Quarterly report pursuant to Section 13 or 15(d)

Inventories, net

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Inventories, net
9 Months Ended
Sep. 30, 2022
Inventory Disclosure [Abstract]  
Inventories, net Inventories, netInventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value. The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. Capitalized costs of inventories for LUPKYNIS mainly include third party manufacturing costs, transportation, storage, insurance, and allocated internal labor.
The Company assesses recoverability of inventory each reporting period to determine any write-down to net realizable value resulting from excess or obsolete inventories. As of September 30, 2022, we have recorded reserves of finished goods inventories of approximately $2.7 million which were primarily related to process validation batches used for FDA approval.

The components of inventory, net are as follows:
(in thousands) September 30, 2022 December 31, 2021
Raw materials $ 2,217  $ 2,217 
Work in process 20,150  12,566 
Finished goods 2,953  4,543 
Total inventories $ 25,320  $ 19,326