When partner Bristol-Myers Squibb (NYSE: BMY) called it quits on co-developing the XL184 cancer drug, a lot of folks wrote off Exelixis (Nasdaq: EXEL) for dead. They couldn't have been more wrong. Between rumors of a buyout, and the undeniable fact of insider buying, shares of this tiny drug developer have taken off like a rocket -- bouncing from their August lows and accelerating into a 30% rush for the stratosphere just in this past month. Why?

In a word: earnings. One week from today, Exelixis will release fiscal fourth-quarter earnings. But will the stock fare any better than Curis (Nasdaq: CRIS) did, after experiencing a similar run-up, but no really new developments on the earnings front last week?

Bull thesis
Exelixis bulls will tell you the two situations aren't really comparable. In Curis' case, the run-up was built on positive developments on Curis' GDC-0449 drug -- developments that were widely reported before earnings day. In contrast, Exelixis is all about the future. XL184 has already won "orphan drug" designation from the Food and Drug Administration, but what really counts are the results of phase 3 trials on the drug, due out in a couple months -- and after that, the filing for final FDA approval. Last week, Exelixis told investors it would update them on "recent clinical data and development plans ... for cabozantinib (XL184)" when reporting earnings -- and you can bet investors will hang on every word.

Bear thesis
Honestly, though, investors won't have much choice but to pay attention to the clinical update. While nominally "earnings day," it's unlikely Exelixis will have much in the way of actual earnings to discuss. Analysts who follow the stock predict a $0.21 per-share quarterly loss. Next year should be similar, with most guesses centering on a likely loss of about $0.73 -- and significant projected losses each year for four more years. (And with Exelixis already deeply in debt, that means four more years of the company taking on more debt, or diluting its shareholders through new share floatations.)

Foolish takeaway
Which, of course, we already knew. Lacking the funding of gigantic industry rivals such as AstraZeneca (NYSE: AZN), up-and-comers such as Exelixis are fated to burn before they earn. Barring a buyout (which many Fools think likely, but I doubt), I expect we'll see Exelixis continue to bounce up and down for many years to come, twisting in the wind with every passing press release. Such is the fate of the biotech start-up investor.

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Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. Exelixis is a Motley Fool Rule Breakers selection. The Fool owns shares of Exelixis. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.