Alliance Pharmaceutical Corp. and Baxter Enter Into Agreement for Oxygent.

Business Editors and Health/Medical Writers

BIOWIRE2K

SAN DIEGO, Calif. and DEERFIELD, Ill.--(BW HealthWire)--May 12, 2000

Alliance Pharmaceutical Corp. (Nasdaq:ALLP) and Baxter Healthcare Corporation announced today that they have reached an agreement for the manufacturing, sales and distribution of Alliance's Oxygent(TM) (perflubron emulsion) in the United States, Canada and Europe.

Oxygent(TM) is a chemical-based oxygen carrier being developed to enhance the delivery of oxygen to tissues and vital organs. Oxygent(TM) is being developed for use with a procedure called Augmented-Acute Normovolemic Hemodilution(TM) (Augmented-ANH) to eliminate or reduce the need for donor blood transfusion during surgery.

Under the agreement, Baxter will purchase $20 million of convertible preferred stock in Alliance later this month. In order for Baxter to maintain its rights to commercialize the product, Baxter is required to invest an additional $30 million of convertible redeemable preferred stock over the next 18 months as clinical trials progress. Once the product is launched, Alliance will also receive royalty income and an ongoing share in the profits generated by sales of the product.

The investment will help support Alliance in the completion of late-stage clinical trials and achievement of regulatory approvals. Baxter will obtain an exclusive license for the manufacture, sales and distribution of Oxygent(TM) in the United States, Canada, and Europe, and will have the rights to co-develop Oxygent(TM) for further indications.

"As we considered potential partners for Oxygent(TM), we concluded that Baxter would be the best possible company due to their recognized leadership in marketing products for the surgical setting," said Duane J. Roth, Chairman and Chief Executive Officer of Alliance. "The Baxter division that will be responsible for marketing the product focuses on the anesthesiologist, the physician most responsible for transfusion decisions. This makes them an ideal marketing partner for Oxygent(TM)."

"Oxygent(TM) complements our business strategy of expanding our proprietary anesthesia and critical care pharmaceutical product offerings through the addition of currently marketed products and compounds in late-stage clinical development," said Jack McGinley, group vice president of Baxter. "The addition of Oxygent(TM) to Baxter's portfolio is also complementary to our other development programs."

Efforts to develop oxygen-carrying solutions have focused on two technologies, either hemoglobin, which may be derived from various biologic sources, including recombinant technology, or synthetic perfluorochemicals, such as Oxygent(TM). Perfluorochemicals (PFCs) are clear fluids that dissolve large amounts of respiratory gases such as oxygen and carbon dioxide and can be formulated into a stable emulsion for intravenous use. This emulsion is designed to increase the oxygen-carrying capacity of blood. PFCs differ from hemoglobin-based oxygen-carrying solutions in that they are most effective in the presence of higher levels of oxygen. This makes PFCs ideally suited to circumstances in which the patient is already receiving elevated oxygen, such as during surgery.

Oxygent(TM) is being developed for use with the Augmented-ANH technique to reduce and/or eliminate the need for donor blood transfusion during surgeries of expected high blood loss. Augmented-ANH involves the collection of several pints of blood from the patient immediately prior to surgery. Oxygent(TM) would then be administered to the patient to replace the oxygen-carrying capacity of the collected blood. When the surgery is completed, the patient's blood that was removed and conserved during surgery would then be re-infused to achieve a safe red cell concentration for postoperative recovery. Augmented-ANH is thereby intended to minimize the need for donor blood transfusions during and after surgery. Approaches to minimize the use of blood transfusions are being pursued for a variety of reasons, including the increase in blood shortages throughout the U.S., and the reduced ability of red blood cells to transport oxygen effectively after extended storage.

Oxygent(TM) has been administered to patients in clinical trials involving more than 1,000 subjects. A Phase 3 study involving patients undergoing cancer, urologic, vascular, orthopedic, and other general surgery procedures in eight European countries is expected to complete enrollment next month. An additional Phase 3 study involving cardiac surgery patients undergoing coronary artery bypass grafting (CABG) procedures with cardiopulmonary bypass (CPB) support is underway in the U.S. and Canada. Oxygent(TM) is the only oxygen-carrying therapeutic in Phase 3 whose studies were designed to support a label claim for use in patients undergoing both cardiac and non-cardiac surgical procedures.

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(TM), 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.

Baxter Healthcare Corporation is the principal U.S. operating subsidiary of Baxter International Inc. (NYSE:BAX). Baxter International Inc. is a global medical products and services company that provides critical therapies for people with life-threatening conditions. Baxter's products and services in bioscience (biopharmaceuticals and blood collection, separation and storage devices), medication delivery and renal therapy are used by health-care providers and their patients in more than 100 countries.

This news release contains forward-looking statements that involve risks and uncertainties, including those related to timing or results of pending or future clinical trials, actions by appropriate regulatory bodies, technological advances in the medical field, product demand and market acceptance, availability of funding for development, the effect of economic conditions and other risks detailed in the companies' filings with the Securities and Exchange Commission. These forward-looking statements are based on estimates and assumptions made by management of the companies and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements.