Key Takeaways
- • Arquitos Capital returned -51.9% net of fees in the third quarter of 2026, lifting its year-to-date loss to -26.5%, according to the fund's Q3 investor letter.
- • A September 30, 2026 district court ruling found two of six claims asserted against Liquidia valid and infringed, and Liquidia shares fell from $71 to $30 by quarter-end.
- • The fund's core position was $50 and $60 call options on Liquidia expiring January 2028, which moved from in-the-money with additional premium to out-of-the-money.
- • The manager said the decline was steeper than expected even under a worst-case scenario, though a remote possibility existed of Yutrepia being temporarily removed from the PAH market.
Summary
Arquitos Capital reported a net return of -51.9% for the third quarter of 2026, according to its quarterly commentary for the period ended September 30, 2026, bringing year-to-date performance to -26.5%. The letter notes that individual investor returns will vary based on timing of investment and directs partners to their statements for specific results.
The loss was driven by a September 30 district court ruling in which two of the six claims asserted against Liquidia were found valid and infringed. Liquidia's shares fell from $71 to $30, and that price was the mark used to close the quarter.
The fund's holdings were concentrated in $50 and $60 strike call options on Liquidia expiring in January 2028. Those options moved from in-the-money with additional premium to out-of-the-money. The manager stated that the options were not sold and that there was no plan to sell them. The commentary characterizes the magnitude of the decline as steeper than anticipated even under a worst-case scenario, while acknowledging that a remote possibility existed of Yutrepia being temporarily taken off the market for pulmonary arterial hypertension (PAH).
The loss was driven by a September 30 district court ruling in which two of the six claims asserted against Liquidia were found valid and infringed. Liquidia's shares fell from $71 to $30, and that price was the mark used to close the quarter.
The fund's holdings were concentrated in $50 and $60 strike call options on Liquidia expiring in January 2028. Those options moved from in-the-money with additional premium to out-of-the-money. The manager stated that the options were not sold and that there was no plan to sell them. The commentary characterizes the magnitude of the decline as steeper than anticipated even under a worst-case scenario, while acknowledging that a remote possibility existed of Yutrepia being temporarily taken off the market for pulmonary arterial hypertension (PAH).
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