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Future of BAT’s Planned Nicotine Inhaler in Question

British American Tobacco ends the supplier deal for its long-delayed Voke inhaler

British American Tobacco PLC terminated the supplier agreement for its long-delayed Voke nicotine inhaler, which the tobacco giant had promoted as setting it apart in the growing market for cigarette alternatives.

BAT in 2014 received a medicinal license for Voke from the U.K.’s Medicines and Healthcare Products Regulatory Agency, marking the first time a product from a major tobacco company had been licensed by a Western government.

Voke isn’t an electronic cigarette—it doesn’t heat liquid, use a battery or create vapor—meaning BAT expected it to be unaffected by regulations targeting such devices.

The product, meant to be sold as a cigarette-sized stick in a box containing 20 nicotine refills, was billed as a safer alternative to cigarettes—in the same way as nicotine gum or patches—and one that could be prescribed by doctors.

BAT, which licensed distribution, manufacturing and marketing rights to Voke from closely held patent developer Kind Consumer Ltd., had said it expected the product to be launched in the U.K. by the end of 2015. The London-based tobacco giant has delayed the launch several times, however.

On Tuesday, drug-delivery-device maker Consort Medical PLC said BAT was terminating its entire supply deal for Voke, effective immediately, which was a contractual right if the product hadn’t been commercially launched by the end of 2016.

The companies remain in “constructive dialogue” about the future of Voke, Consort said. A BAT spokeswoman declined to comment on whether the deal’s termination meant Voke was being permanently shelved. Kind Consumer also declined to comment.

In an interview in December, Kingsley Wheaton, BAT’s head of next-generation products, described Voke as “a very complex and challenging product to miniaturize at speed” and said the company was “still working through the many manufacturing challenges of Voke.”

Analysts hadn’t expected Voke to be a significant revenue driver for BAT, but they had seen the product as diversifying the Dunhill and Lucky Strike owner’s offerings within the market for cigarette alternatives.

Consort’s shares were down 3.3% in recent London trading, while BAT’s were down less than 0.1%. Consort said the termination didn’t materially affect its performance expectations for the fiscal year ending in April.

— Denise Roland contributed to this article.

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