Complex sentence: The Alien is unable to heal itself from injuries and instead "cocoons" marines; if the Alien dies a cocooned marine will become a new Alien, allowing the player to continue from that location.
Split into simpler sentences: The Alien is unable to heal itself from injuries and instead "cocoons" marines. If the Alien dies--a cocooned marine will become a new Alien, allowing the player to continue from that location.