This item "Regurgitonic [Bad Regurgitonic]" is randomly given to you during The Regurgitonic quest instead of the standard good "Regurgitonic". You will either get the normal or the bad one, randomly, when you turn in the Flask of Nitrates to Kimble Nogflop in Ak`Anon.
I don't know how often you get the good version versus the bad, but it happened to me at least once. It just seems to be random which you get.
This is also confirmed by a post from 2003-02-13 by player Morphea in the above quest entry for The Regurgitonic.
I am not sure if the bad Regurgitonic has a specific use, or if it is just meant to be a flavour-item that role-plays how Kimble doesn't always get a good batch when he makes the stuff. Like the "good" version of Regurgitonic , this item has the QUEST tag in-game, so perhaps there is special flavour-text that happens when you turn it in to someone.
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Rondor