With the Nasdaq Biotechnology Index up 65% since the start of the year, it's clear that the biotech sector performed extraordinarily well in 2013-but which stocks were the biggest winners? Several small-cap and mid-cap biotech companies posted returns of 200% or more through the middle of December this year, and, in this series, I'll review the 15 biggest movers.

Let's continue this review with number 13 on the list, Anacor Pharmaceuticals (NASDAQ:ANAC). Anacor's boron based antiviral and antibacterial treatment pipeline has attracted industry attention for years. As the first of the company's topical drugs makes its way toward commercialization, investors are becoming confident Anacor can deliver alternative therapies for disease resistant to traditional carbon based drugs, boosting the company's shares by 234% this year through mid December.

Winding its way to market

Schering-Plough was among the first to embrace Anacor's boron technology. Schering plunked down $50 million in 2007, and agreed to up to $575 million more in milestones, to license Anacor's anti-fungal drug for toe infection.

However that drug ended up back in Anacor's hands when Schering was acquired by Merck in a massive $41 billion deal in 2009.

Anacor continued development on that drug, tavaborole, and filed for FDA approval in July. The FDA will review the phase 3 trial data and issue a decision on July 29, 2014.

If approved, Anacor hopes tavaborole's ability to clear onychomycosis in 10% of treated patients will be enough to win market share away from generic Lamisil and generic topical Pentac. While Lamisil cleared the fungus in 38% of patients, it's been associated with rare cases of liver failure. And Pentac requires frequent debridement of the nail and only clears the fungus in 5.5% to 8.5% of patients.

That suggests Anacor may have an opportunity to profit from treating the condition, which affects 35 million people in the United States. That big patient pool helped Pentac generate $125 million in annual sales in 2002, before losing patent protection. It also contributed to Lamisil racking up peak annual sales of $1.2 billion in 2004, before it lost patent protection too.

Collaboration wins and losses

While tavaborole appears to have succeeded in clinic, Anacor's deal with GlaxoSmithKline (NYSE:GSK) hasn't panned out, yet. Glaxo handed over $12 million up front, gave Anacor $10 million in equity financing, and agreed to between $252 million and $331 million in milestone payments in 2007 if Anacor could effectively deliver new boron drugs to market.

However the lead candidate being developed by the two companies -- a treatment for urinary tract infections -- was returned by Glaxo to Anacor in 2012.

Despite that stumble, industry enthusiasm hasn't waned. While Glaxo has stepped back in its collaboration with Anacor, the two companies are still working together on an early stage tuberculosis treatment.

In April, the Bill and Melinda Gates Foundation forked over $17.7 million to collaborate with Anacor on boron based solutions for neglected diseases in far flung regions. Importantly, the foundation also invested $5 million in Anacor stock.

And the U.S. Department of Defense teamed up with Anacor in October, giving the company a $13.5 million award to work on a new class of antibiotics.

Fool-worthy final thoughts

If approved, it won't be all clear sailing for tavaborole. A judge awarded Anacor $100 million in a suit brought against Valeant Pharmaceuticals (NYSE:VRX) tied to its new onychomycosis treatment Jublia.  But the judge didn't agree to an injunction or royalties. That means tavaborole will compete against Jublia, a drug which in phase 3 trials cleared the condition in up to 18% of patients. As a result, Anacor will need additional wins from its pipeline, which includes AN2728 for psoriasis and atopic dermatitis. Anacor expects to initiate phase 3 trials for that compound next year. http://www.anacor.com/an2728.php

Top Stock for 2014

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC.  E.B. Capital's clients may or may not have positions in the companies mentioned.  Todd owns Gundalow Advisor's, LLC.  Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Valeant Pharmaceuticals. 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.