(Bloomberg) -- Chanticleer Holdings Inc., the owner and operator of Hooters and other restaurant franchises, plans to combine with Sonnet BioTherapeutics Inc. in a reverse merger, turning from selling chicken wings, burgers and beer to developing cancer drugs.
Under the terms of the proposed deal, Chanticleer said it will spin off its restaurant holdings into a new public company. The firm’s stock has lost nearly all of its since a 2015 peak of about $35 a share.
Sonnet has a pipeline of oncology drugs in development. Its most advanced product is meant to treat nerve damage caused by chemotherapy, while other molecules in earlier stages of testing target tumors. The company is based in Princeton, New Jersey.
Reverse mergers are a way for closely held companies like Sonnet to enter the public market without having to do an initial public offering. A wave of biotechnology companies have gone public this month, with mixed results.
Charlotte, North Carolina-based Chanticleer has suffered amid a broader decline in fast-casual dining. Hooters, once known for its scantily clad female waitstaff, has increasingly seemed out of date.
The company’s shares, which trade under the food-themed ticker BURG, gained 50% to $1.24 in late trading in New York. Chanticleer, which had a market of $8.3 million at Thursday’s close, will be renamed Sonnet BioTherapeutics Holdings after the transaction is finalized.
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