Alliance Pharmaceutical Corp. Announces Company Update.

Business Editors/Health & Medical Writers

BIOWIRE2K

SAN DIEGO--(BW HealthWire)--Jan. 22, 2001

Alliance Pharmaceutical Corp. (Nasdaq:ALLP) announced today that it is re-aligning its personnel to focus its efforts on identifying the cause of the previously reported suspension of enrollment in its Phase 3 Oxygent(TM) clinical study.

This will result in a reduction of approximately 50 employees (about 20% of the workforce), primarily those who were involved in preparations for the anticipated near-term commercialization of Oxygent. The retained employees include key clinical, scientific, medical, and other personnel necessary for the Oxygent effort and for activities associated with the company's Imavist(TM) and LiquiVent(R) products. Oxygent, an intravenous oxygen-carrier, is being developed by Alliance in the United States, Canada, and Europe in conjunction with Baxter Healthcare Corp. The Alliance and Baxter Healthcare Corp. agreement regarding Oxygent was established in May 2000. Baxter obtained an exclusive license for the manufacture, sales, and distribution of Oxygent in the United States, Canada, and Europe, and has the rights to co-develop Oxygent for further indications.

The company anticipates that the downsizing and other planned decreases in expenditures will result in cost savings of approximately $14 million annualized. As announced earlier, Alliance expects to report more than $25 million in cash as of Dec. 31, 2000.

"Alliance's immediate priorities are to identify the issues that led to the Oxygent study suspension and resume development of the product," said Duane J. Roth, chairman and chief executive officer of Alliance. "We are also continuing our efforts to obtain approval of Imavist in the U.S., which is expected later this year. In regard to LiquiVent, we are compiling and analyzing the data from our recently completed Phase 2-3 clinical study, and we anticipate that preliminary results will be available this spring.

"We have re-aligned our personnel to concentrate on these objectives," Roth noted. "We retained a workforce of skilled individuals with experience in product development, medical affairs, and Alliance's core technologies who are dedicated to accomplishing our new goals."

Alliance Pharmaceutical Corp. is developing therapeutic and diagnostic products based on its perfluorochemical and surfactant technologies. Alliance's products are intended primarily for use during acute care situations, including surgical, cardiology, and respiratory applications.

Imavist(TM), an ultrasound contrast agent being developed with Schering AG, Germany, was the subject of a New Drug Application that has been reviewed by the FDA and found it to be approvable, upon satisfactory response to certain issues identified in the review process.

LiquiVent(R), an intrapulmonary "liquid ventilation" agent for treatment of acute lung injury and acute respiratory distress syndrome. Patient enrollment in an international Phase 2-3 study was completed in December 2000.

Additional information about the company is available on Alliance's web site at www.allp.com.

Except for historical information, the matters set forth in this release are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth herein, including the availability of funding for development, the uncertainties associated with the conduct of preclinical or clinical studies and the timing or ability to investigate scientific data. Alliance refers you to cautionary information contained in documents the company files with the Securities and Exchange Commission from time to time, including the last Form 10-K and Form 10-Q, and those risk factors set forth in the most recent registration statement on Form S-3 (File No. 333-47032) and Form S-4 (File No. 333-49676). Alliance is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.