Only 38% of Licensing Milestones Pay Out

The gap between headline deal value and realized deal value is wider than most founders realize. When a licensing deal is announced at $1.2B total value, the market reads "$1.2 billion." What actually arrives in the licensor's bank account depends on milestone achievability — and the data shows that most milestones don't pay.

847 Milestones, Five Categories

We analyzed 847 individual milestone payments embedded in 312 biopharma licensing transactions signed between 2018 and 2024, tracking which milestones were ultimately achieved. The results vary dramatically by milestone type.

Regulatory milestones — tied to IND filings, end-of-phase meetings, NDA/BLA submissions, and FDA/EMA approvals — achieved payment 61% of the time. These are the highest-achievability category because they sit on a defined regulatory timeline with binary outcomes. Even so, 39% of regulatory milestones go unpaid, typically because the program is terminated for clinical or strategic reasons before the regulatory event occurs.

Development milestones — tied to clinical endpoints, patient enrollment targets, or data readouts — achieved payment 38% of the time. This is the median across all milestone types and the number most relevant to early-stage licensing deals, where the majority of deal value sits in development milestones.

Commercial milestones — tied to annual sales thresholds ($100M, $500M, $1B in net sales) — achieved payment just 23% of the time. Commercial milestones are the most speculative component of any deal, yet they frequently represent 30-40% of total headline value. The achievability gap here is where deals are most systematically overvalued.

Combination milestones — where multiple conditions must be met simultaneously — achieved payment 19% of the time. These are the lowest-achievability structures and should be valued accordingly.

The Stage Effect

Milestone achievability varies significantly by the development stage at which the licensing deal was signed.

Deals signed at Phase 2 show 44% overall milestone achievability. Phase 1 deals show 31%. Preclinical deals show 22%. The pattern is intuitive — earlier-stage programs have more development risk ahead, and more milestones go unpaid as a result.

What's less intuitive: the achievability gap between Phase 2 and Phase 1 deals (13 percentage points) is smaller than the gap between Phase 1 and preclinical deals (9 percentage points). This suggests that the single biggest de-risking event for milestone achievability is getting through Phase 1 — not getting through Phase 2. Companies that license after Phase 1 data capture a disproportionate share of milestone value relative to the clinical risk reduction.

Therapeutic Area Variation

Milestone achievability is not uniform across therapeutic areas. Rare disease leads at 52% overall achievability — driven by smaller trials, clearer endpoints, and regulatory incentives that accelerate the development timeline. Oncology sits at 36%, dragged down by the competitive intensity that causes program terminations even when clinical data is positive. Neurology/CNS shows the lowest achievability at 28%, reflecting the historically high failure rates in CNS drug development.

These milestone benchmarks are available in real-time on Solidus, our deal terms platform.

What This Means for Deal Negotiation

The practical implication: every licensing deal should be valued on a risk-adjusted basis before negotiation begins. A $1B deal with $200M upfront, $400M in development milestones, and $400M in commercial milestones has a risk-adjusted value of roughly $200M + ($400M × 0.38) + ($400M × 0.23) = $444M. The headline is $1B. The expected value is $444M. The gap is where misaligned expectations live.

Companies that model their own milestone achievability before entering negotiations have a structural advantage. They know which milestones to fight for (high-achievability regulatory events) and which to trade away (low-achievability commercial thresholds). They can propose milestone structures that maximize risk-adjusted value rather than headline value — which is ultimately what matters for the return to shareholders.