<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 MARCH 31, 1998

                                       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 1, 1998, the registrant had 33,499,950 shares of common stock
outstanding.




<PAGE>   2

                                TABLE OF CONTENTS

PART I.    FINANCIAL INFORMATION

           Item 1.  Financial Statements

                    Consolidated Balance Sheets - March 31, 1998 and 
                         December 31, 1997                                     3

                    Consolidated Statements of Operations for the 
                         three months ended March 31, 1998 and 1997            4

                    Consolidated Statements of Cash Flows for the 
                         three months ended March 31, 1998 and 1997            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                                         11

           Item 2.  Changes in Securities                                     11

           Item 3.  Defaults Upon Senior Securities                           11

           Item 4.  Submission of Matters to a Vote of Security Holders       11

           Item 5.  Other Information                                         11

           Item 6.  Exhibits and Reports on Form 8-K                          11


SIGNATURES




                                        2


<PAGE>   3




                   CREATIVE BIOMOLECULES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      March 31,       December 31,
                                                                                        1998              1997
                                                                                    ------------      ------------
                                                                                     (unaudited)
<S>                                                                                 <C>               <C>         
ASSETS
------
CURRENT ASSETS:
  Cash and cash equivalents                                                         $  2,197,845      $  2,158,909
  Marketable securities                                                               24,024,270        28,438,841
  Accounts receivable                                                                  5,111,286         4,572,518
  Inventory                                                                            1,199,658         1,249,330
  Prepaid expenses and other                                                             528,890           284,649
                                                                                    ------------      ------------
    Total current assets                                                              33,061,949        36,704,247
                                                                                    ------------      ------------
PROPERTY, PLANT AND EQUIPMENT - net                                                   17,134,493        17,245,338
                                                                                    ------------      ------------
OTHER ASSETS:
  Notes receivable - officer                                                             262,501           273,334
  Patents and licensed technology - net                                                  411,288           417,070
  Deferred patent application costs - net                                              4,510,668         4,220,080
  Deposits and other                                                                     128,809           177,930
                                                                                    ------------      ------------
    Total other assets                                                                 5,313,266         5,088,414
                                                                                    ------------      ------------
TOTAL                                                                               $ 55,509,708      $ 59,037,999
                                                                                    ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
  Lease obligations - current portion                                                    187,355           124,575
  Accounts payable                                                                     1,758,748         2,311,710
  Accrued liabilities                                                                    547,020           575,171
  Accrued compensation                                                                 1,708,566         1,312,274
  Deferred contract revenue                                                              875,000
                                                                                    ------------      ------------
    Total current liabilities                                                          5,076,689         4,323,730
                                                                                    ------------      ------------
LEASE OBLIGATIONS                                                                      2,315,178         2,004,927
                                                                                    ------------      ------------

STOCKHOLDERS' EQUITY:

  Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
  Common stock, $.01 par value, 50,000,000 shares authorized,
    33,493,544 shares and 33,392,582 shares issued and outstanding
    at March 31, 1998 and December 31, 1997, respectively                                334,935           333,926
  Additional paid-in capital                                                         140,791,870       140,465,512
  Accumulated deficit                                                                (93,008,964)      (88,090,096)
                                                                                    ------------      ------------
    Total stockholders' equity                                                        48,117,841        52,709,342
                                                                                    ------------      ------------
TOTAL                                                                               $ 55,509,708      $ 59,037,999
                                                                                    ============      ============
</TABLE>






SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                        3


<PAGE>   4




                   CREATIVE BIOMOLECULES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Three Months Ended
                                                          March 31,
                                                ------------------------------
                                                   1998                1997
                                                -----------        -----------
                                                         (unaudited)

REVENUE:
  Research and development contracts            $ 3,002,859        $ 2,751,473
  Manufacturing contracts                                              232,239
  Interest and other                                415,259            663,225
                                                -----------        -----------
    Total revenues                                3,418,118          3,646,937
                                                -----------        -----------
COSTS AND EXPENSES:
  Research and development                        6,297,867          5,579,053
  Manufacturing contracts                                              161,038
  General and administrative                      1,966,609          1,602,916
  Interest                                           72,510             52,472
                                                -----------        -----------
    Total costs and expenses                      8,336,986          7,395,479
                                                -----------        -----------
NET LOSS                                        $(4,918,868)       $(3,748,542)
                                                ===========        ===========
BASIC AND DILUTED LOSS PER SHARE                      ($.15)             ($.11)
                                                      =====              =====
SHARES FOR BASIC AND DILUTED                     33,442,341         32,853,617
                                                ===========        ===========















SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                        4


<PAGE>   5




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

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                ---------------------------------
                                                                                    1998                  1997
                                                                                -----------          ------------
                                                                                           (unaudited)
<S>                                                                             <C>                  <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                      $(4,918,868)         $ (3,748,542)
                                                                                -----------          ------------
  Adjustments to reconcile net loss to net cash
   provided by (used for) operating activities:
    Depreciation and amortization                                                   574,366               490,639
    Compensation expense                                                             10,833
    Increase (decrease) in cash from:
      Accounts receivable                                                          (538,768)             (169,875)
      Inventory and prepaid expenses                                               (194,569)             (287,598)
      Accounts payable and accrued liabilities                                     (184,821)           (1,231,061)
      Deferred contract revenue                                                     875,000             1,079,765
                                                                                -----------          ------------
        Total adjustments                                                           542,041              (118,130)
                                                                                -----------          ------------

  Net cash used for operating activities                                         (4,376,827)           (3,866,672)
                                                                                -----------          ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of marketable securities                                               (500,755)          (12,552,675)
  Sales of marketable securities                                                  4,915,326               317,712
  Expenditures for property, plant and equipment                                   (198,027)             (420,497)
  Expenditures for patents                                                         (333,746)             (281,672)
  Decrease in deposits and other                                                     49,121                99,784
                                                                                -----------          ------------

  Net cash provided by (used for) investing activities                            3,931,919           (12,837,348)
                                                                                -----------          ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from sale of equity:
    Common stock - other                                                            327,367               553,657
 Increase in obligations under capital leases                                       193,524
 Repayments of obligations under capital leases                                     (37,047)              (12,744)
                                                                                -----------          ------------

  Net cash provided by financing activities                                         483,844               540,913
                                                                                -----------          ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 38,936           (16,163,107)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    2,158,909            38,248,988
                                                                                -----------          ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $ 2,197,845          $ 22,085,881
                                                                                ===========          ============
SUPPLEMENTAL DISCLOSURE OF
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment purchased under capital lease obligations                $   216,554
                                                                                ===========
</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 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, 1998 and the
results of operations and cash flows for the three months ended March 31, 1998
and 1997. 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, 1997.

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. NEW ACCOUNTING STANDARDS - In January 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") Number 130 "Reporting Comprehensive
Income" ("SFAS 130") and SFAS Number 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 130 establishes
standards for reporting comprehensive income and its components in the
consolidated financial statements. SFAS 131 establishes standards for reporting
information on operating segments in interim and annual financial statements.
The adoption of SFAS 130 had no effect on the Company's business, results of
operations or financial position for the three months ended March 31, 1998. The
adoption of SFAS 131 had no effect on the Company's financial statement
disclosures for the three months ended March 31, 1998.



                                        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. In 1996 and 1995, a significant portion of the Company's
revenues also were derived from contract manufacturing. The Company anticipates
that over the next several years its revenues will be derived primarily from
agreements with collaborative partners. 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 major research collaborations with Stryker Corporation ("Stryker")
to develop products for orthopaedic reconstruction and with Biogen, Inc.
("Biogen") to develop products for the treatment of renal disorders. Under the
research portion of the collaboration with Stryker, the Company supplies OP-1
products to Stryker for clinical trials and other uses, provides clinical
support and performs research work pursuant to work plans established
periodically by the two companies. The current work plan established research
objectives and funding through April 1998. The two companies currently are
negotiating whether and to what extent Stryker will continue to provide
financial support for research collaborations. In December 1996, the Company
signed a Research Collaboration and License Agreement with Biogen (the "Biogen
Research Agreement"). Under the research collaboration, the Company performs
research work through December 1999 pursuant to work plans established
periodically by the two companies, and supplies OP-1 to Biogen for preclinical
and clinical uses. 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 and at the Company's research facility in
Hopkinton, Massachusetts. The Company is presently a party to a manufacturing
contract with Biogen (the "Manufacturing Contract") to produce several of
Biogen's protein-based therapeutic candidates. The companies agreed that the
supply of OP-1 to Biogen pursuant to the Biogen Research Agreement during 1997
satisfied Biogen's 1997 obligation under the Manufacturing Contract. The
companies also agreed to extend the Manufacturing Contract for two years through
1999, with Biogen having the option, but not the obligation, to use the
manufacturing facility for a mutually agreeable number of months in one of the
two years. 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.


                                        7


<PAGE>   8

RESULTS OF OPERATIONS

           THREE MONTHS ENDED MARCH 31, 1998 AND 1997. The Company's total
revenues for the three month periods ended March 31, 1998 and 1997 were
$3,418,000 and $3,647,000, respectively. Research and development contract
revenues increased 9% from $2,751,000 for the three month period ended March 31,
1997 to $3,003,000 for the three month period ended March 31, 1998. The increase
in research and development contract revenues primarily is due to fluctuations
in research funding from Stryker. The Company anticipates that research and
development contract revenues for each of the remaining quarters in 1998 will be
less than the three month period ended March 31, 1998 and less than the research
and development contract revenues for the comparable periods in 1997 due to
decreases in research funding from Stryker (see discussion under "Liquidity and
Capital Resources" below). In addition, research and development contract
revenues for the year ended December 31, 1997 included revenue from the supply
of OP-1 to Biogen pursuant to the Biogen Research Agreement. The Company does
not anticipate significant revenues from the supply of OP-1 to Biogen during the
year ending December 31, 1998.

           Manufacturing contract revenues for the three month period ended
March 31, 1997 reflect manufacturing for Biogen, under a Service Agreement
separate from the Biogen Research Agreement and Manufacturing Contract,
conducted at the Company's research facility in Hopkinton, Massachusetts. The
Company does not anticipate significant manufacturing contract revenues during
the year ending December 31, 1998.

           Interest revenues decreased 37% from $663,000 for the three month
period ended March 31, 1997 to $415,000 for the three month period ended March
31, 1998. The decrease is due to a decrease in the average funds of the Company
available for investment.

     The Company's total costs and expenses, consisting primarily of research
and development expenses, increased 13% from $7,395,000 for the three month
period ended March 31, 1997 to $8,337,000 for the three month period ended
March 31, 1998. Research and development expenses increased 13% from $5,579,000
for the three month period ended March 31, 1997 to $6,298,000 for the three
month period ended March 31, 1998. The increase in research and development
expenses is due to expanded research and development activities, including work
in preparation for the filing of a Pre-Market Approval ("PMA") application by
Stryker for the bone graft substitute product, and research into neurological
disease therapies and other indications proprietary to the Company. Stryker has
initiated regulatory review of the bone graft substitute product following a
122 patient pivotal trial in the treatment of tibial non-union fractures which
was presented at the American Academy of Orthopaedic Surgeons in March 1998.
The filing will be done on a modular basis under a new regulatory review
procedure initiated by the U.S. Food and Drug Administration ("FDA"). The first
module has been submitted and Stryker has indicated to the Company that it
expects the final module of the PMA application will be submitted by mid-year
1998. The Company anticipates that research and development expenses for each
of the remaining quarters in 1998 will continue at amounts higher than the
prior year due to expanded research and development activities, including work
in preparation for the FDA's regulatory review of Stryker's bone graft
substitute product, and research into neurological disease therapies and other
indications proprietary to the Company.

           Cost of manufacturing contracts for the three month period ended
March 31, 1997 consists of the costs associated with the manufacturing for
Biogen, discussed under manufacturing contract revenues above.

           General and administrative expenses increased 23% from $1,603,000 for
the three month period ended March 31, 1997 to $1,967,000 for the three month
period ended March 31, 1998. The increase is due to an increase in executive
staff. General and administrative expenses for the three month period ended
March 31, 1998 are consistent with general and administrative expenses for 
the three month period ended December 31, 1997. The Company anticipates that
general and administrative expenses for the remaining quarters in 1998 will
continue at amounts consistent with the three month period ended March 31, 1998
but at amounts higher than the comparable periods in 1997.


                                        8


<PAGE>   9



           Interest expense increased 40% from $52,000 for the three month
period ended March 31, 1997 to $73,000 for the three month period ended March
31, 1998. The increase is due to an increase in obligations under capital
leases. In October 1997, the Company entered into a master lease agreement for
the sale and leaseback or lease of up to $2,000,000 of laboratory and office
equipment, of which $900,000 is outstanding at March 31, 1998. See discussion
under "Liquidity and Capital Resources" below.

           As a result of the foregoing, the Company incurred a net loss of
$4,919,000 for the three month period ended March 31, 1998 compared to a net
loss of $3,749,000 for the three month period ended March 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

           At March 31, 1998, the Company's principal sources of liquidity
consisted of cash, cash equivalents and marketable securities of $26,222,000, a
$15,000,000 unsecured line of credit from Biogen and $1,100,000 remaining on an
equipment lease line, as discussed further below.

           The Company increased its investment in property, plant and equipment
to $31,699,000 at March 31, 1998 from $31,378,000 at December 31, 1997. The
Company currently plans to spend up to approximately $7,000,000 in the year
ending December 31, 1998 in leasehold improvements, equipment purchases and
validation expenses required to obtain FDA approval of the manufacturing
facility and to expand the Company's research, development and manufacturing
capabilities. In October 1997, the Company entered into a master lease agreement
for the sale and leaseback or lease of up to $2,000,000 of laboratory and office
equipment. At March 31, 1998, $1,100,000 is available under this lease
commitment.

           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
orthopaedic 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. The current work plan established
research objectives and funding through April 1998. The two companies currently
are negotiating whether and to what extent Stryker will continue to provide
financial support for research collaborations.

           In December 1996, the Company signed the Biogen Research Agreement to
collaborate on the development of the Company's morphogenic protein, OP-1, for
the treatment of renal disorders. Under the agreement, the Company granted to
Biogen exclusive worldwide rights to manufacture, market and sell OP-1 for the
treatment of renal disease. Biogen paid a $10,000,000 license fee in 1996 and
made an $18,000,000 equity investment in common stock at a premium over the
then-current market price per share. In addition, the agreement provides for
$10,500,000 in research funding over a three year period ending December 31,
1999. Biogen also will pay up to an additional $69,000,000 upon the attainment
of certain milestones and make available a $15,000,000 line of credit. The
Biogen Research Agreement further provides for the payment of royalties to the
Company based on product sales. The Company may draw upon the $15,000,000 line
of credit over the next two years to fund the research and development of small
molecule products based on OP-1. Advances are limited to $10,000,000 in 1998 and
the remaining balance in 1999. In exchange for the line of credit, Biogen
received an exclusive option to obtain an exclusive, worldwide license to OP-1
based small molecule products for the treatment of renal disorders. In the event
Biogen exercises its option, Biogen will forgive the lesser of $10,000,000 or
the principal amount outstanding under the line of credit. The remaining
principal, together with all accrued and unpaid interest is due and payable five
years from the date of the first advance and may be repaid, at the Company's
option, in either cash, common stock or reduction of royalties due the Company
from Biogen.

           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 covered the period from
January 1995 through December 1997. As part of the research collaboration, the
two companies agreed to extend the


                                        9


<PAGE>   10



Manufacturing Contract for two years through December 31, 1999, with Biogen
having the option, but not the obligation, to use the manufacturing facility for
a mutually agreeable number of months in one of the two extension years. 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 $2,900,000. The Company agreed to reimburse Biogen for the construction
costs and leasehold improvements at the end of the contract term, including the
extension, at an amount equal to Biogen's construction costs less $300,000 and
less all accumulated depreciation. The reimbursement to Biogen is estimated to
be no more than $2,100,000. Biogen also agreed to lease equipment to the Company
for the operation of such portion of the facility and for cGMP production using
bacterial fermentation by the Company at an estimated total cost of $2,400,000,
as provided in an equipment lease agreement. The Company has the option to
purchase the equipment at the end of the extended lease term for an amount equal
to its then fair market value or for such other amount as is negotiated by the
two parties.

           The Company anticipates that its existing capital resources should
enable it to maintain its current and planned operations through late 1999. 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
1999 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 also expects to raise funds through one or more financing transactions, as
conditions permit. 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 several applications of its
products, which are controlled by 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 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 and commercialization efforts involve a high degree
of risk.


                                       10


<PAGE>   11



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.

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

(a)        Exhibits

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

           27         Financial Data Schedule.

(b)        Reports on Form 8-K.

           No reports on Form 8-K were filed during the three month period ended
           March 31, 1998.


                                       11


<PAGE>   12



                                   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 14,
1998.

                                  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


<PAGE>   13


                                  EXHIBIT INDEX

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

27         Financial Data Schedule