The World of 3-Parent Babies Officially Becomes Reality in the U.K.

Good morning and happy Friday, readers.

This is Sy filling in for Cliff. As 2016 draws to a close, there’s plenty to look back on in the world of the life sciences and health care. Controversies over drug pricing and wide-scale investigations into illegal collusion rocked the world of big pharma; insurers and hospitals are grappling with the reality of a Donald Trump administration, and what it might mean for their patients and bottom lines; and, oh, there was also some pretty special science inching closer to the marketplace, including the advent of the first CRISPR gene-editing clinical trials in humans.

For all the political anxieties and legitimate scandals to hit the sector, it’s that kind of biopharma innovation that will continue to change the face of medical care and human life itself in the years and decades to come. And governments will have to catch up with a brave new world wherein we can modify genes and re-engineer basic biology.

The U.K. took just such a step on Thursday, officially giving fertility clinics the green light to pursue applications that will allow them to create “three-parent babies” (albeit in very limited cases). This extraordinary new technique is meant to fight the scourge of devastating diseases passed on through mitochondria, allowing parents to give birth to children who share their genetic code but are free from their genetic defects.

This is, of course, controversial. Bioethicists and certain advocacy groups have warned that such technology can lead to a slippery slope with unknown consequences for future generations, and give rise to a Gattaca-like world of “designer babies.” But what’s clear is this: the future is here, whether we’re ready for it or not.

Read on for more of the day’s news, and enjoy your weekend.

Sy Mukherjee

@the_sy_guy

sayak.mukherjee@fortune.com

DIGITAL HEALTH

The next salvo in the CRISPR patent war: An industry-wide IP alliance. Earlier this month, we reported on the epic biotech legal battle between world class academic institutes and their allied biopharma partners that are jockeying for intellectual rights to the revolutionary CRISPR-Cas9 gene-editing technology. Now, one set of players in the fight has established a global IP alliance that not-so-coincidentally doesn't include its main rivals. CRISPR-focused firms Intellia Therapeutics, Caribou Biosciences (which was co-founded by Jennifer Doudna, one of the original CRISPR pioneers), CRISPR Therapeutics, and ERS Genomics announced Friday "a global cross-consent and invention management agreement for the foundational intellectual property covering CRISPR/Cas9 gene editing technology." The agreement also spans the Regents of the University of California, Emmanuelle Charpentier, and the University of Vienna. "Through this agreement, we are ensuring alignment in our efforts to protect and prosecute the foundational CRISPR/Cas9 discoveries made by Dr. Doudna, Dr. Charpentier, and their teams, which have transformed the genomics field and unleashed new therapeutic possibilities," said Intellia CEO Nessan Bermingham in a statement. "This strengthens Intellia's IP position as we continue forging ahead with the discovery and development of therapies for patients worldwide." It'll be interesting to see whether the opposing team—Broad Institute of MIT and Harvard University and scientist Feng Zhang, who are allied with companies like Editas—formalizes a similar alliance as the various outfits gird for their legal scuffle.

Flagship pours $285 million into new fund to fuel fledgling biotechs. The biotech VC outfit Flagship Ventures is changing its name to Flagship Pioneering and launching a follow-on $285 million fund that will be used to fuel rapid growth for startups that it helps birth that are ready to scale up, the firm announced on Thursday. "Flagship's operational scale and resources for founding and launching the next generation of breakthrough ventures have recently expanded. Through the innovative, opportunities-fund structure, we will now substantially increase investment into the growth-phase of select ventures and fuel an accelerated path to value creation while increasing Flagship's return on pioneering innovation," said Flagship CEO and founder Noubar Afeyan in a statement. The venture fund is now entering its 17th year.

U.K. fertility clinics can apply for 3-parent baby licenses. As I mentioned above, U.K. regulators made history on Thursday by officially sanctioning fertility clinics to become licensed practitioners of creating three-parent babies. The method can only be used in very specific circumstances in order to fight devastating mitochondrial disorders"Today's historic decision means that parents at very high risk of having a child with a life-threatening mitochondrial disease may soon have the chance of a healthy, genetically related child," said Sally Cheshire, chair of the U.K.'s Human Fertilisation and Embryology Authority (HFEA), in a statement. "This is life-changing for those families. The technique isn't new, and neither is the U.K.'s decision to embrace it. Rather, it's the final step in a regulatory process that has been taking shape over the last two years. (NPR, Fortune)

INDICATIONS

Merck wins a massive, record-breaking $2.5 billion judgment against Gilead. Gilead didn't have a particularly fun year, with tumbling sales of flagship drugs in its groundbreaking hepatitis C franchise. Well, things got a whole lot worse on Thursday, when a Delaware jury delivered a stunning verdict in favor of rival drug maker Merck that would entitle the company to more than $2.5 billion in royalties from Gilead. The IP case centers on the molecules at the heart of Gilead's blockbuster hep C cures Sovaldi and Harvoni, and the jury concluded that patents filed by Merck in 2014 were valid and encompasses the Gilead drugs. "The jury’s verdict upholds patent protections that are essential to the development of new medical treatments," said Merck. Gilead plans to appeal the decision. (Fortune)

Mylan introduces its generic EpiPen at a steep discount. Mylan, which became one of pharma's most recognizable villains after news broke of its gigantic price hike for the EpiPen, announced that a far cheaper generic version of its flagship device will go on sale next week. The authorized generic epinephrine product will be made available at a more than 50% discount. The question is whether Mylan's brand name power will be enough to overcome potential competition from other devices like Auvi-Q, which is set to return to the market in 2017. (Fortune)

THE BIG PICTURE

Political anxiety builds over repealing Obamacare's taxes. The problem with repealing a law that covers 20 million Americans and is funded through a variety of taxes and fees is that replacing it will require some serious tradeoffs—ones that may not be very palatable to the incoming GOP Congress. For instance, if an eventual Obamacare replacement aims to cover as many people as possible and not contribute massively to the deficit, then said replacement will also have to involve raising revenues. And that could prove anathema to fiscally conservative lawmakers who want to pursue both lower taxes and a lower deficit, raising the question of whether or not it would be prudent to repeal the various Obamacare funding mechanisms that already exist under current law. (Modern Healthcare)