NOTE 8. INVENTORIES

Inventories relate to the manufacture of the Company's Glumetza, Gralise and Proquin XR products. Inventories are stated at the lower of cost or market and consist of the following (in thousands):

	June 30, 2011		December 31, 2010
Raw materials	$	1,082	$	74
Work-in-process	137		202
Finished goods	3,778		1,254
Deferred costs	17		41
Total	$	5,014	$	1,571

Deferred costs represent the costs of Proquin XR product shipped for which recognition of revenue has been deferred.