5. Balance Sheet Details

Inventory

Inventories are recorded at standard cost on a first-in, first-out basis. Inventories consist of the following (in thousands) as of:


	March 31, 2012			December 31, 2011
Raw materials	$	470		$	353
Work in progress		981			495
Finished goods		5,769			5,699

		7,220			6,547
Reserve		(274	)		(224	)

Net inventory	$	6,946		$	6,323

The Company reviews inventory periodically and reduces the carrying value of items considered to be slow moving or obsolete to their estimated net realizable value. The Company considers several factors in estimating the net realizable value, including shelf life of raw materials, demand for its enzyme products and historical write-offs.

Property and equipment

Property and equipment is stated at cost and depreciated over the estimated useful lives of the assets (generally three to five years) using the straight-line method.

Property and equipment consists of the following (in thousands):


	March 31, 2012			December 31, 2011
Laboratory, machinery and equipment	$	25,143		$	24,927
Computer equipment		3,358			3,031
Construction in progress		6,548			4,106

Property and equipment, gross		35,049			32,064
Less: Accumulated depreciation and amortization		(24,581	)		(24,258	)

Property and equipment, net	$	10,468		$	7,806

Construction in progress assets relate primarily to equipment associated with the build out of the research, bioprocess development and automation laboratories acquired in anticipation of the Company's new building lease commencement in June 2012. Upon installation of the equipment, the assets will begin depreciating over their appropriate asset lives. Depreciation of property and equipment is provided on the straight-line method over estimated useful lives as follows:


Laboratory equipment			3-5 years
Computer equipment			3 years
Furniture and fixtures			5 years
Machinery and equipment			3-5 years
Office equipment			3 years
Software			3 years

In conjunction with the signing of the Company's facility lease agreement in June 2011, an analysis of all tenant improvements to be completed on the new building was performed. In accordance with authoritative guidance, it was concluded that the tenant improvements being funded through tenant allowances are assets of the landlord and not the Company as all tenant improvements will remain with the building, are not specific to the Company and all construction is controlled by the landlord. As such, tenant improvements not paid directly by the Company or controlled by the Company, as well as the respective liabilities will not be recorded on the Company's consolidated financial statements.

Accrued expenses

Accrued expenses consists of the following (in thousands):


	March 31, 2012		December 31, 2011
Employee compensation	$	1,575	$	3,138
Professional and outside services costs		1,660		1,060
Accrued interest on convertible notes		958		479
Royalties		576		1,202
Accrued restructuring		153		396
Accrued taxes		1,074		40
Other		131		204

	$	6,127	$	6,519