3. INVENTORY

Inventory is stated at the lower of cost or net realizable value, on a first in, first out basis. Costs include amounts related to third-party manufacturing, freight and distribution costs, allocation of labor, quality control and quality assurance and other manufacturing overhead. Capitalization of costs as inventory begins when the product has received regulatory approval in the United States. The Company expensed inventory costs related to product candidates as research and development expenses prior to regulatory approval. For INVELTYS, capitalization of costs as inventory began upon U.S. regulatory approval on August 22, 2018. Inventory produced that will be used in a promotional sample program is expensed to selling, general and administrative expense when it is selected for use and shipped as part of a marketing program.

Current inventory and long-term inventory consist of the following (in thousands):


	September 30,		December 31,
	2019		2018

Raw materials	$	690	$	350
Work in progress		5,186		3,357
Finished goods		2,681		388
Total inventory	$	8,557	$	4,095

As of September 30, 2019, the Company had $5.6 million of current inventory and $3.0 million of long-term inventory.