Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotechnology company Pharmacyclics (NASDAQ:PCYC) shed as much as 19% following the company's release of disappointing clinical data, as well as its first-quarter earnings results.

So what: For the quarter, Pharmacyclics reported a huge jump in revenue, to $102.7 million from just $37,000 in the year-ago quarter, largely due to a $100 million milestone payment from collaborating partner Johnson & Johnson (NYSE:JNJ). Pharmacyclics also earned $1.02 per share. But investors predominantly ignored these figures and focused instead on an early multiple myeloma study in which its lead drug Ibrutinib, a BTK-inhibitor, failed to provide tumor shrinkage at a 420 mg dose, although it appears to have had some success in slowing disease progression. Pharmacyclics plans to test the drug at higher doses.

Now what: As I've been saying for more months, if we're going to place a $3.5 billion valuation on a biotechnology company that doesn't have a drug approved by the Food and Drug Administration as of yet, it had better make me breakfast in bed! Today's news isn't a death knell to Pharmacyclics, but it's a reminder that investors should keep their expectations in check. It's true that few companies possess a unique pathway product like Pharmacyclics' Ibrutinib, but it's also going to need to show that the drug is both extremely effective and safe if it's going to maintain this frothy valuation. As for me, I'm not going anywhere near Pharmacyclics.

Craving more input? Start by adding Pharmacyclics to your free and personalized Watchlist so you can keep up on the latest news with the company.

Editor's note: A previous version of this article referred to the Ibrutinib trial as having 420 patients. The correct patient number was 13. The Fool regrets the error.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of, and buying calls in, Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.