Phase 1: Is the drug safe? Increasing dosages of the drug are given to a very small number of volunteers (dozens). They are tracked very closely to determine if anything bad happens (referred to as 'adverse effects'), and also to analyze how the body breaks down and eliminates the drug from their system. If a drug ends up being too toxic, there is no reason to further test the drug's usefulness.
Phase 2: Is the drug promising? Once its proven to be well tolerated, a larger -- but still small -- group of patients with the disease will be given the drug to see if it has the desired effect and to further assess its safety. Oftentimes, the responses of patients on the drug will be compared to standard treatments.
Phase 3: Is the drug effective? To firmly establish that a drug is effective, a large population of patients with the disease is segregated into groups. Some groups are given the drug and others are given standard therapies and/or a placebo. Patients and prescribing physicians will sometimes not know what compound is being given -- this is referred to as a 'double-blind study.' Data is collected during this time and if the new drug is better than the standard of care, the FDA may approve that drug for the general population.
Phase 4: How well has the drug worked after approval? Once a drug is FDA-approved after a Phase 3, data continues to be collected from the treated population to ensure that it is the optimal treatment.
Discovery: Here (2002), scientists discovered that there is a particular feature (a mutated form of a cancer-causing protein) in ~50% of melanomas that may be targeted by a drug.
Preclinical Phase: In this study (2007), it was discovered that a compound can selectively kill cancer cells that have the particular mutation. Three years later (2010), authors show that this compound is effective in animals.
Clinical Phases: Phase I (Is it safe?), Phase II (Is it promising?) , Phase III (Is it effective?), 2010 - 2012