Betting on Drug Trials: A New Leak Risk for Biotech Investors

Michael Watson and Joeri Klein of Deminor consider how the introduction of prediction markets for clinical trial outcomes and FDA approvals by Kalshi and Polymarket creates new opportunities for insiders to profit from confidential biotech information, potentially exposing regulatory gaps between securities and derivatives markets while providing investors, litigation funders and class action lawyers with new sources of evidence, including time-stamped betting activity, to investigate suspected information leaks, disclosure failures and potential securities claims in the US and Europe.

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