Investor Biotech Primer

Phase I Studies -- The first study of a drug in humans. The trial is usually conducted in a small number (20-80) of healthy people. According to the FDA, sufficient information about the drug's pharmacokinetics and pharmacological effects should be obtained in order to design phase II studies.

Phase II Studies -- These studies are used to test the effectiveness of the drug and include patients with the disease that the drug is intended to treat. Phase II trials usually include several hundred patients or fewer. In rare disorders, the number may be less than one hundred.

Phase III Studies -- Larger studies with hundreds or thousands of patients. Safety and efficacy from these trials are what the FDA uses to determine whether a drug will be approved or rejected. Occasionally, the FDA can order more studies be conducted before reaching a decision.

It's important to keep in mind that drugs can be in different phases for different diseases. For example, Genentech's (DNA Quote) Avastin is approved for colorectal and non-small-cell lung cancer. However, the drug is in or about to begin phase III trials for a host of other cancers, including first-line metastatic breast cancer and first- and second-line ovarian cancers. Avastin is being prepared to enter phase II for extensive small-cell lung cancer.