[4S-(4I.7I,10aJ)]1-Octahydro-5-oxo-4-[phenylmethoxy)carbonyl]amino]-7H-pyrido-[2,1-b] [1,3]thiazepine-7-carboxylic acid methyl ester (BMS-199541-01) is a key chiral intermediate for the synthesis of Omapatrilat (BMS-186716), a new vasopeptidease inhibitor under development. By using a selective enrichment culture technique we have isolated a strain of Sphingomonas paucimobilis SC 16113, which contains a novel L-lysine epsilon-aminotransferase. This enzyme catalyzed the oxidation of the epsilon-amino group of lysine in the dipeptide dimer N-2-[N[phenyl-methoxy)-carbonyl] L-homocysteinyl] L-lysine)1,1-disulphide (BMS-201391-01) to produce BMS-199541-01. The aminotransferase reaction required alpha-ketoglutarate as the amino acceptor. Glutamate formed during this reaction was recycled back to alpha-ketoglutarate by glutamate oxidase from Streptomyces noursei SC 6007. Fermentation processes were developed for growth of S. paucimobilis SC 16113 and S. noursei SC 6007 for the production of L-lysine epsilon-amino transferase and glutamate oxidase, respectively. L-lysine epsilon-aminotransferase was purified to homogeneity and N-terminal and internal peptides sequences of the purified protein were determined. The mot wt of L-lysine epsilon-aminotransferase is 81 000 Da and subunit size is 40 000 Da. L-lysine epsilon-aminotransferase gene (lat gene) from S. paucimobilis SC 16113 was cloned and overexpressed in Escherichia coli. Glutamate oxidase was purified to homogeneity from S. noursei SC 6003. The mol wt of glutamate oxidase is 125 000 Da and subunit size is 60 000 Da. The glutamate oxiadase gene from S. noursei SC 6003 was cloned and expressed in Streptomyces lividans. The biotransformation process was developed for the conversion of BMS-201391-01 to BMS-199541-01 by using L-lysine epsilon-aminotransferase expressed in E. coli. In the biotransformation process, for conversion of BMS-201391-01 (CBZ protecting group) to BMS-199541-01, a reaction yield of 65-70 65-70 M% was obtained depending upon reaction conditions used in the process. Phenylacetyl or phenoxyacetyl protected analogues of BMS-201391-01 also served as substrates for L-lysine epsilon-aminotransferase giving reaction yields of 70 M% for the corresponding BMS-199541-01 analogs. Two other dipeptides N-[N[(phenylmethoxy)carbonyl]-L-methionyl]-L-lysine (BMS-203528) and N,2-[S-acetyl-N-[(phenylmethoxy)carbonyl]-L-homocysteinyl]-L-lysine (BMS-204556) were also substrates for L-lysine epsilon-aminotransferase. N-alpha-protected (CBZ or BOC)-L-lysine were also oxidized by L-lysine E-aminotransferase.