In just two days, Exelixis (NASDAQ:EXEL) has lost over 15% of its market cap. The tumble for the once-hot biotech stock started last week with a downgrade of the stock by an analyst at Leerink Partners. It wasn't over anything Exelixis did -- analyst Mike Schmidt said the biotech's fundamentals still appear to be strong. Instead, the concerns were about Exelixis stock's valuation.

Over the last three years, buying Exelixis stock every time it pulled back proved to be a winning strategy. Is that still the case? I think so. Here are three reasons to buy the dip with Exelixis. 

Green "buy stock" button on computer keyboard.

Image source: Getty Images.

1. Cabozantinib is just cranking up

Sales are booming for Exelixis' cabozantinib franchise, which includes Cabometyx tablets and Cometriq capsules. Revenue soared 30% in the second quarter -- not year over year, but versus the previous quarter. Use of Cabometyx in previously treated renal cell carcinoma (RCC) is the biggest driver of this growth right now, but that's just the start.

Exelixis should be in pretty good position to win regulatory approval for Cabometyx as a first-line treatment for RCC next year. Assuming the drug gets a green light from regulators, it will likely go head-to-head against Bristol-Myers Squibb's (NYSE:BMY) Opdivo/Yervoy combo. However, I suspect Exelixis will fare well in that fight because of efficacy and cost.

In the bigger scheme of things, though, there's room for both drugs -- and both companies -- to succeed. This is made more likely because Exelixis and Bristol-Myers Squibb are working together to evaluate combinations of their drugs in treating RCC.

Cabometyx also has tremendous potential in treating liver cancer. Exelixis' phase 2 data for the indication was encouraging. The company expects a second interim analysis from its late-stage study of Cabometyx as a second-line treatment for liver cancer later this year.

2. Partnered programs

While cabozantinib deservedly gets the most attention from investors, Exelixis' other approved drug, cobimetinib (marketed as Cotellic), could become a much bigger winner in the future. Exelixis CEO Michael Morrissey said at the Cantor Fitzgerald Global Healthcare Conference on Monday that his company was a "somewhat bystander" with the drug, since its partner Roche (NASDAQOTH:RHHBY) runs the show for cobimetinib for the most part. However, Exelixis is definitely an interested bystander.

The company splits U.S. profits with Roche on the drug and also fields 25% of the total sales team promoting Cotellic. Outside of the U.S., Exelixis receives low double-digit royalties on all sales. Those sales, both in the U.S. and internationally, could increase in the future. Roche has two late-stage studies in progress -- one evaluating a combo of Cotellic and its own drugs in treating melanoma, and another targeting treatment of colorectal cancer. 

Just this week, Exelixis announced good news from another partnership. Japanese drugmaker Daiichi Sankyo reported positive top-line results from a late-stage study of esaxerenone in treating patients with essential hypertension. Daiichi Sankyo plans to submit the drug for approval in Japan in the first quarter of 2018. Exelixis stands to receive both milestone payments and double-digit royalties on sales of esaxerenone if approved.

3. Adding to the pipeline

Morrissey said that "pipeline replenishment" was another significant potential growth catalyst for Exelixis. The company is restarting its internal drug discovery programs after several years of focusing primarily on cabozantinib. In addition, Exelixis is actively pursuing licensing candidates from other biotechs.

Thanks to the success of Cabometyx, Exelixis is in great shape to fund both of these efforts. The company became profitable as of earlier this year. Revenue, earnings, and cash flow appear to be headed for strong growth in the future. Also, Exelixis paid off its debt recently, which means that it will have even more capital to allocate to research and development, both internal and via in-licensing drugs developed externally.

It's this potential to repeat the success of Cabometyx that represents perhaps the best reason to buy Exelixis stock on the dip. The biotech should have a good shot at walking in the footsteps of what are now the biggest biotechs in the world by following the directions found on shampoo bottles: rinse and repeat. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Exelixis. The Motley Fool has a disclosure policy.