<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                            ----------------------

                                   FORM 10-Q

   [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1999


                        COMMISSION FILE NUMBER 0-21481

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

                            ----------------------

                DELAWARE                                         04-3027191
     (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                          Identification No.)

            195 ALBANY STREET
        CAMBRIDGE, MASSACHUSETTS                                    02139
(Address of principal executive offices)                         (Zip Code)

      Registrant's telephone number, including area code:  (617) 349-0200

                                      ----------------------


         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       / /


         At November 5, 1999, there were 22,584,202 shares of Common Stock,
$.01 par value, issued and outstanding.  There were no issued and outstanding
shares of Preferred Stock.

<PAGE>
                         Transkaryotic Therapies, Inc.


                                      INDEX

<TABLE>
<CAPTION>                                                                                                PAGE NUMBER
                                                                                                         -----------
<S>               <C>                                                                                    <C>
PART  I.          FINANCIAL INFORMATION

Item  1.          Condensed Consolidated Financial Statements (unaudited)

                  Condensed Consolidated Balance Sheets as of
                  September 30, 1999 and December 31, 1998                                                        3

                  Condensed Consolidated Statements of Operations for the Three and
                  Nine Months Ended September 30, 1999 and 1998                                                   4

                  Condensed Consolidated Statements of Cash Flows for the Nine Months
                  Ended September 30, 1999 and 1998                                                               5

                  Notes to Condensed Consolidated Financial Statements                                        6 - 8

Item  2.          Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                                       9 - 14

Item  3.          Quantitative and Qualitative Disclosures about Market
                  Risk                                                                                           14


PART  II.         OTHER INFORMATION

Item 1.           Legal Proceedings                                                                              15

Item 2.           Changes in Securities and Use of Proceeds                                                      15

Item 6.           Exhibits and Reports on Form 8-K                                                               15


SIGNATURES                                                                                                       16

EXHIBIT INDEX                                                                                                    17
</TABLE>

                                                                             2

<PAGE>

Part 1- Item 1- Condensed Consolidated Financial Statements

                          Transkaryotic Therapies, Inc.
                     Condensed Consolidated Balance Sheets
                                  (unaudited)

<TABLE>
<CAPTION>
(in thousands, except par values)                          September 30,     December 31,
                                                              1999            1998
                                                          -------------   -------------
<S>                                                       <C>             <C>
ASSETS
Current assets:
   Cash and cash equivalents                                  $ 21,851        $ 31,760
   Marketable securities                                        59,012          78,395
   Prepaid expenses and other current assets                     1,609           2,334
                                                          -------------   -------------
      Total current assets                                      82,472         112,489
Property and equipment, net                                     18,886           5,140
Other assets                                                       371             333
                                                          -------------   -------------
                                                              $101,729        $117,962
                                                          =============   =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                            $ 3,244         $ 1,456
   Accrued expenses                                              6,022           2,860
   Current maturities of long-term debt                          1,761               -
                                                          -------------   -------------
      Total current liabilities                                 11,027           4,316
Long-term debt, less current maturities                         10,570               -
                                                          -------------   -------------
      Total liabilities                                         21,597           4,316
                                                          -------------   -------------

Stockholders' equity:
   Preferred stock, $1.00 par value, 10,000 shares authorized:
      no shares issued and outstanding                               -               -
   Common stock, $.01 par value; 30,000 shares authorized;
      19,280 and 19,126 shares issued and outstanding at
      September 30, 1999 and December 31, 1998, respectively       193             191

   Additional paid-in capital                                  187,072         186,067
   Accumulated deficit                                        (104,797)        (69,952)
   Deferred compensation                                        (1,957)         (2,632)
   Accumulated other comprehensive loss                           (379)            (28)
                                                          -------------   -------------
      Total stockholders' equity                                80,132         113,646
                                                          -------------   -------------
                                                              $101,729        $117,962
                                                          =============   =============
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.

                                                                             3

<PAGE>

Part 1- Item 1- Condensed Consolidated Financial Statements


                          Transkaryotic Therapies, Inc.
              Condensed Consolidated Statements of Operations
                                  (unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share amounts)      Three Months Ended          Nine Months Ended
                                                 September 30,               September 30,
                                              1999          1998          1999          1998
                                          ------------  ------------  ------------  ------------
<S>                                       <C>           <C>           <C>           <C>
License and research revenues                $    649       $ 4,750      $  1,370      $  5,325
Operating expenses:
   Research and development                    11,753         6,394        32,787        17,422
   General and administrative                   2,836         1,801         7,034         4,987
                                          ------------  ------------  ------------  ------------
                                               14,589         8,195        39,821        22,409
                                          ------------  ------------  ------------  ------------
Loss from operations                          (13,940)       (3,445)      (38,451)      (17,084)
Interest income                                 1,070         1,663         3,606         5,199
                                          ------------  ------------  ------------  ------------
Net loss                                     $(12,870)      $(1,782)     $(34,845)     $(11,885)
                                          ============  ============  ============  ============
Basic and diluted net loss per share           $(0.67)       $(0.09)       $(1.82)       $(0.62)
                                          ============  ============  ============  ============
Shares used to compute basic and diluted
   net loss per share                          19,241        19,074        19,198        19,032
                                          ============  ============  ============  ============
</TABLE>
   See accompanying Notes to Condensed Consolidated Financial Statements.

                                                                             4

<PAGE>

Part 1- Item 1- Condensed Consolidated Financial Statements


                         Transkaryotic Therapies, Inc.
               Condensed Consolidated Statements of Cash Flows
                               (unaudited)

<TABLE>
<CAPTION>
(in thousands)                                    Nine Months Ended
                                                     September 30,
                                                1999            1998
                                             -----------    -----------
<S>                                          <C>            <C>
OPERATING ACTIVITIES:
Net loss                                       $(34,845)      $(11,885)
Adjustments to reconcile net loss to net
   cash provided by operating activities:
      Depreciation and amortization               1,468          1,629
      Compensation expense related to
         equity issuances                           747            847
Changes in operating assets and liabilities       5,675           (959)
                                             -----------    -----------
Net cash used for operating activities          (26,955)       (10,368)
                                             -----------    -----------
INVESTING ACTIVITIES:
Proceeds from sales of marketable securities     82,383         91,080
Purchases of marketable securities              (63,351)       (70,911)
Purchases of property and equipment             (15,214)        (1,849)
Changes in other assets and liabilities             (38)           (34)
                                             -----------    -----------
Net cash provided by investing activities         3,780         18,286
                                             -----------    -----------
FINANCING ACTIVITIES:
Proceeds from long-term debt financing           12,331              -
Proceeds from exercise of options and
warrants                                            935            623
                                             -----------    -----------
Net cash provided by financing activities        13,266            623
Net increase (decrease) in cash and cash         (9,909)         8,541
equivalents
Cash and cash equivalents at January 1           31,760         23,922
                                             -----------    -----------
Cash and cash equivalents at September 30      $ 21,851       $ 32,463
                                             ===========    ===========
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                                                             5

<PAGE>

PART I - Item 1 - Condensed Consolidated Financial Statements

                          Transkaryotic Therapies, Inc.
        Notes to Condensed Consolidated Financial Statements (unaudited)
                           September 30, 1999 and 1998

1.       NATURE OF BUSINESS AND BASIS OF PRESENTATION

         Transkaryotic Therapies, Inc. ("TKT" or the "Company") is a
biopharmaceutical company building a broad and renewable product pipeline
based on three proprietary development platforms: Gene Activated-TM- proteins,
Niche Protein-TM- products, and Gene Therapy.

         The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, the accompanying financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial condition, results of operations, and cash
flows for the periods presented. The results of operations for the interim
period ended September 30, 1999 are not necessarily indicative of the results
to be expected for the year ending December 31, 1999.

         These financial statements should be read in conjunction with the
audited financial statements and notes thereto for the year ended December
31, 1998 included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission.

2.       BASIC AND DILUTED NET LOSS PER SHARE

         Basic and diluted net loss per share is calculated under Statement
of Financial Accounting Standard ("SFAS") No. 128, "Earnings per Share".
Basic earnings per share is calculated by dividing income available to common
stockholders by the weighted average common shares outstanding. Diluted
earnings per share is calculated by dividing net income by the sum of
weighted average common shares outstanding during the period plus common
stock equivalents. Common stock equivalents are shares assumed to be issued
if outstanding stock options and warrants were exercised. Basic net loss per
share was the same as diluted net loss per share during each of the three and
nine months ended September 30, 1999 and 1998 since common equivalent shares
from stock options and warrants have been excluded as their effect is
antidilutive.

                                                                             6

<PAGE>

3.       COMPREHENSIVE INCOME

         As of January 1, 1998 the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes new rules for the reporting
and display of comprehensive income and its components, including the
requirement that unrealized gains or losses on the Company's
available-for-sale securities, which prior to adoption were reported
separately in stockholders' equity, be included in other comprehensive
income. The adoption of SFAS No. 130 had no impact on the Company's net loss
or stockholders' equity.

         The Company had total comprehensive loss of $12,968,000 and
$1,606,000 for the three months ended September 30, 1999 and 1998,
respectively. For the nine months ended September 30, 1999 and 1998, total
comprehensive loss was $35,196,000 and $11,713,000, respectively.

4.       LEGAL PROCEEDINGS

         In April 1997, Amgen Inc. filed a civil action in the U.S. District
Court for the District of Massachusetts against the Company and Hoechst
Marion Roussel, Inc. ("HMRI"), the Company's collaborative partner. The
complaint in the action alleged that Gene Activated erythropoietin
("GA-EPO-TM-") and processes for producing GA-EPO infringe certain of Amgen's
U.S. patents and requests that TKT and HMRI be enjoined from making, using,
or selling GA-EPO and that the Court award Amgen monetary damages.

         In April 1998, the District Court granted TKT and HMRI's Motion for
Summary Judgment of Non-Infringement and denied Amgen's Motion for Summary
Judgment of Infringement on the ground that all of TKT and HMRI's GA-EPO
related activities through that date had been conducted solely for uses
reasonably related to the production of information for submission to the
U.S. Food and Drug Administration (the "FDA") as part of seeking regulatory
approval to market GA-EPO. According to the District Court, under the
Waxman-Hatch Act, such activities are not acts of patent infringement. The
Court did not address the issue of whether TKT and HMRI's activities that
were challenged by Amgen would infringe Amgen's patents in the future. The
District Court ordered Amgen's remaining claim for declaratory judgment of
future infringement administratively closed, to be reopened upon motion of
either party for good cause shown. The court also stated that issuance by the
FDA of a product license presumably would constitute good cause to reopen the
claim.

         In June 1999, the Company and HMRI filed a motion to reopen the
case, which the Court granted. The District Court scheduled the trial to
commence in April 2000. In addition, in July 1999, the Company commenced
legal proceedings against Kirin-Amgen, Inc., a joint venture of Amgen and
Kirin Brewery Co., Ltd., in the U.K. seeking a declaration that a U.K. patent
held by Kirin-Amgen will not be infringed by the sale of GA-EPO and that
numerous

                                                                             7

<PAGE>


claims of Kirin-Amgen's U.K. patent are invalid.  The trial is scheduled to
commence in November 2000.

         In September 1999, the Court in the Massachusetts proceeding granted
Amgen's motion to amend its complaint to include two additional patents that
issued in May 1998 and September 1999, respectively.

         In November 1999, Amgen filed a motion for Summary Judgement of
Infringement in the District Court. The motion asserts that GA-EPO and the
process for producing GA-EPO infringe a total of six claims in Amgen's U.S.
patents. It requests that the District Court grant a summary judgement of
infringement with respect to those claims.

         The Company can provide no assurance as to the outcome of either the
U.S. or U.K. proceedings. A decision by a court in Amgen's or Kirin-Amgen's
favor, including the issuance of an injunction against the making, using or
selling of GA-EPO by the Company and HMRI in the U.S. or U.K., or any other
conclusion of either litigation in a manner adverse to the Company and HMRI,
would have a material adverse effect on the Company's business, financial
condition, and results of operations.

         Pursuant to the Amended and Restated License Agreement, dated March
1995, by and between HMRI and the Company, HMRI assumed the cost of defense
of the Amgen and Kirin-Amgen litigations. The Company is required to
reimburse HMRI for its share of litigation expenses, as defined, from future
royalties, if any, otherwise payable by HMRI as to the sale of GA-EPO and in
certain other circumstances.

4.       SUBSEQUENT EVENT

         On November 2, 1999 the Company issued 3,300,000 shares of its
common stock to qualified institutional buyers and other accredited investors
for $40.00 per share, representing aggregate proceed to the Company of
$132,000,000 before deducting offering expenses. Net proceeds amounted to
approximately $125,000,000. The Company intends to use the net proceeds of
this offering for the establishment of sales and marketing capabilities for
its Niche Protein products, the funding of preclinical testing, clinical
trials and other research and development programs, and for working capital
and other general corporate purposes.

                                                                             8

<PAGE>

PART I - Financial Information

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

OVERVIEW

         Since its inception in 1988, Transkaryotic Therapies, Inc. ( "TKT"
or the "Company") has been primarily engaged in the development of products
based on the Company's three proprietary development platforms:
Gene-Activated-TM- proteins, Niche Protein-TM- products, and Gene Therapy.
The Company has not derived revenues from the sale of products, and the
Company does not expect to receive revenues from product sales until 2000, at
the earliest. The Company expects that its research and development
expenditures will increase substantially in future years as product
development efforts accelerate. The Company also expects that its sales and
marketing expenditures will increase substantially in connection with the
establishment of sales and marketing capabilities related to the Company's
Niche Protein products. Finally, the Company's facility costs will increase
as its scale of operations increases.

         With the exception of 1995, the Company has incurred substantial
annual operating losses since inception and expects to incur substantial
operating losses in the future. At September 30, 1999, the Company's
accumulated deficit was $104,797,000. As a result, the Company is dependent
upon existing cash resources, interest income, and external financing from
equity offerings, debt financings, and collaborative research and development
arrangements with corporate sponsors to finance its operations.

         Results of operations may vary significantly from period to period
depending on, among other factors, the progress of the Company's research and
development efforts, the outcome of patent litigation and other patent
proceedings, the receipt, if any, of additional license fees and milestone
payments, the timing of certain expenses, and the establishment of additional
collaborative agreements.

         The following discussion of the financial condition and results of
operation of the Company should be read in conjunction with the accompanying
condensed consolidated financial statements and the related footnotes thereto.

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

         License and research revenues totaled $649,000 and $4,750,000 for the
three months ended September 30, 1999 and 1998, respectively. Revenues in the
third quarter of 1999 were earned from collaborative agreements with Sumitomo
Pharmaceuticals Co., Ltd. ("Sumitomo") and HMRI. Revenues in the same period in
1998 included a $2,500,000 milestone payment

                                                                             9

<PAGE>

relating to the initiation of the Phase III clinical program for GA-EPO and a
$2,000,000 non-refundable up front payment from Sumitomo relating to the
development and commercialization of the Company's alpha-galactosidase A
(alpha-gal) product for Fabry disease in Japan and other Asian countries.

         Research and development expenses totaled $11,753,000 in the third
quarter of 1999, as compared to $6,394,000 during the same period in 1998.
The increase in 1999 of $5,359,000, or 84%, was principally due to an
increase in research and development staff, clinical trial expenses, and
external development costs for the Company's programs. The Company expects
research and development expenses to continue to increase during the
remainder of 1999.

         General and administrative expenses were $2,836,000 in the quarter
ended September 30, 1999, compared with $1,801,000 during the same period in
1998. The increase in 1999 of $1,035,000, or 57%, represents principally
personnel and costs expended in connection with the establishment of sales
and marketing capabilities related to the Company's Niche Protein products.
During the remainder of 1999, the Company expects that its general and
administrative costs will continue to increase over the prior year as it
continues to build such capabilities.

         Interest income was $1,070,000 and $1,663,000 for the three months
ended September 30, 1999 and 1998, respectively. The average cash and
marketable securities balances were $84,966,000 and $119,135,000 in the three
months ended September 30, 1999 and 1998, respectively. The decrease in
interest income of $593,000 was primarily attributable to lower average cash
and marketable securities balances, as well as lower interest rates in 1999.

         The Company had a net loss of $12,870,000 and $1,782,000 for the
three months ended September 30, 1999 and 1998, respectively. Basic and
diluted net loss per share was $0.67 for the three months ended September 30,
1999, as compared to a basic and diluted net loss per share of $0.09 for the
corresponding period in 1998.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

         License and research revenues totaled $1,370,000 and $5,325,000 for
the nine months ended September 30, 1999 and 1998, respectively. Revenues in
the first nine months of 1999 were earned from collaborative agreements with
Sumitomo and HMRI. Revenues in the first nine months of 1998 included a
$2,500,000 milestone payment relating to the initiation of the Phase III
clinical program for GA-EPO and a $2,000,000 non-refundable up front payment
from Sumitomo relating to the development and commercialization of the
Company's alpha-gal product for Fabry disease in Japan and other Asian
countries.

         Research and development expenses totaled $32,787,000 in the first
nine months of 1999, as compared $17,422,000 during the same period in 1998.
The increase in 1999 of $15,365,000, or 88%, was principally due to an
increase in research and development staff, clinical trial expenses and
external development costs. The Company expects research and development
expenses will continue to increase for the remainder of 1999.

                                                                            10

<PAGE>

         General and administrative expenses were $7,034,000 in the nine
months ended September 30, 1999, compared with $4,987,000 during the same
period in 1998. The increase in 1999 of $2,047,000, or 41%, principally
represents costs expended in connection with the establishment of sales and
marketing capabilities related to the Company's Niche Protein products.
During the remainder of 1999, the Company expects that its general and
administrative costs will continue to increase over the prior year as it
continues to build such sales and marketing capabilities.

         Interest income was $3,606,000 and $5,199,000 for the nine months
ended September 30, 1999 and 1998, respectively. The average cash and
marketable securities balances were $95,404,000 and $122,844,000 in the nine
months ended September 30, 1999 and 1998, respectively. The decrease in
interest income of $1,593,000 was primarily attributable to lower average
balances and lower interest rates in the respective nine month periods.

         The Company had a net loss of $34,845,000 and $11,885,000 for the
nine months ended September 30, 1999 and 1998, respectively. Basic and
diluted net loss per share was $1.82 for the nine months ended September 30,
1999, as compared to a basic and diluted net loss per share of $0.62 for the
corresponding period in 1998.

LIQUIDITY AND SOURCES OF CAPITAL

         Since its inception, the Company has financed its operations
primarily through the sale of common and preferred stock, revenues from
collaborative agreements, and interest income.

         The Company had unrestricted cash, cash equivalents, and marketable
securities totaling $80,863,000 at September 30, 1999. Cash equivalents and
marketable securities are invested in U.S. Treasury notes, agencies of the
U.S. government, and money market funds.

         On November 2, 1999 the Company issued 3,300,000 shares of its
common stock to qualified institutional buyers and other accredited investors
resulting in aggregate proceeds to the Company of $132,000,000. Net proceeds
amounted to approximately $125,000,000.

         The Company leased additional facilities in 1998. Equipment and
improvements to the space are estimated to cost approximately $14,000,000. In
December 1998, the Company obtained an unsecured term loan facility for up to
$14,000,000 to finance the capital costs related to the leased space. The
loan is payable beginning in December 1999 on the basis of a seven year
amortization schedule over a five year period, with a final payment for any
remaining amount in September 2004. The loan bears interest at either the
prime rate or LIBOR plus 1.50% at the Company's election. An election is made
at the time of each drawdown. The weighted average interest rate of the loan
was 7.4% as of September 30, 1999. The note contains certain restrictive
covenants, including, among other things, minimum cash and tangible net asset
requirements and a prohibition on the payment of dividends. At September 30,
1999, $12,331,000 was outstanding under the term loan.

                                                                            11

<PAGE>

         The Company may require space in addition to that referenced in the
prior paragraph to meet its needs beginning in 2001. The Company currently
expects to meet any additional facilities requirements through development of
a new facility or conversion of an existing building. The Company intends to
seek financing for all or a significant portion of the cost of any additional
facilities. There can be no guarantee that financing will be available on
favorable terms, if at all.

         Substantial additional funds will be required to support the
Company's research and development programs, for acquisition of technologies,
for preclinical and clinical testing of its products, pursuit of regulatory
approvals, acquisition of capital equipment, expansion of laboratory and
office facilities, establishment of manufacturing capabilities, establishment
of sales and marketing capabilities, and for general and administrative
expenses. The Company has no material committed external sources of capital
and, as discussed above, does not anticipate product revenues until 2000, at
the earliest. As a result, the Company will need to fund its operations with
its existing cash resources, interest income, and proceeds from equity
offerings, debt financings, and funding from collaborative arrangements.

         The Company expects to pursue opportunities to obtain additional
financing in the future through equity offerings, debt financings, lease
arrangements related to facilities and capital equipment, and collaborative
research agreements. The source, timing, and availability of any future
financing will depend principally upon equity and debt market conditions,
interest rates, and, more specifically, on the Company's continued progress
in its exploratory, preclinical, and clinical development programs. There can
be no assurance that such funds will be available on favorable terms, if at
all.

         The Company expects that its existing capital resources, together
with revenues from collaborative agreements and interest income, will be
sufficient to fund its operations into 2002. The Company's cash requirements
may vary, however, depending on numerous factors. Lack of necessary funds may
require the Company to delay, scale back, or eliminate some or all of its
research and product development programs or to license its potential
products or technologies to third parties.

         The Company is engaged in litigation with Amgen Inc. with respect to
the development of GA-EPO. See Note 4 to Notes to Condensed Consolidated
Financial Statements. Pursuant to TKT's agreements with HMRI, HMRI has
assumed the cost of the litigation. The Company is required to reimburse HMRI
for the Company's share of litigation expenses from future royalties, if any,
otherwise payable by HMRI as to the sale of GA-EPO and in certain other
circumstances.

         At December 31, 1998, the Company had net operating loss carryforwards
of approximately $62,700,000, which expire at various times through 2013. Due to
the degree of uncertainty related to the ultimate use of loss carryforwards and
tax credits, the Company has fully reserved against any potential tax benefit.
The future utilization of net operating loss

                                                                            12

<PAGE>

carryforwards and tax credits may be subject to limitation under the changes
in stock ownership rules of the Internal Revenue Code. Because of this
limitation, it is possible that taxable income in future years, which would
otherwise be offset by net operating losses, will not be offset and,
therefore, will be subject to tax.

YEAR 2000

         The Year 2000 issue results from computer programs and systems that
were created to accept only two digit dates. As a result, computer programs
are unable to differentiate between the year 1900 and the year 2000. This
could result in miscalculations and system failures.

         The Company has established a multidisciplinary Year 2000 project
committee. The committee has assessed the Company's software, hardware,
communications systems, applications, and networks, as well as other date
sensitive equipment. Mission critical systems such as the accounting system
have been found compliant or have been upgraded. The remaining systems are
currently being tested to identify those systems which would be affected by
Year 2000 non-compliance. In most cases, vendors have offered free upgrades
or the systems were already scheduled for upgrade. Therefore, the cost for
obtaining Year 2000 compliance is expected to be minimal for internal
systems. The Company believes its internal systems will not pose significant
operating issues for the Company as a result of the Year 2000.

         In addition to the Company's internal risks, the Company is
dependent upon a number of third parties that provide information, goods and
services to the Company. These include financial institutions, suppliers,
service providers, and research partners. If these third parties experience
failures in their computer systems or equipment due to Year 2000
non-compliance, it could seriously affect the Company's business operations.
The Company has contacted its significant external business partners to
determine the extent to which the Company is vulnerable to their failure. The
Company is reviewing the responses and expects that all necessary contingency
plans will be completed in the fourth quarter.

           If third party providers are not able to supply the Company, the
Company could experience delays in its research and development including
delays in clinical trial development or the submission of products for
regulatory approval. As a contingency plan, the Company expects to identify,
if available, a secondary source for critical third party providers. The
Company has not yet incurred significant cost to address the Year 2000 issue.
While the total cost of obtaining Year 2000 compliance is not known at this
time, the Company believes the cost will not be material.

FORWARD-LOOKING STATEMENTS

          This document contains forward-looking statements that involve a
number of risks and uncertainties. For this purpose, any statements contained
herein that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," "intends," and similar
expressions are

                                                                            13

<PAGE>

intended to identify forward-looking statements. Important factors that could
cause actual results to differ materially from the expectations described in
these forward-looking statements are set forth in Exhibit 99.1 to this
Quarterly Report on Form 10-Q and incorporated herein by reference. These
important factors include risks as to whether TKT's products will advance in
the clinical trials process, the timing of such clinical trials, whether the
clinical trial results will warrant continued product development, and
whether the Company's products will receive approval from the U.S. Food and
Drug Administration or equivalent regulatory agencies, and, if such products
receive approval, whether they will be successfully marketed.

Item 3.       Quantitative and Qualitative  Disclosures about Market Risk

                  The Company does not believe that there is any material
market risk exposure with respect to derivative or other financial
instruments that would require disclosure under this item.

                                                                            14

<PAGE>

PART II - Other Information

Item 1.  Legal Proceedings

                  The Company is engaged in litigation with Amgen Inc. and
         Kirin-Amgen, Inc. with respect to the development of GA-EPO.  See
         Note 4 to Notes to Condensed Consolidated Financial Statements,
         which is incorporated by reference herein.

Item 2. Changes in Securities and Use of Proceeds

                  On November 2, 1999, TKT issued 3,300,000 shares of its common
         stock to qualified institutional buyers and other accredited investors
         for $40.00 per share, representing aggregate proceeds to the Company of
         $132,000,000 before deducting offering expenses. Net proceeds amounted
         to approximately $125,000,000. The shares of common stock were issued
         without registration under the Securities Act of 1933, as amended (the
         "Securities Act") pursuant to an exemption from registration under
         Section 4 (2) of the Securities Act and Rule 506 of Regulation D
         thereunder. The Company filed a registration statement with the
         Securities and Exchange Commission and the shares are now available for
         resale.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  The Exhibits filed as part of this Form 10-Q are listed on the
         Exhibit Index immediately preceding such Exhibits, which Exhibit Index
         is incorporated herein by reference.


         (b)      Reports on Form 8-K

                   Current report on Form 8-K dated November 2, 1999.



                                                                            15

<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.

                                       TRANSKARYOTIC THERAPIES, INC.



Date:  November 15, 1999               By:    /s/  DANIEL E. GEFFKEN
                                              ---------------------------------
                                              Daniel E. Geffken
                                              Vice President, Finance and
                                              Chief Financial Officer (Principal
                                              Financial and Accounting Officer)

                                                                            16

<PAGE>

                          Transkaryotic Therapies, Inc.




                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
       Exhibit No.             Description
       -----------             -----------
       <S>                     <C>
                27             Financial Data Schedule (for EDGAR filing
                                     purposes only)

              99.1             Certain Factors That May Affect Future Results
</TABLE>

                                                                            17