Biotech Sonnet to transform into public crypto treasury company. All about the deal

Shares of oncology-focused biotech Sonnet BioTherapeutics soared more than 80% yesterday, July 14, after the company announced a deal to become a public cryptocurrency treasury company.

Sonnet BioTherapeutics rose 86% yesterday on the Nasdaq to $9.60 per share. At one point, shares changed hands at $23 per share, more than 350% above the closing price on Friday. In premarket trading today, Sonnet is down 21% as of this writing.

The biotech startup has combined with Rorschach I, a newly formed company affiliated with Atlas Merchant Capital, a venture capital fund founded by former Barclays CEO Bob Diamond. Rorschach I is also affiliated with Paradigm Operations, a crypto investment firm founded by Coinbase cofounder Fred Ehrsam and Sequoia Capital Partner Matt Huang. 

The deal is valued at $888 million and features prominent strategic investors like Pantera Capital, led by former Goldman Sachs trader and Tiger Management CFO Dan Morehead, and GameStop investor D1 Capital, among others. 

The combination will create a new, publicly traded entity called HyperLiquid Strategies. It will be a crypto treasury company holding HYPE, the token of the Hyperliquid Layer-1 blockchain. 

HyperLiquid Strategies is expected to hold 12.6 million HYPE tokens for $583 million and gross cash invested of at least $305 million, which will be used to purchase more tokens in the future. 

HyperLiquid is a high-performance decentralized exchange specifically designed for trading open-ended futures contracts. The team includes people from Caltech and MIT who previously worked at Airtable, Citadel, Hudson River Trading, and Nuro, as stated on the company's website. 

Previously, the company was self-funded and had not raised external capital to "focus on building a product they believe in without external pressure." 

Huang was quoted in the Sonnet press release as saying, "We hear lots of institutional demand for exposure to HyperLiquid, yet the native token HYPE is difficult to access in the U.S."

With a market capitalization of nearly $16 billion, HYPE is the eleventh-largest cryptocurrency, writes TheStreet Roundtable. Its value has increased 8% to $47.40 per token in the last week and 1,380% in the last 12 months.

Sonnet's existing biotech operations, focused on oncology and autoimmune disease treatments, will be spun off into a separate subsidiary that will continue to operate independently. The newly combined, publicly traded entity will shift its focus to managing crypto assets.

Proceeds from the deal will be used for general corporate purposes and working capital, including continued development of Sonnet’s biotech pipeline. While the company does not yet have any approved therapies, several candidates are currently in clinical trials, a stage that historically requires significant investments. The company's latest financial report put cash at $4.8 million as of the end of 2024, with a net loss of $3.1 million reported for the 2024 fourth quarter. 

According to data from MarketWatch, Sonnet has only one rating, from investment firm Chardan Capital, which rates the stock a "buy" at a target price of $20 per share. 

The AI translation of this story was reviewed by a human editor.