Kalshi to Launch Prediction Markets on FDA Drug Approvals, Clinical Trial Outcomes

Prediction market platform Kalshi announced Thursday it will begin offering contracts allowing investors to bet on the outcomes of pharmaceutical clinical trials and U.S. Food and Drug Administration (FDA) decisions. The new markets, launched in partnership with clinical trial intelligence firm AppliedXL, will make the odds of drug development milestones public for the first time, according to a Reuters report.

A New Avenue for Biotech Investing

This new offering allows traders to take a financial position on the success or failure of a single drug, isolating it from the broader performance of the parent company's stock. Kalshi said the markets allow investors to act on a view about a single pharmaceutical asset, rather than an entire company.

The initiative will begin as a pilot program, initially focusing on the outcomes of late-stage clinical trials. Contracts will only be listed for trading after a trial has finished enrolling participants, according to the announcement.

How the Contracts Work

To ensure clarity and objectivity, each contract will be based on specific, named public documents. AppliedXL will define the precise criteria for interpreting a document's outcome before a contract opens for trading, not after results are released.

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Key settlement sources for the contracts include:

• The registered primary endpoint on ClinicalTrials.gov
• The official FDA approval letter
• The voting record of an agency advisory committee

Initial Offerings and Safeguards

Contracts available at launch will cover more than a dozen FDA decisions and trial outcomes. Notable markets include the approval decision for Gilead’s experimental cancer drug, anito-cel, and Summit Therapeutics’ experimental lung cancer drug, ivonescimab. Another contract will focus on whether an Alzheimer's disease drug in development by AriBio will meet its main goals in a late-stage trial.

To address potential conflicts of interest, Kalshi stated it will require employment verification for all traders. The platform will also prohibit trading by any individual who holds material nonpublic information related to the events.