IntelGenx Technologies Corp.: Exhibit 10.2 - Filed by newsfilecorp.com






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: 







 

	 	
     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.
      





2 





	
    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.




3 





	
    
	
      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. 



4 





	
    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                             
    



5 









ANNEX A 


[****]


 


A-1 











Annex B 


[****] 


 


B-1