10-K: Sonnet BioTherapeutics Reports FY25 Losses Amid Pipeline Focus

Sonnet BioTherapeutics reported a significant increase in net loss for fiscal year 2025, driven by higher R&D and administrative costs, while advancing its oncology pipeline and completing a business combination.

Summary

• Sonnet BioTherapeutics Holdings, Inc. is a clinical-stage, oncology-focused biotechnology company utilizing its proprietary FHAB (Fully Human Albumin Binding) platform to innovate biologic medicines.
• The FHAB technology is designed to improve drug accumulation in tumors and extend the duration of activity in the body, with a U.S. patent granted in June 2021 and a continuation in June 2024.
• Net loss for the fiscal year ended September 30, 2025, increased to $16.0 million, up from $7.4 million in 2024.
• Research and development expenses rose to $8.4 million in 2025 from $5.7 million in 2024, primarily due to increased costs for SB101 and SB221 clinical trials.
• General and administrative expenses increased to $8.5 million in 2025 from $6.1 million in 2024, mainly due to professional fees related to a business combination and SEC filings.
• Cash and cash equivalents stood at $5.1 million as of September 30, 2025, with restricted cash of $8.2 million.
• The company completed a business combination with Hyperliquid Strategies Inc. (HSI) and Rorschach I LLC on December 2, 2025, becoming a wholly-owned subsidiary of HSI.
• SON-1010 (IL12-FHAB) monotherapy in advanced solid tumors (SB101 trial) showed clinical benefit (stable disease for at least 4 months) in 48% of patients overall and 83% at the highest dose (1200 ng/kg), including one partial response in sarcoma.
• SON-1010 in combination with atezolizumab (Tecentriq) for platinum-resistant ovarian cancer (PROC) (SB221 trial) showed one partial response and one complete response at the highest dose, with a new higher dose cohort (E7) being enrolled.
• Topline efficacy data for SON-1010 with trabectedin in soft-tissue sarcoma (STS) and for SON-1010 with atezolizumab in PROC are expected in the second half of calendar year 2025.
• The SON-080 (IL-6) program for Chemotherapy-Induced Peripheral Neuropathy (CIPN) was put on hold due to business priorities, but a licensing agreement with Alkem Laboratories Limited was signed for its development and commercialization in India for DPN, CIPN, and autonomic neuropathy.
• New Life Therapeutics Pte., Ltd. provided notice of its intention to exercise its 'Give Back Option' for SON-080 rights, as it elected to move its business in a different direction.
• SON-1210 (IL12-FHAB-IL15), a lead bifunctional compound for solid tumors, successfully completed IND-enabling toxicology studies, and an investigator-initiated Phase 1/2a study in combination with chemotherapy for metastatic pancreatic cancer is planned.
• Discovery programs SON-1400 and SON-1411 (IL18BPR-FHAB-IL12) have been placed on hold for expense reduction purposes.
• The company raised $11.2 million from warrant exercises, $2.0 million from convertible notes, and $5.5 million from a private placement of Series 5 Convertible Preferred Stock and warrants in July 2025.
• A registered direct and PIPE offering in December 2024 generated approximately $3.9 million in gross proceeds, and a November 2024 underwritten public offering generated approximately $4.2 million in net proceeds.
• The company received a Nasdaq notice for non-compliance with the minimum stockholders' equity requirement but regained compliance by July 23, 2025, following capital raises.
• As a result of the business combination, Sonnet's common stock was delisted from Nasdaq on December 2, 2025, and the company intends to deregister its common stock and suspend reporting obligations.
• The company had 9 full-time employees as of September 30, 2025.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including increased losses and going concern doubts, and has put some programs on hold. However, it has successfully raised capital and shown promising early clinical data for its lead assets, particularly SON-1010, and secured new collaborations. The business combination and delisting from Nasdaq represent a major structural change, introducing new uncertainties and a shift in focus. The overall sentiment is neutral to slightly negative due to the financial strain and strategic pivots, balanced by clinical progress and new partnerships.

Positives

• FHAB technology received a U.S. patent in June 2021 and a continuation in June 2024, strengthening intellectual property.
• SON-1010 monotherapy in SB101 trial showed clinical benefit (stable disease for at least 4 months) in 48% of patients overall and 83% at the highest dose (1200 ng/kg), including one partial response in sarcoma.
• SON-1010 in combination with atezolizumab (SB221 trial) demonstrated one partial response and one complete response in platinum-resistant ovarian cancer (PROC) at the highest dose.
• SON-1010 trials have collectively dosed 103 subjects with a favorable safety profile and no dose-limiting toxicities reported.
• PK data for SON-1010 shows a 10-fold extended half-life compared to rhIL-12 and suggests tumor targeting by the FHAB domain.
• A controlled, dose-related, and sustained IFN-γ response to SON-1010 has been observed, potentially allowing improved efficacy.
• Successful completion of IND-enabling toxicology studies for SON-1210 in non-human primates.
• Collaboration agreement with Sarcoma Oncology Center for an investigator-initiated Phase 1/2a study of SON-1210 in combination with chemotherapy for metastatic pancreatic cancer.
• Licensing agreement with Alkem Laboratories Limited for SON-080 in India, providing upfront payments and potential milestones/royalties.
• Successful capital raises in July 2025 ($5.5 million PIPE, $2.0 million convertible notes, $11.2 million warrant exercises) and December/November 2024 ($3.9 million gross, $4.2 million net respectively) to fund operations.
• Regained compliance with Nasdaq's minimum stockholders' equity rule by July 23, 2025.

Negatives

• Net loss significantly increased to $16.0 million in fiscal year 2025 from $7.4 million in 2024.
• Recurring losses from operations and negative cash flows raise substantial doubt about the company's ability to continue as a going concern.
• Cash and cash equivalents of $5.1 million at September 30, 2025, are projected to fund operations only into February 2026, indicating a critical need for additional financing.
• The SON-080 program for Chemotherapy-Induced Peripheral Neuropathy (CIPN) (SB211 study) was put on hold due to business priorities, despite positive safety and preliminary efficacy data.
• New Life Therapeutics Pte., Ltd. intends to exercise its 'Give Back Option' for SON-080 rights, indicating a loss of a previous collaboration.
• Discovery programs SON-1400 and SON-1411 have been placed on hold for expense reduction purposes, delaying potential future assets.
• The company's common stock was delisted from Nasdaq on December 2, 2025, following the business combination, and reporting obligations will be suspended.
• A significant portion of cash proceeds from warrant exercises ($8.2 million out of $11.2 million) is restricted and cannot be spent without prior written consent from Rorschach due to the BCA.
• The company has a limited operating history and has not yet commercialized any products or generated revenue from product sales.
• Dependence on third-party manufacturers and CROs introduces risks of delays, insufficient supplies, and quality issues.

Risks

• History of significant operating losses and expectation of increasing losses, with no guarantee of achieving or maintaining profitability.
• Recurring losses from operations raise substantial doubt about the ability to continue as a going concern, requiring significant additional capital.
• Inability to raise capital when needed could force delays, reductions, or elimination of product discovery, development programs, or commercialization efforts.
• Substantial dependence on the success of internal development programs and product pipeline candidates, which may not successfully complete clinical trials, receive regulatory approval, or be commercialized.
• Product candidates represent a new category of medicines and may be subject to heightened regulatory scrutiny, potentially increasing costs or time to development.
• The marketing approval process is expensive, time-consuming, and uncertain, potentially preventing or delaying commercialization.
• Significant competition from larger pharmaceutical and biotechnology companies with greater resources and established products.
• Commercial success depends on market acceptance by physicians, patients, and payors, which is uncertain.
• Reliance on development and commercialization collaborators (e.g., Roche, Sarcoma Oncology Center, Alkem) means their failure to perform could significantly reduce future revenue.
• Reliance on third parties (clinical investigators, CROs, CDMOs) to conduct clinical trials and manufacturing, increasing risks of delays, insufficient supplies, and non-compliance with regulations.
• Inability to obtain and maintain patent and other intellectual property protection, or if the scope is not broad enough, competitors could commercialize similar products.
• Potential product liability claims if product candidates harm patients, leading to substantial liability and costs.
• Difficulty enrolling patients in clinical trials could delay or prevent advancement of product candidates.
• Results of preclinical studies and early clinical trials may not be predictive of future clinical trial outcomes, with a high risk of failure in later stages.
• Product candidates may cause undesirable side effects, halting development, preventing approval, or limiting commercial potential.
• Failure to identify or discover additional product candidates could limit business growth.
• Risk of expending limited resources on less profitable or less likely-to-succeed product candidates or indications.
• Uncertainty regarding insurance coverage and reimbursement status of newly-approved products, potentially limiting marketability and revenue generation.
• Subject to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws, with potential for substantial penalties for non-compliance.
• Healthcare legislative reform measures and constraints on national budget social security systems may adversely affect business and results of operations.
• Subject to economic, political, regulatory, and other risks associated with international operations, including differing regulatory requirements, intellectual property protection, and currency exchange rates.
• European data collection is governed by restrictive regulations (GDPR), imposing strict requirements and potential fines for non-compliance.
• Limited number of employees and dependence on key personnel, with risks if unable to retain or attract qualified staff.
• Employees, independent contractors, consultants, and collaborators may engage in misconduct or improper activities, leading to significant liability and reputational harm.
• Expected organizational expansion may lead to difficulties in managing growth, disrupting operations.
• Significant costs and management time incurred as a public company, which are expected to increase.
• Cyber-attacks or failures in IT systems could result in information theft, data corruption, and business disruption.
• Business, strategy, and access to capital may be adversely affected by the business, financial condition, and decisions of HSI, the new parent company, particularly due to its focus on digital assets and associated market volatility and regulatory uncertainties.

Future Outlook

The company expects to continue incurring significant expenses and operating losses for the foreseeable future as it advances preclinical activities and clinical trials. Substantial additional financing will be needed to fund operations beyond February 2026. Future funding requirements are dependent on the scope, progress, timing, and costs of clinical trials, regulatory approvals, and potential collaborations. The company intends to prioritize expense allocation on assets with the greatest strategic interest and negotiate licensing deals to fund pipeline expansion. Topline efficacy data for SON-1010 in combination with trabectedin and with atezolizumab are expected in the second half of calendar year 2025. Alkem is preparing to initiate a Phase 2 clinical trial for SON-080 in DPN in H2 calendar year 2025. The first clinical trial for SON-1210 monotherapy is expected to initiate subsequent to raising adequate funding in 1H 2026. The company will operate as a wholly-owned subsidiary of HSI and will continue to focus on developing existing biotech assets while disposing of others. The company intends to file Form 15 to deregister its common stock and suspend reporting obligations after Nasdaq's Form 25 becomes effective.

Management Comments

• "We believe our FHAB technology... is a distinguishing feature of our biopharmaceutical platform that is well suited for future drug development across a range of human disease areas."
• "We have built an efficient R&D platform that includes a network of outsourced vendors to help remediate expenses and improve execution timelines."
• "Running clinical trials [in Australia] offers a substantial cost reduction relative to US trials via the Australian government's R&D tax credit program."
• "Overall, we have dosed 103 patients and healthy volunteers with SON-1010 to date in these three Phase 1 studies."
• "As part of our ongoing cost-cutting strategy, all antiviral development with SON-1010 has been suspended."
• "We expect to report topline efficacy data from this combination [SON-1010 with trabectedin] in the second half of calendar year 2025."
• "Enrollment remains ongoing and an update on safety and topline efficacy in that trial [SB221] is expected in the second half of calendar year 2025."
• "Given the business priorities at the time, the SB211 study [SON-080 for CIPN] was put on hold."
• "We are prepared to initiate commercial development of SON-1210, pending the outcome of any partnering activity."
• "We elected to place the SON-1400 program on hold for expense reduction purposes."
• "The SON-1411 program is in cell line development, and has also been placed on hold for the time being."
• "Our goal is to advance our pipeline and leverage our therapeutic FHAB platform to become a leader in the discovery, development, and commercialization of biologic drugs."
• "As partnership conversations evolve, we intend to prioritize our expense allocation on assets with the greatest strategic interest."
• "We reduced operating expenses during fiscal year 2024 and intend to negotiate a licensing deal that will help fund future pipeline expansion."
• "We believe that SON-1010 has the potential to complement that activity [trabectedin's macrophage conversion] by activating the NK and T cells in the TME to secrete more interferon-gamma (IFN), which is considered to be important for anti-tumor control."
• "Until new clinical data are generated in the DPN indication, we have decided to delay further direct development of this program [SON-080]."
• "We have elected to put the SON-1411 development program on hold to preserve cash."
• "We believe our cash and cash equivalents at September 30, 2025 will fund our projected operations into February 2026."
• "Substantial additional financing will be needed by us to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern."
• "Following the Closing Date, we will operate as a wholly owned subsidiary of HSI and will continue to focus on the development of our existing biotech assets, including SON-1010, while disposing of other assets."

Industry Context

Sonnet BioTherapeutics operates in the highly competitive and rapidly advancing pharmaceutical and biotechnology industries, specifically focusing on immuno-oncology. Its FHAB platform aims to address common challenges in cytokine therapy, such as poor tissue accumulation and short half-life, by leveraging human serum albumin for targeted delivery and extended activity. This approach differentiates it from conventional cytokine therapies and other albumin-binding technologies. The company faces competition from major pharmaceutical and biotechnology players like Amgen, AstraZeneca, Bristol-Myers Squibb, Merck, Novartis, Pfizer, and Roche/Genentech, who are also developing immuno-oncology treatments, including IL-12 programs. The industry trend towards combination therapies is reflected in Sonnet's trials combining SON-1010 with atezolizumab and trabectedin. The focus on high unmet medical needs like platinum-resistant ovarian cancer, sarcoma, and diabetic peripheral neuropathy aligns with broader industry efforts to develop novel treatments for difficult-to-treat conditions. The company's strategy of outsourcing R&D and manufacturing to reduce costs and improve timelines is a common practice among smaller biotech firms.

Comparison to Industry Standards

• SON-1010's PK data reveals about a 10-fold extended half-life compared with recombinant human IL-12 (rhIL-12), suggesting a significant improvement over previous IL-12 therapies that suffered from short half-lives.
• The observed controlled, dose-related, and sustained IFN-γ response to SON-1010 may allow improved efficacy compared to many studies that used rhIL-12 since the late 1990s, which often faced systemic toxicity challenges.
• SON-080 (rhIL-6) was demonstrated to be well-tolerated at doses about 10-fold lower than the therapeutic Maximum Tolerated Dose (MTD) for IL-6 established in previous clinical evaluations, suggesting a potentially more benign adverse event profile.
• Preclinical studies with murine SON-1010 (mIL12-FHAB) showed a 30-to-50-fold increase in tumor reduction compared to standalone mIL-12 in a mouse melanoma model, indicating superior potency.
• The company's proprietary continuous intensive perfusion manufacturing process and FHAB-binding ligand for downstream processing are presented as advancements over industry standards for cytokine production, aiming for rapid scale-up and commercial manufacturing.
• The company aims to seek breakthrough therapy designations, which, if granted, could lead to accelerated clinical development timelines compared to conventional regulatory pathways.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently subject to any material legal proceedings, but may from time to time become a party to various lawsuits, claims, and other legal proceedings arising in the ordinary course of its business.

Related Party Transactions

• Pankaj Mohan, former Chairman and CEO, purchased 4,296 shares of common stock and warrants to purchase 8,593 shares of common stock in an underwritten public offering on October 27, 2023.
• Raghu Rao, a director and interim CEO, purchased 1,953 shares of common stock and warrants to purchase 3,906 shares of common stock in an underwritten public offering on October 27, 2023.
• Dr. Richard Kenney, Chief Medical Officer, participated in a private placement that closed on June 30, 2025, purchasing convertible notes for a principal amount of $200,000 and warrants to purchase up to 86,505 shares of common stock. These notes converted into Series 5 Preferred Stock and warrants to purchase up to 320,000 shares of common stock.

Stakeholder Impact

• **Shareholders:** Significant dilution from multiple equity offerings and warrant exercises. Delisting from Nasdaq and deregistration will eliminate public trading access and liquidity for common stockholders. Contingent Value Rights (CVRs) are tied to potential future value of biotech assets for legacy stockholders.
• **Employees:** The company has a limited number of employees (9 full-time) and relies heavily on independent contractors. Management changes, including the passing of the former CEO and resignations of several executive officers and directors due to the business combination, could impact morale and operational continuity. The company expects to expand its organization, which could create new opportunities but also management challenges.
• **Customers/Patients:** Continued development of oncology-focused product candidates (SON-1010, SON-1210) offers potential new treatments for solid tumors, platinum-resistant ovarian cancer, and pancreatic cancer. The licensing of SON-080 in India could provide a new treatment for DPN and CIPN in that region. Delays in development or program holds could impact future treatment availability.
• **Suppliers/Creditors:** Reliance on third-party CDMOs and CROs for manufacturing and clinical trials means their business continuity is crucial. The company's 'going concern' doubt and need for substantial additional financing could pose risks to creditors if funding is not secured.
• **Regulatory Bodies:** The company's delisting from Nasdaq and intent to deregister will reduce its reporting obligations under the Exchange Act, impacting transparency for regulators and the public.

Next Steps

• Report topline efficacy data for SON-1010 with trabectedin in STS in H2 calendar year 2025.
• Report safety and topline efficacy data for SON-1010 in combination with atezolizumab in PROC (SB221 trial) in H2 calendar year 2025.
• Alkem Laboratories Limited to initiate a Phase 2 clinical trial for SON-080 in DPN in H2 calendar year 2025.
• Initiate the first clinical trial to study dose escalation of SON-1210 monotherapy subsequent to raising adequate funding expected in 1H 2026.
• Negotiate terms of the 'Give Back Option' with New Life Therapeutics Pte., Ltd. for SON-080 rights.
• File Form 15 with the SEC to request deregistration of common stock and suspension of reporting obligations after Nasdaq's Form 25 becomes effective.
• Continue to focus on the development of existing biotech assets, including SON-1010, while disposing of other assets as a wholly-owned subsidiary of HSI.
• Explore FHAB technology licenses with external partners for expanded therapeutic deployment in areas like vaccines, antibody drug conjugates (ADCs), and CAR T-cell technology.
• File provisional patents to secure exclusivity with FHAB in new application fields as soon as supportive data are available.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by a substantial increase in net losses to $16.0 million and a 'going concern' warning, with cash only sufficient until February 2026. While there are promising early-stage clinical results for SON-1010 and new collaborations, these are long-term prospects that do not address immediate liquidity issues. The delisting from Nasdaq and subsequent deregistration significantly reduce liquidity and transparency for investors, making it difficult to exit positions. Furthermore, the new parent company's focus on digital assets introduces additional, unrelated market volatility and risks. The restriction on spending a large portion of cash from warrant exercises further limits the company's operational flexibility. Given the high financial risk, limited near-term revenue prospects, and loss of public market access, a seasoned investor would likely recommend selling.

Keywords

Oncology, Biotechnology, FHAB, Fully Human Albumin Binding, IL-12, IL-6, IL-15, SON-1010, SON-080, SON-1210, Cytokines, Immunotherapy, Solid Tumors, Platinum-Resistant Ovarian Cancer, Sarcoma, Chemotherapy-Induced Peripheral Neuropathy, Diabetic Peripheral Neuropathy, Clinical Trials, IND, FDA, Regulatory Approval, Drug Development, Biologics, Capital Raise, Nasdaq Delisting, Business Combination, Hyperliquid Strategies Inc, Rorschach I LLC, Intellectual Property, Patent, Research and Development