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Inventories

6 Months Ended

Jun. 30, 2012

Inventories consist of finished goods, raw materials and work in process and are stated at the lower of cost or market and consist of the following (in thousands):



	June 30,		December 31,
	2012		2011

Raw materials	$	1,786	$	1,244
Work-in-process		1,289		643
Finished goods		5,273		2,831
Deferred costs		377		677
Less: allowance for obsolescence		(696)		—
Total	$	8,029	$	5,395

The fair value of inventories acquired included a step-up in the value of Zipsor inventories of $1.9 million which will be amortized to cost of sales as the acquired inventories are sold.

Deferred costs at June 30 2012 represent the costs of Gralise product shipped for which recognition of revenue has been deferred. Deferred costs at December 31, 2011 represent the costs of Gralise and Proquin XR products shipped for which recognition of revenue has been deferred.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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