DUBLIN ( TheStreet) -- Elan ( ELN) said Johnson & Johnson ( JNJ - Get Report) will cut the value of a partnership deal to $885 million after Elan said it repaired a breach in its Tysabri agreement with Biogen Idec ( BIIB).

Johnson & Johnson previously agreed in July to invest up to $1 billion for an 18.4% stake in Elan. Its stake will remain the same, but be acquired for much less, and J&J will still commit up to $500 million to continue the development of bapineuzumab, a potential treatment for Alzheimer's disease, Elan said in a statement.

Johnson & Johnson's move to cut its stake follows a judge's ruling in which Elan was found to have violated terms of its deal with Biogen over Tysabri, a drug for multiple sclerosis. Elan said Monday it "cured an unintended breach" of the Tysabri agreement with Biogen.

When J&J signed the deal it allowed Elan to get financing from J&J to buy Biogen's Tysabri stake if Biogen was to be acquired. Biogen, however, claimed the Elan/J&J deal breached the Tysabri agreement. A federal judge agreed earlier this month, forcing Elan to fix the J&J pact by the end of September of risk losing all rights to Tysabri, a drug which is on track to generate about $1 billion in revenue this year.

Biogen wouldn't comment on whether it accepted Elan's claims that the Tysabri agreement would remain intact, the Financial Times reported.

-- Reported by Joseph Woelfel in New York .

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