Amgen Inc. (AMGN) reported a 40% rise in second-quarter profits and offered a brighter outlook for 2009 on better-than-expected sales of its key drugs.

Amgen "had a substantial recovery from the first quarter in terms of revenue," Chief Executive Kevin Sharer said in an interview.

The Thousand Oaks, Calif., drug maker also announced a deal with GlaxoSmithKline PLC (GSK) that allows the European drug giant to sell Amgen's experimental bone drug denosumab - expected to get a u.s. Food and Drug Administration marketing decision in October - to osteoporosis patients in Europe and other overseas markets.

In after-hours trading, Amgen shares rose 3.5% to $62.84.

For the three months ended June 30, Amgen reported net income of $1.27 billion, or $1.25 a share, up from year-ago earnings of $906 million, or 84 cents a share. Excluding items, earnings were $1.29 a share, well above the average analyst estimate of $1.16, according to Thomson Reuters.

Revenue dipped 1% to $3.71 billion but surpassed the average Street estimate of $3.58 billion.

"Concerns we had about the pressure of the recession on health care have moderated," Sharer said. "They're certainly not gone, but they have moderated compared to the first quarter."

Enbrel sales, in particular, came back strong, he said, after concerns that the job losses and other effects of the recession had damped earlier patient demand for the rheumatoid arthritis medicine.

Sales of Enbrel - sold in North America by Amgen and distributed elsewhere by Wyeth (WYE) - rose 7% to $899 million for the quarter, beating the average analyst estimate of $863 million, according to MDRx Financial, a health-care market research firm.

Despite the stronger performance, Enbrel sales were driven by a "high single digit [percentage] increase" in the price of the drug, Amgen said, while the number of units sold dropped due to market-share declines.

Look forward, Amgen raised its 2009 per-share earnings expectations, excluding items, to between $4.80 and $4.95, from a previous view of $4.55 to $4.75. Wall Street currently expects $4.57 a share.

The company also expects full-year revenue to be at the upper end of its previous projection of $14.4 billion to $14.8 billion. Analysts, in general, had been pessimistic of that range; their average estimate was $14.33 billion.

Wall Street's focus, though, remains on Amgen's lead pipeline candidate denosumab, on which the company is depending to return it to its high-growth biotech roots.

Sharer said the GlaxoSmithKline accord "is an important strategic move" that will develop the global market for the drug more effectively than Amgen could do alone.

The deal includes an initial payment and near-term milestones totaling $120 million, along with ongoing royalties.

The companies will co-promote denosumab to treat post-menopausal osteoporosis in Europe, Australia, New Zealand and Mexico, assuming the drug is approved in those countries. In those areas, the companies will split marketing and profits, after expenses, in order to provide incentives for maximum growth.

Glaxo will commercialize the drug in such countries as China, Brazil, India and South Korea, where Amgen currently lacks a commercial presence, the company said.

Amgen keeps exclusive marketing of the drug in the U.S. and Canada. The company also is retaining all rights to denosumab for cancer indications.

"Cancer we're not partnering anywhere," Sharer said. "We're keeping that to ourself."

Earlier this month, Amgen reported data showing denosumab's superiority to an already marketed Novartis AG (NVS) drug in preventing complications related to the spread of cancer to bones. The news sent Amgen shares surging 14% in the past month, as investors expect the data to reflect an additional multibillion-dollar opportunity for the drug.

In a conference call Monday, the company gave some additional details on cases of osteonecrosis of the jaw in the study. The side effect, a serious problem that has been connected to bisphosphonates like Zometa in the past, occurred in 20 denosumab patients and 14 Zometa patients.

The company stressed that the difference wasn't statistically significant and will present additional details on the cases in the future. The condition hadn't appeared in any previous studies of denosumab.

An FDA advisory committee will review Amgen's marketing application for the drug on Aug. 13 and give its recommendation to the agency. However, that approval is for treating only osteoporosis and bone loss caused by hormone treatment in patients with breast or prostate cancer. After additional studies, Amgen expects to file for approval in the cancer-related uses.

In the second quarter, sales of anemia treatment Aranesp dropped 16% to $693 million but still surpassed the Wall Street consensus estimate of $648 million, according to MDRx Financial.

The drop in sales came from label changes in the drug last summer that restricted the drug's use in cancer patients, the company said.

Sales of Epogen, an earlier version of Aranesp, rose 3% to $638 million, also beating expectations of $600 million. The increase was driven by patient growth, as well as a price increase.

Combined second-quarter sales of Neulasta and Neupogen, used to prevent infections in patients receiving chemotherapy, dropped 4% to $1.16 billion, falling short of Wall Street expectations of $1.18 billion.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com