Note 3 — Inventory

Inventory consists of the following (in thousands):

	September 30, 2017		December 31, 2016
Raw materials	$	1,751	$	2,055
Work-in-process		8,398		7,311
Finished goods		3,505		1,743
Total inventory	$	13,654	$	11,109

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 net realizable value and defective or excess inventory is written down to net realizable value based on historical experience or projected usage.