Simulations Plus Inc. announced on Thursday a $7 million acquisition of a New York company that helps drug makers seek approval for their products.

Simulations Plus, a Lancaster company that develops clinical trial software, is buying Cognigen Corp. of Buffalo, which operates a similar business.

Under the agreement, Simulations Plus will pay Cognigen shareholders $7 million, with $2.8 million of that in cash and the remainder in newly-issued unregistered shares of stock. Cognigen shareholders are unable to sell the shares for two years, according to a regulatory filing.

The deal, expected to close Sept. 2, will swell Simulations Plus’ workforce from 30 to 65 and add about $5 million in revenue in the next fiscal year.

“Their advanced systems and processes provide cost-effective support for model-based research and development,” said Walt Woltosz, Simulations Plus chairman and chief executive, in a statement.

Once the merger is complete, management of the combined company will be comprised of executives from both company’s, including Ted Grasela, the current president of Cognigen, whose role was not defined.

“By combining the strengths of the two companies, we will be able to better address the recent push by regulatory agencies to include more physiologically based pharmacokinetics modeling,” said Grasela in a statement.

Shares of Simulations Plus closed up 24 cents, or more than 4 percent, to $5.89 on the Nasdaq.