SAN DIEGO, May 15 /PRNewswire-FirstCall/ -- Alliance Pharmaceutical
Corp. (OTC Bulletin Board: ALLP) today announced that it has entered into
an amendment (the "Amendment") to its Senior Convertible Promissory Notes
(the "Senior Notes") and its Senior Convertible Promissory Note Purchase
Agreement (the "Purchase Agreement") with holders of substantially all of
the outstanding principal amount of the Senior Notes.
    Pursuant to the Amendment, the maturity date of each outstanding Senior
Note was extended as follows:
    *  The maturity date was extended from April 1, 2007 to the date ninety
       (90) days after the date of the Amendment.  If the Company receives
       more than $1.5 million but less than $3 million in connection with a
       Qualified Financing (as defined in the Amendment) prior to the
       expiration of the ninety (90) days, the maturity date will
       automatically be extended to the date that is one hundred eighty
       (180) days after the date of the Amendment; and

    *  If the Company receives at least $3 million in connection with a
       Qualified Financing prior to the extended maturity date, the maturity
       date will automatically become June 30, 2008.
    The holders of the Senior Notes also agreed to subordinate their rights
to any debt that is issued in a Qualified Financing. Further, any financing
that qualifies as a Qualified Financing will not require additional
approval from the Senior Note holders.
    Alliance also agreed to issue to each current holder of a Senior Note
an additional note with principal amount equal to 20% of the outstanding
principal amount of such Senior Note on the date of the Amendment, which
will result in Alliance issuing new promissory notes in the aggregate
principal amount of approximately $1.8 million. These new notes will bear
interest at the rate of 10% per annum, will mature on June 30, 2008 and may
become convertible into common stock of Alliance on the same terms as the
Senior Notes at such time as Alliance has a sufficient number of authorized
and unreserved shares of common stock to accommodate such conversion and
Alliance provides written notice to the holders of these notes that they
are then convertible into common stock.
    The Company has further agreed to an increase of 20% to the current
royalty/milestone payment participation amounts set forth in the Omnibus
Amendment to the Purchase Agreement and Registration Rights Agreement dated
April 20, 2006. Under the original agreement, Senior Note holders receive
50% of the total amounts of royalties and milestones received by the
Company from third parties until 100% of the payment participation amounts
have been received. The Senior Note holders will now receive payment
sharing until 120% of the payment participation amounts have been received
if they continue to hold their Senior Notes through June 30, 2008.
    Alliance intends to seek additional financing that would qualify as a
Qualified Financing for the purpose of funding its continuing operations
through June 2008. Under the current plan, Alliance has enough funds to
operate through its fiscal year ending June 30, 2007.
    About Alliance Pharmaceutical Corp.
    Alliance Pharmaceutical Corp. is a development-stage pharmaceutical
company that is currently focused on developing its lead product, Oxygent,
which is based on its proprietary perfluorochemical ("PFC") technology.
Oxygent is being developed as an intravascular oxygen carrier designed to
augment oxygen delivery in surgical patients.
    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. Alliance has not had any substantive discussions to
date with any potential financing source and does not know if such
financing will be available to it on terms acceptable to it, or at all.
Such financing may come in the form of preferred stock, having rights,
preferences and privileges superior to our outstanding common stock or
additional debt, which may have to be secured by some or all of the assets
of Alliance. Alliance refers you to cautionary information contained in
documents Alliance files with the Securities and Exchange Commission from
time to time, including the last Form 10-KSB and Form 10-QSB. 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.

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