Inventories

12 Months Ended

Dec. 31, 2022

Inventories

Inventories

4. Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories. Inventory includes the cost of API, raw materials and third-party contract manufacturing and packaging services. Indirect overhead costs associated with production and distribution are recorded as period costs in the period incurred. OLINVYK was approved by the FDA in August 2020. Prior to FDA approval, all manufacturing costs for OLINVYK were expensed to research and development. Upon FDA approval, manufacturing costs for OLINVYK manufactured for commercial sale have been capitalized as inventory cost. Costs of drug product to be consumed in any current or future clinical trials will continue to be recognized as research and development expense.

The Company periodically evaluates the carrying value of inventory on hand using the same lower of cost or net realizable value approach as that used to initially value the inventory. Valuation adjustments may be required for slow-moving or obsolete inventory or in any situations where market conditions have caused net realizable value to fall below the carrying cost of the inventory.

	December 31, 2022		December 31, 2021
Finished goods	$	3,111	$	2,488
Inventory Valuation Adjustment		(2,205)		(136)
Total Inventories	$	906	$	2,352

The Company recorded an inventory valuation adjustment of $2.1 million during the year ended December 31, 2022 and $0.1 million during the year ended December 31, 2021. The valuation adjustments recorded during the year ended December 31, 2022 were to account for slow moving or obsolete inventory due to uncertainty of commercial activities and future expected OLINVYK sales. The inventory adjustment recorded during the year ended December 31, 2021 was primarily related to a commercial batch that was not saleable based on the Company’s quality requirements.