Alliance and Inhale expand particle processing technology agreement.

Alliance Pharmaceutical Corp. (San Diego, CA: 858-410-5275) and Inhale Therapeutic Systems, Inc. (San Carlos, CA; 650-631-3138) announced that the two companies have expanded their agreement regarding the PulmoSpheres particle and particle processing technology, aspects of which Inhale initially acquired from Alliance in November, 1999. The PulmoSpheres technology is a particle formation method designed to enhance the performance of drugs delivered via the lung in propellant-based metered-dose inhalers and dry powder inhalers. As a result of the supplemental agreement, Inhale has paid to Alliance $5.25 million in exchange for rights beyond inhaleable applications and other considerations.

Under the terms of the supplemental agreement, Inhale has the right to use the PulmoSpheres technology for alternative methods of delivery in addition to inhaleable applications. Further, Alliance assigned five new patent applications covering methods of producing microparticles to Inhale. Alliance retains the rights to use the technology on products to be instilled directly into the lung, and obtains the rights to commercialize up to four products administered with inhalers, two of which will be royalty-free. Inhale will pay Alliance future milestone or royalty payments on a reduced number of products developed by Inhale or its licensees utilizing the technology. Inhale has also purchased chemicals from Alliance in accordance with the 1999 agreement and obtained an option to purchase additional such material through September 2003. These chemicals are used in the production of the PulmoSpheres technology, and this purchase will allow Inhale to accelerate its product development efforts.

"The PulmoSpheres technology was developed by Alliance as an outgrowth of our expertise with surface chemistry, perfluorochemicals, emulsions, and spray dry manufacturing processes," said Duane J. Roth, Chairman and CEO of Alliance. "We are pleased that Alliance's continued advancement of the technology has furthered our collaboration with Inhale. The supplemental agreement allows us to participate in Inhale's success through potential future milestones and royalties. We also look forward to developing our own products using this promising technology."

"Inhale has been very pleased with the performance of the PulmoSpheres technology for inhaled products. We have seen improved efficiency and reproducibility results in several clinical trials, including, inhaled to bramycin, a drug used in the treatment of cystic fibrosis; inhaled budesonide for the treatment of asthma; and inhaled leuprolide for the treatment of prostate cancer and endometriosis," said Ajit Gill, President and CEO of Inhale. "The expanded use of the technology will enable us to offer the performance-enabling PulmoSpheres to our partners for a variety of indications and for different delivery routes. Such expansion will further Inhale's goal of being a broad drug delivery company."

Alliance 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. Oxygent (perflubron emulsion), an intravenous oxygen carrier, is being developed in the United States, Canada, and Europe in conjunction with Baxter Healthcare Corporation. Imavist, an ultrasound contrast agent awaiting final FDA approval, is being developed jointly by Alliance and Schering AG, Germany, and will be marketed in the United States in partnership with Cardinal Health, Inc.

Inhale provides a portfolio of leading performance-enabling drug delivery technologies and expertise to help pharmaceutical and biotechnology companies maximize the performance of their compounds. Inhale offers three leading drug delivery platforms: a suite of technologies for the inhaleable delivery of macromolecules and small molecules for systemic and local lung delivery; supercritical fluid powder particle engineering to easily control particle size for a variety of drug delivery applications; and PEGylation for enhanced delivery performance of most major drug classes. The company is collaborating with major pharmaceutical and biotechnology companies, including Amgen, AstraZeneca, Aventis Behring, Bristol-Myers Squibb, Chiron, Enzon, GlaxoSmithKline, Johnson & Johnson, Lilly, Pfizer, Pharmacia, Roche, Schering-Plough and Serono.