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Validated hits from screening are selected for structure–activity relationship (SAR) studies aimed at improving the properties of the compound along multiple vectors. These vectors include target potency, target selectivity, cellular permeability, aqueous solubility, metabolic stability in plasma and hepatic microsome assays, and pharmacokinetic properties. The aim of compound optimization is to identify compounds of sufficient quality to transition to clinical studies. A critical milestone along the path to this goal is the identification of lead compounds with sufficient target potency, selectivity, permeability, and other properties to demonstrate modulation of intracellular target function (pharmacodynamics or PD) and attendant phenotypic outcomes. The demonstration of cellular phenotypic activity that conforms to the expectations of the foundational target-selective essentiality hypothesis marks the transition from hit-to-lead activities to lead optimization.