Sonnet BioTherapeutics (SONN) shares soar 200%+ on Monday after announcing it has entered into a definitive agreement for a transformative business combination with Rorschach I LLC, a newly formed entity backed by Atlas Merchant Capital, Paradigm, and other notable crypto sponsors. The deal will pivot Sonnet into an entirely new role as a public cryptocurrency treasury company, to be renamed Hyperliquid Strategies Inc. (HSI).

The transaction represents a bold shift in Sonnet’s strategic direction, aligning with the rising prominence of the Hyperliquid Layer-1 blockchain. At the center of the deal is a reserve of 12.6 million HYPE tokens, valued at approximately $583 million (based on recent spot prices). With an additional $305 million in gross cash invested, the transaction carries an implied total value of $888 million.

Upon closing, HSI is expected to remain listed on Nasdaq under a new ticker symbol, positioning itself as a top-tier holder of HYPE and seeking to expand its crypto treasury strategy by integrating digital assets into the public equity landscape.

The deal includes participation from several high-profile crypto investors, including Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital—adding institutional weight and strategic validation to HSI’s model.

At the closing of the transaction, Bob Diamond, Co-founder and CEO of Atlas Merchant Capital, will become Chairman of HSI, while David Schamis, Atlas Co-founder and CIO, will assume the role of Chief Executive Officer. A new CFO is expected to be appointed, and Eric Rosengren, former President of the Boston Fed, will join the Board, alongside two of Sonnet’s current independent directors.

HSI will also enter into a Sponsor Advisory Agreement with Rorschach, aimed at expanding operations and integrating HYPE into a long-term treasury framework.

“We are delighted by this opportunity to partner with Sonnet in establishing a leading crypto treasury management strategy,” said Bob Diamond. “We believe Hyperliquid Strategies will be well positioned to maximize this opportunity, supported by a team with deep crypto and financial services experience.”

Matt Huang, Co-founder of Paradigm, added:”Hyperliquid has broken out as a crypto project with real fundamentals—strong contributors, exacting product quality, and meteoric growth. We’re excited about this treasury strategy, which helps institutional investors access HYPE—a token still difficult to obtain in the U.S.”

As part of the transformation, Sonnet will become a wholly owned subsidiary of HSI, continuing development of its lead biotech candidate SON-1010, while divesting other non-core assets. To preserve value for legacy shareholders, common stockholders and select equity holders will receive Contingent Value Rights (CVRs) at closing, tied to the future potential of Sonnet’s biotech pipeline.

Upon completion of the deal, Rorschach owners and new investors will collectively hold approximately 98.8% of the combined company, while Sonnet’s legacy stockholders—including PIPE and bridge investors—will retain about 1.2%.

In connection with the transaction, 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 previously issued convertible notes will convert into the new preferred equity upon closing, which is expected by July 14, 2025. Proceeds will be used for general corporate purposes, continued biotech development, and to support transaction-related expenses.

This deal stands as one of the most ambitious biotech-to-crypto transitions ever seen in the public markets, signaling a potentially disruptive fusion of digital asset strategies with traditional corporate structures. With a substantial HYPE token reserve and elite investor backing, Hyperliquid Strategies Inc. aims to pioneer a new class of publicly traded crypto treasury firms—reshaping how institutional capital engages with blockchain ecosystems.