<PAGE>   1
                                  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 SEPTEMBER 30, 1996

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE TRANSITION PERIOD FROM          TO

                         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) 435-9001

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 November 5, 1996 the registrant had 31,148,963 shares of common stock
outstanding.
<PAGE>   2
                                TABLE OF CONTENTS


PART I.    FINANCIAL INFORMATION

<TABLE>
<S>                   <C>                                                                                 <C>
           Item 1.    Financial Statements

                      Consolidated Balance Sheets - September 30, 1996 and December 31, 1995                3

                      Consolidated Statements of Operations for the three months and
                          nine months ended September 30, 1996 and 1995                                     4

                      Consolidated Statements of Cash Flows for the nine months ended
                          September 30, 1996 and 1995                                                       5

                      Notes to Consolidated Financial Statements                                            6

           Item 2.    Management's Discussion and Analysis
                          of Financial Condition and Results of Operations                                  7


PART II. OTHER INFORMATION

           Item 1.    Legal Proceedings                                                                   12

           Item 2.    Changes in Securities                                                               12

           Item 3.    Defaults Upon Senior Securities                                                     12

           Item 4.    Submission of Matters to a Vote of Security Holders                                 12

           Item 5.    Other Information                                                                   12

           Item 6.    Exhibits and Reports on Form 8-K                                                    13


SIGNATURES
</TABLE>


                                        2
<PAGE>   3
                   CREATIVE BIOMOLECULES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                   September 30,         December 31,
                                                                                      1996                   1995
                                                                                    (unaudited)
<S>                                                                                <C>                  <C>          
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                        $  17,916,119        $  11,917,779
  Marketable securities                                                                6,303,228            8,084,269
  Accounts receivable                                                                  3,085,554            2,818,618
  Inventory                                                                              704,529              562,290
  Prepaid expenses and other                                                             210,802              149,105
                                                                                   -------------        -------------
    Total current assets                                                              28,220,232           23,532,061
                                                                                   -------------        -------------
PROPERTY, PLANT AND EQUIPMENT - net                                                   15,560,209           14,736,306
                                                                                   -------------        -------------
OTHER ASSETS:
  Patents and licensed technology - net                                                  362,498              382,703
  Deferred patent application costs - net                                              3,152,692            2,431,298
  Note receivable - officer                                                              350,000                   --
  Deposits and other                                                                     396,749              258,473
                                                                                   -------------        -------------
    Total other assets                                                                 4,261,939            3,072,474
                                                                                   -------------        -------------
TOTAL                                                                              $  48,042,380        $  41,340,841
                                                                                   =============        =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Lease obligations - current portion                                              $      51,837        $      42,567
  Accounts payable                                                                     1,729,253              738,100
  Accrued liabilities                                                                    495,294              512,446
  Accrued compensation                                                                   719,596              495,633
                                                                                   -------------        -------------
    Total current liabilities                                                          2,995,980            1,788,746
                                                                                   -------------        -------------
LEASE OBLIGATIONS                                                                      1,665,529            1,710,910
                                                                                   -------------        -------------
DEFERRED COMPENSATION - Officers                                                              --               12,500
                                                                                   -------------        -------------
STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
  Common stock, $.01 par value, 50,000,000 shares authorized,
    31,125,319 shares and 28,894,996 shares issued and outstanding
    at September 30, 1996 and December 31, 1995, respectively                            311,253              288,950
  Common stock payable                                                                        --            1,736,586
  Additional paid-in capital                                                         120,036,534          105,001,625
  Accumulated deficit                                                                (76,966,916)         (69,198,476)
                                                                                   -------------        -------------
     Total stockholders' equity                                                       43,380,871           37,828,685
                                                                                   -------------        -------------
TOTAL                                                                              $  48,042,380        $  41,340,841
                                                                                   =============        =============
</TABLE>



SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        3
<PAGE>   4
                   CREATIVE BIOMOLECULES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Three Months Ended                    Nine Months Ended
                                              ---------------------------------       --------------------------------
                                              September 30,       September 30,       September 30,      September 30,
                                                  1996                1995                1996                1995
                                              ------------        ------------        ------------        ------------

<S>                                           <C>                 <C>                 <C>                 <C>         
REVENUE:
  Research and development contracts          $  1,766,887        $    944,776        $  3,934,590        $  3,451,150
  Manufacturing contracts                        1,888,820           1,516,326           4,213,914           5,599,898
  License fees                                     101,000              40,000             622,584              44,000
  Interest                                         355,406             175,360             820,842             555,650
  Other                                              1,758              11,466              21,900              49,782
                                              ------------        ------------        ------------        ------------
    Total revenues                               4,113,871           2,687,928           9,613,830           9,700,480
                                              ------------        ------------        ------------        ------------
COSTS AND EXPENSES:
  Research and development                       3,391,444           2,711,979          10,819,196           7,864,935
  Manufacturing contracts                        1,562,839           1,429,414           3,390,890           4,792,814
  Marketing, general and administrative          1,041,528             918,062           3,009,070           2,674,206
  Interest                                          53,771              74,780             163,114             177,062
                                              ------------        ------------        ------------        ------------
    Total costs and expenses                     6,049,582           5,134,235          17,382,270          15,509,017
                                              ------------        ------------        ------------        ------------
NET LOSS                                      $ (1,935,711)       $ (2,446,307)       $ (7,768,440)       $ (5,808,537)
                                              ============        ============        ============        ============
NET LOSS PER COMMON SHARE                     $      (0.06)       $      (0.11)       $      (0.26)       $      (0.28)
                                              ============        ============        ============        ============
WEIGHTED AVERAGE NUMBER
OF COMMON AND
COMMON EQUIVALENT
SHARES OUTSTANDING                              30,932,154          22,245,031          29,681,685          20,717,357
                                              ============        ============        ============        ============
</TABLE>


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        4
<PAGE>   5
                   CREATIVE BIOMOLECULES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Nine Months Ended
                                                       --------------------------------
                                                       September 30,       September 30,
                                                           1996                1995
                                                       ------------        ------------

<S>                                                    <C>                 <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                             $(7,768,440)       $ (5,808,537)
                                                       ------------        ------------
  Adjustments to reconcile net loss to net cash
   provided by (used for) operating activities:
    Depreciation and amortization                         1,800,666           1,841,448
    Compensation expense                                         --             107,002
    Increase (decrease) in cash from:
       Accounts receivable                                 (266,936)           (734,106)
       Inventory and prepaid expenses                      (203,936)             33,661
       Accounts payable and accrued liabilities           1,243,339            (701,148)
                                                       ------------        ------------
          Total adjustments                               2,523,133             546,857
                                                       ------------        ------------

  Net cash used for operating activities                 (5,195,307)         (5,261,680)
                                                       ------------        ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of marketable securities                     (7,231,423)        (12,701,607)
  Sales of marketable securities                          9,012,464           6,642,713
  Expenditures for property, plant and equipment         (2,534,913)           (319,649)
  Expenditures for patents                                 (790,845)           (608,834)
  Note receivable - officer                                (350,000)                 --
  Increase in deposits and other                           (138,276)            (32,981)
                                                       ------------        ------------

  Net cash used for investing activities                 (2,032,993)         (7,020,358)
                                                       ------------        ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from sale of equity:
    Public placement of common stock                     14,000,000                  --
    Series Preferred stock                                       --           4,352,994
    Common stock - other                                    545,904             114,713
  Cost of raising equity                                 (1,283,153)            (15,117)
  Decrease in stockholders' notes receivable                     --           1,833,307
  Repayments of obligations under capital leases            (36,111)            (92,583)
                                                       ------------        ------------

  Net cash provided by financing activities              13,226,640           6,193,314
                                                       ------------        ------------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS                              5,998,340          (6,088,724)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           11,917,779          10,515,954
                                                       ------------        ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD               $ 17,916,119        $  4,427,230
                                                       ============        ============
</TABLE>


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        5
<PAGE>   6
                   CREATIVE BIOMOLECULES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (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 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 financial position at September 30, 1996 and the results of
operations and cash flows for the nine month periods ended September 30, 1996
and 1995 of Creative BioMolecules, Inc. and Subsidiary (the "Company"). The
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto for the transition period
ended December 31, 1995.

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. Note Receivable - Officer - In September 1996, the Company loaned $350,000 to
an officer of the Company. The loan is evidenced by a fully secured promissory
note bearing interest at the annual rate of 6.02% and payable in three equal
annual installments, plus accrued interest.

3. Stock-Based Compensation - In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation," which is effective for the
Company beginning January 1, 1996. SFAS No. 123 requires expanded disclosures of
stock-based compensation arrangements with employees and encourages (but does
not require) compensation cost to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply Accounting Principles Board ("APB") Opinion No. 25, which recognizes
compensation cost based on the intrinsic value of the equity instrument awarded.
The Company will continue to apply APB No. 25 to its stock-based compensation
awards to employees and will disclose the required pro forma effect on net
income and earnings per share in the Company's audited consolidated financial
statements for the year ending December 31, 1996.

4. Stockholders' Equity - In July 1996, the Company sold 2,000,000 shares of
common stock in a public offering at a price of $7.00 per share. Net proceeds to
the Company, after deducting fees and other expenses of the offering, were
approximately $12.7 million.


                                        6
<PAGE>   7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


GENERAL

           To date, most of the Company's revenues have been derived from
research and development payments and license fees under agreements with
collaborative partners and from contract manufacturing. The Company anticipates
that over the next several years its revenues will continue to be derived
primarily from such collaborative agreements and from contract manufacturing.
The Company has been unprofitable since its inception and expects to incur
additional operating losses over the next several years.

           The Company's research agreements with collaborative partners have
typically provided for the partial or complete funding of research and
development for specified projects and royalties payable to the Company in
exchange for licenses to market the resulting products. The Company is presently
a party to one major research collaboration with Stryker Corporation ("Stryker")
to develop products for orthopedic reconstruction. Under the research portion of
the collaboration with Stryker, the Company supplies an OP-1 product to Stryker
for clinical trials and other uses and provides clinical support and performs
research work pursuant to work plans established periodically by the two
companies. The current work plan establishes research objectives and funding
through April 1998. Although the Company is seeking and in the future may seek
to enter into collaborative arrangements with respect to certain other projects,
there can be no assurance that the Company will be able to obtain such
agreements on acceptable terms or that the costs required to complete the
projects will not exceed the funding available for such projects from the
collaborative partners.

           The Company's manufacturing contracts provide for technical
collaboration and manufacturing for third parties at the Company's manufacturing
facility in Lebanon, New Hampshire. The Company is presently a party to a
manufacturing contract with Biogen, Inc. ("Biogen") to produce several of
Biogen's protein-based therapeutic candidates through December 1997 for use in
Biogen's clinical trials. The Company agreed to provide Biogen with all
available cell culture and bacterial fermentation capacity within the
manufacturing facility, and Biogen agreed to pay the Company's costs associated
with such capacity, for approximately six months in each of the three years
beginning in January 1995. Although the Company is seeking additional
manufacturing contracts for available cell culture and bacterial fermentation
capacity, there can be no assurance that the Company will be able to obtain such
contracts on acceptable terms.

           Revenue is earned and recognized 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. The Company's results of operations vary significantly
from year to year and quarter to quarter and depend on, among other factors, the
timing of contract manufacturing activities and the timing of payments made by
collaborative partners. The timing of the Company's contract revenues may not
match the timing of the Company's 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 the Company's development
expenses for such product.

           In January 1996, the Board of Directors voted to change the Company's
fiscal year end from September 30 to December 31, effective with the three month
period ended December 31, 1995.


                                        7
<PAGE>   8
RESULTS OF OPERATIONS

           THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995. The
Company's total revenues for the three and nine month periods ended September
30, 1996 were $4,114,000 and $9,614,000, respectively. This compared to total
revenues of $2,688,000 and $9,700,000 for the three and nine month periods ended
September 30, 1995. Research and development contract revenues increased 87% to
$1,767,000 for the three month period ended September 30, 1996 from $945,000 for
the three month period ended September 30, 1995 and 14% to $3,935,000 for the
nine month period ended September 30, 1996 from $3,451,000 for the nine month
period ended September 30, 1995. The increase is primarily due to fluctuations
in research activities for Stryker. Manufacturing contract revenues increased
25% to $1,889,000 for the three month period ended September 30, 1996 from
$1,516,000 for the three month period ended September 30, 1995. Manufacturing
contract revenue decreased 25% to $4,214,000 for the nine month period ended
September 30, 1996 from $5,600,000 for the nine month period ended September 30,
1995. Manufacturing contract revenues reflect manufacturing principally for
Biogen conducted at the Company's manufacturing facility in Lebanon, New
Hampshire. License fees represent revenue from licensing patent rights and
know-how associated with BABSTM protein technology which is not central to the
Company's business. Interest revenue increased 103% to $355,000 for the three
month period ended September 30, 1996 from $175,000 for the three month period
ended September 30, 1995 and 48% to $821,000 for the nine month period ended
September 30, 1996 from $556,000 for the nine month period ended September 30,
1995. The increase is due to an increase in average funds available for
investment resulting from a self-managed public offering completed in October
1995 of 3,000,000 shares of common stock at a price of $4.25 per share and from
an underwritten public offering completed in July 1996 of 2,000,000 shares of
common stock at a price of $7.00 per share. Other revenue was primarily due to
non-recurring gains from the sale of certain manufacturing equipment.

           The Company's total costs and expenses increased 18% to $6,050,000
for the three month period ended September 30, 1996 from $5,134,000 for the
three month period ended September 30, 1995 and 12% to $17,382,000 for the nine
month period ended September 30, 1996 from $15,509,000 for the nine month period
ended September 30, 1995.

           Research and development expenses increased 25% to $3,391,000 for the
three month period ended September 30, 1996 from $2,712,000 for the three month
period ended September 30, 1995 and 38% to $10,819,000 for the nine month period
ended September 30, 1996 from $7,865,000 for the nine month period ended
September 30, 1995. In September 1995, the Company commenced a second pilot
clinical trial to further evaluate an OP-1 product for dentin regeneration. The
costs of such trial began to be incurred in September 1995 and continue through
December 1996. Also contributing to the increase in costs is an increase in
research and development expenses at the Company's manufacturing facility in
Lebanon, New Hampshire. For part of the nine month period ended September 30,
1996 the facility was used for development activities of the Company until
production resumed for Biogen in May 1996; therefore, facility operating costs
related to development activities were reported as research and development
expenses. For the nine month period ended September 30, 1995, the facility was
primarily used for contract manufacturing for Biogen; therefore, facility
operating costs were reported as manufacturing contract expenses. The Company
anticipates that research and development expenses at the Company's
manufacturing facility in Lebanon, New Hampshire will increase for the remaining
three months in 1996 and manufacturing contract expenses will decrease. The
Company anticipates that research and development expenses at the Company's
research facility also will increase for the remaining three months in 1996. The
Company plans to expand its research and development staff. Labor and laboratory
supply and service costs will increase as additional personnel are hired.
Furthermore, the Company plans to increase expenditures on academic
collaborations and subcontracted research related to technology and product
development.


                                        8
<PAGE>   9
           Manufacturing contract expenses includes the costs associated with
third-party manufacturing conducted at the manufacturing facility in Lebanon,
New Hampshire. Manufacturing contract expenses increased 9% to $1,563,000 for
the three month period ended September 30, 1996 from $1,429,000 for the three
month period ended September 30, 1995. Manufacturing contract expenses decreased
29% to $3,391,000 for the nine month period ended September 30, 1996 from
$4,793,000 for the nine month period ended September 30, 1995. The decrease is
primarily due to the reduction in contract manufacturing for Biogen. The Company
provided manufacturing services for Biogen from January 1995 through December
1995 and resumed production for Biogen in May 1996. The Company plans to provide
manufacturing services for Biogen through October 1996 after which the facility
will be used for the production of OP-1 for Stryker and Company use.

           Marketing, general and administrative expenses increased 13% to
$1,042,000 for the three month period ended September 30, 1996 from $918,000 for
the three month period ended September 30, 1995 and 13% to $3,009,000 for the
nine month period ended September 30, 1996 from $2,674,000 for the nine month
period ended September 30, 1995. The increase is primarily due to increases in
staffing and recruiting costs. The Company anticipates that marketing, general
and administrative expenses will continue at amounts higher than the previous
year.

           As a result of the foregoing, the Company's net loss decreased 21% to
$1,936,000 for the three month period ended September 30, 1996 compared to
$2,446,000 for the three month period ended September 30, 1995. The Company's
net loss increased 34% to $7,768,000 for the nine month period ended September
30, 1996 compared to $5,809,000 for the nine month period ended September 30,
1995.


LIQUIDITY AND CAPITAL RESOURCES

           At September 30, 1996, the Company's principal sources of liquidity
consisted of cash and cash equivalents of $17,916,000 and marketable securities
of $6,303,000. The Company has financed its operations since inception primarily
through placements of equity securities, revenues received under agreements with
collaborative partners and, more recently, revenues received under manufacturing
contracts. Since inception through September 30, 1996, sales of equity
securities have raised approximately $113,663,000 in gross proceeds and the
Company has earned approximately $62,808,000 in gross revenues. In July 1996,
the Company completed a public offering of common stock and raised approximately
$14,000,000 in gross proceeds before underwriters' commissions and expenses of
the offering.

           The Company increased its investment in property, plant and equipment
to $27,215,000 at September 30, 1996 from $24,680,000 at December 31, 1995. The
Company plans to spend an additional $2.4 million during the remaining three
months of 1996 for leasehold improvements and equipment purchases to increase
the capacity and flexibility in operating the manufacturing facility and to
expand the Company's research and development capabilities. In addition, as part
of a manufacturing contract with Biogen, Biogen financed the construction of
leasehold improvements to the Company's manufacturing facility and is installing
and financing for the Company certain equipment as discussed further below.

           The Company's collaborative agreements with Stryker provide for
research payments to the Company and royalty payments to the nonseller from
sales of any OP-1 products. The Company also has the exclusive right to supply
Stryker's worldwide commercial requirements for OP-1 products for use in
orthopedic reconstruction. Under the research portion of the collaboration, the
Company supplies OP-1 products to Stryker for clinical trials and other uses and
provides clinical support and performs research work pursuant to work plans
established periodically by the two companies. In May 1996, the Company and


                                        9
<PAGE>   10
Stryker agreed to extend the research portion of the collaboration for two years
through April 1998. The Company estimates that the contract extension will
provide approximately $12 million of revenue to the Company over the two year
period.

           In September 1994, the Company signed a three-year manufacturing
contract with Biogen to produce in the Company's manufacturing facility in
Lebanon, New Hampshire several of Biogen's protein-based therapeutic candidates
for use in Biogen's clinical trials. The contract covers the period through
December 1997. To enable the Company to meet its obligations under the
manufacturing contract, Biogen financed the construction of a 7,000 square foot
addition to the present facility for cGMP production using bacterial
fermentation at an estimated total cost of $2.9 million. The Company agreed to
reimburse Biogen for the construction costs and leasehold improvements at the
end of the contract term at an amount equal to Biogen's construction costs less
$300,000 and less all accumulated depreciation. The reimbursement to Biogen is
expected to be no more than $2.2 million. Biogen also agreed to lease equipment
having a total cost currently estimated at $2.4 million to the Company for the
operation of such portion of the facility and for cGMP production using
bacterial fermentation by the Company as provided in an equipment lease
agreement. The Company has the option to purchase the equipment at the end of
the lease term for an amount equal to its then fair market value or for such
other amounts as negotiated by the parties. Biogen plans to install the
equipment and prepare the bacterial facility for operation.

           The Company anticipates that its existing capital resources,
including the proceeds of the public offering completed in July 1996, should
enable it to maintain its current and planned operations through 1998. The
Company expects to incur substantial additional research and development, and
other costs, including costs related to preclinical studies and clinical trials.
The Company's ability to continue funding its planned operations beyond late
1998 is dependent upon its ability to generate sufficient cash flow from
collaborative arrangements and manufacturing contracts, and to obtain additional
funds through equity or debt financings, or from other sources of financing, as
may be required. The Company is seeking additional collaborative arrangements
and expects to raise funds through one or more financing transactions, as
conditions permit, and is investigating the feasibility of raising capital
through the sale/leaseback or debt financing of some of its capital assets. Over
the longer term, because of the Company's significant long-term capital
requirements, the Company intends to raise funds when conditions are favorable,
even if it does not have an immediate need for additional capital at such time.
If substantial additional funding is not available, the Company's business will
be materially and adversely affected.


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.
The Company's actual results may differ significantly from the results discussed
in the forward-looking statements. The Company cautions investors that there can
be no assurance 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:
uncertainty as to timing of and the Company's ability to commercialize its
products; the Company's reliance on its lead product candidate and the Company's
lack of control over the clinical progress of one of its primary applications
for such products, which is controlled by one of the Company's collaborative
partners; the Company's reliance on current and prospective collaborative
partners to supply funds for research and development and to commercialize its
products; 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 the Company may not be able
to gain rights with respect to, the technology necessary to commercialize its
products; the Company's lack of experience in


                                       10
<PAGE>   11
commercial manufacturing and unproven ability to manufacture products on a large
scale; the Company's lack of marketing and sales experience and the risk that
any products that the Company develops may not be able to be marketed at
acceptable prices or receive commercial acceptance in the markets that the
Company expects to target; uncertainty as to whether there will exist adequate
reimbursement for the Company's products from government, private health
insurers and other organizations; and uncertainties as to the extent of future
government regulation of the Company's business. As a result, the Company's
future development efforts involve a high degree of risk.


                                       11
<PAGE>   12
PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

           Not Applicable.


ITEM 2.    CHANGES IN SECURITIES.

           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.

           Not Applicable.


                                       12
<PAGE>   13
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

(a)        Exhibits

           Exhibit
           Number         Description

           *10.52         Cross-License Agreement, dated as of July 15, 1996,
                          between Genetics Institute, Inc., Stryker Corporation
                          and the Registrant (incorporated by reference to
                          Exhibit 10.1 to the quarterly report on Form 10-Q for
                          the quarter ended September 30, 1996 of Genetics
                          Institute, Inc. [file number 0-14587], filed with the
                          Securities and Exchange Commission on November 6,
                          1996).

             27           Financial Data Schedule.

*Confidential treatment requested.


(b)        Reports on Form 8-K.

           Current Report on Form 8-K filed July 24, 1996, for the Registrant's
           July 17, 1996 press release announcing that the Registrant, together
           with Stryker Corporation and Genetics Institute, Inc., publicly
           disseminated a press release announcing that the three companies have
           cross-licensed on a royalty-free basis their worldwide patent rights
           in the bone morphogenetic/osteogenic protein family.


                                       13
<PAGE>   14
                                   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 November
13, 1996.

                               CREATIVE BIOMOLECULES, INC.



                               By:  /s/ Wayne E. Mayhew III
                                    -------------------------------
                                      Wayne E. Mayhew III
                                      Vice President and Chief Financial Officer



                               By:  /s/ Susan B. Blanton
                                    -------------------------------
                                      Susan B. Blanton
                                      Controller