Clinical phases of drug development

Translation: Original article published in Finnish on 9/10/2024 at 7:21 am EEST.

We are starting a series of articles focusing on the basics of investing in Life Science companies. This first part of the series describes the clinical phases of drug development that most drug development companies have to go through before they can apply for marketing authorization and commercialize a drug.

The clinical phases of drug development are preceded by basic research and pre-clinical studies based on, for example, computer modeling, molecular biology, and cell and animal models. However, in this article we focus on the clinical phases, where the majority of listed drug development companies are in their development stage. Drug development typically involves three clinical phases with increasing numbers of subjects and costs, and a shift in the focus of the trial from safety to proving efficacy.

Phase I - gathering information about the drug candidate's safety, tolerability, dosage, and behavior in the body

Typically, a Phase I trial has three objectives: 1) to determine at what doses the drug candidate will be safe and well tolerated for the Phase II study; 2) to obtain preliminary information on the potential adverse effects of the candidate; and 3) to determine whether the candidate will reach the desired concentration and effect in the target tissue.

Typically, the drug is administered to healthy volunteers in escalating doses and its pharmacological and potential adverse effects are monitored. Individual subjects may receive a single ascending dose or multiple ascending doses. These studies typically measure the pharmacokinetics, i.e., absorption, tissue distribution, metabolism, and excretion, of the drug candidate. The aim is usually also to obtain information on the pharmacological effect (so-called pharmacodynamics), for example, the ability of the drug to act on a target protein in the target tissue.

Unlike other diseases, Phase I cancer trials are typically conducted in patients with the disease being studied rather than in healthy volunteers. In the development of an anti-cancer drug, the goal is often to find the maximum tolerated dose above which dose-limiting toxicities occur. This is based on the assumption that patients with severe disease would be willing to accept greater adverse effects. The results obtained indicate the Recommended Phase II Dose (RP2D). A Phase I cancer trial is often conducted as a seamlessly combined Phase I/II trial, with the same patients proceeding directly to Phase II.

Phase I typically involves a few dozen subjects and lasts 1–2 years. If the study is paid for by the drug development company (a so-called sponsored trial), the cost is around a few million euros. A so-called investigator-initiated trial is much less expensive for the drug owner, but the study setting and schedule are determined by the independent researchers.

Phase II - preliminary information on efficacy

The purpose of the mid-stage clinical phase is typically to determine whether the drug candidate is effective (known as proof of concept). Studies are conducted in patients with the disease, rather than in healthy volunteers, to provide evidence of potential clinical benefit. The study may also further determine the most appropriate dose for use in subsequent phases of the study.

Phase II trials vary widely, for example in terms of the number of patients, the structure of the study, and the costs. In its simplest form, the study is carried out in a single center with a few dozen subjects and includes no control group (a single-arm study). At the other extreme are international multicenter trials, which are randomized, controlled, double-blind trials involving hundreds of patients. The structure and size of the study can have a significant impact on the quality of data it provides at this stage, particularly in terms of the drug’s efficacy. In some cases, the terms Phase 2a and 2b are used to describe which end of the continuum described above the study is at.

Phase II trials typically aim to provide data on the optimal dose, the population of patients who may benefit from the drug, and the magnitude of the therapeutic effect. This information is used to decide whether to continue development in larger, more expensive trials or to discontinue development. The results are also central to the planning of Phase III, which typically involves a discussion with the regulatory authority at the end of Phase II about the implementation of the final phase. Phase II trials typically involve tens to hundreds of patients, last 2–4 years and cost anywhere from ten to several tens of millions of euros.

Phase III – a pivotal study of efficacy and safety

The purpose of this clinical phase is to demonstrate sufficient efficacy and an acceptable risk/benefit balance to support a marketing authorization application for commercialization. Phase III studies are sometimes referred to as pivotal trials. In addition to efficacy data, Phase III studies will provide information on safety and tolerability in a much larger number of patients than before, which is essential for regulatory approval and future use of the drug. If there is a standard of care for the indication being studied, the drug being studied is typically compared to this standard of care rather than a placebo.

The efficacy demonstrated by the study should be sufficient not only for the authorities, but also for patients, doctors and those paying the costs. These studies are almost always carried out as international multicenter studies. The number of patients is usually in the hundreds or even thousands, but smaller studies are also possible, for example in the case of rare diseases. Studies can last several years and cost tens of millions of euros.

In some relatively rare cases, a drug may already be approved after Phase II if the results suggest that there is likely to be sufficient benefit. In this case, the drug can be approved through an expedited procedure (e.g., FDA Accelerated Approval). It is also sometimes possible to go directly from Phase I to Phase III. In addition to the above-mentioned combined Phase I and II studies, combined Phase II/III studies are also possible.

Phase IV - post-marketing surveillance

Phase IV refers to a trial in an indication for which a marketing authorization has already been granted. In some cases, the regulatory authority may require such a study as a condition of the marketing authorization to provide additional evidence of safety and/or efficacy. Drug development companies may also conduct Phase IV trials on their own initiative, for example to differentiate themselves from competing drugs. The aim may also be to generate data on quality of life or the cost-effectiveness of the medicine, which can help in marketing the drug.

Source used in this article: Frank S David, The Pharmagellan Guide to Analyzing Biotech Clinical Trials, 2022