide funding, manage regulatory filings, aid and augment our
      internal research and development efforts and provide access to important
      intellectual property and know-how. Their activities include, for example,
      support in processing the regulatory filings of our product candidates and
      funding clinical trials. Our outside scientific consultants and contractors
      perform research, develop technology and processes to advance and augment our
      internal efforts and provide access to important intellectual property and
      know-how. Their activities include, for example, clinical evaluation of our
      product candidates, product development activities performed under our research
      collaborations, research under sponsored research agreements and contract
      manufacturing services. Collaborations with established pharmaceutical and
      biotechnology companies and academic, research and public health organizations
      often provide a measure of validation of our product development efforts in
      the
      eyes of securities analysts, investors and the medical community. The
      development of certain of our potential products, and therefore the success
      of
      our business, depends on the performance of our partners, consultants and
      contractors. If they do not dedicate sufficient time, regulatory or other
      technical resources to the research and development programs for our product
      candidates or if they do not perform their obligations as expected, we may
      experience delays in, and may be unable to continue, the preclinical or clinical
      development of those product candidates. Each of our collaborations and
      scientific consulting relationships concludes at the end of the term specified
      in the applicable agreement unless we and our partners agree to extend the
      relationship. Any of our partners may decline to extend the collaboration,
      or
      may be willing to extend the collaboration only with a significantly reduced
      scope. Competition for scientific consultants and partners in gene therapy
      is
      intense. We may be unable to successfully maintain our existing relationships
      or
      establish additional relationships necessary for the development of our product
      candidates on acceptable terms, if at all. If we are unable to do so, our
      research and development programs may be delayed or we may lose access to
      important intellectual property or know-how. </font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>The
      success of our clinical trials and preclinical studies may not be indicative
      of
      results in a large number of subjects of either safety or
      efficacy.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      The successful results of our technology in preclinical studies using animal
      models may not be predictive of the results that we will see in our clinical
      trials. In addition, results in early-stage clinical trials are based on limited
      numbers of subjects and generally test for drug safety rather than efficacy.
      Our
      reported progress and results from our early phases of clinical testing of
      our
      product candidates may not be indicative of progress or results that will be
      achieved from larger populations, which could be less favorable. Moreover,
      we do
      not know if the favorable results we have achieved in clinical trials will
      have
      a lasting or repeatable effect. If a larger group of subjects does not
      experience positive results or if any favorable results do not demonstrate
      a
      beneficial effect, our product candidates that we advance to clinical trials
      may
      not receive approval from the FDA for further clinical trials or
      commercialization. For example, in March 2005, we discontinued the development
      of tgAAVCF, our product candidate for the treatment of cystic fibrosis,
      following the analysis of Phase&#160;II clinical trial data in which tgAAVCF
      failed to achieve the efficacy endpoints of the trial. </font></div>
    <div>&#160;</div>
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    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>We
      may be unable to adequately protect our proprietary rights domestically or
      overseas, which may limit our ability to successfully market any product
      candidates.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Our success depends substantially on our ability to protect our proprietary
      rights and operate without infringing on the proprietary rights of others.
      We
      own or license patents and patent applications, and will need to license
      additional patents, for genes, processes, practices and techniques critical
      to
      our present and potential product candidates. If we fail to obtain and maintain
      patent or other intellectual property protection for this technology, our
      competitors could market competing products using those genes, processes,
      practices and techniques. The patent process takes several years and involves
      considerable expense. In addition, patent applications and patent positions
      in
      the field of biotechnology are highly uncertain and involve complex legal,
      scientific and factual questions. Our patent applications may not result in
      issued patents and the scope of any patent may be reduced both before and after
      the patent is issued. Even if we secure a patent, the patent may not provide
      significant protection and may be circumvented or invalidated. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      We also rely on unpatented proprietary technology and technology that we have
      licensed on a nonexclusive basis. While we take precautions to protect our
      proprietary unpatented technology, we may be unable to meaningfully protect
      this
      technology from unauthorized use or misappropriation by a third party. Our
      competitors could also obtain rights to our nonexclusively licensed proprietary
      technology. In any event, other companies may independently develop equivalent
      proprietary information and techniques. If our competitors develop and market
      competing products using our unpatented or nonexclusively licensed proprietary
      technology or substantially similar technology, our products, if successfully
      developed, could suffer a reduction in sales or be forced out of the market.
      </font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>If
      we do not develop adequate development, manufacturing, sales, marketing and
      distribution capabilities, either alone or with our business partners, we will
      be unable to generate sufficient product revenue to maintain our
      business.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Our potential products require significant development of new processes and
      design for the advancement of the product candidate through manufacture,
      preclinical and clinical testing. We may be unable to continue development
      or
      meet critical milestones with our partners due to technical or scientific issues
      related to manufacturing or development. We currently do not have the physical
      capacity to manufacture large-scale quantities of our potential products. This
      could limit our ability to conduct large clinical trials of a product candidate
      and to commercially launch a successful product candidate. In order to
      manufacture product at such scale, we will need to expand or improve our current
      facilities and staff or supplement them through the use of contract providers.
      If we are unable to obtain and maintain the necessary manufacturing
      capabilities, either alone or through third parties, we will be unable to
      manufacture our potential products in quantities sufficient to sustain our
      business. Moreover, we are unlikely to become profitable if we, or our contract
      providers, are unable to manufacture our potential products in a cost-effective
      manner. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      In addition, we have no experience in sales, marketing and distribution. To
      successfully commercialize any products that may result from our development
      programs, we will need to develop these capabilities, either on our own or
      with
      others. We intend to enter into collaborations with other entities to utilize
      their mature marketing and distribution capabilities, but we may be unable
      to
      enter into marketing and distribution agreements on favorable terms, if at
      all.
      If our current or future collaborative partners do not commit sufficient
      resources to timely marketing and distributing our future products, if any,
      and
      we are unable to develop the necessary marketing and distribution capabilities
      on our own, we will be unable to generate sufficient product revenue to sustain
      our business. </font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Post-approval
      manufacturing or product problems or failure to satisfy applicable regulatory
      requirements could prevent or limit our ability to market our
      products.</em></strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Commercialization of any products will require continued compliance with FDA
      and
      other federal, state and local regulations. For example, our current
      manufacturing facility, which is designed for manufacturing our AAV vectors
      for
      clinical and development purposes, is subject to the Good Manufacturing
      Practices requirements and other regulations of the FDA, as well as to other
      federal, state and local regulations such as the Occupational Health and Safety
      Act, the Toxic Substances Control Act, the Resource Conservation and Recovery
      Act and the Environmental Protection Act. Any future manufacturing facility
      that
      we may construct for large-scale commercial production will also be subject
      to
      regulation. We may be unable to obtain regulatory approval for or maintain
      in
      operation this or any other manufacturing facility. In addition, we may be
      unable to attain or maintain compliance with current or future regulations
      relating to manufacture, safety, handling, storage, record keeping or marketing
      of potential products. If we fail to comply with applicable regulatory
      requirements or discover previously unknown manufacturing, contamination,
      product side effects or other problems after we receive regulatory approval
      for
      a potential product, we may suffer restrictions on our ability to market the
      product or be required to withdraw the product from the market. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong>Risks
      Related to Our Industry</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Adverse
      events in the field of gene therapy could damage public perception of our
      potential products and negatively affect governmental approval and
      regulation.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Public perception of our product candidates could be harmed by negative events
      in the field of gene transfer. For example, in 2003, fourteen subjects in a
      French academic clinical trial being treated for x-linked severe combined
      immunodeficiency in a gene therapy trial using a retroviral vector showed
      correction of the disease, although three of the subjects subsequently developed
      leukemia. Serious adverse events, including patient deaths, have occurred in
      clinical trials. Adverse events in our clinical trials and the resulting
      publicity, as well as any other adverse events in the field of gene therapy
      that
      may occur in the future, could result in a decrease in demand for any products
      that we may develop. The commercial success of our product candidates will
      depend in part on public acceptance of the use of gene therapy for preventing
      or
      treating human diseases. If public perception is influenced by claims that
      gene
      therapy is unsafe, our product candidates may not be accepted by the general
      public or the medical community. The public and the medical community may
      conclude that our technology is unsafe. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Future adverse events in gene therapy or the biotechnology industry could also
      result in greater governmental regulation, unfavorable public perception,
      stricter labeling requirements and potential regulatory delays in the testing
      or
      approval of our potential products. Any increased scrutiny could delay or
      increase the costs of our product development efforts or clinical trials.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Our
      use of hazardous materials exposes us to liability risks and regulatory
      limitations on their use, either of which could reduce our ability to generate
      product revenue.</em></strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Our research and development activities involve the controlled use of hazardous
      materials, including chemicals, biological materials and radioactive compounds.
      Our safety procedures for handling, storing and disposing of these materials
      must comply with federal, state and local laws and regulations, including,
      among
      others, those relating to solid and hazardous waste management, biohazard
      material handling, radiation and air pollution control. We may be required
      to
      incur significant costs in the future to comply with environmental or other
      applicable laws and regulations. In addition, we cannot eliminate the risk
      of
      accidental contamination or injury from hazardous materials. If a hazardous
      material accident were to occur, we could be held liable for any resulting
      damages, and this liability could exceed our insurance and financial resources.
      Accidents unrelated to our operations could cause federal, state or local
      regulatory agencies to restrict our access to hazardous materials needed in
      our
      research and development efforts, which could result in delays in our research
      and development programs. Paying damages or experiencing delays caused by
      restricted access could reduce our ability to generate revenue and make it
      more
      difficult to fund our operations. </font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>The
      intense competition and rapid technological change in our market may result
      in
      failure of our potential products to achieve market
      acceptance.</em></strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      We face increasingly intense competition from a number of commercial entities
      and institutions that are developing gene therapy technologies. Our competitors
      include early-stage and more established gene delivery companies, other
      biotechnology companies, pharmaceutical companies, universities, research
      institutions and government agencies developing gene therapy products or other
      biotechnology-based therapies designed to treat the diseases on which we focus.
      We also face competition from companies using more traditional approaches to
      treating human diseases, such as surgery, medical devices and pharmaceutical
      products. If our product candidates become commercial gene therapy products,
      they may affect commercial markets of the analogous protein or traditional
      pharmaceutical therapy. This may result in lawsuits, demands, threats or patent
      challenges by others in an effort to reduce our ability to compete. In addition,
      we compete with other companies to acquire products or technology from research
      institutions or universities. Many of our competitors have substantially more
      resources, including research and development personnel, capital and
      infrastructure, than we do. Many of our competitors also have greater experience
      and capabilities than we do in: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 4.35pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">research
      and development;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 4.35pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">clinical
      trials;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 4.35pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">obtaining
      FDA and other regulatory approvals;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 4.35pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">manufacturing;&#160;and</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 4.35pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">marketing
      and distribution.</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      In addition, the competitive positions of other companies, institutions and
      organizations, including smaller competitors, may be strengthened through
      collaborative relationships. Consequently, our competitors may be able to
      develop, obtain patent protection for, obtain regulatory approval for, or
      commercialize new products more rapidly than we do, or manufacture and market
      competitive products more successfully than we do. This could limit the prices
      we could charge for the products that we are able to market or result in our
      products failing to achieve market acceptance. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Gene therapy is a rapidly evolving field and is expected to continue to undergo
      significant and rapid technological change and competition. Rapid technological
      development by our competitors, including development of technologies, products
      or processes that are more effective or more economically feasible than those
      we
      have developed, could result in our actual and proposed technologies, products
      or processes losing market share or becoming obsolete. </font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Healthcare
      reform measures and the unwillingness of third-party payors to provide adequate
      reimbursement for the cost of our products could impair our ability to
      successfully commercialize our potential products and become
      profitable.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Sales of medical products and treatments depends substantially, both
      domestically and abroad, on the availability of reimbursement to the consumer
      from third-party payors. Our potential products may not be considered
      cost-effective by third-party payors, who may not provide coverage at the price
      set for our products, if at all. If purchasers or users of our products are
      unable to obtain adequate reimbursement, they may forego or reduce their use
      of
      our products. Even if coverage is provided, the approved reimbursement amount
      may not be high enough to allow us to establish or maintain pricing sufficient
      to realize a sufficient return on our investment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Increasing efforts by governmental and third-party payors, such as Medicare,
      private insurance plans and managed care organizations, to cap or reduce
      healthcare costs will affect our ability to commercialize our product candidates
      and become profitable. We believe that third-party payors will attempt to reduce
      healthcare costs by limiting both coverage and level of reimbursement for new
      products approved by the FDA. There have been and will continue to be a number
      of federal and state proposals to implement government controls on pricing,
      the
      adoption of which could affect our ability to successfully commercialize our
      product candidates. Even if the government does not adopt any such proposals
      or
      reforms, their announcement could impair our ability to raise capital.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong>Risks
      Related to Our Common Stock</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>If
      we sell additional shares, our stock price may decline as a result of the
      dilution that will occur to existing shareholders.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      Until we are profitable, we will need significant additional funds to develop
      our business and sustain our operations. Any additional sales of shares of
      our
      common stock are likely to have a dilutive effect on our then-existing
      shareholders. Subsequent sales of these shares in the open market could also
      have the effect of lowering our stock price, thereby increasing the number
      of
      shares we may need to issue in the future to raise the same dollar amount and
      consequently further diluting our outstanding shares. These future sales could
      also have an adverse effect on the market price of our shares and could result
      in additional dilution to the holders of our shares. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      The perceived risk associated with the possible sale of a large number of shares
      could cause some of our shareholders to sell their stock, thus causing the
      price
      of our stock to decline. In addition, actual or anticipated downward pressure
      on
      our stock price due to actual or anticipated sales of stock could cause some
      institutions or individuals to engage in short sales of our common stock, which
      may itself cause the price of our stock to decline. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      If our stock price declines, we may be unable to raise additional capital.
      A
      sustained inability to raise capital could force us to go out of business.
      Significant declines in the price of our common stock could also impair our
      ability to attract and retain qualified employees, reduce the liquidity of
      our
      common stock and result in the delisting of our common stock from the NASDAQ
      Capital Market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Concentration
      of ownership of our common stock may give certain shareholders significant
      influence over our business. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
      A small number of investors own a significant number of shares of our common
      stock. As of January 18, 2007, Elan International Services, Ltd., or Elan,
      held
      approximately 1.2 million shares and Biogen Idec held approximately 2.2 million
      shares of our common stock. Together these holdings represent approximately
      25%
      of our common shares outstanding as of January 18, 2007. This concentration
      of
      stock ownership may allow these shareholders to exercise significant control
      over our strategic decisions and block, delay or substantially influence all
      matters requiring shareholder approval, such as: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">election
      of directors;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">amendment
      of our charter documents;&#160;or</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#8226;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">approval
      of significant corporate transactions, such as a change of control of
      us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
      The interests of these shareholders may conflict with the interests of other
      holders of our common stock with regard to such matters. Furthermore, this
      concentration of ownership of our common stock could allow these shareholders
      to
      delay, deter or prevent a third party from acquiring control of us at a premium
      over the then-current market price of our common stock, which could result
      in a
      decrease in our stock price. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
      Both Biogen Idec and Elan have sold shares of our common stock and may continue
      to do so. Sales of significant value of stock by these investors may introduce
      increased volatility to the market price of our common stock. In accordance
      with
      the termination agreement that we entered into with Elan in March 2004, Elan
      is
      only permitted to sell quantities of our stock equal to 175% of the volume
      limitation set forth in Rule&#160;144(e)(1) promulgated under the Securities
      Act. </font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><strong><em>Market
      fluctuations or volatility could cause the market price of our common stock
      to
      decline and limit our ability to raise capital.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      The stock market in general and the market for biotechnology-related companies
      in particular have experienced extreme price and volume fluctuations, often
      unrelated to the operating performance of the affected companies. The market
      price of the securities of biotechnology companies, particularly companies
      such
      as ours without earnings and product revenue, has been highly volatile and
      is
      likely to remain so in the future. Any report of clinical trial results that
      are
      below the expectations of financial analysts or investors could result in a
      decline in our stock price. We believe that in the past, similar levels of
      volatility have contributed to the decline in the market price of our common
      stock, and may do so again in the future. Trading volumes of our common stock
      can increase dramatically, resulting in a volatile market price for our common
      stock. The trading price of our common stock could decline significantly as
      a
      result of sales of a substantial number of shares of our common stock, or the
      perception that significant sales could occur. In addition, the sale of
      significant quantities of stock by Elan, Biogen Idec or other holders of
      significant amounts of shares of our stock, could adversely impact the price
      of
      our common stock. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>USE
      OF PROCEEDS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;
      We will not receive any proceeds from the sale or other disposition by the
      Selling Shareholders of the Common&#160;Shares registered hereunder, or
      interests therein. We will, however, receive proceeds from the exercise of
      any
      Warrants, if the exercise price is paid in cash. If all of the Warrants are
      exercised for cash, we will receive proceeds of approximately $4.1 million,
      which we currently intend to use for general corporate purposes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SELLING
      SHAREHOLDERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table provides information regarding the Selling Shareholders and
      the
      number of Shares each Selling Shareholder is offering, including the Warrant
      Shares held by each Selling Shareholder. We have prepared this table based
      on
      information furnished to us by or on behalf of the Selling Shareholders. Under
      the rules of the SEC, beneficial ownership includes shares over which the
      indicated beneficial owner exercises voting or investment power. Beneficial
      ownership is determined under Section 13(d) of the Exchange Act and generally
      includes voting or investment power with respect to securities and including
      any
      securities that grant the Selling Shareholder the right to acquire common stock
      within 60 days of January 18, 2007. Unless otherwise indicated in the footnotes
      below, we believe that the Selling Shareholders have sole voting and investment
      power with respect to all shares beneficially owned. The percentage ownership
      data is based on 13,107,235&#160;shares of our common stock issued and
      outstanding as of January 18, 2007. Since the date on which they provided us
      with the information below, the Selling Shareholders may have sold, transferred
      or otherwise disposed of some or all of their Shares in transactions exempt
      from
      the registration requirements of the Securities Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Shares may be sold by the Selling Shareholders, by those persons or entities
      to
      whom they transfer, donate, devise, pledge or distribute their Shares or by
      other successors in interest. The information regarding shares beneficially
      owned after this offering assumes the sale of all Shares offered by each of
      the
      Selling Shareholders. The Selling Shareholders may sell less than all of the
      Shares listed in the table. In addition, the Shares listed below may be sold
      pursuant to this prospectus or in privately negotiated transactions.
      Accordingly, we cannot estimate the number of Shares the Selling Shareholders
      will sell under this prospectus. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except
      as
      described in this prospectus, the Selling Shareholders have not held any
      position or office or had any other material relationship with us or any of
      our
      predecessors or affiliates within the past three years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders have represented to us that they purchased the Common
      Shares (and the right to acquire shares pursuant to exercise of the Warrants)
      for their own account, for investment only and not with a view toward selling
      or
      distributing them in violation of the Securities Act, except in sales either
      registered under the Securities Act, or sales that are exempt from registration.
      In recognition of the fact that the Selling Shareholders, even though purchasing
      their shares for investment, may wish to be legally permitted to sell their
      Shares when they deem appropriate, we agreed with the Selling Shareholders
      to
      file a registration statement to register the resale of the Shares. We have
      also
      agreed to prepare and file all amendments and supplements necessary to keep
      the
      registration statement effective until the earlier of (i)&#160;the date on which
      the Selling Shareholders may resell all the Shares covered by the registration
      statement without registration pursuant to Rule&#160;144(k) under the Securities
      Act or any successor rule thereto and (ii)&#160;the date on which the Selling
      Shareholders have sold all the Shares covered by the registration
      statement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>

      <div>
        <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td valign="bottom" width="43%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="5" valign="bottom" width="21%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
                  Beneficially Owned Before Offering (1)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="2" valign="bottom" width="10%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="5" valign="bottom" width="21%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
                  Beneficially </strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Owned
                  After Offering (1)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            </tr>
            <tr>
              <td valign="bottom" width="43%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                  of Selling Shareholders</strong></font></div>
              </td>
              <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="2" valign="bottom" width="10%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="2" valign="bottom" width="10%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percentage</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(%)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="2" valign="bottom" width="10%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
                  Offered Hereby(2)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="2" valign="bottom" width="10%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td colspan="2" valign="bottom" width="10%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percentage</strong></font></div>
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              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SRB
                  Greenway Capital, L.P. (3)</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">85,050</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">85,050</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SRB
                  Greenway Capital, Q.P., L.P. (3)</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">831,600</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6.2</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">831,600</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SRB
                  Greenway Offshore Operating Fund, L.P. (3)</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">28,350</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">28,350</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Millennium
                  Partners, L.P.</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">339,945</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2.6</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">337,500</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,445</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
                </div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PGE
                  Partner Fund LP (4)</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">78,840</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">78,840</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
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              <td align="left" valign="bottom" width="43%">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PGE
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              <td align="left" valign="bottom" width="1%">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">29,160</font></div>
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              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
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              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">29,160</font></div>
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              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
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              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Special
                  Situations Fund III, Q.P., L.P. (5)</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">708,750</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5.3</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">708,750</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Special
                  Situations Life Sciences Fund, L.P. (5) </font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">506,250</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3.8</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">506,250</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tang
                  Capital Partners, L.P.</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">337,500</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2.6</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">337,500</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="9%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>

        </table>
      </div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_____________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
        Less
        than 1%.</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td width="5%">
              </td>
              <td width="95%">
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">(1) </font></td>
              <td width="95%"><font size="2">Includes an aggregate of 763,000 shares
                of
                common stock issuable under the Warrants that are exercisable after
                July
                11, 2007, which Warrant Shares are deemed outstanding for computing
                the
                percentage ownership of the Selling Shareholder holding Warrant Shares
                before the offering and after giving effect to the offering, but
                are not
                deemed outstanding for computing the beneficial ownership of any
                other
                Selling Shareholder.</font></td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="5%"><font size="2">(2)</font></td>
              <td width="95%"><font size="2">We do not know when or in what amounts
                a
                Selling Shareholder may offer Shares for sale. The Selling Shareholders
                may not sell any or all of the Shares offered by this prospectus.
                Because
                the Selling Shareholders may offer all or some of the Shares pursuant
                to
                this offering and because there are currently no agreements, arrangements
                or undertakings with respect to the sale of any of the Shares, we
                cannot
                estimate the number of Shares that will be held by the Selling
                Shareholders after completion of this offering. However, for purposes
                of
                this table, we have assumed that, after completion of this offering,
                none
                of the Shares covered by this prospectus will be held by the Selling
                Shareholders.</font></td>
            </tr>

        </table>
      </div>

        <div>
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

              <tr bgcolor="white">
                <td valign="top" width="5%"><font size="2">(3)</font></td>
                <td width="95%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SRB
                  Greenway Capital, L.P, SRB Greenway Capital, Q.P., L.P. and SRB
                  Greenway
                  Offshore Operating Fund, L.P. are affiliated entities. BC Advisors,
                  LLC
                  (&#8220;BCA&#8221;) is the general partner of SRB Management, L.P. (&#8220;SRB Management&#8221;).
                  SRB Management is the general partner of SRB Greenway Capital,
                  L.P., SRB
                  Greenway Capital (Q.P.), L.P. and SRB Greenway Offshore Operating
                  Fund,
                  L.P. Steven R. Becker is the sole principal of BCA. Through his
                  control of
                  BCA, Mr. Becker possesses sole voting and investment control over
                  the
                  portfolio securities of each of the funds listed above.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font></td>
                <td width="95%"><font size="2">PGE Partner Fund LP and PGE Partner
                  Fund II
                  LP are affiliated entities. In addition, each entity&#160;is an affiliate
                  of Pacific Growth Equities, LLC, our exclusive placement agent
                  in the
                  private placement in which the Selling Shareholders purchased the
                  Common
                  Shares and Warrants.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="5%"><font size="2">(5)</font></td>
                <td width="95%"><font size="2">Special Situations Fund III, Q.P.,
                  L.P. and
                  Special Situations Life Sciences Fund, L.P. are affiliated entities.
<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MGP
                  Advisors Limited (&#8220;MGP&#8221;) is the general partner of&#160;Special Situations
                  Fund III, QP, L.P. AWM Investment Company, Inc. (&#8220;AWM&#8221;) is the general
                  partner of MGP and the investment adviser to Special Situations
                  Fund III,
                  QP, L.P. and Special Situations Life Sciences Fund, L.P. Austin
                  W. Marxe
                  and David M. Greenhouse are the principal owners of MGP and AWM.
                  Through
                  their control of MGP and AWM, Messrs. Marxe and Greenhouse share
                  voting
                  and investment control over the portfolio securities of each of
                  the funds
                  listed above.</font></font></td>
              </tr>

          </table>
        </div>

    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PLAN
      OF DISTRIBUTION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a name="tx74573_7"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders, which as used in this prospectus includes donees,
      pledgees, transferees or other successors-in-interest selling Shares or
      interests in Shares received after the date of this prospectus from a Selling
      Shareholder as a gift, pledge, partnership distribution or other transfer,
      may,
      from time to time, sell, transfer or otherwise dispose of any or all of the
      Shares or interests in the Shares on any stock exchange, market or trading
      facility on which the Shares are traded or in private transactions. These
      dispositions may be at fixed prices, at prevailing market prices at the time
      of
      sale, at prices related to the prevailing market price, at varying prices
      determined at the time of sale, or at negotiated prices. </font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders may use any one or more of the following methods when
      disposing of Shares or interests therein: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div align="center">
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

              <tr bgcolor="white">
                <td valign="top" width="5%"><font size="2">&#8226;</font></td>
                <td width="95%"><font size="2">ordinary brokerage transactions
                  and
                  transactions in which the broker-dealer solicits purchasers;</font></td>
              </tr>
              <tr bgcolor="white">
                <td width="5%">&#160;</td>
                <td width="95%">&#160;</td>
              </tr>
              <tr bgcolor="white">
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                <td width="95%"><font size="2">block trades in which the broker-dealer
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                  a portion
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                <td width="95%"><font size="2">an exchange distribution in accordance
                  with
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                <td width="95%"><font size="2">privately negotiated
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                <td width="95%"><font size="2">short sales effected after the date
                  the
                  registration statement of which this prospectus is a part is declared
                  effective by the SEC; </font></td>
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                <td width="95%"><font size="2">through the writing or settlement
                  of options
                  or other hedging transactions, whether through an options exchange
                  or
                  otherwise;</font></td>
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                <td width="95%"><font size="2">agreement between broker-dealers
                  and the
                  Selling Shareholders to sell a specified number of the Shares at
                  a
                  stipulated price per share; and</font></td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders may, from time to time, pledge or grant a security interest
      in some or all of the Shares owned by them and, if they default in the
      performance of their secured obligations, the pledgees or secured parties may
      offer and sell the Shares, from time to time, under this prospectus, or under
      an
      amendment to this prospectus under Rule 424(b)(3) or other applicable provision
      of the Securities Act amending the list of Selling Shareholders to include
      the
      pledgee, transferee or other successors-in-interest as Selling Shareholders
      under this prospectus. The Selling Shareholders also may transfer the Shares
      in
      other circumstances, in which case the transferees, pledgees or other
      successors-in-interest will be the selling beneficial owners for purposes of
      this prospectus. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the sale of the Shares or interests therein, the Selling
      Shareholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Shareholders may also sell Shares short and deliver Shares to close out their
      short positions, or loan or pledge the Shares to broker-dealers that in turn
      may
      sell these securities. The Selling Shareholders may also enter into option
      or
      other transactions with broker-dealers or other financial institutions or the
      creation of one or more derivative securities that require the delivery to
      such
      broker-dealer or other financial institution of Shares offered by this
      prospectus, which Shares such broker-dealer or other financial institution
      may
      resell pursuant to this prospectus (as supplemented or amended to reflect such
      transaction). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      aggregate proceeds to the Selling Shareholders from the sale of the Shares
      offered by them will be the purchase price of the Shares less discounts or
      commissions, if any. Each of the Selling Shareholders reserves the right to
      accept and, together with their agents from time to time, to reject, in whole
      or
      in part, any proposed purchase of Shares to be made directly or through agents.
      We will not receive any of the proceeds from this offering. Upon any exercise
      of
      the Warrants by payment of cash, however, we will receive the exercise price
      of
      the Warrants. </font></div>
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders also may resell all or a portion of the Shares in open
      market transactions in reliance on Rule 144 under the Securities Act, provided
      that they meet the criteria and conform to the requirements of that rule.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Selling Shareholders and any underwriters, broker-dealers or agents that
      participate in the sale of the Shares or interests therein may be deemed
&#8220;underwriters&#8221; within the meaning of Section&#160;2(11) of the Securities Act.
      Specifically, the Selling Shareholders who are registered broker-dealers are
      deemed to be &#8220;underwriters&#8221; within the meaning of the Securities Act. In
      addition, Selling Shareholders who are affiliates of registered broker-dealers
      may be deemed to be &#8220;underwriters&#8221; within the meaning of the Securities Act if
      such Selling Shareholder (i)&#160;did not acquire the Shares in the ordinary
      course of business or (ii)&#160;had any agreement or understanding, directly or
      indirectly, with any person to distribute the Shares. In such event, any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the Shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act, and such Selling Shareholders
      may be subject to certain additional regulations and statutory liabilities
      under
      the Securities Act and the Exchange Act. To our knowledge and based on
      information we received from the Selling Shareholders, (i)&#160;each Selling
      Shareholder that is a registered broker-dealer or affiliated with a registered
      broker-dealer acquired the Shares in the ordinary course of business,
      (ii)&#160;such Selling Shareholder did not have any agreement or understanding,
      directly or indirectly, with any person to distribute the Shares, and
      (iii)&#160;no such Selling Shareholder received any securities as underwriting
      compensation. However, Pacific Growth Equities, LLC, an affiliate of Pacific
      Growth Equity Management, LLC, received a warrant to purchase approximately
      25,000 shares of our common stock as part of its compensation for acting as
      the
      placement agent in connection with the private placement. We are also not aware
      of any underwriting plan or agreement, underwriters&#8217; or dealers&#8217; compensation,
      or passive market making or stabilizing transactions involving the purchase
      or
      distribution of the Shares. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      discounts, commissions, concessions or profit the Selling Shareholders earn
      on
      any resale of the Shares may be underwriting discounts and commissions under
      the
      Securities Act. Selling Shareholders who are &#8220;underwriters&#8221; within the meaning
      of Section&#160;2(11) of the Securities Act will be subject to the prospectus
      delivery requirements of the Securities Act. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      the
      extent required, the Shares to be sold, the names of the Selling Shareholders,
      the respective purchase prices and public offering prices, the names of any
      agents, dealers or underwriters, any applicable commissions or any discounts
      with respect to a particular offer will be set forth in an accompanying
      prospectus supplement or a post-effective amendment to the registration
      statement that includes this prospectus, or, if appropriate, a filing pursuant
      to the Exchange Act. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      order
      to comply with the securities laws of some states, if applicable, the Shares
      may
      be sold in these jurisdictions only through registered or licensed brokers
      or
      dealers. In addition, in some states the Shares may not be sold unless they have
      been registered or qualified for sale or an exemption from registration or
      qualification requirements is available and is complied with. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      advised the Selling Shareholders that the anti-manipulation rules of Regulation
      M under the Exchange Act may apply to sales of Shares in the market and to
      the
      activities of the Selling Shareholders and their affiliates. In addition, to
      the
      extent applicable, we will make copies of this prospectus (as it may be
      supplemented or amended from time to time) available to the Selling Shareholders
      for the purpose of satisfying the prospectus delivery requirements of the
      Securities Act. The Selling Shareholders may indemnify any broker-dealer that
      participates in transactions involving the sale of the Shares against certain
      liabilities, including liabilities arising under the Securities Act.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      agreed to indemnify the Selling Shareholders against liabilities, including
      liabilities under the Securities Act and state securities laws, relating to
      the
      registration of the Shares offered by this prospectus. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      agreed with the Selling Shareholders to keep the registration statement of
      which
      this prospectus constitutes a part effective until the earlier of: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr bgcolor="white">
            <td valign="top" width="5%"><font size="2">&#8226;</font></td>
            <td width="95%"><font size="2">such time as all of the Shares covered
              by
              this prospectus have been disposed of pursuant to and in accordance
              with
              the registration statement, and</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="5%">&#160;</td>
            <td width="95%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="5%"><font size="2">&#8226;</font></td>
            <td width="95%"><font size="2">the date on which the Shares may be
              sold
              pursuant to Rule 144 of the Securities
              Act.</font></td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 14.4pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 0.35pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEGAL
      MATTERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      validity of the Shares covered by this prospectus was passed upon by Orrick,
      Herrington &amp; Sutcliffe LLP, Seattle, Washington.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPERTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ernst
      &amp; Young LLP, an independent registered public accounting firm, has audited
      our consolidated financial statements included in our Annual Report on Form
      10-K
      for the year ended December 31, 2005, and management&#8217;s assessment of the
      effectiveness of our internal control over financial reporting as of December
      31, 2005, as set forth in their reports, which are incorporated by reference
      in
      this prospectus and registration statement. Our consolidated financial
      statements and management&#8217;s assessment are, and audited consolidated financial
      statements and management&#8217;s assessments to be included in subsequently filed
      documents will be, incorporated by reference in reliance on Ernst &amp; Young
      LLP&#8217;s reports (to the extent covered by consents filed with the SEC), given on
      their authority as experts in accounting and auditing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      prospectus and the documents incorporated by reference herein contain
      forward-looking statements that involve risks and uncertainties. Forward-looking
      statements include statements about our product development and
      commercialization goals and expectations, potential market opportunities, our
      plans for and anticipated results of our clinical development activities and
      the
      potential advantage of our product candidates, our future cash requirements
      and
      the sufficiency of our cash and cash equivalents to meet these requirements,
      our
      ability to raise capital when needed and other statements that are not
      historical facts. Words such as &#8220;may,&#8221; &#8220;will,&#8221; &#8220;believes,&#8221; &#8220;estimates,&#8221;
&#8220;expects,&#8221; &#8220;anticipates,&#8221; &#8220;plans&#8221; and &#8220;intends,&#8221; or statements concerning
&#8220;potential&#8221; or &#8220;opportunity&#8221; and other words of similar meaning, or the negative
      thereof, may identify forward-looking statements, but the absence of these
      words
      does not mean that the statement is not forward-looking. In making these
      statements, we rely on a number of assumptions and make predictions about the
      future. Our actual results could differ materially from those stated in, or
      implied by, forward-looking statements for a number of reasons, including the
      risks described in the section entitled &#8220;Risk Factors&#8221; beginning on page 4 of
      this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should not unduly rely on these forward-looking statements, which speak only
      to
      our expectations as of the date of this prospectus. We undertake no obligation
      to publicly revise any forward-looking statement after the date of this
      prospectus to reflect circumstances or events occurring after the date of this
      prospectus or to conform the statement to actual results or changes in our
      expectations. You should, however, review the factors, risks and other
      information we provide in the reports we file from time to time with the SEC,
      including after the date of this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>WHERE
      YOU CAN FIND MORE INFORMATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      file
      annual, quarterly and current reports, proxy statements and other information
      with the SEC. Our SEC filings are available to the public over the Internet
      at
      the SEC&#8217;s website at http://www.sec.gov. The SEC&#8217;s website contains reports,
      proxy statements and other information regarding issuers, such as us, that
      file
      electronically with the SEC. You may also read and copy any document we file
      with the SEC at the SEC&#8217;s public reference room at 100 F Street, N.E.,
      Washington, D.C. 20549. You may also obtain copies of the documents at
      prescribed rates by writing to the SEC&#8217;s public reference room at 100 F Street,
      N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
      information about its public reference room.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      SEC
      allows us to &#8220;incorporate by reference&#8221; into this prospectus the information and
      reports we file with the SEC. This means that we can disclose important
      information to you by referring to another document. The information that we
      incorporate by reference is considered to be part of this prospectus, and later
      information that we file with the SEC automatically updates and supersedes
      this
      information. We incorporate by reference the following documents:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                annual report on Form&#160;10-K for the year ended December&#160;31, 2005,
                which contains audited consolidated financial statements for the
                most
                recent fiscal year for which such statements have been
                filed;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                quarterly reports on Form&#160;10-Q for the quarters ended March&#160;31,
                2006, June 30, 2006 and September 30,
                2006;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                current reports on Form&#160;8-K filed on January 19, 2006, January 25,
                2006, March 8, 2006, March 10, 2006, March 15, 2006, March 16, 2006,
                April
                28, 2006, May 9, 2006, May 12, 2006, June 2, 2006, June 16, 2006,
                June 21,
                2006, June 28, 2006, August 18, 2006, September 5, 2006, September
                20,
                2006, November 1, 2006, November 7, 2006, November 15, 2006, December
                14,
                2006, January 8, 2007 and January 11, 2007;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                description of our common stock contained in our registration statements
                on Form 8-A filed on April 26, 1994 and October 22, 1996 under Section
                12(g) of the Exchange Act, including any amendments or reports filed
                for
                the purpose of updating that description.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      incorporate by reference into this prospectus all documents we file under
      Section&#160;13(a), 13(c), 14 or 15(d) of the Exchange Act (a)&#160;after the
      initial filing date of the registration statement of which this prospectus
      is a
      part and before the effectiveness of the registration statement and
      (b)&#160;after the effectiveness of the registration statement and before the
      Shares offered by this prospectus have been sold. The most recent information
      that we file with the SEC automatically updates and supersedes older
      information. The information contained in any such filing will be deemed to
      be a
      part of this prospectus as of the date on which the document is filed, and
      any
      older information that has been modified or superseded will not be deemed to
      be
      a part of this prospectus. Unless specifically stated to the contrary, none
      of
      the information that we disclose under Item 9 or 12 of any Current Report on
      Form 8-K that we may from time to time furnish to the SEC will be incorporated
      by reference into, or otherwise included in, this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      request, we will provide to each person who receives this prospectus a copy
      of
      the information </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that
      has
      been incorporated by reference into this prospectus. Please direct your request,
      either in writing or by telephone, to the Secretary, Targeted Genetics
      Corporation, 1100 Olive Way, Suite 100, Seattle, Washington&#160;&#160;98101,
      (206) 623-7612.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      should rely only on the information contained in this prospectus. We have not
      authorized anyone to provide you with different information. We are not making
      an offer of these securities in any state where the offer is not permitted.
      You
      should not assume that the information in this prospectus is accurate as of
      any
      date other than the date on the front of this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NO
      PERSON
      HAS BEEN AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE UNDER THIS PROSPECTUS
      TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED
      IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
      NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US OR THE SELLING SHAREHOLDERS.
      NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS
      WILL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THERE HAS BEEN NO CHANGE IN OUR
      AFFAIRS OR THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME
      SUBSEQUENT TO THE DATE AS OF WHICH THE INFORMATION IS GIVEN. THIS PROSPECTUS
      DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
      ANY
      OF THE SECURITIES OFFERED UNDER THIS PROSPECTUS TO ANYONE IN ANY JURISDICTION
      IN
      WHICH THE OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
      THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT
      IS
      UNLAWFUL TO MAKE THE OFFER OR SOLICITATION.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;<img src="v064717_logo.jpg" alt=""></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      II</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INFORMATION
      NOT REQUIRED IN PROSPECTUS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      14. Other Expenses of Issuance and Distribution</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table lists the costs and expenses payable by the registrant in
      connection with the sale of the shares of common stock covered by this
      registration statement. All amounts are estimates except for the SEC
      registration fee:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="75%">

          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SEC
                registration fee</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,298</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Printing
                and engraving expenses</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,000
                </font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Legal
                fees and expenses</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">15,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounting
                fees and expenses</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">15,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Transfer
                agent fees and expenses</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Miscellaneous
                fees and expenses</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">46,298</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      15. Indemnification of Directors and Officers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sections&#160;23B.08.500
      through 23B.08.600 of the Washington Business Corporation Act, or WBCA,
      authorize a court to award, or a corporation&#8217;s board of directors to grant,
      indemnification to directors and officers on terms sufficiently broad to permit
      indemnification under certain circumstances for liabilities arising under the
      Securities Act. Section&#160;10 of the registrant&#8217;s bylaws provides for
      indemnification of the registrant&#8217;s directors, officers, employees and agents to
      the maximum extent permitted by Washington law. The registrant maintains a
      liability insurance policy for this purpose.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section&#160;23B.08.320
      of the WBCA authorizes a corporation to limit a director&#8217;s liability to the
      corporation or its shareholders for monetary damages for acts or omissions
      as a
      director, except in certain circumstances involving intentional misconduct,
      knowing violations of law or illegal corporate loans or distributions, or any
      transaction from which the director personally receives a benefit in money,
      property or services to which the director is not legally entitled. Article
      11
      of the registrant&#8217;s Restated Articles of Incorporation contains provisions
      implementing, to the fullest extent permitted by Washington law, these
      limitations on a director&#8217;s liability to the registrant and its
      shareholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant has entered into indemnification agreements with certain of its
      officers and directors. The indemnification agreements provide the registrant&#8217;s
      officers and directors with indemnification to the fullest extent permitted
      by
      applicable law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">II-1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      16. Exhibits</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="bottom" width="11%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit
                  No.</u></font></div>
              </td>
              <td valign="bottom" width="61%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Description</u></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="11%">&#160;</td>
              <td valign="bottom" width="61%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1*</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td align="left" valign="top" width="61%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
                  of Orrick, Herrington &amp; Sutcliffe LLP, counsel to Targeted Genetics
                  Corporation, regarding the legality of the shares of common stock
                  being
                  registered</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="right" valign="top" width="11%">&#160;</td>
              <td align="left" valign="top" width="61%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.1</font></div>
              </td>
              <td align="left" valign="top" width="61%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                  of Independent Registered Public Accounting Firm</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="right" valign="top" width="11%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
              <td align="left" valign="top" width="61%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.2*</font></div>
              </td>
              <td align="left" valign="top" width="61%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                  of Orrick, Herrington &amp; Sutcliffe LLP (contained in
                  Exhibit&#160;5.1)</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="right" valign="top" width="11%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              </td>
              <td align="left" valign="top" width="61%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24.1*</font></div>
              </td>
              <td align="left" valign="top" width="61%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Power
                  of attorney</font></div>
              </td>
            </tr>

        </table>
      </div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">__________________<br>

        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
          Previously filed.</font></div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      17. Undertakings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9.75pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9.7pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      undersigned registrant hereby undertakes: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="white">
            <td width="10%">&#160;</td>
            <td valign="top" width="5%"><font size="2">(1)</font></td>
            <td width="85%"><font size="2">To file, during any period in which
              offers or
              sales are being made, a post-effective amendment to this registration
              statement: </font></td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="left">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="white">
            <td width="10%">&#160;</td>
            <td width="5%">&#160;</td>
            <td valign="top" width="5%"><font size="2">(i)</font></td>
            <td width="80%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
                include any prospectus required by Section&#160;10(a)(3) of the Securities
                Act of 1933;</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="10%">&#160;</td>
            <td width="5%">&#160;</td>
            <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)</font></td>
            <td width="80%"><font size="2">To reflect in the prospectus any facts
              or
              events arising after the effective date of the registration statement
              (or
              the most recent post-effective amendment thereof) which, individually
              or
              in the aggregate, represent a fundamental change in the information
              set
              forth in the registration statement. Notwithstanding the foregoing,
              any
              increase or decrease in volume of securities offered (if the total
              dollar
              value of securities offered would not exceed that which was registered)
              and any deviation from the low or high end of the estimated maximum
              offering range may be reflected in the form of prospectus filed with
              the
              Commission pursuant to Rule 424(b) if, in the aggregate, the changes
              in
              volume and price represent no more than a 20% change in the maximum
              aggregate offering price set forth in the &#8220;Calculation of Registration
              Fee&#8221; table in the effective registration statement; and </font></td>
          </tr>
          <tr bgcolor="white">
            <td width="10%">&#160;</td>
            <td width="5%">&#160;</td>
            <td valign="top" width="5%"><font size="2">(iii)</font></td>
            <td width="80%">
              <div><font size="2">To include any material information with respect
                to the
                plan of distribution not previously disclosed in the registration
                statement or any material change to such information in the registration
                statement;</font></div>
              <div>&#160;</div><font size="2"><u>provided</u><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
              </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>however</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
              that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section
              do
              not apply if the registration statement is on Form S-3 or Form F-3
              and the
              information required to be included in a post-effective amendment by
              those
              paragraphs is contained in reports filed with or furnished to the SEC
              by
              the registrant pursuant to Section&#160;13 or Section&#160;15(d) of the
              Securities Exchange Act of 1934 that are incorporated by reference
              in the
              registration statement, or is contained in a form of prospectus filed
              pursuant to Rule 424(b) that is part of the registration statement.
              </font></font></td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td width="10%">&#160;</td>
              <td valign="top" width="5%"><font size="2">(2)</font></td>
              <td width="85%"><font size="2">That, for the purpose of determining
                any
                liability under the Securities Act of 1933, each such post-effective
                amendment shall be deemed to be a new registration statement relating
                to
                the securities offered therein, and the offering of such securities
                at
                that time shall be deemed to be the initial bona fide offering thereof.
                </font></td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div align="center">
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

              <tr bgcolor="white">
                <td width="10%">&#160;</td>
                <td valign="top" width="5%"><font size="2">(3)</font></td>
                <td width="85%"><font size="2">To remove from registration by means
                  of a
                  post-effective amendment any of the securities being registered
                  that
                  remain unsold at the termination of the offering.
</font></td>
              </tr>

          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div align="center">
            <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

                <tr bgcolor="white">
                  <td width="10%">&#160;</td>
                  <td valign="top" width="5%"><font size="2">(4)</font></td>
                  <td width="85%"><font size="2">That, for the purpose of determining
                    liability under the Securities Act of 1933 to any purchaser:
                    </font></td>
                </tr>

            </table>
          </div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">&#160;</div>
              <div>
                <div id="GLFTR" style="WIDTH: 100%" align="left">
                </div>
              </div>
              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">II-2</font></div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right">
                </div>
              </div>
            </div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                  <div align="left">
                    <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

                        <tr bgcolor="white">
                          <td width="10%">&#160;</td>
                          <td width="5%">&#160;</td>
                          <td valign="top" width="5%">&#160;</td>
                          <td width="80%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
                              prospectus filed pursuant to Rule 424(b) as part of
                              a registration
                              statement relating to an offering, other than registration
                              statement
                              relying on Rule 430B or other than prospectuses filed
                              in reliance on Rule
                              430A, shall be deemed to be part of and included in
                              the registration
                              statement as of the date it is first used after effectiveness.
                              Provided,
                              however, that no statement made in a registration statement
                              or prospectus
                              that is part of the registration statement or prospectus
                              that is part of
                              the registration statement will, as to a purchaser
                              with a time of contract
                              of sale prior to such first use, supersede or modify
                              any statement that
                              was made in the registration statement or prospectus
                              that was part of the
                              registration statement or made in any such document
                              immediately prior to
                              such date of first use.
</font></div>
                          </td>
                        </tr>

                    </table>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                undersigned registrant hereby undertakes that, for the purpose of
                determining any liability under the Securities Act of 1933, each
                filing of
                the registrant&#8217;s annual report pursuant to Section&#160;13(a) or
                Section&#160;15(d) of the Securities Exchange Act of 1934 (and, where
                applicable, each filing of an employee benefit plan&#8217;s annual report
                pursuant to Section&#160;15(d) of the Securities Exchange Act of 1934)
                that is incorporated by reference in this registration statement
                shall be
                deemed to be a new registration statement relating to the securities
                offered herein and the offering of such securities at that time shall
                be
                deemed to be the initial bona fide offering thereof.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
                  as indemnification for liabilities arising under the Securities
                  Act of
                  1933 may be permitted to directors, officers and controlling persons
                  of
                  the registrant pursuant to the foregoing provisions, or otherwise,
                  the
                  registrant has been advised that in the opinion of the SEC such
                  indemnification is against public policy as expressed in the Securities
                  Act and is, therefore, unenforceable. In the event that a claim
                  for
                  indemnification against such liabilities (other than the payment
                  by the
                  registrant of expenses incurred or paid by a director, officer
                  or
                  controlling person of the registrant in the successful defense
                  of any
                  action, suit or proceeding) is asserted by such director, officer
                  or
                  controlling person in connection with the securities being registered,
                  the
                  registrant will, unless in the opinion of its counsel the matter
                  has been
                  settled by controlling precedent, submit to a court of appropriate
                  jurisdiction the question whether such indemnification by it is
                  against
                  public policy as expressed in the Securities Act and will be governed
                  by
                  the final adjudication of such
                  issue.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">II-3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
        <div>&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the requirements of the Securities Act of 1933, the registrant certifies
        that
        it has reasonable grounds to believe that it meets all of the requirements
        for
        filing on Form&#160;S-3 and has duly caused this Amendment No. 1 to registration
        statement to be signed on its behalf by the undersigned, thereunto duly
        authorized, in the city of Seattle, state of Washington, on the 8<sup>th</sup>
        day of February, 2007.</font></div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
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          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/
              H.
              Stewart Parker</font></td>
          </tr>
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            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%">
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                Stewart Parker</font></div>
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                and Chief Executive Officer</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the requirements of the Securities Act of 1933, this Amendment No. 1 to
        registration statement has been signed by the following persons in the
        capacities indicated below on the&#160;8<sup>th </sup>day of February,
        2007.</font></div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Signature</strong></font></div>
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              <td width="5%">&#160;</td>
              <td valign="top" width="57%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Title</strong></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  H. Stewart Parker</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">President,
                  Chief Executive Officer and Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
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              <td align="left" valign="top" width="57%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Principal
                  Executive Officer)</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                  David J. Poston</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
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              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
                  J. Poston</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Principal
                  Financial and Accounting Officer)</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*&#160;
                  /s/ </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jack
                  L. Bowman</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jack
                  L. Bowman</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*&#160;
                  /s/ </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jeremy
                  L. Curnock Cook</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jeremy
                  L. Curnock Cook</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*&#160;
                  /s/ Joseph M. Davie</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Joseph
                  M. Davie</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*&#160;
                  /s/ Roger L. Hawley</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Roger
                  L. Hawley</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">&#160;</td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nelson
                  L. Levy</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*&#160;
                  /</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">s</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/
                  MICHAEL S. PERRY</font></div>
              </td>
              <td width="5%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="top" width="57%" style="border-bottom: #ffffff solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Michael
                  S. Perry</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
              </td>
            </tr>

        </table>
      </div>

    <div>&#160;</div>

      <div align="left">
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td width="4%"><font size="2">* By:</font></td>
              <td width="1%">&#160;</td>
              <td valign="top" width="33%"><font size="2">/s/&#160;David J. Poston</font></td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Attorney-in-Fact</font></div>
              </td>
            </tr>
            <tr>
              <td width="4%">&#160;</td>
              <td width="1%">&#160;</td>
              <td valign="top" width="33%">
                <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">David
                J. Poston</font></td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="57%">&#160;</td>
            </tr>

        </table>
      </div>

    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">II-4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>

      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="bottom" width="11%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                  </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Number</u></strong></font></div>
              </td>
              <td width="5%" style="border-bottom: medium none;">&#160;</td>
              <td valign="bottom" width="84%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></div>
              </td>
            </tr>
            <tr>
              <td valign="bottom" width="11%">&#160;</td>
              <td width="5%">&#160;</td>
              <td valign="bottom" width="84%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1*</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="84%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
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                  regarding the legality of the common stock being
                  registered</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="right" valign="top" width="11%">&#160;</td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
              <td align="left" valign="top" width="84%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.1</font></div>
              </td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
              <td align="left" valign="top" width="84%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
                  of Independent Registered Public Accounting Firm</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="right" valign="top" width="11%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
              <td width="5%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
              </td>
              <td align="left" valign="top" width="84%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="right" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.2*</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="84%">
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                  of Orrick, Herrington &amp; Sutcliffe LLP (contained in
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                  of attorney</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">__________________<br>

        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
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in&#160;Amendment No. 1 to the&#160;Registration Statement (Form&#160;S-3 No.
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        effectiveness of internal control over financial reporting, and the
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        8, 2007</font></div>

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