The company Naturally Advanced Technology has been on quite a roll lately. They successfully conducted some bulk commercial hemp trials that have already lead to a partnership with Hanes, and the scientists who made those trials a success then won an award for figuring out how to alter hemp fibers so that they could be processed on cotton machinery (it’s called Crailar fiber).

The breakthrough is a big deal because this way, no new machinery needs to be invented and then sold to fabric manufacturers. It will pretty much make processing hemp affordable which, in turn, will make hemp products affordable which, in turn, will fuel hemp industry growth. That’s important because the sooner that hemp can replace cotton, the sooner we can depleting our soil and water supplied just to put clothes on our back.

In any case, here is a clip of that scientist, Dr. Wing Sung, explaining how its done.

Last week, we reported how Naturally Advanced Technologies (with Hanes) conclude the bulk commercial hemp trials they had jointly undertaken earlier in the year. The result was that NAT’s Crailar hemp fiber was successfully used on cotton machinery, making it a viable substitute to cotton (one of the most destructive crops there is).

Well it now seems that one of the researchers involved in the project was awarded Clean Technology Innovation Award from the Ottawa Centre for Research and Innovation (OCRI). Here’s the press release with all the details:

PORTLAND, Oregon, November 24, 2008– Naturally Advanced Technologies Inc. (NAT, OTCBB: NADVF, TSXV: NAT), reported Dr. Wing Sung, BSc, MSc, PhD, Principal Research Officer, National Research Council of Canada (NRC), was awarded the inaugural Clean Technology Innovation Award from the Ottawa Centre for Research and Innovation (OCRI) on November 18th for his work with NAT developing CRAILAR®, its new organic fiber technology that creates an environmentally friendly alternative to cotton, and for his work reducing toxic effluent in the production of paper and textiles.

Dr. Sung said, “I am grateful for the support, vision and determined attitude of our collaborator NAT. In the last two years, we developed the organic enzyme bath process called CRAILAR that transforms hemp into fiber using conventional cotton equipment with no modifications. We are very excited the project is now moving to the commercialization stage. As announced on Nov. 17th, CRAILAR’s advanced technology produced successful spinning and knitting trials of hemp blend yarns and fabric for Hanesbrands Inc. The ground breaking results pave the way for hemp to enter mainstream apparel production using traditional cotton knitting systems and for commercialization of CRAILAR as a sustainable alternative to organic cotton.”

“Dr. Sung and the NRC share NAT’s commitment to the development of cleantech as both good stewardship and an obligation to the future generations,” said Ken Barker, CEO of NAT. “His brilliant study of proteins and enzymes has been pivotal in developing CRAILAR, an alternative to cotton that will lead to minimizing the apparel industry’s environmental footprint. By producing hemp fibers that are stronger, longer lasting, warmer and more absorbent than cotton, but just as soft and bright, CRAILAR’s disruptive technology positions NAT and the NRC to contribute a viable solution for the rapidly growing global renewable bio-fiber industry.”

The award, the latest of several in the last 10 years, was based on Dr. Sung’s leadership and promotion of the life sciences industry for over 10 years, his collaboration with the industry on a national scale, and his strong research record that is supported by 24 patents issued, including 6 in the US.

Dr. Sung is a Principal Research Officer at the Institute for Biological Sciences, National Research Council of Canada, Ottawa, with research interests in protein engineering of industrial enzymes, bio-products and natural fiber. His current research involves protein engineering and application of glycosidase enzymes for the extraction of plant fibers for textile and bio-composite materials.

Dr. Sung is the researcher behind four generations of engineered xylanases for the production of bleached pulp, in partnership with Iogen Corporation of Ottawa. Iogen develops, manufactures and markets industrial enzymes. Sung’s xylanase technology processes two million tons of pulp in Canada and USA annually, resulting in a net saving of between $500,000 – $1,000,000/year per facility. Between 1997 and 2007, this technology was responsible for a cumulative reduction of 100,000 tons of undesirable organochloride by-products by reducing the amount of chlorine bleach required in the production of 25 million tons of bleached pulp.

About Ottawa Centre for Research and Innovation
The Ottawa Centre for Research and Innovation (OCRI) is Ottawa’s leading member-based economic development corporation for fostering the advancement of the region’s globally competitive knowledge-based institutions and industries. OCRI delivers its economic development services through a unique partnership with the City of Ottawa, where the City and OCRI, through its members set the strategy and manage the programs that move Ottawa’s economy forward. OCRI is a non-profit, partnership organization that operates on an annual budget that comes from a variety of sources including: municipal, federal and provincial government; membership fees; professional development programs; and private sector contributions. http://www.ocri.ca/about/

About Naturally Advanced Technologies, Inc.
Naturally Advanced Technologies Inc. is committed to unlocking the potential of renewable and environmentally sustainable biomass resources from hemp and other bast fibers. NAT, through its wholly owned subsidiary Crailar Fiber Technologies Inc., is developing proprietary technologies for production of bast fibers, cellulose pulp, and their resulting by-products, in collaboration with Canada’s National Research Council and the Alberta Research Council. CRAILAR® technology offers cost-effective and environmentally sustainable processing and production of natural, bast fibers such as hemp and flax, resulting in increased performance characteristics for use in textile, industrial, energy, medical and composite material applications. The Company is also a provider of sustainable, environmentally friendly fibers and fabrics through its apparel division HTnaturals. Founded in 1998 in response to the growing demand for environmentally friendly, socially responsible clothing, NAT adheres to a “triple bottom line” philosophy, respecting the human rights of employees, the environmental impact of the Company’s operations and fiscal responsibility to its shareholders. www.naturallyadvanced.com

Forward Looking Statement Disclaimer
This press release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts that address commencement of trading of NAT’s Shares on the TSX-V, technology, and activities of NAT are forward-looking statements. Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, risks and uncertainties relating to: any market interruptions that may delay commencement of trading of NAT’s Shares on the TSX-V, technological and operational challenges, needs for additional capital, changes in consumer preferences, market acceptance and technological changes, dependence on manufacturing and material supplies providers, international operations, competition, regulatory restrictions, and the loss of key employees. In addition, the Company’s business and operations are subject to the risks set forth in the Company’s most recent Form 10-KSB, Form 10-QSB and other SEC filings which are available through EDGAR at www.sec.gov. These are among the primary risks we foresee at the present time. The Company assumes no obligation to update the forward-looking statements.

Investor Contact:
Kirsten Chapman / Cathy Mattison
Lippert / Heilshorn & Associates
415.433.3777
ir@naturallyadvanced.com

Media Contact:
Summer Facchini
Black Lab Communications
503.830.5983
summer@blacklabcomm.com

We’d like to take this opportunity to congratulate both Dr. Sung and NAT on their accomplishment with hemp-based fiber. This kind of innovation may very well be the key to finding a much more renewable alternative to cotton, a plant that we all rely on quite a bit.

Just the other day, we were speculating about NAT’s growth rates, and left it up to how the company’s bulk commercial hemp trials worked out. Well, some of the results are already in, and it’s looking pretty good for both Naturally Advance Technologies and the hemp industry writ large.

You see, part of hemp’s biggest potential is also one of its largest obstacle: as a fabric. Now, while cotton needs an immense amount of water (i.e. heavy irrigation), hemp can often subsist on rain water. Furthermore, while cotton is a destructive crop that quickly depletes the soil, hemp makes a great rotation crop while the soil is being left to recover.

The problem with hemp as an alternative to cotton, however, is twofold: (1) it does not make as soft of a fabric as cotton does, and as a result (2) it cannot be as easily spun by machines as cotton can. All this seriously drives up the cost of using hemp as a fabric, which in turn reduces demand for hemp fibres, which in turn discourages the kind of investment required to find a solution to all. It’s all a vicious cycle.

Well, NAT may have solved this problem with its Crailar organic fiber. Crailar is a traditionally spun yarn, but using bast fibers (like those found in plants like hemp), as is consequently a replacement for cotton. Incidentally, Crailar was part of the aforementioned bulk commercial hemp trials. These trials, moreover, were conducted in conjunction with Hanesbrands Inc. (the maker of Hanes t-shirts), and they have not only yielded a way to mass process hemp into a viable cotton substitute, but NAT has already secured a distribution deal with Costco. As Ecotextile reports:

PORTLAND – [17.11.08] An industrial hemp blended yarn has been successfully spun on conventional cotton ring-spinning equipment without modification and then knitted into jersey fabrics in trials sponsored by Hanesbrands Inc.

The hemp yarns were spun at North Carolina State University using fibres made with the ‘Crailar’ enzyme process from Naturally Advanced Technology, which uses enzyme technology to produce soft, comfortable textiles made from hemp and bast fibres that can better compete with cotton.

Tim Pleasants, Spun Yarn Lab Manager, NC State University, said, “[...] This is the first time in my 23-year yarn spinning career that I have seen hemp processed on conventional cotton spinning equipment.”

Earlier this summer, British Colombia-based Naturally Advanced Technologies (NAT) raised nearly US$2 million through a private placement of its shares and more recently signed a new promotional deal with Costco’s US stores.

Overall, NAT’s achievement with their Crailar fiber is a business accomplishment par excellence. Not only have they found a way to replace one of the most destructive textile crops with one of the most sustainable ones, but they’ve secured distribution deal for their go-to-market strategy. This kind of innovation and entrepreneurship is just the kind of proactive approach that the hemp industry needs to overcome the economies-of-scale that its less eco-friendly alternatives have held over it for so long.

The same company that recently concluded bulk hemp trials and offered their CEO stock option, has just reported their third quarter earnings. Naturally Advance Technologies (NAT) has reported that, although earnings are up from the second quarter, they are down from the third quarter one year ago. As Market Watch reports:

CEO Ken Barker said, “Our third quarter sales increased 13% compared to second quarter, but declined 10% compared to a year ago, somewhat reflecting the overall economic slowdown. While we believe this may temper short-term sales, we are confident our retail and corporate customers have a long-term interest in our natural fiber garments. This year, we added more retail customers to the distribution network and increased our corporate business, which grew nine-month revenue 21%, compared to the first nine months of 2007. We also increased gross margins to approximately 41% this quarter and 38% year-to-date, indicating continued sound supply chain and operational management.”

In October, the company was wrapping up bulk hemp commercialization trials for both apparel and paper products. It’s possible, the, that Barker’s optimism is rooted in the results of those trials — i.e. he knows something that we don’t know. If through those trials NAT has found a way to cut the costs of hemp processing and pass those savings on to the consumer, it is all that much more likely that NAT will persist through this economic climate where pricier items such as those made from hemp are not expected to sell as well.

A few days ago, we post about how a company called Naturally Advanced Technologies (NAT) was conducting industrial hemp trials on the bulk commercialization of hemp. The point of the trials is to determine the best ways to bring their patented CRAILAR® Organic Fiber into the apparel and pulp & paper markets.

Well, to reward theri CEO, Kenneth C. Barker, for setting up the partnerships necessary to get these trials underway, NAT is now offering Barker stock options. As the press release reports:

PORTLAND, OR, Oct 23, 2008 /PRNewswire-FirstCall via COMTEX/ — Naturally Advanced Technologies Inc. (NADVF), a pioneer in commercializing the use of bast fibers including industrial hemp for use in casual apparel, performance yarns, industrial filters and absorbent pulp and paper products, granted a stock option to purchase up to 500,000 shares in the capital of NAT at an exercise price of US$1.45 per share to Kenneth C. Barker, NAT’s Chief Executive Officer. Press release notice of this grant falls under standard compliance requirements of the TSX Venture Exchange.

Miljenko Horvat, Chairman of the board, stated, “We have an extremely talented management team and it is our policy to employ stock options as incentive. This year Ken has led the team in efforts that culminated in two significant milestones: CRAILAR(R) trials for Organic Fibers with a leading U.S. apparel brand and CRAILAR(R) trials for Advanced Materials with one of North America’s largest pulp and paper producers. We look forward to management driving to commercialization with the goal of establishing commercial partnerships.”

The stock option is dated October 14, 2008 and is subject to an 18 month vesting schedule under the terms and conditions of NAT’s existing fixed share option plan. The options carry a three year term and expire on October 14, 2011.

What this means is that, until October 14, 2011, Barker will be able to purchase as many as 500,000 stocks in NAT for only $1.45 USD each. Although stock in NAT is currently only worth $1.45 USD per share, it can go up, and if it does, Barker won’t have to pay more than $1.45 USD a share. So if NAT stock rises to $3.00 a share, Barker can buy as many as half a million shares for only $1.45, and then turn around a sell those share and more than double his money.

All in all, Barker has quite the incentive to keep up his seemingly good work at NAT, and continue to find ways to bring industrial hemp products to market. It will be interesting, then, when the NAT trials conclude in a few weeks, and we start to get an idea of just how much potential NAT’s hemp-based products have in a bulk commercial market (not to mention how much of a rich man Barker stands to become).