<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, 1999

                                       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, Suite 1920, 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, 1999
               -----                         -----------------------------

  Common Stock, $0.005 par value                        34,197,798


<PAGE>   2


                         TEXAS BIOTECHNOLOGY CORPORATION

                                TABLE OF CONTENTS

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

           ITEM 1:   FINANCIAL STATEMENTS

           Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998          1

           Consolidated Statements of Operations for the three months ended
           March 31, 1999 and 1998                                                         2

           Consolidated Statements of Cash Flows for the three months ended
           March 31, 1999 and 1998                                                         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                             13
                     ABOUT MARKET RISK

PART II.   OTHER INFORMATION

           ITEM 1:  Legal Proceedings                                                     14

           ITEM 2:  Changes in Securities                                                 14

           ITEM 3:  Defaults Upon Senior Securities                                       14

           ITEM 4:  Submission of Matters to a Vote of Security Holders                   14

           ITEM 5:  Other Information                                                     14

           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,
                                                                                     1999           1998
                                                                                -------------    ------------
                                                                                 (Unaudited)
<S>                                                                             <C>              <C>
Current assets:
        Cash and cash equivalents                                               $  14,180,106      4,176,911
        Short term investments                                                      6,588,432     20,407,146
        Other current receivables                                                     961,884      1,426,959
        Prepaids                                                                    1,671,318        963,590
        Other current assets                                                           10,400         10,400
                                                                                -------------    -----------
             Total current assets                                                  23,412,140     26,985,006

Long term investments                                                               6,052,123      5,791,945

Equipment and leasehold improvements, at cost less
        accumulated depreciation and amortization                                   3,231,595      3,269,438

Other assets                                                                           59,591         59,591
                                                                                -------------    -----------

            Total assets                                                        $  32,755,449     36,105,980
                                                                                =============    ===========

                                LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
        Accounts payable                                                        $   1,167,054      1,209,853
        Accrued expenses                                                            1,815,905      1,659,907
                                                                                -------------    -----------
            Total current liabilities                                               2,982,959      2,869,760

Commitments and contingencies                                                            --             --

Stockholders' equity:
        Preferred stock, par value $.005 per share.  At March 31, 1999,
            5,000,000 shares authorized; none outstanding.  At December 31,
            1998, 5,000,000 shares authorized; none outstanding                          --             --
        Common stock, par value $.005 per share.  At March 31, 1999,
            75,000,000 shares authorized; 34,194,864 shares issued and
            outstanding.  At December 31, 1998, 75,000,000 shares
            authorized; 34,128,017 shares issued and outstanding                      170,974        170,640
        Additional paid-in capital                                                117,782,252    117,667,479
        Accumulated deficit                                                       (88,180,736)   (84,601,899)
                                                                                -------------    -----------
            Total stockholders' equity                                             29,772,490     33,236,220
                                                                                -------------    -----------

            Total liabilities and stockholders' equity                          $  32,755,449     36,105,980
                                                                                =============    ===========
</TABLE>



See accompanying notes to consolidated financial statements               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,
                                                     1999            1998
                                                  -----------     -----------
                                                  (unaudited)     (unaudited)
<S>                                               <C>             <C>
Revenues:
   Research agreements                            $   534,925         621,600
                                                  -----------     -----------
       Total revenues                                 534,925         621,600
                                                  -----------     -----------

Expenses:
   Research and development                         3,158,640       3,410,384
   General and administrative                       1,339,441       1,214,309
                                                  -----------     -----------
       Total expenses                               4,498,081       4,624,693
                                                  -----------     -----------

       Operating loss                               3,963,156       4,003,093

   Investment income                                  384,319         580,549
                                                  -----------     -----------

       Net loss                                     3,578,837       3,422,544
       Preferred dividend requirement                      --           1,690

       Net loss applicable to common shares       $ 3,578,837       3,424,234

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

Weighted average common shares used to
   compute net loss per common share, basic
   and diluted:                                    34,168,310      33,653,337
                                                  ===========     ===========
</TABLE>


See accompanying notes to consolidated financial statements               Page 2
<PAGE>   5
                    TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                              THREE MONTHS ENDED
                                                                                                   MARCH 31,

                                                                                             1999               1998
                                                                                        ------------      ------------
                                                                                          (Unaudited)       (Unaudited)
<S>                                                                                     <C>                 <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                             $ (3,578,837)       (3,422,544)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
      Depreciation and amortization                                                          208,510           200,470
      Expenses paid with stock                                                                 5,883             3,592
      Loss on disposition of fixed assets                                                       --               7,895
      Decrease in preferred dividend payable not included in net loss                           --              11,913
   Change in operating assets and liabilities
     (Increase) in prepaids                                                                 (707,728)         (303,049)
     Decrease in receivables                                                                 465,075           378,403
     (Increase) in other current assets                                                         --              (2,500)
     Increase (decrease) in current liabilities                                              113,199           (19,276)
                                                                                        ------------      ------------
            Net cash used in operating activities                                         (3,493,898)       (3,145,096)
                                                                                        ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment and leasehold improvements                                        (170,667)         (368,903)
   Proceeds from disposition of fixed assets                                                    --               3,000
   Purchase of long-term investments                                                      (3,000,000)             --
   Maturity of long-term investments                                                       2,700,000              --
   Purchase of short-term investments                                                     (1,941,780)      (15,840,434)
   Maturity of short-term investments                                                     15,501,801        19,272,605
   Decrease in interest receivable included in short-term and long-term investments          298,515             7,227
                                                                                        ------------      ------------
           Net cash provided by investing activities                                      13,387,869         3,073,495
                                                                                        ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from sale of common stock and exercises of
      options and warrants, net                                                              109,224           288,224
                                                                                        ------------      ------------

      Net increase in cash and cash equivalents                                           10,003,195           216,623

Cash and cash equivalents at beginning of period                                           4,176,911        14,323,572
                                                                                        ------------      ------------

Cash and cash equivalents at end of period                                              $ 14,180,106        14,540,195
                                                                                        ============      ============
Supplemental disclosure of noncash financing activities:
     Expenses paid with stock                                                           $      5,883             3,592
                                                                                        ============      ============
</TABLE>


See accompanying notes to consolidated financial statements               Page 3
<PAGE>   6
                 TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                MARCH 31, 1999 (UNAUDITED) AND DECEMBER 31, 1998


(1)    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

       (a)    Organization

              Texas Biotechnology Corporation (the "Company" or "TBC"), a
              biopharmaceutical company, applies innovative drug discovery
              techniques and its specialized knowledge of the role of vascular
              cell biology in vascular diseases to the design and development of
              novel pharmaceutical compounds. 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") (now
              discontinued), a San Diego, California based company, in exchange
              for Common Stock of the Company. TBC consolidated the IPI
              operation into TBC in the first half of 1996.

              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 small amounts of monoclonal antibody compounds and
              services produced and sold by IPI, the Company has not developed
              or sold any products, and no assurance can be given that the
              Company will be able to develop, manufacture or market any
              products in the future. In addition, no assurance exists that
              future revenues will be significant, that any sales will be
              profitable, or that the Company will have sufficient funds
              available to complete its research and development programs or
              market any products which it may develop.

       (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. The
              Company's consolidated financial statements include the activity
              related to IPI since August 1, 1994.

       (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, 1999, approximately $363,000 was
              invested in demand and money market accounts. Short-term
              investments are those investments which have an original maturity
              of less than one year and greater than three months. At March 31,
              1999, the Company's short-term investments consisted of
              approximately $1,512,000 in Government Agency Discount Bonds and
              $5,076,000 in Corporate Commercial Paper. Long-term investments
              consist of approximately $6,052,000 in Government Agency bonds
              with an original maturity of one year or more. 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
              investments 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 remaining minimum lease term.


                                                                          Page 4

<PAGE>   7


       (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. With
              respect to research and development, salaries and benefits for the
              three months ended March 31, 1999 and 1998, totaled approximately
              $1,665,000 and $1,673,000, respectively, of which approximately
              $1,279,000 and $1,237,000, respectively, was charged to research
              and development. Payments related to the acquisition of in-process
              research and development are expensed as incurred.

       (f)    Net Loss Per Common Share

              Basic net loss per common share is calculated by dividing the net
              loss applicable to common shares after preferred dividend
              requirements by the weighted average number of common shares
              outstanding during the period. For the three months ended March
              31, 1999 and 1998, there were no common dilutive shares used in
              the calculation of weighted average common shares outstanding. For
              the three months ended March 31, 1999 and 1998, the weighted
              average common shares used to compute basic net loss per common
              share totaled 34,168,310 and 33,653,337, respectively.

       (g)    Reclassifications

              Certain reclassifications have been made to prior period financial
              statements to conform with the March 31, 1999 presentation with no
              effect on net loss previously reported.

       (h)    Revenue Recognition

              Revenue from service contracts is recognized as the services are
              performed and/or as milestones are achieved. Milestone payments
              related to contractual agreements are recognized as the milestones
              are achieved. Revenue from products and services is recognized
              when the products are shipped or the services are performed.
              Revenue from licensing fees is recorded when the license is
              granted. Revenue from grants is recognized as earned under the
              terms of the related grant agreements. Amounts received in advance
              of services to be performed under contracts are recorded as
              deferred revenue.

       (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 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, 1999, and the
              related Consolidated Statement of Operations for the three month
              periods ended March 31, 1999 and 1998 and Consolidated Statements
              of Cash Flows for the three month periods ended March 31, 1999 and
              1998 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.


                                                                          Page 5

<PAGE>   8


(2)    STOCK OPTIONS AND WARRANTS

       The Company applies APB Opinion 25 and related interpretations in
accounting for its plans.

       A summary of stock options as of March 31, 1999, 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 - $5.59       285,715       171,048        68,461       163,634        46,206

1992 Plan               $1.41 - $5.36     1,700,000     1,215,357       341,326     1,031,807       143,317

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

1995 Plan               $1.31 - $8.13     2,000,000     1,901,052        21,851     1,108,068        77,097

1995 Director Plan      $1.38 - $5.69       300,000       166,505        10,909       119,005       122,586
                                          ---------     ---------     ---------     ---------       -------
             TOTALS                       4,357,144     3,488,204       479,734     2,456,756       389,206
                                          =========     =========     =========     =========       =======
</TABLE>


       At the 1999 Annual Stockholders Meeting held on May 4, 1999, the 1999
       Stock Incentive Plan (the "1999 Plan") was approved. This plan allows for
       the issuance of incentive and non-qualified options, shares of restricted
       stock and stock bonuses to directors, employees, officers and
       non-employee independent contractors, pursuant to which 1,000,000 shares
       of Common Stock are to be reserved for issuance out of the authorized but
       unissued shares of the Company.

 (3)   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 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, 1999 the net deferred tax asset, representing primarily net
       operating loss carryforwards, totaled approximately $30,795,000. 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.

       At March 31, 1999 the Company had net operating loss carryforwards of
       approximately $56,597,000 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 2019.


                                                                          Page 6

<PAGE>   9
 (4)   EQUIPMENT AND LEASEHOLD IMPROVEMENTS

       Equipment and leasehold improvements consist of the following:
<TABLE>
<CAPTION>
                                                  March 31,1999  December 31, 1998
                                                  -------------  -----------------
<S>                                                <C>              <C>        
Laboratory and office equipment                    $ 5,589,516      $ 5,418,849
Leasehold improvements                               3,701,772        3,701,772
                                                   -----------      -----------
                                                     9,291,288        9,120,621
Less accumulated depreciation and amortization      (6,059,693)      (5,851,183)
                                                   -----------      -----------
                                                   $ 3,231,595      $ 3,269,438
                                                   ===========      ===========
</TABLE>

(5)    COMMON STOCK RESERVED

       The Company has reserved Common Stock for issuance as of March 31, 1999
as follows:

<TABLE>
<S>                                                               <C>      
              Stock option plans                                  3,877,410
              Common Stock issuable under licensing agreement        71,429
              Publicly traded warrants outstanding                3,995,394
              Other warrants outstanding                            660,578
                                                                  ---------
                   Total shares reserved                          8,604,811
</TABLE>

       At the 1999 Annual Stockholders Meeting held on May 4, 1999, the 1999
       Stock Incentive Plan (the "1999 Plan") was approved. This plan allows for
       the issuance of incentive and non-qualified options, shares of restricted
       stock and stock bonuses to directors, employees, officers and
       non-employee independent contractors, pursuant to which 1,000,000 shares
       of Common Stock are to be reserved for issuance out of the authorized but
       unissued shares of the Company.

(6)    REGULATORY FILING

       During August, 1997, the Company filed a new drug application ("NDA")
       with the United States Food and Drug Administration (the "FDA") for its
       lead product candidate, NOVASTAN(R), for use as an anticoagulant in
       patients with heparin induced thrombocytopenia ("HIT") and heparin
       induced thrombocytopenia with thrombosis syndrome ("HITTS"). During
       September, 1997, the FDA granted priority review status to the new drug
       application for NOVASTAN(R). During October, 1997, the Company was
       notified by the FDA that the filed NDA for NOVASTAN(R) was accepted. The
       FDA extended the priority review period by 90 days during January, 1998.
       On May 11, 1998, the Company announced that it had received a
       non-approvable letter from the FDA for NOVASTAN(R). Based on consultation
       with representatives from the FDA, TBC has focused on the collection and
       analysis of a new more comparable historical control group as the basis
       for demonstrating the safety and efficacy NOVASTAN(R). The Company
       amended its NDA with the FDA for NOVASTAN(R) as an anticoagulant for use
       in patients with HIT syndrome on March 19, 1999 and expects a response
       from the FDA to the amendment within approximately six months of filing.
       While the Company believes the amendment includes consistent, positive
       results and supports the use of NOVASTAN(R) in its proposed indication,
       there can be no assurances as to the timing or outcome of the FDA
       decision.

(7)    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 are two
       individuals who purchased shares of the Company on December 16, 1993
       following the Company's initial public offering ("IPO"). In their
       complaint, plaintiffs have 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.



                                                                          Page 7


<PAGE>   10
       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 will be
       paid by the Company and $612,500 will be paid by the Company's insurer.

       The agreement to settle is subject to negotiation and execution of a
       detailed stipulation of settlement between the parties, submission of the
       stipulation of settlement to the court, provision of notice to class
       members of the settlement terms, a fairness hearing, and final approval
       of the settlement by the court. Discussions are ongoing with plaintiffs
       as to the schedule for completing these steps; however, it is expected
       that final dismissal will take place no sooner than 90 days. The Company
       cannot predict exactly when final dismissal can be obtained.


                                                                          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, 1999 (UNAUDITED) AND DECEMBER 31, 1998


                                    OVERVIEW

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties.

Since its inception in 1989, the Company has primarily devoted its resources to
fund drug discovery research and development. The Company has been unprofitable
to date and expects to incur substantial losses for the next several years as
the Company invests in product research and development, preclinical and
clinical testing and regulatory compliance. The Company has sustained net losses
of approximately $88.0 million from inception to March 31, 1999. The Company has
primarily financed its operations to date through certain private placements of
Common Stock and shareholder loans, which have raised an aggregate of $21.3
million in net proceeds, the IPO which raised an aggregate of $24.2 million in
net proceeds including the over-allotment sold in January 1994, a private
placement of Common Stock on February 13, 1996, which raised $13.0 million in
net proceeds, a private placement of 5% Preferred Stock on March 14, 1997, which
raised approximately $6.0 million in net proceeds, and a secondary public
offering which closed during October 1997 and raised approximately $26.7 million
in net proceeds.

On July 25, 1994, the Company acquired all of the outstanding stock of IPI in
exchange for 1,599,958 shares of Common Stock, 999,956 shares of escrowed Common
Stock which were released upon satisfaction of certain research milestones, and
contingent stock issue rights to acquire 1,400,000 shares of which 399,961
shares were issued upon satisfaction of certain research milestones. IPI's
financial results have been included in the Company's financial statements
beginning August 1, 1994. In March 1996, IPI's remaining operations in
California were consolidated with the Company's Houston operations.

The Company signed a collaborative agreement with Synthelabo S.A. ("Synthelabo")
on October 11, 1994. Upon consummation of the transaction, Synthelabo purchased
1,428,571 shares of Common Stock for a total of $5.0 million and paid a
licensing fee of $3.0 million. In addition, Synthelabo paid $3.0 million
annually in research payments for two years and paid $750,000 for the third
year. During 1996, TBC signed agreements with Synthelabo to provide copies of
certain NOVASTAN(R) clinical data. Over the life of the agreements TBC may
receive as much as $2.92 million, of which $2.88 million has been received as of
March 31, 1999.

During October 1996, the Company executed a research and Common Stock purchase
agreement with LG Chemical, Ltd. ("LG Chemical"). LG Chemical purchased
1,250,000 shares of Common Stock for $5.0 million and committed to pay up to
$10.7 million over a five year period to develop two compounds in clinical
development. Of this amount, $4.1 million has been paid and $1.0 million will be
paid on each of June 30 and December 31, of 1999 and 2000, and $1.3 million will
be paid on June 30 and December 31, 2001.

In August 1997, the Company entered into a Product Development, License and
CoPromotion Agreement (the "SmithKline Agreement") whereby SmithKline Beecham,
PLC ("SmithKline") was granted exclusive rights to work with TBC 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 and during October 1997, paid a $5 million milestone payment
to TBC and has 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, HITTS and acute myocardial infarction
("AMI"). Future milestone payments for the AMI indication are subject to
SmithKline's agreement to market NOVASTAN(R) for such indication. In connection
with the SmithKline Agreement, SmithKline purchased 176,922 shares 


                                                                          Page 9

<PAGE>   12
of Common Stock for $1.0 million and an additional 400,000 shares of Common
Stock for $2.0 million in conjunction with the Company's public offering which
closed during October, 1997. At this time, SmithKline has no plans to conduct
development work for the acute myocardial infarction ("AMI") and stroke
indications. TBC is evaluating the feasibility of development of NOVASTAN(R) for
stroke and possibly AMI.

The Company's operating results have fluctuated significantly during each
quarter, and the Company anticipates that such fluctuations, largely
attributable to varying research and development commitments and expenditures,
will continue for the next several years.

                              RESULTS OF OPERATIONS

                THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998


Revenues decreased from $621,600 in the three month period ended March 31, 1998
to $534,925 in the same period of 1999, a decrease of 14%. Revenues were
composed of earned revenues under research and development agreements. Revenue
from research agreements decreased primarily due to a decrease in reimbursable
expenses related to the SmithKline Agreement.

Total operating expenses decreased 3% from $4,624,693 in the three month period
ended March 31, 1998 to $4,498,081 in the same period of 1999 due primarily to
the decrease in research and development expenses. Research and development
expenses decreased 7% from $3,410,384 in the three month period ended March 31,
1998 to $3,158,639 in the same period of 1999. This decrease was primarily
attributable to reduced clinical trial expenses related to the completion of
several phase I and II studies involving mainly endothelin and selectin
antagonist compounds. This was partially offset by higher preclinical study
costs for these same compounds and expenses related to the NDA amendment for
NOVASTAN(R). General and administrative expenses increased 10% from $1,214,309
in the three month period ended March 31, 1998 to $1,339,441 in the same period
of 1999 due primarily to approximately $200,000 accrued for settlement of a
lawsuit offset by decreased compensation, personnel recruiting costs and market
research expenses partially offset by the addition of an investor relations
department. The Company had 82 employees at March 31, 1999 and 81 employees at
March 31, 1998.

The 34% decrease in investment income, from $580,549 in the three month period
ended March 31, 1998 to $384,319 in the same period of 1999, is attributed
primarily to lower investment balances and a trend toward lower interest rates.

                         LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its research and development activities to date
principally through (i) public offerings and private placements of its equity
securities, (ii) issuances of Common Stock in conjunction with acquisitions and
research and collaboration agreements and exercise of stock options and
warrants, (iii) license fees and milestone and research payments received in
conjunction with research and collaborative agreements, and (iv) investment
income, net of interest expense. During the first three months of 1999, the
Company utilized net cash of $3,493,898 in operating activities. The use of cash
in operations was caused primarily by the Company's net loss. Investing and
financing activities primarily reflect the purchases and redemptions of
short-term and long-term investments during the first three months of 1999. In
addition, $109,224 was provided by exercise of warrants and stock options during
the first three months of 1999. At March 31, 1999, the Company had cash, cash
equivalents, short-term investments and long-term investments of $26,820,661.

The Company expects to incur substantial research and development expenditures
as it designs and develops small molecule drugs for vascular diseases. The
Company anticipates that operating expenses may increase during 1999 and
subsequent years. The Company began to incur costs to develop NOVASTAN(R) during
the third quarter of 1993. These costs will continue during 1999 due to expenses
associated with the amendment of the new drug application with the FDA for
NOVASTAN(R) and costs associated with additional clinical and regulatory work
being completed for NOVASTAN(R). The Company also began incurring clinical trial
costs in 1997 for the compounds TBC11251 and TBC1269 and is continuing its
clinical trials for these compounds during 1999. In 1999, the Company expects to
begin to incur costs for clinical trials related to additional compounds. These
costs include, among other things, hiring personnel to direct and 

                                                                         Page 10

<PAGE>   13


carry out all operations related to the clinical trials, hospital and procedural
costs, services of a contract research organization and purchasing and
formulating large quantities of the compound to be used in such trials. In
addition, the Company anticipates that the administrative costs associated with
this effort will be significant. The amounts and timing of expenditures will
depend on the progress of the Company's ongoing research, clinical development
and commercialization efforts.

The Company anticipates that its existing capital resources, research payments
from LG Chemical and its other revenue sources should be sufficient to fund its
cash requirements through the second quarter of the year 2000. This date is
contingent upon various factors, including the rates of patient enrollment and
spending associated with the development and commercialization of NOVASTAN(R),
the level of research, development and clinical trial expenditures for TBC11251,
TBC1269 and other compounds, results of clinical trials, the costs and timing of
regulatory approvals (including NOVASTAN(R)), the success of sales and marketing
efforts for NOVASTAN(R), if approved by the FDA, the exercise of the Company's
publicly traded warrants, if any, which expire on September 30, 1999 and are
presently not "in the money", and the timing and terms of future corporate
collaborations, if any, entered into by the Company. If the Company does not
receive timely FDA approval for NOVASTAN(R), or such approval is significantly
delayed or if NOVASTAN(R) cannot be successfully marketed after FDA approval,
the Company will need to re-examine the use of its existing capital resources.
No assurances can be given that the Company will be able to continue its
research and development programs at currently anticipated levels. Moreover,
TBC's agreement with Synthelabo requires the Company to maintain a "net worth",
as defined in the agreement, of at least $5.0 million during the term of the
agreement. If the Company fails to maintain at least $5.0 million of "net
worth", Synthelabo may require that the technology, as defined in the agreement,
be transferred to, and the development program be conducted by, a joint venture
owned by TBC and Synthelabo.

The Company anticipates that it may need to raise substantial funds for future
operations through collaborative arrangements, public or private issuance of
debt and equity, or other arrangements. These financings could result in the
issuance of equity securities which dilute the existing holders of the Company's
Common Stock. The Company expects that as additional product candidates enter
clinical trials, the Company may incur increased expenditures for laboratory
space, scientific and administrative personnel, and services of contract
research organizations. There can be no assurance that the Company will be able
to obtain such additional financings or establish corporate collaborations on
acceptable terms or in time to fund its research and development programs. It is
likely that the Company's ability to raise additional funds will be adversely
affected by unfavorable results of its clinical trials and the failure to obtain
regulatory approvals for its product candidates, including NOVASTAN(R). In the
event such financing is not obtained, the Company's drug discovery or
development programs may be delayed, scaled back or eliminated. The Company may
also be required in this event to obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies, product candidates or products that it
would not otherwise relinquish.

                  HAZARDOUS MATERIALS AND ENVIRONMENTAL MATTERS

The Company's research and development activities involve the controlled use of
hazardous and radioactive materials. The Company is subject to federal, state,
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of such materials and certain waste products. Management believes
that the Company is in compliance with such laws, regulations and standards
currently in effect and that the cost of compliance with such laws, regulation,
and standards will not have a material adverse effect on the Company. The
Company does not expect to incur any material capital expenditures for
environmental control in the foreseeable future.

                     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 the operations of the Company.


                                                                         Page 11

<PAGE>   14

                                 YEAR 2000 ISSUE

The Year 2000 ("Y2K") issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Computer
equipment, software and other devices with imbedded technology that are
time-sensitive, such as computer systems, related software, research equipment,
alarm systems and telephone systems may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, temporary inability to process data, and may materially impact the
Company's financial condition.

The Company has undertaken various initiatives intended to ensure that it is
prepared for the Y2K issue. The Company is in the process of assessing its state
of readiness. Presently, the Company has reviewed its scientific equipment,
computer systems and related software to identify systems which may exhibit Y2K
issues. This review was performed by internal teams from various disciplines
within the Company. These teams evaluated the Company's equipment, computer
systems and software for Y2K issues and is currently performing testing to
insure proper operation after January 1, 2000. If necessary, specific
remediation plans will be developed for non-compliant items after testing is
completed. As a part of this review the Company will determine the known risks
related to the consequences of a failure to correct any Y2K deficiencies. The
Company has initiated formal communications with material third parties to
determine the extent to which the Company may be vulnerable to those third
parties' failure to remediate their Y2K problems. The Company and its licensee,
SmithKline are dependent upon Mitsubishi Chemical Corporation for supply of bulk
NOVASTAN(R) for clinical trial material and for its inventory needs should the
FDA approve the compound for marketing. The Company has received communication
from Mitsubishi Chemical Corporation which states that it has undertaken to
become Y2K compliant. Any Y2K issues which would result in significant
interruptions of delivery schedules could have a material effect on the
Company's operations. However, the Company is presently not aware of any Y2K
issues that have been encountered by any third party, which could materially
affect the Company's operations.

The Company has developed a contingency plan to address potential Y2K issues.
This contingency plan addresses problems that the Company may encounter after
January 1, 2000 and will be updated to include issues identified during the
course of its remediation efforts and reasonably foreseeable problems that may
arise as a result of Y2K, including, but not limited to computer hardware and
software and research equipment. The contingency plan will be continually
refined as additional information becomes available. However, it is unlikely
that any contingency plan can fully address all events that may arise.

The Company estimates that the costs associated with the Y2K issue will not be
material, and as such will not have a significant impact on the Company's
financial position or operating results. The Company's current estimate of Y2K
remediation costs is approximately $50,000 which may be revised should other
remediation costs be discovered in the review of Y2K issues. However, the
failure to discover or correct a material Y2K problem could result in an
interruption in the Company's normal business activities or operations. Such
failure could materially and adversely affect the Company's results of
operation, liquidity and financial condition.

                 DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This Report includes "forward looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact included in this Report are forward looking
statements. Such forward looking statements include, without limitation,
statements under (a) "Business" regarding Texas Biotechnology Corporation's
expectations for future drug discovery and development and related expenditures
and (b) "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources" regarding TBC's estimate of
sufficiency of existing capital resources and its ability to raise additional
capital to fund cash requirements for future operations. Although TBC believes
that the expectations reflected in such forward looking statements are
reasonable, it can give no assurance that such expectations reflected in such
forward looking statements will prove to have been correct. The ability to
achieve TBC's expectations is contingent upon a number of factors which include
(i) ongoing cost of research and development activities, (ii) cost of clinical
development of product candidates, (iii) attainment of research and clinical
goals of product candidates, (iv) timely approval of TBC's product candidates by
appropriate governmental and regulatory 

                                                                         Page 12
<PAGE>   15
agencies, (v) effect of any current or
future competitive products, (vi) ability to manufacture and market products
commercially, (vii) retention of key personnel and (viii) capital market
conditions.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       Not Applicable


                                                                         Page 13
<PAGE>   16



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 are two individuals who
purchased shares of the Company on December 16, 1993 following the Company's
initial public offering ("IPO"). In their complaint, plaintiffs have 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 will be paid by the Company and $612,500 will be
paid by the Company's insurer.

The agreement to settle is subject to negotiation and execution of a detailed
stipulation of settlement between the parties, submission of the stipulation of
settlement to the court, provision of notice to class members of the settlement
terms, a fairness hearing, and final approval of the settlement by the court.
Discussions are ongoing with plaintiffs as to the schedule for completing these
steps; however, it is expected that final dismissal will take place no sooner
than 90 days. The Company cannot predict exactly when final dismissal can be
obtained.

ITEM 2.  CHANGES IN SECURITIES

       None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

       None

ITEM 4.  SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

       None

ITEM 5.  OTHER INFORMATION

       None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
     EXHIBIT NO.             DESCRIPTION
     -----------             -----------
<S>                    <C>
          27.1         Financial Data Schedule

         10.68         Employment Agreement with Pamela M. Murphy and Texas
                       Biotechnology Corporation dated February 26, 1998.

         10.69         Employee Agreement between Pamela M. Murphy and
                       Texas Biotechnology Corporation dated March 2, 1999.

         10.70         Fourth Amendment dated January 1, 1999 to Consulting
                       Agreement with John M. Pietruski dated January 1, 1992.

         10.71         Texas Biotechnology Corporation 1999 Stock Incentive
                       Plan.
</TABLE>

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


                                                                         Page 14
<PAGE>   17


                         TEXAS BIOTECHNOLOGY CORPORATION

                                 MARCH 31, 1999

                                   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 13th day of May, 1999.




                                             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)



                                                                         Page 15
<PAGE>   18



                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
     EXHIBIT NO.             DESCRIPTION OF EXHIBIT
     -----------             ----------------------
<S>                    <C>
          27.1         Financial Data Schedule

         10.68         Employment Agreement with Pamela M. Murphy and Texas
                       Biotechnology Corporation dated February 26, 1998.

         10.69         Employee Agreement between Pamela M. Murphy and
                       Texas Biotechnology Corporation dated March 2, 1999.

         10.70         Fourth Amendment dated January 1, 1999 to Consulting
                       Agreement with John M. Pietruski dated January 1, 1992.

         10.71         Texas Biotechnology Corporation 1999 Stock Incentive
                       Plan.
</TABLE>

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


                                                                         Page 16