Well, this seems to be true sadly.. Some insider's have come out confirming the layoff's, and pretty much confirmed the project being dead. Wait and see, but even Sega just announced that they are canceling games, laying off employees, closing arcades..so..
Whats even more unfortunate is that development sounded steady, although not perfect.. But it seemed they were at the stage that they wanted to show off the game, and this news from Sega came sudden.
Here's hoping when things are official that things arent as bad off as they seem.. Otherwise it seems the rumors about Aliens: CM are true also...