Sonnet BioTherapeutics to Merge with Rorschach I LLC for $888 Million

Sonnet BioTherapeutics, a biotech firm listed on the Nasdaq, has announced a significant merger agreement with Rorschach I LLC, a company formed by crypto businesses. The deal, valued at $888 million, will shift Sonnet's focus from biotechnology to crypto treasury management under the new entity, Hyperliquid Strategies Inc. (HSI). HSI will hold Hyperliquid Layer-1 blockchain’s token, HYPE, and the merger is expected to close in the second half of 2025, subject to shareholder approval and regulatory conditions.

Upon completion, the combined company will operate as Hyperliquid Strategies Inc. and continue trading on the Nasdaq Capital Market under a new ticker. HSI will possess approximately 12.6 million HYPE tokens, valued at around $583 million, along with a minimum of $305 million in invested cash, bringing the company to a combined valuation of $888 million. The transaction involves a consortium of investors, including Paradigm, Galaxy Digital, Pantera Capital, Republic Digital, D1 Capital, and 683 Capital. The cash component of the deal will be used to acquire additional HYPE tokens.

Under the terms of the deal, Sonnet will become a wholly owned subsidiary of HSI and will retain some of its biotech operations while divesting other assets. Its biotech development program, SON-1010, will continue, supported by capital raised from the merger process. The startup leadership team will feature Bob Diamond, co-founder and CEO of Atlas Merchant Capital, as chairman of the board, and David Schamis, Atlas’s Chief Investment Officer and Co-founder, will become Chief Executive Officer of HSI. A new Chief Financial Officer is expected to be named soon, while the board will expand to include Eric Rosengren, of the Boston Federal Reserve, and two of Sonnet’s existing independent directors.

At the time of closing, HSI will also enter into a Sponsor Advisory Agreement (SAA) with Rorschach to expand the business by adding HYPE into the treasury. Concurrent with the signing of the Business Combination Agreement (BCA), Sonnet is raising $5.5 million in a private placement to accredited investors. The technology company is issuing non-voting convertible preferred stock and warrants to purchase common stock. The placement is expected to close later on today. An additional $2 million in convertible notes issued by Sonnet in June 2025 will convert into preferred stock and warrants as part of the same transaction. Net proceeds from these offerings will be used for general corporate purposes, including the development of existing biotech assets and expenses related to the Business Combination.

Ownership of HSI will be weighted toward Rorschach and new investors, who are projected to hold about 98.8% of the company. Existing Sonnet shareholders, including PIPE and bridge investors, will hold approximately 1.2%. Chardan is the sole placement agent for the transaction and exclusive financial advisor to Rorschach. Greenberg Traurig, LLP is providing legal counsel to Rorschach, while Lowenstein Sandler LLP is representing Sonnet. Additionally, Lucid Capital Markets, LLC, is delivering a fairness opinion to Sonnet’s board. The securities offered in the private placement are exempt from registration under the Securities Act of 1933 and may not be publicly traded unless registered or covered by another exemption.