Inventories, net

Inventories are stated at the lower of cost or market (net realizable value) and net of a valuation allowance for potential excess or obsolete material of $0.2 million at March 31, 2012. There was no valuation allowance as of December 31, 2011. Cost is determined by the first-in, first-out method.

Raw materials consist of bulk drug material for BYETTA, SYMLIN and BYDUREON. Work-in-process inventories consist of in-process vials for BYDUREON, in-process BYETTA cartridges and in-process SYMLIN cartridges. Finished goods inventories consist of BYDUREON, BYETTA and SYMLIN drug product in disposable delivery systems.

We expense costs relating to the purchase and production of pre-approval inventories as research and development expense in the period incurred until such time as we believe future commercialization is probable and future economic benefit is expected to be realized.

Inventories, net consist of the following (in thousands):



	March 31, 2012		December 31, 2011
Raw materials	$	95,934	$	74,793
Work-in-process	29,657		30,155
Finished goods	9,916		7,011
	$	135,507	$	111,959