Annual report pursuant to Section 13 and 15(d)

Inventory

Inventory

12 Months Ended

Dec. 31, 2012

Inventory

The components of net inventory at December 31, 2012 and 2011 are as follows:

	2012		2011
Pharmaceutical materials	$	297,500	$	482,000
Pharmaceutical work-in-process		--		339,549
	$	297,500	$	821,549

During 2012 and 2011, we capitalized $525,000 and $213,000, respectively, of inventory costs associated with our Lymphoseek product. During 2012, we wrote off $741,000 of previously capitalized Lymphoseek inventory due to changes in our projections of the probability of future commercial use for the specific lots previously capitalized or the consumption of the Lymphoseek material in previously unanticipated product development activities.

We estimate a reserve for obsolete inventory based on management's judgment of probable future commercial use, which is based on an analysis of current inventory levels, historical and estimated future sales and production rates, and estimated shelf lives. During 2012, we recorded an obsolescence reserve for $308,000 of Lymphoseek inventory based on delays in U.S. regulatory approval impacting the timing of future commercial use of the specific lots previously capitalized.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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