Inclusion Criteria:

• - Eastern Cooperative Oncology Group (ECOG) performance status of =< 2.

• - IDH1-R132 mutated disease status as assessed by local laboratory.

2HG-producing IDH1 variants outside of R132 (i.e. R100) may be eligible after discussion with the principal investigator (PI)

• - Treatment naive or relapsed/refractory AML who are eligible for intensive chemotherapy.

Patients with high-risk MDS or MPN (defined as >= 10% bone marrow blasts, or intermediate or high risk by International Prognostic Scoring System [IPSS], revised [R]-IPSS or dynamic [D]-IPSS) may also be eligible after discussion with the PI.

• - Direct bilirubin =< 2 x upper limit of normal (ULN) unless deemed to be related to underlying leukemia.

• - Alanine aminotransferase (ALT) and/or aspartate aminotransferase (AST) =< 3 x ULN unless deemed to be related to underlying leukemia.

• - Creatinine clearance >= 30 ml/min based on the Cockcroft-Gault equation.

• - Willing and able to provide informed consent.

• - In the absence of rapidly proliferative disease, the interval from prior treatment to time of initiation will be at least 7 days for cytotoxic or non-cytotoxic (immunotherapy) agents.

• - Male subjects must agree to refrain from unprotected sex and sperm donation from initial study drug administration until 90 days after the last dose of study drug.

Exclusion Criteria:

• - Patients who have previously received either ivosidenib or CPX-351.

• - Patients with any concurrent uncontrolled clinically significant medical condition including infection, laboratory abnormality, or psychiatric illness, which could place the patient at unacceptable risk of study treatment.

• - The use of other chemotherapeutic agents or anti-leukemic agents is not permitted during study with the following exceptions (1) intrathecal chemotherapy for prophylactic use or for controlled central nervous system (CNS) leukemia.

• (2) use of hydroxyurea, and/or cytarabine (1 or 2 doses; up to 2 g/m^2) for patients with rapidly proliferative disease is allowed before the start of study therapy.

• - Patients with active graft-versus-host-disease (GVHD) status post stem cell transplant (patients without active GVHD on chronic suppressive immunosuppression and/or phototherapy for chronic skin GVHD are permitted after discussion with the PI) - Patients with any severe gastrointestinal or metabolic condition which could interfere with the absorption of oral study medications.

• - Patients with symptomatic congestive heart failure (New York Heart Association [NYHA] class III or IV), unstable angina, or an ejection fraction < 45% - Patients with prior anthracycline exposure of > 360 mg/m^2 daunorubicin (or equivalent) or > 210 mg/m^2 daunorubicin (or equivalent) in patients with prior mediastinal radiation.

• - Corrected QT (QTc) interval using Fridericia's formula (QTcF) >= 470 msec.

A prolonged QTc interval in the setting of right bundle branch block is permitted after discussion with the PI.

• - Nursing women, women of childbearing potential (WOCBP) with positive urine or serum pregnancy test, or women of childbearing potential who are not willing to maintain adequate contraception.

• - Appropriate highly effective method(s) of contraception include oral or injectable hormonal birth control, intrauterine device (IUD), and double barrier methods (for example a condom in combination with a spermicide) - Subjects with a known medical history of progressive multifocal leukoencephalopathy (PML) - Subjects taking strong CYP3A4 inducers are excluded from the study unless they can be transferred to other medications within >= 5 half lives prior to dosing.

- Patients with a diagnosis of acute promyelocytic leukemia (APL) - Unresolved toxicities > grade 1 from prior treatment including chemotherapy, targeted therapy, immunotherapy, experimental agents, radiation, or surgery

PRIMARY OBJECTIVE:

• I. To determine the overall response rate (ORR) including complete remission (CR), complete remission with hematologic recovery (CRh), complete remission with incomplete blood count recovery (CRi), morphologic leukemia-free state (MLFS), and partial remission (PR) of the combination of liposome-encapsulated daunorubicin-cytarabine (CPX-351) and ivosidenib in IDH1-mutated patients with acute myeloid leukemia (AML) or high-risk myelodysplastic syndrome (MDS).

SECONDARY OBJECTIVES:

• I. To assess safety of CPX-351 in combination with ivosidenib.

• II. To determine time to event endpoints including duration of response (DOR), event free survival (EFS) and overall survival (OS).

EXPLORATORY OBJECTIVES:

• I. Evaluate minimal residual disease (MRD) using multiparameter flow cytometry, cytogenetics and molecular evaluation.

• II. To evaluate molecular and cellular biomarkers that may be predictive of antitumor activity and/or resistance to treatment including evaluation of 2HG, IDH1 and other co-occurring mutations and VAF levels before, during and after treatment.

OUTLINE: INDUCTION: Patients receive CPX-351 intravenously (IV) over 90 minutes on days 1, 3, and 5, and ivosidenib orally (PO) once daily (QD) on days 1-28. Patients who do not achieve complete remission may receive a second cycle of induction therapy in the absence of disease progression or unacceptable toxicity. Patients achieving complete remission proceed to consolidation. CONSOLIDATION: Patients receive CPX-351 IV over 90 minutes on days 1 and 3, and ivosidenib PO QD on days 1-28. Treatment repeats every 28 days for up to 2 cycles in the absence of disease progression or unacceptable toxicity. MAINTENANCE: Patients receive ivosidenib PO QD for up to 2 years in the absence of disease progression or unacceptable toxicity. Patients who are experiencing clinical benefit and who have not experienced excessive toxicity after completion of 2 years of maintenance may be eligible to continue therapy after discussion with the principal investigator. After completion of study treatment, patients are followed up at 30 days, then monthly for 3 years.

Arms

Experimental: Treatment (CPX-351, ivosidenib)

INDUCTION: Patients receive CPX-351 IV over 90 minutes on days 1, 3, and 5, and ivosidenib PO QD on days 1-28. Patients who do not achieve complete remission may receive a second cycle of induction therapy in the absence of disease progression or unacceptable toxicity. Patients achieving complete remission proceed to consolidation. CONSOLIDATION: Patients receive CPX-351 IV over 90 minutes on days 1 and 3, and ivosidenib PO QD on days 1-28. Treatment repeats every 28 days for up to 2 cycles in the absence of disease progression or unacceptable toxicity. MAINTENANCE: Patients receive ivosidenib PO QD for up to 2 years in the absence of disease progression or unacceptable toxicity. Patients who are experiencing clinical benefit and who have not experienced excessive toxicity after completion of 2 years of maintenance may be eligible to continue therapy after discussion with the principal investigator.

Interventions

Drug: - Ivosidenib

Given PO

Drug: - Liposome-encapsulated Daunorubicin-Cytarabine

Given IV