This Cancer Biotech Company Is Making a Big Bet on the HYPE Crypto. Should You Buy Its Stock Here?

Michael Saylor-led MicroStrategy (MSTR) started it in 2020. Now, from Tesla (TSLA) to Block (XYZ) to even the federal government, it seems that everyone is doing it to various degrees. I am referring, of course, to becoming a crypto treasury company or adopting a dedicated strategy to accumulate reserves of a specific cryptocurrency. Although most of the time, the preferred choice of crypto is the world's most popular and largest digital asset, Bitcoin (BTCUSD), building reserves of a token that's not as widely accessible for investment can be a strategically prudent move. That's because it can raise the stock's appeal as a “proxy trade” for the underlying token.

Based on recent headlines, it seems that this is exactly what cancer-focused clinical-stage biotechnology company Sonnet BioTherapeutics is doing with the little-known HYPE crypto.

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About Sonnet BioTherapeutics

Founded in 2011, Sonnet BioTherapeutics (SONN) has focused on developing novel immuno-oncology therapeutics using its proprietary F_HAB platform, which leverages fully human albumin-binding antibody fragments to deliver immune-activating molecules such as IL‑12 or IL‑6 directly to tumors.

Valued at a modest market cap of $8.9 million, SONN stock has gained 89.4% on a YTD basis, but still closed Monday at a price of $2.83, placing it firmly in penny stock territory.

www.barchart.com Following the Wall Street trend, Sonnet has recently formed a SPAC-like business combination to transition into a crypto treasury company focused on the HYPE token. The company has agreed to merge with Rorschach I LLC, a newly formed vehicle backed by Atlas Merchant Capital, Paradigm, and other crypto-investor groups. Through this merged company, which will be called Hyperliquid Strategies, Inc or HSI, it will hold about 12.6 million HYPE tokens worth $583 million at the time of signing of the agreement and $305 million in cash, totaling an assumed $888 million valuation.

Notably, Sonnet's legacy biotech unit will operate under HSI as its wholly owned subsidiary.

Commenting on the development, interim Sonnet CEO Raghu Rao said, “Following a thorough review, we believe this proposed combination with Rorschach provides us with a unique and exciting opportunity. We will be able to capitalize on the recent advancements around digital assets and equip Sonnet with funding to potentially realize the future value of our existing biotech assets."

Story ContinuesBob Diamon, co-founder and CEO of Atlas, who is poised to be the Chairman of the Board of the new entity, added, “We believe HYPE and the Hyperliquid protocol represent a truly differentiated offering within the digital asset space. We believe Hyperliquid Strategies will be well placed to maximize these opportunities because of our unique team of investors and operators with deep, relevant crypto and financial services experience.”

But why HYPE? What is its utility, and can it draw interest from crypto investors over the long haul - or will the “hype” die down after a while? Let's find out.

What is HYPE?

HYPE is the native token that powers the Hyperliquid network, an advanced decentralized exchange built entirely on its own Layer-1 foundation. Unveiled in the latter part of 2024, Hyperliquid has carved out a place among the most prominent projects in the digital asset space, and is now counted among the top 15 by total market cap.

Rather than depending on established chains like Ethereum (ETHUSD), Hyperliquid was architected independently, allowing for performance levels uncommon in decentralized finance. Its infrastructure enables extraordinary transactional speeds (up to 100,000 operations each second) with settlement finality taking less than a second. These capabilities allow for trading behavior that more closely resembles traditional high-frequency environments.

Notably, one of Hyperliquid’s distinguishing traits lies in its market model. Unlike many decentralized exchanges that function through automated market makers, this protocol maintains an entirely on-chain order book. The result is a structure similar to centralized platforms in terms of price precision and trade depth, but with the transparency and auditability of blockchain. Every order and execution can be verified without intermediaries.

Another key feature is the absence of gas fees. By removing that cost layer, the platform opens the door for frequent and efficient trading, appealing to both individual and institutional participants. This also provides the technical flexibility required to support broader blockchain use cases. Over time, the same infrastructure may facilitate the tokenization of assets in sectors like real estate, raw materials, or environmental credits, allowing for divisible ownership and on-chain liquidity.

HYPE’s total supply is capped at one billion tokens, with the current valuation placing its market capitalization at around $12.6 billion.

Dire Financial Straits

Sonnet's transformation to a HYPE treasury company may have been accelerated by its poor financial condition, characterized by widespread losses and pre-revenue status.

For the six months ended March 31, 2025, net cash outflow from operating activities increased to $5.38 million from $2.36 million in the same period a year ago. Even more troubling was a “going concern” warning in the quarterly filing (emphasis added):

“The Company has incurred recurring losses and negative cash flows from operations since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates. The Company believes its cash at March 31, 2025 of $2.1 million will fund the Company’s projected operations into July 2025. Substantial additional financing will be needed by the Company to fund its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company’s ability to continue as a going concern exists.”

In other words, the biotech company went public with its HYPE treasury news just before its previously stated funding runway - and ability to continue as a going concern - was about to run out.

Analyst Opinion

Unsurprisingly, SONN has limited coverage on Wall Street, with just one analyst following the shares. Although that one analyst calls the stock a “Strong Buy,” I would steer clear of SONN due to its unproven track record in its core business, cash flow struggles, and limited evidence of HYPE becoming a prominent cryptocurrency in the future. Granted, HYPE use-cases and utility could be exciting, but currently the story around Sonnet seems to be just that - hype.

www.barchart.com On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

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