By Chris Wack

Pasithea Therapeutics Corp. stock dived 29% to $4 after the biotech company entered into agreements with investors to purchase 8.68 million shares, and warrants to buy 8.68 million shares at $3.50 a share and accompanying warrants, in a private placement.

Volume for the stock was 19 million shares at 12:15 p.m. ET, compared to its 65-day average volume of 4.3 million shares. The stock hit its 52-week high of $8.50 on Tuesday, and its 52-week low of $2.10 on Monday.

The proceeds to the company are expected to be $30.4 million before fees.

The warrants will be immediately exercisable from the date of issuance and have an exercise price of $3.50 a share. The warrants will expire five years from the date of issuance.

The offering is expected to close on or about Monday.

The company intends to use the proceeds from the private placement to fund pre-clinical research and development work for future product candidates, invest in developing its U.S. and UK clinic businesses, and for working capital and general corporate purposes.

The stock ended Tuesday up 153% after the company said its wholly-owned Pasithea Clinics subsidiary was approved to provide esketamine nasal spray Spravato for depression in adults.

Write to Chris Wack at chris.wack@wsj.com