Drug development for Alzheimer disease and other neurodegenerative dementias, including frontotemporal dementia, has experienced a long history of phase 2 and phase 3 clinical trials that failed to show efficacy of investigational drugs. Despite differences in clinical and behavioral characteristics, these disorders have shared pathologies and face common challenges in designing early-phase trials that are predictive of late-stage success. Here, we discuss exploratory clinical trials in neurodegenerative dementias. These are generally phase 1b or phase 2a trials that are designed to assess pharmacologic effects and rely on biomarker outcomes, with shorter treatment durations and fewer patients than traditional phase 2 studies. Exploratory trials can establish go/no-go decision points, support proof of concept and dose selection, and terminate drugs that fail to show target engagement with suitable exposure and acceptable safety profiles. Early failure saves valuable resources including opportunity costs. This is especially important for programs in academia and small biotechnology companies but may be applied to high-risk projects in large pharmaceutical companies to achieve proof of concept more rapidly at lower costs than traditional approaches. Exploratory studies in a staged clinical development program may provide promising data to warrant the substantial resources needed to advance compounds through late-stage development. To optimize the design and application of exploratory trials, the Alzheimer’s Drug Discovery Foundation and the Association for Frontotemporal Degeneration convened an advisory panel to provide recommendations on outcome measures and statistical considerations for these types of studies and study designs that can improve efficiency in clinical development.