During the course of our effort to identify compounds present in a recombinant strain of Penicillium chrysogenum expressing deacetoxycephalosporin C synthase activity, we have identified a new cephem compound 16-hydroxyadipoyl-7-ADCA (2) along with deacetoxy-cephalosporin C (1). The recombinant P. chrysogenum strain (PC100) expresses the S. clavuligerus expandase gene to high levels through its fusion to the isopenicillin N synthetase gene promoter. Metabolites were isolated from the fermentation broth by a series of chromatographic procedures: the filtered broth was first applied to an HP-20 resin column and the components sequentially eluted with H2O, 50% aqueous acetone and finally with 100% acetone; final purification of 1 and 2 were achieved by repeated semi-preparative HPLC of the 100% acetone fraction on tandem Nova-pak C18 cartridges with 10 mM phosphate buffer and MeOH. HPLC fractions having the diagnostic UV absorption maxima at 260nm were collected and identified as cephems 1 and 2. Structure determination via ¹H NMR, ¹³C NMR and mass spectrometry confirmed compound 1 as the potassium salt of deacetoxy-cephalosporin C (matching reported data) and compound 2 as the potassium salt of 16-hydroxyadipoyl-7-ADCA (a new cephem). The production of 1 suggests that P. chrysogenum contains some IPNS epimerase activity, which is probably masked by the high activities of the penicillin biosynthetic enzymes during precursor feeding and may be catalyzed by an enzyme related to the epimerase found in cephem biosynthetic gene clusters or be a side reaction of an amino acid racemase. The production of 16-hydroxyadipyl-7-ADCA (2) may involve a-hydroxyadipate present in the cells (from an unknown anabolic pathway to a-aminoadipate or an unknown catabolic pathway from a-aminoadipate) accepted by acyltransferase to yield a-hydroxyadipyl-6-APA, or conversion of the amino function of isopencillin N or penicillin N to the hydroxy function by an unknown pathway, both requiring a-hydroxyadipyl-6-APA as a substrate for the heterologous expandase activity (not yet established experimentally).