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Biotech Firm Sonnet Pivots to Crypto Treasury Strategy in $888M HYPE Token Deal

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Biotech Firm Sonnet Pivots to Crypto Treasury Strategy in $888M HYPE Token Deal

Sonnet BioTherapeutics (Nasdaq: SONN), an oncology-focused biotech company, announced Monday it will effectively abandon its core business model to become a cryptocurrency treasury company through an $888 million business combination centered on accumulating HYPE tokens from the Hyperliquid blockchain.

The dramatic pivot sees the Princeton-based company merging with Rorschach I LLC, a newly-formed entity backed by prominent crypto investors including Atlas Merchant Capital, Paradigm Operations, Galaxy Digital, and Pantera Capital. The resulting entity, to be renamed Hyperliquid Strategies Inc. (HSI), will hold approximately 12.6 million HYPE tokens worth $583 million at current prices.

From Cancer Drugs to Crypto Assets

The transformation represents one of the most dramatic corporate pivots in recent memory, as Sonnet abandons its proprietary FHAB (Fully Human Albumin Binding) cancer treatment platform to chase exposure to what has become the 13th-largest cryptocurrency by market capitalization.

Under the deal terms, existing Sonnet shareholders will retain just 1.2% of the combined company, while new crypto investors will control 98.8%. Legacy shareholders will receive contingent value rights (CVRs) tied to Sonnet's remaining biotech assets, though the company plans to dispose of most non-core assets while maintaining minimal development of its SON-1010 drug candidate.

The transaction brings together heavyweight crypto investors led by Bob Diamond, co-founder and CEO of Atlas Merchant Capital, who will serve as chairman of the new entity. David Schamis, Atlas's CIO and co-founder, will become CEO of HSI.

"We believe HYPE and the Hyperliquid protocol represent a truly differentiated offering within the digital asset space," Diamond said in announcing the deal.

Paradigm co-founder Matt Huang emphasized institutional demand for Hyperliquid exposure, noting that "the native token HYPE is difficult to access in the United States" - a gap the new public vehicle aims to fill.

Hyperliquid's Meteoric Rise

The deal capitalizes on Hyperliquid's rapid ascent in the crypto ecosystem. The layer-1 blockchain's native HYPE token has surged to become the 13th-largest cryptocurrency by market cap, according to Forbes. The platform combines fully on-chain perpetual futures and spot trading with support for approximately 200,000 orders per second.

HSI's $305 million in cash proceeds will enable further HYPE accumulation, potentially creating one of the largest strategic reserves of the token. The company plans to integrate HYPE into its treasury management strategy while providing institutional investors with regulated exposure to the hard-to-access asset.

The deal reflects broader trends of public companies pivoting to cryptocurrency treasury strategies, following the playbook established by MicroStrategy's bitcoin accumulation model. However, Sonnet's complete business transformation goes beyond typical treasury diversification, representing a fundamental shift from drug development to digital asset speculation.

The transaction requires Sonnet shareholder approval and is expected to close in the second half of 2025. The company will remain listed on NASDAQ under a new ticker symbol, though existing shareholders face massive dilution in the restructuring.

Financial Restructuring

Sonnet is simultaneously raising $5.5 million through a private placement of convertible preferred stock and warrants, with an additional $2 million in convertible notes from June converting into the new securities. The funding will support transaction costs and minimal continued biotech operations.

The deal includes advisory agreements with Rorschach to help expand HSI's operations and maximize HYPE integration opportunities. Former Boston Fed President Eric Rosengren is expected to join the board alongside other new directors.

The Sonnet transformation highlights the speculative fervor surrounding alternative cryptocurrencies and the lengths struggling public companies will go to access hot digital assets. For crypto investors, it provides a regulated vehicle for HYPE exposure that has been difficult to obtain through traditional channels.

HYPE hit an all-time high of ~$50 on Monday, on the back of the news, and is currently trading at $48.15, or up 23% in the past week. Sonnet stock also popped on Monday, rising from $5.25 pre-announcement to a high of $14.94, though it has since settled at $9.10, with a current market cap of $30.97 million.

Biotech Firm Sonnet Pivots to Crypto Treasury Strategy in $888M HYPE Token Deal
HYPE token price (Data: Coinmarketcap)
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