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 review the 15 biggest movers of 2013. Let's continue this review with number 5 on the list, Puma Biotechnology (PBYI 1.37%).

With nearly a quarter of global research and development  spending focused on oncology drugs in 2011, it's not surprising that a number of the drugs being developed then are getting closer to approval, including Puma Biotechnology's neratinib.

Impressive results so far

This isn't the first time Puma's CEO Alan Auerbach has sought to bring next generation cancer treatment to market. The first time was with Cougar Biotechnology, a company Auerbach sold to Johnson & Johnson (JNJ 0.22%) in 2009. At Cougar, a focus on prostate cancer produced the uber successful Zytiga, which is on track to reach blockbuster billion dollar status over the coming year.

At Puma, Auerbach is ushering forward neratinib as a treatment for stage 2 and higher breast cancer. So far, results for nerabinib appear promising. Recently reported data from a phase 2 trial suggest combining neratinib with paclitaxel may outperform a combination of Roche's (RHHBY -0.50%) blockbuster drug Herceptin with paclitaxel in HER2 positive patients. Outperforming Herceptin could prove big for Puma given Herceptin generated $466 billion in U.S. sales alone during the third quarter for Roche.

Puma gained control of neratinib in a 2011 licensing deal with Pfizer (PFE -1.05%). Pfizer dealt the drug as part of its aim to consolidate research efforts around fewer candidates in a bid to more quickly offset sales lost to patent expiration of high profile drugs like Lipitor.

Since, Puma has ramped efforts to position neratinib as one of the most promising drugs in industry pipelines.

In March, the company announced a head-to-head phase 3 test of neratinib, combined with former Roche blockbuster Xeloda, against GlaxoSmithKline's (GSK -0.88%) Tykerb plus Xeloda. Data from that 600 person trial is expected in 2015 and if it proves successful in improving progression free survival, the company could move quickly to file for FDA approval.

Riding a one-trick pony

Puma investors will have to hope neratinib succeeds in those late stage trials given it's the only drug in Puma's pipeline. That makes Puma a bit rare among the best performing biotechs this year. Most emerging plays have more than one novel compound and are targeting multiple indications.

That means Puma investors are exposed to significant risk if anything goes wrong in terms of neratinib's safety or efficacy. However if it does succeed it may clear the way for an acquirer to step up similar to what Johnson did with Cougar.

One potential suitor may eventually be Pfizer because the company is already entitled to receive royalties on eventual sales of the drug.   An argument could also be made that Johnson's relationship with Auerbach through Cougar or Roche's desire to protect Herceptin could make them interested in a deal. And we shouldn't count out Glaxo either.

If Puma decides to go-it alone, eventual approval could prove very lucrative given $16.5 billion was spent on breast cancer in the U.S. in 2010 and as much as $25 billion could be spent caring for those with the disease by 2010, according to the National Cancer Institute.

Either way, Puma's $3 billion market cap is pretty rich for a company without any revenue and only one product in its pipeline.

Another incredible growth stock to watch now