New financing for U.S. biotechnology companies virtually collapsed in 2001, compared with the previous year, falling 76 percent and imperiling the dreams of many young, small companies in the industry, a new study shows.

The collapse, however, is relative. In a measure of just how gargantuan the previous year's financing bubble had been, 2001 was still the second-best year on record for biotech financing. Moreover, higher-profile companies that were smart enough to stick out their hands in the period when investors were shoving money at them remain in excellent financial shape today, with years worth of cash to finance the development of new treatments.

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