Inventories

The Company uses the lower of first-in, first-out (“FIFO”) cost or market method of accounting for inventory.



Inventories consist of the following:	(in thousands)
	September 30,		December 31,
	2014		2013
Inventory work-in-process, January 1	$	—	$	453
Production	—		5
Spoilage	—		(458		)
Inventory work-in-process, end of period	$	—	$	—

In April 2012, FDA reviewers raised certain questions about the status of our existing lots of older Work-In-Process Alferon® materials and Alferon® Active Pharmaceutical Ingredient (“API”), which would need to be released by the FDA before those materials could be used in commercial product. After conducting all of the appropriate tests on samples of the inventory during 2013, the Company concluded that it could not alleviate certain questions the FDA had about the older Work-In-Process Alferon N Injection®. Accordingly, these lots were not be submitted to the FDA to request release for commercial sale and their remaining dollar value was written-off in 2013.