<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-Q


(MARK ONE)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
     THE SECURITIES EXCHANGE ACT OF 1934
     FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
     THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER: 0-19910

                                   ----------

                           CREATIVE BIOMOLECULES, INC.
             (Exact name of registrant as specified in its charter)

                 DELAWARE                               94-2786743
       (State or other jurisdiction        (I.R.S. Employer Identification No.)
     of incorporation or organization)

      45 SOUTH STREET, HOPKINTON, MA                      01748
 (Address of principal executive offices)               (Zip Code)


       Registrant's telephone number, including area code: (508) 782-1100

                                   ----------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                             [X] Yes     [ ] No


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.

As of May 2, 2000, the registrant had 38,238,502 shares of Common Stock
outstanding.
<PAGE>

                                TABLE OF CONTENTS


PART I.    FINANCIAL INFORMATION                                     Page Number

           Item 1.    Financial Statements

                      Consolidated Balance Sheets - March 31, 2000
                      (unaudited) and December 31, 1999                       3

                      Unaudited Consolidated Statements of Operations
                      for the three months ended March 31, 2000 and
                      1999                                                    4

                      Unaudited Consolidated Statements of
                      Comprehensive Loss for the three months ended
                      March 31, 2000 and 1999                                 4

                      Unaudited Consolidated Statements of Cash Flows
                      for the three months ended March 31, 2000 and
                      1999                                                    5

                      Notes to Unaudited Consolidated Financial
                      Statements                                              6

           Item 2.    Management's Discussion and Analysis of
                      Financial Condition and Results of Operations           8

           Item 3.    Quantitative and Qualitative Disclosures
                      About Market Risk                                      13


PART II.   OTHER INFORMATION

           Item 1.    Legal Proceedings                                      14

           Item 2.    Changes in Securities                                  14

           Item 3.    Defaults Upon Senior Securities                        14

           Item 4.    Submission of Matters to a Vote of Security Holders    14

           Item 5.    Other Information                                      14

           Item 6.    Exhibits and Reports on Form 8-K                       14


SIGNATURES


                                       2
<PAGE>

CREATIVE BIOMOLECULES, INC. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
================================================================================

<TABLE>
<CAPTION>
                                                                        March 31,             December 31,
                                                                           2000                   1999
                                                                      -------------          -------------
                                                                       (unaudited)
<S>                                                                   <C>                    <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                           $  10,555,450          $   2,751,069
  Marketable securities                                                   9,381,888             18,619,516
  Accounts receivable                                                       199,187                 60,296
  Prepaid expenses and other                                                322,266                146,764
  Deferred merger costs                                                   1,482,026                   --
                                                                      -------------          -------------
    Total current assets                                                 21,940,817             21,577,645
                                                                      -------------          -------------

PLANT AND EQUIPMENT - net                                                 1,947,414              2,130,158
                                                                      -------------          -------------

OTHER ASSETS:
  Patents and licensed technology - net                                     938,461                951,198
  Deferred patent application costs - net                                 4,434,796              4,124,716
  Deposits and other                                                        108,574                108,574
     Total other assets                                                   5,481,831              5,184,488
                                                                      -------------          -------------
TOTAL                                                                 $  29,370,062          $  28,892,291
                                                                      =============          =============


LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Lease obligations - current portion                                 $     359,895          $     347,323
  Accounts payable                                                          421,805                612,811
  Accrued liabilities                                                     2,396,591              1,895,634
  Accrued compensation                                                      455,732                944,270
  Deferred revenue                                                             --                  661,279
                                                                      -------------          -------------
     Total current liabilities                                            3,634,023              4,461,317
                                                                      -------------          -------------
LEASE OBLIGATIONS                                                           915,939              1,009,388
                                                                      -------------          -------------

COMMITMENTS
STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value, 10,000,000 shares authorized
  Common Stock, $.01 par value, 50,000,000 shares authorized,
   38,238,502 shares and 36,665,115 shares issued and outstanding at
   March 31, 2000 and December 31, 1999, respectively                       382,385                366,651
  Additional paid-in capital                                            153,039,725            144,680,760
  Officer notes receivable                                               (1,131,380)                  --
  Accumulated other comprehensive income                                    (34,058)               (30,801)
  Accumulated deficit                                                  (127,436,572)          (121,595,024)
                                                                      -------------          -------------
     Total stockholders' equity                                          24,820,100             23,421,586
                                                                      -------------          -------------
TOTAL                                                                 $  29,370,062          $  28,892,291
                                                                      =============          =============
</TABLE>

See notes to unaudited consolidated financial statements


                                       3
<PAGE>

CREATIVE BIOMOLECULES, INC. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
================================================================================


<TABLE>
<CAPTION>
                                                        Three Months Ended March 31,
                                                      ----------------------------------
                                                          2000                  1999
                                                      ------------          ------------
                                                                  (unaudited)
<S>                                                   <C>                   <C>
REVENUES:
  Research and development contracts                  $    670,387          $    824,645
                                                      ------------          ------------
     Total revenues                                        670,387               824,645
                                                      ------------          ------------

COSTS AND EXPENSES:
  Research and development                               2,073,338             2,728,917
  General and administrative                             4,732,249             1,529,638
  1999 reorganization expense adjustment                   (38,391)                 --
                                                      ------------          ------------
     Total costs and expenses                            6,767,196             4,258,555
                                                      ------------          ------------

NET OPERATING LOSS                                      (6,096,809)           (3,433,910)
                                                      ------------          ------------

OTHER  INCOME/(EXPENSES)
  Interest and other                                       298,896               755,733
  Interest expense                                         (43,635)              (32,661)
                                                      ------------          ------------
    Total other income/(expenses)                          255,261               723,072
                                                      ------------          ------------

NET LOSS                                                (5,841,548)           (2,710,838)

ACCRETION ON SERIES 1998/A PREFERRED STOCK                    --                (389,168)
                                                      ------------          ------------

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS            $ (5,841,548)         $ (3,100,006)
                                                      ============          ============

BASIC AND DILUTED LOSS PER COMMON SHARE               $       (.16)         $       (.09)

COMMON SHARES FOR BASIC AND DILUTED
LOSS COMPUTATION                                        37,556,903            34,666,296
                                                      ============          ============



CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

NET LOSS                                              $ (5,841,548)         $ (2,710,838)

UNREALIZED LOSS ON MARKETABLE SECURITIES                    (3,257)             (110,359)
                                                      ------------          ------------

COMPREHENSIVE LOSS                                    $ (5,844,805)         $ (2,821,197)
                                                      ============          ============
</TABLE>



See notes to unaudited consolidated financial statements


                                       4
<PAGE>

CREATIVE BIOMOLECULES, INC. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================


<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                         ----------------------------------
                                                                              2000                  1999
                                                                         ------------          ------------
                                                                                     (unaudited)

<S>                                                                      <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                 $ (5,841,548)         $ (2,710,838)
                                                                         ------------          ------------
Adjustments to reconcile net loss to net cash used:
  Depreciation and amortization                                               240,966               217,563
  Compensation expense                                                      3,139,478                64,000
  Reorganization expense adjustment                                            38,391                  --
  Deferred patent and application costs                                          --                  45,653
  Increase (decrease) in cash from:
    Accounts receivable                                                      (138,891)              216,398
    Inventory and prepaid expenses                                           (175,502)               46,552
    Deferred merger costs                                                  (1,482,026)                 --
    Accounts payable and accrued liabilities                                 (216,978)           (1,993,197)
    Deferred contract revenue                                                (661,279)             (750,000)
                                                                         ------------          ------------
       Total adjustments                                                      744,159            (2,153,031)
                                                                         ------------          ------------

    Net cash  used  for operating activities                               (5,097,389)           (4,863,869)
                                                                         ------------          ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities                                                --              (6,409,882)
Sale of marketable securities                                               9,234,371             4,601,703
Expenditures for property, plant and equipment                                (16,463)              (74,940)
Expenditures for patents                                                     (339,102)             (149,145)
                                                                         ------------          ------------

  Net cash provided by (used for) investing activities                      8,878,806            (2,032,264)
                                                                         ------------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of equity:
  Common Stock - other                                                      4,103,841                47,313
Repayments of obligations under capital leases                                (80,877)              (42,927)
                                                                         ------------          ------------

  Net cash provided by financing activities                                 4,022,964                 4,386
                                                                         ------------          ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        7,804,381            (6,891,747)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              2,751,069            17,738,044
                                                                         ------------          ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $ 10,555,450          $ 10,846,297
                                                                         ============          ============

SUPPLEMENTAL DISCLOSURE OF NON CASH
INVESTING AND FINANCING ACTIVITIES:
Property and equipment purchased under capital lease obligations         $       --            $     73,758
                                                                         ============          ============

Conversion of Series 1998/A Preferred Stock                              $       --            $    788,305
                                                                         ============          ============
Officer notes payable for exercise of stock options                      $  1,131,380          $       --
                                                                         ============          ============
</TABLE>


See notes to unaudited consolidated financial statements


                                       5
<PAGE>

CREATIVE BIOMOLECULES, INC. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
================================================================================


1.    Opinion of Management - The accompanying consolidated financial statements
      have been prepared in accordance with generally accepted accounting
      principles applicable to interim periods. These statements are condensed
      and do not include all disclosures as required by generally accepted
      accounting principles. In the opinion of management, the unaudited
      financial statements contain all adjustments (all of which were considered
      normal and recurring) necessary to present fairly the Company's financial
      position at March 31, 2000 and the results of operations and cash flows
      for the three months ended March 31, 2000 and 1999. The financial
      statements should be read in conjunction with the Company's audited
      consolidated financial statements and notes thereto for the year ended
      December 31, 1999.

      Interim results are not necessarily indicative of results for a full year
      and such results are subject to year end adjustments and independent
      audit.

2.    Reorganization - In October 1999, the Company was reorganized and the
      Board approved a plan to focus our operations and financial resources on
      the development of morphogenic protein-based clinical candidates for the
      treatment of stroke and renal disease. The reorganization charge included
      $511,000 related primarily to termination benefits in the reduction of
      employees, of which $95,503 remained to be paid as of December 31, 1999.
      During the quarter ended March 31, 2000, the Company determined that
      health insurance claims were less than originally estimated. This resulted
      in a reduction in the reorganization charges and the related accrual of
      approximately $38,000. As of March 31, 2000, there was approximately
      $6,000 of accrued costs, principally representing future cash outlays for
      employee outplacement costs. The Company expects to pay these accrued
      costs by June 2000.

3.    Merger - On February 15, 2000, the Company announced that it will merge
      with Ontogeny, Inc., and Reprogenesis, Inc., to form a public company
      named Curis, Inc. Under the terms of the merger, which is subject to
      shareholder approval, Creative's stockholders will receive three Curis
      shares for every ten shares of Creative Common Stock. Following the
      completion of the transaction, Creative's stockholders will hold
      approximately 43%, Ontogeny's stockholders will hold approximately 38% and
      Reprogenesis' stockholders will hold approximately 19% of Curis. The
      merger will be accounted for under the purchase method of accounting for
      business combinations, with the Company being the acquiring company for
      accounting purposes. The merger is expected to close in June 2000. As of
      March 31, 2000, the Company has incurred and deferred approximately
      $1,482,000 of costs directly attributable to the merger. Such costs will
      be included in determining the final purchase price or will be expensed in
      the event the merger is not consummated.

4.    Stock Option Amendment - On February 8, 2000, the Board of Directors
      approved the immediate acceleration of vesting of unvested stock options
      held by the Company's executive officers and outside directors and the
      extension of the exercise period for one year. Vesting for approximately
      1,264,000 options was accelerated and the exercise period for
      approximately 2,361,000 vested options was extended, resulting in a
      non-cash compensation charge of $3,139,000 recorded in the quarter ending
      March 31, 2000.

5.    Lease Obligations - In March 2000, the Company entered into a sublease for
      its Boston, Massachusetts facility lease commencing on the later of July
      1, 2000 or the date that the Company vacates the facility. The sublease
      terminates on July 31, 2002, also the termination date of the Company's
      original lease on this facility. In April 2000, the Company agreed to
      terminate one of its Hopkinton, Massachusetts facility leases on July 31,
      2000.




                                       6
<PAGE>

      Future minimum operating lease obligations at March 31, 2000 were as
follows:


<TABLE>
<CAPTION>
      YEAR ENDING DECEMBER 31,          Operating        Sublease      Net Obligation
      ------------------------         -----------     -----------     --------------
<S>                                    <C>             <C>               <C>
      2000                             $   502,200     $  (241,086)      $   261,114
      2001                                 528,825        (482,172)           46,653
      2002                                 274,558        (281,267)           (6,709)
      2003                                   8,483            --               8,483
      Thereafter                              --              --                --
                                       -----------     -----------       -----------

      Total minimum lease payments     $ 1,314,066     $(1,004,525)      $   309,541
                                       ===========     ===========       ===========
</TABLE>

6.    Net Loss Per Share - Basic and Diluted Loss Per Common Share--Basic loss
      per common share is computed after giving effect to accretion and
      repurchase costs on Series 1998/A Preferred Stock using the weighted
      average number of common shares outstanding during each year. Diluted
      loss per common share reflects the effect of the Company's outstanding
      options and warrants, except where such items would be anti-dilutive. In
      2000 and 1999, the effect of stock options and warrants was anti-dilutive
      and, therefore, not included in the computation of diluted loss per share.

      SFAS No. 128, "Earnings Per Share," provides that if there is a loss from
      continuing operations, a company should not include potential common
      shares in the denominator of a dilutive per share computation, even if
      including those potential common shares in other dilutive per share
      computations may be dilutive to their comparable basic per share amounts.
      Therefore, loss per share excludes the dilutive effect of options,
      warrants and preferred stock of 2,393,342 and 3,942,045 for the three
      months ended March 31, 2000 and 1999, respectively.

7.    New Accounting Standards - In June 1998, the Financial Accounting
      Standards Board, or FASB, released Statement of Financial Accounting
      Standards No. 133, "Accounting for Derivative Instruments and Hedging
      Activities," which the Company will be required to adopt effective January
      1, 2001. SFAS No. 133 establishes standards for reporting and accounting
      for derivative instruments, and conforms the requirements for treatment of
      hedging activities across the different types of exposures hedged. The
      Company has not yet completed its evaluation of SFAS No. 133, and is,
      therefore unable to disclose the impact adoption will have on its
      consolidated financial position or results of operations.


                                       7
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
================================================================================

GENERAL

To date, we have derived most of our revenues from research and development
payments and license fees under agreements with collaborative partners. We
anticipate that over the next several years we will derive most of our revenues
from agreements with collaborative partners, including possible royalty revenues
from Stryker Corporation, or Stryker. We have never been profitable and expect
to incur additional operating losses in the remainder of 2000. Results beyond
2000 will depend largely on the timing and magnitude of royalty payments from
Stryker if the OP-1 Device, currently under regulatory review with the Food and
Drug Administration, or FDA, and certain international regulatory agencies, is
approved for commercial sale and is sold. We may not receive substantial
royalties from Stryker, and, if we do, we cannot be sure when those royalties
will be received. We may incur continued losses in future years.

Our research agreements with collaborative partners have typically obligated
such collaborative partners to provide for the partial or complete funding of
research and development for specified projects and pay royalties to us in
exchange for licenses to market the resulting products. We have been a party to
research collaborations with Stryker to develop products for orthopaedic
reconstruction and dental therapeutics and with Biogen Inc., or Biogen, to
develop products for the treatment of renal disorders. Each of these research
collaborations was restructured in 1998.

Under the research portion of our collaboration with Stryker, prior to its
restructuring in November 1998, we supplied OP-1 products to Stryker for
clinical trials and other uses, provided manufacturing regulatory support and
performed research work pursuant to work plans we both established periodically.
In November 1998, we sold certain of our OP-1 manufacturing rights and
facilities to Stryker. In fiscal 1999 and 2000, we have focused internal
research efforts on developing new tissue regeneration therapies in non-bone
applications and do not anticipate significant revenue from Stryker in the
remainder of 2000.

We are developing an OP-1 based therapy for chronic renal failure, a condition
characterized by the slow progressive loss of kidney function ultimately
resulting in the need for kidney transplantation or dialysis. Chronic renal
failure represents a substantial unmet medical need. Preclinical studies
indicate that OP-1 administration improves kidney function in animal models of
both acute and chronic renal failure. In 1998, we modified our partnership in
renal therapy with Biogen. Biogen provided funding to us through December 1999
pursuant to an option to resume responsibility for development of OP-1 as a
therapy for chronic renal failure. As of December 31, 1999, Biogen did not
exercise its option, and we have assumed all rights to OP-1 renal therapies.

In October 1999, we reorganized and the Board approved a plan to focus our
operations and financial resources on the development of morphogenic
protein-based clinical candidates for the treatment of stroke and renal disease.
In connection with this reorganization, we reduced our headcount from 70 to 43
employees. In the year ending December 31, 1999, we recorded approximately
$511,000 in operating expenses for salary termination costs.

On February 15, 2000, we announced that we will merge with Ontogeny, Inc., and
Reprogenesis, Inc., to form a public company named Curis, Inc. Under the terms
of the merger, which is subject to stockholder approval, our stockholders will
receive three Curis shares for every ten shares of our Common Stock. Following
completion of the transaction, our stockholders will hold approximately 43%,
Ontogeny's stockholders will hold approximately 38% and Reprogenesis'
stockholders will hold approximately 19% of Curis. The merger will be accounted
for under the purchase method of accounting for business combinations, with the
Company being the acquiring company for accounting purposes. The merger is
expected to close in June 2000.

Although we are seeking to enter into collaborative arrangements with respect to
certain other projects, there can be no assurance that we will be able to obtain
such agreements on acceptable terms or that the costs


                                       8
<PAGE>

required to complete the projects will not exceed the funding available for such
projects from the collaborative partners. Upon consummation of our proposed
merger with Ontogeny and Reprogenesis, Curis, the successor entity intends to
review the research and development pipeline of the combined companies and
allocate resources among the various research and development projects based on
their strategic fit and the availability of internal resources.

We earn and recognize revenue based upon work performed, upon the sale or
licensing of product rights, upon shipment of product for use in preclinical and
clinical testing or upon attainment of benchmarks specified in collaborative
agreements. Our results of operations vary significantly from year to year and
quarter to quarter and depend on, among other factors, the timing of payments
made by collaborative partners. The timing of our contract revenues may not
match the timing of our associated product development expenses. As a result,
research and development expenses may exceed contract revenues in any particular
period. Furthermore, aggregate research and development contract revenues for
any product may not offset all of our development expenses for such product.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 AND 1999. Our total revenues for the three
month periods ended March 31, 2000 and 1999 consisted entirely of research and
development revenues. Research and development contract revenues decreased 19%
from $825,000 for the three month period ended March 31, 1999 to $670,000 for
the three month period ended March 31, 2000. The decrease in research and
development contract revenues from 1999 to 2000 primarily is a result of the
termination of the Biogen research contract which provided research funding
during 1999. This decrease was offset in part by the recognition of deferred
contract revenue from Stryker.

Our total costs and expenses increased 59% from $4,259,000 for the three month
period ended March 31, 1999, to $6,767,000 for the three month period ended
March 31, 2000. Research and development expenses decreased 24% from $2,729,000
for the three month period ended March 31, 1999 to $2,073,000 for the three
month period ended March 31, 2000. The decrease in research and development
expenses is primarily due to the October 1999 company-wide reorganization, which
resulted in a reduction in our employee headcount. As a result of the decrease
in employee headcount, payroll related expenses and lab supplies were
substantially lower in the period ended March 31, 2000 as compared to the same
period in 1999. This decrease was partially offset by slightly higher costs for
external scientific consultants and collaborations. We anticipate that research
and development expenses in the remaining quarters of 2000 will be substantially
less than in the comparable periods of 1999.

General and administrative expenses increased 209% from $1,530,000 for the three
month period ended March 31, 1999 to $4,732,000 for the three month period ended
March 31, 2000. The increase primarily is due to a one-time non-cash charge of
$3,139,000 for compensation expense related to the February 8, 2000 acceleration
of certain stock options and the extension of the exercise period for options
held by the Company's executive officers and outside directors. Payroll expenses
decreased due to reduced employee headcount following the October 1999
company-wide reorganization. This decrease was partially offset by increases in
legal and other consulting costs. We anticipate that general and administrative
expenses for the remaining quarters of 2000 will be at amounts lower than the
comparable periods in 1999.

Interest and other income consisted primarily of interest revenues and decreased
60% from $756,000 for the three month period ended March 31, 1999 to $299,000
for the three month period ended March 31, 2000. This decrease was primarily
attributed to lower average balances of cash and marketable securities during
the three months ended March 31, 2000 as compared to the same period of 1999 due
principally to our repurchase of all of the outstanding Series 1998/A Preferred
Stock for approximately $22,470,000 in May 1999.

Interest expense increased 34% from $33,000 for the three month period ended
March 31, 1999 to $44,000 for the three month period ended March 31, 2000. The
increase in interest expense is due to an increase in our obligations under
capital leases as compared to the same period a year ago.


                                       9
<PAGE>

As a result of the foregoing, we incurred a net loss of $5,842,000 for the three
month period ended March 31, 2000, compared to a net loss of $2,711,000 for the
three month period ended March 31, 1999.

Accretion on Series 1998/A Preferred Stock for the three month period ended
March 31, 1999, includes $283,000 calculated at the rate of 5% per annum of the
stated value of the outstanding Series 1998/A Preferred Stock and $106,000 of
accretion of issuance costs related to the sale of Series 1998/A Preferred
Stock. In May 1999, we repurchased all of the then outstanding Series 1998/A
Preferred Stock. As a result of this transaction, the Series 1998/A Preferred
Stock has been retired and there will be no subsequent conversions into Common
Stock.

In computing the net loss applicable to common stockholders for the three months
ended March 31, 1999, accretion of the Series 1998/A Preferred Stock mentioned
above is included.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2000, our principal sources of liquidity consisted of cash, cash
equivalents and marketable securities of $19,937,000. We have financed our
operations primarily through placements of equity securities, revenues received
under agreements with collaborative partners, and more recently, manufacturing
contracts and the sale of our OP-1 manufacturing rights and facilities to
Stryker.

Cash used for operating activities of $5,097,000 in the first quarter of 2000
compared to $4,864,000 in the first quarter of 1999. In November 1998, we sold
certain of our OP-1 manufacturing rights and facilities to Stryker for cash
proceeds of $19,530,000 and increased royalties on Stryker products, if approved
for commercial sale, in lieu of the manufacturing revenues anticipated under the
prior agreement. In prior years, we had received significant revenue from
Stryker for research support and the supply of OP-1.

In December 1998, we amended our 1996 Licensing and Development Agreement with
Biogen, Inc. Under the amended agreement, Biogen paid $3,000,000 to fund our
research in 1999 for development of OP-1 as a therapy for chronic renal failure.
Biogen retained an option through December 1999 to resume responsibility for
development of OP-1 as a therapy for chronic renal failure. Biogen did not
exercise its option by December 31, 1999 and has no further obligation to
provide funds to us. We have assumed all rights and responsibilities,
independent of Biogen, for the development of renal failure therapies.

Cash provided by investing activities of $8,879,000 in the first quarter of 2000
compared to $2,032,000 of cash used for investing activities in the first
quarter of 1999. We increased our investment in property, plant and equipment to
$8,642,000 at March 31, 2000 from $8,625,000 at December 31, 1999. We have
budgeted to spend approximately $240,000 during the remaining quarters of 2000
on equipment purchases to upgrade our research and development capabilities. In
the past, we have entered into lease agreements to provide for the lease
financing of laboratory and office equipment. We may enter into similar
agreements in the future.

Financing activities in the first quarter of 2000 provided $4,023,000 of cash as
compared with $4,000 provided in the first quarter of 1999. On May 27, 1998, we
completed a private placement with three institutional investors for the sale of
25,000 shares of Series 1998/A Preferred Stock, with a stated value of $1,000
per share resulting in net proceeds of approximately $23,618,000 after expenses.
On May 7, 1999, subsequent to the end of the first fiscal quarter of 1999, we
repurchased 20,486 shares, which represented all of the outstanding Series
1998/A Preferred Stock following final conversions, for approximately
$22,470,000 in cash. As a result of this transaction, the Series 1998/A
Preferred Stock has been retired and there will be no subsequent conversions
into Common Stock.

We anticipate that our existing capital resources should enable us to maintain
our current and planned operations through at least approximately March 2001. We
expect to incur substantial additional research and development and other costs,
including costs related to preclinical studies and clinical trials. Our ability
to continue funding planned operations is dependent upon our ability to generate
sufficient cash flow from royalties on Stryker products, if approved for
commercial sale, from collaborative arrangements and from



                                       10
<PAGE>

additional funds through equity or debt financings, or from other sources of
financing, as may be required. We are seeking additional collaborative
arrangements and also expect to raise funds through one or more financing
transactions, if conditions permit. Over the longer term, because of our
significant long-term capital requirements, we intend to raise funds when
conditions are favorable, even if we do not have an immediate need for
additional capital at such time. If Stryker products are not approved for
commercial sale and we do not receive royalties from Stryker and/or if
substantial additional funding is not available, our business will be materially
and adversely affected.

NEW ACCOUNTING STANDARDS

In June, 1998, the Financial Accounting Standards Board, or FASB, released
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which the Company will be required to adopt
effective January 1, 2001. SFAS No. 133 establishes standards for reporting and
accounting for derivative instruments, and conforms the requirements for
treatment of hedging activities across the different types of exposures hedged.
The Company has not yet completed its evaluation of SFAS No. 133, and is
therefore unable to disclose the impact adoption will have on its consolidated
financial position or results of operations.

YEAR 2000 COMPLIANCE

We did not experience any difficulties related to the Year 2000 problem on
December 31, 1999 and are not aware of any such difficulties since that date.
Our operations have not, to date, been adversely affected by any difficulties
experienced by any of our suppliers or customers in connections with the Year
2000 problem. The Company's Year 2000 Compliance Plan also addressed issues
related to the date February 29, 2000 and management will continue to monitor
our systems for potential difficulties for the remainder of calendar year 2000.

CAUTIONARY FACTORS WITH RESPECT TO FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements which are based on
management's current expectations and which involve risks and uncertainties. Our
actual results may differ significantly from the results discussed in the
forward-looking statements. We caution investors that there is no guarantee that
the actual results or business conditions will not differ materially from those
projected or suggested in such forward-looking statements as a result of various
factors, including, but not limited to the following:

o     Our reliance on current and prospective collaborative partners to supply
      funds for research and development and to commercialize our products;

o     Uncertainty as to timing of and our ability to commercialize our products;

o     Our reliance on our lead product candidate;

o     Our lack of control over the clinical or regulatory progress of several
      applications for our products, which are controlled by our collaborative
      partners;

o     Our reliance on programs in various stages of preclinical development and
      early stage research;

o     Our reliance on key management personnel;

o     Intense competition related to the research and development of morphogenic
      and other proteins for various applications and therapies and the
      possibility that others may discover or develop, and we may not be able to
      gain rights with respect to, the technology necessary to commercialize our
      products;

o     Our lack of development, commercial manufacturing, marketing and sales
      experience and the risk that any products that we develop may not be able
      to be marketed at acceptable prices or receive commercial acceptance in
      the markets that we expect to target;

o     Our lack of control over government approvals on our lead product;

o     Uncertainty related to market conditions affecting the biotechnology
      industry;

o     Uncertainty as to the extent of future government regulation of our
      business;

o     Uncertainty as to whether there will exist adequate reimbursement for our
      products from governments, private health insurers and other
      organizations; and



                                       11
<PAGE>

o     Uncertainty as to whether the merger will be approved by our shareholders
      and regulatory authorities, and if approved, whether the benefits of
      integration will be achieved.

As a result, our future development and commercialization efforts involve a high
degree of risk.



                                       12
<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
================================================================================

The Company's market risk disclosures set forth in the 1999 Form 10-K have not
changed significantly through the quarter ended March 31, 2000.




                                       13
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

           Not Applicable.

ITEM 2.    CHANGES IN SECURITIES.

(a)   Not Applicable.

(b)   Not Applicable.

(c)   Not Applicable.

(d)   Not Applicable.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.

           Not Applicable.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

           Not Applicable.

ITEM 5.    OTHER INFORMATION.

           On February 8, 2000, the Company loaned to two executive officers an
           aggregate of $1,131,380, which was equal to the aggregate exercise
           price of incentive stock options exercised by them on the same date.
           The officers immediately used these funds to pay the Company the
           exercise price of these incentive stock options. These full recourse
           loans each bear interest at an annual rate of 7.0% and the principal
           is due and payable on the earlier of May 8, 2002 or 30 days following
           the sale of the stock purchased with these funds.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

           (a)   Exhibits.

                 Exhibit
                 Number    Description
                 ------    -----------

                  10.1     Sublease dated March 15, 2000 by BP 111 Huntington
                           Avenue LLC to the Company.

                  10.2     Form of Promissory Note dated February 8, 2000 by
                           certain executive officers to the Company.

                  27       Financial Data Schedule.

(b)   Reports on Form 8-K.

      On February 15, 2000, the Company filed a Current Report on Form 8-K,
      dated February 15, 2000, to report the merger with Ontogeny, Inc. and
      Reprogenesis, Inc. to form a new public company named Curis, Inc.

      On February 18, 2000, the Company filed a Current Report on Form 8-K,
      dated February 14, 2000, to file the Agreement and Plan of Merger among
      us, Ontogeny, Inc. and Reprogenesis, Inc.



                                       14
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in Hopkinton, Massachusetts, on May 4,
2000.



                                       CREATIVE BIOMOLECULES, INC.



                                       By: /s/ Steven L. Basta
                                           -----------------------------
                                           Vice President, Finance and
                                           Business Development



                                       By: /s/ Susan M. Letterie
                                           -----------------------------
                                           Director of Accounting


                                       15
<PAGE>

                                  EXHIBIT INDEX


Exhibit
Number   Description
------   -----------

 10.1    Sublease dated March 15, 2000 by BP 111 Huntington Avenue LLC to the
         Company

 10.2    Form of Promissory Note dated February 8, 2000 by certain executive
         officers to the Company

 27      Financial Data Schedule



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