An unconfirmed report by Kotaku mentions that while X-Men Destiny was in development Silicon Knights was also working on an Eternal Darkness 2 demo that they intended to shop around to publishers.
According to multiple former Silicon Knights employees speaking on condition of anonymity, the company had split their resources 60/40 between developing X-Men and the Eternal Darkness demo. When Activision put pressure on the studio to finish the neglected X-Men Destiny Silicon Knights was forced to stop work on the demo.
Despite the time put into the Eternal Darkness 2 demo one former employee revealed that not much progress was made.
“The farthest they got with it when I left SK was, literally, one two-level church interior. It was really bad, as I recall. It took the side-team a long time to even get that far. Bad tech, combined with a team composed of people who had not shipped a title since Metal Gear really hurt that demo. Other than that, I can’t explain why things went so poorly for them [except that] a lot of key people responsible for the original Eternal Darkness are long gone.”
Considering the cuts that Silicon Knights made after X-Men Destiny was released it seems unlikely that we will ever see anything come from the failed Eternal Darkness 2 demo. If even half the claims in the report are accurate that may be a blessing in disguise, as it doesn’t sound like the studio is capable of developing anything that comes close to living up to the original GameCube classic.
The bulk of Kotaku’s report focuses on what went wrong with the development of X-Men Destiny, and the allegedly poor working conditions at Silicon Knights. I highly recommend that you read it, just keep in mind that this is only one part of the story and none of it has been confirmed.