<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


(Mark One)

     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 FOR QUARTER ENDED MARCH 31, 2000

                                       OR

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

                         Commission File Number: 1-12574

                         TEXAS BIOTECHNOLOGY CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



              Delaware                                13-3532643
-------------------------------------------------------------------------------
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)


        7000 Fannin, 20th Floor, Houston, Texas            77030
--------------------------------------------------------------------------------
        (Address of principal executive office)          (Zip code)



                                 (713) 796-8822
--------------------------------------------------------------------------------
              (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
    -----     -----

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.


            Class                             Outstanding at April 30, 2000
            -----                             -----------------------------
 Common Stock, $0.005 par value                         40,801,214


<PAGE>   2
                         TEXAS BIOTECHNOLOGY CORPORATION

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                 PAGE NO.
                                                                                                 --------
<S>        <C>                                                                                   <C>
PART I.    FINANCIAL INFORMATION

           ITEM 1:   FINANCIAL STATEMENTS

           Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999                    1

           Consolidated Statements of Operations for the three months ended
           March 31, 2000 and 1999                                                                   2

           Consolidated Statements of Cash Flows for the three months ended
           March 31, 2000 and 1999                                                                   3

           Notes to Consolidated Financial Statements                                                4

           ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                    9

           ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES                                        12
                    ABOUT MARKET RISK


PART II.   OTHER INFORMATION

           ITEM 1:  Legal Proceedings                                                               13

           ITEM 2:  Changes in Securities                                                           13

           ITEM 3:  Defaults Upon Senior Securities                                                 13

           ITEM 4:  Submission of Matters to a Vote of Security Holders                             13

           ITEM 5:  Other Information                                                               13

           ITEM 6:  Exhibits and Reports on Form 8-K                                                14



SIGNATURES                                                                                          15


INDEX TO EXHIBITS                                                                                   16
</TABLE>
<PAGE>   3
                 TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
ASSETS

                                                                                  MARCH 31,       DECEMBER 31,
                                                                                    2000             1999
                                                                                -------------    -------------
                                                                                 (Unaudited)
<S>                                                                             <C>              <C>
Current assets:
       Cash and cash equivalents                                                $   8,185,941    $   2,804,270
       Short-term investments                                                       6,222,284       11,366,066
       Other current receivables                                                      551,879        1,067,738
       Prepaids                                                                     1,507,937        1,453,090
                                                                                -------------    -------------
           Total current assets                                                    16,468,041       16,691,164

Long-term investments                                                                    --          1,000,000

Equipment and leasehold improvements, at cost less
       accumulated depreciation and amortization                                    2,769,738        2,998,431

Other assets                                                                          115,096          115,096
                                                                                -------------    -------------
           Total assets                                                         $  19,352,875    $  20,804,691
                                                                                =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
       Accounts payable                                                         $     874,940    $     556,664
       Accrued expenses                                                             2,196,080        1,657,706
                                                                                -------------    -------------
           Total current liabilities                                                3,071,020        2,214,370

Commitments and contingencies                                                            --               --

Stockholders' equity:
       Preferred stock, par value $.005 per share.  At March 31, 2000,
           5,000,000 shares authorized; none outstanding.  At
           December 31, 1999, 5,000,000 shares authorized;
           none outstanding                                                              --               --
       Common stock, par value $.005 per share. At March 31, 2000, 75,000,000
           shares authorized; 34,937,471 shares issued and outstanding. At
           December 31, 1999, 75,000,000 shares
           authorized; 34,392,909 shares issued and outstanding                       174,687          171,964
       Additional paid-in capital                                                 120,993,268      118,317,599
       Accumulated deficit                                                       (104,886,100)     (99,899,242)
                                                                                -------------    -------------
           Total stockholders' equity                                              16,281,855       18,590,321
                                                                                -------------    -------------
           Total liabilities and stockholders' equity                           $  19,352,875    $  20,804,691
                                                                                =============    =============
</TABLE>


          See accompanying notes to consolidated financial statements

FORM 10-Q                                                                 Page 1
<PAGE>   4
                 TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                               THREE MONTHS  THREE MONTHS
                                                   ENDED        ENDED
                                                 MARCH 31,     MARCH 31,
                                                   2000          1999
                                               ------------  ------------
                                                (unaudited)   (unaudited)
<S>                                            <C>           <C>
Revenues:
   Research agreements                          $   522,608      534,925
                                                -----------   ----------
      Total revenues                                522,608      534,925
                                                -----------   ----------

Expenses:
   Research and development                       3,781,949    3,158,640
   General and administrative                     1,930,935    1,339,441
                                                -----------   ----------
      Total expenses                              5,712,884    4,498,081
                                                -----------   ----------

      Operating loss                             (5,190,276)  (3,963,156)

   Investment income                                203,418      384,319
                                                -----------   ----------

      Net loss                                  $(4,986,858)  (3,578,837)

Net loss per common share, basic and diluted:   $     (0.14)       (0.10)
                                                ===========   ==========

Weighted average common shares used to
   compute net loss per common share, basic
   and diluted:                                  34,612,293   34,168,310
                                                ===========   ==========
</TABLE>


          See accompanying notes to consolidated financial statements

FORM 10-Q                                                                 Page 2
<PAGE>   5
              TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                            2000           1999
                                                                         -----------    -----------
                                                                         (Unaudited)    (Unaudited)
<S>                                                                     <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                             $(4,986,858)    (3,578,837)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
      Depreciation and amortization                                         250,613        208,510
      Expenses paid with stock and warrants                                  43,615          5,883
   Change in operating assets and liabilities
    Increase in prepaids                                                    (54,847)      (707,728)
    Decrease in receivables                                                 515,859        465,075
    Increase in current liabilities                                         856,650        113,199
                                                                         ----------     ----------
            Net cash used in operating activities                        (3,374,968)    (3,493,898)
                                                                         ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment and leasehold improvements                        (21,920)      (170,667)
   Purchases of investments                                              (3,154,148)    (4,941,780)
   Maturities of investments                                              9,090,886     18,201,801
   Decrease in interest receivable included in short-term investments       207,044        298,515
                                                                         ----------     ----------
           Net cash provided by investing activities                      6,121,862     13,387,869
                                                                         ----------     ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from sale of common stock and exercises of
      options and warrants, net                                           2,634,777        109,224
                                                                         ----------     ----------

      Net increase in cash and cash equivalents                           5,381,671     10,003,195

Cash and cash equivalents at beginning of period                          2,804,270      4,176,911
                                                                         ----------     ----------
Cash and cash equivalents at end of period                              $ 8,185,941     14,180,106
                                                                        ===========     ==========
Supplemental disclosure of noncash financing activities:
    Expenses paid with stock and warrants                               $    43,615          5,883
                                                                        ===========     ==========
</TABLE>


          See accompanying notes to consolidated financial statements

FORM 10-Q                                                                 Page 3
<PAGE>   6
                 TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999


(1)    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

       (a)    Organization

              Texas Biotechnology Corporation (the "Company" or "TBC") is a
              biopharmaceutical company focused on the discovery, development
              and commercialization of novel synthetic small molecule compounds
              for the treatment of a variety of vascular diseases. Since its
              formation in 1989, the Company has been engaged principally in
              research and drug discovery programs and clinical development of
              certain drug compounds. On July 25, 1994, the Company acquired all
              of the outstanding Common Stock of ImmunoPharmaceutics, Inc.
              ("IPI") in exchange for Common Stock of the Company.

              The Company is presently working on a number of long-term
              development projects which involve experimental and unproven
              technology, which may require many years and substantial
              expenditures to complete, and which may be unsuccessful. To date,
              other than compounds and services produced and sold by IPI, a
              wholly-owned subsidiary, the Company has not sold any products.

       (b)    Basis of Consolidation

              The Company's consolidated financial statements include the
              accounts of the Company and its wholly owned subsidiary, IPI. All
              material intercompany transactions have been eliminated.

       (c)    Cash, Cash Equivalents, Short-Term Investments and Long-Term
              Investments

              Cash equivalents are considered to be those securities or
              instruments with original maturities, when purchased, of three
              months or less. At March 31, 2000, approximately $1,106,000 was
              invested in demand and money market accounts. Short-term
              investments are those investments which have a remaining maturity
              of less than one year at the balance sheet date. At March 31,
              2000, the Company's short-term investments consisted of
              approximately $4,923,000 in Government Agency Discount Bonds and
              $1,299,000 in Corporate Commercial Paper. The Company had no
              long-term investments at March 31, 2000. Cash equivalents,
              short-term and long-term investments are stated at cost plus
              accrued interest, which approximates market value. Interest income
              is accrued as earned. The Company classifies all short-term and
              long-term investments as held to maturity.

       (d)    Equipment and Leasehold Improvements

              Equipment and leasehold improvements are stated at cost less
              accumulated depreciation and amortization. Depreciation of
              furniture and equipment is provided on the straight-line method
              over the estimated useful lives of the respective assets (3 to 10
              years). Amortization of leasehold improvements is provided on the
              straight-line method over the shorter of the useful life or the
              remaining minimum lease term.

       (e)    Research and Development Costs

              All research and development costs are expensed as incurred and
              include salaries of research and development employees, certain
              rent and related building services, research supplies and
              services, clinical trial expenses and other associated costs.
              Salaries and benefits for the three months ended March 31, 2000
              and 1999, were approximately $1,777,000 and $1,665,000,
              respectively, of which approximately $1,360,000 and


FORM 10-Q                                                                 Page 4
<PAGE>   7
              $1,279,000, respectively, was charged to research and development.
              Payments related to the acquisition of in-process research and
              development are expensed.

       (f)    Net Loss Per Common Share

              Basic net loss per common share is calculated by dividing the net
              loss applicable to common shares by the weighted average number of
              common and common equivalent shares outstanding during the period.
              For the three months ended March 31, 2000 and 1999, there were no
              common dilutive shares used in the calculation of weighted average
              common shares outstanding. For the three months ended March 31,
              2000 and 1999, the weighted average common shares used to compute
              basic net loss per common share totaled 34,612,293 and 34,168,310,
              respectively. The conversion of securities convertible into Common
              Stock and the exercise of stock options and warrants were not
              assumed in the calculation of diluted net loss per common share
              because the effect would have been antidilutive.

       (g)    Reclassifications

              Certain reclassifications have been made to prior period financial
              statements to conform with the March 31, 2000 presentation with no
              effect on net loss reported.

       (h)    Revenue Recognition

              Revenues for research agreements is recognized as the services are
              performed and/or as milestones are met. Milestone payments related
              to contractual agreements are recognized as the milestones are
              achieved. Revenue from licensing fees is recognized when the
              license is granted, subject to section (l) of this footnote (1)
              regarding accounting pronouncements dealing with revenue
              recognition.

       (i)    Patent Application Costs

              Costs incurred in filing for patents are expensed as incurred.

       (j)    Use of Estimates

              Management of the Company has made a number of estimates and
              assumptions relating to the reporting of assets and liabilities
              and the disclosure of contingent assets and liabilities and the
              reported amounts of revenues and expenses to prepare these
              consolidated financial statements in conformity with generally
              accepted accounting principles. Actual results could differ from
              these estimates.

       (k)    Interim Financial Information

              The Consolidated Balance Sheet as of March 31, 2000, and the
              related Consolidated Statement of Operations for the three month
              periods ended March 31, 2000 and 1999 and Consolidated Statements
              of Cash Flows for the three month periods ended March 31, 2000 and
              1999 are unaudited. In the opinion of management, all adjustments
              necessary for a fair presentation of such financial statements
              have been included. Such adjustments consisted of normal recurring
              items. Interim results are not necessarily indicative of results
              for a full year. The consolidated financial statements and notes
              are presented as permitted by Form 10-Q and do not contain certain
              information included in the Company's Annual Consolidated
              Financial Statements and Notes which should be read in conjunction
              with these consolidated financial statements and notes.

       (l)    Accounting Pronouncements

              In December 1999, the United States Securities and Exchange
              Commission ("SEC") issued Staff Accounting Bulletin No. 101
              ("SAB101"), Revenue Recognition in Financial Statements. SAB101
              summarizes certain of the staff's views in applying generally
              accepted accounting principles to revenue recognition in financial


FORM 10-Q                                                                 Page 5
<PAGE>   8
              statements. The Company will be required to implement SAB101 for
              the quarter ended June 30, 2000. The Company has not yet
              determined the impact, if any, that SAB101 will have on its
              financial statements.

              In March 2000, the Financial Accounting Standards Board issued
              FASB Interpretation No. 44 ("FIN44"), Accounting for Certain
              Transactions involving Stock Compensation. The provisions of
              FIN44 that will be applicable to the Company will be effective
              July 1, 2000. The Company has not yet determined the impact,
              if any, that FIN44 will have on its financial statements.

(2)    CAPITAL STOCK

       During April 2000, the Company sold 5,750,000 shares of Common Stock for
       $12.50 per share pursuant to an underwritten public offering. The net
       proceeds to the Company for the 5,750,000 shares sold were approximately
       $65.0 million after deducting selling commissions and expenses of
       approximately $4.8 million related to the offering and approximately $2.1
       million allocable to selling shareholders.

(3)    STOCK OPTIONS

       The Company applies Accounting Principles Board Opinion No. 25,
       Accounting for Stock Issued to Employees and related interpretations in
       accounting for its plans and applies Financial Accounting Standards Board
       Statement No. 123, Accounting for Stock-Based Compensation and related
       interpretations in reporting for its plans.

       A summary of stock options as of March 31, 2000, follows:


<TABLE>
<CAPTION>
                             Exercise Price                               Exercised/                 Available
       Stock Option Plans       Per Share      Authorized   Outstanding     Other      Exercisable   for Grant
       ------------------    --------------    ----------   -----------   ----------   -----------   ---------
       <S>                   <C>               <C>          <C>           <C>          <C>           <C>
       1990 Plan             $1.38 - $21.59      285,715       190,495      95,220       139,496          --

       1992 Plan             $1.41 - $21.59    1,700,000     1,023,518     627,915       791,988        48,567

       1995 Plan              $1.31 - $8.13    2,000,000     1,652,162     165,723     1,294,912       182,115

       1999 Plan             $20.13 - $20.13   1,000,000       181,000        --            --         819,000

       Director Plan          $3.50 - $4.54       71,429        34,242      37,187        34,242          --

       1995 Director Plan     $1.38 - $5.69      300,000       217,505      24,938       168,505        57,557
                                               ---------     ---------     -------     ---------     ---------
                    TOTALS                     5,357,144     3,298,922     950,983     2,429,143     1,107,239
                                               =========     =========     =======     =========     =========
</TABLE>


       As of March 6, 2000, the Compensation and Personnel Committee of the
       Board of Directors approved an increase in the number of shares
       authorized of 200,000 shares in the Amended and Restated 1995
       Non-Employee Director Stock Option Plan which is scheduled to be
       submitted to a vote of stockholders at the annual meeting on June 8,
       2000.

 (4)   INCOME TAXES

       The Company uses the asset and liability method of accounting for income
       taxes. Under the asset and liability method, deferred tax assets and
       liabilities are recognized for the future tax consequences attributable
       to differences between the financial statement carrying amounts of
       existing assets and liabilities and their respective tax bases and
       operating loss and tax credit carryforwards. Deferred tax assets and
       liabilities are measured using enacted tax rates expected to apply to
       taxable income in the years in which those temporary differences are
       expected to be recovered


FORM 10-Q                                                                 Page 6
<PAGE>   9
       or settled. The effect on deferred tax assets and liabilities of a change
       in tax rates is recognized in income in the period that includes the
       enactment date.

       At March 31, 2000 the net deferred tax asset, representing primarily net
       operating loss carryforwards and start-up costs deferred for tax
       purposes, totaled approximately $37,893,000. The Company has established
       a valuation allowance for the full amount of these deferred tax assets,
       as management believes that it is not more likely than not that the
       Company will recover these assets. The Company did not incur any tax
       expense in any year due to operating losses and the related increase in
       the valuation allowance.

       At March 31, 1999 the Company had net operating loss carryforwards of
       approximately $69,894,000 for federal income tax return purposes.
       Utilization of the Company's net operating loss carryforwards is subject
       to certain limitations due to specific stock ownership changes which have
       occurred or may occur. To the extent not utilized, the carryforwards will
       expire during the years beginning 2002 through 2020.

(5)    EQUIPMENT AND LEASEHOLD IMPROVEMENTS

       Equipment and leasehold improvements consist of the following:


<TABLE>
<CAPTION>
                                                                            March 31,2000       December 31, 1999
                                                                            -------------       -----------------
<S>                                                                         <C>                 <C>
       Laboratory and office equipment                                       $ 5,782,034           $ 5,760,113
       Leasehold improvements                                                  3,974,942             3,974,942
                                                                             -----------           -----------
                                                                               9,756,976             9,735,055
       Less accumulated depreciation and amortization                         (6,987,238)           (6,736,624)
                                                                             -----------           -----------
                                                                             $ 2,769,738           $ 2,998,431
                                                                             ===========           ===========
</TABLE>


(6)    COMMON STOCK RESERVED

       The Company has reserved Common Stock for issuance as of March 31, 2000
as follows:


<TABLE>
              <S>                                                              <C>
              Stock option plans                                               4,406,161
              Common Stock issuable under licensing agreement                     71,429
              Publicly traded warrants outstanding                             3,950,222
              Other warrants outstanding                                         638,433
                                                                              ----------
                   Total shares reserved                                       9,066,245
                                                                              ==========
</TABLE>


(7)    REGULATORY FILING

       On February 18, 2000, the Company received an approvable letter from the
       FDA for NOVASTAN(R) as an anticoagulant for prevention or treatment of
       thrombosis in patients with heparin-induced thrombocytopenia ("HIT"). The
       Company is in the process of satisfying FDA requirements for securing the
       final approval letter for NOVASTAN(R).

(8)    COMMITMENTS AND CONTINGENCIES

       Legal Proceedings

       On November 21, 1994, a class action shareholders' suit was filed in the
       United States District Court for the Southern District of Texas, Houston
       Division seeking damages in the amount of $16 million. Plaintiffs were
       two individuals who purchased the Company's shares on December 16, 1993
       following the Company's initial public offering ("IPO"). In their
       complaint, plaintiffs sued the Company, certain members of the board of
       directors and certain officers alleging violations of Sections 11, 12 and
       15 of the Securities Act of 1933, as amended. A subsequently filed class
       action arising out of the IPO was dismissed in June 1996, leaving the
       first class action as the only pending litigation arising out of the IPO.

       In May 1999, the Company reached an agreement in principle to settle the
       pending class action. The agreement in principle achieved with
       plaintiff's counsel provides for dismissal of all claims against the
       Company and the officers and directors named as defendants. The
       settlement amount is $800,000, of which approximately $187,500



FORM 10-Q                                                                 Page 7
<PAGE>   10
       was expensed during 1999 and paid by the Company into escrow during
       January 2000 and approximately $612,500 will be paid by the Company's
       insurer.

       On December 21, 1999, the Company and the plaintiffs filed a Stipulation
       of Settlement of All Claims Against Certain Defendants. Notification of
       the settlement to potential class members was delivered on or about
       February 4, 2000, and a hearing to approve the settlement was held on
       April 5, 2000. As there were no objections to the proposed settlement,
       the Court indicated its intention to enter an Order approving it. As of
       May 15, 2000, however, no written Order has been entered. The Court's
       approval of the settlement and dismissal of all claims against the
       Company and its directors and officers will become final upon expiration
       of the deadline for appeal of that Order.




FORM 10-Q                                                                 Page 8
<PAGE>   11

ITEM 2.

                 TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

                MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999


                                    OVERVIEW

    The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes to the financial statements included in Form
10-K for the year 1999 and our consolidated financial statements and the related
notes to the financial statements included this Form 10-Q.

    Since our inception in 1989, we have primarily devoted our resources to
funding drug discovery research and development. We have been unprofitable to
date and expect to incur substantial operating losses for the next several years
as we invest in product research and development, preclinical and clinical
testing and regulatory compliance. We have sustained net losses of approximately
$104.9 million from the date of our inception to March 31, 2000. We have
primarily financed our operations to date through:

o      private placements of common stock, which raised an aggregate of $34.3
       million in net proceeds;

o      our initial public offering, which raised an aggregate of $24.2 million
       in net proceeds including the over-allotment sold in January 1994;

o      a private placement of 5% preferred stock on March 14, 1997, which raised
       approximately $6.0 million in net proceeds;

o      a subsequent public offering, which closed during October 1997 and raised
       approximately $26.7 million in net proceeds; and

o      a follow-on public offering, which closed during April 2000 and raised
       approximately $65.0 million in net proceeds.

    During October 1996, we signed a research and common stock purchase
agreement with LG Chemical. LG Chemical purchased 1,250,000 shares of our common
stock for $5.0 million and committed to pay us up to $10.7 million over a
five-year period to develop two compounds in clinical development. Of this
amount, $6.1 million has been paid. Furthermore, $1.0 million will be paid on
June 30 and December 31, 2000, and $1.3 million will be paid on June 30 and
December 31, 2001.

    In August 1997, we entered into an agreement with SmithKline Beecham, plc,
commonly known as SmithKline, whereby we granted SmithKline the exclusive right
to work with us in the development and commercialization of NOVASTAN(R) in the
U.S. and Canada for specified indications. Upon execution of the agreement,
SmithKline paid an $8.5 million license fee, a $5.0 million milestone payment in
October 1997 and has also committed to pay up to a total of $15.0 million in
additional milestone payments based on the clinical development and FDA approval
of NOVASTAN(R) for the indications of HIT and acute myocardial infarction.
Future milestone payments for the acute myocardial infarction indication are
subject to SmithKline's agreement to market NOVASTAN(R) for the acute myocardial
infarction indication. At this time, SmithKline has no plans to conduct
development work for the acute myocardial infarction and stroke indications. We
are evaluating the feasibility of developing NOVASTAN(R) for ischemic stroke and
possibly other indications. In connection with the agreement, SmithKline
purchased 176,922 shares of our common stock for $1.0 million and an additional
400,000 shares of our common stock for $2.0 million in conjunction with our
public offering, which closed during October 1997.

    Our operating results have fluctuated significantly during each quarter, and
we anticipate that such fluctuations, which are largely attributable to varying
research and development commitments and expenditures, will continue for the
next several years.


FORM 10-Q                                                                 Page 9
<PAGE>   12
                              RESULTS OF OPERATIONS

                THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999


    Revenues were $534,925 and $522,608 during the three month periods ended
March 31, 1999 and 2000, respectively. Revenues were composed of amounts
recognized under research and development agreements and decreased 2% due to a
decrease in reimbursable expenses related to the SmithKline Agreement. Interest
income for the three month period ended March 31, 1999 was 47% higher than the
same period of 2000 due primarily to higher investment balances in 1999.

    Research and development expenses increased 20% from $3,158,640 during the
three month period ended March 31, 1999 to $3,781,949 for the same period of
2000. The increase was due primarily to increased clinical trial expense related
to the sitaxsentan development program for pulmonary hypertension.

    General and administrative expenses increased 44% from $1,339,441 during the
three month period ended March 31, 1999 to $1,930,935 during the same period of
2000. The increase was due primarily to increases in premarketing and consulting
costs related to NOVASTAN(R) and increased patent legal fees related to the
sitaxsentan program.

    We incurred net losses of $3,578,837 and $4,986,858 for the three month
periods ended March 31, 1999 and 2000, respectively.

    The Company had 82 employees at March 31, 1999 and 83 employees at March 31,
2000.

                         LIQUIDITY AND CAPITAL RESOURCES

    We have financed our research and development activities to date principally
through:

o      private placements of our common and preferred stock;

o      our initial public offering and subsequent offerings of our common stock;

o      issuances of common stock in conjunction with acquisitions, research and
       collaboration agreements and upon exercises of stock options and
       warrants;

o      milestone and research payments received in conjunction with research and
       collaborative agreements; and

o      investment income, net of interest expense.

    At March 31, 2000 we had cash, cash equivalents and short-term investments
of $14,408,225. In April 2000, we raised approximately $65.0 million from an
underwritten public offering of our common stock.

    We expect to incur substantial research and development expenditures as we
design and develop biopharmaceutical products for the prevention and treatment
of cardiovascular and other diseases. We anticipate that our operating expenses
will increase during 2000 and subsequent years because:

o      We will incur significant clinical trial costs for sitaxsentan and
       TBC1269 compounds and expect to begin to incur costs for clinical trials
       related to additional compounds. These costs include:

       o      hiring personnel to direct and carry out all operations related to
              clinical trials;

       o      hospital and procedural costs;

       o      services of a contract research organization; and

       o      purchasing and formulating large quantities of the compound to be
              used in such trials.


FORM 10-Q                                                                Page 10
<PAGE>   13
o      There will be additional costs in future periods related to NOVASTAN(R)
       in complying with ongoing FDA requirements and possible clinical trial
       expenditures for additional therapeutic indications.

Furthermore, we anticipate that the administrative costs associated with our
efforts will be significant. The amount and timing of expenditures will depend,
among other things, on our progress in ongoing research, clinical development
and commercialization efforts.

    We anticipate that our existing capital resources and our other revenue
sources, should be sufficient to fund our cash requirements through the end of
2003 without considering the impact of revenues from NOVASTAN(R). This date is
contingent upon various factors, including the rates of patient enrollment and
spending associated with clinical trials for sitaxsentan and TBC1269 and the
level of research and development expenditures for our other compounds. We
cannot assure you that there will be market acceptance and commercial success of
NOVASTAN(R), which could significantly impact our cash flow.

    We anticipate that we may need to raise substantial funds for future
operations, which may be raised through collaborative arrangements, public or
private issuance of debt and equity, or other arrangements. We expect that
additional expenditures will be required if additional product candidates enter
clinical trials, which may require additional expenditures for laboratory space,
scientific and administrative personnel, and services of contract research
organizations. We cannot assure you that we will be able to obtain such
additional financings on acceptable terms or in time to fund any necessary or
desirable expenditures. In the event such financings are not obtained, our drug
discovery or development programs may be delayed, scaled back or eliminated; or
we may be required to obtain funds through arrangements with collaborative
partners or others that may require that we relinquish rights to certain of our
technologies, product candidates or products that would not otherwise be
relinquished. Our ability to raise additional funding is contingent upon a
number of factors which include:

o      the market acceptance and commercial success of NOVASTAN(R);

o      the ongoing cost of research and development activities;

o      the attainment of research and clinical goals of product candidates;

o      the timely approval of our product candidates by appropriate governmental
       and regulatory agencies;

o      the presence and effect of competitive products;

o      our ability to manufacture and market products commercially;

o      the retention of key personnel; and

o      conditions in the capital markets.

                  HAZARDOUS MATERIALS AND ENVIRONMENTAL MATTERS

    Our research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials and produce waste
products. We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
materials and waste products. Although we believe that our safety procedures for
handling and disposing of hazardous materials comply with the standards
prescribed by laws and regulations, the risk of accidental contamination or
injury from these materials cannot be eliminated completely. In the event of an
accident, we could be held liable for any damages that result. This liability
could exceed our resources or not be covered by our insurance. Although we
believe that we are in compliance in all material respects with applicable
environmental laws and regulations, there can be no assurance that we will not
be required to incur significant costs to comply with environmental laws and
regulations in the future. There can also be no assurance that our operations,
business or assets will not be materially adversely affected by current or
future environmental laws or regulations.


FORM 10-Q                                                                Page 11
<PAGE>   14
                     IMPACT OF INFLATION AND CHANGING PRICES

     The pharmaceutical research industry is labor intensive, and wages and
related expenses increase in inflationary periods. The lease of space and
related building services for the Houston facility contains a clause that
escalates rent and related services each year based on the increase in building
operating costs and the increase in the Houston Consumer Price Index,
respectively. To date, inflation has not had a significant impact on our
operations.

                                 YEAR 2000 ISSUE

     The Year 2000, or Y2K, problem has not caused any material disruptions to
our facilities or operations and has not resulted in any material costs. We have
developed reasonable contingency plans to avoid, to the extent practicable, Year
2000-related problems that may yet occur due to hidden defects in computer
hardware or software. We anticipate, but cannot guarantee, that the Year 2000
problem will not create material disruptions to our facilities or operations and
will not cause us to incur material costs.

              CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

     This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical fact
included in and incorporated by reference into this Form 10-Q are
forward-looking statements. These forward-looking statements include, without
limitation, statements regarding our estimate of the sufficiency of our existing
capital resources and our ability to raise additional capital to fund cash
requirements for future operations, and regarding the uncertainties involved in
the drug development process and the timing of regulatory approvals required to
market these drugs. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we can not give any assurance that
such expectations reflected in these forward-looking statements will prove to
have been correct.

     When used in this Form 10-Q, the words "expect," "anticipate," "intend,"
"plan," "believe," "seek," "estimate" and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements
contain these identifying words. Because these forward-looking statements
involve risks and uncertainties, actual results could differ materially from
those expressed or implied by these forward-looking statements for a number of
important reasons, including those discussed under "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

     You should read these statements carefully because they discuss our
expectations about our future performance, contain projections of our future
operating results or our future financial condition, or state other
"forward-looking" information. Before you invest in our common stock, you should
be aware that the occurrence of any of the contingent factors described in under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" could substantially harm our
business, results of operations and financial condition and that upon the
occurrence of any of these events, the trading price of our common stock could
decline, and you could lose all or part of your investment.

We cannot guarantee any future results, levels of activity, performance or
achievements. Except as required by law, we undertake no obligation to update
any of the forward-looking statements in this Form 10-Q after the date of this
Form 10-Q.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
To date, interest rate risk has not had a significant impact on the operations
of the Company.


FORM 10-Q                                                                Page 12
<PAGE>   15
PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
On November 21, 1994, a class action shareholders' suit was filed in the United
States District Court for the Southern District of Texas, Houston Division
seeking damages in the amount of $16 million. Plaintiffs were two individuals
who purchased the Company's shares on December 16, 1993 following the Company's
initial public offering ("IPO"). In their complaint, plaintiffs sued the
Company, certain members of the board of directors and certain officers alleging
violations of Sections 11, 12 and 15 of the Securities Act of 1933, as amended.
A subsequently filed class action arising out of the IPO was dismissed in June
1996, leaving the first class action as the only pending litigation arising out
of the IPO.

In May 1999, the Company reached an agreement in principle to settle the pending
class action. The agreement in principle achieved with plaintiff's counsel
provides for dismissal of all claims against the Company and the officers and
directors named as defendants. The settlement amount is $800,000, of which
approximately $187,500 was expensed during 1999 and paid by the Company into
escrow during January 2000 and approximately $612,500 will be paid by the
Company's insurer.

On December 21, 1999, the Company and the plaintiffs filed a Stipulation of
Settlement of All Claims Against Certain Defendants. Notification of the
settlement to potential class members was delivered on or about February 4,
2000, and a hearing to approve the settlement was held on April 5, 2000. As
there were no objections to the proposed settlement, the Court indicated its
intention to enter an Order approving it. As of May 15, 2000, however, no
written Order has been entered. The Court's approval of the settlement and
dismissal of all claims against the Company and its directors and officers will
become final upon expiration of the deadline for appeal of that Order.

ITEM 2.  CHANGES IN SECURITIES
In January, February and March 2000, the Company issued an aggregate of 127,145
shares of its Common Stock to certain institutions and individuals, pursuant to
the exercise of outstanding warrants for an aggregate purchase price of
$491,490. The issuance of Common Stock was exempt from registration under
Section 4 (2) of the Securities Act of 1933, as amended. The warrants and the
Common Stock underlying the warrants may not be sold in the United States absent
registration or an applicable exemption from registration requirements.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
       None

ITEM 4.  SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
       None

ITEM 5.  OTHER INFORMATION

NOVASTAN(R)

The Company announced that is has submitted its response to the approvable
letter for NOVASTAN(R) issued by the U.S. Food & Drug Administration on February
18, 2000. The approvable letter from FDA included the Agency's recommendation
for NOVASTAN(R) as an anticoagulant for prophylaxis or treatment of thrombosis
in patients with HIT. Based on recent discussions with representatives from FDA,
TBC expects a response from the Agency by mid July.

The Company also reported that SmithKline Beecham, the partner for the
manufacturing and marketing of NOVASTAN(R) in the U.S. and Canada, and TBC are
rebranding the product to avoid confusion with several other approved hospital
based drugs.

The Company also reported that it has filed a Canadian New Drug Submission
seeking approval for argatroban in Canada as treatment for HIT. The Therapeutic
Products Program, the Canadian equivalent of the FDA, classified the argatroban
submission as a priority review, and is expected to issue its formal response in
the second half of the year.

FORM 10-Q                                                              Page 13
<PAGE>   16

SITAXSENTAN

During the first quarter, the Company completed enrollment of a 20 patient
open-label Phase II clinical trial to assess the safety and tolerability of
sitaxsentan in patients with pulmonary hypertension ("PH"). Preliminary results
for the trial will be available in the third quarter of this year.

A Phase IIb/III clinical trial is currently being finalized with the Company's
Scientific Advisory Board and is expected to be initiated during the second
half of this year. To date, sitaxsentan has demonstrated statistically
significant results in Phase II clinical trials for chronic heart failure and
essential hypertension. TBC is currently focused on developing the product as a
treatment for PH.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
One report on Form 8-K was filed during the quarter ended March 31, 2000. The
report was filed February 22, 2000 and regarded the Company's receipt of an
approvable letter from the U.S. Food and Drug Administration for NOVASTAN(R).

     EXHIBIT NO.             DESCRIPTION
     -----------             -----------
       27.1                  Financial Data Schedule


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


FORM 10-Q                                                                Page 14
<PAGE>   17
                         TEXAS BIOTECHNOLOGY CORPORATION

                                 MARCH 31, 2000

                                   SIGNATURES



Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on the 15th day of May, 2000.


                                        TEXAS BIOTECHNOLOGY CORPORATION


                                        By:   /s/ David B. McWilliams
                                           -------------------------------------
                                           David B. McWilliams
                                           President and Chief Executive Officer



                                        By:   /s/ Stephen L. Mueller
                                           -------------------------------------
                                           Stephen L. Mueller
                                           Vice President, Finance and
                                           Administration Secretary and
                                           Treasurer (Principal Financial and
                                           Accounting Officer)


FORM 10-Q                                                                Page 15
<PAGE>   18
                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
   Exhibit No.               Description of Exhibit
   -----------               ----------------------
   <S>                       <C>
       27.1                  Financial Data Schedule
</TABLE>

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


FORM 10-Q                                                                Page 16