Inventory

6 Months Ended

Jun. 30, 2021

Inventory

Inventory

3.            Inventory

Inventory is stated at the lower of cost or net realizable value. Inventory is valued on a first-in, first-out basis and consists primarily of material costs, third-party manufacturing costs, and related transportation costs along the Company's supply chain. The Company capitalizes inventory upon regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are recorded as research and development expense. Costs of drug product to be consumed in any current or future clinical trials will continue to be recognized as research and development expense and costs of sample inventory is recorded as selling, general and administrative expense. The Company reviews inventories for realization on a quarterly basis and would record provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value when necessary. As of June 30, 2021, the Company had a $0.9 million non-cash reserve for excess and obsolete finished goods inventory due to the uncertainty of commercial activities underlying XENLETA product sales. Inventory reported at December 31, 2020 and June 30, 2021 consisted of the following:

		As of		As of
		December 31,		June 30,
(in thousands)		2020		2021
Raw materials	$	952	$	1,379
Work in process		4,608		7,014
Finished goods		263		1,721
Total Inventory	$	5,823	$	10,113