For investors exploring US biotech, a useful starting point is to connect three questions: what has the science shown, what regulatory work remains, and how will the company pay for it? This guide focuses on businesses developing medicines, one part of the wider biotechnology industry.

For context, the FDA’s Center for Drug Evaluation and Research (CDER) recorded 46 novel drug approvals in 2025, according to its January 2026 report. That is a historical count of CDER approvals across drug developers. It is not a biotech-only tally, a measure of investment returns or a forecast for 2026.

1. Read beyond the trial headline

Clinical trials test medicines in people. Broadly, Phase 1 focuses on safety and dosage; Phase 2 explores effectiveness and side effects; and Phase 3 gathers larger-scale evidence about benefits and risks. The FDA’s clinical-research guide explains these stages.

A phase number alone does not establish how convincing a result is. Useful details include who took part, the comparison treatment, what the trial measured and how long participants were followed. Read the trial’s main results alongside safety findings and the limitations of the study.

2. Separate progress from approval

Encouraging results can support an application, but an application still needs FDA review. The agency considers the submitted evidence and proposed prescribing information; unresolved questions can require further work or studies. The FDA describes its review process here.

Accelerated approval adds another distinction. For certain serious conditions with unmet medical needs, FDA can approve a medicine using a measure reasonably likely to predict clinical benefit, rather than waiting for that benefit to be demonstrated directly. Confirmatory studies must verify the benefit; failure to do so can lead to withdrawal. Investors therefore need to understand the evidence and obligations attached to an approval.

3. Put the milestone beside the cash runway

Cash runway is an estimate of how long available cash could support spending. In a hypothetical example, US$120 million of unrestricted cash divided by US$20 million of quarterly net cash use before financing gives six quarters, or 18 months. This assumes unchanged spending and no new financing. Larger trials, debt repayments or other commitments can change the answer.

Accounting losses and cash use are different. The SEC’s financial-statements guide explains how cash flows record money moving through a business. Read the latest available financial statements alongside management’s liquidity discussion and risk disclosures; the SEC’s guide to the 10-K shows where these appear in an annual filing.

New funding also has consequences. Issuing additional shares can reduce an existing holder’s percentage ownership if they do not participate; borrowing creates repayment obligations. Our analytical takeaway is to assess a scientific milestone together with the cash required to reach it and the funding assumptions behind that estimate. Scientific progress alone cannot establish whether an investment offers an attractive return.

Educational information only. It does not take account of your objectives, financial situation or needs. This article does not provide medical advice.