Inventory

6 Months Ended

Jun. 30, 2020

The components of inventory, inclusive of step-up as a result of bringing Keryx’s inventory onto Akebia’s books at fair value in connection with the Merger, are summarized as follows:


	June 30, 2020		December 31, 2019
	(in thousands)
Raw materials	$	2,078	$	2,278
Work in process	101,641		137,858
Finished goods	38,636		42,096
Total inventory	$	142,355	$	182,232

Long-term inventory, which primarily consists of raw materials and work in process, is included in other assets in the Company’s unaudited condensed consolidated balance sheets.


	June 30, 2020		December 31, 2019
	(in thousands)
Balance Sheet Classification:
Inventory	$	104,603	$	116,349
Other assets	37,752		65,883
Total inventory	$	142,355	$	182,232

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $9.9 million and $10.1 million during the three and six months ended June 30, 2020, respectively, in addition to related step-up charges of $6.0 million during the three and six months ended June 30, 2020. Inventory write downs charged to cost of goods sold totaled $1.3 million and $3.0 million during the three and six months ended June 30, 2019, respectively, in addition to related step-up charges of $1.9 million and $2.8 million during the three and six months ended June 30, 2019, respectively. The increase for the three and six months ended June 30, 2020 was primarily related to the write-down of inventory associated with specific lots of Auryxia because it was determined that these lots were not manufactured in conformance with the FDA's GMP guidance relating to validation.

If future sales of Auryxia are lower than expected, the Company may be required to write-down the value of such inventories. Inventory write-downs and losses on purchase commitments are recorded as a component of cost of sales in the unaudited condensed consolidated statement of operations.