That decision apparently came on the back of lacklustre sales for theDead Space remake, despite its critical acclaim.
They were working on it.
They were working on Dead Space 2, and they are no longer working on it, Grubb said.

So if you were looking forward to a Dead Space 2, its bad news.
It straight-up is just bad news.
Does this mean it never happens?

I dont know if thats the case.
But as it stands right now, they were working on it.
It was in the concepting phase, I believe.
It was definitely pre-production.
And now that work has been put on the shelf.
Presumably the response wasnt quite enough to convince the publisher.
The Dead Space remake is brilliant.
Put together carefully by caring hands.
Nothing is broken, except that which begged to be replaced.