In a cell-free system prepared by lysis of protoplasts of Cephalosporium acremonium mutant M-0198, isopenicillin N was converted into a penicillinase-resistant material that behaved like deacetoxycephalosporin C on high-pressure liquid chromatography analysis. This activity was found to be unstable to storage at -80 degrees C; 70-80% of the activity was lost after 1 day.