In a stunning pivot that has sent shockwaves through both the biotechnology and cryptocurrency sectors, Sonnet BioTherapeutics (NASDAQ: SONN) announced on July 14, 2025, a transformative $888 million business combination with Rorschach I LLC. This deal will fundamentally reshape Sonnet’s business, transitioning it from a biotech firm to a pioneering cryptocurrency treasury company focused on the HYPE token, native to the Hyperliquid Layer-1 blockchain.
The newly formed entity, to be named Hyperliquid Strategies Inc. (HSI), is set to become the largest U.S.-based publicly listed company holding HYPE tokens in its treasury. The transaction includes approximately 12.6 million HYPE tokens valued at $583 million, alongside $305 million in gross cash proceeds, signaling a bold strategic shift for Sonnet and its shareholders.
Sonnet’s shares responded explosively to the announcement, soaring over 320% intraday, with premarket trading surging more than 227% to $16.92 from a previous close of $5.17. This remarkable price jump marks one of the most significant single-day percentage gains recorded in recent biotech history and underscores investor enthusiasm for the company’s new direction.
Rorschach I LLC, the merging partner, is a newly formed entity backed by prominent investors including Atlas Merchant Capital, Paradigm Operations LP, and other influential crypto sponsors such as Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital. Bob Diamond, co-founder and CEO of Atlas Merchant Capital, will assume the role of Chairman of HSI, while David Schamis, Atlas co-founder and CIO, is slated to become CEO. The company also plans to appoint a new CFO and add notable board members, including Eric Rosengren, former President of the Boston Federal Reserve, lending regulatory credibility to the venture.
Bob Diamond expressed optimism about the new partnership, 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. We believe HYPE and the Hyperliquid protocol represent a truly differentiated offering within the digital asset space." Similarly, Matt Huang, co-founder of Paradigm, praised the project’s fundamentals, noting, "Hyperliquid has broken out as a crypto project with real fundamentals—strong 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. We are excited about this treasury strategy, which we believe will contribute to the Hyperliquid ecosystem in many ways over time."
Under the terms of the deal, Sonnet stockholders will retain a modest 1.2% ownership stake in HSI, with new investors and Rorschach owners controlling the remaining 98.8%. To preserve value for legacy shareholders, common stockholders and select equity holders will receive Contingent Value Rights (CVRs) tied to the future potential of Sonnet’s existing biotech pipeline. Sonnet itself will continue operating as a wholly owned subsidiary of HSI, maintaining development of its lead drug candidate, SON-1010, while divesting other non-core assets.
The transaction includes a private placement raising $5.5 million through non-voting convertible preferred stock and warrants to accredited investors, along with the conversion of $2 million in previously issued convertible notes into preferred equity. These funds will support general corporate purposes, ongoing biotech development, and transaction-related expenses. The business combination is expected to close in the second half of 2025, pending stockholder approval and customary closing conditions.
Sonnet’s dramatic pivot reflects a growing trend of traditional companies embracing cryptocurrency and blockchain technology to unlock shareholder value and align with emerging market opportunities. The HYPE token is integral to the Hyperliquid blockchain’s custom consensus algorithm, HyperBFT, and powers a sophisticated trading infrastructure supporting approximately 200,000 orders per second. As of early July 2025, HYPE had risen to become the 13th-largest cryptocurrency by market capitalization, according to Forbes.
Hyperliquid itself has demonstrated impressive market activity, handling over $1.5 trillion in perpetuals trading volume in the past year and recently achieving a record $11.3 billion in open interest. The new entity’s strategy includes building one of the largest strategic reserves of HYPE tokens in the public markets, providing institutional investors with a rare opportunity to gain exposure to this fast-growing digital asset through a regulated equity vehicle.
Despite the excitement, the transaction carries inherent risks. The biotech division’s continued operation as a subsidiary indicates Sonnet’s commitment to its original scientific mission, yet the significant dilution of legacy shareholders and the company’s reliance on the volatile cryptocurrency market introduce uncertainties. The stock price of HSI is expected to correlate closely with the performance of the HYPE token, which may fluctuate dramatically due to market and regulatory factors.
Industry observers note that this deal represents one of the most ambitious transformations from biotech to crypto treasury management ever witnessed on public markets. The involvement of seasoned financial leaders like Bob Diamond, alongside top-tier crypto venture firms, suggests a well-structured approach to integrating digital assets into traditional corporate frameworks.
Sonnet’s interim CEO, Raghu Rao, remarked, "Following a thorough review, 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. We believe this transaction and the strategic options it provides offer Sonnet and our shareholders with an innovative path forward and the potential for significant value creation." Sonnet’s board chairman, Nailesh Bhatt, echoed this sentiment, praising the leadership’s efforts to navigate turbulent times and expressing confidence in the transaction’s promise.
As the deal moves toward completion, investors and market participants will be closely watching how Hyperliquid Strategies Inc. navigates the intersection of biotechnology and cryptocurrency. The company’s success could pave the way for a new class of publicly traded firms that blend digital asset strategies with traditional business models, potentially reshaping how institutional capital engages with blockchain ecosystems.
For now, Sonnet’s radical transformation stands as a testament to the dynamic and rapidly evolving nature of both the biotech and crypto industries, highlighting the innovative paths companies are willing to explore in pursuit of growth and shareholder value.
