Quarterly report pursuant to Section 13 or 15(d)


3 Months Ended
Mar. 31, 2013
Inventory [Abstract]  
  5. Inventory


All components of inventory are valued at the lower of cost (first-in, first-out) or market. We adjust inventory to market value when the net realizable value is lower than the carrying cost of the inventory. Market value is determined based on estimated sales activity and margins.


During the three-month periods ended March 31, 2013 and 2012, we capitalized $525,000 and $510,000, respectively, of inventory costs associated with our Lymphoseek product. During the three-month period ended March 31, 2012, we wrote off $74,000 of previously capitalized Lymphoseek inventory due to the consumption of the Lymphoseek material in previously unanticipated product development activities.


The components of inventory as of March 31, 2013 and December 31, 2012, net of reserves of $308,000, are as follows:


    March 31,
    December 31,
Pharmaceutical materials   $ 419,953     $ 297,500  
Pharmaceutical work-in-process     447,314       -  
Total   $ 867,267     $ 297,500  


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 the three-month period ended March 31, 2012, we recorded an obsolescence reserve for $339,000 of Lymphoseek inventory due to changes in our projections of the probability of future commercial use for the specific lots previously capitalized.