06:58 AM EDT, 07/14/2025 (MT Newswires) -- Sonnet BioTherapeutics ( SONN ) said Monday it has agreed to merge with Rorschach, backed by Atlas Merchant Capital and Paradigm Operations and will build a reserve of HYPE, the token of the Hyperliquid Layer-1 blockchain.

Sonnet said the new entity, Hyperliquid Strategies (HSI), will hold 12.6 million HYPE tokens valued at $583 million and receive at least $305 million in cash, valuing the deal at $888 million.

HSI will be listed on Nasdaq under a new ticker and operate as a public cryptocurrency treasury company, with strategic investors including Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital.

Parallely, Sonnet said it plans to raise $5.5 million via private placement of convertible preferred stock and warrants, closing July 14.

A $2 million convertible note from June will convert at closing. Funds will support corporate operations, biotech development, and transaction costs, it added.

Following the business combination, Sonnet said it will become a wholly owned subsidiary of Hyperliquid Strategies and continue developing its biotech asset SON-1010, its lead candidate for cancer immunotherapy, while divesting other holdings.

Common shareholders and certain equity holders will receive a contingent value right at closing it said, adding that it is also pursuing commercial partnerships for its biotech portfolio.