5. INVENTORIES

Inventories consist of the following (in thousands):


	Balance as of
	March 31,		December 31,
	2017		2016
Raw materials	$	14,210	$	9,412
Work-in-process		239		2,984
Finished goods		2,741		3,110
Deferred costs		—		680
Inventories	$	17,190	$	16,186

Raw materials inventories consist primarily of the active pharmaceutical ingredients, or API, for Qsymia and STENDRA/SPEDRA. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first in, first out method for all inventories, which are valued using a weighted-average cost method calculated for each production batch. The Company periodically evaluates the carrying value of inventory on hand for potential excess amounts over demand using the same lower of cost or net realizable value approach as that used to value the inventory.