The race to develop lifesaving COVID-19 treatments recently took a surprise turn for the worse. Eli Lilly's (NYSE:LLY) COVID-19 treatment candidate, an antibody called LY-CoV555, flopped in a clinical trial with hospitalized patients.

The failure is more than a little surprising because the same treatment candidate was also part of a different study that produced positive results.

Healthcare professional donning personal protective equipment.

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Let's look at what's working and what isn't so we know what to expect from Eli Lilly's COVID-19 treatment program. 

Where LY-CoV555 worked

The BLAZE-1 study sponsored by Eli Lilly enrolled nonhospitalized COVID-19 patients shortly after they tested positive for the first time. Eli Lilly started with LY-CoV555 as monotherapy in three ascending dosages before selecting one to combine with a complementary antibody called LY-CoV016. 

Blood samples drawn from patients treated with LY-CoV555 had significantly fewer copies of the virus responsible for COVID-19. Moreover, the viral load reductions coincided with an 84.5% hospitalization risk reduction. Just 0.9% of patients treated with LY-CoV555 plus LY-CoV016 were eventually hospitalized for COVID-19 compared to 5.8% of the placebo group.

Where LY-CoV555 flopped

The National Institutes of Allergy and Infectious Diseases (NIAID) is running clinical trials with nonhospitalized and hospitalized patients called ACTIV-2, and ACTIV-3, respectively. In a portion of the ACTIV-3 study to be shuttered, hospitalized patients received standard care, which included Veklury (remdesivir) from Gilead Sciences (NASDAQ:GILD), plus either LY-CoV555 as a monotherapy or a placebo.

On Oct. 26, 2020, the independent data and safety monitoring board (DSMB) watching the ACTIV-3 study recommended no further participants be randomized to receive LY-CoV555 in addition to standard care. On Oct. 13, the same DSMB recommended pausing enrollment in this study due to a safety issue that has since been resolved. According to the NIAID, the latest recommendation to end the portion of ACTIV-3 that involves Lilly's COVID-19 treatment candidate was driven by a lack of efficacy, not safety concerns.

Scientist in a laboratory with a face mask.

Image source: Getty Images.

Next steps

It doesn't look like Eli Lilly's COVID-19 treatment candidate is going to become standard care for severe COVID-19 cases, but it could go a long way to keep hospitals from overcrowding. The DSMB overseeing ACTIV-3 is also privy to data from the ACTIV-2 study and doesn't recommend any changes. In fact, ACTIV-2 is currently enrolling patients who test positive for COVID-19 and show symptoms that aren't severe enough to require hospitalization, a group that Gilead's Veklury isn't approved to treat.

Earlier this month, Lilly submitted an initial request for an Emergency Use Authorization (EUA) of LY-CoV555 as monotherapy for higher-risk patients who have been recently diagnosed with mild to moderate COVID-19. Eli Lilly thinks it could be ready to apply for full approval of LY-CoV555 plus LY-CoV016 in the second quarter of 2021.

In August, Eli Lilly began the BLAZE-2 trial with healthy residents and staff members at long-term care facilities in the U.S.; we could have results before the end of 2020. An infusion with LY-CoV555 isn't expected to prevent infection for the long term, but it could greatly reduce the risk of infection for at least a few months. 

Buy the dip

Eli Lilly has what it takes to outperform with or without a successful COVID-19 treatment under its belt. Since 2014, the company has launched 11 new drugs, 10 of which have grown sales by double digits or better this year.

The company recently reported third-quarter sales that gained 5% year over year. Investors can expect further gains from a young product lineup with rapidly growing sales.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.