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Company Overview - Sonnet BioTherapeutics Holdings, Inc. is a clinical-stage biotechnology company focused on developing immunotherapeutic drugs targeted to the tumor microenvironment (TME) [1] - The company utilizes a proprietary platform known as FHAB (Fully Human Albumin-Binding) for developing targeted biologic drugs [2] Upcoming Events - Raghu Rao, the Interim Chief Executive Officer, will present at the MedInvest Biotech & Pharma Conference on September 25, 2025, at 9:40 AM PT [1] - Management will also be available for one-on-one meetings with qualified investors registered for the conference [2] Technology and Product Pipeline - The FHAB technology employs a fully human single chain antibody fragment that binds to human serum albumin for targeted transport to tumor and lymphatic tissues [2] - Sonnet's lead program, SON-1010 (IL-12-FHAB), is in development for treating solid tumors, certain sarcomas, and ovarian cancer, currently in a Phase 1/2a study in collaboration with Roche [3] - The second program, SON-1210 (IL12-FHAB-IL15), is being evaluated for solid tumors, with an upcoming investigator-initiated Phase 1/2a study for pancreatic cancer [3]

Core Insights - Premarket trading is showing notable activity with significant price movements indicating potential trading opportunities before the market opens [1] Premarket Gainers - 89bio, Inc. (ETNB) increased by 83% to $14.84 [3] - Aptevo Therapeutics Inc. (APVO) rose by 75% to $2.47 [3] - Psyence Biomedical Ltd. (PBM) saw a 29% increase to $4.82 [3] - Beam Global (BEEM) gained 27% reaching $3.23 [3] - MicroAlgo Inc. (MLGO) was up 14% at $13.06 [3] - Akero Therapeutics, Inc. (AKRO) increased by 12% to $47.50 [3] - Hyperion DeFi, Inc. (HYPD) rose by 11% to $13.69 [3] - Sonnet BioTherapeutics Holdings, Inc. (SONN) increased by 11% to $7.85 [3] - FuelCell Energy, Inc. (FCEL) was up 9% at $8.34 [3] - Robo.ai Inc. (AIIO) gained 6% to $2.05 [3] Premarket Losers - Presidio Property Trust, Inc. (SQFT) decreased by 14% to $7.58 [4] - Aeluma, Inc. (ALMU) fell by 10% to $15.18 [4] - FGI Industries Ltd. (FGI) dropped 10% to $7.65 [4] - Lazydays Holdings, Inc. (GORV) was down 9% at $2.26 [4] - StableX Technologies, Inc. (SBLX) decreased by 8% to $5.40 [4] - Artelo Biosciences, Inc. (ARTL) fell by 8% to $4.48 [4] - SciSparc Ltd. (SPRC) decreased by 8% to $4.10 [4] - Cracker Barrel Old Country Store, Inc. (CBRL) was down 7% at $45.75 [4] - Columbus Circle Capital Corp I (BRR) fell by 7% to $9.42 [4] - Visionary Holdings Inc. (GV) decreased by 7% to $2.58 [4]

Industry Overview - Biotech and healthcare stocks are responding positively to clinical trial progress, regulatory developments, and economic indicators, particularly with the Federal Reserve's first rate cut of 2025, which is expected to improve funding conditions for capital-intensive sectors like biotechnology [1] Company Highlights - **Sonnet BioTherapeutics Holdings Inc. (SONN)**: Shares increased by 11.19% in after-hours trading, reaching $7.85 after a regular session close of $7.06. The stock has a 52-week range of $1.08 - $19.30. The company expanded clinical evaluation of its lead candidate, SON-1010, for ovarian cancer, reporting a strong safety profile and a partial response at the highest dose level [2][3] - **Akari Therapeutics Plc (AKTX)**: Shares surged 11.58% in after-hours trading to $0.8855 after closing at $0.7936. The stock has a 52-week range of $0.5710 - $3.8500. The increase follows a provisional patent filing for its antibody-drug conjugate platform aimed at cancer treatment, which is expected to enhance its intellectual property and support the development of first-in-class ADCs [4][5] - **Safety Shot Inc. (SHOT)**: Shares rose 9.75% in after-hours trading to $0.3333 after closing at $0.3037. The company announced a strategic refresh of its Board of Directors with three new members to strengthen its capabilities in digital assets and operations [6][7] - **Reviva Pharmaceuticals Holdings Inc. (RVPH)**: Shares climbed 10.09% in after-hours trading to $0.4451 after closing at $0.4043. The stock has a 52-week range of $0.3000 - $4.2800. The price movement follows a revised analyst rating maintaining a "Speculative Buy" while lowering the price target from $14.00 to $7.00. Reviva's lead candidate, brilaroxazine, is being developed for multiple neuropsychiatric and respiratory indications [8][9][10] - **Cognition Therapeutics Inc. (CGTX)**: Shares rose 7.48% in after-hours trading to $1.58 after closing down at $1.47. The company is focused on its lead candidate, Zervimesine, for Alzheimer's disease, and recently closed a $30 million offering to support its Phase 3 development [12][13]

PART I - FINANCIAL INFORMATION [Item 1: Financial Statements (Unaudited)](index=3&type=section&id=Item%201%3A%20Financial%20Statements%20(unaudited)) This section presents the unaudited interim consolidated financial statements of Sonnet BioTherapeutics Holdings, Inc. for the period ended June 30, 2025, including the Balance Sheets, Statements of Operations, Changes in Stockholders' Equity (Deficit), and Cash Flows, along with detailed notes explaining the company's organization, accounting policies, commitments, collaboration revenue, equity activities, share-based compensation, and significant subsequent events [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a decrease in total assets and an increase in total liabilities from September 30, 2024, to June 30, 2025, resulting in a significantly larger stockholders' deficit | Metric | June 30, 2025 | September 30, 2024 | | :--------------------------------- | :------------ | :----------------- | | Total assets | $2,055,347 | $2,771,030 | | Total liabilities | $5,101,826 | $3,256,769 | | Total stockholders' deficit | $(3,046,479) | $(485,739) | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported increased net losses for both the three and nine months ended June 30, 2025, compared to the same periods in 2024, primarily driven by higher research and development expenses and a significant decrease in other income | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Collaboration revenue | $— | $— | $1,000,000 | $18,626 | | Research and development | $2,425,551 | $1,727,033 | $6,196,534 | $4,538,363 | | General and administrative | $1,380,905 | $1,801,632 | $5,688,764 | $4,156,360 | | Total operating expenses | $3,806,456 | $3,528,665 | $11,885,298 | $8,694,723 | | Net loss | $(3,775,804) | $(3,505,555) | $(10,427,632) | $(4,308,639) | | Net loss per share, basic and diluted | $(0.95) | $(5.57) | $(3.16) | $(7.69) | [Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) The statements detail changes in stockholders' equity (deficit) for the nine months ended June 30, 2025 and 2024, reflecting significant increases in additional paid-in capital from stock sales and warrant exercises, offset by accumulated net losses - For the nine months ended June 30, 2025, additional paid-in capital increased by **$7,866,624**, primarily from the sale of common stock and share-based compensation, while the accumulated deficit grew by **$10,427,632** due to net losses[16](index=16&type=chunk) - For the nine months ended June 30, 2024, additional paid-in capital increased by **$4,077,338**, mainly from stock sales, warrant exercises, and share-based compensation, with the accumulated deficit increasing by **$4,308,639**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operating activities increased significantly for the nine months ended June 30, 2025, compared to 2024, primarily due to a larger net loss. However, net cash provided by financing activities also increased, leading to a net increase in cash for the period, albeit lower than the prior year | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(7,140,544) | $(5,437,553) | | Net cash used in investing activities | $(12,000) | $(12,000) | | Net cash provided by financing activities | $7,324,385 | $6,729,625 | | Net increase in cash | $171,841 | $1,280,072 | | Cash, end of period | $321,297 | $3,554,331 | [Notes to Interim Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the interim consolidated financial statements, covering the company's business, accounting policies, financial instruments, revenue recognition, equity transactions, and subsequent events [1. Organization and Description of Business](index=9&type=section&id=1.%20Organization%20and%20Description%20of%20Business) Sonnet BioTherapeutics is a clinical-stage oncology biotechnology company developing biologic medicines via its FHAB™ platform, advancing candidates like SON-1010, SON-080, and SON-1210, while facing significant liquidity challenges and requiring substantial additional financing - Sonnet BioTherapeutics is a clinical-stage, oncology-focused biotechnology company leveraging its FHAB™ platform for biologic medicines, with a **U.S. patent received in June 2021**[20](index=20&type=chunk) - Lead asset SON-1010 (IL-12) is in clinical development for solid tumors, with interim safety, tolerability, and efficacy data from SB101 reported in March 2025 and SB221 (in combination with atezolizumab) in April 2025[21](index=21&type=chunk)[22](index=22&type=chunk) - SON-080 (IL-6) development for CIPN is on hold, but a license agreement with Alkem Laboratories Limited was signed in October 2024 for DPN in India[25](index=25&type=chunk) - The company has incurred recurring losses and negative cash flows, with cash of **$0.3 million** at June 30, 2025. While **$10.5 million** was raised in July 2025, substantial additional financing is needed, raising **substantial doubt about its ability to continue as a going concern**[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines significant accounting policies for interim financial statements, covering presentation, estimates, tax receivables, property, deferred costs, derivatives, revenue, R&D, other income, foreign currency, stock splits, net loss per share, and recent pronouncements - The financial statements are prepared in conformity with U.S. GAAP for interim financial information, including all normal and recurring adjustments[34](index=34&type=chunk) - The company estimates an Australian research and development tax incentive receivable of **$0.6 million** as of June 30, 2025, which reduces R&D expenses[38](index=38&type=chunk) - A **1-for-8 reverse stock split** was effected on September 30, 2024, retroactively adjusting all common share and per share amounts[51](index=51&type=chunk) - Potentially dilutive securities, totaling **5,144,413 warrants** and unvested restricted stock units/awards as of June 30, 2025, were excluded from diluted EPS calculation due to anti-dilutive impact from net loss[55](index=55&type=chunk) [3. Accrued Expenses and Other Current Liabilities](index=16&type=section&id=3.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities increased from $942,489 at September 30, 2024, to $1,282,906 at June 30, 2025, primarily driven by increases in research and development accruals and professional fees | Category | June 30, 2025 | September 30, 2024 | | :------------------------ | :------------ | :----------------- | | Compensation and benefits | $168,281 | $149,802 | | Research and development | $777,846 | $617,545 | | Professional fees | $334,821 | $173,319 | | Other | $1,958 | $1,823 | | **Total** | **$1,282,906**| **$942,489** | [4. Commitments and Contingencies](index=16&type=section&id=4.%20Commitments%20and%20Contingencies) The company is party to various legal proceedings, license agreements, and a collaboration agreement, which involve potential milestone payments, royalties, and support services. Key agreements include licenses with XOMA, ARES, Cellca, Brink, InvivoGen, and ProteoNic, as well as a collaboration with Sarcoma Oncology Center for SON-1210 - The company has various license agreements with potential milestone payments and royalties, including XOMA (**$3.8M** milestones), ARES (high single-digit royalties, sublicense revenue percentage), Cellca (**$0.7M** milestones or buy-out option), Brink (**$12K** annual fee for storage), InvivoGen (**€0.1M** extension fee), and ProteoNic (**€0.2M** per IND submission)[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) - A collaboration agreement with Sarcoma Oncology Center (SOC) for SON-1210 development includes a potential one-time fee to SOC of **5%** or **$1.5M** from the first upfront payment of a third-party partnership[71](index=71&type=chunk) - The company incurred **$0.1 million** in license fees related to sublicense revenue from the Alkem Agreement during the nine months ended June 30, 2025[63](index=63&type=chunk) [5. Collaboration Revenue](index=19&type=section&id=5.%20Collaboration%20Revenue) Collaboration revenue for the nine months ended June 30, 2025, was $1.0 million, primarily from the Alkem Agreement for SON-080 in India, recognized at a point in time. This contrasts with the $18,626 recognized in the prior year from the New Life Agreement, which was recognized over time and has since been subject to a 'Give Back Option' by New Life - Collaboration revenue for the nine months ended June 30, 2025, was **$1.0 million**, stemming from the Alkem Agreement for SON-080 in India[76](index=76&type=chunk)[80](index=80&type=chunk) - The Alkem Agreement granted an exclusive license for SON-080 in India, with Alkem paying **$1.0 million upfront and up to an additional $1.0 million** in milestone payments, plus **low double-digit royalties** on net sales[76](index=76&type=chunk) - The New Life Agreement, which generated **$18,626** in revenue for the nine months ended June 30, 2024, is subject to a 'Give Back Option' by New Life, indicating a change in their business direction[75](index=75&type=chunk)[80](index=80&type=chunk) [6. Stockholders' Equity (Deficit)](index=20&type=section&id=6.%20Stockholders'%20Equity%20(Deficit)) The company engaged in several equity financing activities, including public offerings in October 2023 and November 2024, a registered direct and PIPE offering in December 2024, and utilized a committed equity facility. These activities resulted in the issuance of common stock and various warrants, significantly increasing additional paid-in capital and the number of outstanding shares and warrants - October 2023 public offering raised **$3.9 million** net proceeds through the sale of common stock and warrants[81](index=81&type=chunk) - A Committed Equity Facility (ChEF) with Chardan allows the company to sell up to **$25.0 million** in common stock, with **$24.7 million** available as of June 30, 2025. **$0.2 million** net proceeds were raised through this facility during the nine months ended June 30, 2025[82](index=82&type=chunk) - November 2024 public offering raised **$4.2 million** net proceeds through the sale of common stock and warrants[83](index=83&type=chunk) - December 2024 registered direct and PIPE offerings raised approximately **$3.4 million** net proceeds[88](index=88&type=chunk) Warrant Type | Outstanding (June 30, 2025) | Exercise Price | | :--------------------------------- | :---------------------------- | :------------- | | Common stock warrants August 2021 | 14,031 | $2,094.4000 | | Underwriter warrants August 2021 | 284 | $2,618.0000 | | Chanticleer warrants | 6 | $144,144.00 - $224,224.00 | | Series C warrants | 2,297 | $7,860.1600 | | Series 3 warrants | 1,566 | $717.0240 | | Common stock warrants February 2023| 31,563 | $190.0800 | | Underwriter warrants February 2023 | 1,933 | $237.6000 | | Common stock private placement warrants June 2023 | 28,409 | $12.4000 | | Placement agent warrants June 2023 | 852 | $118.7824 | | Common stock warrants October 2023 | 354,994 | $9.6000 | | Pre-funded warrants October 2023 | 99,687 | $0.0008 | | Underwriter warrants October 2023 | 10,664 | $16.0000 | | Placement agent warrants June 2024 | 14,142 | $14.8800 | | Common stock warrants June 2024 | 703,125 | $12.4000 | | Common stock warrants November 2024| 2,222,222 | $4.5000 | | Common stock registered direct warrants December 2024 | 1,085,325 | $2.1000 | | Common stock PIPE warrants December 2024 | 673,000 | $2.1000 | | Pre-funded warrants December 2024 | 545,500 | $0.0001 | | **Total** | **5,789,600** | | [7. Share-Based Compensation](index=24&type=section&id=7.%20Share-Based%20Compensation) Share-based compensation expense decreased to $60,395 for the nine months ended June 30, 2025, with all prior unvested RSUs/RSAs vested, though 120,000 new RSUs were issued in July 2025 | Category | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------ | :------------------------------ | :------------------------------ | | Research and development | $28,268 | $81,089 | | General and administrative| $32,127 | $89,706 | | **Total** | **$60,395** | **$170,795** | - As of June 30, 2025, there was **no unrecognized compensation expense** relating to unvested RSUs or RSAs, as all **9,175 RSUs** and **7,977 RSAs** outstanding at October 1, 2024, vested[95](index=95&type=chunk)[98](index=98&type=chunk) - On July 9, 2025, the Company issued **120,000 RSUs**, which will vest on July 8, 2026[96](index=96&type=chunk) [8. Subsequent Events](index=25&type=section&id=8.%20Subsequent%20Events) Subsequent to June 30, 2025, the company completed a private placement of convertible notes and a preferred stock and warrant private placement, raising $2.0 million and $5.5 million respectively. These financings, along with $10.5 million from warrant exercises, are linked to a definitive Business Combination Agreement with Hyperliquid Strategies Inc. (HSI), under which Sonnet will become a wholly-owned subsidiary of HSI - In July 2025, the company completed a private placement of zero-interest convertible notes, raising **$2.0 million**, which subsequently converted into non-voting convertible preferred stock and warrants[100](index=100&type=chunk)[101](index=101&type=chunk)[104](index=104&type=chunk) - On July 11, 2025, the company entered into a definitive Business Combination Agreement (BCA) with Rorschach I LLC and Hyperliquid Strategies Inc. (HSI), under which Sonnet will become a wholly-owned subsidiary of HSI, focusing on existing biotech assets[103](index=103&type=chunk) - Concurrently with the BCA, a **$5.5 million** private placement of non-voting convertible preferred stock and warrants was closed[104](index=104&type=chunk) - In July 2025, warrant exercises generated **$10.5 million** in gross proceeds, with any cash proceeds **exceeding $3.0 million restricted** from spending without Rorschach's consent[105](index=105&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting its clinical-stage biotechnology focus, pipeline progress, and significant financial challenges, including recurring losses and the need for substantial additional funding. It details the performance for the three and nine months ended June 30, 2025 and 2024, and discusses liquidity, capital resources, and critical accounting policies [Cautionary Note Regarding Forward-Looking Statements](index=27&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements subject to various known and unknown risks and uncertainties, which could cause actual results to differ materially from projections. Key risk factors include the company's lack of operating history, need for significant capital, ability to complete clinical trials, maintain Nasdaq listing, protect intellectual property, and retain key personnel - Forward-looking statements are subject to known and unknown risks, including lack of operating history, need for significant additional capital, ability to complete clinical trials and obtain FDA approval, maintaining Nasdaq listing, protecting intellectual property, and retaining key executives[108](index=108&type=chunk)[109](index=109&type=chunk) [Overview](index=28&type=section&id=Overview) Sonnet BioTherapeutics is a clinical-stage oncology biotechnology company developing biologic medicines via its FHAB™ platform, advancing candidates like SON-1010, SON-080, and SON-1210, while facing significant financial challenges and requiring substantial additional funding - Sonnet is a clinical-stage, oncology-focused biotechnology company with a proprietary FHAB™ platform designed to improve drug accumulation in solid tumors and extend activity duration[112](index=112&type=chunk) - Lead asset SON-1010 is in clinical development for solid tumors, with a Phase 1 U.S. trial (SB101) and a collaboration with Roche for a Phase 1b/2a study (SB221) in platinum-resistant ovarian cancer[114](index=114&type=chunk)[115](index=115&type=chunk) - SON-080 development for CIPN is on hold, but a license agreement with Alkem Laboratories was signed for DPN in India. SON-1210 is advancing for solid tumors, with a Phase 1b/2a study in pancreatic cancer planned[117](index=117&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk) - The company incurred net losses of **$10.4 million** and **$4.3 million** for the nine months ended June 30, 2025 and 2024, respectively, and **requires substantial additional funding** to support operations[125](index=125&type=chunk)[128](index=128&type=chunk) [Lead Clinical Programs Update](index=31&type=section&id=Lead%20Clinical%20Programs%20Update) Sonnet provided updates on its lead clinical programs: SON-1010, SON-080, and SON-1210. SON-1010 has completed dose escalation in monotherapy (SB101) and combination with atezolizumab (SB221), showing favorable safety and partial responses. SON-080's CIPN study (SB211) is on hold, but a Phase 2 DPN trial is planned with Alkem. SON-1210 is progressing towards an investigator-initiated Phase 1b/2a study in pancreatic cancer - SON-1010 Phase 1 (SB101) in solid tumors completed monotherapy dose escalation, with **one patient showing a partial response** at the highest dose (**1200 ng/kg**). An expansion cohort with trabectedin is underway, with **topline safety data expected in H2 calendar year 2025**[131](index=131&type=chunk)[136](index=136&type=chunk) - SON-1010 Phase 1b/2a (SB221) in PROC with atezolizumab established **MTD at 1200 ng/kg**, with **two of three evaluable patients at MTD showing partial responses**. **Topline efficacy for RP2D is expected in H2 calendar year 2025**[133](index=133&type=chunk)[136](index=136&type=chunk) - SON-080 Phase 1b/2a (SB211) for CIPN is on hold, but **Alkem is expected to initiate a Phase 2 trial for DPN in H2 calendar year 2025**[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - SON-1210 is slated for an investigator-initiated Phase 1b/2a study in pancreatic cancer in combination with chemotherapy, with the **first patient expected to be dosed in H2 calendar year 2025**[140](index=140&type=chunk)[141](index=141&type=chunk) [Components of Results of Operations](index=33&type=section&id=Components%20of%20Results%20of%20Operations) This section details the components contributing to the company's results of operations, including collaboration revenue, research and development expenses, general and administrative expenses, other income, foreign exchange gains/losses, and provision for income taxes. It explains how each component is recognized and the primary drivers behind their fluctuations - Collaboration revenue is recognized from license arrangements, with the Alkem Agreement's **$1.0 million** upfront payment recognized at a point in time upon transfer of license and supply[142](index=142&type=chunk)[144](index=144&type=chunk) - Research and development expenses are expensed as incurred, including personnel, consulting, third-party services for preclinical/clinical development, manufacturing, and license fees[145](index=145&type=chunk)[147](index=147&type=chunk) - General and administrative expenses cover salaries, share-based compensation, facility costs, and professional fees, expected to increase with continued research and public company operations[151](index=151&type=chunk)[152](index=152&type=chunk) - Other income primarily consists of net proceeds from the sale of New Jersey state net operating losses (NOLs) through a tax certificate transfer program[153](index=153&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) The company experienced a significant increase in net loss for both the three and nine months ended June 30, 2025, compared to the prior year. This was primarily driven by higher research and development expenses, increased general and administrative costs, and a substantial decrease in other income from the sale of New Jersey state NOLs Comparison of Three Months Ended June 30, 2025 and 2024 | Metric | 2025 | 2024 | Change | | :------------------------ | :----------- | :----------- | :----------- | | Research and development | $2,425,551 | $1,727,033 | $698,518 | | General and administrative| $1,380,905 | $1,801,632 | $(420,727) | | Net loss | $(3,775,804) | $(3,505,555) | $(270,249) | Comparison of Nine Months Ended June 30, 2025 and 2024 | Metric | 2025 | 2024 | Change | | :------------------------ | :----------- | :----------- | :----------- | | Collaboration revenue | $1,000,000 | $18,626 | $981,374 | | Research and development | $6,196,534 | $4,538,363 | $1,658,171 | | General and administrative| $5,688,764 | $4,156,360 | $1,532,404 | | Other income | $720,102 | $4,327,946 | $(3,607,844) | | Net loss | $(10,427,632)| $(4,308,639) | $(6,118,993) | - The **$1.7 million** increase in R&D expenses for the nine months ended June 30, 2025, was primarily due to the cancellation of **$1.0 million** in accrued bonuses in the prior year and a **$0.7 million** increase in clinical trial costs and license extension fees[161](index=161&type=chunk) - Other income decreased by **$3.6 million** for the nine months ended June 30, 2025, due to a reduction in available New Jersey state NOLs for sale[163](index=163&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company has historically funded operations through equity and convertible debt, incurring significant net losses. As of June 30, 2025, cash was $0.3 million, with an additional $10.5 million raised in July 2025, projected to fund operations into February 2026. Substantial additional financing is required, raising going concern doubts. The company utilizes a committed equity facility and has completed several public and private offerings, including a recent PIPE offering and convertible notes, to secure funding - The company has incurred net losses of **$10.4 million** and **$4.3 million** for the nine months ended June 30, 2025 and 2024, respectively, and expects significant operational expenses and net losses to continue[166](index=166&type=chunk) - Cash at June 30, 2025, was **$0.3 million**. With **$10.5 million raised in July 2025**, operations are projected to be **funded into February 2026**, but substantial additional financing is needed, raising **substantial doubt about the company's ability to continue as a going concern**[167](index=167&type=chunk) Cash Flow Summary (Nine Months Ended June 30) | Activity | 2025 | 2024 | | :--------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(7,140,544) | $(5,437,553) | | Net cash used in investing activities | $(12,000) | $(12,000) | | Net cash provided by financing activities | $7,324,385 | $6,729,625 | | Net increase in cash | $171,841 | $1,280,072 | - Financing activities in the nine months ended June 30, 2025, provided **$7.3 million**, primarily from **$7.8 million** in net proceeds from common stock and pre-funded warrant sales, offset by **$0.5 million** in financing costs[172](index=172&type=chunk) - Subsequent to June 30, 2025, the company raised **$2.0 million** from convertible notes, **$5.5 million** from a PIPE offering, and **$10.5 million** from warrant exercises, totaling **$18.0 million**[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) [Contractual Obligations and Commitments](index=43&type=section&id=Contractual%20Obligations%20and%20Commitments) As of June 30, 2025, the company's primary contractual obligation affecting future liquidity is a current operating lease liability of $0.1 million. Other contracts with CROs, CMOs, and third parties for research and development are cancellable and do not contain minimum purchase commitments - As of June 30, 2025, the company had a current operating lease liability of **$0.1 million**[187](index=187&type=chunk) - Contracts with CROs, CMOs, and other third parties for R&D are cancellable upon prior notice and do not contain minimum purchase commitments[188](index=188&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements requires management to make estimates and judgments, particularly concerning the accrual of research and development expenses. These estimates are based on historical experience and current circumstances, with actual results potentially differing. The company evaluates progress on third-party R&D contracts to accrue expenses, making no material adjustments to prior estimates as of June 30, 2025 - The most critical accounting policy involves estimates and judgments related to the accrual of research and development expenses[189](index=189&type=chunk)[191](index=191&type=chunk) - Estimates for third-party R&D services are based on progress toward completion, costs incurred, and milestones achieved, with no material adjustments made as of June 30, 2025[192](index=192&type=chunk) [Recently Issued Accounting Pronouncements](index=43&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The company is evaluating the impact of recently issued accounting pronouncements, including ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), and ASU 2024-03 (Expense Disaggregation Disclosures), on its consolidated financial statements and disclosures - The company is evaluating the impact of ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), and ASU 2024-03 (Expense Disaggregation Disclosures) on its financial statements[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[193](index=193&type=chunk) [Item 3: Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item states that the company is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide quantitative and qualitative disclosures about market risk[194](index=194&type=chunk) [Item 4: Controls and Procedures](index=44&type=section&id=Item%204%3A%20Controls%20and%20Procedures) As of June 30, 2025, the company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the three months ended June 30, 2025 - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[195](index=195&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[197](index=197&type=chunk) PART II - OTHER INFORMATION [Item 1: Legal Proceedings](index=45&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is subject to various legal proceedings in the ordinary course of business, but no reportable legal proceedings or material developments to previously reported proceedings occurred during the three months ended June 30, 2025 - No reportable legal proceedings or material developments occurred during the three months ended June 30, 2025[200](index=200&type=chunk) [Item 1A: Risk Factors](index=45&type=section&id=Item%201A%3A%20Risk%20Factors) This section outlines significant risks, including potential Nasdaq delisting (since regained), pending business combination risks, HYPE volatility, digital asset regulatory uncertainties, and the potential classification of HYPE as a 'security,' which could lead to investment company regulations and operational challenges [Nasdaq Listing Compliance](index=45&type=section&id=Nasdaq%20Listing%20Compliance) The company received a Nasdaq notice for non-compliance with the $2.5 million minimum stockholders' equity rule as of March 31, 2025. However, compliance was regained by July 18, 2025, due to proceeds from a private placement and warrant exercises, though Nasdaq will continue to monitor - On May 30, 2025, Nasdaq notified the company of non-compliance with the **$2.5 million** minimum stockholders' equity requirement[203](index=203&type=chunk) - By July 18, 2025, the company believed it had **regained compliance** due to proceeds from a private placement and warrant exercises, and Nasdaq confirmed compliance on July 23, 2025, subject to ongoing monitoring[204](index=204&type=chunk) [Business Combination Conditions](index=46&type=section&id=Business%20Combination%20Conditions) The completion of the mergers under the Business Combination Agreement is subject to various conditions, including stockholder approval and legal restraints, which are beyond the company's control. Failure to satisfy these conditions could lead to delays, significant costs, and adverse effects on the business - Completion of the mergers is contingent upon satisfaction or waiver of conditions, including stockholder approval and absence of legal restraints, which are beyond the company's control[207](index=207&type=chunk) [HYPE Volatility and Regulatory Uncertainty](index=46&type=section&id=HYPE%20Volatility%20and%20Regulatory%20Uncertainty) The company's financial results and stock price may be adversely affected by the high volatility of HYPE (Hyperliquid) and significant legal and regulatory uncertainties surrounding digital assets. New laws, regulations, or enforcement actions could materially impact HYPE's price, ownership, and transferability, as well as the broader digital asset industry - Fluctuations in HYPE price, influenced by user confidence, transactional activities, negative publicity, competition, and blockchain developments, may adversely affect the company's financial results and market price of its securities[208](index=208&type=chunk)[209](index=209&type=chunk) - HYPE and other digital assets are subject to significant legal and regulatory uncertainty, with evolving application of securities laws and potential for new laws or enforcement actions by U.S. and foreign regulators[210](index=210&type=chunk)[211](index=211&type=chunk)[214](index=214&type=chunk) [HYPE Treasury Strategy Risks](index=48&type=section&id=HYPE%20Treasury%20Strategy%20Risks) The company's HYPE treasury strategy subjects it to enhanced regulatory oversight, including anti-money laundering and sanctions compliance. The plan to acquire HYPE with capital not required for working capital introduces risks from price volatility, potential impairment charges, and increased scrutiny under various financial regulations, which could materially affect financial results and stock price - The HYPE treasury strategy subjects the company to enhanced regulatory oversight, including anti-money laundering and sanctions compliance, with potential restrictions on HYPE transactions if bad actors are involved[215](index=215&type=chunk) - Acquiring HYPE with capital not required for working capital exposes the company to price volatility, potential impairment charges, and increased regulatory scrutiny, which could adversely affect financial results and stock price[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [HYPE Classification as a "Security"](index=49&type=section&id=HYPE%20Classification%20as%20a%20%22Security%22) There is a risk that HYPE could be classified as a 'security' by regulators or courts, despite the company's belief it is a commodity. Such a classification would subject the company to additional regulation, including potential registration as an investment company, leading to enforcement proceedings, injunctions, fines, and significant adverse impacts on its business and financial condition - The classification of HYPE as a 'security' by a regulator or federal court, despite the company's belief it is a commodity, could subject the company to additional regulation and enforcement actions[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) [Investment Company Act Implications](index=50&type=section&id=Investment%20Company%20Act%20Implications) If the company were deemed an 'investment company' under the Investment Company Act, it would face significant restrictions, including limitations on stock issuance and transactions with affiliates, making its current business model impractical. While a one-year grace period may be available, maintaining non-investment company status could require asset dispositions or acquisitions under unfavorable conditions, severely impacting operations and financial prospects - If deemed an 'investment company,' the company would face restrictions under the Investment Company Act, making its current business impractical and potentially leading to material adverse effects[228](index=228&type=chunk)[232](index=232&type=chunk) - Maintaining non-investment company status or relying on a grace period could necessitate asset dispositions or acquisitions under unfavorable market conditions, limiting investments and changing service offerings[231](index=231&type=chunk) [Hyperliquid Network and Custody Risks](index=52&type=section&id=Hyperliquid%20Network%20and%20Custody%20Risks) The company faces risks related to the Hyperliquid network's operations, including disruptions that could impact HYPE transactions. Significant risks also arise from the custody of HYPE, such as loss or destruction of private keys, cyberattacks, smart contract vulnerabilities, and the potential for HYPE to be treated as unsecured creditor claims in custodian insolvency, with limited insurance coverage - Disruptions to the Hyperliquid network, including price volatility, insolvency of participants, security breaches, or network congestion, could negatively impact HYPE transactions and value[234](index=234&type=chunk) - Risks related to HYPE custody include loss or destruction of private keys, cyberattacks, smart contract vulnerabilities, and the potential for HYPE to be treated as unsecured creditor claims in custodian insolvency, with limited insurance coverage[236](index=236&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) [Historical Financial Statements and CAMT](index=53&type=section&id=Historical%20Financial%20Statements%20and%20CAMT) The company's historical financial statements do not reflect the potential variability in earnings from HYPE holdings. The anticipated adoption of ASU 2023-08 will require fair value measurement of HYPE, recognizing gains/losses in net income, leading to increased earnings volatility. This, combined with the Inflation Reduction Act of 2022, could subject the company to a corporate alternative minimum tax (CAMT) in future tax years, potentially resulting in a material cash tax obligation - Adoption of ASU 2023-08 will require fair value measurement of HYPE holdings, recognizing gains and losses in net income, which is expected to significantly increase earnings volatility[241](index=241&type=chunk)[242](index=242&type=chunk) - Unrealized fair value gains on HYPE holdings could subject the company to the **15% corporate alternative minimum tax (CAMT)** under the Inflation Reduction Act of 2022, potentially resulting in a **material cash tax obligation**[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [HYPE Trading Venue Risks](index=54&type=section&id=HYPE%20Trading%20Venue%20Risks) The unregulated nature and lack of transparency of many HYPE trading venues expose the company to risks of fraud, security failures, and operational problems, which could erode confidence in HYPE and the broader digital currency markets. Allegations of 'wash trading' and failures of major participants (e.g., Celsius, FTX) highlight the market's instability, potentially leading to declines in HYPE value and adverse effects on the company's stock price - Unregulated HYPE trading venues pose risks of fraud, security failures, and operational problems, potentially leading to a loss of confidence in HYPE and the broader digital currency markets[246](index=246&type=chunk) - Allegations of 'wash trading' and failures of major digital asset participants (e.g., Celsius, FTX) contribute to market instability and could adversely affect HYPE value and the company's stock price[247](index=247&type=chunk)[248](index=248&type=chunk) [Concentration of HYPE Holdings](index=54&type=section&id=Concentration%20of%20HYPE%20Holdings) The company's concentration of assets in HYPE holdings enhances inherent risks, as any significant decline in HYPE price would have a more pronounced impact on its financial condition compared to a diversified portfolio - Concentration of assets in HYPE holdings **enhances inherent risks**, making the company more vulnerable to significant declines in HYPE price[249](index=249&type=chunk) [Liquidity of HYPE Holdings](index=55&type=section&id=Liquidity%20of%20HYPE%20Holdings) HYPE holdings are less liquid than cash and cash equivalents due to cryptocurrency market volatility, limited trading volumes, and a developing regulatory landscape. This illiquidity may prevent the company from selling HYPE at favorable prices or using it as a reliable source of liquidity, potentially impacting its business and financial condition - HYPE holdings are **less liquid than cash** due to market volatility, limited trading volumes, and regulatory uncertainty, potentially hindering sales at favorable prices or use as a liquidity source[251](index=251&type=chunk)[253](index=253&type=chunk) - HYPE held with custodians does **not enjoy the same protections as cash or securities with FDIC or SIPC regulated institutions**[252](index=252&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item states that there were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds were reported[254](index=254&type=chunk) [Item 3: Defaults Upon Senior Securities](index=55&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) This item states that there were no defaults upon senior securities to report - No defaults upon senior securities were reported[255](index=255&type=chunk) [Item 4: Mine Safety Disclosures](index=55&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This item states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[257](index=257&type=chunk) [Item 5: Other Information](index=55&type=section&id=Item%205%3A%20Other%20Information) This item reports that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[259](index=259&type=chunk) [Item 6: Exhibits](index=56&type=section&id=Item%206%3A%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the Business Combination Agreement, Certificate of Designations, forms of convertible notes and warrants, subscription agreements, employment agreements, certifications, and XBRL-related documents - Key exhibits include the Business Combination Agreement, Certificate of Designations, forms of convertible notes and warrants, subscription agreements, and employment agreements[260](index=260&type=chunk) [Signatures](index=57&type=section&id=Signatures) The report is duly signed on behalf of Sonnet BioTherapeutics Holdings, Inc. by Raghu Rao, Interim Chief Executive Officer, and Donald Griffith, Chief Financial Officer, on August 13, 2025 - The report was signed by Raghu Rao, Interim Chief Executive Officer, and Donald Griffith, Chief Financial Officer, on August 13, 2025[263](index=263&type=chunk)

Core Insights - Sonnet BioTherapeutics is expanding its clinical study of SON-1010 in combination with atezolizumab for patients with advanced platinum-resistant ovarian cancer, showing promising early results with a 66% tumor response rate at the highest dose [1][2] - The company is also exploring a higher maintenance dose of SON-1010 to assess its safety and efficacy before moving to a randomized Phase 2a trial [1][2] - SON-1010 is designed to enhance immune response in tumors by delivering IL-12 directly to the tumor microenvironment, potentially improving treatment outcomes for various cancers [3][4] Company Overview - Sonnet BioTherapeutics focuses on developing targeted biologic drugs using its Fully Human Albumin-Binding (FHAB) platform, which aims to optimize the safety and efficacy of immune-modulating therapies [6][7] - The company is currently evaluating SON-1210, another candidate using the FHAB platform, for the treatment of pancreatic cancer in collaboration with the Sarcoma Oncology Center [7] Clinical Trial Details - The SB221 trial is a Phase 1b/2a multicenter study assessing the safety, tolerability, pharmacokinetics, pharmacodynamics, and efficacy of SON-1010, both alone and in combination with atezolizumab [5] - The trial aims to establish the maximum tolerated dose (MTD) and evaluate the potential for improved efficacy in patients with platinum-resistant ovarian cancer [5]

Group 1: Hong Kong Stock Market Highlights - Yunfeng Financial (00376) surged over 21% as the company plans to strategically invest in digital currency and AI sectors [1] - China Merchants Securities (06099) opened nearly 15% higher and is currently up over 4% after receiving approval for a virtual asset license [1] - GDS Holdings (09698) rose over 7% as its Southern GDS data center REIT concluded public investor fundraising ahead of schedule [1] - Hillstone Technology (01478) increased nearly 6% with positive earnings expectations, and Citigroup anticipates a favorable market reaction [1] - Sunny Optical Technology (02382) briefly rose over 3% and is currently up over 1% as its lithography equipment successfully entered Shanghai, indicating a shift to mass production [1] - Kintor Pharmaceutical (02171) saw an early gain of over 3% after achieving positive results in the European patent opposition process [1] - Bilibili (09626) rose over 5% as HSBC expressed optimism about its gaming and advertising business, with new games planned for 2025 [1] - Solar stocks experienced a decline, with institutions citing electricity prices affecting the stable profitability of new energy projects [1] Group 2: U.S. Stock Market Highlights - The U.S. nuclear sector saw gains, with NuScale Power (SMR.US) up 12.38% and Oklo Inc (OKLO.US) up 11.29%, following comments from the U.S. Energy Secretary about a nuclear revival [3] - Autodesk (ADSK.US) rebounded 5.05% after a period of decline, expressing confidence in its cloud and AI business strategies [3] - Sonnet BioTherapeutics (SONN.US) surged 86.46% due to a merger announcement, forming a cryptocurrency financial company valued at $888 million [3] - Quantum stocks rose, with D-Wave Quantum (QBTS.US) up 6.89% and Quantum Computing (QUBT.US) up 8.66% [3] - Hims & Hers Health (HIMS.US) increased 8.64% as it plans to enter the Canadian market with a generic drug following the expiration of a patent [4] - Rocket Lab (RKLB.US) rose 10.71% after Citigroup raised its target price, noting a significant increase in global space technology investments [4] - Nvidia-related stocks mostly strengthened as Jensen Huang made his third visit to China this year [5] - Cryptocurrency stocks collectively rose, with Bitcoin surpassing $120,000, driven by upcoming legislative reviews in the U.S. [5] - Tesla (TSLA.US) gained 1.08% amid investor speculation regarding a stake in xAI [5] - Netflix (NFLX.US) rose 1.35% ahead of its upcoming earnings report, with analysts projecting significant revenue growth [6]

Core Viewpoint - Monteverde & Associates PC is investigating Sonnet BioTherapeutics, Inc. regarding its merger with Rorschach I LLC, questioning the fairness of the deal where Sonnet shareholders will own approximately 1% of the combined company [1]. Group 1: Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has recovered millions for shareholders [1]. - The firm is headquartered in the Empire State Building, New York City, and specializes in class action securities litigation [2]. Group 2: Legal Investigation - The investigation focuses on the merger between Sonnet BioTherapeutics, Inc. and Rorschach I LLC, raising concerns about the equity of the transaction for Sonnet shareholders [1]. - The proposed transaction will result in Sonnet shareholders owning only about 1% of the new entity, prompting questions about the fairness of the deal [1].

Group 1 - Sonnet BioTherapeutics Inc. is undergoing a transformative business combination with Rorschach I, resulting in the creation of Hyperliquid Strategies Inc., a public cryptocurrency treasury company valued at approximately $888 million [1][2] - Hyperliquid Strategies will hold around 12.6 million HYPE tokens worth $583 million and $305 million in cash [1] - The new entity will be Nasdaq-listed under a new ticker and led by Bob Diamond as Chairman and David Schamis as CEO, with participation from major crypto investors like Galaxy Digital, Pantera Capital, and D1 Capital [2] Group 2 - Sonnet will become a subsidiary of Hyperliquid Strategies and will continue its biotech research and development, including the SON-1010 project [2] - The company plans to raise $5.5 million through private placement and shareholders will receive a contingent value right (CVR) related to Sonnet's legacy biotech assets [2] - In April, Sonnet released safety results for SON-1010 in a Phase 1b/2a trial, which has now advanced to the expansion phase based on positive feedback from the Safety Review Committee [3] Group 3 - The expansion phase will study the preliminary effect of the combination treatment before moving to a Phase 2a randomized comparison with the standard of care [4] - Following the news of the business combination, SONN stock surged by 151%, reaching $12.98 [4]

Core Viewpoint - Sonnet BioTherapeutics is pivoting into the cryptocurrency sector through a significant business combination valued at $888 million, leading to a substantial increase in its stock price [1][2]. Group 1: Business Combination Details - Sonnet has entered into an agreement with Rorschach I LLC to form Hyperliquid Strategies Inc. (HSI), which will focus on cryptocurrency treasury operations [2]. - The transaction includes HSI holding approximately 12.6 million HYPE tokens valued at around $583 million and at least $305 million in cash at closing [3]. - The total valuation of the transaction is $888 million [3]. Group 2: Market Reaction - Following the announcement, Sonnet's stock price surged by 265%, reaching a pre-market high of $18.68, up from a closing price of $5.17 [1]. - Year-to-date, SONN shares have gained over 220% [1]. Group 3: Investor Participation - The transaction has attracted notable participation from prominent crypto investors, including Paradigm, Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital [4]. Group 4: Leadership Structure - HSI's leadership will include Bob Diamond as Chairman of the Board and David Schamis as CEO, with additional board members including Eric Rosengren, former President of the Boston Federal Reserve [5]. Group 5: Future Plans - HSI plans to utilize its capital to acquire more HYPE tokens, aiming to become one of the largest strategic holders of the asset [6]. - The transaction is expected to close in the coming months, pending regulatory and shareholder approvals [6].