Do bad things really come in threes? It might seem like the old saying is true with the development of treatments and vaccines for COVID-19. AstraZeneca paused its late-stage studies of coronavirus vaccine candidate AZD1222 last month after one participant had an unexplained illness. Johnson & Johnson followed suit earlier this week, temporarily pausing its late-stage study of COVID-19 vaccine candidate JNJ-78436735.

Now Eli Lilly (NYSE:LLY) has also pumped the brakes. On Tuesday, the big drugmaker said that a clinical trial evaluating its antibody therapy targeting COVID-19 has been paused due to potential safety concerns. The pharma stock fell following this news. Should you buy Lilly on the dip?

Gloved hand pressing pause button.

Image source: Getty Images.

A pause and a pullback

It's not surprising that Lilly's share price slipped on the news about the clinical trial pause. After all, the company filed last week for FDA emergency use authorization of its experimental COVID-19 antibody therapy LY-CoV555.  

The paused late-stage study is being conducted by the National Institute of Allergy and Infectious Diseases, which is part of the National Institute of Health. NIAID is evaluating a combination of LY-CoV555 and Gilead Sciences' (NASDAQ:GILD) remdesivir, an antiviral drug that has already received EUA for treating COVID-19.

Few details are available at this point about what happened. The independent data safety monitoring board for this phase 3 study recommended pausing enrollment because of safety concerns. Lilly stated that it supported this recommendation.

Last week, the company reported interim results from a phase 2 study that included LY-CoV555. Lilly said that side effects from the experimental antibody therapy were "isolated drug-related infusion reactions or hypersensitivity that were generally mild." 

The bigger story

The FDA will undoubtedly hold off on granting EUA for LY-CoV555 until more information is available to clear up any safety concerns. It's also possible that the pause of the NIAID-led late-stage study could delay Lilly's timeline for requesting EUA for a combination antibody therapy of LY-CoV555 and LY-CoV016. The company had expected to submit an EUA filing for the combo therapy next month. 

But the story is far from over for Lilly's antibody therapy program. Pauses in clinical trials are relatively common, with the trials often resuming following an investigation of issues that arise. There's a good chance that the issues will be resolved, allowing Lilly to move forward with its EUA requests and with its plans to submit for full FDA approval of its combo therapy next year. 

More importantly, Lilly's growth prospects don't solely depend on success for its COVID-19 candidates. The company's current product lineup is loaded with big winners. Six of them delivered double-digit percentage year-over-year sales growth in the second quarter of 2020: diabetes drugs Trulicity and Jardiance, immunology drugs Taltz and Olumiant, and cancer drugs Verzenio and Tyvyt. In addition, newer migraine drug Emgality gained solid momentum. 

Lilly could have more strong candidates on the way. The company currently awaits regulatory approvals for four programs, including new pain drug tanezumab. It has 18 programs in late-stage clinical studies, with immunology drug mirikizumab looking especially promising. 

Buy on the dip?

I wouldn't be surprised if the pause for the NIAID's late-stage study of LY-CoV555 and remdesivir is only a short one. The small dip for Lilly's share price could evaporate very quickly.

Even if my optimism doesn't pan out, I still think that Lilly is a pretty good stock to buy. With shares trading at less than 20 times expected earnings and solid growth prospects over the next few years, Lilly's valuation appears to be attractive. In addition, Lilly offers a dividend that currently yields close to 2%.

Lilly probably won't generate jaw-dropping gains. However, it should deliver market-beating total returns throughout the next decade. My view is that the minor pullback resulting from the paused enrollment in the late-stage study of LY-CoV555 presents a good buying opportunity for long-term investors.