Phase 1 Major Inclusion Criteria:

1. Untreated AML, including patients with an antecedent hematologic disorder or secondary disease. Patients with prior MDS may have received therapy with immunomodulatory agents or hypomethylating agents for this diagnosis. Patients with other prior cancer diagnoses are allowed as long as they have no measurable disease, are not undergoing active therapy, and have a life expectancy of ≥ 4 months.
2. Patients age ≥60 years who:
   1. Are unwilling to receive intensive (e.g. 7+3) chemotherapy, or
   2. Have poor-risk prognostic factors defined as antecedent hematologic disorder, prior chemotherapy or XRT, abnormal karyotype other than t(8;21), inv16, or t(16;16), any karyotype with FLT3-ITD, or presenting WBC>100K, or
   3. Have significant comorbidities, that in the judgment of the investigator makes the subject unsuitable for standard dose induction chemotherapy (e.g. anthracycline and infusional cytarabine given as 7+3), or;
   4. Any patient age ≥ 70 years.
3. Blast count ≥20%
4. Greater than 25% of blasts must be CD33 positive.
5. Adequate renal and hepatic function
6. ECOG ≤ 3

Phase 2 Inclusion Criteria:

1. Untreated AML, including patients with an antecedent hematologic disorder or secondary disease. Patients with prior MDS may have received therapy with immunomodulatory agents or hypomethylating agents for this diagnosis. Patients with other prior cancer diagnoses are allowed as long as they have no measurable disease, are not undergoing active therapy, and have a life expectancy of ≥ 4 months.
2. Patients age ≥60 years who:
   1. Patients ≥60 years unfit to receive intensive (e.g., 7+3) chemotherapy who have:
      • Congestive heart failure or documented cardiomyopathy with an EF ≤50%, provided that EF ≥35% or,
      • Documented pulmonary disease with DLCO ≤65% or FEV1 ≤65%, provided that patients do not require more than 2 L of oxygen per minute or,
      • Documented liver disease with marked elevation of transaminases >3 x ULN or,
      • Serum creatinine >1.2 mg/dL
   2. Have significant comorbidities, that in the judgment of the investigator makes the subject unsuitable for standard dose induction chemotherapy (e.g., anthracycline and infusional cytarabine given as 7+3); or
   3. Any patient age ≥ 75 years.
3. Blast count ≥ 20% (WHO criteria)
4. Greater than 25% of blasts must be CD33 positive.
5. Have a circulating blast count of less than 200/mm3 (control with hydroxyurea or similar agent is allowed);
6. Creatinine < 2.0 mg/dl
7. Estimated creatinine clearance ≥ 50ml/min
8. Bilirubin ≤ 2.0 mg/dl; AST and ALT < 5.0 times the ULN
9. Eastern Cooperative Oncology Group (ECOG) Performance Status ≤ 3

Exclusion Criteria:

1. Patients with acute promyelocytic leukemia
2. Treatment with chemotherapy or biologic therapy within 3 weeks, except for hydroxyurea, which must be discontinued prior to treatment on study
3. Treatment with radiation within 6 weeks
4. Active serious infections uncontrolled by antibiotics
5. Active malignancy within 2 years of entry, except previously treated non-melanoma skin cancer, carcinoma in situ or cervical intraepithelial neoplasia, and organ confined prostate cancer with no evidence of progressive disease based on PSA levels and are not on active therapy.
6. Clinically significant cardiac or pulmonary disease
7. Patients with liver cirrhosis
8. Active CNS leukemia. Patients with symptoms of CNS involvement, particularly those with M4 or M5 subtypes, should undergo lumbar puncture prior to treatment on study to exclude CNS disease. Symptoms include cranial neuropathies, other neurologic deficits, and headache.
9. Psychiatric disorder that would preclude study participation