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 Intercept Pharmaceuticals (NASDAQ:ICPT), a clinical-stage biopharmaceuticals company focused on developing therapies to treat chronic liver disease, plunged as much as 34% after reporting its third-quarter earnings results, and publishing its FLINT trial data involving obeticholic acid, or OCA, in The Lancet.

So what: For the quarter, Intercept posted $445,000 in licensing revenue, which was essentially in line with Wall Street's expectations, although its net loss per share widened even further from the year-ago period, to $35.8 million or $1.69 per share from $31.7 million or $1.65 per share. Comparably speaking, the Street was looking for a narrower per-share loss of just $1.13. The concern here is wider than expected losses could demonstrate management's inability to keep expenses and its cash burn under control, and may ultimately coerce Intercept to sell shares of common stock in order to raise money.

However, the bigger story here is the FLINT data publication for OCA. As a quick refresher, Intercept shares more than tripled overnight in January after reporting that OCA met its primary endpoint of a highly statistical improvement in liver histology, and that its midstage study was stopped early on the recommendation of the data safety monitoring board due to that efficacy.

The company's data publication in The Lancet certainly highlighted the positives of meaningful improvement in liver fibrosis and liver histology, but the medical journal also hinted toward longer-term follow-up studies being needed considering various safety concerns that popped up during the trial, including lipid management. After reading between the lines of The Lancet report, shareholders pounced on Intercept.

Now what: What we have here looks like a classic overreaction by investors to what has generally been a positive story -- though they likely overreacted to the upside back in January, too. Additional studies wouldn't be out of the question considering what I believe is the good, but not great, safety profile of OCA that was established in midstage studies. What's indisputable, at least based on the data we have so far, is that OCA works exceptionally well, and could be a fantastic new therapy for those with non-alcoholic steatohepatitis. That alone should keep its share price from tumbling too much further.

Even so, and even with a Food and Drug Administration approval still in the cards on the horizon, I'd much prefer to avoid this near-term volatility and emotional trading, and observe Intercept from the sidelines. Its phase 3 study should go a long way toward calming investors' nerves, as will as a concerted effort at controlling expenses.