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

                         FORM 10-Q


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

               For Quarter Ended:  May 27, 1995

               Commission File No:  0-10824

               GENOME THERAPEUTICS CORPORATION
     (Exact name of registrant as specified in its charter)

     MASSACHUSETTS                            04-2297484
     (State or other jurisdiction      (I.R.S. identification no.)
      of incorporation or organization)
  

   100 BEAVER STREET;  WALTHAM, MASSACHUSETTS     02154
   (Address of principal executive offices)     (Zip code)


     Registrant's telephone number:  (617) 893-5007


     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.

        COMMON STOCK                    ______12,844,637________ 
        $.10 PAR VALUE                  Outstanding July 7, 1995

    SERIES B RESTRICTED STOCK           __________57,512________
        $.10 PAR VALUE                  Outstanding July 7, 1995

- --------------------------------------------------------------------
<PAGE>



           Genome Therapeutics Corp. and Subsidiaries

      Index to Financial Information (Unaudited) and Other
          Information

                                                        Page
Part I
Financial Information  (Unaudited) :

 Consolidated Condensed Balance Sheets as of              3
     May 27, 1995 and August 31, 1994

 Consolidated Condensed Statements of Operations          4
     for the 13 and 39 week periods ended May 27, 1995
     and May 28, 1994

 Consolidated Statements of Cash Flows for the            5  
     39-week periods ended May 27, 1995
     and May 28, 1994

 Notes to Consolidated Condensed Financial                6
     Statements for the 39-week periods ended
     May 27, 1995 and May 28, 1994

 Management's Discussion and Analysis of Financial
     Conditions and Results of Operations                 7-9


Part II
Other Information:

     Other Information                                    10

     Signature                                            11

                                 Page 2
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<PAGE>


GENOME THERAPEUTICS CORP. AND SUBSIDIARIES          
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)        

                                      May 27,      August 31,
                                        1995            1994                   
Assets:                                                    
Current Assets:                                            
   Cash and Cash Equivalents        $1,599,131     $1,208,836                 
   Short-term Investments            2,829,154      3,008,344
   Receivables:                                             
     Trade and Other (net of allowances                               
       for doubtful accounts)          274,073        391,151
     Unbilled Costs                    276,435        229,045
   Prepaid Expenses                    107,656         17,836
   Other Current Assets                  3,800          4,550
        Total Current Assets         5,090,249      4,859,762
                                                           
Equipment and Leasehold                                    
Improvements, at cost:
   Laboratory and Scientific   
     Equipment                       1,230,710        752,482
   Leasehold Improvements            1,570,930      1,446,236
   Office Equipment and Furniture      791,499        532,656
   Unfinished Plant and Equipment      251,763        173,186
                                     3,844,902      2,904,560
   Less Accumulated Depreciation     2,344,600      2,120,146
                                     1,500,302        784,414
                                                           
Restricted Cash                        605,540              0
Other Assets                           281,507        266,506
                                                           
        Total Assets                $7,477,598     $5,910,682
                                                       
                                                           
                                                           
Liabilities and Shareholders'                              
Equity:
Current Liabilities:                                       
   Accounts Payable                   $381,775       $450,854
   Accrued Expenses                    809,359        838,595
   Deferred Contract Revenue             9,537         37,991
   Current Maturities of Capital       331,653        193,388
     Lease Obligations
                                                           
        Total Current Liabilities    1,532,324      1,520,828
                                                           
Deferred Compensation                  172,974        153,507
Capital Lease Obligations, net of 
  Current Maturities                   779,613        165,299
                                                   
Shareholders' Equity                 4,992,687      4,071,048
                                                           
        Total Liabilities and        
          Shareholders' Equity      $7,477,598     $5,910,682                  
                                                            

See notes to consolidated condensed financial
 statements.




                            Page 3                
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<PAGE>                                                           
                                                           

GENOME THERAPEUTICS CORP. AND SUBSIDIARIES                         
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)                   


                              Thirteen Weeks Ended   Thirty-nine Weeks Ended 
                                May 27,    May 28,     May 27,     May 28,
                                  1995       1994        1995        1994
                                                       
Revenues:                                                       
  Operating Revenues        $1,935,942   $1,539,064   $5,362,510   $4,676,579
  Interest Income               71,863       38,458      157,619       98,732
  Royalties                     11,853       34,750       82,973      113,584
                                                                
   Total Revenues            2,019,658    1,612,272    5,603,102    4,888,895
                                                         
                                                                
Costs and Expenses:                                             
  Cost of Revenues           1,696,476    1,266,336    4,685,240    3,861,200
  Research and Development     231,506       84,630      769,404      177,159
  General and Administrative   559,648      546,035    1,522,657    1,638,293
                                                                
   Total Costs and Expenses  2,487,630    1,897,001    6,977,301    5,676,652
                                                                
   Net Loss                  ($467,972)   ($284,729) ($1,374,199)   ($787,757)
                                                                
Net Loss per Common Share       ($0.04)      ($0.03)      ($0.11)      ($0.07)

                                                         
Weighted Average Number of                                         
  Common Shares Outstanding  12,470,154   11,170,694   12,009,349   10,894,207

                                                               
                                                               
See notes to consolidated condensed financial
 statements.                                     
                               
                                Page 4 
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<PAGE>

GENOME THERAPEUTICS CORP. AND SUBSIDIARIES                         
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                    Thirty-nine Weeks Ended 
                                                       May 27,       May 28,   
                                                          1995          1994    
                                                                               
Cash Flows from Operating Activities:
Net Loss                                           ($1,374,199)    ($787,757)   
Adjustments to Reconcile Net Loss to Net
   Cash Used by Operating Activities:
      Depreciation and Amortization                    239,496       151,060   
      Deferred Compensation                             19,467        19,759
      Provision for Accounts Receivable                      0        62,680
      Changes in Assets and Liabilities:
        (Increase) Decrease in Current Assets:
          Receivables                                   69,688       165,208
          Prepaid Expenses                             (89,820)       (5,648)
          Other Current Assets                             750        (1,983)
        Increase (Decrease) in Current Liabilities:
          Accounts Payable                              97,061       (64,901)  
          Accrued Expenses                             (29,236)     (173,522)  
          Deferred Contract Revenue                    (28,454)      (85,280)   
                                                                
            Total Adjustments                          278,952        67,373    
                                                                
            Net Cash Used for Operating 
              Activities                            (1,095,247)     (720,384)   
                                                                
Cash Flows from Investing Activities:
   Purchases of Securities Held-to-Maturity          (4,820,810)  (3,006,341)  
   Proceeds from Securities Held-to-Maturity          5,000,000    3,000,000   
   Increase in Restricted Cash                         (605,540)           0   
   Purchases of Equipment and Leasehold Improvements   (113,309)     (17,329)  
   Increase in Other Assets                             (26,102)     (99,399)
   Purchase of Long-term Investment                           0      (50,000)
         
           Net Cash Used for Investing Activities      (565,761)    (173,069)  
                                                                
Cash Flows from Financing Activites:                                       
   Proceeds from Issuance of Common Stock 
     and Warrants                                     2,030,477    1,453,388
   Proceeds from Exercise of Stock Options              265,361      135,182   
   Principal Payments under Capital Lease Obligations  (244,535)    (134,597)   
                                                                
          Net Cash Provided by Financing Activities   2,051,303    1,453,973  
                                                                
Net Increase in Cash and Cash Equivalents               390,295      560,520   
Cash and Cash Equivalents at Beginning of Period      1,208,836    1,892,932  
                                                                
Cash and Cash Equivalents at End of Period           $1,599,131   $2,453,452   
                                                                
                                                                 
Supplemental Disclosure of Cash Flow Information:
  Interest Paid during Period                           $39,373       $15,566  
                                                                
Supplemental Schedule of Non-cash Investing Activities:
  Property and Equipment Acquired under Capital Leases $830,974       $40,449  

                                                                
                                                                
                                                                
See notes to consolidated condensed financial
 statements.                                        

                              Page 5
- ----------------------------------------------------------------------------
<PAGE>

Notes to Consolidated Condensed Financial Statements
(Unaudited)
- -----------------------------------------------------------

1.The unaudited consolidated condensed financial
  statements included herein have been prepared by the
  Company, without audit, pursuant to the rules and
  regulations of the Securities and Exchange Commission and
  include, in the opinion of management, all adjustments
  (consisting only of normal recurring adjustments)
  necessary for a fair presentation of interim results.
  Certain information and footnote disclosures normally
  included in the  financial statements prepared in
  accordance with generally accepted accounting principles
  have been condensed or omitted pursuant to such   rules and
  regulations.  The Company believes, however, that its
  disclosures are adequate to make the information presented
  not misleading.  The results  of operations for the
  thirteen (13) and thirty-nine (39) week periods ended  May
  27, 1995 are not necessarily indicative of the results to
  be expected for the full fiscal year.

2.For all periods presented, net loss per common share
  is based upon the weighted average number of shares
  outstanding during the period, since inclusion of common
  equivalent shares would be anti-dilutive.

3.Cash equivalents are short term highly liquid
  investments with original maturities of less than three
  (3) months.  The Company's cash equivalents primarily
  consisted of money market funds at August 31, 1994 and May
  27,1995.  The Company accounts for its short-term
  investments under Financial Accounting Standards No. 115
  "Accounting for Certain Investments in Debt and Equity
  Securities" ("SFAS No. 115").  Accordingly, short-term
  investments, which consist of commercial paper and medium-
  term notes, are  classified as held to maturity and
  recorded at amortized cost.
                         
                            Page 6   
- ---------------------------------------------------------------------------   
<PAGE>                             
                             
          Management's Discussion and Analysis of
       Financial Condition and Results of Operations


Financial Condition and Liquidity
  The Company's treasury, including restricted cash,  for
the third quarter increased by $1,843,738 from $3,190,087
at the end of the second quarter to $5,033,825 at the end
of the third quarter.  The Company raised approximately
$2,295,000 through the private placement of 850,000 shares
of common stock and the issuance of 154,552 shares of
common stock resulting from the exercise of stock options.
The Company believes that these funds are adequate to meet
its short-term operational and capital needs.  However, the
Company needs to continue to supplement its capital in
order to pursue its therapeutic strategy.

  During the current quarter, the Company pledged both cash
and marketable securities totaling $606,000 as collateral
under capital lease financing arrangements.  These funds
were reclassified in the financial statements as restricted
cash.

Results of Operations
  For the thirteen week period ended May 27, 1995, total
revenues increased approximately $408,000 or 25% when
compared to the same period last year from $1,612,000 in
fiscal 1994 to $2,020,000 in fiscal 1995 and increased
$51,000 or 3% from $1,969,000 when compared to the prior
quarter.

  For the thirty-nine (39) week period ended May 27,1995,
total revenues increased $714,000 or 15% when compared to
the same period last year from $4,889,000 in fiscal 1994 to
$5,603,000 in fiscal 1995.

     For the thirteen (13) week period ended May 27, 1995,
operating revenues increased approximately $397,000 or 26%
when compared to the same period last year reflecting
primarily an increase in newly funded government research
programs.  Operating revenues remained relatively constant
when compared to the prior quarter.

  Operating revenue for the thirty-nine (39) week period
ended May 27,1995   increased $686,000 or 15% when compared
to the same period last year also reflecting an increase in
newly funded government research programs.

                         Page 7  
- ------------------------------------------------------------------------
<PAGE> 

 For the thirteen (13) week period ended May 27,1995,
royalty income decreased by approximately $23,000 when
compared to both prior year and prior quarter due to a
downward adjustment to reflect actual sales performance by
Pfizer, Dow Chemical's licensee of recombinant chymosin.
Royalty income from Dow is accrued monthly based on prior
year sales and is adjusted once a year to reflect actual
sales performance by Pfizer.

  For the thirty-nine (39) week period ended May 27,1995,
royalty income decreased by approximately $31,000 when
compared to prior year also reflecting the downward
adjustment as noted above.

  For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995, interest income increased approximately
$33,000 and $59,000, respectively, when compared to the
same periods last year.  These increases reflect a rise in
the interest rates as well as an increase in the Company's
treasury.  Interest income for the thirteen (13) period
ended May 27,1995 increased $27,000 when compared to the
prior quarter also reflecting an increase in the Company's
treasury.

Costs and Expenses
  For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995,  cost of revenues, as a percentage of
operating revenues, increased approximately 5% when
compared to the same periods last year reflecting
increased occupancy cost and related depreciation and
amortization expenses associated with the expansion of the
operations into laboratory space at our Beaver Street
facility.  Last year, this  space was sublet to Dianon
Systems, Inc., the purchaser of our diagnostics testing
business.  As of July 1994, Dianon had relocated its
employees out of the sublet space to accommodate growth in
the Company's operations.  Cost of revenues, as a
percentage of operating revenues, remained relatively
constant when compared to the prior quarter.

  For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995,  cost of revenues, in absolute dollars,
increased approximately 34% and 21%, respectively, when
compared with the same periods last year.  These increases
reflect primarily the substantial increase in operating
revenues as well as increased occupancy cost as noted
above.  Cost of revenues, in absolute dollars, remained
relatively constant when compared to the prior quarter.

                         Page 8
- --------------------------------------------------------------------------
<PAGE>
 
 For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995, company-funded research and development
expenses increased substantially when compared to the same
periods last year reflecting primarily the period expenses
associated with the Company's project in Helicobacter
pylori, the causative agent of stomach ulcers and believed
to be responsible for some gastrointestinal cancers.  The
increase also reflects increased effort on other company-
funded research and development projects.   For the
thirteen (13) week period ended May 27, 1995, company-
funded research and development expenses decreased 18% when
compared to the prior quarter.

  For the thirteen (13) week period ended May 27, 1995,
general and administrative expenses increased by 3% and
16%, respectively, when compared to both the same period
last year and prior quarter reflecting  increased business
development expenses.

  For the thirty-nine (39) week period ended May 27,1995,
general and administrative expenses decreased approximately
7% when compared to the prior year reflecting primarily a
personnel reduction in administrative support including the
resignation of Dr. Orrie Friedman as a full-time employee
and Chairman of the Board of the Company.  As of June 30,
1994, Dr. Friedman terminated his employment with the
Company.

                          Page 9
- ---------------------------------------------------------------------------
<PAGE>

                         Part II


Item 1.   Legal Proceedings

          None

Item 2.   Changes In Securities

          None

Item 3.   Defaults Upon Senior Securities

          None

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

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          a) Exhibits:

             None.

          b) Reports on Form 8-K

             None.

                            Page 10
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<PAGE>  

                           Signature



Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has caused this report to be signed
on its behalf by the undersigned thereunto duly authorized
who also serves in the capacity of principal financial
officer.



                Genome Therapeutics Corporation



                    ______________________
  
                        Fenel M. Eloi
                  (Principal Financial Officer)

                      Date: July 7, 1995

                            PAGE 11
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SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, D.C. 20549
                         ____________

                         FORM 10-Q

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

               For Quarter Ended:  May 27, 1995

               Commission File No:  0-10824

               GENOME THERAPEUTICS CORPORATION
     (Exact name of registrant as specified in its charter)

     MASSACHUSETTS                            04-2297484
     (State or other jurisdiction      (I.R.S. identification no.)
      of incorporation or organization)
  

   100 BEAVER STREET;  WALTHAM, MASSACHUSETTS     02154
   (Address of principal executive offices)     (Zip code)

     Registrant's telephone number:  (617) 893-5007

     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.

        COMMON STOCK                    ______12,844,637________ 
        $.10 PAR VALUE                  Outstanding July 7, 1995

    SERIES B RESTRICTED STOCK           __________57,512________
        $.10 PAR VALUE                  Outstanding July 7, 1995

- --------------------------------------------------------------------
Genome Therapeutics Corp. and Subsidiaries

      Index to Financial Information (Unaudited) and Other
          Information

                                                        Page
Part I
Financial Information  (Unaudited) :

 Consolidated Condensed Balance Sheets as of              3
     May 27, 1995 and August 31, 1994

 Consolidated Condensed Statements of Operations          4
     for the 13 and 39 week periods ended May 27, 1995
     and May 28, 1994

 Consolidated Statements of Cash Flows for the            5  
     39-week periods ended May 27, 1995
     and May 28, 1994

 Notes to Consolidated Condensed Financial                6
     Statements for the 39-week periods ended
     May 27, 1995 and May 28, 1994

 Management's Discussion and Analysis of Financial
     Conditions and Results of Operations                 7-9

Part II
Other Information:

     Other Information                                    10

     Signature                                            11

                                 Page 2
- ---------------------------------------------------------------------
GENOME THERAPEUTICS CORP. AND SUBSIDIARIES          
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)        

                                      May 27,      August 31,
                                        1995            1994                   
Assets:                                                    
Current Assets:                                            
   Cash and Cash Equivalents        $1,599,131     $1,208,836                 
   Short-term Investments            2,829,154      3,008,344
   Receivables:                                             
     Trade and Other (net of allowances                               
       for doubtful accounts)          274,073        391,151
     Unbilled Costs                    276,435        229,045
   Prepaid Expenses                    107,656         17,836
   Other Current Assets                  3,800          4,550
        Total Current Assets         5,090,249      4,859,762
                                                           
Equipment and Leasehold                                    
Improvements, at cost:
   Laboratory and Scientific   
     Equipment                       1,230,710        752,482
   Leasehold Improvements            1,570,930      1,446,236
   Office Equipment and Furniture      791,499        532,656
   Unfinished Plant and Equipment      251,763        173,186
                                     3,844,902      2,904,560
   Less Accumulated Depreciation     2,344,600      2,120,146
                                     1,500,302        784,414
                                                           
Restricted Cash                        605,540              0
Other Assets                           281,507        266,506
                                                           
        Total Assets                $7,477,598     $5,910,682
                                                       
                                                           
                                                           
Liabilities and Shareholders'                              
Equity:
Current Liabilities:                                       
   Accounts Payable                   $381,775       $450,854
   Accrued Expenses                    809,359        838,595
   Deferred Contract Revenue             9,537         37,991
   Current Maturities of Capital       331,653        193,388
     Lease Obligations
                                                           
        Total Current Liabilities    1,532,324      1,520,828
                                                           
Deferred Compensation                  172,974        153,507
Capital Lease Obligations, net of 
  Current Maturities                   779,613        165,299
                                                   
Shareholders' Equity                 4,992,687      4,071,048
                                                           
        Total Liabilities and        
          Shareholders' Equity      $7,477,598     $5,910,682                  
                                                            

See notes to consolidated condensed financial
 statements.

                            Page 3                
- ----------------------------------------------------------------------
GENOME THERAPEUTICS CORP. AND SUBSIDIARIES                         
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)                   

                              Thirteen Weeks Ended   Thirty-nine Weeks Ended 
                                May 27,    May 28,     May 27,     May 28,
                                  1995       1994        1995        1994
                                                       
Revenues:                                                       
  Operating Revenues        $1,935,942   $1,539,064   $5,362,510   $4,676,579
  Interest Income               71,863       38,458      157,619       98,732
  Royalties                     11,853       34,750       82,973      113,584
                                                                
   Total Revenues            2,019,658    1,612,272    5,603,102    4,888,895
                                                         
                                                                
Costs and Expenses:                                             
  Cost of Revenues           1,696,476    1,266,336    4,685,240    3,861,200
  Research and Development     231,506       84,630      769,404      177,159
  General and Administrative   559,648      546,035    1,522,657    1,638,293
                                                                
   Total Costs and Expenses  2,487,630    1,897,001    6,977,301    5,676,652
                                                                
   Net Loss                  ($467,972)   ($284,729) ($1,374,199)   ($787,757)
                                                                
Net Loss per Common Share       ($0.04)      ($0.03)      ($0.11)      ($0.07)

                                                         
Weighted Average Number of                                         
  Common Shares Outstanding  12,470,154   11,170,694   12,009,349   10,894,207

                                                               
                                                               
See notes to consolidated condensed financial
 statements.                                     
                               
                                Page 4 
- ---------------------------------------------------------------------------
GENOME THERAPEUTICS CORP. AND SUBSIDIARIES                         
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                    Thirty-nine Weeks Ended 
                                                       May 27,       May 28,   
                                                          1995          1994    
                                                                               
Cash Flows from Operating Activities:
Net Loss                                           ($1,374,199)    ($787,757)   
Adjustments to Reconcile Net Loss to Net
   Cash Used by Operating Activities:
      Depreciation and Amortization                    239,496       151,060   
      Deferred Compensation                             19,467        19,759
      Provision for Accounts Receivable                      0        62,680
      Changes in Assets and Liabilities:
        (Increase) Decrease in Current Assets:
          Receivables                                   69,688       165,208
          Prepaid Expenses                             (89,820)       (5,648)
          Other Current Assets                             750        (1,983)
        Increase (Decrease) in Current Liabilities:
          Accounts Payable                              97,061       (64,901)  
          Accrued Expenses                             (29,236)     (173,522)  
          Deferred Contract Revenue                    (28,454)      (85,280)   
                                                                
            Total Adjustments                          278,952        67,373    
                                                                
            Net Cash Used for Operating 
              Activities                            (1,095,247)     (720,384)   
                                                                
Cash Flows from Investing Activities:
   Purchases of Securities Held-to-Maturity          (4,820,810)  (3,006,341)  
   Proceeds from Securities Held-to-Maturity          5,000,000    3,000,000   
   Increase in Restricted Cash                         (605,540)           0   
   Purchases of Equipment and Leasehold Improvements   (113,309)     (17,329)  
   Increase in Other Assets                             (26,102)     (99,399)
   Purchase of Long-term Investment                           0      (50,000)
         
           Net Cash Used for Investing Activities      (565,761)    (173,069)  
                                                                
Cash Flows from Financing Activites:                                       
   Proceeds from Issuance of Common Stock 
     and Warrants                                     2,030,477    1,453,388
   Proceeds from Exercise of Stock Options              265,361      135,182   
   Principal Payments under Capital Lease Obligations  (244,535)    (134,597)   
                                                                
          Net Cash Provided by Financing Activities   2,051,303    1,453,973  
                                                                
Net Increase in Cash and Cash Equivalents               390,295      560,520   
Cash and Cash Equivalents at Beginning of Period      1,208,836    1,892,932  
                                                                
Cash and Cash Equivalents at End of Period           $1,599,131   $2,453,452   
                                                                
                                                                 
Supplemental Disclosure of Cash Flow Information:
  Interest Paid during Period                           $39,373       $15,566  
                                                                
Supplemental Schedule of Non-cash Investing Activities:
  Property and Equipment Acquired under Capital Leases $830,974       $40,449  

                                                                
                                                                
                                                                
See notes to consolidated condensed financial
 statements.                                        

                              Page 5
- ----------------------------------------------------------------------------
Notes to Consolidated Condensed Financial Statements
(Unaudited)
- -----------------------------------------------------------

1.The unaudited consolidated condensed financial
  statements included herein have been prepared by the
  Company, without audit, pursuant to the rules and
  regulations of the Securities and Exchange Commission and
  include, in the opinion of management, all adjustments
  (consisting only of normal recurring adjustments)
  necessary for a fair presentation of interim results.
  Certain information and footnote disclosures normally
  included in the  financial statements prepared in
  accordance with generally accepted accounting principles
  have been condensed or omitted pursuant to such   rules and
  regulations.  The Company believes, however, that its
  disclosures are adequate to make the information presented
  not misleading.  The results  of operations for the
  thirteen (13) and thirty-nine (39) week periods ended  May
  27, 1995 are not necessarily indicative of the results to
  be expected for the full fiscal year.

2.For all periods presented, net loss per common share
  is based upon the weighted average number of shares
  outstanding during the period, since inclusion of common
  equivalent shares would be anti-dilutive.

3.Cash equivalents are short term highly liquid
  investments with original maturities of less than three
  (3) months.  The Company's cash equivalents primarily
  consisted of money market funds at August 31, 1994 and May
  27,1995.  The Company accounts for its short-term
  investments under Financial Accounting Standards No. 115
  "Accounting for Certain Investments in Debt and Equity
  Securities" ("SFAS No. 115").  Accordingly, short-term
  investments, which consist of commercial paper and medium-
  term notes, are  classified as held to maturity and
  recorded at amortized cost.
                         
                            Page 6   
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Management's Discussion and Analysis of
       Financial Condition and Results of Operations

Financial Condition and Liquidity
  The Company's treasury, including restricted cash,  for
the third quarter increased by $1,843,738 from $3,190,087
at the end of the second quarter to $5,033,825 at the end
of the third quarter.  The Company raised approximately
$2,295,000 through the private placement of 850,000 shares
of common stock and the issuance of 154,552 shares of
common stock resulting from the exercise of stock options.
The Company believes that these funds are adequate to meet
its short-term operational and capital needs.  However, the
Company needs to continue to supplement its capital in
order to pursue its therapeutic strategy.

  During the current quarter, the Company pledged both cash
and marketable securities totaling $606,000 as collateral
under capital lease financing arrangements.  These funds
were reclassified in the financial statements as restricted
cash.

Results of Operations
  For the thirteen week period ended May 27, 1995, total
revenues increased approximately $408,000 or 25% when
compared to the same period last year from $1,612,000 in
fiscal 1994 to $2,020,000 in fiscal 1995 and increased
$51,000 or 3% from $1,969,000 when compared to the prior
quarter.

  For the thirty-nine (39) week period ended May 27,1995,
total revenues increased $714,000 or 15% when compared to
the same period last year from $4,889,000 in fiscal 1994 to
$5,603,000 in fiscal 1995.

     For the thirteen (13) week period ended May 27, 1995,
operating revenues increased approximately $397,000 or 26%
when compared to the same period last year reflecting
primarily an increase in newly funded government research
programs.  Operating revenues remained relatively constant
when compared to the prior quarter.

  Operating revenue for the thirty-nine (39) week period
ended May 27,1995   increased $686,000 or 15% when compared
to the same period last year also reflecting an increase in
newly funded government research programs.

                         Page 7  
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For the thirteen (13) week period ended May 27,1995,
royalty income decreased by approximately $23,000 when
compared to both prior year and prior quarter due to a
downward adjustment to reflect actual sales performance by
Pfizer, Dow Chemical's licensee of recombinant chymosin.
Royalty income from Dow is accrued monthly based on prior
year sales and is adjusted once a year to reflect actual
sales performance by Pfizer.

  For the thirty-nine (39) week period ended May 27,1995,
royalty income decreased by approximately $31,000 when
compared to prior year also reflecting the downward
adjustment as noted above.

  For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995, interest income increased approximately
$33,000 and $59,000, respectively, when compared to the
same periods last year.  These increases reflect a rise in
the interest rates as well as an increase in the Company's
treasury.  Interest income for the thirteen (13) period
ended May 27,1995 increased $27,000 when compared to the
prior quarter also reflecting an increase in the Company's
treasury.

Costs and Expenses
  For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995,  cost of revenues, as a percentage of
operating revenues, increased approximately 5% when
compared to the same periods last year reflecting
increased occupancy cost and related depreciation and
amortization expenses associated with the expansion of the
operations into laboratory space at our Beaver Street
facility.  Last year, this  space was sublet to Dianon
Systems, Inc., the purchaser of our diagnostics testing
business.  As of July 1994, Dianon had relocated its
employees out of the sublet space to accommodate growth in
the Company's operations.  Cost of revenues, as a
percentage of operating revenues, remained relatively
constant when compared to the prior quarter.

  For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995,  cost of revenues, in absolute dollars,
increased approximately 34% and 21%, respectively, when
compared with the same periods last year.  These increases
reflect primarily the substantial increase in operating
revenues as well as increased occupancy cost as noted
above.  Cost of revenues, in absolute dollars, remained
relatively constant when compared to the prior quarter.

                         Page 8
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For the thirteen (13) and thirty-nine (39) week periods
ended May 27,1995, company-funded research and development
expenses increased substantially when compared to the same
periods last year reflecting primarily the period expenses
associated with the Company's project in Helicobacter
pylori, the causative agent of stomach ulcers and believed
to be responsible for some gastrointestinal cancers.  The
increase also reflects increased effort on other company-
funded research and development projects.   For the
thirteen (13) week period ended May 27, 1995, company-
funded research and development expenses decreased 18% when
compared to the prior quarter.

  For the thirteen (13) week period ended May 27, 1995,
general and administrative expenses increased by 3% and
16%, respectively, when compared to both the same period
last year and prior quarter reflecting  increased business
development expenses.

  For the thirty-nine (39) week period ended May 27,1995,
general and administrative expenses decreased approximately
7% when compared to the prior year reflecting primarily a
personnel reduction in administrative support including the
resignation of Dr. Orrie Friedman as a full-time employee
and Chairman of the Board of the Company.  As of June 30,
1994, Dr. Friedman terminated his employment with the
Company.

                          Page 9
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Part II

Item 1.   Legal Proceedings

          None

Item 2.   Changes In Securities

          None

Item 3.   Defaults Upon Senior Securities

          None

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

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          a) Exhibits:

             None.

          b) Reports on Form 8-K

             None.

                            Page 10
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Signature

Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has caused this report to be signed
on its behalf by the undersigned thereunto duly authorized
who also serves in the capacity of principal financial
officer.

                Genome Therapeutics Corporation

                    ______________________
  
                        Fenel M. Eloi
                  (Principal Financial Officer)

                      Date: July 7, 1995

                            PAGE 11