<PAGE>   1

================================================================================

                       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 JUNE 30, 1997


                         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 August 1, 1997, there were 18,395,854 shares of Common Stock, $.01 par
value, issued and outstanding. There were no issued and outstanding shares of
Preferred Stock.

================================================================================




<PAGE>   2



                          Transkaryotic Therapies, Inc.





                                      INDEX
                                      -----


                                                                     Page Number
                                                                     -----------
PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements (unaudited)

         Condensed Balance Sheets as of June 30, 1997 and 
         December 31, 1996                                                     3

         Condensed Statements of Operations for the Three and Six 
         Months Ended June 30, 1997 and 1996                                   4

         Condensed Statements of Cash Flows for the Three and Six 
         Months Ended June 30, 1997 and 1996                                   5

         Notes to Condensed Financial Statements                             6-7

Item 2.  Management's Discussion and Analysis of Financial 
         Condition and Results of Operations                                8-11

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                    12

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

Item 6.  Exhibits and Reports on Form 8-K                                     12

SIGNATURES                                                                    13

EXHIBIT INDEX                                                                 14





                                                                               2
<PAGE>   3


PART I - Item 1 - Condensed Financial Statements

                          Transkaryotic Therapies, Inc.

<TABLE>
                                              Condensed Balance Sheet
                                                    (unaudited)
<CAPTION>


                                                                                  June 30,            December 31,
                                                                                    1997                  1996
                                                                                ------------          ------------
<S>                                                                             <C>                   <C>         
ASSETS
Current assets:
   Cash and cash equivalents                                                    $ 16,166,703          $ 10,414,412
   Marketable securities                                                          68,271,572            75,840,830
   Prepaid expenses and other current assets                                         474,897               817,812
                                                                                ------------          ------------
      Total current assets                                                        84,913,172            87,073,054
Property and equipment, net                                                        3,104,534             3,237,402
Other assets                                                                         670,769               687,969
                                                                                ------------          ------------
                                                                                $ 88,688,475          $ 90,998,425
                                                                                ============          ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                             $    719,667          $    612,026
   Accrued expenses                                                                1,149,147               651,944
                                                                                ------------          ------------
      Total current liabilities                                                    1,868,814             1,263,970
Other long-term liabilities                                                           59,733                89,600
Stockholders' equity:
   Preferred stock, $1.00 par value, 10,000,000 shares authorized:
      no shares issued and outstanding                                                     -                     -
   Common stock, $.01 par value;  30,000,000 shares authorized;
      16,684,458 shares issued and outstanding at June 30, 1997
      (16,614,273 at December 31, 1996)                                              166,845               166,143
   Additional paid-in capital                                                    131,274,323           131,795,736
   Accumulated deficit                                                           (40,582,668)          (37,115,670)
   Deferred compensation                                                          (4,138,894)           (5,217,604)
   Unrealized gain on marketable securities                                           40,322                16,250
                                                                                ------------          ------------
      Total stockholders' equity                                                  86,759,928            89,644,855
                                                                                ------------          ------------
                                                                                $ 88,688,475          $ 90,998,425
                                                                                ============          ============
</TABLE>


           See accompanying Notes to Condensed Financial Statements.

                                                                               3

<PAGE>   4

PART I - Item 1 - Condensed Financial Statements

                          Transkaryotic Therapies, Inc.

<TABLE>
                                         Condensed Statements of Operations
                                                    (unaudited)
<CAPTION>



                                                          Three Months Ended June 30,           Six Months Ended June 30,
                                                            1997              1996               1997               1996
                                                        -----------       ------------       ------------       ------------

<S>                                                     <C>               <C>                <C>                <C>         
License and research revenues                           $ 4,912,500       $    137,500       $  5,212,500       $  1,975,000

Operating expenses:
   Research and development                               4,192,053          4,074,414          8,024,547          6,979,315
   General and administrative                             1,505,943          1,006,158          2,907,571          1,771,154
                                                        -----------       ------------       ------------       ------------
                                                          5,697,996          5,080,572         10,932,118          8,750,469
                                                        -----------       ------------       ------------       ------------

Loss from operations                                       (785,496)        (4,943,072)        (5,719,618)        (6,775,469)

Interest income                                           1,111,952            325,351          2,252,620            788,125
                                                        -----------       ------------       ------------       ------------

Net income (loss)                                       $   326,456       $ (4,617,721)      $ (3,466,998)      $ (5,987,344)
                                                        ===========       ============       ============       ============

Net income (loss) per share (pro forma in 1996)         $      0.02       $      (0.32)      $      (0.21)      $      (0.42)
                                                        ===========       ============       ============       ============

Shares used to compute net income (loss) per
    share (pro forma in 1996)                            17,965,301         14,255,369         16,653,916         14,255,336
                                                        ===========       ============       ============       ============
</TABLE>


           See accompanying Notes to Condensed Financial Statements.


                                                                               4


<PAGE>   5

PART I - Item 1 - Condensed Financial Statements

                          Transkaryotic Therapies, Inc.

<TABLE>

                                         Condensed Statements of Cash Flows
                                                    (unaudited)
<CAPTION>

                                                                       Six Months Ended June 30,
                                                                   1997                        1996
                                                               ------------                ------------

<S>                                                            <C>                         <C>          
OPERATING ACTIVITIES:
Net loss                                                       $ (3,466,998)               $ (5,987,344)
Adjustments to reconcile net loss to net
   cash used for operating activities:
      Depreciation and amortization                                 810,408                     789,401
      Compensation expense related to
         equity issuances                                           566,644                     480,726
Changes in operating assets and liabilities                         917,892                    (188,856)
                                                               ------------                ------------

Net cash used for operating activities                           (1,172,054)                 (4,906,073)
                                                               ------------                ------------

INVESTING ACTIVITIES:
Proceeds from sales of marketable securities                     35,163,779                  27,033,777
Purchases of marketable securities                              (27,570,449)                (15,106,279)
Purchase of property and equipment                                 (656,842)                   (526,889)
Changes in other assets                                               3,500                    (235,608)
                                                               ------------                ------------

Net cash provided by investing activities                         6,939,988                  11,165,001
                                                               ------------                ------------

FINANCING ACTIVITIES:
Repurchase of common stock                                          (15,643)                          -
                                                               ------------                ------------

Net increase in cash and cash equivalents                         5,752,291                   6,258,928

Cash and cash equivalents at January 1                           10,414,412                  11,539,531
                                                               ------------                ------------

Cash and cash equivalents at June 30                           $ 16,166,703                $ 17,798,459
                                                               ============                ============
</TABLE>


           See accompanying Notes to Condensed Financial Statements.


                                                                               5



<PAGE>   6



PART I - Item 1 - Condensed Financial Statements

                          Transkaryotic Therapies, Inc.

               Notes to Condensed Financial Statements (unaudited)
                             June 30, 1997 and 1996

1.       BASIS OF PRESENTATION

         The accompanying unaudited condensed 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 of normal recurring accruals,
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 June 30, 1997 are not necessarily indicative of the
results to be expected for the year ended December 31, 1997.

         These financial statements should be read in conjunction with the
audited financial statements and notes thereto for the year ended December 31,
1996 included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission.

         Certain reclassifications have been made to the 1996 financial
statements to conform to the 1997 presentation.


2.       NET INCOME (LOSS) PER SHARE

         For the quarter ended June 30, 1997, net income per share is computed
using the weighted average number of shares of common stock and common
equivalent shares from stock options and warrants outstanding. For 1996 and the
six months ended June 30, 1997, common equivalent shares are excluded as their
effect is antidilutive. For the three and six months ended June 30, 1996, the
weighted average number of shares also includes the common stock equivalents for
convertible preferred shares, assuming conversion at date of issuance, which
occurred upon the completion of the Company's initial public offering in October
1996. Pursuant to the requirements of the Securities and Exchange Commission,
shares and equivalent shares issued by the Company during the twelve-month
period prior to the public offering have been included in the calculations as if
they were outstanding for all periods prior to the initial public offering
whether or not they are anti-dilutive, using the treasury stock method.

         Fully diluted earnings per share have not been presented as it does not
differ materially from primary earnings per share.




                                                                               6
<PAGE>   7



         In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share", which
is required to be adopted on December 31, 1997. At that time, the Company will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
basic earnings per share, the dilutive effect of stock options will be excluded.
The impact is not expected to result in a change in basic earnings (loss) per
share for the three and six months ended June 30, 1997 or in the pro forma
basic loss per share for the three and six months ended June 30, 1996. The
impact of Statement 128 on the calculation of fully diluted earnings per share
for these three and six month periods is not expected to be material.

3.       LEGAL PROCEEDINGS

         In April 1997, Amgen Inc. filed a civil action in the U.S. District
Court in Massachusetts against the Company and Hoechst Marion Roussel, Inc.
("HMRI"), its collaborative partner. The complaint in the action alleges that
GA-EPO and processes for producing GA-EPO infringe three Amgen 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 May 1997, TKT and HMRI filed a
"Motion To Dismiss, Or, In The Alternative, For Summary Judgment" stating that
under 35 U.S.C. sec. 271(e)(1), TKT's and HMRI's activities do not constitute
infringement and further stating that "(n)either the product created by TKT nor
the process used by TKT and HMR infringes any valid claim of any of the Amgen
patents in suit." In July 1997, the court denied TKT's and HMRI's motion and
stated that the motion should instead be filed as a Motion for Summary Judgment.

         Pursuant to the Amended and Restated License Agreement, dated March 1,
1995, by and between HMRI and TKT, HMRI has assumed the cost of defense of the
suit by Amgen. TKT will reimburse HMRI for its share of litigation expenses, as
defined, from future royalties received from the sale of GA-EPO. The Company and
HMRI believe that they have substantial defenses to the allegations in the
complaint and expect that their position will be thoroughly vindicated in court.

         The Company can provide no assurance as to the outcome of this
litigation. A decision by the court in Amgen's favor, including the issuance of
an injunction against the manufacture and sale of GA-EPO by the Company and HMRI
in the United States, or any other conclusion of this litigation in a manner
adverse to the Company and HMRI, could have a material adverse effect on the
Company's business, financial condition and results of operations.

4.       SUBSEQUENT EVENT

         On August 4, 1997, the Company completed a directed public offering of
1,700,000 shares of common stock to a small number of accredited institutional
investors, resulting in net proceeds of approximately $53,000,000.







                                                                               7
<PAGE>   8



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. (the
"Company") has been primarily engaged in the development and commercialization
of products based on the Company's proprietary Gene Activation and gene therapy
technologies. No revenues have been derived from the sale of any products, and
the Company does not expect to receive revenues from product sales for a number
of years. The Company expects that its research and development expenditures
will increase substantially in future years as research and product development
efforts accelerate and clinical trials are broadened or initiated. 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 June 30, 1997, the Company's accumulated deficit was $40,583,000. As a
result, the Company is dependent upon existing cash resources, external
financing from equity and debt offerings or 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 receipt, if any, of additional license fees and
milestone payments, the timing of certain expenses, and the establishment of
additional collaborative research agreements.

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

RESULTS OF OPERATIONS

         For the Three Months Ended June 30, 1997 and 1996
         -------------------------------------------------

         License and research revenues totaled $4,913,000 and $138,000 for the
three months ended June 30, 1997 and 1996, respectively. All revenues were
earned from two collaborative agreements with Hoechst Marion Roussel, Inc.
("HMRI"). The increase of $4,775,000 in 1997 is principally due to $4,500,000
received upon the achievement of certain development milestones relating to the
Company's two Gene Activation collaborations with HMRI.

         Research and development expenses totaled $4,192,000 in the second
quarter of 1997, as compared to $4,074,000 during the same period in 1996. The
increase in 1997 of $118,000, or 3%, was principally due to increases in
research and development staff, an increase in facilities costs for additional
leased space, offset, in part, by decreases in consulting and outside research
costs.





                                                                               8
<PAGE>   9



         General and administrative expenses were $1,506,000 in the three months
ended June 30, 1997, compared with $1,006,000 during the same period in 1996.
The increase in 1997 of $500,000, or 50%, is principally due to increases in
administrative employee costs, including several additions in administrative
personnel, and outside professional service fees related to costs associated
with being a public company.

         Interest income was $1,112,000 and $325,000 for the three months ended
June 30, 1997 and 1996, respectively. The average cash and marketable securities
balances were $83,679,000 and $30,857,000 in 1997 and 1996, respectively. The
increase in interest income of $787,000, or 242%, is primarily attributable to
higher average balances in the respective three month periods.

         The Company had net income of $326,000 for the three months ended June
30, 1997 and a net loss of $4,618,000 for the comparable period in 1996. While
profitable for the three months ended June 30, 1997, the Company does not expect
to be profitable in subsequent quarters of 1997 or for the year ended December
31, 1997. Earnings per share was $0.02 for the quarter ended June 30, 1997, as
compared to a pro forma loss per share of $0.32 in 1996. Weighted average common
and common equivalent shares outstanding were 17,965,000 for the first quarter
of 1997, as compared to 14,255,000 in 1996. The increase in 1997 is due to the
issuance of 2,500,000 shares of common stock in the Company's initial public
offering in October 1996, as well as the dilutive effect of stock options and
warrants. In 1996, common equivalent shares are ignored as their effect is
anti-dilutive.

         For the Six Months Ended June 30, 1997 and 1996
         -----------------------------------------------

         License and research revenues totaled $5,213,000 and $1,975,000 for the
six months ended June 30, 1997 and 1996, respectively. All revenues were earned
from two collaborative agreements with HMRI. The increase of $3,238,000 in 1997
is principally due to $4,500,000 in milestones payments from HMRI. In 1996, the
Company received $1,975,000 in research funding from HMRI, as compared to
$713,000 in 1997.

         Research and development expenses totaled $8,025,000 in the first six
months of 1997, as compared to $6,979,000 during the same period in 1996. The
increase in 1997 of $1,045,000, or 15%, was principally due to an increase in
research and development staff, an increase in facilities costs for additional
leased space and increases in consulting and outside research contract costs.



                                                                               9
<PAGE>   10



         General and administrative expenses were $2,908,000 in the six months
ended June 30, 1997, compared with $1,771,000 during the same period in 1996.
The increase in 1997 of $1,136,000, or 64%, is principally due to increases in
administrative employee costs, including several additions in administrative
personnel, and outside professional service fees related to costs associated
with being a public company.

         Interest income was $2,253,000 and $788,000 for the six months ended
June 30, 1997 and 1996, respectively. The average cash and marketable securities
balances were $85,347,000 and $31,629,000 in 1997 and 1996, respectively. The
increase in interest income of $1,464,000, or 186%, is primarily attributable to
higher average balances in the respective six month periods.

         The Company had a net loss of $3,467,000 and $5,987,000 for the six
months ended June 30, 1997 and 1996, respectively. Loss per share was $0.21 for
the six months ended June 30, 1997, as compared to a pro forma net loss per
share of $0.42 for the corresponding period in 1996. Weighted average common
shares and pro forma common shares outstanding were 16,654,000 and 14,255,000
respectively, in 1997 and 1996. The increase in 1997 is related principally to
the Company's initial public offering 2,500,000 shares of common stock in
October 1996.

LIQUIDITY AND SOURCES OF CAPITAL

         Since its inception, the Company has financed its operations 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 $84,438,000 at June 30, 1997. Cash equivalents and
marketable securities are invested principally in U.S. Treasury notes, agencies
of the U.S. government and money market funds.

         Substantial additional funds will be required to support the Company's
research and development programs, for acquisition of technologies and
intellectual property rights, for preclinical and clinical testing of its
products, pursuit of regulatory approvals, acquisition of capital equipment,
expansion of laboratory and office facilities, establishment of production
capabilities and for general and administrative expenses. Until the Company's
operations generate significant revenues from product sales, cash reserves and
proceeds from equity and debt offerings and funding from collaborative
arrangements will be used to fund operations.

         The Company expects to pursue opportunities to obtain additional
financing in the future through equity and debt financings, lease arrangements
related to capital equipment and collaborative research agreements. The source,
timing and availability of any future financing will depend principally upon
equity 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.


                                                                              10






<PAGE>   11



         In August 1997, the Company completed a direct sale of 1,700,000 
shares of common stock resulting in net proceeds of approximately $53,000,000.
The Company expects that its existing capital resources, together with revenues
from collaborative agreements and interest income, will be sufficient to fund
its operations through 2001. 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 3 to Notes to Condensed Financial
Statements, which is incorporated by reference herein.

FORWARD LOOKING STATEMENTS

         Statements that are not historical facts, including statements about
the Company's confidence and strategies and the Company's expectations about
future products, technologies and opportunities, market demand or acceptance of
future products are forward looking statements that involve risks and
uncertainties. These uncertainties include commercialization or technology
delays or difficulties; timing and satisfactory completion of clinical trials;
patent and proprietary rights risks, including patent infringement litigation;
changes in governmental regulations; lengthy approval processes; impact of
competitive products and prices; development of manufacturing, distribution and
marketing capabilities; dependence on collaborative partners; product demand and
market acceptance risks; legal, economic and other risks detailed in Exhibit 99
to the Company's Quarterly Report on Form 10-Q, filed on August 13, 1997.




                                                                              11






<PAGE>   12



PART II - Other Information

Item 1. Legal Proceedings

         The Company is engaged in litigation with Amgen Inc. with respect to
the development of GA-EPO. See Note 3 to Notes to Condensed Financial
Statements, which is incorporated by reference herein.

         The Company is currently involved, with respect to its gene therapy
technology, in an interference proceeding requested by the Company and declared
by the U.S. Patent and Trademark Office, as more fully described in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, filed
on March 28, 1997.

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

         At the Company's Annual Meeting of Stockholders held on Thursday, June
12, 1997, the following individuals were elected as directors of the Company:

<TABLE>
<CAPTION>
                                                Votes
                                                --------
Nominee                        For              Withheld      Broker Non-Votes
-------                        ----------       --------      ----------------

<S>                            <C>              <C>                   <C>
William R. Miller              14,658,698       31,774                0 
Rodman W. Moorhead, III        14,658,698       31,774                0 
Richard F Selden               14,651,466       39,006                0 
James E. Thomas                14,658,698       31,774                0 
Peter Wirth                    14,658,698       31,774                0 
</TABLE>

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

             No reports were filed on Form 8-K during the three months ended 
June 30, 1997.



                                                                              12




<PAGE>   13



                                   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: August 13, 1997               By: /s/ Daniel E. Geffken
                                        ----------------------------------------
                                        Daniel E. Geffken
                                        Vice President, Finance and 
                                        Chief Financial Officer (Principal 
                                        Financial and Accounting Officer)





                                                                              13




<PAGE>   14


                         TRANSKARYOTIC THERAPIES, INC.

                                 EXHIBIT INDEX
                                 -------------

Exhibit No.           Description                                             
-----------           -----------                                             
                                                                              
   11             Statement Re: Computation of Loss Per Share                 
                                                                              
   27             Financial Data Schedule (for EDGAR filing                   
                      purposes only)                                          
                                                                              
   99             Important Factors Regarding Forward Looking                 
                      Statements                                              
                                                                              




                                                                              14