Inventory

9 Months Ended

Sep. 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:


	September 30, 2020		December 31, 2019
	(in thousands)
Raw materials	$	2,493	$	2,278
Work in process	90,160		137,858
Finished goods	27,524		42,096
Total inventory	$	120,177	$	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.


	September 30, 2020		December 31, 2019
	(in thousands)
Balance Sheet Classification:
Inventory	$	88,242	$	116,349
Other assets	31,935		65,883
Total inventory	$	120,177	$	182,232

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $8.5 million and $18.6 million during the three and nine months ended September 30, 2020, respectively, in addition to related step-up charges of $1.4 million and $7.4 million during the three and nine months ended September 30, 2020, respectively. Inventory write downs charged to cost of goods sold totaled $2.9 million and $6.0 million during the three and nine months ended September 30, 2019, respectively, in addition to related step-up charges of $8.1 million and $10.9 million during the three and nine months ended September 30, 2019, respectively. The increase for the three and nine months ended September 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. This write-down was largely related to a previously disclosed manufacturing quality issue related to Auryxia.

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.