In the first part of this series, the authors discussed strengths and weaknesses of traditional phase I drug development involving single ascending dose studies followed by multiple ascending dose studies in healthy volunteers. They then discussed how these traditional designs are being challenged by the development of truly novel molecular compounds that are not derived from earlier drugs and how the extent and design of phase I studies will need to be expanded and altered to investigate these novel compounds. In this column, the authors focus in more detail on limitations of traditional phase I studies for investigating truly novel compounds and propose solutions to address these problems. Adaptive trial designs and biomarker endpoints are discussed. (Journal of Psychiatric Practice 2011;17:277–284).