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May 5, 2004

NUCRYST Pharmaceuticals announces first quarter results

Wakefield, MA, USA -- -
For immediate release

NUCRYST earns US$5 million milestone payment

Wakefield, Massachusetts – May 5, 2004 – NUCRYST Pharmaceuticals, a subsidiary of The Westaim Corporation, today announced first quarter total revenue of US$7.7 million, compared to US$4.5 million posted in the same period last year.

In the first quarter, NUCRYST Pharmaceuticals earned a US$5.0 million milestone from its wound care partner Smith & Nephew plc. NUCRYST and Smith & Nephew have an agreement for the global sales and distribution of Acticoat™ dressings for serious wounds, including burns and chronic wounds. The agreement includes up to US$56 million in milestone payments that can be earned upon the achievement of certain pre-determined sales and regulatory milestones. To date, NUCRYST has earned US$9 million in milestone payments under the agreement.

In partnership with Smith & Nephew, the world’s leading wound care company, NUCRYST develops and manufactures Acticoat™ dressings using its proprietary SILCRYST™ nanocrystalline coating. Smith & Nephew’s Acticoat™ dressings are sold in 28 countries and are used extensively for serious wounds including burns and chronic wounds.

“With year-over-year sales achieving at least 50 per cent growth since 1998, our agreement with Smith & Nephew continues to be profitable for both parties,” said Scott H. Gillis, President of NUCRYST. “We expect sales to continue to grow and we anticipate further milestones will be achieved as Acticoat™ dressings continue to penetrate the worldwide market.”

NUCRYST is currently conducting Phase II clinical trials of a novel dermatology cream containing its proprietary formulation of silver Rx nanocrystals. NUCRYST is developing this new drug (NPI 32101) for the treatment of atopic dermatitis, or eczema, and other skin conditions. The company believes that its nanocrystalline silver with dual anti-inflammatory and antimicrobial properties will address both the inflammation associated with atopic dermatitis and the secondary infections that often accompany the disease.

NUCRYST is one of the first companies to translate nanotechnology into clinically and commercially proven medical products. Laboratory studies of NUCRYST’s nanocrystals have demonstrated significant anti-inflammatory and antimicrobial properties with the potential to treat a variety of conditions involving infection and inflammation.

The market in the United States alone for anti-inflammatory topical products is more than US$1 billion. NUCRYST believes that, unlike other traditional 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.

Today, The Westaim Corporation announced its results for the first quarter ended March 31, 2004. As a Canadian company, Westaim reports in Canadian dollars (CDN). For the quarter, Westaim recorded a net income of $1.0 million or one cent per share, on revenues of $10.4 million. In the same quarter last year, the company recorded a net loss of $1.2 million, or two cents per share, on revenues of $7.6 million.

In the first quarter of 2004, results included income from discontinued operations of $4.2 million compared to income from discontinued operations of $2.4 million in the same period of 2003. The net income from discontinued operations in the first quarter of 2004 includes a $5.4 million gain on the sale of the Company's Ambeon operating division. Ambeon was sold on January 29, 2004 for net proceeds of $33.4 million.

At March 31, 2004, Westaim had $87.5 million in cash and short-term investments, and no debt.

NUCRYST Pharmaceuticals Corp. ( researches and develops pharmaceutical products based on noble metal nanocrystalline technology. Potential products are in development for dermatology and severe respiratory conditions. The company has also profitably commercialized its antimicrobial™technology in medical devices with a first product line, Acticoat™ dressings for burns and serious wounds, using NUCRYST’s proprietary SILCRYST™ nanocrystalline technology. These products are marketed, sold and distributed by Smith & Nephew, the world’s leading wound care company.

In addition to NUCRYST, The Westaim Corporation’s technology investments include iFire Technology, which has developed a revolutionary low-cost flat panel 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:
Lisa Lupynec
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 trademark of Smith & Nephew plc

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