Note 3 — Inventory

Inventory consists of the following (in thousands):

	September 30, 2016		December 31, 2015
Raw materials	$	2,386	$	3,236
Work-in-process		6,695		6,087
Finished goods		1,673		2,023
Total inventory	$	10,754	$	11,346

Inventory is generally manufactured upon receipt of firm purchase orders from our collaboration partners. Inventory includes direct materials, direct labor, and manufacturing overhead and cost is determined on a first-in, first-out basis. Inventory is valued at the lower of cost or market and defective or excess inventory is written down to net realizable value based on historical experience or projected usage.