Human Head Studios recently announced that Prey 2 is delayed rather than cancelled, but now ShackNews heard that Human Head stopped working on the game in November, in an attempt to get a better deal with ZeniMax:
According to a Shacknews source who asked not to be identified, Human Head was not happy with the terms of its contract with ZeniMax, and deliberately stopped work on the game in November so it could try to negotiate a more favorable deal. While doing that, many on the development team were laid off, with the hope they would be rehired if the contract issue was resolved favorably. The process seemed to be gathering some positive momentum until January when ZeniMax's responses all but stopped, causing some of the laid-off Prey 2 team to wonder if the game would ever see the light of day.
By March 1, the source said, things had progressed a bit, leaving the Prey 2 team hopeful that they would return to work soon. But that quickly soured the following day. The source could provide no further first-hand details after March 2.
Additionally, the site also heard Human Head Studios is considering a sequel to Rune.