Prior to regulatory approval, we expense costs relating to the production of inventory as research and development expenses in the period incurred. We capitalize the costs incurred to manufacture our products after regulatory approval when, based on our judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. We value our inventories at the lower of cost or estimated net realizable value. We determine the cost of our inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw materials, active pharmaceutical ingredient, and drug product. Finished goods include packaged and labelled products.

Raw materials and work in process that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development. If the material is intended to be used for research and development, it is expensed as research and development once that determination is made.

We assess the recoverability of our inventory each reporting period and write-down any inventory that has become obsolete, that has a cost basis in excess of its estimated realizable value, or that is not expected to be sold or otherwise consumed before expiry. Inventory write-downs are recorded as cost of sales in the period the impairment is identified.

Cost of sales includes the cost of producing and distributing inventories related to sales of XPOVIO in the U.S. and sales of selinexor to our partners who commercialize our products outside of the U.S. Cost of sales is recognized in the period the related sales occur and includes compensation expense for employees involved with production and distribution, freight, and indirect overhead costs, as well as third-party royalties payable on net product revenue. Cost of sales may also include excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances.

The following table presents our inventory (in thousands), all of which was related to XPOVIO:


	As of December 31,
	2023		2022
Raw materials	$	553	$	1,370
Work in process		1,732		1,878
Finished goods		758		976
Total inventory	$	3,043	$	4,224

XPOVIO was initially approved by the FDA in July 2019 at which time we began to capitalize costs to manufacture XPOVIO. Prior to FDA approval of XPOVIO, all costs related to the manufacturing of XPOVIO and related material were charged to research and development expense in the period incurred.