Sonnet Biotherapeutics Merges with Rorschach I LLC in a Blockbuster $888 Million Deal to Pivot into Crypto Treasury Management

• What’s the Big Deal About Sonnet’s Merger with Rorschach?
• Why the Pivot to Crypto Treasury Management?
• What Happens to Sonnet’s Biotech Operations?
• Who’s Leading the New HSI?
• How Is the Deal Being Funded?
• What’s Next for HSI and the Crypto Market?
• Who’s Advising the Deal?
• Final Thoughts: A Bold Bet on Crypto’s Future
• FAQs

In a groundbreaking move, Nasdaq-listed biotech firm Sonnet Biotherapeutics has announced an $888 million merger with crypto-focused entity Rorschach I LLC. The deal, set to close in late 2025, will shift Sonnet’s focus from biotechnology to crypto treasury management under Hyperliquid Strategies Inc. (HSI). The combined entity will hold $583 million in Hype tokens and $305 million in cash, backed by heavyweights like Paradigm and Galaxy Digital. Here’s the full breakdown of this high-stakes pivot.

What’s the Big Deal About Sonnet’s Merger with Rorschach?

Sonnet Biotherapeutics, a Nasdaq-listed biotech company, is making waves with its $888 million merger agreement with Rorschach I LLC, a crypto-driven entity. The deal, formalized under a Business Combination Agreement (BCA), has been greenlit by both boards and is expected to close in the latter half of 2025, pending shareholder and regulatory approvals. Post-merger, the company will rebrand as Hyperliquid Strategies Inc. (HSI) and trade under a new NASDAQ ticker, marking a dramatic shift from biotech to crypto treasury management.

Why the Pivot to Crypto Treasury Management?

The merger isn’t just a rebrand—it’s a complete strategic overhaul. HSI will take control of approximately 12.6 million HYPE tokens (valued at $583 million) and a minimum of $305 million in cash reserves, bringing its total valuation to $888 million. The move is backed by a consortium of crypto heavyweights, including Paradigm, Galaxy Digital, and Pantera Capital. According to insiders, the cash will be used to acquire additional tokens, solidifying HSI’s position in the digital asset space.

What Happens to Sonnet’s Biotech Operations?

While the merger signals a major shift, Sonnet won’t abandon biotech entirely. Its subsidiary, HSI, will retain some biotech operations while divesting non-core assets. The SON-1010 biotech development program will continue, funded by capital raised through the merger. This dual focus allows Sonnet to leverage its existing biotech IP while diving headfirst into the crypto market.

Who’s Leading the New HSI?

The executive lineup post-merger reads like a who’s who of finance and crypto. Bob Diamond, co-founder and CEO of Atlas Merchant Capital, will chair the board, while David Schamis, Atlas’s investment director, steps in as HSI’s CEO. Diamond emphasized the strategic fit in a press conference: “Hyperliquid’s protocol and Hype tokens offer a differentiated edge in digital assets.” A new CFO is expected to be named soon, and the board will expand to include Eric Rosengren, former Boston Fed president, alongside two existing Sonnet directors.

How Is the Deal Being Funded?

Alongside the BCA, Sonnet is raising $5.5 million in a private placement for accredited investors, issuing non-voting convertible preferred shares and warrants. Another $2 million in convertible notes issued in June 2025 will be rolled into the same transaction. Proceeds will fund general corporate purposes, including biotech R&D and merger-related expenses. Post-close, HSI’s ownership will skew heavily toward Rorschach and new investors (98.8%), with existing Sonnet shareholders holding just 1.2%.

What’s Next for HSI and the Crypto Market?

HSI plans to sign a Sponsor Advisory Agreement (SAA) with Rorschach to expand its business by adding Hype tokens to its treasury. The merger’s success hinges on crypto market conditions, but with backing from top-tier investors and a clear roadmap, HSI is poised to make a splash. As one analyst put it, “This isn’t just a merger—it’s a bet on the future of digital assets.”

Who’s Advising the Deal?

Chardan is acting as sole placement agent and Rorschach’s exclusive financial advisor. Legal counsel comes from Greenberg Traurig for Rorschach and Lowenstein Sandler for Sonnet. Lucid Capital Markets provided a fairness opinion to Sonnet’s board. The private placement securities are exempt from SEC registration under the 1933 Securities Act.

Final Thoughts: A Bold Bet on Crypto’s Future

Sonnet’s merger with Rorschach is more than a corporate reshuffle—it’s a high-stakes gamble on crypto’s institutional adoption. With a war chest of $888 million and elite backers, HSI could become a major player in digital asset management. Whether this pivot pays off remains to be seen, but one thing’s clear: the lines between biotech and blockchain have never been blurrier.

FAQs

What is the valuation of the Sonnet-Rorschach merger?

The combined entity is valued at $888 million, comprising $583 million in Hype tokens and $305 million in cash.

When will the merger close?

The deal is expected to finalize in the second half of 2025, pending shareholder and regulatory approvals.

Who are the key investors backing the merger?

The consortium includes Paradigm, Galaxy Digital, Pantera Capital, Republic Digital, D1 Capital, and 683 Capital.

Will Sonnet abandon biotech entirely?

No, HSI will retain some biotech operations, including the SON-1010 program, while pivoting focus to crypto treasury management.

What role will Bob Diamond play in HSI?

Diamond, co-founder of Atlas Merchant Capital, will serve as board chairman of the merged entity.