UPDATE 3-Dendreon pulls forecast as Provenge falls short

* Q2 EPS loss $0.79 vs Street view loss $0.71

* Revenue $49.6 million

* Withdraws full-year forecast; sees only modest growth

* Shares fall 62 percent (Adds analyst, company comment, share move)

By Bill Berkrot

NEW YORK, Aug 3 (Reuters) - Dendreon Corp (DNDN.O) on Wednesday reported far lower-than-expected second-quarter sales of the prostate cancer vaccine Provenge and withdrew its full-year revenue forecast, sending its shares into a tailspin.

The biotechnology company, whose shares fell 62 percent after hours, also plans to reduce expenses, including through job cuts, at a time when Wall Street was expecting sales to take off as manufacturing capacity for the vaccine increases.

Dendreon had forecast full-year revenue of $350 million to $400 million, with about half coming in the fourth quarter as more production capacity comes on line.

The company now expects only modest quarter over quarter revenue growth for the remainder of this year, but insisted the market for Provenge, which has been available for a year, remains significant.

"There's something wrong here and I don't think anyone really knows exactly what it is," said Cowen and Co analyst Eric Schmidt.

"They didn't post second quarter sales near where we would have hoped and guided down and admitted there's little visibility about where this drug is going over the next several quarters," Schmidt said. "I'd expect the stock to be down sharply when it opens tomorrow."

Dendreon said clarity over reimbursement for the drug that costs about $93,000 for a three-infusion course of treatment and physician comfort with the vaccine "will take time."

"For the remainder of 2011, the launch trajectory will reflect a more gradual adoption of Provenge," Chief Executive Mitchell Gold said in a statement.

The company had previously cited manufacturing constraints for holding back Provenge sales, but was now pointing to "reimbursement headwinds."

The majority of physicians are unaware of a recent positive national reimbursement ruling for Medicare patients, Gold told analysts on a conference call, adding that educating doctors will be a top priority for the sales force.

He said community urologists and oncologists are much more concerned about making certain they will get paid than those at academic medical centers, which represented the vast majority of early prescribers.

For the second quarter, the company reported a net loss of $114.6 million, or 79 cents per share, compared with a loss of $142.6 million, or $1.04 per share, a year ago.

Analysts on average expected a loss of 71 cents per share, according to Thomson Reuters I/B/E/S.

Revenue of $49.6 million was short of Wall Street estimates of $57.7 million and the company's forecast of $54 million to $60 million.

Excluding a $1.9 million reserve for estimated rebates and charge-backs associated with either Medicaid patients or other pricing discounts gross revenue was $51.4 million, still below expectations.

The company said Provenge sales in July were $19 million and that early August orders were coming in at a higher level than the previous two months.

After being halted, Dendreon shares plunged to $13.60 in extended trading from a Nasdaq close at $35.84. (Reporting by Bill Berkrot; editing by Robert MacMillan, Andre Grenon and Bernard Orr)