Alliance Pharmaceuticals

(ALLP)

and

Baxter International

(BAX) - Get Report

are getting back together to figure out a way to salvage the development of their experimental blood substitute, Oxygent, according to a statement released by Alliance Thursday morning.

Late last month, Alliance unilaterally

sought an end to the Oxygent partnership, complaining that Baxter was not abiding by terms of the agreement. This forced Alliance, already struggling to stay afloat, to cut 40% of its workforce and temporarily halt development of the blood substitute.

Thursday, Alliance said it was re-engaging Baxter in talks to "explore avenues to preserve and/or realize the value of PFC Therapeutics and to negotiate in good faith to achieve that result." PFC Therapeutics is the name of the Oxygent joint venture owned equally by both companies.

The press release contained no comment from Baxter, nor did it provide details about the specific options being discussed. Previously, Alliance had said it will require additional funding from Baxter and from outside parties to restart clinical testing of Oxygent.

Meanwhile, Alliance is still facing delisting from

Nasdaq

and must come up with cash just to stay in business. The company had $7 million in its coffers as of March 30, and was set to run out of cash at the end of June. The company has said it is working on raising more capital.

Alliance shares are trading at 35 cents, unchanged from Wednesday's close.