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Dendreon, one of the great hopes of Seattle’s biotech industry, today reduced its financial projections for the year and said it will be cutting jobs amid lower-than-expected sales of its Provenge drug for prostate cancer. The approval of Provenge by the FDA last year was heralded as Seattle’s biggest biotech breakthrough in nearly a decade.

The company employed more than 1,600 people as of March, including 975 people in its manufacturing operations. Executives didn’t give a specific target for its job cuts but said on a conference call with analysts that it would be providing details to employees shortly.

The main problem, the company says, is the confidence of physicians about being reimbursed in a timely manner after prescribing the drug, which costs $93,000 per patient treatment. The company announced progress on that front earlier last month, winning approval for Medicare reimbursement.

Executives say that decision “will have a significant impact on increased physician adoption” over time.

“However, we believe this will take time, and for the remainder of 2011, the launch trajectory will reflect a more gradual adoption of PROVENGE as physicians gain confidence in this positive reimbursement landscape,” said Mitchell Gold, Dendreon’s president and chief executive officer, in a statement.

Dendreon posted a net loss of $114.6 million for the quarter ending June 30, on revenue of $49.6 million. The company withdrew its previous guidance of $350 to $400 million in revenue for 2011 and said it now expects “modest quarter over quarter revenue growth for the remainder of this year.”

Financial analysts on the conference call were skeptical of Dendreon’s explanations, asking executives to explain the situation repeatedly, and asking what steps they’ll take to ensure better accuracy in their future financial projections.

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