Key Takeaways

• Drug development moves through structured stages that manage scientific, regulatory, and commercial risk.
• Discovery and early development focus on identifying targets and refining promising compounds.
• Preclinical research tests safety and biological activity before human trials can begin.
• Clinical trials progress through phases to evaluate safety, dosing, and real-world effectiveness.
• Even after approval, post-market monitoring continues to track safety and long-term outcomes.

John Mullaly is a private investor based in Cohasset, Massachusetts, with a long-standing focus on the life sciences sector. John Mullaly draws on more than two decades of experience working within healthcare-focused investment banking, institutional research sales, and equity capital markets. Over the course of his career, he has supported investment bankers, trading desks, and research teams with specialized healthcare insights, while also advising small and mid-cap biotechnology companies on investor relations and financing strategy.

Today, as a self-employed investor, John Mullaly evaluates opportunities across drug development and advanced therapeutic modalities, including small molecules, biologics, cell and gene therapies, RNA-based medicines, and antivirals. His bottom-up research approach emphasizes later-stage innovation that addresses unmet medical needs across areas such as oncology, immunology, neurology, and genetic disease. A clear understanding of the stages of drug development is essential in this field, as scientific, regulatory, and commercial risks evolve at each phase.

The article below outlines how promising scientific ideas progress from early discovery through clinical trials and regulatory review.

Understanding Different Stages of Drug Development

Drug development is the multidisciplinary process of turning a scientific idea into a usable medicine. This process involves key parties – like scientists, physicians, regulators, and manufacturers – who contribute expertise to ensure a potential drug can safely and effectively reach the public. Besides delivering patient care, drug development helps advance medical science, improves patients;’ outcomes, protects public health, and supports global healthcare systems as well as economic/social impact. Drug development involves various stages.

Work on a new drug starts long before patient use, with discovery and development. Researchers first identify a biological target linked to a disease, such as a protein or pathway. This step shows where a drug could act. Teams then screen large numbers of chemical or biological compounds to find those that interact with the target. Most compounds fail. A small group shows early promise and earns the label “hits.” Scientists refine these hits into “leads” by adjusting their structure to improve strength, precision, and safety. They also study how the body absorbs, distributes, metabolizes (breaks down), and excretes the drug – a process known as ADME.

During discovery and development, researchers also examine dose levels, side effects, toxicity, and possible drug interactions. They choose how a drug enters the body, such as by mouth or injection, and compare it with existing treatments.

Data tools – including artificial intelligence and machine learning – support this stage by helping predict which compounds have a higher chance of success. This approach reduces the number of lab tests needed. Even so, the success rate stays low. Only a small fraction of the many compounds tested move beyond this stage and progress toward approval.

Preclinical research follows discovery and development and links early lab work with human testing. This stage determines whether a drug candidate shows enough safety and activity to justify trials in humans. Researchers begin with in vitro studies, which test the drug on cells to confirm that it acts on the target and to detect early signs of toxicity. The work then moves to in vivo studies in animals such as rodents to examine safety, biological effects, and relevance to the disease.

Teams measure pharmacodynamics (what the drug does to a person;’s body), ADME, dose limits, and safety risks. Studies follow Good Laboratory Practice standards, so results remain reliable and well recorded. If results show acceptable safety and biological activity, sponsors submit the data to regulators to seek permission for human testing.

Clinical trials, the third stage, shift focus to humans. Before trials begin, sponsors in the US submit an Investigational New Drug application while those in Europe submit a Clinical Trial Application (CTA) so that regulators can review safety data and the planned study design. After approval, trials move through four phases. Phase I enrolls a small group – often 20 to 100 participants to assess safety, dosing range, and early side effects. Phase II enrolls a few hundred patients (100 to 500) who have the target disease, while phase III studies expand to thousands of patients across diverse locations to confirm the drug;’s efficacy, broader safety issues, and effectiveness compared with current treatments.

After a drug completes clinical trials, it enters regulatory review by the Food and Drug Administration (FDA). An interdisciplinary team – including project managers, medical officers, statisticians, chemists, and pharmacologists – examines the evidence. The team evaluates safety findings, treatment benefit, and how trial results apply to patient care in the real world. They also assess chemistry, manufacturing, and controls (CMC) to confirm product quality and consistency.

Clear labeling and instructions remain central to approval. When the team approves the drug, final labeling gets established, and the product enters the market. If it does not, the team issues a complete response outlining deficiencies.

Post-market safety monitoring follows approval and continues tracking of a drug;’s safety and effectiveness during routine use across broad patient groups. During this stage, researchers can reveal risks that trials did not detect. Findings can lead to label changes, new warnings, or limits on use. Regulators may also impose restrictions or remove a drug from the market when risks exceed acceptable levels.

FAQ

What is the goal of the discovery and early development stage?

This stage focuses on identifying a biological target and finding compounds that can act on it. Scientists then refine these compounds to improve effectiveness, safety, and how the body processes them.

Why is preclinical research required before testing in humans?

Preclinical studies evaluate safety, toxicity, and biological activity using lab and animal models. Regulators require this data to reduce the risk of harm before a drug is given to people.

What happens during clinical trials?

Clinical trials test a drug in humans across multiple phases to study safety, dosing, and effectiveness. Later phases involve larger patient groups to confirm benefits and detect less common side effects.

What does the FDA review before approving a drug?

The FDA evaluates clinical results, safety data, and manufacturing quality to ensure the drug;’s benefits outweigh its risks. The agency also reviews labeling to confirm proper use and instructions.

Why is post-market safety monitoring important?

Some risks only appear when a drug is used by large and diverse patient populations. Ongoing monitoring allows regulators to update warnings, restrict use, or remove products if needed.

About John Mullaly

John Mullaly is a private investor in the life sciences sector based in Cohasset, Massachusetts. He brings more than 25 years of experience working as a healthcare specialist across investment banking, institutional research sales, and investor relations. John Mullaly evaluates opportunities across drug development, cell and gene therapy, biologics, and RNA-based medicines, with a focus on later-stage innovation addressing unmet medical needs. Outside of investing, he enjoys uphill skiing, running, mountain biking, and spending time outdoors.