That's before the shortlist is announced, and is relatively common. Neil Gaiman withdrew Ocean at the End of the Lane last year, and Larry Correia withdrew Monster Hunter Nemesis(?) this year. You don't necessarily hear about that until after the awards, when the details are released. The next book on the list gets promoted to the shortlist, provided it has the votes to qualify.
Withdrawing after the announcement of the shortlist is a different matter. I believe it has been done before, but I don't think the withdrawn entry necessarily gets replaced.
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