According to Tweets from Game Informer's Jim Reilly, Activision is trying to keep the Radical team together, but the studio looks like it's busted. Prototype was not considered commercially successful, and the publisher may sell the developer to make up for it.
The PC version of Prototype 2 will launch on July 24th as planned. The pc version was done on console release just shelved for a month or two."Although we made a substantial investment in the Prototype IP, it did not find a broad commercial audience. Radical is a very talented team of developers, however, we have explored various options for the studio, including a potential sale of the business, and have made a difficult conclusion through the consultation process that the only remaining option is a significant reduction in staff. As such, some employees will remain working for Radical Entertainment supporting other existing Activision Publishing projects, but the studio will cease development of its own games going forward.