Sonnet BioTherapeutics, Inc. (NASDAQ: SONN) announced a definitive agreement for a business combination with Rorschach I LLC, a new entity formed by affiliates of Atlas Merchant Capital LLC, Paradigm Operations LP, and other sponsors.
The transaction will transform Sonnet into a cryptocurrency treasury company through a substantial reserve of HYPE, the native token of the Hyperliquid Layer-1 blockchain.
Upon closing, the combined company will be named Hyperliquid Strategies Inc. (“HSI”) and is expected to hold roughly 12.6 million HYPE tokens valued at $583 million (based on spot pricing prior to the agreement) and $305 million in gross cash, for a total closing valuation of $888 million. HSI will be listed on the Nasdaq Capital Market under a new ticker and become the largest U.S.-based publicly traded company to hold HYPE in its treasury.
Notable strategic investors in the transaction include Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital. The $305 million in proceeds will enable HSI to increase its HYPE holdings and build one of the largest strategic HYPE reserves.
Bob Diamond, Co-founder and CEO of Atlas, will become Chairman of HSI, while Atlas Co-founder and CIO David Schamis will serve as CEO. Former Boston Fed President Eric Rosengren and two of Sonnet’s current independent directors are expected to join the board. A new CFO will also be appointed. Upon close, HSI will enter into a Sponsor Advisory Agreement with Rorschach to support business expansion through HYPE integration.
Bob Diamond stated:
“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. We believe Hyperliquid Strategies will be well placed to maximize these opportunities because of our unique team of investors and operators with deep, relevant crypto and financial services experience.”
Matt Huang, Co-founder of Paradigm, added:
“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. We are excited about this treasury strategy, which we believe will contribute to the Hyperliquid ecosystem in many ways over time.”
Raghu Rao, Interim CEO of Sonnet, said:
“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.”
Nailesh Bhatt, Chairman of Sonnet’s Board, added:
“On behalf of the Sonnet Board, we are incredibly grateful to Raghu for stepping in as interim CEO and spearheading the operational and strategic efforts despite the turbulent times. We believe this transaction holds a lot of promise and opportunity, and we are dedicatedly working to bring it to fruition. Raghu along with the rest of the leadership at Sonnet attributed significant efforts into determining the best path forward and we believe this transaction clearly represents just that. We are excited for the next phase ahead and look forward to optimizing value for all stakeholders.”
Sonnet will raise $5.5 million in a private placement of non-voting convertible preferred stock and warrants, expected to close July 14, 2025. Additionally, $2 million in convertible notes sold in June 2025 will convert into preferred stock and warrants. Proceeds will support general operations, biotech development, and transaction costs.
After the combination, Sonnet will operate as a wholly owned subsidiary of HSI, focusing on its core assets including SON-1010. Holders of Sonnet equity will receive CVRs (contingent value rights), and partnering discussions on biotech assets remain ongoing.
Pre-financing, Rorschach owners and new investors will own ~98.8% of HSI, with legacy SONN shareholders (including PIPE and bridge investors) owning ~1.2%.
The Business Combination has been approved by both companies’ boards and is expected to close in the second half of 2025, pending shareholder approval and customary conditions.
Pump Radar
Stock Alerts