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 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 0-19278


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

           Delaware                                        13-3357370
 (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                       Identification No.)

  51 James Way, Eatontown, New Jersey                           07724
    (Address of principal executive offices)                  (Zip Code)

                                 (908) 542-2800
              (Registrant's telephone number, including area code)

                                 Not Applicable
     (Former name, former address and former fiscal year, if changed since
last report)

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. Yes X 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  practical date.  Common Stock,  $.01 par value -
7,812,011 shares as of October 31, 1996


<PAGE>

PART I.       FINANCIAL INFORMATION
ITEM 1.       Financial Statements



                        OSTEOTECH, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>


                                                            Three Months                       Nine Months
                                                       Ended September 30,                Ended September 30,
                                                  --------------------------------   --------------------------------
                                                       1996             1995              1996             1995
---------------------------------------------------------------------------------------------------------------------
Net Revenues:
<S>                                                       <C>              <C>              <C>              <C>
     Service                                              $8,340           $6,148           $23,441          $17,991
     Product                                                 512              649             1,877            2,056
     Grant                                                   158              180               476              538
                                                  ---------------  ---------------   ---------------  ---------------
                                                           9,010            6,977            25,794           20,585
Costs and expenses:
     Cost of services                                      3,188            2,628             9,315            7,645
     Cost of products                                        661              523             1,746            1,620
     Marketing, general and administrative                 3,206            2,511             9,346            7,924
     Research and development                              1,099              938             3,282            2,801
     Provision for termination of
        distribution agreement                                                                                   980
                                                  ---------------  ---------------   ---------------  ---------------
                                                           8,154            6,600            23,689           20,970
Other income (expense):
     Recovery of principal on note from
        a significant customer                                              4,078                              4,147
     Interest income                                         112              135               321              489
     Interest expense                                       (52)             (74)             (181)             (172)
     Other                                                     9               15                34               13
                                                  ---------------  ---------------   ---------------  ---------------
                                                              69            4,154               174            4,477
                                                  ---------------  ---------------   ---------------  ---------------

Income before income taxes                                   925            4,531             2,279            4,092

Income tax provision (benefit), net                          674             (178)            1,655               92

----------------------------------------------------------------------------------------------------------------------
Net income                                                $  251           $4,709            $  624           $ 4,000
======================================================================================================================
Net income per share
     Primary                                              $  .03           $  .58            $  .08           $  .50
     Assuming full dilution                               $  .03           $  .57            $  .08           $  .48
----------------------------------------------------------------------------------------------------------------------
Shares used in computing net income per share
     Primary                                           8,242,823        8,143,315          8,304,495       8,017,862
     Assuming full dilution                            8,242,823        8,270,101          8,304,495       8,247,574
======================================================================================================================

</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       -2-

<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                        September 30,          December 31,
                                                                            1996                   1995
----------------------------------------------------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------------------------------------------------
Current assets:
<S>                                                                               <C>                   <C>
     Cash and cash equivalents                                                    $ 5,615               $ 2,788
     Short-term investments                                                         2,973                 4,919
     Accounts receivable, net                                                       6,167                 4,561
     Deferred income taxes                                                            643                 1,429
     Prepaid expenses and other current assets                                      3,064                 3,963
                                                                    --------------------------------------------
        Total current assets                                                       18,462                17,660

Equipment and leasehold improvements, net                                           8,636                 8,624
Excess of cost over net assets of business acquired,
     less accumulated amortization of $1,134 in 1996
     and $945 in 1995                                                               2,564                 2,753
Intangible assets, net of accumulated amortization of
     $183 in 1996 and $113 in 1995                                                    591                   610
Other assets                                                                          546                   523
================================================================================================================
Total assets                                                                      $30,799               $30,170
================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------
Current liabilities:
     Accounts payable and accrued liabilities                                     $ 5,006               $ 4,078
     Notes payable                                                                     92                   647
     Current maturities of long-term debt and
          obligations under capital leases                                            785                   800
                                                                    --------------------------------------------
        Total current liabilities                                                   5,883                 5,525

Long-term debt and obligations under capital leases                                 1,008                 1,598
Other liabilities                                                                     322                   453
----------------------------------------------------------------------------------------------------------------
Total liabilities                                                                   7,213                 7,576
----------------------------------------------------------------------------------------------------------------

Commitments and contingencies

Stockholders' equity:
     Preferred stock, $.01 par value; 5,676,595 shares
         authorized; no shares issued or outstanding
     Common stock, $.01 par value; 20,000,000 shares
         authorized; issued and outstanding 7,810,674
         shares in 1996 and 7,198,179 shares in 1995                                   78                    72
     Additional paid-in capital                                                    30,197                29,782
     Currency translation adjustments                                               (101)                  (48)
     Accumulated deficit                                                          (6,588)               (7,212)
----------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                         23,586                22,594
                                                                    --------------------------------------------
====================================================================
Total liabilities and stockholders' equity                                        $30,799               $30,170
================================================================================================================
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       -3-

<PAGE>


                        OSTEOTECH, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                             (dollars in thousands)
<TABLE>
<CAPTION>

Nine Months Ended September 30,                                             1996              1995
--------------------------------------------------------------------------------------------------------
Cash Flow From Operating Activities
<S>                                                                            <C>              <C>
   Net income                                                                  $  624           $ 4,000
   Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
         Provision for termination of distribution agreement                                        980
         Depreciation and amortization                                          1,942             1,238
         Deferred income taxes                                                    786             (730)
         Other items, net                                                        (11)                13
         Changes in assets and liabilities:
               Accounts receivable                                            (1,617)             (526)
               Prepaid expenses and other current assets                          827             (307)
               Accounts payable and other liabilities                             817                73
--------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                             3,368             4,741

Cash Flow From Investing Activities
   Capital expenditures                                                       (1,328)            (2,995)
   Purchases of investments                                                   (5,947)            (7,860)
   Proceeds from sale of investments                                           7,894              3,928
   Increase in other assets                                                     (495)              (559)
--------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities                               124           (7,486)

Cash Flow From Financing Activities
   Proceeds from issuance of common stock                                         421               782
   Proceeds from issuance of notes payable                                         94               110
   Proceeds from issuance of long-term debt                                                       1,227
   Principal payments on notes payable                                          (649)             (365)
   Principal payments on long-term debt
     and obligations under capital leases                                       (590)             (395)
   Proceeds from other long-term obligations                                                        150
--------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities                             (724)             1,509

Effect of exchange rate changes on cash                                           59               (59)
--------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                            2,827           (1,295)
Cash and cash equivalents at beginning of period                                2,788            3,785
========================================================================================================
Cash and cash equivalents at end of period                                     $5,615          $ 2,490
========================================================================================================


Supplementary cash flow data:
   Cash paid during the period for interest                                    $  189           $  168
   Cash paid during the period for taxes                                          782               84
   Capital lease obligations entered into during the period                                        282


</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       -4-


<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES

              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)


1.       Basis of Presentation
         The accompanying  unaudited condensed consolidated financial statements
         reflect all adjustments  (consisting only of normal recurring accruals)
         considered  necessary by  management  to present  fairly the  Company's
         consolidated  financial  position as of September 30, 1996 and December
         31,  1995,  and  the   consolidated   results  of  operations  for  the
         three-month  and nine-month  periods ended September 30, 1996 and 1995,
         and the consolidated cash flows for the nine-month  periods then ended.
         The results of operations  for the respective  interim  periods are not
         necessarily indicative of the results to be expected for the full year.
         The  condensed  consolidated  financial  statements  should  be read in
         conjunction  with the audited  financial  statements for the year ended
         December 31, 1995 which were included as part of the  Company's  Report
         on Form 10-K.

2.       Financing Arrangements
         Effective as of March 1996,  the Company  amended its loan and security
         agreement  with a  Dutch  bank  which  provides  for  borrowings  up to
         5,000,000 Dutch Guilders  ("dfl"),  or approximately  $2,924,000 at the
         September 30, 1996 exchange rate. The amendment extends the term of the
         agreement  through June 1997 and reduces the annual rate of interest on
         borrowings  from the  bank's  prime  rate  plus a margin of 2.5% to the
         bank's prime rate plus a margin of 2.0%. Additionally,  the Company has
         voluntarily  agreed to limit its borrowings in 1996, if any, to no more
         than  3,000,000 dfl, or  approximately  $1,755,000 at the September 30,
         1996 exchange rate.

         Effective  as of May 1996,  the Company  amended its loan and  security
         agreement  with a U.S.  bank  which  provides  for  borrowings  under a
         revolving line of credit and an equipment line of credit. The amendment
         extends  the term of the  agreement  through  May 1997 and  reduces the
         annual rate of interest on  equipment  advances  from the bank's  prime
         rate plus a margin of .75% to the  bank's  prime  rate plus a margin of
         .25%.

3.       Reclassifications  Certain  of the  1996 and 1995  amounts  have  been
         reclassified for comparative purposes.


                                       -5-
<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


Information contained herein contains "forward-looking statements" (as such term
is defined in the Private Securities Litigation Reform Act of 1995) which can be
identified  by the  use  of  forward-looking  terminology  such  as  "believes",
"expects",  "may", "will", "should", or "anticipates" or the negative thereof or
other variations thereon or comparable terminology. Certain statements contained
in "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations" and other sections herein, including without limitation,  statements
regarding the Company's  liquidity and capital  resources,  and restructuring of
the  Netherlands  operations and other  statements  contained  herein  regarding
matters  that are not  historical  facts,  are  forward-looking  statements.  No
assurance can be given that the future  results  covered by the  forward-looking
statements  will be  achieved.  The  matters  set forth in Exhibit  99.0  hereto
constitute cautionary  statements  identifying important factors with respect to
such forward-looking statements,  including risks and uncertainties,  that could
cause  actual  results to vary  materially  from the future  results  indicated,
expressed or implied, in such  forward-looking  statements.  Other factors could
also cause actual results to vary materially  from the future results  indicated
in such forward-looking statements.



FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995

Results of Operations

Net Income

Net income in the third quarter of 1996 was $251,000 or $.03 per share  compared
to $4,709,000 or $.58 per share in the third quarter of 1995.  Net income in the
first nine months of 1996 was $624,000 or $.08 per share  compared to $4,000,000
or $.50 per share in the first nine  months of 1995.  Results of  operations  in
1995 were  affected by  $4,147,000  of  principal  payments  received on a fully
reserved  note from a  significant  customer  and a pre-tax  charge of  $980,000
resulting from the Company's  decision to terminate its  distribution  agreement
for trauma  implant  products.  Additionally,  in accordance  with  Statement of
Financial  Accounting  Standards  No. 109  "Accounting  for Income  Taxes",  the
Company  recognized a deferred tax asset of  $2,232,000  in the third quarter of
1995  resulting in a net tax benefit of $178,000 in the third  quarter and a net
tax provision of $92,000 in the nine months ended September 30, 1995.

Following is a discussion of factors which  affected  results of operations  for
the three-month and nine-month periods ended September 30, 1996 and 1995.


Revenues

Revenues  in  the  third  quarter  of  1996  increased  29% to  $9,010,000  from
$6,977,000  in the third  quarter of 1995.  Revenues in the first nine months of
1996  increased 25% to $25,794,000 as compared to $20,585,000 in the nine months
ended  September  30,  1995.  During the third  quarter and first nine months of
1996, two of the Company's major customers accounted for 65% and 25% and 65% and
24%, respectively, of revenues.

                                       -6-


<PAGE>

The  increase  in  revenues  in the third  quarter and first nine months of 1996
resulted principally from increased demand for the Company's allograft processed
tissue including Grafton(R)  Demineralized Bone Matrix (DBM) Gel and Grafton DBM
Flex which was introduced in January 1996.

Cost of Services and Products

Cost of  services as a  percentage  of service  revenues  was 38% and 40% in the
third quarter and first nine months of 1996,  respectively,  compared to 43% and
42% in the same  periods last year.  The  decrease in costs as a  percentage  of
revenues  results  primarily  from a shift in revenue mix toward  services  with
higher gross margins.

Cost of products as a  percentage  of product  revenues  was 129% and 93% in the
third quarter and first nine months of 1996,  respectively,  compared to 81% and
79% in the same periods last year.  Although  product  revenues  have  declined,
costs have increased primarily as a result of higher product liability insurance
premiums.

Marketing, General and Administrative

Marketing,  general and administrative expenses increased $695,000 or 28% in the
third quarter and  $1,422,000 or 18% in the first nine months of 1996,  compared
to the same periods last year. The increases were primarily  attributable  to an
increase in facilities and expanded  marketing  activities  associated  with the
development of a national network of independent agents.

Research and Development

Research and development  expenses  increased $161,000 and $481,000 in the third
quarter  and first nine  months of 1996,  respectively,  or 17% in both  periods
compared  to  the  same  periods  last  year.   The  increases   were  primarily
attributable to increased spending associated with the development of additional
allograft tissue forms which have been or are expected to be introduced into the
market during 1996,  expansion of the Company's viral inactivation  process to a
broader range of allograft  tissue and the  development  of PolyActive  products
(See Subsequent Events - Restructuring).

Provision for Termination of Distribution Agreement

In June 1995,  the Company  terminated  its  distribution  agreement  for trauma
implant products with its supplier,  aap, GmbH, of Berlin, Germany, due to aap's
inability to meet certain  material  covenants of the agreement.  As a result of
this  termination  the  Company   recorded  a  charge  of  $980,000   consisting
principally of inventory write-offs, employee termination costs and legal fees.

Other Income, net

Other income,  net decreased  $4,085,000 and $4,303,000 in the third quarter and
first nine  months of 1996.  During  the third  quarter  of 1995  $4,078,000  of
principal  payments  were  received on a fully  reserved note from a significant
customer,  reducing  the  outstanding  balance  on the  note to $0 at  September
30, 1995.

                                       -7-

<PAGE>

Provision for Income Taxes

The provision for income taxes increased by $852,000 and $1,563,000 in the third
quarter and first nine  months of 1996 as a result of higher US taxable  income.
The provision  for income taxes in each period  reflects a rate in excess of the
Federal  statutory  income tax rate due to state income taxes and foreign losses
for which no current tax benefits were available.

The tax benefit of $178,000 in the third  quarter of 1995 is due to U.S.  losses
resulting  primarily from the $980,000 charge associated with the termination of
the distribution agreement for trauma implant products.


Liquidity and Capital Resources

At September 30, 1996, the Company had cash and cash  equivalents and short-term
investments of $8,588,000  compared to $7,707,000 at December 31, 1995.  Working
capital increased by $444,000 to $12,579,000.

The Company has a loan and security  agreement with a US bank which provides for
borrowings of up to $3,000,000  under a revolving  line of credit and $4,000,000
under an  equipment  line of credit.  At  September  30,  1996,  $1,552,000  was
outstanding  under the  equipment  line of credit and there  were no  borrowings
outstanding under the revolving line of credit.

The  Company  also has a line of credit  with a Dutch  bank which  provides  for
borrowings of up to 5,000,000 dfl, or approximately  $2,924,000 at the September
30,  1996  exchange  rate.  An  analysis  of the  Company's  cash  position  and
anticipated  cash flow  indicated  that it most likely would not be necessary to
utilize a significant  portion of the line of credit during 1996 and, therefore,
the Company has voluntarily  agreed to limit its borrowings,  if any, to no more
than 3,000,000 dfl, or approximately  $1,755,000 in 1996.  Additionally,  one of
the Company's facility leases requires it to maintain a declining bank guarantee
which  reduced  the  amount  available  for  borrowings  to  2,314,000  dfl,  or
approximately  $1,353,000 at the September 30, 1996 exchange rate. There were no
borrowings under this credit line as of September 30, 1996.

The Company is involved in lawsuits principally  involving allegations of spinal
fixation  device products  liability (See Part II - Item 1. LEGAL  PROCEEDINGS).
The Company believes the claims to be without merit and all such cases have been
and will  continue  to be  vigorously  defended.  Pursuant  to its  distribution
agreement with Heinrich C. Ulrich, KG ("Ulrich"),the  manufacturer of the spinal
system distributed by the Company which is the subject of these lawsuits, Ulrich
has agreed to indemnify the Company for liabilities  incurred in connection with
the  distribution  of Ulrich's  products.  Additionally,  the Company  maintains
products  liability  insurance  coverage  and is also named as a  co-insured  on
Ulrich's products liability insurance policy. Although the Company believes that
it will  ultimately  prevail  in these  cases,  litigation  is  subject  to many
uncertainties and

                                       -8-

<PAGE>

it is  possible  that some of the  pending  cases  could be decided  against the
Company.  It is possible that the results of operations or liquidity and capital
resources  of  the  Company  could  be  materially  adversely  affected  by  the
ultimateoutcome  of the  pending  litigation  or as a  result  of the  costs  of
contesting  such suits if the  ultimate  liability  exceeds  the amount that the
Company  recovers from Ulrich  and/or such  insurance  policies.  The Company is
unable to estimate the  potential  liability,  if any,  that may result from the
pending  litigation  and,  accordingly,  no provision  for any  possible  future
liability has been made in the consolidated financial statements.

The Company believes that its cash and cash equivalents,  short-term investments
and  available  lines of  credit,  together  with  anticipated  cash  flow  from
operations,  will be sufficient to meet its near-term requirements,  but may not
be adequate to fully  develop and  commercialize  all products  currently  under
development  by the Company.  From time to time the Company may seek  additional
funds through equity or debt financing. However, there can be no assurances that
such additional  funds will be available to the Company,  or if available,  that
such funds will be available on terms favorable to the Company.



Subsequent Event - Restructuring of The Netherlands Operations

In  October,  the Company  announced a plan to  restructure  its  operations  in
Leiden,  The Netherlands to focus the Company's  efforts on building its current
revenue producing ceramic and titanium plasma spray coating services and ceramic
powders  and  products.  As a result of this  restructuring,  the  Company  will
immediately  discontinue  investing  in  its  long-term  PolyActive(TM)  polymer
research and development program,  which includes the development of an adhesion
barrier  product  and an  artificial  skin  product.  OsteoActive(TM)  Bone Void
Filler, the lead product from the polymer research and development program, will
also be  discontinued.  This  determination  has  resulted in  cessation  of all
marketing  efforts as well as clinical  trials which were  initiated to pursue a
Council of Europe designation.  Since its market introduction,  the only revenue
derived from  OsteoActive  has been from stocking  orders to distributors in the
third quarter of 1996 totaling approximately $48,500.

Other  than  OsteoActive   stocking  orders  and  annual  polymer  research  and
development   grant   revenues   estimated  at   approximately   $600,000,   the
restructuring of The Netherlands operations will have no impact on the Company's
revenue base but is expected to result in the reduction of operating expenses of
approximately $1 million annually.

As a result of the  restructuring  of The  Netherlands  operations,  the Company
expects to record a pre-tax  restructuring  charge in the fourth quarter of 1996
of approximately  $1,350,000 consisting primarily of employee termination costs,
write-offs of equipment,  intangible assets and inventories and costs associated
with  the  planned  sub-leasing  of  office  space on which  the  company  has a
long-term lease.

                                       -9-

<PAGE>

Since the Company's  acquisition  of The  Netherlands  operations in May,  1992,
these  operations  have incurred  pretax  losses each year,  including a loss of
$1,384,000  in the year ended  December 31, 1995 and a pretax loss of $1,256,000
in the nine- month period ended  September  30, 1996.  Since the Company  cannot
take these losses into account when  determining its consolidated tax provisions
until  such  time as The  Netherlands  operations  report a pretax  profit,  the
Company has been reporting unusually high effective tax rates, which in the nine
months  ended  September  30, 1996 was 72.6%.  As these  operations  move toward
profitability due to the  restructuring,  the Company's  effective tax rate will
decrease  toward a more  expected  level.  Additionally,  when these  operations
become  profitable,  the Company  will  recognize  the benefit of net  operating
losses  accumulated since the acquisition and will begin to utilize these losses
to offset future tax liabilities when it files its tax returns.


                                      -10-

<PAGE>

PART II.         OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS


1. Orthopaedic Bone Screw Products Liability Litigation
-------------------------------------------------------

As  previously  reported,   the  Company  had  been  named  as  a  defendant  in
approximately  95 lawsuits  involving  approximately  4,000  plaintiffs  brought
against spinal implant manufacturers,  distributors  (including the Company) and
promoters.  The majority of these actions,  all of which are individual lawsuits
and not class actions, are pending in federal court and have been, or are being,
consolidated  with other  similar  actions for  coordinated  proceedings  in the
District Court for the Eastern District of Pennsylvania in an action entitled In
re:  Orthopaedic Bone Screw Products  Liability  Litigation,  MDL Dkt 1014 (E.D.
Pa.) (the "MDL  Litigation").  On August 22, 1996, the district judge  presiding
over the MDL Litigation,  Honorable Louis C. Bechtle,  entered an order granting
an omnibus  motion to dismiss 81 of these  actions.  The  remaining  14 lawsuits
against the Company were not a part of the MDL Litigation,  and thus not subject
to the August 22, 1996  Order.  The  Company  believes  that the claims in these
remaining  actions are without merit,  and all such cases are, and will continue
to be, vigorously defended.


2. Osteotech, Inc. v. Biosystems of New England, Inc.,  C.A. No.
   96-11908 (MRW)  (D. Mass.)
   --------------------------

On September 24, 1996, The Company commenced an action in the District Court for
the  District  of  Massachusetts,   against  Biosystems  of  New  England,  Inc.
("Biosystems"),  for breach of contract and unfair trade practices.  On or about
October  15,  1996,  Biosystems  served its  answers  and  counterclaims  on the
Company,  which alleges violations of federal antitrust  statutes,  unfair trade
practices, and interference with contractual relations.

The Company believes that the  counterclaims are without merit and will move for
an order dismissing the counterclaims.  In addition, the Company believes it has
affirmative defenses, including but not limited to failure to state a claim upon
which relief can be granted,  lack of standing,  the doctrine of unclean  hands,
laches, and waiver and estoppel.

                                      -11-


<PAGE>

ITEM 4. EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits (numbered in accordance with Item 601 of Regulation S-K)

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

        11.1    Computation of Primary Net Income Per Share         E-1
        11.2    Computation of Fully Diluted Net Income
                Per Share                                           E-2
        27.0    Financial Data Schedule                             E-3
        99.0    Certain Factors to Consider in Connection
                with Forward-Looking Statements                     E-4

(b)     Reports on Form 8K

        None

                                      -12-


<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.


                                                                 Osteotech, Inc.
                                                                    (Registrant)



Date:  November  12, 1996                           By: /s/ Richard W. Bauer
-----  --------  --------                           ------------------------
                                                             Richard W. Bauer
                                                             President, Chief
                                                             Executive Officer



Date:  November 12, 1996                            By: /s/ Michael J. Jeffries
-----  -----------------                            ---------------------------
                                                            Michael J. Jeffries
                                                        Executive Vice President
                                                        Chief Operating Officer
                                                        Chief Financial Officer

                                      -13-