Sonnet BioTherapeutics Enters Major Business Combination to Enhance Cryptocurrency Strategy
On July 14, 2025, Sonnet BioTherapeutics, Inc. (NASDAQ: SONN) announced a significant step forward by entering into a definitive agreement for a business combination with Rorschach I LLC, a newly-formed entity backed by Atlas Merchant Capital LLC and other prominent sponsors. This move is set to transform Sonnet by establishing a strategic reserve of HYPE, the token associated with the Hyperliquid Layer-1 blockchain.
Overview of the Business Combination Agreement
The anticipated closing of this business combination will culminate in the formation of Hyperliquid Strategies Inc (HSI). Upon its establishment, HSI is expected to hold approximately 12.6 million HYPE tokens, valued at around $583 million based on the token’s spot price prior to signing the Business Combination Agreement. Furthermore, the gross cash invested will amount to at least $305 million, bringing the total assumed closing value to an impressive $888 million. Notably, this transaction includes strategic investments from key players in the crypto industry, including Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital. Once finalized, HSI is expected to list on the Nasdaq Capital Market under a new ticker symbol, positioning itself as a public cryptocurrency treasury company.
Strategic Financial Maneuvers
In addition to the substantial HYPE token reserve, the gross cash proceeds of $305 million will provide HSI with the capital needed to acquire even more HYPE tokens, placing it among the top strategic reserves of this cryptocurrency. Following the closing, Bob Diamond, Co-founder and CEO of Atlas, is set to become Chairman of the Board, while David Schamis, CIO and Co-founder of Atlas, will assume the role of Chief Executive Officer of HSI. Plans include appointing a new Chief Financial Officer and adding new board members, such as Eric Rosengren, former President of the Boston Federal Reserve, alongside two of Sonnet’s current independent directors.
Vision for the Future
Bob Diamond voiced his enthusiasm regarding this alliance, stating, “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. HYPE and the Hyperliquid protocol represent a truly differentiated offering within the digital asset space.” Additionally, Diamond pointed out that the unique team comprising seasoned investors and industry operators provides a competitive edge in maximizing these opportunities.
Matt Huang, Co-founder of Paradigm, added, “Hyperliquid has emerged as a crypto project with real fundamentals and systematic growth. There’s substantial institutional demand for exposure to Hyperliquid; however, accessing the native token HYPE in the United States has proven challenging. Our treasury strategy aims to contribute greatly to the Hyperliquid ecosystem over time.”
Sonnet’s Strategic Transition
Raghu Rao, Sonnet’s Interim CEO, expressed optimism regarding the partnership with Rorschach, emphasizing the unique opportunity to capitalize on advancements in digital assets and provide Sonnet with necessary funding to realize the value of their existing biotech assets. He believes this transaction represents an innovative path forward for Sonnet and its shareholders.
In line with this new strategy, Sonnet will conduct a private placement to accredited investors, aiming to raise $5.5 million through the issuance of non-voting convertible preferred stock and warrants. This funding is expected to close simultaneously with the business combination, thereby supporting Sonnet’s ongoing development and operational expenses related to the merger.
Continued Focus on Biotechnology
After the closing of the potential business combination, Sonnet will operate as a wholly owned subsidiary of HSI while also continuing to focus on its existing assets, including the development of SON-1010. There are plans to offload other non-core assets. Moreover, common shareholders and specific equity security holders in Sonnet will receive a Contingent Value Right (CVR) upon completion of the business combination.
Ownership Structure Post-Combination
In terms of ownership, it’s anticipated that approximately 98.8% of HSI will be owned by current Rorschach stakeholders and new investors at closing, while legacy stockholders of Sonnet, including those involved in the PIPE and bridge financing, will retain approximately 1.2% of ownership.
Pending Approval
The Business Combination Agreement has already received approval from the boards of both companies, but it is still subject to Sonnet stockholders’ approval and other customary closing conditions. The finalization of this business arrangement is projected for the latter half of this year.
Additional Insights
Chardan will serve as the sole placement agent for the transaction as well as the exclusive financial advisor to Rorschach. Legal representation includes Greenberg Traurig, LLP for Rorschach and Lowenstein Sandler LLP for Sonnet. Additionally, Lucid Capital Markets, LLC will provide a fairness opinion to Sonnet’s board of directors.
About the HYPE Token
HYPE is the native cryptocurrency of the Hyperliquid layer one blockchain, utilized in its custom consensus algorithm known as HyperBFT. The Hyperliquid ecosystem encompasses two major components: HyperCore, which features fully on-chain perpetual futures and spot order books, and HyperEVM, a general-purpose smart contract platform. As of July 6, 2025, HYPE ranks as the 13th-largest cryptocurrency by market capitalization.
About Sonnet BioTherapeutics
Sonnet BioTherapeutics is an innovative oncology-focused biotechnology company that specializes in developing biologic drugs with a proprietary platform known as FHAB (Fully Human Albumin Binding). This technology uses a fully human single chain antibody fragment designed to transport therapeutic agents to target tissues more efficiently, thereby enhancing the effectiveness and safety of immune-modulating biologics.
About Atlas Merchant Capital LLC
Founded by Bob Diamond and David Schamis, Atlas Merchant Capital LLC engages in compelling financial services market opportunities. With bases in New York and London, the firm leverages significant operational and investment expertise across the industry.
Conclusion
This business combination between Sonnet BioTherapeutics and Rorschach highlights a significant transition into the cryptocurrency sector, positioning Sonnet to leverage its traditional biotechnology assets alongside a new strategic focus in digital finance. As developments unfold, both companies aim to enhance shareholder value and capitalize on the promising intersection of biotech and cryptocurrency.
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