4. Inventory

All of the Company’s inventories relate to the manufacturing of Iclusig. The following table sets forth the Company’s inventories as of December 31, 2013 and 2012:


*In thousands*	2013		2012
Raw materials	$	—	$	—
Work in process		3,170		—
Finished goods		234		6

Total	$	3,404	$	6

Current portion	$	419	$	6

Non-current portion included in Other assets, net	$	2,985	$	—

Upon approval of Iclusig by the FDA on December 14, 2012, the Company began capitalizing inventory costs for Iclusig manufactured in preparation for the product launch in the United States. In periods prior to December 14, 2012, the Company expensed costs associated with Iclusig, including raw materials, work-in-process and finished goods, as development expenses. The Company has not capitalized inventory costs related to its other drug development programs. Non-current inventory consists of work-in-process inventory that was manufactured in order to provide adequate supply of Iclusig in the United States and Europe and to support continued clinical development.

Due to the temporary suspension of Iclusig in the United States and the decrease in expected demand for Iclusig under the revised USPI, the Company assessed the need for an inventory write-down for excess inventory for its inventory on hand at December 31, 2013. This review included all components of inventory, including raw materials, work-in-process and finished goods inventory. Inventory balances on hand were compared to the expected uses of inventory in the future, taking into account the estimated future global demand for Iclusig in the foreseeable future, as well as the estimated shelf-life of the Company’s inventory components. From this analysis, the Company determined that approximately $7.1 million of its inventory was excess at December 31, 2013 and recorded a charge to cost of product revenue to write down inventory in the fourth quarter of 2013. In addition, during 2013 the Company also wrote down finished goods that will expire and not be sold. Total charges for 2013 for excess inventory, as well as finished goods inventory that will expire before it is sold, was approximately $7.6 million.

In connection with this review, the Company also charged $1.3 million of vendor advances to cost of product revenue as the advances relate to future inventory production that will result in excess inventory.