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Exhibit 10.2

CONFIDENTIAL TREATMENT REQUESTED
Redacted portions are indicated by [****]

Redacted portions filed separately with the SEC pursuant
to the confidential treatment request

CONFIDENTIAL

Term Sheet: [****] Co-development and Licensing Agreement

 April 2010

The purpose of this term sheet (“Term Sheet”) is to set forth the terms for an
exclusive worldwide co- development and licensing agreement between IntelGenx
Technologies Corp., a US corporation, or any subsidiaries thereof (“IGXT”) and
RedHill Biopharma Ltd. (“RedHill”), an Israeli corporation or its designee
(collectively the “Parties”). This Term Sheet is legally binding on the Parties
and is subject only to satisfactory customary due diligence by RedHill,
verifying inter alia that no drastic changes emerge vis a vis the currently
estimated budgetary requirements, and regulatory, technical, IP and market
risks, and the Parties entering into definite documentation (the “Agreement”)
elaborating on the terms of this Term Sheet, and other customary terms
including, without limitation, representations and warranties, liability and
indemnity, and including a side letter to be executed by the original
inventors/licensors (if other than IGXT).

Limited Term

This Term Sheet will expire and become null if not executed by both parties on
or before Monday, April 19, 2010, 5pm EST.

To the extent possible, execution of the Agreement (“Closing”) is anticipated to
take place on or before Monday, July 18, 2010

Product

[****] – [****] formulation based on IGXT’s proprietary and patented VersaFilm
oral drug delivery technology in all indications whatsoever (for both human and
animals) and in all doses and formulations whatsoever.

Field

All indications whatsoever (including, but not limited to [****]) with right to
sub-license (and further sub-license) in all indications and formulations
whatsoever, and the right to commercialize the Product in all countries of the
world.

Territory

Worldwide

Collaboration Project

The Parties wish to develop the Product for use in the Field and
commercialization in the Territory (the “Project”). The Project shall be
comprised of all activities relating to the development and commercialization of
the Product in the Territory.

Responsibilities and Decision-making

The Parties shall jointly take all key decisions regarding the development and
commercialization of the Product subject to the following:

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 IGXT:

 * Primary responsibility for the development of the Product and the final vote
   on development, regulatory and manufacturing decisions
 * Funding the costs of the Project according to the "Internal Costs” in the
   budget specified in Annex A.

 RedHill:

 * Primary responsibility for the licensing and partnering of the Product and
   the final vote on partnering/licensing/commercialization decisions.
 * Funding the external development costs of the Project up to a maximum of
   [****] according to the “External Costs” in the budget specified in Annex A
   and according to payment procedures to be specified in the Agreement and
   according to the development plan specified in Annex B, reflecting actual
   progress in the various stages of the development of the program (Note: all
   numbers and other details specified in Annex A and Annex B are subject to a
   final development budget and plan to be agreed and specified in detail in the
   Agreement following the due diligence by RedHill).

Payments

             RedHill Shall make the following one-time milestone payments to
IGXT (Note: all payments are due only once for the Product):

Within 7 days of Closing: [****]

Within 30 days of Closing: [****]

Within 60 days of Closing: [****]

Within 30 days of successful completion of scale up, process development, and
production of pivotal batches (“Development Milestone I”): [****]

Within 30 days of filing and acceptance of the NDA by the US FDA (“Development
Milestone II”): [****]

Within 30 days of the Product marketing approval (approval of the NDA of the
Product) by the US FDA (“Development Milestone III”): [****]

R&D tax credits and all other tax or other credits that relate directly to
development or R & D activities of the Product in Canada or anywhere else,
actually received by IGXT, as a direct or indirect result of funds provided or
otherwise invested by RedHill, are expressly covered by the definition of Rights
in the Project and such tax credit amounts shall be deducted from RedHill’s
Development Milestone payments to IGXT, or otherwise transferred back to RedHill
within 30 days of actual receipt of the tax credit by IGXT. Any and all third
party (government and/or other) financing for the Project shall be
proportionally deducted from the Parties’ respective contribution toward the
internal (IGXT) and external (RedHill) costs of the Project. For the purpose of
clarity, tax credits as they pertain to this Term Sheet do not include corporate
taxes or other similar taxes. For the avoidance of any doubt, any and all
discounts or other price reductions for the Project resulting from tax credits
available to third party service providers as part of the external development
costs of the Project, shall be fully reflected as such in reducing RedHill’s
commitment to pay such external development costs.

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Rights in the Product and Resulting Proceeds

In territories where the Product is marketed by a third party marketing partner:
RedHill will receive [****] and IGXT will receive [****] of all proceeds
(“Proceeds”) including, but not limited to, all sales milestones, income and all
monetary and non monetary value whatsoever resulting anywhere in the world
directly and/or indirectly from the Product and the Project in all countries of
the world. Notwithstanding the foregoing, [****] of Proceeds, RedHill shall
receive [****] and IGXT shall receive [****] (“Initial Proceeds Split”). For the
avoidance of any doubt, the Initial Proceeds Split will only apply once for the
Product, and not per territory or per third party partner. Therefore, following
the Initial Proceeds Split, RedHill will receive [****] and IGXT will receive
[****] of any and all Proceeds exceeding [****]. A mechanism of reimbursement
for qualifying and itemized costs incurred by any of the Parties in relation to
the partnering of the product shall be specified in the Agreement.

In territories where RedHill sells the Product on its own: RedHill will receive
[****] and IGXT will receive [****] of net sales (to be defined) actually
received by RedHill.

IP Ownership

All Product-related IP developed prior to the Closing: IGXT, with a license to
be granted to RedHill per the terms of the Agreement (detailed terms of the
license to be specified in the Agreement). For all Product related IP solely
developed by IGXT after Closing, IGXT retains ownership and will grant to
RedHill an exclusive, worldwide license to such IP for the commercial
exploitation of the Product. Any Product related IP jointly developed by the
parties will be owned jointly by the parties. Each party shall have the right to
use such jointly developed IP for products other than the Product provided that
such other products do not compete with the Product or other products of the
other party; and provided that neither party shall grant an exclusive license
(i.e. exclusivity to the rights of the licensing party) to or otherwise dispose
of joint IP without the prior written consent of the other party; other than an
assignment or transfer in connection with a merger of such party or sale of all
or substantially all of its assets or shares.

Steering Committee

Within thirty (30) days of the Closing, the Parties shall establish a joint
(50/50) Steering Committee (“SC”) comprising not less than four (4) members,
with at least two (2) being appointed and replaced by IGXT, of which one shall
be the IGXT Project Leader, and at least two (2) being appointed and replaced by
RedHill, of which one shall be the RedHill Project Leader. All such
representatives shall be individuals of suitable authority and seniority with
significant and relevant experience and expertise. Any appointment or
replacement shall be notified to the other Party in writing. The SC shall
oversee the overall execution of the objectives of the Project. In particular,
the SC shall (i) monitor the progress of the R&D Program against the timeframe
and estimated budgets and any amendments agreed between the Parties, (ii) report
on delays in the conduct of the R&D Program which would materially affect IGXT’s
ability to successfully complete the R&D Program within the timeframe or
estimated budgets and (iii) determine whether corrective action is required.

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The Project Leaders shall facilitate the flow of information and otherwise
promote communications and collaboration within and among the Parties, the SC,
and any other sub-committees or teams that the SC may appoint or constitute. The
SC shall meet at least monthly on the phone or in person. Meetings shall be
chaired alternatively by the IntelGenx Project Leader and the RedHill Project
Leader. Each Party shall be responsible for its own meeting- related costs. The
Project Leader conducting the meeting also will be responsible for taking and
distributing the minutes. At and between meetings of the SC, each Party shall
keep the other fully and regularly informed as to its progress with its
respective tasks and obligations under the Agreement. The Parties shall
undertake their respective obligations under the Agreement on a collaborative
basis. In case the SC cannot reach an agreement on a professional matter related
to the development of the Product, the matter shall be submitted to a third
party expert for an additional expert opinion. In the event that the parties
cannot agree upon a third party within 21 days of the dispute arising, the
matter shall be submitted to arbitration.

R&D, Manufacturing and other Data

Within 7 (seven) days of the Closing and regularly thereafter, IGXT shall
provide RedHill, at no cost to RedHill, with all the information and it has
about the Product including, but not limited to, all Patents, know-how, R&D
data, past trials data, communications with regulatory authorities in the US,
Europe and elsewhere, manufacturing, supply, external service and other
contracts and any and all other information whatsoever that is relevant for the
development, marketing approval, marketing and other commercialization of the
Product.

Exclusivity and Due Diligence

IGXT understands and acknowledges that RedHill will invest significant capital,
management time and other resources during the expedited due diligence period.
Accordingly, for a period of 90 days starting on the date of this Term Sheet
(the “Due Diligence Exclusivity Period”), IGXT shall fully and swiftly cooperate
with RedHill and provide RedHill with all requested technical, legal, audit and
other information that is reasonably and customarily necessary for conducting
and completing such due diligence process. During the Due Diligence Exclusivity
Period IGXT shall not initiate, engage, or continue any discussions with any
party other than RedHill with regard to a transaction covering or otherwise
involving the Product in any way. Upon signing this Term Sheet IGXT shall
immediately discontinue any and all third party discussions regarding or
affecting the Product in any way and shall immediately inform all relevant
parties that it has formally entered a binding agreement and exclusivity period.
IGXT shall completely refrain from supplying any information to any third party
enquiries concerning the Product during the Expedited Due Diligence Exclusivity
Period. Furthermore, in the event that IGXT’s corporate approval is not obtained
by the end of the Due Diligence Exclusivity Period, or IGXT otherwise declines
or is unable to complete the transaction for whatever reason, IGXT shall pay
RedHill, within 30 (Thirty) days, an amount equal to US $50,000 to compensate
RedHill for its due diligence costs and expenses, and other costs incurred by
it, including alternative costs (“Breakup Fee”). Should RedHill decline to
complete the transaction for reasons other than unsatisfactory due diligence
results, RedHill shall pay IGXT, within 30 (Thirty) days, a Breakup Fee equal to
US $50,000 to compensate IGXT for hosting the due diligence and other costs
incurred by it, including alternative costs.

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Confidentiality

Subject to compulsory regulatory and legal requirements or (in the absence of
such requirements) a written approval from the other party, neither party shall
make any public release or other public disclosure to third parties (other than
the Parties’ professional advisors) concerning this Term Sheet, the Agreement
contemplated hereby or the status of the discussions between or among IGXT and
RedHill without first allowing the other party to review and comment on the
wording of the relevant announcement such review and comment not to be
unreasonably withheld. Subject to confidentiality, RedHill is expressly
permitted to generally describe the Product to its investors provided it is done
with the aim of securing the financing needed to continue the development of the
Product.

Diligence Obligation

IGXT will make a good faith, continuous and diligent effort to allocate all
appropriate resources to prepare, initiate and complete the clinical development
of the Product and file an application for regulatory marketing approval in
accordance with industry standards, and within the agreed budget and timeframe
(the “Diligence Obligation”). Any expenses exceeding the agreed development
budget must be authorized by the Steering Committee. IntelGenx will be
responsible for all internal expenses that exceed the agreed budget by up to 10%
and RedHill will be responsible for all external expenses that exceed the agreed
budget (Annex A) by up to 10%. If the internal and/or external budgets exceed
the planned budget specified in Annex A by more than 10%, the Parties will
discuss in good faith the necessary next steps to advance the Project under
these new circumstances. In the event that the Parties cannot agree on the
necessary next steps, within 21 days of the dispute arising, the matter shall be
submitted to arbitration.

Governing Law

This Term Sheet is exclusively governed by English law and the courts of London,
England.

Acknowledged and agreed:

 

For IntelGenx Technologies Corp.

For RedHill Biopharma Ltd.

By:  /s/Horst G. Zerbe                         

By: /s/ Ori Shilo                                  

Name: Horst G. Zerbe

Name: Ori Shilo

Title: President and CEO

Title: VP Finance and Operation

Date: April 19, 2010                             

Date: April 18, 2010                             

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ANNEX A

[****]

 

A-1

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Annex B

[****]

 

B-1

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