Alliance Pharmaceutical Corp. and the pharmaceutical division ofHoechst AG signed an agreement Thursday giving Hoechst aworldwide license to develop and market LiquiVent, which is inpivotal studies for acute respiratory failure.

Hoechst Marion Roussel, of Frankfurt, Germany, will purchase $22million in Alliance convertible stock. An undisclosed license fee alsowill be paid upon close of the transaction.

Alliance, of San Diego, also can receive milestone payments,reimbursement of development expenses and royalties. Thecompanies said if approvals and market introductions are made incertain countries, the deal could be worth $100 million.

LiquiVent is a biologically inert, oxygen-carrying liquid administereddirectly into the lungs of patients undergoing mechanical ventilation.It is in pivotal Phase II/III studies in pediatric patients and in Phase IIstudies in adults and premature infants.

If certain events occur, Hoechst will convert $15 million of the stockinto 3 percent of the outstanding shares of Alliance, which currentlyhas about 25 million shares outstanding. Conversion of the rest wouldbe determined later by market value. Hoechst also will receive awarrant to purchase 300,000 Alliance shares at $20 each, a premiumto the current price.

Alliance's stock (NASDAQ:ALLP) closed up 38 cents Thursday at$16.75.

Ted Roth, executive vice president and chief financial officer atAlliance, said Alliance will be responsible for clinical development inNorth America and be reimbursed for expenses going forward.Hoechst will do any studies outside North America.

Alliance had about $13 million at the end of December 1995 and islosing about $7 million per quarter. The deal could cut the company'sburn rate $10 million to $12 million per year, the amount being spenton LiquiVent.

Alliance struck a similar deal for its product Oxygent, anintravascular oxygen carrier being studied as a temporary bloodsubstitute to reduce the need for donor blood transfusions withsurgery. The deal, also in the neighborhood of $100 million, wasmade with Johnson & Johnson, of New Brunswick, N.J. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.