Alliance Pharmaceutical Corp. has signed a letter of intent with Baxter Healthcare Corporation under which Alliance would acquire an option to purchase Baxter's ownership interest in PFC Therapeutics, LLC, the joint venture established by Alliance and Baxter in May 2000 to commercialize Oxygent, an intravascular oxygen carrier, in North America and Europe.The definitive agreement for the purchase of the option will provide that Alliance would pay Baxter a royalty on the sales of Oxygent by PFC Therapeutics, its licensees, or its assignees following regulatory approval.In addition, Alliance would have six months to exercise its option to purchase Baxter's ownership interest in PFC Therapeutics.

Under the terms of the letter of intent, Baxter would retain a right of first offer to market Oxygent in the U.S.Oxygent (perflubron emulsion) is intended to avoid the need for donor blood in elective surgery and other situations.

Alliance also announced that it has retained Burrill & Company, a life sciences merchant bank, to assist Alliance and PFC Therapeutics in seeking strategic and financial partners to provide the resources necessary to conduct pending international Phase 3 clinical studies with Oxygent.Alliance has obtained regulatory and clinical site approvals in select European countries to commence the Phase 3 protocol, which was designed using data from a successful multinational Phase 3 study with general surgery patients as reported in the journal Anesthesiology last month.

Alliance has been using its perfluorochemical and surfactant technologies to develop therapeutic and diagnostic products in addition to Oxygent.On November 25, 2002, Alliance announced that it had signed a term sheet for Photogen Technologies, Inc. to acquire Imagent (perflexane lipid microspheres), an ultrasound contrast agent that was recently approved by the FDA for marketing in the United States.