Sonnet BioTherapeutics, Inc. (NASDAQ: SONN) announced a definitive agreement for an $888 million business combination with Rorschach I LLC that will transform the oncology-focused biotechnology company into a cryptocurrency treasury management entity. The newly-created Hyperliquid Strategies Inc. (HSI) will hold approximately 12.6 million HYPE tokens representing $583 million in value, plus gross cash invested of at least $305 million.
The transaction represents an unprecedented pivot for Sonnet, which has been developing biologic drugs through its proprietary FHAB (Fully Human Albumin Binding) platform. Following the merger, HSI will become the largest U.S.-listed public company to hold HYPE tokens in its treasury, focusing on the native token of the Hyperliquid Layer-1 blockchain.
Strategic Transformation and Leadership Changes
The business combination includes participation from prominent strategic investors, including Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital. Upon closing, Bob Diamond, Co-founder and CEO of Atlas Merchant Capital, will serve as Chairman of the Board, while David Schamis, CIO and Co-founder of Atlas, will become Chief Executive Officer of HSI.
"We are delighted by this opportunity to partner with Sonnet in establishing a leading crypto treasury management strategy to ultimately deliver strong value to shareholders," Diamond commented. "We believe HYPE and the Hyperliquid protocol represent a truly differentiated offering within the digital asset space."
The leadership team will also include Eric Rosengren, former President of the Boston Federal Reserve, as a board member, alongside two of Sonnet's current independent directors and a new Chief Financial Officer.
HYPE Token and Hyperliquid Protocol
HYPE serves as the native token of the Hyperliquid layer one blockchain and is utilized in Hyperliquid's custom consensus algorithm, HyperBFT. The Hyperliquid stack comprises two components: HyperCore, which includes fully on-chain perpetual futures and spot order books supporting approximately 200,000 orders per second, and HyperEVM, a general-purpose smart contract platform.
Matt Huang, Co-founder of Paradigm, emphasized the institutional demand for HYPE exposure: "Hyperliquid has broken out as a crypto project with real fundamentals: strong core contributors, exacting product quality, and meteoric growth. We hear lots of institutional demand for exposure to Hyperliquid, yet the native token HYPE is difficult to access in the United States."
As of July 6, 2025, HYPE became the 13th-largest cryptocurrency by market capitalization according to Forbes, with the decentralized exchange protocol achieving over $1.5 trillion in trading volume.
Biotech Assets and Shareholder Structure
Following the completion of the business combination, Sonnet will operate as a wholly owned subsidiary of HSI and continue focusing on existing assets and business lines, including the development of SON-1010, while disposing of other assets. Common shareholders and certain other holders of equity securities will receive a contingent value right (CVR) at closing tied to the future value of Sonnet's biotech assets.
Raghu Rao, Sonnet's Interim Chief Executive Officer, stated: "We believe this proposed combination with Rorschach provides us with a unique and exciting opportunity. We will be able to capitalize on the recent advancements around digital assets and equip Sonnet with funding to potentially realize the future value of our existing biotech assets."
The ownership structure will see current owners of Rorschach and other new investors controlling approximately 98.8% of HSI, while legacy stockholders of Sonnet, including PIPE and bridge investors, will own the remaining 1.2%.
Financing and Transaction Timeline
In connection with the business combination agreement, Sonnet will raise $5.5 million through a private placement of non-voting convertible preferred stock and warrants to accredited investors. Additionally, $2.0 million in convertible notes sold in June 2025 will convert into preferred stock and warrants at closing.
The Business Combination Agreement has received approval from both companies' governing boards and requires approval from Sonnet stockholders along with other customary closing conditions. The transaction is expected to close in the second half of 2025, with HSI expected to remain listed on the Nasdaq Capital Market under a new ticker symbol.
Chardan is serving as sole placement agent and exclusive financial advisor to Rorschach, while Greenberg Traurig, LLP provides legal counsel to Rorschach and Lowenstein Sandler LLP represents Sonnet. Lucid Capital Markets, LLC is providing a fairness opinion to Sonnet's board of directors.
