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Early-phase clinical trials have traditionally focused on the safety, tolerability and pharmacokinetic properties of a therapeutic candidate, while questions regarding efficacy have been left unanswered until phase II clinical development. Although an understanding of all of these parameters is unarguably essential to the successful development of a drug candidate, this information is insufficient. Biomarkers are increasingly being used in early drug development to allow for the exploration of pharmacodynamic effects of targeted therapeutics before clinical signs and symptoms are evaluated. The trend of using pharmacodynamic biomarkers will continue and, ultimately, may enable these biomarkers to be used routinely to demonstrate the impact of a compound on the treatment of a disease, and to aid in the selection of therapeutic doses and regimens based on accurate measures of human physiological responses. Biomarkers are also beginning to be used to determine those patients who are most likely to respond to a therapeutic, and thereby improve treatment outcomes while avoiding the administration of a drug to individuals who are unlikely to benefit. This article describes a strategy that is being used to achieve these aims for biomarkers, and discusses how biomarkers can be used to identify information that can be applied back into to the drug discovery process.