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September 7, 2004

Westaim's NUCRYST Pharmaceuticals reports Phase 2a clinical trial results of investigational drug in atopic dermatitis

Wakefield, MA, USA -- -  

For immediate release

Westaim’s NUCRYST Pharmaceuticals reports Phase 2a clinical trial results of investigational drug in atopic dermatitis
Initial results indicate positive response to topical silver Rx nanocrystals

Wakefield, Massachusetts – September 7, 2004 – NUCRYST Pharmaceuticals Corp., a subsidiary of The Westaim Corporation, today announced results from its initial Phase 2a efficacy and safety study of NPI 32101 in a cream formulation in adult patients with mild to moderate atopic dermatitis. NPI 32101 is a topical form of NUCRYST’s proprietary silver Rx nanocrystals.

This double-blind, randomized, placebo-controlled study in 224 adult patients with mild to moderate symptoms of atopic dermatitis, involved 23 clinical sites across the United States. Patients were treated twice daily for a six-week period with one of two concentrations of NPI 32101, 0.5% and 1.0%, in a cream formulation or with the vehicle alone. 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.

Efficacy in this study was assessed using three commonly-used statistical methods. Using the intent-to-treat analysis (including all randomized patients who had at least one post-treatment efficacy assessment) with last observation carried forward method, statistical significance was not met in investigator overall assessment of disease improvement. However, statistical significance was achieved with 1.0% NPI 32101 compared to vehicle using intent-to-treat patients who completed six weeks of treatment method (i.e. without last observation carried forward data imputation method). In addition, in patients who completed the study in accordance with the protocol (the per protocol completers method), statistical significance was achieved with 1.0% NPI 32101. NPI 32101 was well tolerated and there were no serious adverse events. Any adverse events reported were not unusual for a topical drug and did not occur with a greater statistical frequency than was observed in the vehicle group. For example, application site reactions occurred in 11.4%, 10.3% and 15.7% in the vehicle, 0.5% and 1.0% creams, respectively. Additional studies will continue to be conducted to more fully understand the safety profile of NPI 32101.

“Based on the findings in this exploratory Phase 2a study, it is Westaim’s intention to continue with further human clinical trials,” said Barry M. Heck, President & CEO of Westaim. “This study provided compelling evidence to support the premise that NUCRYST’s Rx nanocrystals have commercial potential in pharmaceutical applications.”

Atopic dermatitis is a chronic inflammatory disease of the skin, which affects five to seven per cent of the general population. The cause of atopic dermatitis is unknown and the inflammation often is associated with secondary skin infection. Preclinical laboratory studies have demonstrated that NPI 32101 possesses both anti-inflammatory and broad spectrum antimicrobial activities. This combination of pharmacological properties may have additional therapeutic uses beyond dermatology.

“This clinical trial demonstrated that our topical silver Rx nanocrystals can be beneficial in the treatment of dermatological diseases and we are eager to continue its development based on these results,” said Scott H. Gillis, President of NUCRYST. “NPI 32101 represents the first pharmaceutical application of our nanotechnology. We believe our silver Rx nanocrystals hold great promise in treating many conditions where inflammation and infection are present.”

“These results indicate that additional clinical trials of NUCRYST’s silver Rx nanocrystals are warranted,” said Michael Weintraub, MD, former Director, Office of Drug Evaluation, FDA, Rockville, MD and currently Senior Scientist at the Lash Group and member, NUCRYST’s Scientific Advisory Board. “Findings in this study provide NUCRYST with important guidance to optimize the product, protocol and study design for future clinical trials.”

Using information obtained from these results, NUCRYST plans to design and conduct additional Phase 2 clinical studies in order to prepare for the larger Phase 3 clinical trials of NPI 32101. NPI 32101 is still investigational and has not been approved by any regulatory agencies for marketing.

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

In addition to NUCRYST Pharmaceuticals, 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:
David Wills
Investor Relations
The Westaim Corporation
(416) 504-8464

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 financial considerations, the outcome of further clinical trials and those predicting the applicability of Nucryst's Rx nanocrystals for the treatment of other conditions. The Company disclaims any intention or obligations 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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