Note 3—Inventory

Inventory consists of the following (in thousands):


	June 30,		December 31,
	2011		2010
Raw materials	$	8,985	$	6,101
Work-in-process		808		—
Finished goods		4		1,165

Total	$	9,797	$	7,266

Inventory is manufactured upon receipt of firm orders from our collaboration partners. Inventory includes direct materials, direct labor, and manufacturing overhead and is determined on a first-in, first-out basis. Inventory is stated at the lower of cost or market and is net of reserves of $2.9 million and $4.0 million as of June 30, 2011 and December 31, 2010, respectively. Reserves are determined using specific identification plus an estimated reserve for potential defective or excess inventory based on historical experience or projected usage.