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AMENDMENT TO SUPPLEMENTAL AGREEMENT                                EXHIBIT 10.79

         This Amendment to the Supplemental Agreement (this "Amendment"), dated
as of February 7, 2005 (the "Amendment Date"), is made and entered into by and
among Nektar Therapeutics ("Nektar", formerly known as Inhale Therapeutic
Systems, Inc. or "Inhale") and Alliance Pharmaceutical Corp. ("Alliance")
(collectively referred to as the "Parties").

         WHEREAS, Inhale and Alliance have previously entered into the following
agreements (collectively, the "Prior Agreements"): (a) an Asset Purchase
Agreement dated as of October 4, 1999 (the "APA"); (b) a License Agreement
(License to Inhale) dated as of November 4, 1999 (the "License to Inhale"); (c)
a License Agreement (License to Alliance) dated as of November 4, 1999 (the
"License to Alliance"); (d) a Product Development Rights Agreement dated as of
November 4, 1999 (the "PDRA"); (e) an Escrow Agreement dated as of November 4,
1999 (the "Escrow Agreement"); and (f) a Supplemental Agreement dated as of
March 15, 2002 (the "Supplemental Agreement");

         WHEREAS, Nektar and Alliance desire to amend certain portions of the
Supplemental Agreement and other Prior Agreements;

         WHEREAS, Nektar desires to purchase from Alliance, and Alliance is
willing to sell to Nektar, additional amounts of a chemical known as Perflubron
to enable Nektar to develop products based upon the technology assigned and/or
licensed to Nektar pursuant to the Prior Agreements; and

         WHEREAS, Nektar desires to reinstate and modify an escrow arrangement
described in the Prior Agreements to enable Nektar to access certain files,
records and information described in the Prior Agreements;

         NOW, THEREFORE, for and in consideration of the premises, and the
mutual promises, releases, and agreements herein contained, the Parties agree as
follows:

1. IMPACT OF THIS AMENDMENT ON THE SUPPLEMENTAL AGREEMENT AND OTHER PRIOR
AGREEMENTS.

         1.1. ALL PRIOR AGREEMENTS REMAIN EFFECTIVE. The Parties have concluded
that it is not practical to restate in their entirety the Prior Agreements to
reflect the compromises, agreements, and additional transactions embodied in
this Amendment. As modified and explained by this Amendment, and except as
specifically set forth in this Amendment, the other Prior Agreements remain in
full force and effect. Any capitalized terms not defined herein shall have the
meanings given in the Prior Agreements.

         1.2. THIS AMENDMENT CONTROLS. This Amendment modifies and/or explains
certain aspects of the Prior Agreements and addresses additional subjects not
covered by the Prior Agreements. In the event of any inconsistency between the
provisions of this Amendment and the provisions of the Prior Agreements, this
Amendment is controlling for all purposes.


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2. PAYMENTS BY NEKTAR. In consideration for rights granted herein to Nektar and
termination of certain of Nektar's obligations under the Prior Agreements, and
the sale by Alliance to Nektar of ten (10) metric tons of Perflubron as
described in Section 4.1, Nektar agrees to pay Alliance up to a total of one
million seven hundred fifty thousand dollars ($1,750,000), in three (3)
installments. The first such installment, of one million two hundred eighty-two
thousand five hundred dollars ($1,282,500), will be paid within five (5)
business days of the later to occur of the following: (a) the date upon which
the Parties sign the Amendment; (b) the date upon which Alliance deposits the
laboratory notebooks into escrow as required pursuant to Section 3.1; and (c)
the date upon which Nektar receives from Alliance the invention disclosures as
required pursuant to Section 3.2. The second such installment, of one hundred
thousand dollars ($100,000), will be paid within five (5) business days of the
later to occur of the following: (a) the date upon which the Parties sign the
Amendment and (b) the date upon which Nektar receives the last letter of consent
to be provided by Alliance and certain Third Parties pursuant to Section 6. The
third and final such installment, of up to three hundred sixty-seven thousand
five hundred dollars ($367,500) (the "Total Potential Third Installment"), will
be paid as provided in Section 4.2(c). Each of such installment payments shall
be made by wire transfer to an account designated in writing by Alliance.

3. ALLIANCE'S ESCROW OBLIGATIONS.

         3.1. INFORMATION TO BE PLACED INTO ESCROW. Within fifteen (15) calendar
days after the Amendment Date, Alliance will place into escrow with Iron
Mountain Intellectual Property Management, Inc. (formerly known as DSI
Technology Escrow Services, Inc.) pursuant to the terms of the Escrow Agreement
between the Parties of even date herewith (the "Second Escrow Agreement") the
originals of the laboratory notebooks listed on Exhibit A. The Parties
acknowledge that such notebooks are necessary for Nektar to practice the
intellectual property rights it has licensed, acquired or been assigned under
the Prior Agreements. Additionally, from time to time Nektar may request that
Alliance place into escrow copies of such additional data owned or controlled by
Alliance directly related to, necessary, or useful for the use or the
development of the PulmoSpheres(R) Technology, MediSpheres(TM) Technology or the
Bioavailability Technology in the Inhale Field. Alliance will make reasonable
efforts to comply with all such requests within thirty (30) calendar days of its
receipt of such request. If Alliance fails to deposit the requested data and
information into escrow within the time specified herein, then Nektar will have
direct right of access to such data and information, provided that Nektar shall
allow Alliance an opportunity to redact any Confidential Information of
Alliance, other than information constituting Licensed Know-How or information
that is in the public domain, that is contained in such requested data and
information using the mechanism set forth in Section 3.4(c).

         3.2. TRANSFER AND SALE OF INVENTION DISCLOSURES. Within five (5)
business days after the Amendment Date, Alliance shall ship to Nektar, in
accordance with Nektar's instructions and at Nektar's expense, the originals of
the invention disclosures listed on Exhibit B. The Parties acknowledge that such
disclosures and inventions are necessary for Nektar to practice the intellectual
property rights it has licensed, acquired or been assigned under the Prior
Agreements. Alliance may retain copies of each of such items. Nektar shall on
the Effective Date own all rights, title, and interest in and to such invention
disclosures, provided that Alliance shall have access to such items as follows.


                                       2
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If required for patent or regulatory purposes, Nektar shall allow Alliance or
its representatives or independent contractors (including its licensees or
sublicensees), and any regulatory authorities, to access and/or make additional
copies of the originals of each of such items at Nektar's facilities, upon
reasonable written advance notice to Nektar. Such access shall be provided
during the hours of 9 a.m. until 5 p.m. on normal business days in California.

         3.3. EXPENSES. Nektar shall bear all expenses of establishing and
maintaining the escrow established pursuant to this Amendment and the Second
Escrow Agreement.

         3.4. NEKTAR ACCESS TO INFORMATION.

              (a) Any information placed into escrow pursuant to Section 3.1
that is directly related to, necessary, or useful for the use or the development
of PulmoSpheres(R) Technology, MediSpheres(TM) Technology or Bioavailability
Technology in the Inhale Field and all information provided to Nektar pursuant
to Section 3.2 shall be Confidential Information of Nektar, provided that
Alliance may use the information provided under Section 3.2 solely to develop
Alliance Products.

              (b) All other information placed into escrow pursuant to Section
3.1 or Information as to which Nektar obtains a right of access, use or
maintenance as provided in Section 6 shall be Confidential Information of
Alliance (excluding any information that is included in the Purchased Assets),
subject to the rights granted to Nektar below in this Section 3.4(d) or
otherwise in this Amendment or the Prior Agreements. Further, the Parties
recognize that certain of the laboratory notebooks to be placed into escrow
pursuant to Section 3.1 may contain, in part, information or data that is not
directly related to, necessary, or useful for the use or the development of
PulmoSpheres(R) Technology, MediSpheres(TM) Technology or Bioavailability
Technology in the Inhale Field, which is deemed the Confidential Information of
Alliance but which is therefore not included in Licensed Know-How. The Parties
further recognize that Alliance desires to protect such Confidential Information
of Alliance from disclosure to Nektar to the extent practicable while enabling
Nektar to exercise its rights under the Prior Agreements and this Amendment.

              (c) Accordingly, if Nektar, its Partners, licensees or
sublicensees (or patent or regulatory authorities interacting with the
foregoing) require access to the originals of the escrowed laboratory notebooks
or to make copies of such notebooks, then Nektar shall provide to Alliance the
reason why access is required and shall give Alliance ten (10) calendar days
prior written notice of its desire to so review or copy such notebooks (such
time period, the "Notice Period"). Following the Notice Period, Nektar, its
Partners, licensees and sublicensees shall access the escrowed notebooks and
review them to determine what information it or they require. After such review,
Nektar, its Partners, licensees and sublicensees may copy only that information
required and shall provide any copies of such information to Alliance for
redaction. Nektar, its Partners, licensees and sublicensees shall endeavor to
use copies of the escrowed notebooks, rather than original notebooks, where
copies will reasonably serve the purpose of such access or review, and shall
endeavor to only withdraw those notebooks that are necessary. Alliance has the
right to temporarily redact Confidential Information of Alliance, other than


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information constituting Licensed Know-How or information in the public domain,
from the escrowed notebooks being reviewed in original form, or permanently
redact Confidential Information of Alliance, other than information constituting
Licensed Know-How or information in the public domain, from copies of the
escrowed notebooks so made, provided that Alliance shall endeavor to effect such
redactions as quickly as practicable, but in no event shall such redactions
require longer than ten (10) calendar days from the date Nektar provides
Alliance with the escrowed notebooks or copies thereof. Alliance shall notify
Nektar in writing when such redactions are complete. Notwithstanding the
foregoing, if Nektar, its Partners, licensees or sublicensees require expedited
access to the escrowed laboratory notebooks because of deadlines imposed by
regulatory or patent authorities, other governmental or administrative
authorities, or any court, then Nektar shall provide to Alliance written
documentation of such deadline, and the basis thereof, and the Notice Period
shall instead be five (5) business days or such longer period as the Parties may
mutually agree, in which case Alliance shall have three (3) business days to
redact the escrowed notebooks or copies thereof as described above. If Alliance
fails to redact Confidential Information of Alliance, other than information
constituting Licensed Know-How or information in the public domain, within the
relevant time provided in this Section 3.4(c), then such information will
nevertheless remain the Confidential Information of Alliance and subject to the
protections of Section 11 of the Asset Purchase Agreement. For clarity, the
Parties hereby agree that Alliance shall not redact information contained in the
escrowed notebooks that constitutes Confidential Information of Nektar, Licensed
Know-How or information in the public domain. If the Parties cannot agree on
what information constitutes Confidential Information of Alliance subject to
redaction, the Parties shall meet and confer to resolve such disagreement.
Nektar hereby affirms that (i) the escrowed notebooks remain at all times the
property of Alliance and (ii) if Nektar, its Partners, licensees or sublicensees
(or patent or regulatory authorities interacting with the foregoing) accesses
the originals of such escrowed notebooks in accordance with the foregoing
provisions, then Nektar shall notify Alliance of the expected time during which
such originals will be removed from escrow; provided that Nektar, its Partners,
licensees and sublicensees (or patent or regulatory authorities interacting with
the foregoing) shall not remove such originals from escrow any longer than is
necessary, and shall redeposit such originals into escrow when Nektar's need for
the original escrowed notebooks ceases. Additionally, Nektar shall require any
Partner, licensee and sublicensee (or patent or regulatory authorities
interacting with the foregoing) to abide by this provision.

              (d) Nektar may grant to its Partners, licensees or sublicensees a
right of reference to any of Nektar's regulatory filings containing data and
information placed into escrow pursuant to Section 3.1, provided in the
Invention Disclosures pursuant to Section 3.2, or provided by certain Third
Parties pursuant to Section 6, provided that such Partners, licensees or
sublicensees maintain the confidentiality of all Confidential Information of
Nektar and all Confidential Information of Alliance as required by Section 11 of
the Asset Purchase Agreement. Nektar shall require its Partners, licensees and
sublicensees to enter into a written agreement requiring such entities to hold
in confidence and not make use of the Confidential Information of Alliance,
other than information constituting Licensed Know-How or information in the
public domain, for any purpose other than those permitted by this Agreement.
Nektar and its Partners, licensees or sublicensees (or patent or regulatory
authorities interacting with the foregoing) may copy and use all information and
data provided to Nektar under Section 3.1 (and the Second Escrow Agreement),
other than Confidential Information of Alliance that does not constitute
Licensed Know-How or information in the public domain, to develop or
commercialize Products in the Inhale Field. Notwithstanding the foregoing, all
access to the escrowed notebooks under Section 3.1 by Nektar, its Partners,


                                       4
<PAGE>

licensees or sublicensees (or patent or regulatory authorities interacting with
the foregoing) shall be provided only using the mechanism set forth in Section
3.4(c). Nothing in this Section 3.4 should be interpreted or construed as
expanding Alliance's obligation to place into escrow or otherwise transfer to
Nektar any information other than the information expressly described in
Sections 3.1, 3.2, and 6. For clarity, the foregoing Section 3.4(d) shall not
limit any of the rights granted Nektar under the Prior Agreements.

4. SUPPLY OF PERFLUBRON.

         4.1. PURCHASE OF PERFLUBRON. Alliance hereby agrees to sell to
Nektar, and Nektar hereby agrees to purchase from Alliance, ten (10) metric tons
of Perflubron that complies with the specifications attached as Exhibit C (the
"Specifications") and has been made in compliance with current Good
Manufacturing Practices (as defined in 21 C.F.R. Sections 210-211) and other
applicable laws, rules, and regulations. Notwithstanding the foregoing, Alliance
makes no representations as to compliance with specific gravity requirements in
the Specifications as Alliance never tested such Perflubron for specific
gravity. Alliance shall ship at Nektar's cost, including any costs of weighing
the Perflubron and preparing the associated paperwork (provided that such costs
do not exceed one thousand five hundred dollars ($1,500)), in accordance with
Nektar's instructions such Perflubron FCA (INCOTERMS 2000) 6175 Lusk Boulevard,
San Diego, California 92121 prior to February 28, 2005. Title and risk of loss
and damages shall pass to Nektar upon delivery to Nektar's designated common
carrier. Nektar will insure the shipments of Perflubron against damage or loss,
and Alliance will reasonably cooperate with Nektar if requested in such efforts.
Any federal, state or local sales or use tax, or similar charges, assessed or
charged on such sale shall be paid by Nektar.

         4.2. REPLACEMENT OF NONCONFORMING PERFLUBRON.

              (a) Nektar shall have ninety (90) calendar days from the date that
Nektar receives the shipment of Perflubron to notify Alliance that some or all
of the shipment fails to comply with the Specifications (other than the specific
gravity requirements thereof); provided that if Nektar fails to inform Alliance
of any nonconformance within such time, then Nektar shall be deemed to accept
such shipment of Perflubron. Within thirty (30) calendar days of notice by
Nektar of any non-compliance, Alliance shall replace the nonconforming
Perflubron (in any amount up to three (3) metric tons) with Perflubron remaining
in Alliance's possession, provided that Nektar shall bear the cost of shipping
such replacement supply as if such shipment were the original shipment made
under Section 4.1. Nektar shall have ninety (90) calendar days from the date
that Nektar receives the shipment of such replacement Perflubron to notify
Alliance that some or all of the replacement Perflubron fails to comply with the
Specifications (other than the specific gravity requirements thereof); provided
that if Nektar fails to inform Alliance of any nonconformance within such time,
then Nektar shall be deemed to accept such replacement shipment of Perflubron.
Notwithstanding the foregoing, if more than five (5) metric tons of Perflubron
initially shipped to Nektar fails to conform to the Specifications (other than
the specific gravity requirements thereof), then Nektar shall have the right to
notify Alliance that Nektar does not want Alliance to ship any replacement
Perflubron under this Section 4.2(a). Nektar shall, at its own cost, destroy any
nonconforming Perflubron it receives from Alliance and provide to Alliance a
certificate of destruction from an independent Third Party.

                                       5
<PAGE>

              (b) Notwithstanding the foregoing Section 4.2(a), during the five
(5) business days of receiving notice from Nektar that any portion of the
Perflubron shipped to Nektar is nonconforming, Alliance shall have the right,
but not the obligation, to require the submission of the nonconforming
Perflubron to be retested by an independent Third Party laboratory (reasonably
acceptable to Nektar) to determine whether such shipment conformed to
Specifications (other than the specific gravity requirements thereof); provided
that Alliance shall bear the costs of such independent Third Party laboratory
testing. The determination of such Third Party shall be obtained within ninety
(90) calendar days after submission of a sample to such Third Party and shall be
binding upon the Parties; provided that if such Third Party determination is not
obtained within such ninety (90) day period, then Nektar's determination that
the Perflubron is nonconforming shall be binding. If such Third Party laboratory
determines that any Perflubron requested by Nektar does meet the Specifications
thereof (excluding the specific gravity requirements thereof), then Nektar shall
be deemed to accept such quantity of Perflubron as the date such Third Party
makes such determination.

              (c) Within five (5) business days of Nektar accepting or being
deemed to accept any portion of the Perflubron as conforming to the
Specifications (other than the specific gravity requirements thereof) pursuant
to Section 4.2, Nektar shall pay to Alliance an amount equal to the product of
thirty-six thousand seven hundred fifty dollars ($36,750) and the number of full
metric tons of conforming Perflubron accepted or deemed to be accepted by Nektar
as set forth in Section 4.2. The Total Potential Third Installment paid by
Nektar to Alliance under this Section 4.2(c) shall not exceed three hundred
sixty-seven thousand five hundred dollars ($367,500).

         4.3. RELATED INFORMATION. Additionally, Alliance shall at the time it
supplies Perflubron pursuant to Section 4.1 provide to Nektar information
regarding analytical testing methodology described in Exhibit D for Perflubron
sufficient to enable Nektar to perform the testing to confirm that the
Perflubron meets the specifications set forth in Exhibit C.

         4.4. CLARIFICATION. Section 9.3 of the Supplemental Agreement does not
apply to Perflubron supplied hereunder. The Parties have provided in this
Amendment all terms and conditions applicable to such supply.

5. TERMINATION OF ROYALTY AND MILESTONE PAYMENT OBLIGATION. Nektar's payment
obligations under Sections 1.6 and 1.7 of the APA (as amended pursuant to
Section 2.2 of the Supplemental Agreement) and Section 2.3 of the Supplemental
Agreement are hereby terminated in their entirety.

6. LETTERS OF CONSENT. Within sixty (60) calendar days after the Amendment Date,
Alliance shall provide to Nektar two letters of consent conferring upon Nektar,
its Partners, licensees and sublicensees the right to access, use, and maintain
any data and materials generated in the course of the relevant clinical research
organization's (the "CRO") performance of certain pre-clinical studies for
Alliance. Each such letter shall be substantially in the form of the consent
letter attached as Exhibit E, and shall be executed by Alliance and either of
the two (2) CROs involved in the studies listed on Exhibit F. Such letter of
consent will (a) obligate the CRO to notify Nektar and Alliance if and when the
CRO decides to abandon or otherwise no longer maintain data and materials
generated in the course of the pre-clinical study for Alliance and (b) if the


                                       6
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CRO notifies Nektar that it will abandon or no longer maintain data and
materials generated in the course the study for Alliance, grant Nektar the right
to maintain such data at Nektar's sole expense. The Parties acknowledge that any
information or data and materials transferred to Nektar under this Section 6 is
necessary for Nektar to practice the intellectual property rights it has
licensed, acquired or been assigned under the Prior Agreements.

7. AMENDMENT OF ASSIGNMENT PROVISION OF THE PRIOR AGREEMENTS.

         7.1. AMENDMENT OF APA. Section 12.11 of the APA is deleted in its
entirety and replaced with the following:

                  Except as otherwise expressly provided under this Agreement,
                  neither this Agreement nor any right or obligation hereunder
                  may be assigned or otherwise transferred (whether voluntarily,
                  by operation of law or otherwise) without the prior express
                  written consent of the other party; provided, however, that
                  either party may, without such consent, assign this Agreement
                  and its rights and obligations hereunder in connection with
                  the transfer or sale of all or substantially all of its
                  business to which this Agreement relates, or in the event of
                  its merger, consolidation, change in control or other similar
                  transaction, and further, provided in no event shall Alliance
                  assign its rights under this Agreement to a Competitor of
                  Inhale (as defined in the License to Alliance).
                  Notwithstanding the foregoing, Inhale may only assign its
                  rights and obligations under this Agreement to a third party
                  in conjunction with an assignment of the PDRA. Any permitted
                  assignee shall assume all obligations of its assignor under
                  this Agreement. Any purported assignment or transfer in
                  violation of this Section 12.11 shall be void.

         7.2. AMENDMENT OF LICENSE TO INHALE. Section 8.4 of the License to
Inhale shall be deleted and replaced with the following:

                  Except as otherwise expressly provided under this Agreement,
                  neither this Agreement nor any right or obligation hereunder
                  may be assigned or otherwise transferred (whether voluntarily,
                  by operation of law or otherwise) without the prior express
                  written consent of the other party; provided, however, that
                  either party may, without such consent, assign this Agreement
                  and its rights and obligations hereunder in connection with
                  the transfer or sale of all or substantially all of its
                  business to which this Agreement relates, or in the event of
                  its merger, consolidation, change in control or other similar
                  transaction, and further, provided in no event shall Alliance
                  assign its rights under this Agreement to a Competitor of
                  Inhale (as defined in the License to Alliance).
                  Notwithstanding the foregoing, Inhale may only assign its
                  rights and obligations under this Agreement to a third party
                  in conjunction with an assignment of the PDRA and the License
                  to Alliance. Any permitted assignee shall assume all
                  obligations of its assignor under this Agreement. Any
                  purported assignment or transfer in violation of this Section
                  8.4 shall be void.

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<PAGE>

7.3. AMENDMENT OF LICENSE TO ALLIANCE. Section 8.4 of the License to Alliance is
hereby deleted and replaced in its entirety with the following:

                  Except as otherwise expressly provided under this Agreement,
                  neither this Agreement nor any right or obligation hereunder
                  may be assigned or otherwise transferred (whether voluntarily,
                  by operation of law or otherwise) without the prior express
                  written consent of the other party; provided, however, that
                  either party may, without such consent, assign this Agreement
                  and its rights and obligations hereunder in connection with
                  the transfer or sale of all or substantially all of its
                  business to which this Agreement relates, or in the event of
                  its merger, consolidation, change in control or other similar
                  transaction, and further, provided in no event shall Alliance
                  assign its rights under this Agreement to a Competitor of
                  Inhale (as defined in the License to Alliance). Any permitted
                  assignee shall assume all obligations of its assignor under
                  this Agreement. Any purported assignment or transfer in
                  violation of this Section 8.4 shall be void.

         7.4. AMENDMENT OF PDRA (AS AMENDED). Section 7.7 of the PDRA (as
amended in Section 7.2(j) of the Supplemental Agreement) shall be modified by
deleting the phrase "or shall Inhale assign its rights under this Agreement to
an entity that has fewer than two hundred employees without Alliance's prior
written consent, not to be unreasonably withheld."

         7.5. AMENDMENT OF SUPPLEMENTAL AGREEMENT. Section 13.4 of the
Supplemental Agreement is deleted and replaced in its entirety with the
following:

                  Except as otherwise expressly provided under this Agreement,
                  neither this Agreement nor any right or obligation hereunder
                  may be assigned or otherwise transferred (whether voluntarily,
                  by operation of law or otherwise) without the prior express
                  written consent of the other party; provided, however, that
                  either party may, without such consent, assign this Agreement
                  and its rights and obligations hereunder in connection with
                  the transfer or sale of all or substantially all of its
                  business to which this Agreement relates, or in the event of
                  its merger, consolidation, change in control or other similar
                  transaction, and further, provided in no event shall Alliance
                  assign its rights under this Agreement to a Competitor of
                  Inhale (as defined in the License to Alliance).
                  Notwithstanding the foregoing, Inhale may only assign its
                  rights and obligations under this Agreement to a third party
                  in conjunction with an assignment of the PDRA and the License
                  to Alliance. Any permitted assignee shall assume all
                  obligations of its assignor under this Agreement. Any
                  purported assignment or transfer in violation of this Section
                  13.4 shall be void.

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8. REPRESENTATIONS AND WARRANTIES.

         8.1. REPRESENTATIONS AND WARRANTIES OF ALLIANCE.

              (a) Alliance is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated by this Amendment. In
addition, and immediately before and after giving effect to the consummation of
the transactions contemplated by this Amendment, (i) Alliance is able and will
be able to pay its debts as they become due; (ii) Alliance does not and will not
have unreasonably small assets with which to conduct its present or proposed
business; and (iii) taking into account all contingent pending and threatened
litigation, final judgments against Alliance in actions for money damages are
not reasonably anticipated to be rendered at a time when, or in amounts such
that, Alliance is or will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum probable amount of
such judgments in any such actions might be rendered) as well as all other
obligations of Alliance. The cash available to Alliance, taking into account all
other anticipated uses of the cash, is and will be sufficient to pay all such
judgments promptly in accordance with their terms. As used in this Section, (x)
"insolvent" means that the sum of the present fair saleable value of Alliance's
assets does not and will not exceed its debts and other probable liabilities;
and (y) "debts" includes any legal liability, whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent, disputed or
undisputed, or secured or unsecured.

              (b) EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 8.1, SELLER MAKES
NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PERFLUBRON, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

         8.2. REPRESENTATIONS AND WARRANTIES OF NEKTAR. Nektar warrants that
neither it nor, to Nektar's reasonable belief, any of its current affiliates,
licensees or sublicensees, will commence or conduct Phase III clinical trials
for more than one product that incorporates or is made using PulmoSpheres(R)
Technology or MediSpheres(TM) Technology prior to January 1, 2006. Nektar also
warrants that there are no payments, as of the date of this Amendment, owed from
Nektar to Alliance pursuant to Sections 1.6 and 1.7 of the APA (as amended by
Section 2.2 of the Supplemental Agreement) and Section 2.3 of the Supplemental
Agreement.

9. MISCELLANEOUS.

         9.1. NOTICES. All notices, requests, waivers, releases, consents, and
other communications required or permitted by this Amendment (collectively,
"Notices") must be given in writing. Notices will be deemed sufficiently given
for all purposes when delivered in person or when dispatched by electronic
facsimile transmission or upon confirmation of receipt when dispatched by a
nationally recognized overnight courier service to the appropriate party as
follows: (a) If to Nektar, at 150 Industrial Road, San Carlos, CA 94070, to the
attention of the Chief Executive Officer, with a copy to the Vice President,
Corporate Legal, and (b) if to Alliance, at 4660 La Jolla Village Drive, Suite
825, San Diego, California 92122, to the attention of the President and Chief
Operating Officer, with a copy to Ken Polin, Foley and Lardner, 402 W. Broadway,
Suite 2300, San Diego, CA, 92101.

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<PAGE>

              9.2. OPPORTUNITY TO CURE. Upon a Party's failure to comply with
any of its material obligations set forth in this Amendment, the other Party
shall give written notice to the breaching Party of such default, specifying the
nature of the default, and requiring the breaching Party to cure such default.
The breaching Party shall have thirty (30) calendar days after its receipt of
such notice to cure the default. If such default is not cured within such thirty
(30) calendar day period, then the non-breaching Party shall be entitled to
pursue its right under the dispute resolution provisions of the Prior
Agreements.

              9.3. AMENDMENT AND WAIVER. This Amendment may be amended,
modified, waived, discharged, or terminated only by an instrument in writing
signed by all Parties.

              9.4. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided under this Amendment, neither this Amendment nor any right or
obligation hereunder may be assigned or otherwise transferred (whether
voluntarily, by operation of law or otherwise) without the prior express written
consent of the other party; provided, however, that either party may, without
such consent, assign this Amendment and its rights and obligations hereunder in
connection with the transfer or sale of all or substantially all of its business
to which this Amendment relates, or in the event of its merger, consolidation,
change in control or other similar transaction, and further, provided in no
event shall Alliance assign its rights under this Amendment to a Competitor of
Inhale (as defined in the License to Alliance). Notwithstanding the foregoing,
Nektar may only assign its rights and obligations under this Amendment to a
third party in conjunction with an assignment of the PDRA. Any permitted
assignee shall assume all obligations of its assignor under this Amendment. Any
purported assignment or transfer in violation of this Section 9.4 shall be void.

              9.5. RIGHTS OF THE PARTIES. Nothing expressed or implied in this
Amendment is intended or will be construed to confer upon or give any person or
entity other than the Parties any rights or remedies under or by reason of this
Amendment or any transaction contemplated hereby.

              9.6. EXPENSES. Each of the Parties to this Amendment will bear its
own expenses incurred in connection with this Amendment and the transactions
contemplated hereby.

              9.7. TITLES AND HEADINGS. Titles and headings to Sections herein
are inserted for convenience of reference only, and are not intended to be part
of or to affect the meaning or interpretation of this Amendment or the Prior
Agreements.

              9.8. ENTIRE AGREEMENT. This Amendment, together with its Exhibits,
constitutes the entire agreement between the Parties hereto with respect to the
subject matter hereof, and there are no agreements among the Parties hereto with
respect thereto except as expressly set forth herein.

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              9.9. SEVERABILITY. In case any provision contained in this
Amendment is invalid or unenforceable, the validity and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

              9.10. GOVERNING LAW. This Amendment will be governed by and
construed in accordance with the laws of the State of California.

              9.11. CLARIFICATION. All information provided or transferred to
Nektar pursuant to this Agreement or the Escrow Agreement is necessary for
Nektar to practice the licenses granted by Alliance to Nektar under the Prior
Agreements, which licenses are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101 of the U.S. Bankruptcy
Code. Alliance agrees that Nektar, as a licensee of such rights under the Prior
Agreements, shall retain and may fully exercise all of its rights and elections
under the U.S. Bankruptcy Code with respect to such information and related
intellectual property rights. All rights under this Amendment are supplemental
to the licenses granted by Alliance to Nektar under the Prior Agreements.
Nothing in this Amendment is intended to affect the rights granted by Nektar to
Alliance under the Prior Agreements.

              9.12. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which so executed will be deemed to be an original;
such counterparts will together constitute but one agreement.

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         IN WITNESS WHEREOF, the Parties hereto have duly executed this
Amendment as of the Amendment Date.

NEKTAR THERAPEUTICS                          ALLIANCE PHARMACEUTICAL CORP.

By:                                          By:
    --------------------------------             -------------------------------
Date:                                        Date:
      ------------------------------               -----------------------------


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