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 Zogenix (NASDAQ:ZGNX), a pharmaceutical company that focuses on developing therapies to treat pain and central nervous system disorders, dipped as much as 10% earlier in the trading session following the release of the company's first-quarter earnings results.

So what: For the quarter, Zogenix produced a 10% revenue increase to $7.7 million from $6.9 million, aided by the March 2014 launch of severe pain management therapy Zohydro ER as well as from an increase in service revenue. Zogenix did note $6 million in deferred Zohydro ER revenue sold to wholesalers, but this stock has not yet been prescribed to patients. Sales of acute migraine medication Sumavel DosePro fell 6% year over year to $6.5 million. Net loss for the quarter inched higher to $21.1 million, or $0.20 per share, from $20.9 million, or $0.21 in the year-ago period (Zogenix has more outstanding shares now). By comparison, Wall Street had been forecasting a narrower loss of just $0.15 per share and $9.1 million in revenue. Zogenix also reaffirmed its operating expense guidance of $110 million-$120 million, but did not offer any sales guidance for Zohydro ER.

Now what: Clearly this looks like a disappointment on two fronts. First, there's investor disappointment with a reduction in Sumavel DosePro sales. Second, Zogenix being unwilling to provide sales guidance on Zohydro ER after its top-line results, including the aforementioned dip in Sumavel DosePro, failed to meet the Street's estimates in the first quarter. In all fairness to Zogenix, it's way too early to throw a judgment on Zohydro ER's success or failure. But Wall Street is expecting the company to basically be breakeven by 2016 on an EPS basis, so any launch weakness apparent a few quarters from now could push that back into 2017 or beyond. With Sumavel DosePro sales stalling I'd suggest sticking to the sidelines until we see demonstrable momentum in Zohydro ER sales and a clear lessening of Zogenix's quarterly losses.

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.

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