Theranos founder Elizabeth Holmes at Glamour’s Women of the Year Awards last November in New York. Photo: Larry Busacca/Getty Images 
 
 Theranos Inc. withdrew its request for emergency clearance of a Zika-virus blood test after federal regulators found that the company didn’t include proper patient safeguards in a study of the new test, said people familiar with the matter. 
 
 The move is another setback for the Palo Alto, Calif., company as it tries to recover from crippling regulatory sanctions that followed revelations by The Wall Street Journal of shortcomings in Theranos’s technology and operations. Theranos has said it is appealing. 
 
 Theranos founder Elizabeth Holmes announced Aug. 1 a new blood-testing device called miniLab that she said was designed for use outside a clinical laboratory and could run accurate tests from a few drops of blood. 
 
 Ms. Holmes also said Theranos was seeking clearance for its Zika test, and a company news release said Theranos had collected finger-stick blood samples from patients, including in the Dominican Republic, and run the tests on the new miniLab device, which showed that the Zika test worked. 
 
 But during an inspection by the Food and Drug Administration earlier this month, regulators concluded that Theranos had collected some data supporting the accuracy of the Zika test without implementing a patient-safety protocol approved by an institutional review board, according to the people familiar with the matter. Institutional review boards ensure that patients are treated safely and ethically during medical studies. 
 
 “We hope that our decision to withdraw the Zika submission voluntarily is further evidence of our commitment to engage positively with the agency,” said Dave Wurtz, Theranos’s vice president of regulatory, quality and clinical affairs. An FDA spokeswoman declined to comment on the inspection, citing the agency’s policy on pending product applications. 
 
 It isn’t clear if the problem affected any patients. Some data in the submission was collected under review-board-approved protocols, the people said. Theranos didn’t contest the agency’s findings and withdrew its submission for authorization of the new Zika test, according to people familiar with the matter. 
 
 Theranos executives told employees about the setback during a staff meeting last week, one person familiar with the meeting said. 
 
 In an email to Theranos investors Saturday, the company said it plans to collect additional data requested by the FDA under properly reviewed protocols and resubmit the Zika application. The letter said Theranos would handle a submission for an Ebola test “in the same manner.” 
 
 The miniLab that Ms. Holmes, Theranos’s chief executive, unveiled to laboratory scientists in Philadelphia signaled a potential shift in the closely held company’s business model and a new source of revenue. FDA approval of the miniLab would allow Theranos to sell the device for outside use even if she is banned from owning or running a lab for at least two years. 
 
 The federal agency that oversees labs, the Centers for Medicare and Medicaid Services, imposed the ban and other penalties in July because of problems it found at a Theranos lab. The agency said the deficiencies affected test accuracy and put patients at risk. 
 
 Theranos is appealing the lab’s closing, Ms. Holmes’s ban and other sanctions imposed by CMS and is continuing to negotiate a possible settlement. 
 
 Theranos also has said it is doing no patient testing at the lab where the deficiencies were found. In its investor email Saturday, Theranos said its appeal will argue that CMS hasn’t “fully accounted for the progress we have made toward correcting” problems. 
 
 A CMS spokesman said Tuesday the agency is “reviewing a copy of Theranos’s appeal.” He declined further comment. 
 
 Theranos has pursued a manufacturing-focused business model before. An initial agreement with former retail partner Walgreens, now part of Walgreens Boots Alliance Inc., WBA 0.14 % called for Theranos to sell blood-testing devices directly to the drugstore giant and have Walgreens perform the tests, according to a 2010 contract between the two companies. 
 
 The arrangement later shifted as Theranos sought tighter control over its proprietary technology and operations, according to people familiar with the negotiations. Michael Polzin, a Walgreens spokesman, declined to comment. 
 
 The FDA’s inspection in August was triggered by Theranos’s request for “emergency-use authorization” to sell its new Zika test, a person familiar with the matter said. 
 
 The FDA has cleared Zika tests from several other companies since invoking a rule allowing the agency to lower hurdles for new medical products during emergencies. 
 
 An epidemic of the mosquito-borne Zika virus has swept through parts of South and Central America and reached into South Florida in recent months. The virus can cause serious birth defects in developing fetuses, including distinctively undersized heads and brain abnormalities. 
 
 Theranos’s news release on Aug. 1 as Ms. Holmes spoke at the American Association for Clinical Chemistry’s annual meeting said the company believed no other test for Zika that uses tiny blood samples collected by finger sticks was available. 
 
 “Theranos scientists conducted the tests reflected in the AACC presentation in 2016 under IRB-approved protocols,” the company added, referring to the review-board process. 
 
 Theranos told investors that company officials “recognized” during the FDA’s inspection that some patient data was collected before the review-board protocols were in place. 
 
 After an inspection in August 2015, the FDA declared Theranos’s finger-stick collection device, called the “nanotainer,” an uncleared medical device, and the company said it stopped using it on patients in the U.S. The agency earlier approved the use of nanotainers for a herpes test. 
 
 Theranos said in its news release that it used the nanotainer as part of its blood-collection system for the Zika study, which included the Dominican patients. 
 
 Separately, Theranos’s general counsel, Heather King, is leaving the company to return to law firm Boies Schiller & Flexner LLP, according to the email sent to investors. 
 
 Theranos announced Ms. King’s hiring in May 2015, and she led the company’s legal response to accusations of technological snags. Boies Schiller Chairman David Boies is a Theranos director. 
 
 “We appreciate Heather’s leadership and we wish her the very best,” Theranos said in its email to investors Saturday. 
 
 In a sign that the blows to Theranos’s credibility during the past year continue to hang over the company, leaders of the University of Washington’s medical laboratory division balked when a Theranos manager approached the lab in late July about working with Theranos on research. 
 
 “This is a disgraced company that has not responded to the sanctions in an honorable way,” the lab’s compliance officer wrote in an email to the University of Washington technician who fielded the inquiry from Theranos. “As such, do not set up a client account for this company,” according to the email, which was reviewed by the Journal. 
 
 Write to John Carreyrou at john.carreyrou@wsj.com and Christopher Weaver at christopher.weaver@wsj.com ||||| Embattled blood-testing start-up Theranos will close all its clinical labs and Wellness Centers, chief executive Elizabeth Holmes revealed in a public letter to "stakeholders." 
 
 The move came after months spent "assessing our strengths and addressing our weaknesses," she said in the letter that outlined a new focus for the former Silicon Valley darling. 
 
 The closures would impact about 340 workers in Arizona, California and Pennsylvania, "many of whom have devoted years to Theranos and our mission," Holmes said. Reuters reported that this was a 44 percent staffing cut, with the company employing about 790 full-time workers. 
 
 Theranos would now focus its "undivided attention" on its miniLab platform, Holmes said, adding, "Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care." 
 
 Theranos' miniLab is a self-contained laboratory that allows a robot to run a number of tests on samples. The miniLab contains different modules that allow it to conduct a series of tasks that traditionally would require multiple, separate machines. ||||| Blood-testing startup Theranos Inc. will fire about 41 percent of its employees after months of regulatory setbacks, lawsuits and scrutiny, saying it is paring down to focus on a new product. 
 
 The Silicon Valley company will eliminate 155 positions, leaving 220 employees who will work on the new product, a tabletop blood testing product called the miniLab. 
 
 “These are always the most difficult decisions; however, this move allows Theranos to marshal its resources most efficiently and effectively,” the firm said in a statement on Friday. 
 
 It’s the second wave of layoffs for Theranos, which in October fired 340 workers and said it would close its clinical labs and consumer outlets. Theranos had signed a partnership to put its testing centers in Walgreens Boots Alliance Inc. stores, mainly in Arizona. Now Walgreens is suing the startup. 
 
 Once lauded as a potentially revolutionary company in the medical testing industry, Theranos has been plagued by questions about the accuracy and viability of its technology. U.S. inspectors found failures so severe as to jeopardize patients’ health at Theranos’s lab in Newark, California, leading to sanctions including banning Chief Executive Officer Elizabeth Holmes from running a clinical lab. Theranos is appealing the sanctions. 
 
 Since then, Theranos has said it’s reformed and is working to pursue publications in scientific journals and gain FDA clearance for the miniLab. The company has also reshaped its management team, retiring a group of counselors who were criticized as having little health-care experience and hiring executives and board members from the health industry.
– After scandal and sanctions, Theranos says it is shutting down all of its blood-testing labs and laying off hundreds of workers. "We have moved to structure our company around the model best aligned with our core values and mission," Elizabeth Holmes, the embattled medical technology firm's founder and CEO, says in an open letter, announcing that the move will cost an estimated 340 jobs. She says the company is going to focus on its miniLab technology to "commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care." Theranos has lost major partnerships and is the subject of several investigations over its claim of being able to conduct blood tests using just one drop, CNBC notes, Holmes has been banned from owning or operating a lab for two years. The closing of its clinical labs marks a major shift for Theranos, but the new focus on selling equipment to outside labs will make it much easier for Holmes to remain in her position, reports the Wall Street Journal, which notes that the 32-year-old controls a majority voting stake in the firm and insiders say it would be very difficult to remove her from her position. (In August, Theranos withdrew its FDA clearance request for a miniLab Zika blood test.)