Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Chris Raymond from Robert Baird & Company. You may proceed sir.
Chris Raymond - Robert Baird & Co.
Thanks for taking the question. Guys, I’m a little surprised by, I guess, it seems perhaps it’s the SG&A guidance that’s driving your long range earnings, a huge differential obviously. I’m sure you’re aware to where consensus expectations are and if you do the math on SG&A for 2009, it looks like you’re about $20 million to $30 million higher than anybody thought.
Can you maybe walk through the logic there? Is this is all Kuvan promotion related or is there some other thing that we’re missing on some missing lack of leverage in the model that we didn’t see?
Jeff Cooper
Sure, I’ll be happy to address that just from a financial perspective. We’ve provided a range of guidance for SG&A, but we’re certainly trying to target our spending towards the lower to middle end of that range. The increase in the SG&A as compared to 2008 is due to several factors.
First of all, we are increasing our spend on Kuvan for a number of the commercial programs that Steve has previously alluded to. So, the spending for Kuvan, as we continue to grow sales has increased.
In the case of Naglazyme, we are spending additional funds to grow the product internationally, both in existing markets such as Brazil, but also in some of the newer markets that we’re targeting and hoping to enter. The other things that are impacting the total spends are the non-cash stock compensation, which is purely driven by the number of options in pricing the accounting rules. That spend is going to be about $5 million higher in SG&A than it was in 2008.
Then finally, there’s just some other corporate costs, including depreciation from the facilities that we’re completing and facility related costs that are increasing the overall spend. Also, we’ve implemented ERP program that went live the beginning of this year. So, the costs associated with that program, which were capitalized last year, are now being incurred this year, so certainly a number of different factors that are driving it.
Chris Raymond - Robert Baird & Co.
So all that wraps up to about $20 million to $30 million higher in SG&A. So what’s the delta then in 2010 and 2011? What’s driving essentially the having of expected non-GAAP earnings?
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