With just a few hours left for the year to end, it can be said that 2017 turned out to be a pretty good year for the biotech sector. The sector had been struggling due to several issues including the drug pricing controversy, mixed results, slower-than-expected new product launches, increasing competition and pipeline setbacks.

However, with investors being more comfortable about the drug pricing controversy this year, the focus is now more on the fundamentals of the sector. New product sales ramp up, R&D success and innovation, and continued strong performance from key products are some of the factors that helped the sector rebound in 2017. The Nasdaq Biotechnology Index is up an impressive 22% year to date.

The year also turned out to be pretty good where FDA approvals are concerned. Till date, the regulatory agency has given its nod to 46 novel drugs, well above the 22 drugs approved last year. Immuno-oncology was a key focus area in 2017, whether it was to do with scientific conferences, clinical trial collaborations, acquisitions or FDA approvals.

The approval of Novartis’s Kymriah, a gene cell therapy, and Gilead’s (GILD - Free Report) Yescarta, a CAR-T (chimeric antigen receptor T cells) cell treatment, ensured that the highly lucrative immuno-oncology market remained in the limelight.

The $11.9 billion acquisition of immuno-oncology focused Kite by Gilead also increased interest in this category with investors expecting more acquisition announcements in this area.

Of course, it was not all good news for the sector. Companies like Celgene and Biogen were hit by pipeline setbacks while Gilead continues to struggle due to the dwindling sales of its hepatitis C virus (“HCV”) franchise.

Nevertheless, there were quite a few companies that fared extremely well in 2017 with their shares outperforming the sector as well as the overall market on the back of factors like deals, pipeline progress and FDA approvals. Here is a look at five such companies.

XOMA Corporation (XOMA - Free Report) : XOMA is focused on the discovery, development and licensing of therapeutic antibodies. The company has several licensing agreements with other biotech and pharma companies which provide XOMA with funds in the form of upfront and milestone payments and potential royalty payments. XOMA’s shares have been on an upward trajectory from August following the signing of licensing agreements with Novartis for gevokizumab and intellectual property covering the use of IL-1 beta targeting antibodies in the treatment of cardiovascular disease. This deal resulted in XOMA receiving upfront payments worth $31 million including an equity investment worth $5 million. The agreement terms also resulted in a 50% reduction in XOMA's outstanding debt through the repayment of its €12 million obligation to Les Laboratoires Servier and the extension of the company’s maturity date for its debt to Novartis by a couple of years. XOMA also stands to earn significant milestone payments and tiered royalties on sales of gevokizumab.

Year to date, XOMA’s shares are up 771.8%, significantly outperforming the 3.5% rally of the industry it belongs to. XOMA is a Zacks Rank #1 (Strong Buy) stock – you can see the complete list of today’s Zacks #1 Rank stocks here.

Dynavax Technologies Corporation (DVAX - Free Report) : Commercial-stage biopharma company, Dynavax, is focused on the discovery and development of novel vaccines and immuno-oncology therapeutics. The company’s shares shot up in July following a favorable recommendation (12-1) from the FDA’s Vaccines and Related Biological Products Advisory Committee (“VRBPAC”) for Heplisav-B, a vaccine for immunization against hepatitis B infection in adults. Heplisav-B, which had previously received two complete response letters (one in November 2016 and the other in February 2013), from the FDA, gained FDA approval this year in November. The regulatory action makes Heplisav-B the first new hepatitis B vaccine in the United States in more than 25 years and the only two-dose hepatitis B vaccine for adults. Heplisav-B is the first FDA-approved product for the Zacks Rank #3 (Hold) stock, which expects to launch the vaccine in the first quarter of 2018. Dynavax’s shares are up a whopping 386.1% year to date.

Sangamo Therapeutics, Inc. (SGMO - Free Report) : Clinical-stage biotech company, Sangamo, is focused on translating ground-breaking science into genomic therapies using its platform technologies in genome editing, gene therapy, gene regulation and cell therapy. The company got a shot in the arm earlier this year when it entered into an agreement with Pfizer (PFE - Free Report) for the development and commercialization of gene therapy programs for hemophilia A. The agreement saw Sangamo getting an upfront payment of $70 million with the potential to earn significant milestone payments as well as tiered double-digit royalties on net sales. This deal bodes well for the long-term prospects of the company. The Zacks Rank #2 (Buy) company’s shares are up 468.9% year to date.

Early next year, Sangamo expects preliminary proof-of-concept data on SB-525 (hemophilia A), SB-FIX (hemophilia B), SB-318 (MPS I) and SB-319 (MPS II). Other value drivers could be the signing of partnership deals for the company’s central nervous system/tau and oncology assets.

Alnylam Pharmaceuticals, Inc. (ALNY - Free Report) : RNAi therapeutics company, Alnylam, is focused on rare genetic, cardio-metabolic, and hepatic infectious diseases. The Zacks Rank #3 company has a strong discovery platform and a deep pipeline including four pipeline candidates that are in late-stage development. Alnylam has agreements with companies like Sanofi and Vir Biotechnology. Alnylam’s shares are up 243.4% year to date on the back of pipeline progress during the year.

bluebird bio, Inc. (BLUE - Free Report) : bluebird is a clinical-stage company working on developing lentiviral-based gene therapies for serious genetic diseases and T cell-based immunotherapies for cancer. The company’s pipeline includes Lenti-D, currently in a phase II/III study, for the treatment of cerebral adrenoleukodystrophy, and LentiGlobin, currently in five studies for the treatment of transfusion-dependent β-thalassemia and severe sickle cell disease. The company’s lead oncology programs, bb2121 and bb21217, are anti-BCMA CAR T programs which are being developed in collaboration with Celgene.

bluebird’s shares have been gaining following the presentation of data at the annual meeting of the American Society of Clinical Oncology (“ASCO”) earlier this year in June. Shares shot up further in August when Gilead announced its intention to acquire immuno-oncology focused Kite Pharma. The Gilead-Kite deal has raised hopes for additional acquisition deals in the immuno-oncology therapeutic area with bluebird considered to be an attractive acquisition target. bluebird is also a Zacks Rank #3 stock and its shares are up 191.6% year to date.

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