Prediction market platform Kalshi is expanding into biotech, launching contracts Wednesday night that let traders bet on clinical trial outcomes and drug approvals from companies including Sanofi (NASDAQ:SNY) and Gilead Sciences Inc (NASDAQ:GILD).

The 13 new contracts were launched in partnership with AppliedXL, an AI firm that monitors biomedical data, according to a Bloomberg report.

Each pays out $1 if the FDA approves the drug and nothing if it doesn’t.

That gives traders a direct way to play FDA decision days, known as PDUFA dates, which routinely send biotech stocks swinging double digits, without owning the stock itself.

Critics say the wagers create an incentive to trade on nonpublic information and could distort thinly traded markets or even influence ongoing trials.

Rival Polymarket Got There First

Polymarket already runs an active book of FDA approval markets, where contracts priced as near-certainties have recently collapsed to zero overnight.

On June 10, a contract on Swedish biotech Camurus’ acromegaly drug Oclaiz crashed from 82% to zero overnight after the FDA rejected it for a second time over inspection issues at a third-party manufacturing plant.

Traders holding NO shares were paid more than fivefold, according to an analysis published by Polymarket.

The same analysis found that seven of nine rejections across resolved markets came down to factory issues rather than the drugs themselves.

That pattern repeated on June 30, when Unicycive Therapeutics (NASDAQ:UNCY) received a second rejection over the same third-party manufacturing deficiencies, sending another contract to zero.

Kalshi Recruits A Famous Defender

Kalshi reportedly spent months consulting physicians, bioethicists and industry figures before the launch, including Anne Wojcicki, the 23andMe co-founder who bought the genetics firm out of bankruptcy last year through a nonprofit.

Wojcicki told Bloomberg the markets could help sick patients evaluate their options by highlighting which trials look most promising, though she said guardrails are needed so the wagers don’t affect study outcomes.

Regulator Appears On Board

CFTC Chair Michael Selig has reportedly touted drug-trial contracts as a way for patients to hedge future treatment costs.

Kalshi says it won’t offer contracts tied to pediatric studies or trials still recruiting participants. The platform hosted $3.6 million in science and technology trading in the last week of June, compared with $5.4 billion on sports, according to Dune Analytics data.

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Kalshi and Benzinga have an existing data collaboration agreement.