G.INVENTORIES

Our major classes of inventories were as follows as of March 31, 2015 and December 31, 2014 (in thousands):

	March 31, 2015		December 31, 2014
Raw materials	$	15,757	$	14,188
Work in process	5,900		5,965
Finished goods	14,282		20,457
Total	$	35,939	$	40,610
Included in other long-term assets:
Raw materials	5,908		7,798
Total Inventories	$	41,847	$	48,408

During the three months ended March 31, 2015, we reserved $3.6 million of Makena inventory, which may not be saleable. This amount included a fair value adjustment of $3.3 million.

In the fourth quarter of 2014, we recorded the acquired Makena inventory at a fair value of $30.3 million, which required a $26.1 million step-up adjustment to recognize the inventory at its expected net realizable value. We are amortizing and recognizing the step-up adjustment as cost of product sales in our condensed consolidated statements of operations as the related inventories are sold. During the three months ended March 31, 2015, we recognized $2.9 million of the fair value adjustment as cost of product sales. In connection with the fair value step-up adjustment of Makena inventory, we have recorded a portion of the associated raw material inventory and associated step-up adjustment in other long-term assets as we believe that the amount of inventory purchased in the acquisition exceeds our normal inventory cycle.