Alliance Pharmaceutical Corp. Nets $25 Million in Conjunction With Oxygent Agreement With Baxter.

Business Editors/Health & Medical Writers

BIOWIRE2K

SAN DIEGO--(BW HealthWire)--May 25, 2000

Alliance Pharmaceutical Corp. (Nasdaq:ALLP) announced today that it has received $20 million from Baxter Healthcare Corp.

Additionally, Alliance received a prepaid royalty of $10 million from PFC Therapeutics, LLC, a new company formed by the parties to oversee the further development, manufacture, marketing, sales and distribution of Oxygent(TM) (perflubron emulsion) in the United States, Canada and Europe. Each party invested $5 million for equal ownership of PFC Therapeutics. Oxygent, a chemical-based oxygen carrier developed by Alliance, is being evaluated in international Phase 3 studies for its effectiveness in reducing or eliminating the need for donor blood transfusions in surgical patients.

In consideration for the payment, Baxter has received preferred convertible Alliance stock. In general, if Alliance's common stock price averages $22 per share over a 20-day period within the next four years, the conversion price will be $22 per share. Generally, if the stock does not reach that price, the conversion price will be based on the market value of Alliance's common stock at the time of conversion. In order for Baxter to maintain its rights to commercialize the product, Baxter is required to purchase an additional $30 million of convertible redeemable preferred stock over the next 18 months as clinical trials progress.

PFC Therapeutics will be managed by a committee consisting of four individuals, with each party designating two managers. Alliance and Baxter will share in PFC Therapeutics' cash flows.

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

In addition to Oxygent, Alliance is developing LiquiVent(R), an intrapulmonary "liquid ventilation" agent being evaluated in pivotal Phase 2-3 studies in North America and Europe for treatment of acute lung injury and acute respiratory distress syndrome. Alliance has filed a New Drug Application with the U.S. Food and Drug Administration (FDA) for approval of Imagent(R), an ultrasound contrast agent being developed in partnership with Schering AG, Germany. 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. 333-33242).