While financial aspects of the deal were not disclosed, Verona Pharma's chairman Clive Page told Outsourcing-Pharma.com that it represents a major contract for his company as it concerns its lead compound.
"Onyx will be responsible for supplying preclinical and clinical quantities of the drug," said Page.
"It's an ongoing contract and we have already done some previous work with Onyx for the scale up of the compound."
Verona chose Onyx because it had the type of chemistry and also the flexibility it needed, as well as a competitive cost.
This deal comes at a time when western pharmaceutical companies are increasingly shifting drug research to India to cut costs. India's heterogeneous population and new patent laws have added to the trend.
Verona had to outsource the manufacture of its new drug since, as a new start-up, it actually doesn't have the manufacturing capacity to produce it in-house, however, it chose to pick a UK-based manufacturer.
"Although it would have been cheaper for us to outsource the manufacture to India for example, we didn't want to deal with the issue of distance," said Page.
"At this stage, we wanted to work with a UK-based partner."
The new drug candidate, RPL554, is a novel long-acting inhibitor of both phosphodiesterase 3 and phosphodiesterase 4 enzymes, two enzymes known to be of importance in the development and progression of immunological respiratory diseases, particularly rhinitis (hay fever) and asthma.
Rhinitis and asthma are among the most prevalent respiratory tract diseases in the industrialised world and the market for the drugs used to treat these diseases is estimated to be about $20bn (€15.5bn).
At this time, Verona Pharma is focused on exploiting an unmet medical need in this market since many of the available treatments are limited by unwanted side effects or limited effectiveness, the company said.
"We are hoping to get through toxicology in the next quarter and if it's positive we expect to start Phase I trials at the end of the year or beginning of 2008," said Page.
Meanwhile, Page added that his company is not discarding completely the offshoring option as it is looking at outsourcing some stages of its drug development outside the UK in the future, especially the toxicology stage, but also Phase I and Phase II clinical studies as there is a considerable difference in terms of costs.
"Also, in India, there is a larger availability of patients so it saves time to enrol and complete the studies."
Page stressed that Verona Pharma would carefully study the pros and cons of outsourcing outside the UK though as the objective is to get the best scientific standards and save time.
"It's not always just about the money."