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 biopharmaceutical company focusing on developing therapies to treat central nervous system disorders and pain, slumped as much as 17% after reporting its third-quarter earnings results, proposing a secondary offering, and announcing an agreement for an abuse deterrent formulation of its drug Zohydro ER.

So what: For the quarter, Zogenix reported net product revenue of $6.9 million (total revenue of $7.2 million) thanks to sales of its migraine and cluster headache medication, Sumavel DosePro, compared to $8.5 million in the year-ago period. On the positive side, research and development costs shrank 30% to just $2.5 million due to the timing of key clinical studies last year, which weren't present this year; however, it didn't save Zogenix from reporting an adjusted loss of $0.12 per share. By comparison, Wall Street expected a narrower loss of $0.09 per share and more than $9 million in revenue.

What's really weighing down shares is the company's announcement that it's going to issue $60 million in common shares to raise cash for the launch of Zohydro ER. While a necessary move given that it ended the quarter with only $17.4 million, it will increase Zogenix's outstanding share count (and dilute investors) by more than 20% based on its current price.

Zogenix also announced a development and option agreement with Altus to develop an abuse deterrent version of Zohydro ER. Zogenix will be paying Altus a $750,000 licensing fee for its technology and will be responsible for funding all development activities.

Now what: I know that's a mouthful, but the key reason we're down today is that mammoth of a secondary offering that would have diluted shareholders by roughly 21% based on Friday's closing price. Given that the stock is off as much as it is today, Zogenix's dilutive offering could boost its outstanding share count by close to 25%. As I mentioned above, it's unfortunately a necessary evil for a company that chose to partner with Altus rather than seek out a brand-name marketing partner.

With the company soon to have enough cash to fund Zohydro's launch, all eyes will instead turn back to where they should be -- the actual sales of the drugs themselves. As for me, I'm sticking to the sidelines because I've seen far too many drug hopefuls flop over the past couple of years. Until Zogenix's bottom line does the talking... I'll keep-a-walking!

Editor's note: A previous version of this article did not clearly state that Zogenix and Altus will develop an abuse deterrent formulation of Zohydro ER. The Fool regrets the error.