There are so many horror stories about what goes on in hospitals that they don't sound too, well, healthy.

With all those strange bugs around, it's awful to think you could leave hospital in worse condition than when you arrived. Or perish the thought, not leave at all.

So anybody promising better – and perhaps more importantly, considering how starved of funds public hospitals are, cheaper – hygiene deserves some attention.

And imagine the potential in the US, where hospital-caught infections are said to result in 100,000 deaths a year.

In Australia alone there are an estimated 150,000 nosocomial infections a year (those contracted in healthcare centres) caused by poor standards of disinfection.

Nanosonics can't prevent human error but if it can provide something easier, cheaper, faster and more effective, we will have come a long way.

Its disinfectant box, or transducer, is called the Trophon. It sterilises endoscopes, which are used by doctors to look at your gut for a colonoscopy. Trust me, there's no need to go into how they're placed there; suffice to say they'd want to be spotlessly clean before being used on the next patient.

The beauty of the Nanosonics technique is it doesn't rely on the traditional autoclave, which uses extreme steam pressure and can damage delicate medical instruments, or chemicals, which can be just as harmful.

A Trophon costs $12,000 but the chief executive at Nanosonics, David Radford, says this works out at $4 a procedure, compared with $15 for the processes now being used.

The company has been flogging the Trophon, also suitable for sterilising ultrasound probes, on a softly, softly basis to make sure there are no problems.

There aren't and although it has sold only 55 so far – in Australia, New Zealand and France – it's already getting repeat business.

Nanosonics is expecting approval from the notoriously finicky FDA in the US some time in the next year.

Its technology is also suitable for food processing and sterilising hard services, such as those in ambulances.

Still, this is a speculative stock that has been burning cash at the rate of about $10 million a year.

But this has fallen to $7 million to $8 million, Radford says, and sales are expected to step up next year, when it plans to expand into Europe and the US.

So its $14 million in the bank gives it enough cash until its first profit kicks in about 2011.

Once it gets to the commercialisation stage, like all start-up companies, expect another call to shareholders.

Advantages

Proven technology

No debt

Overseas interest

Disadvantages

Commercialisation costs

Cash burn rate

Loss making

Verdict

Shaw Stockbroking has a 12-month price target of 57 cents and Wilson HTM 74 cents.