What happened

Gene editing pioneer Sangamo Therapeutics Inc. (SGMO -4.31%) delivered a stunning 437.7% return in 2017, according to data from S&P Global Market Intelligence. Once left for dead by investors, this biotech's huge comeback last year came after it announced an important collaboration deal with Pfizer (PFE 0.11%).

So what 

Sangamo has been developing zinc finger nuclease gene-editing technology for over 20 years, but still has no approved products to sell. The stock entered 2017 at depressed levels after management announced significant delays across the company's development pipeline in August 2016.

Woman making a triumphant expression in front of an upward sloping chart.

Image source: Getty Images.

Howver, Sangamo's beatdown in 2016 set the stage for a big jump when the company inked a favorable deal with Pfizer in May. America's largest pharmaceutical company isn't interested in Sangamo's zinc finger tech, but it does want to develop some of the treatments discovered using the company's new gene-therapy platform.

Pfizer licensed Sangamo's hemophilia A candidate, SB-525 which uses an adeno-associated virus (AAV) to remove faulty genes and replace them with functional ones. In addition to $70 million up front, Pfizer will pay for development of SB-525. This takes a lot of the financial risk off of Sangamo, but leaves it eligible for milestone payments and double-digit-percentage royalties.

Now what

Investors should note that Pfizer hasn't picked up the reins just yet. At the 2018 J.P. Morgan Healthcare Conference, Sangamo said it had already treated three patients with SB-525, and expects to have some preliminary data for us to chew on in the first half. Results from its SB-525 trial could have implications beyond hemophilia. Pfizer recently added an amyotrophic lateral sclerosis (ALS) candidate to the collaboration agreement that uses the same AAV technology.

That move by Pfizer seems like a hedge against similar hemophilia treatments from BioMarin and Spark Therapeutics. Pfizer won't advance either program without solid data, so keep your eyes peeled.