<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)
      X        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
------------         OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995

                                       OR

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
-------------        OF THE SECURITIES EXCHANGE ACT OF 1934

        FOR THE TRANSITION PERIOD FROM               TO
                                       -------------    -----------------

                         COMMISSION FILE NUMBER 0-12900

                          ALLIANCE PHARMACEUTICAL CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEW YORK                                     14-1644018
----------------------------------           ----------------------------------
(STATE OR OTHER JURISDICTION                 (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)            IDENTIFICATION NUMBER)

3040 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA                        92121
----------------------------------           ----------------------------------
(ADDRESS OF PRINCIPAL                        ZIP CODE
EXECUTIVE OFFICES)


REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE:                         619-558-4300
                                             ----------------------------------

INDICATE BY A CHECK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO
BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO FILING REQUIREMENTS
FOR THE PAST 90 DAYS.

     YES               X                               NO
          ---------------------------                     --------------------

AS OF JANUARY 30, 1996, REGISTRANT HAD 24,943,946 SHARES OF ITS COMMON STOCK,
$.01 PAR VALUE, OUTSTANDING.

<PAGE>



                 ALLIANCE PHARMACEUTICAL CORP. AND SUBSIDIARIES

                                      INDEX



                                                                        PAGE NO.
                                                                        --------

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

    Condensed Consolidated Balance Sheets                                   3

    Condensed Consolidated Statements of Operations                         4

    Condensed Consolidated Statements of Cash Flows                         5

    Notes to Condensed Consolidated Financial Statements                    6

Item 2. Management's Discussion and Analysis of
 Financial Condition and Results of Operations                              7


PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders               10

Item 5.  Other Information                                                 11

Item 6. Exhibits and Reports on Form 8-K                                   11


                                        2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

     ALLIANCE PHARMACEUTICAL CORP. AND SUBSIDIARIES

     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                        DECEMBER 31,                     JUNE 30,
                                                                            1995                           1995
                                                                     ------------------             ------------------
ASSETS                                                                   (UNAUDITED)                      (NOTE)
<S>                                                                  <C>                            <C>
  Current assets:
    Cash and cash equivalents                                        $    4,763,000                 $   12,519,000
    Short-term investments                                                7,959,000                     10,964,000
    Research revenue receivable                                           2,020,000                      2,060,000
    Inventories and other current assets                                  1,778,000                      1,913,000
                                                                     --------------                 --------------
        Total current assets                                             16,520,000                     27,456,000

  Property, plant and equipment - net                                    10,542,000                      9,946,000
  Purchased technology - net                                             16,725,000                     17,371,000
  Other assets - net                                                      1,105,000                      1,257,000
                                                                     --------------                 --------------
                                                                     $   44,892,000                 $   56,030,000
                                                                     --------------                 --------------
                                                                     --------------                 --------------

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable                                                 $    1,821,000                 $    2,509,000
    Accrued expenses                                                      2,873,000                      2,601,000
    Current portion of long-term debt                                       682,000
                                                                     --------------                 --------------
        Total current liabilities                                         5,376,000                      5,110,000

  Long-term debt                                                          1,314,000
  Other                                                                   1,199,000                        843,000

  STOCKHOLDERS' EQUITY:
    Preferred stock - $.01 par value; 5,000,000 shares authorized;
      1,500,000 outstanding at December 31, 1995
       and June 30, 1995                                                     15,000                         15,000
    Common stock - $.01 par value; 50,000,000 shares authorized;
      24,916,691 and 24,759,150 outstanding at
      December 31, 1995 and June 30, 1995, respectively                     249,000                        248,000
    Additional paid-in capital                                          240,505,000                    238,874,000
    Accumulated deficit                                                (203,766,000)                  (189,060,000)
                                                                     --------------                 --------------
        Total stockholders' equity                                       37,003,000                     50,077,000
                                                                     --------------                 --------------
                                                                     $  44,892,000                  $   56,030,000
                                                                     --------------                 --------------
                                                                     --------------                 --------------
</TABLE>

Note:  The balance sheet at June 30, 1995 has been derived from the audited
       financial statements at that date but does not include all of the
       information and footnotes required by generally accepted accounting
       principles for complete financial statements.

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                        3
<PAGE>

  ALLIANCE PHARMACEUTICAL CORP. AND SUBSIDIARIES

  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                  DECEMBER 31,                  DECEMBER 31,
                                                              1995           1994           1995           1994
                                                          ------------    -----------   ------------   ------------
                                                                   (UNAUDITED)                   (UNAUDITED)
  <S>                                                     <C>             <C>           <C>            <C>
  Revenues:
    License and research revenue                           $ 2,020,000    $ 1,975,000   $  4,110,000   $  7,100,000
    Product revenue                                             20,000         51,000         76,000        109,000
                                                           -----------    -----------   ------------   ------------
                                                             2,040,000      2,026,000      4,186,000      7,209,000

  Operating expenses:
    Research and development                                 7,351,000      7,476,000     15,562,000     19,129,000
    General and administrative                               1,813,000      1,839,000      3,385,000      3,804,000
                                                           -----------    -----------   ------------   ------------
                                                             9,164,000      9,315,000     18,947,000     22,933,000
                                                           -----------    -----------   ------------   ------------
  Loss from operations                                      (7,124,000)    (7,289,000)   (14,761,000)   (15,724,000)

  Investment income and other - net                            177,000        272,000        430,000        575,000
                                                           -----------    -----------   ------------   ------------
  Net loss                                                  (6,947,000)    (7,017,000)   (14,331,000)   (15,149,000)

  Dividends on preferred stock                                (188,000)      (219,000)      (375,000)      (219,000)
                                                           -----------    -----------   ------------   ------------
  Net loss applicable to common shares                     $(7,135,000)   $(7,236,000)  $(14,706,000)  $(15,368,000)
                                                           -----------    -----------   ------------   ------------
                                                           -----------    -----------   ------------   ------------

  Net loss per common share                                $     (0.29)   $     (0.34)  $      (0.59)  $      (0.72)
                                                           -----------    -----------   ------------   ------------
                                                           -----------    -----------   ------------   ------------

  Weighted average number of common shares outstanding      24,884,000     21,398,000     24,851,000     21,385,000
                                                           -----------    -----------   ------------   ------------
                                                           -----------    -----------   ------------   ------------
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                        4
<PAGE>

ALLIANCE PHARMACEUTICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                                          SIX MONTHS ENDED
                                                                                            DECEMBER 31,
                                                                                  1995                         1994
                                                                             --------------               --------------
                                                                                             (UNAUDITED)
  <S>                                                                        <C>                          <C>
  Operating activities:
    Net loss                                                                 $(14,331,000)                $(15,149,000)
    Adjustments to reconcile net loss to net cash used in operations:
      Depreciation and amortization                                             1,520,000                    1,458,000
      Acquired research and development                                           757,000                    1,686,000
      Non-cash compensation                                                       163,000
      Changes in operating assets and liabilities:
        Research revenue receivable                                                40,000                   (3,100,000)
        Inventories and other                                                     172,000                     (281,000)
        Accounts payable and accrued expenses and other                          (434,000)                     722,000
                                                                             ------------                 ------------
  Net cash used in operating activities                                       (12,113,000)                 (14,664,000)
                                                                             ------------                 ------------

  Financing activities:
    Issuance of common stock and preferred stock                                  675,000                   14,859,000
    Proceeds from long-term debt                                                2,208,000
    Principal payments on long-term debt                                         (212,000)
                                                                             ------------                 ------------
  Net cash provided by financing activities                                     2,671,000                   14,859,000
                                                                             ------------                 ------------

  Investing activities:
    Short-term investments                                                      3,042,000                    4,300,000
    Property, plant and equipment                                              (1,356,000)                    (451,000)
                                                                             ------------                 ------------
  Net cash provided by investing activities                                     1,686,000                    3,849,000
                                                                             ------------                 ------------

  (Decrease) increase in cash and cash equivalents                             (7,756,000)                   4,044,000
  Cash and cash equivalents at beginning of period                             12,519,000                    1,902,000
                                                                             ------------                 ------------
  Cash and cash equivalents at end of period                                 $  4,763,000                 $  5,946,000
                                                                             ------------                 ------------
                                                                             ------------                 ------------



  Supplemental disclosure of non-cash investing and financing activities:
    Preferred stock dividends                                                $    375,000                 $    219,000
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                       5
<PAGE>


ALLIANCE PHARMACEUTICAL CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION
     Alliance Pharmaceutical Corp. ("Alliance") and its subsidiaries
(collectively, the "Company") are engaged in identifying, designing, and
developing novel medical and pharmaceutical products.

PRINCIPLES OF CONSOLIDATION
     The consolidated financial statements include the accounts of Alliance, its
wholly owned subsidiaries, BioPulmonics, Inc. ("BioPulmonics") and Rosanin
Corporation, and its majority-owned subsidiaries, Astral, Inc., Talco
Pharmaceutical, Inc., and Applications et Transferts de Technologies Avancees.
All significant intercompany accounts and transactions have been eliminated.
Certain amounts in 1995 have been reclassified to conform to the current year's
presentation.

INTERIM CONDENSED FINANCIAL STATEMENTS
     The condensed consolidated balance sheet as of December 31, 1995, the
condensed consolidated statements of operations for the three and six months
ended December 31, 1995 and 1994, and the condensed consolidated statements of
cash flows for the six months ended December 31, 1995 and 1994 are unaudited.
In the opinion of management, such unaudited financial statements include all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of the results for the periods presented.  Interim results are not
necessarily indicative of the results to be expected for the full year.  The
financial statements should be read in conjunction with the Company's
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended June 30, 1995.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
     Cash, cash equivalents, and short-term investments consist of highly liquid
debt instruments. Management has classified the Company's cash equivalents and
short-term investments as available-for-sale securities in the accompanying
financial statements.  Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a separate
component of stockholders' equity.

PURCHASED TECHNOLOGY

     The purchased technology was primarily acquired as a result of the
merger of Fluoromed Pharmaceutical, Inc. into a subsidiary of the Company in
fiscal 1989.  The technology acquired is the Company's core perfluorochemical
("PFC") technology and was valued based on an analysis of the present value
of future earnings anticipated from this technology at that time.  The
Company identified alternative future uses for the PFC technology, including
OXYGENT-TM- (temporary blood substitute) and LIQUIVENT-Registered Trademark-
(intrapulmonary oxygen carrier) products.  Purchased technology also includes
$2.0 million for technology capitalized as a result of the acquisition of
BioPulmonics in December 1991. Since the acquisition, an alternative future
use of the acquired technology has been pursued by the Company.  An
intrapulmonary drug delivery system using the PFC-based liquid as a carrier
(or dispersing agent) is being developed by Alliance from the liquid
ventilation technology.

     The PFC technology is the basis for the Company's main drug development
programs and is being amortized over a 20-year life. Accumulated amortization
for this PFC technology was $7,355,000 and $7,936,000 at June 30, 1995 and
December 31, 1995, respectively.  The technology acquired from BioPulmonics is
being amortized over five to seven years, and accumulated amortization was
$500,000 and $671,000 at June 30, 1995 and December 31, 1995, respectively.
Amortization of purchased technology is included in research and development
expense.

     The carrying value of purchased technology is reviewed periodically based
on the projected cash flows to be received from license fees, milestone
payments, royalties and other product revenues.  If such cash flows are less
than the carrying value of the purchased technology, the difference will be
charged to expense.


                                      6


<PAGE>


LONG-TERM DEBT
     The Company entered into a loan and security agreement in August 1995 under
which the Company received $2.2 million.  Amounts borrowed under the agreement
are secured by fixed assets, and will be repaid over three years commencing in
September 1995.  If certain financial covenants are not satisfied, the note may
become due and payable.

NET LOSS PER COMMON SHARE
     Net loss per common share is based on the weighted average number of shares
outstanding during the respective periods and does not include common stock
equivalents since their effect would be anti-dilutive.


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations
         (References to years are to the Company's fiscal years ended June 30.)


     Alliance has devoted substantial resources to research and development
related to its pharmaceutical products based upon PFC and emulsion technologies.
The Company has been unprofitable since inception and expects to incur operating
losses for at least the next several years due to continued requirements for
research and development, preclinical testing and clinical trials, regulatory
activities, and commercial manufacturing start-up.  The amount of net losses and
the time required by the Company to achieve profitability are highly uncertain.
There can be no assurance that the Company will be able to achieve profitability
at all or on a sustained basis.

LIQUIDITY AND CAPITAL RESOURCES

     Through December 1995, the Company financed its activities primarily from
public and private sales of equity and funding from collaborations with
corporate partners. In April 1995, the Company completed offerings of 3.2
million shares of newly issued common stock, resulting in net proceeds to the
Company of approximately $14.3 million.  In August 1994, the Company entered
into a license agreement (the "License Agreement") with Ortho Biotech, Inc. and
The R.W. Johnson Pharmaceutical Research Institute, a division of Ortho
Pharmaceutical Corporation, subsidiaries of Johnson & Johnson (collectively
referred to as "Ortho") for injectable PFC emulsions capable of transporting
oxygen for therapeutic use, including OXYGENT. Under the License Agreement,
Ortho paid to Alliance an initial fee of $4.0 million and will make other
payments upon the achievement of certain milestones.  Ortho is responsible for
substantially all the remaining costs of developing the products and will pay
Alliance a royalty based upon sales of products after commercialization.  From
August 1994 through December 31, 1995, the Company had received research revenue
payments of $9.1 million from Ortho, and as of December 31, 1995, had recorded a
receivable of $2.0 million, representing funding due from Ortho for development
costs incurred during the second fiscal quarter.  In conjunction with the
License Agreement, Johnson & Johnson Development Corp. ("J&JDC") purchased 1.5
million shares of Alliance convertible preferred stock for $15.0 million and
obtained a three-year warrant to purchase 300,000 shares of Alliance common
stock at $15 per share.

     On January 12, 1996, the Company and Hoechst Marion Roussel, the global
pharmaceutical division of Hoechst AG, a German company, announced an agreement
in principle for a worldwide license to develop and market LIQUIVENT-Registered
Trademark- (perflubron), a potential new drug in pivotal Phase II/III trials for
treatment of acute respiratory failure.  The transaction is conditioned upon the
negotiation and execution of a definitive agreement for the license, which the
companies expect to finalize within 60 days, and is subject to applicable
regulatory approvals.  However, there can be no assurance that the transaction
will be consummated.  The license agreement is expected to provide for Hoechst
Marion Roussel to purchase a minority equity interest in the Company and to pay
the Company a license fee and other payments upon achieving certain development
milestones.  Hoechst Marion Roussel would have exclusive manufacturing and
worldwide marketing rights to the product.  Hoechst Marion Roussel would fund
product development activities and pay royalties to the Company on sales of
LIQUIVENT following commercialization.

     In August 1995, the Company entered into a loan and security agreement
under which the Company received $2.2 million.  Amounts borrowed under the
agreement are secured by fixed assets, and will be repaid over three years
commencing in September 1995.  If certain financial covenants are not satisfied,
the debt may become due and payable. The Company has financed substantially all
of its office and research facilities and related leasehold improvements under
operating lease arrangements.

     The Company had net working capital of $11.1 million at December 31, 1995
compared to $22.3 million at June 30, 1995.  The Company's cash, cash
equivalents, and short-term investments decreased to $12.7 million at


                                      7

<PAGE>


December 31, 1995 from $23.5 million at June 30, 1995.  The decrease resulted
primarily from net cash used in operations of $12.1 million, and property,
plant, and equipment additions of $1.4 million related to the expansion of
facilities used for research, development, and pilot manufacturing.  These
decreases were partially offset by $2.2 million received under the August 1995
loan and security agreement, and $675,000 from the issuance of common stock upon
exercise of options.  Capital expenditures for 1996 are expected to increase
compared to 1995.  The Company's operations to date have consumed substantial
amounts of cash, and are expected to continue to do so for the foreseeable
future.

     The Company continually reviews its product development activities in an
effort to allocate its resources to those product candidates that the Company
believes have the greatest commercial potential.  Factors considered by the
Company in determining the products to pursue include projected markets and
need, potential for regulatory approval and reimbursement under the existing
health care system, technical feasibility, expected and known product
attributes, and estimated costs to bring the product to market.  Based on these
and other factors, the Company may from time to time reallocate its resources
among its product development activities.  Additions to products under
development or changes in products being pursued can substantially and rapidly
change the Company's funding requirements.

     In December 1993, in order to obtain a commitment for a long-term supply of
raw material for both clinical trials and anticipated future production
requirements, the Company entered into an agreement with a supplier under which
the Company was obligated to make payments to the supplier through May 1997
based, in part, upon the achievement of certain milestones.  Based upon the
supplier's intent to negotiate directly with the Company's existing and future
collaborative partners, that agreement was modified in July 1995 to terminate
certain commitments by both parties.  Some or all of the Company's payment
obligations that remain may be reimbursed to the Company by existing and future
collaborative partners.

     The Company expects to incur substantial additional expenditures associated
with product development.  The Company will seek additional collaborative
research and development relationships with suitable corporate partners for its
non-licensed products.  There can be no assurance that such relationships, if
any, will successfully reduce the Company's funding requirements.  Additional
equity or debt financing may be required, and there can be no assurance that
funds from these sources will be available on favorable terms, if at all. If
adequate funds are not available, the Company may be required to delay, scale
back, or eliminate one or more of its product development programs, or obtain
funds through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies, product
candidates, or products that the Company would not otherwise relinquish.

     Alliance anticipates that its current capital resources, expected revenues
from the License Agreement, cash proceeds from the loan and security agreement,
its investments, and product sales, will be adequate to satisfy its capital
requirements and fund current and planned operations through 1996.  The
Company's future capital requirements will depend on many factors, including
continued scientific progress in its research and development programs, progress
with preclinical testing and clinical trials, the time and cost involved in
obtaining regulatory approvals, patent costs, competing technological and market
developments, changes in existing collaborative relationships, the ability of
the Company to establish additional collaborative relationships, and the cost of
manufacturing scale-up.

     While the Company believes that it can produce materials for clinical
trials and the initial market launch for its emulsion products at its existing
San Diego facility and for LIQUIVENT at its Otisville facility, it may need to
expand its commercial manufacturing capabilities for its products in the future.
This expansion may occur in stages, each of which would require regulatory
approval, and product demand could at times exceed supply capacity.  The Company
has not selected a site or obtained any regulatory approvals for construction of
a commercial production facility for its products.  The projected location and
completion date of any production facility will depend upon regulatory and
development activities and other factors.  The Company cannot predict the amount
that it will expend for the construction of such a production facility, and
there can be no assurance as to when or whether the FDA will determine that such
facility complies with Good Manufacturing Practices.  The License Agreement
provides an option to Ortho to elect to manufacture the emulsion products
referred to therein, or to require the Company to manufacture such products at a
negotiated price.

     The Company wishes to caution readers that the Company's business is
subject to significant risks.  The following important factors, among others, in
some cases have affected, and in the future could affect, the Company's actual
results and could cause the Company's actual consolidated results for 1996, and
beyond, to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company.  These risks include the
inability to enter into collaborative relationships to further develop and
commercialize the Company's products, changes in any such relationship, or the
inability of any collaborative partner to adequately commercialize any of the
Company's products; the uncertainties


                                      8


<PAGE>


associated with the lengthy regulatory approval process; obtaining and
enforcing patents important to the Company's business; and possible
competition from other products.  Furthermore, even if the Company's products
appear promising at an early stage of development, they may not reach the
market for a number of important reasons.  Such reasons include, but are not
limited to, the possibilities that the potential products will be found
ineffective during clinical trials, failure to receive necessary regulatory
approvals, difficulties in manufacturing on a large scale, failure to obtain
market acceptance, and the inability to commercialize because of proprietary
rights of third parties.  The research, development, and market introduction
of new products will require the application of considerable technical and
financial resources, while revenues generated from such products, assuming
they are developed successfully, may not be realized for several years. Other
material and unpredictable factors which could affect operating results
include, without limitation, the uncertainty of the timing of product
approvals and introductions and of sales growth; the ability to obtain
necessary raw materials at cost effective prices or at all; the effect of
possible technology and/or other business acquisitions or transactions; and
the increasing emphasis on controlling health care costs and potential
legislation or regulation of health care pricing.

     During September 1992, the Company and certain of its officers and
directors were named as defendants in several lawsuits filed in the U.S.
District Court for the Southern District of California by certain
shareholders. The actions were consolidated into one class action lawsuit
titled "In re Alliance Pharmaceutical Securities Litigation."  The complaint
claimed, among other things, that the defendants failed to disclose certain
problems with two of the Company's products under development, which conduct
is alleged to have portrayed falsely the Company's financial condition.  On
May 25, 1995, summary judgment was granted in favor of the Company and its
officers and directors. Attorneys for the plaintiffs have appealed the
decision.  The Company believes the eventual outcome of the litigation will
not have a material adverse effect on the Company's financial condition.

RESULTS OF OPERATIONS

     SIX MONTHS ENDED DECEMBER 31, 1995 AS COMPARED WITH SIX MONTHS ENDED
     DECEMBER 31, 1994

     The Company's license and research revenue was $4.1 million for the six
months ended December 31, 1995, compared to $7.1 million for the six months
ended December 31, 1994.  The period ended December 31, 1994 included a one-time
license fee of $4.0 million.

     Research and development expenses decreased by 19% to $15.6 million for the
six months ended December 31, 1995, compared to $19.1 million for the six months
ended December 31, 1994. The decrease in expenses was primarily the result of a
$3.6 million reduction in purchases of raw materials, a $929,000 net reduction
in acquired research and development expense, and reduced staffing costs.  These
reductions were partially offset by $639,000 paid to a supplier under a previous
raw material commitment. The Company also increased payments to universities and
outside consultants.  The expenses for the six months ended December 31, 1994
included a one-time $1.7 million charge to research and development expense
which arose when the Company licensed product rights to Ortho.  The expenses for
the six months ended December 31, 1995 included a $757,000 charge arising from
the acquisition of certain PFC patents, patent rights, and related documents in
exchange for 50,000 shares of the Company's common stock and a five-year warrant
to purchase up to an additional 100,000 shares of the Company's common stock at
$10 per share.

     General and administrative expenses decreased by 11% to $3.4 million for
the six months ended December 31, 1995, compared to $3.8 million for the six
months ended December 31, 1994.  The decrease in general and administrative
expenses was primarily due to decreased professional fees.

     Investment income and other was $430,000 for the six months ended December
31, 1995, compared to $575,000 for the six months ended December 31, 1994.  The
decline was primarily a result of lower average cash balances.

     Alliance expects to incur substantial operating losses over the next
several years due to continuing expenses associated with its research and
development programs.  Operating losses may fluctuate from quarter to quarter as
a result of differences in the timing of revenues earned and expenses incurred
and such fluctuations may be substantial.  The Company's historical results are
not necessarily indicative of future results.


                                      9


<PAGE>

     THREE MONTHS ENDED  DECEMBER 31, 1995 AS COMPARED WITH THREE MONTHS ENDED
     DECEMBER 31, 1994

     The Company's license and research revenue was unchanged at $2.0 million
for the three months ended December 31, 1995, compared to the three months ended
December 31, 1994. The Company expects research revenue for 1996 to be
comparable to 1995.

     Research and development expenses decreased to $7.4 million for the three
months ended December 31, 1995, compared to $7.5 million for the three months
ended December 31, 1994.  A $1.4 million decline in purchases of raw materials
was offset by a $1.1 million increase in payments to universities and outside
consultants and $319,000 paid to a supplier under a previous raw materials
commitment.

     General and administrative expenses were unchanged at $1.8 million for the
three months ended December 31, 1995, compared to the three months ended
December 31, 1994.  Professional fees decreased $303,000 and were offset by
compensation from the exercise of an expiring stock option by an executive
pursuant to the Company's 1991 Stock Option Plan..

     Investment income and other was $177,000 for the three months ended
December 31, 1995, compared to $272,000 for the three months ended December 31,
1994.  The decline in investment revenue was primarily a result of lower average
cash balances.


PART II  OTHER INFORMATION:


Item 4. Submission of Matters to a Vote of Security Holders

An annual meeting of shareholders was held on November 16, 1995.  The following
directors were re-elected for the following year and until the election and
qualification of their respective successors:

<TABLE>
<CAPTION>

    DIRECTOR                      FOR           WITHHELD    ABSTENTIONS  BROKER NON-VOTES
<S>                            <C>              <C>         <C>          <C>
Carroll O. Johnson             17,221,782       1,983,551         0              0

Stephen M. McGrath             17,207,048       1,998,285         0              0

Donald E. O'Neill              17,244,369       1,960,964         0              0

Helen M. Ranney, M.D.          17,241,174       1,964,159         0              0

Jean G. Riess, Ph.D.           17,249,364       1,955,969         0              0

Duane J. Roth                  17,215,262       1,990,071         0              0

Thomas F. Zuck, M.D.           17,221,097       1,984,236         0              0

</TABLE>


The shareholders of the Company voted to amend the 1991 Stock Option Plan of the
Company to increase the number of shares available for issuance thereunder in
accordance with the following vote:



13,798,158  For  5,128,942  Against  188,233 Withheld  90,000  Broker Non-Votes
----------       ---------           -------           ------

The shareholders of the Company voted to amend and restate the Formula Stock
Option Plan for Nonemployee Directors of the Company to increase the number of
shares granted in each annual option in accordance with the following vote:

14,211,521  For  4,737,038  Against  256,774 Withheld       0  Broker Non-Votes
----------       ---------           -------            -----

The shareholders of the Company voted to ratify the appointment of Ernst & Young
LLP as independent auditors of the Company for its fiscal year ending June 30,
1996 in accordance with the following vote:

18,994,214  For  59,833  Against  151,286  Withheld         0  Broker Non-Votes
----------       ------           -------               -----


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<PAGE>



Item 5.  Other Information

     On January 12, 1996, the Company and Hoechst Marion Roussel, the global
pharmaceutical division of Hoechst AG, a German company, announced an agreement
in principle for a worldwide license to develop and market LIQUIVENT-Registered
Trademark- (perflubron), a potential new drug in pivotal Phase II/III trials for
treatment of acute respiratory failure.  The transaction is conditioned upon the
negotiation and execution of a definitive agreement for the license, which the
companies expect to finalize within 60 days, and is subject to applicable
regulatory approvals.  However, there can be no assurance that the transaction
will be consummated.

     The license agreement is expected to provide for Hoechst Marion Roussel to
purchase a minority equity interest in the Company and to pay the Company a
license fee and other payments upon achieving certain development milestones.
Hoechst Marion Roussel would have exclusive manufacturing and worldwide
marketing rights to the product.  Hoechst Marion Roussel would fund product
development activities and pay royalties to the Company on sales of LIQUIVENT
following commercialization.


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibit 10(a) Amended and Restated Formula Stock Option Plan for
         Nonemployee Directors
(b)      There were no reports on Form 8-K.


SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                  ALLIANCE PHARMACEUTICAL CORP.


                                                           (Registrant)


                                                       \s\ Theodore D. Roth
                                                   ----------------------------
                                                          Theodore D. Roth
                                                      Executive Vice President
                                                    and Chief Financial Officer

Date:  February 6, 1996







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<PAGE>

                                EXHIBIT INDEX



The following exhibits are being filed herewith:

10(a)  Amended and Restated Formula Stock Option Plan for Nonemployee Directors











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