This is the first study of the safety of increasing dose levels of AEB1102 in patients with Relapsed or Refractory Acute Myeloid Leukemia or Myelodysplastic Syndrome. The study will also evaluate the amounts of AEB1102 in blood, the effects of AEB1102 on blood amino acid levels and the antitumor effects of AEB1102.

Inclusion Criteria:

• Willing and able to provide informed consent
• Age 18 and older
• Diagnosis of AML or MDS according to the WHO criteria
• AML relapsed or refractory to at least one attempt at induction or subjects not candidates for aggressive induction regimens
• MDS refractory to treatment with HMA therapy or with recurrence or progression of MDS following a response to an HMA
• Has adequate organ function: AST and ALT < 3X the ULN, serum bilirubin < 2X the ULN, serum creatinine of < 2 mg/dL, or a calculated creatinine clearance of > 50 mL/minute
• ECOG Performance Score of 0 -2
• Recovered from the effects of any prior systemic therapy, radiotherapy or surgery
• Willing to use physician approved birth control method

Exclusion Criteria:

• Current CNS Leukemia
• Acute promyelocytic leukemia or AML with a t(15;17) (q22;q12) cytogenetic abnormality or Bcr/Abl positive leukemia
• < 60 days from ASCT; has chronic graft-versus host disease (GVHD) or requires continued treatment with systemic immunosuppressive agents
• Uncontrolled infection
• Known HIV, hepatitis B or hepatitis C.
• Other active malignancy that requires therapy
• If female, is lactating or breast feeding
• Hypersensitivity to PEG or other component of AEB1102 (Co-ArgI-PEG)