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Exelixis (NASDAQ: EXEL) is a stock that I've been following closely for about half a year. To actually "revisit" the stock, I will first go over some of the comments I've made about EXEL in the past. If you want, you can skip this next part.

A (Semi-Tortured) History Of My 2012 EXEL Coverage

August 13th - I try to be cautiously bullish on EXEL following the company's financing which I felt was justified due to cabozantinib's necessary development expenses. The stock is trading around $4.40-4.50 per share.

October 26th - Exelixis trades in a tight range just below $5/share. Even though I'm not a big technical analysis guy, I recognized that $5/share was a key psychological price level for the stock that was unlikely to break without some sort of positive catalyst.

November 26th - Exelixis breaks that $5/share ceiling (finally) exactly one month later on pre-PDUFA speculation. I expected the stock to stay above $5 given an approval, although my recommendation of selling call options against EXEL (specifically $7.00 December 2012 calls) turned out to be a good idea that gave investors a free $.15/share.

December 2nd - Here, in one of my weekly recaps on Seeking Alpha, I gave my opinion that EXEL was a buy following the big "sell the news" reaction post FDA-approval. Cabo was fine, and people were just looking to take their profits (giving a window for fresh purchases of EXEL).

December 17th - I cover Exelxis one last time, noticing how EXEL has rebounded from the post FDA-approval dip.

Although the severity of the post FDA-decision selling caught me by complete surprise, I think the calls have been pretty accurate and useful to those who have been reading.

Exelixis And Cabozantinib in 2013

As mentioned in other articles, I believe that cabozantinib (or Cometriq) will find limited success in MTC (this is the indication that cabo was approved for back in November 2012). Investors are most interested in its potential in the prostate cancer market. The phase III COMET-1 trial is the big data release that investors are waiting for to determine if cabo will make it in the prostate cancer drug market when it comes time for an NDA submission.

This catalyst should make or break the stock (for the most part), but the problem is that the trial won't be completed until 2014. What is an EXEL trader to do?

I think that selling covered calls, in this situation, is a no-brainer. This can generate passive income for EXEL shareholders without exposing them to risk (assuming that you pick the right strike price). Just as I recommended $7.00 December 2012 calls in my pre FDA-approval article, I will give a nod to August 2013 $6.00 calls, which have a bid price of $.30.

EXEL would have a hard time indeed reaching $6.00/share that far ahead of COMET-1 data. Sure, a strong release for Cometriq for MTC could induce a rally, but $1.00/share on a sub $5.00 stock is a HUGE move on a percentage basis and it seems unreasonable.

At the same time, I would advise investors to be careful about buying too much EXEL. EXEL has been a weak performer in the midst of a major rally in biotech and I think there is a severe lack of interest in the name given how much is going on in other names (like CLSN, or AMRN). Low interest makes stocks very vulnerable to bear raids, or natural drops in share price. People tend to like exciting things. Exelixis is also trading at a value of $880 million, which isn't cheap for what the company is (although I wouldn't consider it expensive).

Another option for those who do not have any EXEL - sell 4.00 puts on EXEL and get it at a good price (or keep the premium). It seems that there is healthy demand for put protection on EXEL, which implies that sentiment is "fragile."

Source: Revisiting Exelixis And Cabozantinib