Drug makers Johnson & Johnson (JNJ) and Elan Corp. PLC (ELN.DB) Thursday said they will form a new company to push forward development of Elan and Wyeth's (WYE) Alzheimer's immunotherapy program.

Johnson & Johnson said it will invest $1 billion in Elan in exchange for an 18.4% stake in the Irish drug maker.

Elan will also get a 49.9% interest in a new Johnson & Johnson company formed around the Alzheimer's immunotherapy program, or AIP.

Johnson & Johnson in a statement said the new company will assume development of bapineuzumab, an experimental drug being developed for Alzheimer's, alongside Elan's partner Wyeth. Johnson & Johnson said it will invest $500 million in the drug's development.

Under the terms of the deal, Elan will be entitled to 49.9% of the profits from sales of bapineuzumab and other drugs developed under the AIP program.

Elan's shares jumped after the news, and at 1214 GMT stood 29% higher on the day at EUR6.15 in a higher Dublin market.

In January, Elan announced a strategic review.

Company Web site: www.jnj.com; www.elan.com

-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com