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February 17, 2005

NUCRYST Pharmaceuticals announces year-end results

Wakefield, MA, USA -- -

For immediate release

NUCRYST Pharmaceuticals announces year-end results
Record profits generated by SILCRYST™ Division

Wakefield, Massachusetts – February 17, 2005 –NUCRYST Pharmaceuticals, a subsidiary of The Westaim Corporation, today announced record year-end total revenue of US$24.7 million, compared to US$11.4 million posted in the previous year. The SILCRYST Division of NUCRYST Pharmaceuticals recorded record profits of US$15.4 million compared to US$5.5 million in 2003. Record revenue and profits, along with the achievement of milestone payments for sales of Acticoat™ dressings, resulted in earnings of US$4.5 million for NUCRYST in 2004.

“We are extremely pleased to report record revenue and earnings in 2004,” said Scott H. Gillis, President, NUCRYST Pharmaceuticals. “The success of our SILCRYST Division provides us with resources to pursue our promising pipeline of pharmaceutical and medical device products based on our proprietary nanocrystalline technology.”

SILCRYST Division:
The SILCRYST Division manufactures and develops Acticoat™ dressings for Smith & Nephew plc., the world's leader in advanced wound care management. Acticoat™ dressings with NUCRYST’s proprietary SILCRYST™ nanocrystalline coatings are now sold in 30 countries and are used extensively for serious wounds including burns and chronic wounds.

The results for 2004 include a total of US$10.0 million in milestone payments from Smith & Nephew for attaining sales milestones, with one US$5-million payment achieved ahead of schedule in the third quarter. To date during the term of its relationship with Smith & Nephew, NUCRYST has earned US$14 million in milestones as a result of strong global sales of Acticoat™ dressings.

ActicoatTM Absorbent, the latest member of the ActicoatTM family of dressings, was launched by Smith & Nephew in the United Kingdom in 2004. ActicoatTM Absorbent dressings are an effective barrier to infection incorporating nanocrystalline silver on both sides of the dressing, to provide antimicrobial protection, and absorbency from the alginate layer in the dressing.

NUCRYST has begun a $5.8-million expansion of its production facility in Fort Saskatchewan, Canada to meet anticipated demand from Smith & Nephew for its Acticoat™ family of dressings. The expansion will include new production equipment, overall facility expansion and a new cleanroom controlled environment. NUCRYST anticipates that the facility expansion will be completed by the end of 2005.

Pharmaceutical R&D:
In September 2004, NUCRYST received positive and encouraging results from its first Phase 2a clinical trials for its drug candidate, topical NPI 32101. The product will potentially be used to treat atopic dermatitis, a form of eczema. The purpose of the study was to evaluate the safety and effectiveness of topical NPI 32101 in improving the signs and symptoms of atopic dermatitis. The results were an important validation of NUCRYST’s proprietary technology as a pharmaceutical agent and demonstrated that topical NPI 32101 has the potential to be a well-tolerated and effective drug for the treatment of atopic dermatitis. Based on the results, NUCRYST will continue human clinical trials for topical NPI 32101.

The market in the United States alone for topical anti-inflammatory products was more than US$1 billion in 2003 according to IMS Health, the world’s leading provider of information solutions to the pharmaceuticals and healthcare industries. NUCRYST believes that, unlike traditional steroid treatments, its product will not be burdened with steroidal side effects, which the company expects will represent a major advantage for dermatologists and their patients.

NUCRYST is a subsidiary of The Westaim Corporation. For the year ended December 31, 2004, Westaim recorded a net loss of $25.2 million, or 30 cents per share compared to a net loss of $35.4 million, or 45 cents per share, in the previous year. As a Canadian company, Westaim reports in Canadian dollars (CDN).

At December 31, 2004, Westaim had CND$101.1 million in cash and equivalents, compared to CND$68.1 million in 2003. 

NUCRYST Pharmaceuticals Corp. ( researches and develops pharmaceutical products based on noble metal nanocrystalline technology. Potential products are in development for dermatology and respiratory conditions. The company has profitably commercialized its technology with a wound care product line, ActicoatÔ antimicrobial dressings for life-threatening burns and serious wounds, using NUCRYST’s proprietary SILCRYSTÔ nanocrystalline silver technology. These products are marketed, sold and distributed by Smith & Nephew plc, the world leader in advanced wound management.

In addition to NUCRYST Pharmaceuticals, Westaim’s investments include iFire Technology, which has developed a revolutionary low-cost and high-definition flat panel television display. Westaim's common shares are listed on NASDAQ under the symbol WEDX and on The Toronto Stock Exchange under the trading symbol WED.

For more information contact:
David Wills
Investor Relations
The Westaim Corporation
(416) 504-8464

All figures are in US dollars unless otherwise stated
SILCRYST™ is a trademark of NUCRYST Pharmaceuticals Corp.
Acticoat™ is a trademark of Smith & Nephew plc

This news release may contain forward-looking statements. These statements are based on current expectations that are subject to risks and uncertainties, and the Company can give no assurance that these expectations are correct. Various factors could cause actual results to differ materially from those projected in such statements, including but not limited to financial considerations and financial resources, and those predicting the development, expansion or upgrading of facilities and equipment, construction timeframes, partner discussions and negotiations, product development, product commercialization, market size, product sales, anticipated product demand, manufacturing costs, cost advantages, earning of milestone payments, planned level of investment, potential product use, potential product effectiveness, product advantages, clinical trial progress and results, product side effects, and production and capital costs. The Company disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.

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