Inventory

Inventories have historically been recorded at the lower of cost or market value, with cost determined under specific identification and on the first-in, first-out (FIFO) method. Inventories consisted of raw materials and work-in-process intended for use in the manufacture of LAVIV, which was approved by the FDA in 2011 for the improvement of nasolabial fold wrinkles in adults. Raw materials that could be used either for manufacturing pre-clinical and clinical product candidates or the production of commercial products were expensed as research and development costs when selected for use in pre-clinical or clinical manufacturing operations. As a result of the wind-down of the Company’s azficel-T operations, more fully described in Note 12, the Company wrote off all remaining raw materials and work-in-process inventories as of September 30, 2016.

Inventories consisted of the following as of:



	December 31,
($ in thousands)	2016		2015
Raw materials (LAVIV and product candidates)	$	—	$	338
Work-in-process (LAVIV)	—		144
Total inventory, net	$	—	$	482

Total inventory write-offs of approximately $0.4 million are included in cost of product sales in the Company's Consolidated Statement of Operations for the year ended December 31, 2016. No inventory expiration/obsolescence expense was recognized during the year ended December 31, 2015. Future raw materials purchased for pre-clinical and clinical trials will be charged to R&D expense as incurred.