Target ID & validation
Hit discovery
Hit-to-lead
Lead optimization
Preclinical (IND-enabling)
Phase 1 — safety
Phase 2 — dose & efficacy
Phase 3 — confirm
FDA review → approved
Stage by stage
| Stage | Typical time | Odds of advancing | Typical cost | What happens | Output |
|---|---|---|---|---|---|
| Target ID & validation | 0.5–2 yrs | 60–80% | $10–50M | Pick a protein or pathway that causes the disease; prove hitting it should help. | Validated target |
| Hit discovery | 1–2 yrs | ~50% | $50–100M | Screen large libraries or design molecules (increasingly with AI) that act on the target. | Hit compounds |
| Hit-to-lead | 1–2 yrs | ~50% | $50–100M | Improve potency and selectivity; early drug-likeness checks. | Lead compounds |
| Lead optimization | 1–2 yrs | ~30% | $100–250M | Tune efficacy, pharmacokinetics and safety; pick one candidate. | Preclinical candidate |
| Preclinical | 1–2 yrs | 60–70% | $100–250M | Animal toxicology, PK, manufacturing. Ends with an IND filing asking FDA permission to test in humans. | IND submission |
| Phase 1 | ~1 yr | 60–70% | $50–100M | First in humans, usually 20–100 volunteers. Is it safe? How is it absorbed and cleared? | Phase 1 data |
| Phase 2 | ~2 yrs | 30–50% | $100–300M | 100–300 patients. Does it work, and at what dose? Most failures happen here. | Phase 2 data |
| Phase 3 | 3–4 yrs | 50–70% | $300–600M | 300–3,000+ patients vs. standard of care. The pivotal, expensive trial. | Phase 3 data |
| Regulatory review | 1–2 yrs | ~90% | $50–100M | NDA/BLA submitted; FDA reviews (the PDUFA date is the decision deadline); sometimes an advisory committee. | Approved label |
Why this matters for the stock
A Phase 2 readout is the single most common make-or-break event for a small biotech: fail and the stock can lose 50–80% in a day; succeed and it can double. Phase 3 readouts and PDUFA dates are the next biggest. Big pharma is diversified across dozens of programs, so one failure matters far less. On each company page we list registered trials by phase and their estimated completion dates so you can see these events coming.
Sources: DiMasi et al. (2016), Nature Reviews Drug Discovery, BIO clinical development success rate reports, FDA. Figures are rounded industry averages.