Biotech Runway: How Much You Need to Hit the Next Milestone

A biotech needs enough cash to reach its next value-inflecting milestone, such as a Phase 1 readout, plus a cushion past it of 6 months at least,¹ and an older banker's rule says 12.² A month count alone is the wrong test, because a delay moves the milestone and leaves your bank balance where it was.

I work with founders in the four industries I go real deep in: technology (AI and SaaS), healthcare and biotech, pharma, and pharmacy. Biotech is where this question bites hardest, because a pre-revenue company lives on its next round and investors buy data, not calendars. I am not a CPA and the firm performs no attest work, and nothing here is regulatory, legal or investment advice, so take the pathway questions to your regulatory counsel. Every company number below is made up (illustrative, not a client).

Picture your board meeting this spring. The chair asks how many months of cash you have, and you say 19. Then she asks the question that matters: does 19 months get you to the Phase 1 readout, and what is left in the bank on the day the data lands? If the honest answer is a month and a half of burn, you do not have 19 months of runway. You have a countdown to a raise you will make before data, with a going concern note hanging over the room.

Biotech runway is measured in milestones, not months

Biotech runway is the number of months your cash lasts at your planned burn, and in a pre-revenue company the version that matters is a different one: the cash needed to reach a named milestone, such as Phase 1 topline data, plus a cushion past it. That is the definition I use, and I carry it into every biotech model I build. In my book a month count tells you when the money ends and says nothing about whether the program gets there.

The month count is also getting shorter for a lot of companies. BioSpace's account of EY's 2026 report says that among the 758 listed U.S. and EU biotechs left, down from 977 in 2021, "some 33% of these remaining companies had less than one year of cash runway at the end of 2025"³. A year earlier the figure was 39%.⁴ EY calls it an ongoing liquidity trap for a growing number of biotechs.⁵

The better test is the one investors actually write down. RA Capital's partners write that when a company has enough capital to get through a data release but "it would require burning down to less than a year of cash and they elect to do so"⁶, they respect that choice. That is the line I tell founders to hold: name the readout first, then count the months to it. A public company shows what that looks like: Immuneering says its cash runway should fund operations into the fourth quarter of 2028, and its own milestone list puts the Phase 3 topline readout in mid-2028.⁷

Reaching a Phase 1 readout takes more cash than the month count shows

Start with a back of the napkin plan and make it ugly on purpose. Here is a made up one (illustrative, not a client). A pre-revenue company has $38.0 million in the bank. It burns $1.5 million a month for 6 months while it finishes manufacturing and files its IND, then $2.2 million a month through dosing and data, with topline results at month 18. Cash needed to reach that readout is $35.4 million, which leaves $2.6 million on the day the data lands, about a month and a half of the $1.8 million a month it expects to burn after that.

On a month count this company looks fine, with about 19 months of cash. Now let the readout slip one quarter, which enrollment, site start-up and data cleaning can do without anyone being at fault. Three more months at $2.2 million adds $6.6 million, so the cash needed becomes $42.0 million and the company is $4.0 million short of its own data. That is why I would never show a board a month count without the milestone beside it.

The burn behind the table is $1.5 million a month in months 1 to 6, $2.2 million in months 7 to 18 and through the slip, and $1.8 million after the readout.

An IND goes into effect 30 days after FDA receives it, unless FDA places the study on clinical hold or says sooner that it may begin,⁸ so I put 30 days of waiting into the schedule between filing and first dose. And a day of delay is not free: a Tufts study put the direct cost of a Phase 1 trial at $7,829 a day, about $235,000 for a 30 day slip, before the payroll and rent that keep running whether anyone is dosed or not.⁹

The study itself is short. FDA describes Phase 1 as 20 to 80 participants in most cases and several months of study,¹⁰ so the 18 months in my example is everything around it: manufacturing, the IND, site start-up, dosing and data cleanup. About 70% of drugs move on to the next phase, which leaves 3 in 10 that do not, and I want the cushion to cover the board conversation that follows that answer.

I tie the burn plan to the next readout in four steps

Here is the method, in the order I would build it, on a single sheet the board can read:

1. Write the milestone as a sentence a board member can check. Topline Phase 1 data in month 18, for example, with the data definition in writing.
2. List every cost that has to be paid to get there, by workstream. Manufacturing, toxicology and the IND, the CRO and the sites, clinical supply, people, and lab and rent.
3. Put each cost on the month the work is done. Not the month the invoice arrives.
4. Add a slip case and size the raise to it. One quarter at the full burn is my floor.

The third step is where I learned to be stubborn. Through a High Rock Accounting engagement, I served as the sole accountant on a clinical-stage biopharmaceutical client's month-end close, owning its preclinical, clinical, manufacturing and general accruals through its Nasdaq IPO. The accrual workpapers ran 40 hours or more in the first week of every month. That taught me what a trial bill does: it shows up after the work. A cash plan built from invoices is always behind a plan built from accruals, and the gap between them is the money you think you still have.

Once the plan is monthly, I like to roll it into a 13 week cash flow forecast so the next 90 days are weekly and the rest stays monthly. Then I check the why behind the number on the three biggest lines, meaning what has to be true for this month's CRO cost to be right. If you cannot say, poke a hole in the line before an investor does.

Investors expect a cushion past the milestone, and nobody agrees on its size

There is no single rule, and every number I found is advice, not a standard. A July 2026 note from an advisory publication puts it this way: "Raise to clear your next value-inflecting milestone, plus a real cushion past it, six months at least."¹ An older banker's rule of thumb, from 2017 and so a piece of history, was data plus 12 months, and the summary of it said that "Some deals have been pulled or upsized because they would not have provided that extra runway that investors want to see."²

My take is to treat 6 months as the floor and 12 as the comfortable number, and to size the raise to the slip case before looking at either. In the table above, the 6 month cushion adds $10.8 million to the slip case, which turns $42.0 million of cash needed into $52.8 million to have in hand.

A year keeps showing up because of the going concern rule. Under the FASB standard, management assesses whether it is probable that the company will be unable to meet its obligations within one year after the financial statements are issued,¹¹ and the look-forward runs from the issuance date, not the balance sheet date.¹² Plans that are not yet fully implemented are left out of the first test,¹¹ so a raise you are still negotiating does not count. I put the going concern date and the next raise date on the same calendar. Your auditor, not me, decides how the standard applies to you.

Some rounds close part of this gap with tranches. A tranched financing is one where the investor funds a round in installments, with later installments tied to milestones,¹³ and one law firm's guidance says that once the milestones and conditions are met, the investor should be contractually obliged to invest the next tranche.¹⁴ I read a tranche as a trade, more total capital in exchange for cash that arrives only if the milestone does, so I would not count a tranche in the runway until it closes.

The 2026 funding market favors later-stage, de-risked assets

Money is available, but it is picky about stage. BioPharma Dive's tracker of venture rounds from the 26 firms it follows counted at least 68 biotechs raising more than $9.1 billion in the first half of 2026, and about two-thirds of the rounds, 42 of them, went to companies "that already had a drug prospect in human testing"¹⁵. J.P. Morgan's first quarter review says the same thing another way: capital favors larger, later-stage financings over broad early-stage participation, with median rounds of $34 million at Phase I, $73 million at Phase II and $108 million at Phase III.¹⁶ A J.P. Morgan executive said in October that money is tending to flow toward later-stage, more de-risked assets.¹⁷

The public window follows the same logic. As of June, BioPharma Dive reported: "Prior to their offerings, almost all 13 companies had drugs in Phase 2 testing or later."¹⁸ By October 22, BioSpace counted 31 IPOs for the year against 8 in all of 2025,¹⁹ and no preclinical company has gone public since 2024.²⁰

If you are earlier than that, the picture is mixed. An August 2026 review of HSBC's mid-year venture data found that ten of the 14 largest first financings went to companies whose lead asset was preclinical or in Phase I,²¹ so money for a good first story exists. It does not carry you to the readout, and the round after it is priced on the data you produce.

Here is my take on what that means for your calendar. Plan the next raise for after the data whenever you can. Assume the round after that is priced on what the data says. Build the cash to the slip case, and if your plan needs a generous market before the readout, I would write that down as a risk the board has seen in writing.

Cut around the milestone, not through it

Cut around the milestone, not through it. Sutro Biopharma's September 2025 release planned a workforce reduction of approximately one-third of employees to prioritize three programs, extending runway into at least mid-2027 and protecting initial clinical data from one of them.²² Turnstone Biologics went further in October 2024, cutting about 60% of its workforce, and said the savings would extend runway into the second quarter of 2026 to deliver a clinical update on its lead Phase 1 program in the first half of 2025.²³ Those cuts cost real people their jobs, and I do not treat them as a spreadsheet exercise.

Here is the order I would use, and I would show it to the board before it is needed. First cut work that does not touch the readout, such as a second preclinical program or early platform spending. Then stretch the timing on work that comes after it. Last, and only if the math demands it, cut the people who run the trial. A budget gate helps: one FP&A vendor's guide recommends gates that release funding for next-stage work only when a research achievement is met.²⁴ That is a vendor's view, and the idea is sound.

The cut that kills a program removes the engine that pays the bills. BioXcel Therapeutics filed for Chapter 11 in late August 2026, 11 weeks before the FDA was due to rule on an expanded label for its marketed drug,²⁵ and its own release says it secured a commitment for $19 million in DIP financing from its existing secured lenders.²⁶ A TheStreet writer described the spiral this way: "Cutting the sales force to preserve cash then made the revenue problem worse, the loop small drug companies rarely escape."²⁵ BioXcel was a commercial company with debt payments, not a clinical-stage company waiting on a readout, so I use it for one point only: the date you are waiting for does not stop the clock on what you owe.

A clinical-stage case is quieter. Lyra Therapeutics reported about $15.9 million of cash and equivalents at December 31, 2025, then stopped development and let go of its 28 remaining employees in January 2026.²⁷ I tell founders to make the cut decision while there is still a choice about what to protect, because the quarter after the cash gets short is when the choice goes away.

Your industry changes the plan

Milestone runway is a pre-revenue biotech tool. If you run a commercial pharma or pharmacy company, your runway follows collections, payer timing and inventory, and the milestone is usually a financing or a covenant date. If you run an AI company, it follows compute and gross margin, so start with what runway is and how to calculate it and what a good burn multiple is. If you are health tech with a device or software pathway, the FDA fee is one line in the plan, and I wrote it up in FDA clearance costs in 2027. See our healthcare and biotech page for how we work.

If you only do 4 things after reading this, do these:

1. Write the milestone as one checkable sentence. Name the data you need and the month you expect it.
2. Build the cash to it by workstream, from accruals. Then add a slip case of at least one quarter.
3. Put a cushion past the milestone. 6 months at least, 12 if you can, and size the raise to the slip case.
4. Put the going concern date and the next raise date on one calendar. Count a tranche only after it closes.