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 XOMA (NASDAQ:XOMA), a biopharmaceutical company developing antibody-based therapeutics, were clobbered, falling as much as 28% after the company announced that it would not be advancing gevokizumab as a treatment for erosive osteoarthritis of the hand (EOA) into later-stage development.

So what: According to XOMA's press release, the company plans to conduct a review of the data obtained during its mid-stage studies to see if there's a subset of the population that would benefit from gevokizumab prior to initiating any additional studies in the EOA indication. Based on the snippets of data released, we know from XOMA that patients with a milder form of the disease tended to sway the results toward the placebo while those with more severe pain appeared to respond better and may still be worth researching once XOMA's subset analysis is complete. Gevokizumab is also being studied in a number of other indications, including a number of ophthalmic diseases.

Now what: Gevokuzimab is XOMA's crown jewel, with 11 separate indications currently being tested if you lump in it and partner Servier's clinical studies involving the drug, so today's shortfall certainly stings. The good news is that the data demonstrated favorability toward gevokizumab in more severe cases, so it may not be a total loss in EOA, but it certainly throws a shred of doubt over a number of its other purported indications. We should of course remember that different diseases can behave markedly different to the same experimental therapy, so XOMA's pipeline could also be perfectly fine with today's downside move potentially overblown. As an investor I'd suggest keeping your eyes peeled for fresh data on gevokizumab in its other 10 indications. If all continues to progress well, especially in its ophthalmic disease targets, then XOMA should be just fine.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.