Why did Sonnet BioTherapeutics (SONN) Shares Gain over 200% in Premarket Trading?

Sonnet BioTherapeutics Holdings, Inc. (NASDAQ: SONN) experienced a dramatic surge in premarket trading, with shares jumping over 227% to $16.92 after closing at $5.17 the previous day. This extraordinary price movement follows the company’s announcement of an $888 million business combination that will transform the biotechnology firm into a cryptocurrency treasury company focused on the HYPE token.

The deal represents one of the most significant pivots in recent biotech history, as Sonnet abandons its traditional drug development focus to capitalize on the rapidly growing digital asset sector.

SONN’s Dramatic Business Transformation

The business combination involves Sonnet merging with Rorschach I LLC, a newly formed entity backed by Atlas Merchant Capital and Paradigm Operations LP, among other prominent investors. Upon closing, the combined entity will be renamed Hyperliquid Strategies Inc (HSI) and is expected to hold approximately 12.6 million HYPE tokens worth $583 million, plus $305 million in gross cash proceeds. This positions HSI to become the largest U.S.-based publicly listed company holding HYPE tokens in its treasury.

The transaction includes participation from major strategic investors including Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital. Bob Diamond, Co-founder and CEO of Atlas, will serve as Chairman, while David Schamis will become CEO of the new entity. The deal is expected to close in the second half of 2025, subject to stockholder approval and other customary conditions.

Following the combination, legacy Sonnet stockholders will own approximately 1.2% of HSI, while new investors will control 98.8%. Despite the dramatic shift in focus, Sonnet’s biotech operations will continue as a wholly owned subsidiary, with the company maintaining development of its lead drug candidate SON-1010 while exploring partnerships for its other assets.

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Sonnet Shares Skyrocket Amid Crypto Reserve Pivot

The market’s reaction to Sonnet’s announcement was immediate and dramatic, with shares rocketing 227.27% to $16.92 in premarket trading from the previous close of $5.17. This represents one of the most significant single-day percentage gains for any biotech stock in recent memory. The company’s market capitalization surged to approximately $16.367 million based on the premarket pricing, though this remains modest compared to the $888 million transaction value.

Prior to the announcement, Sonnet had been trading within a 52-week range of $1.08 to $10.02, with relatively low average daily volume of 2.9 million shares. The company had been struggling financially, with negative earnings per share of $12.07 and no meaningful revenue from its biotech operations. The cryptocurrency pivot represents a complete strategic overhaul designed to unlock shareholder value through exposure to the rapidly appreciating HYPE token.

The HYPE token itself has emerged as a major player in the cryptocurrency space, recently becoming the 13th-largest cryptocurrency by market capitalization according to Forbes. As the native token of the Hyperliquid Layer-1 blockchain, HYPE powers a sophisticated trading infrastructure supporting approximately 200,000 orders per second.

This technological foundation, combined with institutional demand for HYPE exposure, makes the Sonnet transformation particularly compelling for investors seeking cryptocurrency exposure through traditional equity markets.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.