Exhibit
      10.3

     

    THIS
      WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD,
      ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY,
      UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
      THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT.

    


    
      	
              WARRANT
                NO. ______

            	 	
              NUMBER
                OF SHARES:  

            	______
	
              DATE
                OF ISSUANCE: January 11, 2007

            	 	
              (subject
                to adjustment)  

            	 


    

    


    WARRANT
      TO PURCHASE SHARES

    OF
      COMMON
      STOCK OF

    


    TARGETED
      GENETICS CORPORATION

     

    This
      Warrant is issued to [_____________], or its registered assigns (the
“Purchaser”),
      pursuant to that certain Securities Purchase Agreement, dated as of January
      8,
      2007, among Targeted Genetics Corporation (the “Company”),
      the
      Purchaser and certain other purchasers thereunder (the “Purchase
      Agreement”)
      and is
      subject to the terms and conditions of the Purchase Agreement.

     

    1.  EXERCISE
      OF WARRANT.

     

    (a)  Method
      of Exercise.
      Subject
      to the terms and conditions herein set forth, upon surrender of this Warrant
      at
      the principal office of the Company and upon payment of the Warrant Price (as
      defined below) by wire transfer to the Company or cashier’s check drawn on a
      United States bank made to the order of the Company, or exercise of the right
      to
      credit the Warrant Price against the fair market value of the Warrant Stock
      (as
      defined below) at the time of exercise (the “Net
      Exercise Right”)
      pursuant to Section 1(b), Purchaser is entitled to purchase from the Company,
      at
      any time after the date that is six (6) months after the date of issuance
      of this Warrant and on or before the date that is five (5) years from the Date
      of Issuance set forth above (the “Expiration
      Date”),
      up to
      [______] shares (as adjusted from time to time pursuant to the provisions of
      this Warrant) of Common Stock of the Company (the “Warrant
      Stock”),
      at a
      purchase price of $5.41 per share (the “Warrant
      Price”).
      

     

    (b)  Net
      Exercise Right.
      If the
      Company shall receive written notice from the holder of this Warrant at the
      time
      of exercise of this Warrant that the holder elects to exercise the Net Exercise
      Right, the Company shall deliver to such holder (without payment by the
      Purchaser of any exercise price in cash) that number of fully paid and
      nonassessable shares of Common Stock, par value $0.01 per share, of the Company
      (“Common
      Stock”)
      equal
      to the quotient obtained by dividing (y) the value of this Warrant (or the
      specified portion thereof) on the date of exercise, which value shall be
      determined by subtracting (1) the aggregate Warrant Price of the Warrant Stock
      (or the specified portion thereof) immediately prior to the exercise of this
      Warrant from (2) the Aggregate Fair Market Value (as defined below) of the
      Warrant Stock (or the specified portion thereof) issuable upon exercise of
      this
      Warrant (or specified portion thereof) on the date of exercise by (z) the Fair
      Market Value (as defined below) of one share of Common Stock on the date of
      exercise. The “Fair
      Market Value”
of
      a
      share of Common Stock shall mean the last reported sale price and, if there
      are
      no sales, the last reported bid price, of the Common Stock on the business
      day
      prior to the date of exercise as reported by the NASDAQ Global Market or such
      other principal exchange or quotation system on which the Common Stock is then
      traded or, if the Common Stock is not publicly traded, the price determined
      in
      good faith by the Company’s Board of Directors. The “Aggregate
      Fair Market Value”
of
      the
      Warrant Stock shall be determined by multiplying the number of shares of Warrant
      Stock by the Fair Market Value of one share of Warrant Stock.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.  CERTAIN
      ADJUSTMENTS.

     

    (a)  Mergers
      or Consolidations.
      If at
      any time after the date hereof there shall be a capital reorganization (other
      than a combination or subdivision of Warrant Stock otherwise provided for
      herein) (a “Reorganization”),
      or a
      merger or consolidation of the Company with another corporation (other than
      a
      merger with another corporation in which the Company is a continuing corporation
      and which does not result in any reclassification or change of outstanding
      securities issuable upon exercise of this Warrant or a merger effected
      exclusively for the purpose of changing the domicile of the Company) (a
“Merger”),
      then,
      as a part of such Reorganization or Merger, lawful provision shall be made
      so
      that the Purchaser shall thereafter be entitled to receive upon exercise of
      this
      Warrant, and upon payment of the Warrant Price, the number of shares of stock
      or
      other securities, cash or property of the Company or the successor corporation
      resulting from such Reorganization or Merger, to which a holder of the Common
      Stock deliverable upon exercise of this Warrant would have been entitled under
      the provisions of the agreement in such Reorganization or Merger if this Warrant
      had been exercised immediately before that Reorganization or Merger. At the
      effective time of any such Reorganization or Merger, this Warrant (and the
      right
      to purchase securities upon exercise hereof) will terminate. 

     

    (b)  Splits
      and Subdivisions; Dividends.
      In the
      event the Company should at any time, or from time to time, fix a record date
      for the effectuation of a split or subdivision of the outstanding shares of
      Common Stock or the determination of the holders of Common Stock entitled to
      receive a dividend or other distribution payable in additional shares of Common
      Stock or other securities or rights convertible into, or entitling the holder
      thereof to receive directly or indirectly, additional shares of Common Stock
      (hereinafter referred to as the “Common
      Stock Equivalents”)
      without payment of any consideration by such holder for the additional shares
      of
      Common Stock or Common Stock Equivalents (including the additional shares of
      Common Stock issuable upon conversion or exercise thereof), then, as of such
      record date (or the date of such distribution, split or subdivision if no record
      date is fixed), the per share Warrant Price shall be appropriately decreased
      and
      the number of shares of Warrant Stock shall be appropriately increased in
      proportion to such increase (or potential increase) of outstanding
      shares.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (c)  Combination
      of Shares.
      If the
      number of shares of Common Stock outstanding at any time after the date hereof
      is decreased by a combination of the outstanding shares of Common Stock, the
      per
      share Warrant Price shall be appropriately increased and the number of shares
      of
      Warrant Stock shall be appropriately decreased in proportion to such decrease
      in
      outstanding shares.

     

    (d)  Adjustments
      for Other Distributions.
      In the
      event the Company shall declare a distribution payable in securities of other
      persons, evidences of indebtedness issued by the Company or other persons,
      assets (excluding cash dividends paid out of net profits) or options or rights
      not referred to in Section 2(b), then, in each such case for the purpose of
      this
      Section 2(d), upon exercise of this Warrant the holder hereof shall be entitled
      to a proportionate share of any such distribution as though such holder was
      the
      holder of the number of shares of Common Stock into which this Warrant may
      be
      exercised as of the record date fixed for the determination of the holders
      of
      Common Stock entitled to receive such distribution.

     

    3.  NO
      FRACTIONAL SHARES. No fractional shares of Warrant Shares will be issued in
      connection with any exercise of this Warrant. In lieu of any fractional shares
      which would otherwise be issuable, the Company shall pay cash equal to the
      product of such fraction multiplied by the Fair Market Value of one share of
      Warrant Stock.

     

    4.  NO
      STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any portion of this
      Warrant, the Purchaser shall not have nor exercise any rights by virtue hereof
      as a stockholder of the Company (including without limitation the right to
      notification of stockholder meetings or the right to receive any notice or
      other
      communication concerning the business and affairs of the Company).

     

    5.  RESERVATION
      OF STOCK. The Company covenants that during the period this Warrant is
      exercisable, the Company will reserve from its authorized and unissued Common
      Stock a sufficient number of shares of Common Stock (or other securities, if
      applicable) to provide for the issuance of Warrant Stock (or other securities)
      upon the exercise of this Warrant. The Company agrees that its issuance of
      this
      Warrant shall constitute full authority to its officers who are charged with
      the
      duty of executing stock certificates to execute and issue the necessary
      certificates for the Warrant Stock upon the exercise of this
      Warrant.

     

    6.  MECHANICS
      OF EXERCISE. This Warrant may be exercised by the holder hereof, in whole or
      in
      part, by the surrender of this Warrant and the Notice of Exercise attached
      hereto as Exhibit
      A
      duly
      completed and executed on behalf of the holder hereof, at the principal office
      of the Company together with payment in full of the Warrant Price then in effect
      (or an election in the Notice of Exercise to net exercise) with respect to
      the
      number of shares of Warrant Stock as to which the Warrant is being exercised.
      This Warrant shall be deemed to have been exercised immediately prior to the
      close of business on the date of its surrender for exercise as provided above,
      and the person entitled to receive the Warrant Stock issuable upon such exercise
      shall be treated for all purposes as the holder of such shares of record as
      of
      the close of business on such date. Within three (3) days after such date,
      the
      Company at its expense shall cause to be issued and delivered to the person
      or
      persons entitled to receive the same a certificate or certificates for the
      number of full shares of Warrant Stock issuable upon such exercise, together
      with cash in lieu of any fraction of a share as provided above. The shares
      of
      Warrant Stock issuable upon exercise hereof shall, upon their issuance, be
      validly issued, fully paid and nonassessable, and free from all preemptive
      rights, taxes, liens and charges with respect to the issue thereof. In the
      event
      that this Warrant is exercised in part, the Company at its expense will execute
      and deliver a new Warrant of like tenor exercisable for the number of shares
      for
      which this Warrant may then be exercised.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    7.  CERTIFICATE
      OF ADJUSTMENT. Whenever the Warrant Price or number or type of securities
      issuable upon exercise of this Warrant is adjusted, as herein provided, the
      Company shall, at its expense, promptly deliver to the record holder of this
      Warrant a certificate of an officer of the Company setting forth the nature
      of
      such adjustment and showing in detail the facts upon which such adjustment
      is
      based.

     

    8.  REPRESENTATIONS
      OF PURCHASER. As of the date hereof, the Purchaser hereby confirms the
      representations and warranties made by the Purchaser in Section 4 of the
      Purchase Agreement.

     

    9.  TRANSFER
      RESTRICTIONS.

     

    (a)  Unregistered
      Security.
      The
      holder of this Warrant acknowledges that this Warrant and the Warrant Stock
      have
      not been registered under the Securities Act of 1933, as amended (the
“Securities
      Act”)
      or
      applicable state securities laws (collectively, the “Acts”),
      and
      agrees not to sell, encumber or otherwise transfer this Warrant or any Warrant
      Stock issued upon its exercise unless (i) there is an effective registration
      statement under the Acts covering the transaction, (ii) the Company receives
      an
      opinion of counsel satisfactory to the Company that such registration is not
      required under the Acts; provided that no such opinion of counsel shall be
      required in connection with a sale of the Securities pursuant to Rule 144 under
      the Securities Act, or (iii) the Company otherwise satisfies itself that
      registration is not required under the Acts. Each certificate or other
      instrument for Warrant Stock issued upon the exercise of this Warrant shall
      bear
      a legend substantially to the foregoing effect.

     

    (b)  No
      Transfer.
      This
      Warrant is not transferable without the Company’s prior written consent;
      provided, however, such consent shall not be required in connection with the
      transfer by the Purchaser of such Warrant (but only with all related
      obligations) without consideration to a Qualifying Holder (as such term is
      defined in the Registration Rights Agreement between the Company and the
      Purchaser entered into in connection with the Purchase Agreement dated as of
      even date herewith), provided that (i) written notice (in the form of
Exhibit
      B
      as
      attached hereto) is provided to the Company at least five (5) business days
      prior to any such transfer, (ii) the transferee is an “accredited investor” as
      defined in Rule 501(a) of Regulation D promulgated under the Securities Act
      and
      (iii) the transferee agrees in writing to be bound by all of the provisions
      of
      this Warrant.

     

    10.  NOTICES
      OF RECORD DATE. In the event of:

     

    (a)  any
      taking by the Company of a record of the holders of any class of securities
      for
      the purpose of determining the holders thereof who are entitled to receive
      any
      dividend (other than a cash dividend payable out of earned surplus of the
      Company) or other distribution, or any right to subscribe for, purchase or
      otherwise acquire any shares of stock of any class or any other securities
      or
      property, or to receive any other right; or 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (b)  any
      Reorganization or Merger; or

     

    (c)  any
      voluntary or involuntary dissolution, liquidation or winding-up of the
      Company,

     

    then
      and
      in each such event the Company will mail or cause to be mailed to the Purchaser
      (or a permitted transferee pursuant to Section 9(b) above) a notice
      specifying (i) the date on which any such record is to be taken for the purpose
      of such dividend, distribution or right, and stating the amount and character
      of
      such dividend, distribution or right, and (ii) the date on which any such
      Reorganization, Merger, dissolution, liquidation or winding-up is to take place,
      and the time, if any, as of which the holders of record of Common Stock (or
      other securities) shall be entitled to exchange their shares of Common Stock
      (or
      other securities) for securities or other property deliverable upon such
      Reorganization, Merger, dissolution, liquidation or winding-up. Such notice
      shall be mailed at least ten (10) business days prior to the date therein
      specified.

     

    11.  REPLACEMENT
      OF WARRANTS. On receipt of evidence reasonably satisfactory to the Company
      of
      the loss, theft, destruction or mutilation of this Warrant and, in the case
      of
      any such loss, theft, destruction or mutilation of this Warrant, on delivery
      of
      an indemnity agreement or security reasonably satisfactory in form and amount
      to
      the Company or, in the case of any such mutilation, on surrender and
      cancellation of such Warrant, the Company at its expense will execute and
      deliver, in lieu thereof, a new Warrant of like tenor.

     

    12.  NO
      IMPAIRMENT. Except to the extent as may be waived by the holder of this Warrant,
      the Company will not, by amendment of its charter or through a Reorganization,
      Merger, dissolution, sale of assets or any other voluntary action, avoid or
      seek
      to avoid the observance or performance of any of the terms of this Warrant,
      but
      will at all times in good faith assist in the carrying out of all such terms
      and
      in the taking of all such action as may be necessary or appropriate in order
      to
      protect the rights of the holder of this Warrant against
      impairment.

     

    13.  SATURDAYS,
      SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the taking of any
      action or the expiration of any right required or granted herein shall be a
      Saturday or Sunday or shall be a legal U.S. holiday, then such action may be
      taken or such right may be exercised on the next succeeding day not a Saturday,
      Sunday or legal U.S. holiday.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    14.  MISCELLANEOUS.
      This Warrant shall be governed by the laws of the State of New York. The
      headings in this Warrant are for purposes of convenience and reference only,
      and
      shall not be deemed to constitute a part hereof. Neither this Warrant nor any
      term hereof may be changed, waived, discharged or terminated orally but only
      by
      an instrument in writing signed by the Company and the Purchaser. All notices
      and other communications from the Company to the Purchaser shall be sufficient
      if in writing and delivered (i) personally, (ii) by facsimile transmission
      (receipt verified), (iii) by registered or certified mail (return receipt
      requested), postage prepaid, or (iv) sent by express courier service (receipt
      verified), to the address furnished to the Company in writing by the Purchaser.
      All such notices and communications to the Company shall be effective if
      delivered (i) personally, (ii) by facsimile transmission (receipt verified),
      (iii) by registered or certified mail (return receipt requested), postage
      prepaid, or (iv) sent by express courier service (receipt verified), at 1100
      Olive Way Suite 100, Seattle, WA 98101, H.
      Stewart Parker, CEO & President, fax: (206) 623-7064, with a copy to Orrick,
      Herrington & Sutcliffe LLP, 719 Second Avenue, Suite 900, Seattle, WA 98104,
      Stephen M. Graham, Esq. fax: (206) 839-4301. The invalidity or unenforceability
      of any provision hereof shall in no way affect the validity or enforceability
      of
      any other provisions.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective as
      of
      the Date of Issuance first set forth above.

    
      	 	 	 
	 	
              TARGETED
                GENETICS CORPORATION

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                H. Stewart Parker

              Title:
                Chief Executive Officer & President

            
	 	
            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    


    NOTICE
      OF
      INTENT TO EXERCISE

    (To
      be
      signed only upon exercise of Warrant)


     

    To:
      Targeted Genetics Corporation

    


    The
      undersigned, the Purchaser of the attached Warrant, hereby irrevocably elects
      to
      exercise the purchase right represented by such Warrant for, and to purchase
      thereunder, ______________ (________) shares of Common Stock of Targeted
      Genetics Corporation and (choose one)

     

    __________
      herewith makes payment of __________________ Dollars ($_________)
      thereof

     

    or

    

      __________
        exercises the Net Exercise Right pursuant to Section 1(b) thereof and requests
        that the certificates for such shares be issued in the name of, and delivered
        to
        ___________________________, whose address is
        ____________________________________________________________________________________________________.

       

    

     

    
      	 	 	 	 
	DATED:
              ____________________________	 	 	
            
	
               

            	 	 	
            
	
            	 	 	
              (Signature
                must conform in all

              respects
                to name of the Purchaser

              as
                specified on the face of the

              Warrant)

            
	 	 	 	 
	 	 	 	
              
                

              

               

              
                

              

               

            
	 	 	 	
              (Address)

            


    

        

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    


    NOTICE
      OF
      ASSIGNMENT FORM


    


    FOR
      VALUE
      RECEIVED, ______________________ (the “Assignor”)
      hereby
      sells, assigns and transfers all of the rights of the undersigned Assignor
      under
      the attached Warrant with respect to the number of shares of common stock of
      Targeted Genetics Corporation (the “Company”)
      covered thereby set forth below, to the following “Assignee”
and,
      in
      connection with such transfer, represents and warrants to the Company that
      (i)
      such Assignee is a Qualifying Holder (as such term is defined in the
      Registration Rights Agreement between the Company and the Purchaser entered
      into
      in connection with the Purchase Agreement dated as of even date herewith) of
      the
      Assignor and (ii) the transfer is otherwise in compliance with Section 9(b)
      of
      the Warrant:

     

     

    
      	
              NAME
                OF ASSIGNEE

            	 	
              ADDRESS/FAX
                NUMBER

            
	 	 	 
	 	 	 
	
              Dated:
                ____________________________

               

            	 	
              Signature:

              
                

              

               

              Witness:

              
                

              

            


    

     

    ASSIGNEE
      ACKNOWLEDGMENT

     

    The
      undersigned Assignee acknowledges that it has reviewed the attached Warrant
      and
      by its signature below it hereby represents and warrants that it is a Qualifying
      Holder and an “accredited investor” as defined in Rule 501(a) of Regulation D
      promulgated under the Securities Act of 1933, as amended, and agrees to be
      bound
      by the terms and conditions of the attached Warrant as of the date
      hereof.

    
      	 	 	 
	 	
            
	
            	Signature: 
              	
            
	 	 	
              
 
	 	By: 	 
	 	Its:	
              
 
	 	
              Address: