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 Kite Pharma (NASDAQ: KITE), a clinical-stage biopharmaceutical company that specializes in developing cancer immunotherapy drugs, were clobbered and sank as much as 12% in Thursday's trading session after reporting its fourth-quarter earnings results.

So what: The company reported in its earnings press release an adjusted loss of $7.5 million, or $0.19 per share, for the quarter and a $0.94 per share full-year loss. Operating expense soared to $13.3 million in the fourth quarter from $2.4 million in the year-ago period as the company widely expanded its clinical research platform and recently announced an acquisition. As a clinical-stage company, Kite Pharma had no revenue to report.

For context, Wall Street's quarterly EPS loss estimates varied widely between a loss of $0.12 per share on the low end to a loss of $0.31 per share on the high end.

Now what: Today's reaction, plain and simple, is a quick reminder to investors that clinical-stage biotechnology companies burn through cash. Luckily for Kite shareholders the company has a very healthy $367 million in cash, cash equivalents, and marketable securities following its IPO, which is likely going to give it a substantial runway to conduct its clinical studies and develop its immunotherapy products.

However, investors should also understand that Kite's therapies are probably years away from reaching the market, meaning they're paying in the neighborhood of $2.5 billion for a company that may not produce a shred of consistent cash flow until multiple years down the road. While buying into a company that may not have consistent cash flow for years isn't uncommon in the biotech sector, paying $2.5 billion for one that has only a single experimental drug past preclinical and phase 1 trials may not be prudent. I'd continue to suggest that waiting on the sidelines for more concrete data from its drug development pipeline (i.e. midstage and late-stage data) would be wise rather than chasing Kite shares at this seemingly astronomical valuation level.