There are a lot of unknowns surrounding the coronavirus pandemic, but one thing is clear. There's a lot of demand for potential COVID-19 treatments from Regeneron (REGN 0.97%) and Eli Lilly (LLY -0.55%) if they can be proven safe and effective in clinical trials that are taking place right now.

It might not feel like it, but the coronavirus pandemic will eventually end along with soaring demand for treatments for infected patients. That means investors want shares of companies positioned to thrive even if things don't work out for their COVID-19 treatment candidates, and these two fit the bill. Let's stack them side by side to see which is the better stock to buy at the moment.

Gloved hands holding test tubes.

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The case for Regeneron

Regeneron has applied lessons learned during the development of an Ebola virus treatment candidate, REGN-EB3, to its attempt to treat COVID-19 patients, and temporarily protect healthy people at risk from infection. Earlier this year the FDA agreed to give REGN-EB3 a priority review after it provided a significantly stronger mortality benefit in a head-to-head study against other antiviral treatment candidates.

In July, Regeneron's COVID-19 treatment candidate, REGN-COV2 entered a phase 3 study as a preventative measure for uninfected people that live with someone that tests positive. As a treatment for hospitalized and non-hospitalized patients Regeneron has also advanced REGN-COV2 into the phase 2/3 portion of an adaptive study.

If Regeneron can show proof of a mortality benefit in line with that observed while testing the company's Ebola virus candidate, REGN-COV2 could add billions to Regeneron's top line in 2021. If it disappoints, though, this company still has what it takes to provide long term gains.

Sales of the company's lead drug, a blindness preventing injection called Eylea, reached an annualized $7.4 billion during the first quarter. Sales of Dupixent, an injection for the treatment of asthma and eczema that Sanofi (SNY -2.69%) launched in partnership with Regeneron in 2017, jumped 129% year over year to an annualized $3.4 billion in the first quarter.

Soaring sales of Regeneron's products helped the company generate $1.7 billion in free cash flow over the past year. The company doesn't offer its shareholders a dividend, but it recently repurchased $5 billion worth of its own stock.

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The case for Eli Lilly

Eli Lilly is also developing a potential new antiviral treatment, called LY-CoV555, for patients with COVID-19 and as a prophylactic for healthy people at risk. Recently, the company began a phase 3 study with LY-CoV555 to see if it can protect people that work and reside in nursing homes. It will take several months to enroll all 2,400 participants expected to participate and follow them around for four weeks to see if LY-CoV555 really can reduce the rate of SARS-CoV-2 infection.

In the second quarter of 2020, Eli Lilly reported a negative impact of around $500 million from the COVID-19 pandemic. The temporary setback won't stop the company from reporting impressive growth for a big pharmaceutical company. Lilly recently told investors to expect adjusted earnings to reach between $7.20 and $7.40 per share, which was 11% more than the company predicted in April and 21% more than the company reported a year earlier.

As a bigger company with more than twice as much revenue Regeneron, and a lot of aging products with declining sales, Eli Lilly makes moving the needle forward look easy thanks to a lot of relatively new products with rapidly climbing sales. The company's top-selling drug at the moment is Trulicity, a type 2 diabetes treatment with sales that climbed 29% in the first half of 2020 to $2.5 billion.

First-half sales of Taltz, a psoriasis injection Lilly launched in 2016 rose 38% year over year to $606 million. Sales of Emgality, a migraine headache preventing injection that Lilly launched in late 2018 more than tripled in the first half to reach $161 million. 

In May, the FDA approved Retevmo, a capsule for the treatment of certain lung cancer and thyroid cancer patients that entered clinical trials in 2017. To get Retivmo in its product portfolio, Lilly paid $8.0 billion to acquire Loxo Oncology in 2019 with strong cash flows that are getting stronger.

Over the past year, Lilly's operations generated a whopping $4.9 billion in free cash flow. Unlike Regeneron, Lilly uses its profits to pay a quarterly dividend that offers a 1.8% yield at recent prices. 

the picture of Ben Franklin on the hundred dollar bill looks out from among a colorful collection of pills and tablets.

Image source: Getty Images.

The better buy

Both of these stocks have a good chance to provide positive returns, but Lilly looks more likely to provide investors with relatively steady gains. That means the better buy really depends on how much risk you're willing to tolerate. 

At the moment Eylea sales are responsible for the vast majority of Regeneron's total revenue, and potential competition for the same patients could limit the company's ability to grow. For most investors, strong cash flows from diverse revenue streams make Eli Lilly the better stock to buy right now.