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Just wasn't up to snuff.
The game was cancelled, and the Prey name was later reused for Arkane's game.
Bethesda had purchased the Prey IP, but had not published a game using the Prey name, until 2017.
2K had no interest in a Prey sequel.
In a twist of irony, Human Head joined Bethesda as Roundhouse. They refused the buyout during Prey 2 development.
Ironically what we got to see of it actually looked pretty awesome.
Still salty we never got it.
no bethesda canceled it because they thought "the first part is old and a second part wouldnt sell as good as the first part so it wouldnt bring us any profit"
The gameplay was very cool for an action RPG and ahead of its time... but Bethesda cancelled it:
In October 2014, during PAX Australia, Bethesda officially cancelled Prey 2. Hines stated, «It was a game we believed in, but we never felt that it got to where it needed to be –– we never saw a path to success if we finished it. It wasn't up to our quality standard, and we decided to cancel it» (LOL)