The study aims to compare the effect of daily oral treatment of laquinimod capsules 0.6 milligrams (mg) with the effect of placebo capsules (capsules that contain no active medication) as well as with the effect of an existing Multiple Sclerosis (MS) injectable drug: Interferon β-1a (Avonex®).

Inclusion Criteria:

1. Subjects must have a confirmed and documented MS diagnosis as defined by the Revised McDonald criteria [Ann Neurol 2005: 58:840-846], with a relapsing-remitting disease course.
2. Subjects must be ambulatory with converted Kurtzke EDSS score of 0-5.5.
3. Subjects must be in a stable neurological condition between screening (month -1) and baseline visits (month 0).
4. Subjects must have had experienced one of the following:
5. At least one documented relapse in the 12 months prior to screening
6. At least two documented relapses in the 24 months prior to screening
7. One documented relapse between 12 and 24 months prior to screening with at least one documented T1-Gd enhancing lesion in an MRI performed within 12 months prior to screening.
8. Subjects must be between 18 and 55 years of age, inclusive.
9. Subjects must have disease duration of at least 6 months (from first symptom) prior to screening.
10. Women of child-bearing potential must practice 2 acceptable methods of birth control [acceptable methods of birth control in this study include: surgical sterilization, intrauterine devices, oral contraceptive, contraceptive patch, long-acting injectable contraceptive, partner's vasectomy or double-barrier method (condom or diaphragm with spermicide)].
11. Subjects must be willing and able to comply with the protocol requirements for the duration of the study.

Exclusion Criteria:

1. An onset of relapse or any treatment with corticosteroids (intravenous [iv], intramuscular [im] and/or per os [po]) or ACTH between month -1 (screening) and 0 (baseline).

2. Use of experimental or investigational drugs, and/or participation in drug clinical studies within the 6 months prior to screening.

3. Use of immunosuppressive (including Mitoxantrone (Novantrone®) or cytotoxic agents within 6 months prior to the screening visit.

4. Previous use of either of the following: natalizumab (Tysabri®), cladribine or laquinimod.

5. Previous treatment with glatiramer acetate (Copaxone®) or IVIG within 3 months prior to screening visit.

6. Previous treatment with Interferon beta-1a (Avonex® or Rebif®) or Interferon beta-1b (Betaseron®).

7. Systemic corticosteroid treatment of ≥30 consecutive days duration within 2 months prior to screening visit.

8. Previous total body irradiation or total lymphoid irradiation.

9. Previous stem-cell treatment, autologous bone marrow transplantation or allogenic bone marrow transplantation.

10. A known history of tuberculosis.

11. Acute infection 2 weeks prior to baseline visit.

12. Major trauma or surgery 2 weeks prior to baseline visit.

13. A history of vascular thrombosis (excluding catheter-site superficial venous thrombophlebitis).

14. A carrier state of factor V Leiden mutation (either homo- or heterozygous) by history or as disclosed at screening.

15. Positive screening test for Hepatitis B surface antigen, Hepatitis C antibody, or HIV antibody as disclosed at screening visit.

16. Use of potent inhibitors of CYP3A4 within 2 weeks prior to baseline visit (see detailed list of drugs in protocol) (1 month for fluoxetine).

17. Use of amiodarone within 2 years prior to screening visit.

18. Pregnancy or breastfeeding.

19. Subjects with a clinically significant or unstable medical or surgical condition that would preclude safe and complete study participation, as determined by medical history, physical examinations, ECG, laboratory tests or chest X-ray. Such conditions may include:

    • A cardiovascular or pulmonary disorder that cannot be well-controlled by standard treatment permitted by the study protocol.
    • A gastrointestinal disorder that may affect the absorption of study medication.
    • Renal, metabolic, endocrinological or hematological diseases.
    • Any form of chronic liver disease, including known non-alcoholic steatohepatitis.
    • A ≥2xULN serum elevation of either of the following at screening: ALT, AST or direct bilirubin.
    • A QTc interval (obtained from either two ECG recordings at screening or from the mean value calculated from three measurements at baseline visit) which is ≥450msec.
    • A family history of Long-QT syndrome.
    • A history of drug and/or alcohol abuse.
    • Major psychiatric disorder.
    • A history of a convulsive disorder.
    • Known hypersensitivity to either of the following: mannitol, meglumine or sodium stearyl fumarate.
    • Known hypersensitivity that would preclude administration of laquinimod.

20. The subject's inability to give informed consent, or to complete the study, or if the subject is considered by the investigator to be, for any reason, an unsuitable candidate for this study.

21. A known history of sensitivity to Gadolinium.

22. Inability to successfully undergo MRI scanning.

23. A known history of hypersensitivity to natural or recombinant interferon beta, human albumin, or any other component of the formulation of Avonex®.

24. Subjects who suffer from any form of progressive MS

25. Any condition which the investigator feels may interfere with participation in the study

26. Subjects with a clinically significant or unstable medical or surgical condition that would preclude safe and complete study participation

27. Subjects who received any investigational medication, immunosuppressives or cytotoxic agents within 6 months prior to screening

28. Previous treatment with immunomodulators within two months prior to screening

29. Pregnancy or breastfeeding