When investing in stocks, particularly in the biotech sector, there's one thing investors have to understand: expectations.

Consider today's biggest loser in the biotech arena: Pharmacyclics (NAS: PCYC) . Revenue surged more than 2,700% year over year. Earnings per share shifted from a loss of $0.21 per share to a $1.09 per share gain. Naturally, shares fell as much as 18% during the day.

The reason has nothing to do with today's financial results -- and everything to do with tomorrow's. The company came out with some less-than-positive commentary around its top cancer drug candidate ibrutinib, which is looking to go up against existing multiple myeloma players such as Celgene's (NAS: CELG) Revlimid, Johnson & Johnson (NYS: JNJ) and Takeda's Velcade, and a newly approved drug from Onyx Pharmaceuticals  (NAS: ONXX) , Krypolis.


Follow along in the video below as Max Macaluso and Brenton Flynn run through the news in more detail.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article The Dirty Details Behind Pharmacyclics' Slide originally appeared on Fool.com.

Brenton Flynn has no positions in the stocks mentioned above. Max Macaluso has no positions in the stocks mentioned above. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services recommend Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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