Note 8 — Long-Term Debt

We have a loan and security agreement (the “Loan Agreement”) with Oxford Finance LLC (“Oxford”) and Silicon Valley Bank (“SVB”) (Oxford and SVB, collectively the “Lenders”) to fund our working capital and other general corporate needs. During the three months ended September 30, 2018, following the satisfaction of certain conditions related to Phase 2 data for reldesemtiv in spinal muscular atrophy specified in the Loan Agreement, we drew down an additional $10.0 million under the Loan Agreement. Our Long-term debt and unamortized debt discount balances are as follows (in thousands):

	September 30, 2018			December 31, 2017
Notes payable, gross	$	42,000		$	32,000
Less: Unamortized debt discount and issuance costs		(496	)		(325	)
Accretion of final payment fee		401			102
Carrying value of notes payable		41,905			31,777
Less: Current portion of long-term debt		(3,778	)		—
Long-term debt	$	38,127		$	31,777

Payments on the notes payable will be interest only through May 2019, followed by 41 months of monthly payments of interest and principal. We are required to make a final payment upon loan maturity of 6.5% of the notes payable, which we accrete over the life of the notes payable. The interest rate under the Amended Loan Agreement is the greater of (a) 8.05% or (b) the sum of 6.81% plus the 30-day U.S. LIBOR rate.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to us and includes customary events of default, including but not limited to the nonpayment of principal or interest, violations of covenants and material adverse changes. Upon an event of default, the Lenders may, among other things, accelerate the loans and foreclose on the collateral. Our obligations under the Loan Agreement are secured by substantially all our current and future assets, other than our intellectual property.

Interest expense was $0.8 million and $0.8 million for the three months ended September 30, 2018 and 2017, respectively and $2.6 million and $2.3 million for the nine months ended September 30, 2018 and 2017, respectively. The effective interest rate on the Loan Agreement, including the amortization of the debt discount and issuance cost, and the accretion of the final payment, was 8.9% at September 30, 2018.

Minimum payments under the Loan Agreement are (in thousands):

Three months ended December 31, 2018	$	955
2019		10,437
2020		15,446
2021		14,283
2022		12,684
Total minimum payments		53,805
Less: Interest and final payment		(11,805	)
Notes payable, gross	$	42,000