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 U.S. drug maker Cephalon (Nasdaq: CEPH) soared 30% on Wednesday after larger Canadian rival Valeant Pharmaceuticals (NYSE: VRX) launched a hostile bid for the company valued at $5.7 billion.

So what: The all-cash offer values Cephalon at $73 per share and represents a 25% premium to its closing price Tuesday. Valeant is making the move to expand its offering into cancer drugs and other fields, and judging from the stock's 11% pop, Mr. Market seems to agree wholeheartedly with the strategy.

Now what: Cephalon shares have soared past the $73 offer price today, so it's obvious that shareholders expect a higher bid coming. Of course, with Valeant CEO Michael Pearson making it very clear that he will "remain very disciplined on price," I'd consider scaling back any position in Cephalon. Given the risk that Valeant ends up walking away from the deal altogether, locking in some gains just seems like the prudent thing to do.

Interested in more info on Cephalon? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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