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

• Why Is a Biotech Firm Merging with a Crypto Startup?
• What Does the Deal Structure Look Like?
• Who’s Backing This Unconventional Merger?
• How Is Sonnet Funding the Transition?
• What Happens to Sonnet’s Biotech Projects?
• When Will the Merger Finalize?
• What’s the Bigger Picture for Crypto-Biotech Crossovers?
• FAQs About the Sonnet-Rorschach Merger

In a surprising strategic shift, NASDAQ-listed biotech firm Sonnet Biotherapeutics has announced an $888 million merger with crypto-focused Rorschach I LLC. The deal, expected to close in late 2025, will transform Sonnet into Hyperliquid Strategies Inc. (HSI), a crypto treasury management powerhouse backed by Paradigm, Galaxy Digital, and other major investors. The new entity will hold $583 million in HYPE tokens and $305 million in cash, while maintaining some biotech operations. Executive shakeups include Atlas Merchant Capital’s Bob Diamond as Chairman and David Schamis as CEO. Meanwhile, Sonnet is raising $5.5 million in a private placement to fund the transition.

Why Is a Biotech Firm Merging with a Crypto Startup?

In what might be 2025’s most unexpected corporate pivot, Sonnet Biotherapeutics is trading test tubes for blockchain tokens. The $888 million merger with Rorschach I LLC—founded by crypto veterans—will create Hyperliquid Strategies Inc. (HSI), a new entity focused on managing crypto treasuries using the Hyperliquid Layer-1 blockchain. According to CoinGlass data, HSI will initially hold 12.6 million HYPE tokens (worth $583 million) and $305 million in cash, giving it a combined valuation matching the deal’s headline figure.

What Does the Deal Structure Look Like?

The Business Combination Agreement (BCA), approved by both boards, involves Sonnet becoming a wholly owned subsidiary of HSI while retaining select biotech assets like its SON-1010 development program. Post-merger, Rorschach and new investors will own 98.8% of HSI, leaving existing Sonnet shareholders with just 1.2%. Chardan Capital is orchestrating the deal as Rorschach’s exclusive financial advisor, with Greenberg Traurig and Lowenstein Sandler handling legal counsel.

Who’s Backing This Unconventional Merger?

The investor consortium reads like a who’s who of crypto heavyweights: Paradigm, Galaxy Digital, Pantera Capital, Republic Digital, D1 Capital, and 683 Capital. "We’re building a premier crypto treasury strategy to deliver long-term value," said incoming Chairman Bob Diamond during Monday’s press conference. His Atlas Merchant Capital co-founder David Schamis will take the CEO reins, supported by an expanded board including former Boston Fed President Eric Rosengren.

How Is Sonnet Funding the Transition?

Concurrent with the merger announcement, Sonnet revealed a $5.5 million private placement for accredited investors. The offering includes non-voting convertible preferred shares and warrants for common stock, with proceeds earmarked for biotech development and merger-related expenses. Notably, $2 million in convertible notes issued in June 2025 will be rolled into the same transaction. TradingView charts show Sonnet’s stock surged 47% on the news before settling at a 28% gain.

What Happens to Sonnet’s Biotech Projects?

While the focus shifts to crypto, Sonnet’s immuno-oncology program SON-1010 will continue with funding from the merger. Other biotech assets face divestiture—a MOVE that’s already drawing mixed reactions. "Biotech investors didn’t sign up for crypto exposure," noted a BTCC analyst, "but the treasury management angle could attract institutional capital." The company’s remaining operations will report through HSI’s new organizational structure.

When Will the Merger Finalize?

Pending shareholder and regulatory approvals, the deal is slated to close in late 2025. A Sponsor Advisory Agreement (SAA) with Rorschach will take effect then, focusing on HYPE token acquisition for treasury reserves. The timeline aligns with crypto market projections from CoinGlass, which anticipates increased institutional adoption of Layer-1 solutions next year.

What’s the Bigger Picture for Crypto-Biotech Crossovers?

This merger exemplifies a growing trend of public companies leveraging crypto assets for treasury management. Similar to MicroStrategy’s bitcoin bets but with a Layer-1 twist, HSI aims to capitalize on Hyperliquid’s blockchain infrastructure. "The HYPE token offers unique utility in decentralized finance," Diamond emphasized, though skeptics question whether biotech and crypto can truly synergize.

FAQs About the Sonnet-Rorschach Merger

Why is Sonnet Biotherapeutics merging with a crypto company?

The merger allows Sonnet to pivot into crypto treasury management while maintaining select biotech operations, leveraging Rorschach’s expertise in blockchain and digital assets.

How much will existing Sonnet shareholders own post-merger?

Current shareholders will retain approximately 1.2% of the combined company, with Rorschach and new investors controlling 98.8%.

What happens to Sonnet’s SON-1010 biotech program?

Development will continue with funding from the merger proceeds, though other biotech assets may be divested.

Who are the key investors backing this deal?

The consortium includes Paradigm, Galaxy Digital, Pantera Capital, and other major crypto investment firms.

When is the merger expected to close?

Late 2025, pending shareholder and regulatory approvals.