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August 7, 2003

NUCRYST Pharmaceuticals posts record quarter

Wakefield, MA, USA -- -  

For immediate release

Wakefield, Massachusetts – August 7, 2003 – NUCRYST Pharmaceuticals, a subsidiary of The Westaim Corporation, today announced second quarter total revenue of $1.9 million, an increase of 66 percent over the $1.2 million posted in the same period last year. Total revenue results reflect a record performance in the current quarter for product-based revenue of $1.8 million, an increase of 59 percent over the same quarter in 2002.

Year to date, total revenue for NUCRYST is $6.6 million, compared to $2.5 million during the first six months of 2002. The results for the first half of 2003 include the receipt of a milestone payment of $3 million in the first quarter of 2003. The milestone payment was received from NUCRYST’s corporate partner, Smith & Nephew, for achievement of additional regulatory approvals in Europe.

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 26 countries and are used extensively for serious wounds, including burns and chronic wounds.

“Our partnership with Smith & Nephew continued to thrive with approximately 50 percent growth of Acticoat™ product sales to end users versus last year, generating increases in both our royalty and manufacturing revenue,” said Scott H. Gillis, President of NUCRYST. “This valuable revenue stream provided a significant financial contribution to our pursuit of new drugs based on our Rx nanocrystals.”

Under an Investigational New Drug application with the US Food and Drug Administration, NUCRYST is currently conducting 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 technology with dual antimicrobial and anti-inflammatory properties addresses both the inflammation associated with eczema and the secondary infections that often accompany the disease. In addition NUCRYST believes that, unlike other traditional treatments, this product will not be burdened with steroidal side effects, which the company expects will represent a major advantage for dermatologists and their patients.

The market in the United States alone for topical anti-inflammatory products was more than $800 million in 2002.

During the second quarter, NUCRYST successfully completed its first Phase 1 safety trial in normal volunteers. Safety and pre-clinical work will continue during the balance of 2003, with plans underway to begin its first Phase 2 human efficacy study early in 2004.

Also today, The Westaim Corporation announced its results for the second quarter ended June, 2003. As a Canadian company, Westaim reports in Canadian dollars (CDN). For the quarter, it recorded a net loss of CDN$8.1 million, or 10 cents per share on revenue of CDN$9.7 million. In the same quarter last year, the company recorded a net loss of CDN$25.6 million, or 33 cents per share, on revenue of CDN$11.6 million. The 2002 results include a net loss from discontinued operations of CDN$14.2 million related to the closing of Westaim’s non-core assets. At June 30, 2003, Westaim had CDN$84.5 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 technology in medical devices with a first product line, Acticoat antimicrobial 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.

The Westaim Corporation’s technology investments include: NUCRYST Pharmaceuticals, which researches, develops and commercializes pharmaceutical products and medical devices based on its nanocrystalline silver technology; and 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:
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 trademark of Smith & Nephew plc

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