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 NPS Pharmaceuticals (NASDAQ:NPSP), a biopharmaceutical company developing therapies to treat both chronic and orphan diseases, collapsed and fell by as much as 17% after announcing the results of the Food and Drug Administration's panel vote on whether to recommend or deny approval for experimental hypoparathyroidism drug, Natpara.

So what: According to the press release from Friday, the FDA's Endocrinologic and Metabolic Drugs Advisory Committee voted in support of approval by a vote of 8 to 5. As NPS' CEO noted in the press release, "We are very pleased with the Committee's vote. Their recommendation reinforces our belief in the favorable benefit-risk profile of Natpara and its potential as a long-term treatment option for Hypoparathyroidism." If you recall, briefing documents were released on Wednesday, two days prior to NPS' meeting with the FDA and it's shares rallied by roughly the same amount they're losing today after the efficacy of the drug was called "conservative" and "superior to placebo" by the panel. The FDA has set an action date of Oct. 24, 2014 for Natpara.

Now what: "So why the big dip today?" you ask? Clearly investors were looking for the FDA's panel to be more convinced of Natpara's efficacy and safety than an 8 to 5 vote would suggest. The possibility that the FDA could be concerned with certain adverse events and/or side effects presented by Natpara in clinical studies is now back on the table. Investors also appear to be pricing in the potential for tougher labeling requirements for the rare disease drug if it's approved. In addition, Natpara's approval no longer seems like a slam dunk as it did last week following the release of the briefing documents.

Now, there's one important factors to keep in mind here: the FDA isn't required to follow the advice of its panel. In other words, the FDA could come out overwhelming positive on Natpara, or be decisively negative and demand additional data. My initial feeling (and understand this "feeling" could be wrong) is that Natpara is still on pace for an approval in October. How much of a market Natpara will have and whether it has any labeling restrictions remains to be seen. However, I believe the REPLACE study should deliver enough in the way of efficacy to get the FDA on board. Of course, only time will tell if I'm right.

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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