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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


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                                    FORM 8-K

                                 CURRENT REPORT

                         PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

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       Date of Report (Date of earliest event reported): OCTOBER 10, 1997
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                           CREATIVE BIOMOLECULES, INC.
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             (Exact name of registrant as specified in its charter)



          Delaware                       0-19910                  94-2786743
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(State or other jurisdiction     (Commission File Number)       (IRS Employer
      of incorporation)                                      Identification No.)
                               

                 45 SOUTH STREET, HOPKINTON, MASSACHUSETTS 01748
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               (Address of principal executive offices) (Zip Code)



       Registrant's telephone number, including area code: (508) 782-1100
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ITEM 5.  OTHER EVENTS.

     In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Creative BioMolecules, Inc. (the "Company") is
hereby filing cautionary statements identifying important factors that could
cause the Company's actual results to differ materially from those projected in
forward-looking statements of the Company made by or on behalf of the Company.
These cautionary statements are set forth in the form of risk factors which the
Company also hereby incorporates by reference into the following Registration
Statements of the Company: Form S-8 No. 33-56706; Form S-8 No. 33-61884; Form
S-3 No. 33-68084, Form S-8 No. 33-80945; Form S-3 No. 33-83276; Form S-3 No.
33-91150; Form S-8 No. 333-36171, and Form S-8 No. 333-36175.


                                  RISK FACTORS

     EARLY STAGE OF DEVELOPMENT. Creative BioMolecules has not yet generated
revenues from the commercialization of its products, and there is substantial
uncertainty regarding the timing and amount of any such future revenues.
Although the Company cannot predict with accuracy the timing of marketing
approval for any products under development, the first such approval is not
expected for several years and no significant product revenues or royalties will
be generated before such approval is obtained. There can also be no assurance
that the Company's products will be proven safe and effective in clinical
trials, meet applicable regulatory standards, be capable of being produced in
commercial quantities at reasonable cost, be marketed successfully or achieve
customer acceptance. Moreover, there can be no assurance that government health
administration authorities, private health care providers or other third party
payors will accept the Company's products, even if the Company's products prove
to be safe and effective and are approved for marketing by the FDA and other
regulatory authorities.

     RELIANCE ON LEAD PRODUCT CANDIDATE. The Company's research and development
resources are primarily dedicated to its programs based on its proprietary
recombinant morphogenic protein, OP-1, the Company's lead product candidate for
several potential therapeutic indications. Clinical progress in the areas of
orthopaedic reconstruction and renal disease are within the control of Stryker
Corporation ("Stryker") and Biogen, Inc. ("Biogen"), respectively, the Company's
collaborative partners. Significant delays in Stryker's or Biogen's clinical
trials of OP-1, unfavorable results in these trials, failure to obtain
regulatory approval for the commercialization of OP-1 products or failure to
achieve market acceptance of OP-1 would have a material adverse effect upon the
Company. See "--Dependence on Efforts of Stryker and Biogen and Other
Collaborative Partners to Commercialize Products."

     CONTINUING OPERATING LOSSES AND ACCUMULATED DEFICIT. The Company has
experienced significant operating losses since its inception and, as of June 30,
1997, had an accumulated deficit of approximately $79.4 million. The Company
expects its operating expenses to increase and its operating losses to continue
over the next several years as it expands its research and development, clinical
testing and manufacturing efforts. The Company's ability to achieve
profitability is dependent in large part on obtaining regulatory approvals for
its products and entering into agreements for product development and
commercialization. There can be no assurance that the Company will ever become
profitable.

     UNCERTAINTIES RELATED TO COMPANY'S ABILITY TO RAISE ADDITIONAL NECESSARY
CAPITAL. The Company has spent and expects to continue to spend substantial
funds for continuation of the research and development of product candidates,
preclinical and clinical testing, the establishment of commercial-scale
manufacturing facilities, and filing, prosecuting and enforcing patent claims.
The Company may also require additional funds in order to acquire technologies
or products that complement the Company's efforts. To satisfy its capital
requirements, the Company may seek to raise funds in the public or private
capital markets or make collaborative arrangements with corporate partners or
from other sources. See "-- Reliance on Collaborative Arrangements as a Part of
the Company's Funding Strategy." No assurance can be given that such additional
funds will be available to the Company on acceptable terms, if at all. If
adequate funds are not available from operations or additional sources of
financing, the Company's business will be materially adversely affected and the
Company may be required to delay, scale back or eliminate one or more of its
development programs or 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 the Company would
otherwise retain for itself. If additional funds are raised by issuing equity
securities, further substantial dilution to existing stockholders may result. 

     RELIANCE ON COLLABORATIVE ARRANGEMENTS AS A PART OF THE COMPANY'S FUNDING
STRATEGY. The Company has relied and plans to continue to rely on collaborative
arrangements with established health care

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companies to fund a portion of its research and development. Pursuant to such
arrangements, the Company would seek to have collaborative partners provide
capital in exchange for certain technology, product, manufacturing and/or
marketing rights related to the collaborative research. There can be no
assurance that the Company will be able to negotiate acceptable collaborative
arrangements or that such collaborative arrangements will succeed.

     The Company's collaborative partners, Stryker and Biogen, have provided a
substantial portion of the Company's revenues during the past several years. The
Company anticipates that a significant portion of its research revenues for the
next several years will be derived from Stryker and Biogen. However, such
continued funding is dependent upon the Company performing research for Stryker
and Biogen and supplying material for preclinical and clinical testing by
Stryker and Biogen.

     There can be no assurance that the Company will satisfy the requirements
for the receipt of payments from Stryker and Biogen. If the Company does not
receive anticipated payments from Stryker and Biogen and does not receive
adequate additional funds, the Company's business will be materially adversely
affected. See "-- Uncertainties Related to Company's Ability to Raise Additional
Necessary Capital."

     DEPENDENCE ON EFFORTS OF STRYKER AND BIOGEN AND OTHER COLLABORATIVE
PARTNERS TO COMMERCIALIZE PRODUCTS. The Company's collaborative arrangements
with Stryker and Biogen provide, and future arrangements between the Company and
other collaborative partners may provide, that the collaborative partner
complete product development, perform clinical trials, obtain regulatory
approvals and market products resulting from such collaboration. The Company
does not control the amount of resources or the schedule of product development
in its collaborations with Stryker and Biogen and may not be able to control the
efforts that any future collaborative partners may devote to their respective
programs with the Company. The timing and amount of any future royalties and
manufacturing revenues of the Company with respect to product development
pursuant to such collaborative arrangements will therefore depend on the level
of commitment, timing and success of such collaborative partners' efforts.
Should Stryker, Biogen or any other collaborative partner fail to develop and to
commercialize marketable products successfully, the Company's business would be
materially adversely affected.

     COMPETITION AND RISK OF TECHNOLOGICAL OBSOLESCENCE. The biotechnology and
pharmaceutical industries are rapidly evolving fields in which developments are
expected to continue at a rapid pace. Competitors of the Company in the United
States and abroad are numerous and include, among others, pharmaceutical and
biotechnology companies, universities and other research institutions. The
Company's success depends upon developing and maintaining a competitive position
in the development of products and technologies in its areas of focus.
Competition from other biotechnology and pharmaceutical companies is intense and
is expected to increase as new products enter the market and as new technologies
are discovered and commercialized. The Company's competitors may develop
technologies and products that are more effective than any which have been or
are being developed by the Company, or that render the Company's technologies or
products obsolete or noncompetitive. Furthermore, the Company's competitors may
obtain patent protection or other intellectual property rights that block the
Company from developing its potential products, or they may obtain regulatory
approval for the commercialization of their products more rapidly or for a wider
array of indications than those obtained by the Company. Finally, many of these
competitors have substantially greater research and development capabilities,
clinical, manufacturing, regulatory and marketing experience and financial and
managerial resources than the Company.

     Other companies are engaged in the research and development of morphogenic
proteins for various applications. The Company is aware that Genetics Institute,
Inc. ("Genetics Institute"), a wholly-owned subsidiary of American Home Products
Corporation, is pursuing the development of bone morphogenetic proteins.
Genetics Institute has also entered into relationships with Yamanouchi
Pharmaceuticals Co., Ltd. and Sofamor Danek Group, Inc. covering development and
marketing of bone morphogenetic proteins. The Company believes that other
biopharmaceutical companies also are developing recombinant human proteins,
primarily growth factors, for use in the local repair of orthopaedic and
skeletal defects and in other indications. A number of other companies are
pursuing traditional therapies that may compete with the Company's

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products, including autografts, allografts and electrical stimulation devices
for the repair of orthopaedic and other skeletal defects.

     LACK OF EXPERIENCE IN COMMERCIAL MANUFACTURING; UNCERTAINTY AS TO
TRANSITION TO COMMERCIAL PRODUCTION. The Company has not yet introduced any
products commercially and has never engaged in large-scale commercial
manufacturing. To be successful, the Company's products must be manufactured in
commercial quantities, at acceptable costs and in compliance with regulatory
requirements. There can be no assurance that the Company's manufacturing
facility in Lebanon, New Hampshire will meet the Company's future needs or those
of its collaborative partners. In addition, manufacturing facilities must be
inspected and, in some cases, licensed by the FDA prior to the production of
commercial products and must be operated in compliance with current Good
Manufacturing Practices ("cGMP") for any products manufactured for either
clinical research or commercial use. No assurance can be given that the Company
will be able to make the transition to commercial production successfully.

     LACK OF COMMERCIAL SALES AND MARKETING EXPERIENCE. The Company does not
have experience in marketing, sales or distribution of commercial products. To
market any of its products, the Company will need to develop a substantial
marketing and sales force or will have to arrange for third parties to market
and distribute its products. To the extent that the Company determines not to,
or is unable to, arrange third party distribution for its products, significant
additional expenditures, management resources and time will be required to
develop a sales force. There can be no assurance that the Company will be able
to establish such a sales force or be successful in gaining market acceptance
for its products.

     DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY. The biotechnology and
pharmaceutical industries place considerable emphasis on obtaining patent and
maintaining trade secret protection for new technologies, products and
processes, and the Company's success will depend, in part, on its ability to
obtain patent protection for its products and manufacturing processes, preserve
its trade secrets and operate without infringing the proprietary rights of third
parties. In addition to the Company's own patents and patent applications,
Stryker has exclusively and irrevocably licensed rights in certain patents and
patent applications to the Company.

     The Company expects to seek additional patents in the future, but there can
be no assurance as to the Company's success or timeliness in obtaining any such
patents or as to the breadth or degree of protection which any such patents may
afford the Company. The patent position of biotechnology and pharmaceutical
firms is often highly uncertain and usually involves complex legal and factual
questions. There is a substantial backlog of biotechnology patent applications
at the U.S. Patent and Trademark Office. No consistent policy has emerged
regarding the breadth of claims covered in biotechnology patents. Accordingly,
there can be no assurance that patent applications relating to the Company's
products or technology will result in patents being issued or that, if issued,
such patents will afford adequate protection to the Company, or that such
patents will not be challenged, invalidated or infringed. Furthermore, there can
be no assurance that others will not independently develop similar products and
processes, duplicate any of the Company's products or, if patents are issued to
the Company, design around such patents. In addition, the Company could incur
substantial costs in defending itself in suits brought against it or in suits in
which the Company may assert its patent rights against others. If the outcome of
any such litigation is adverse to the Company, the Company's business could be
materially adversely affected. To determine the priority of inventions, the
Company also may have to participate in interference proceedings declared by the
U.S. Patent and Trademark Office, which could result in substantial cost to the
Company.

     PATENT INFRINGEMENT RISK. The Company may be subject to claims that it
infringes the patents of others. Competitors of the Company may obtain patents
claiming products or processes that are necessary for or useful to the
development, use or manufacture of the Company's products. Such competitors
could bring legal actions against the Company claiming infringement and seeking
damages and injunctive relief. The Company may be required to obtain licenses
from others to continue to develop, manufacture or market its products or may be
required to cease those activities. There can be no assurance that the Company
will obtain such licenses on acceptable terms, if at all. There can be no
assurance that the Company's current and proposed future activities in the field
of morphogenic proteins will not be challenged in the future in the United
States or

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abroad, that the Company necessarily will prevail in any such challenge, that
patents have not issued or will not issue containing claims which may materially
constrain the proposed activities of the Company, or that the Company will not
become involved in costly, time-consuming litigation or interference proceedings
regarding patents in the field of morphogenic proteins, including actions
brought to challenge or invalidate the Company's own patent rights.

     POTENTIAL INABILITY TO PROTECT UNPATENTED TECHNOLOGY. The Company also
seeks to protect its proprietary technology, including technology which may not
be patented or patentable, in part by confidentiality agreements and, in certain
cases, inventors' rights agreements with its collaborators, advisors, employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise be disclosed to, or discovered
by, competitors.

     NO ASSURANCE OF FDA APPROVAL; COMPREHENSIVE GOVERNMENT REGULATION. The
production and marketing of products developed through the Company's
technologies and its ongoing research and development activities are subject to
regulation by numerous federal, state and local governmental authorities in the
United States and by similar regulatory agencies in other countries where the
Company or any collaborative partner may be testing or intend to test and market
products which have yet to be developed. All of the Company's products require
governmental approvals for commercialization which have not yet been obtained.
Clinical trials and manufacturing of many of the Company's products will be
subject to the rigorous testing and approval processes of the FDA and
corresponding foreign regulatory authorities. The regulatory process, which
includes preclinical testing and clinical trials of each potential product to
establish its safety and efficacy, can take many years and require the
expenditure of substantial resources. Data obtained from preclinical and
clinical activities are susceptible to varying interpretations which could
delay, limit or prevent regulatory approvals. In addition, delays or rejections
may be encountered based upon changes in regulatory policy for product approval
during the period of product development and regulatory review. There can be no
assurance that, even after such time and expenditures, regulatory approvals will
be obtained for any products developed utilizing the Company's technologies.
Moreover, if regulatory approval of a product is granted, such approval may
entail limitations on the indicated uses for which it may be marketed. Further,
even if such regulatory approval is obtained, a marketed product and its
manufacturer are subject to continual review, and discovery of previously
unknown problems with a product or manufacturer may result in restrictions on
such product or manufacturer, including withdrawal of the product from the
market. Regulatory approval of product prices is required in many countries
outside the United States, and various cost containment measures have been
proposed in the United States. There can be no assurance that such regulatory
limitations will not prevent the Company and its collaborative partners from
realizing an adequate return on their investment in product development. Both
the legislative and executive branches of the federal government are considering
reforms to the FDA and its regulatory processes and authority. The effect of
these reforms, if enacted, on the Company or its products cannot be predicted.

     USE AND DISPOSAL OF HAZARDOUS MATERIALS. The Company is subject to numerous
environmental and safety laws and regulations, including those governing the
controlled use and disposal of hazardous materials such as radioactive
compounds, toxins and other chemicals used in the Company's research,
development and manufacturing activities. Any violation of, and the cost of
compliance with, these regulations could adversely impact the Company's
operations. While the Company believes that its safety procedures relating to
the handling and disposing of such materials comply with applicable regulatory
standards, the risk of accidental contamination or injury from these materials
cannot be completely eliminated. If such an accident were to occur, the Company
could be held liable for any resulting damages and any such liability could
exceed the resources of the Company.

     DEPENDENCE ON KEY PERSONNEL. The Company's success depends in large part
upon Michael M. Tarnow, its President and Chief Executive Officer, and Charles
Cohen, Ph.D., its Chief Scientific Officer. The loss of the services of either
of these key employees could have a material adverse effect on the Company. The
Company is also dependent on certain key management and scientific personnel,
the loss of whose services could significantly impede the achievement of its
development objectives. The Company's continued expansion in areas and
activities requiring additional expertise will necessitate the recruitment of
additional

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management and scientific personnel. There can be no assurance that the Company
will be able to attract and retain such personnel on acceptable terms, given the
competition for such personnel among numerous pharmaceutical and biotechnology
companies, government entities and research and academic institutions.

     DEPENDENCE ON ACADEMIC COLLABORATORS. The Company has relationships with
academic collaborators who investigate the potential utility of the Company's
proprietary technology for various therapeutic applications. The Company's
academic collaborators are not employees of the Company. The Company has limited
control over their activities, and only limited amounts of their time are
dedicated to the Company's projects. The Company's academic collaborators may
have relationships with other commercial entities, some of which compete with
the Company. Although the precise nature of each relationship varies, the
academic collaborators and their primary affiliated institutions generally sign
agreements which provide for confidentiality of the Company's proprietary
technology and results of studies. There can be no assurance, however, that the
Company will be able to maintain the confidentiality of its technology or study
results in connection with every collaboration, and dissemination of such
technology or study results could have an adverse effect on the Company's
business. Also, the Company seeks to obtain exclusive rights to license
developments that may result from these studies. However, there can be no
assurance that such licenses will be available on acceptable terms, if at all.

     UNCERTAINTY OF REIMBURSEMENT. The ability of the Company and its
collaborative partners to commercialize the Company's products successfully may
depend in part on the extent to which reimbursement for the cost of such
products and related treatment will be available from government health
administration authorities, private health insurers and other organizations.
Third-party payors are increasingly challenging the price of medical products
and services. Significant uncertainty exists as to the reimbursement status of
newly approved health care products, and there can be no assurance that adequate
third-party coverage will be available to enable the Company and its
collaborative partners to maintain price levels sufficient to realize an
appropriate return on its investment in product development. Legislation and
regulations affecting the pricing of pharmaceuticals may change before any of
the Company's proposed products are approved for commercialization. Adoption of
such legislation could further limit reimbursement for medical products and
services.

     PRODUCT LIABILITY AND INSURANCE. The testing, marketing and sale of health
care products entail an inherent risk of allegations of product liability, and
there can be no assurance that product liability claims will not be asserted
against the Company. The Company currently maintains product liability insurance
at a level which the Company believes is consistent with industry practice.
However, such existing coverage may not be adequate as the Company continues to
pursue clinical testing of its potential products or seeks to commercialize
products. In addition, there can be no assurance that the Company will be able
to maintain or increase its current insurance coverage in the future on
acceptable terms or that any claims against the Company will not exceed the
amount of such coverage.

     VOLATILITY OF STOCK PRICE. The market prices for securities of
biotechnology companies have been volatile. The market price for the Company's
Common Stock has fluctuated significantly since public trading commenced in
1992, and it is likely that the market price will continue to fluctuate in the
future. Announcements of technological innovations or new commercial products by
the Company or its competitors, developments concerning proprietary rights,
including patents and litigation matters, publicity regarding actual or
potential clinical trial and medical results relating to products under
development by the Company or its competitors, regulatory developments in both
the United States and foreign countries, public concern as to the safety of
biotechnology products and economic and other external factors may have a
significant impact on the Company's business and on the market price of the
Common Stock. In addition, the Company has experienced and expects to continue
to experience significant fluctuations in its quarterly operating results, due
primarily to the timing of revenue received under its manufacturing contract
with Biogen. The Company believes that fluctuations in quarterly results may
cause the market price of its Common Stock to fluctuate substantially.

     SHARES ELIGIBLE FOR FUTURE SALE. Substantially all of the Company's shares
are eligible for sale in the public market. Sales of substantial amounts of
Common Stock in the public market after this offering could

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adversely affect the market price of the Common Stock. As of September 15, 1997,
there were options outstanding to purchase 4,765,312 shares of Common Stock with
an average exercise price of $4.72 per share, and warrants to purchase 987,989
shares of Common Stock with an average exercise price of $2.43 per share.
Additional shares may also become available for sale in the public market from
time to time in the future. Exercise of such options and warrants would dilute
the percentage ownership of existing holders of Common Stock and the sale of
such shares could have a significant adverse effect on the market price of the
Common Stock.

     DILUTION. Dilution is likely to occur upon the exercise of outstanding
options and warrants. If the Company raises additional funds by issuing equity
securities, further dilution to existing stockholders may result. See
"Uncertainties Related to Company's Ability to Raise Additional Necessary
Capital."

     ABSENCE OF DIVIDENDS. The Company has not paid any cash dividends on the
Common Stock since inception and does not anticipate paying cash dividends in
the foreseeable future.

     ANTI-TAKEOVER PROVISIONS. The Board of Directors has the authority to issue
shares of preferred stock with rights and preferences, including dividend and
liquidation rights, senior to those of the Common Stock without further action
by the stockholders of the Company. In addition, the Company's Restated
Certificate of Incorporation and Restated By-Laws contain certain provisions
that could have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from attempting to acquire, control of
the Company. Such provisions could limit future prices that certain investors
might be willing to pay for shares of Common Stock. These provisions, which
include classification of the Board of Directors, could also make it more
difficult for stockholders to change the management of the Company or to effect
certain transactions. Certain provisions of Delaware and Massachusetts corporate
law also may have the effect of deterring a hostile takeover or delaying or
preventing changes in control or management of the Company.

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                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                              Creative Biomolecules, Inc.
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                                              (Registrant)



Date: October 10, 1997                        /s/ Wayne E. Mayhew III
                                              ----------------------------------
                                              Wayne E. Mayhew III
                                              Vice President, Chief Financial
                                              Officer, Treasurer and Secretary