From joystiq.com

Any chance of a Heavenly Sword sequel? Will you be working with Ninja Theory again?

That’s really up to Sony, as they’re the ones who own the IP. I know it was rumored that Heavenly Sword 2 (which the Ninjas had already revealed they weren’t working on) had been canned, but I’m not sure if Sony ever confirmed that one way or another. So I’m as much in the dark as you are.

I had several fans of the game writing to me in utter dismay about the rumors. They were really attached to the characters and wanted to know what would happen next. It was heart-warming to know that people cared about the characters that much. I know Ninja Theory have moved onto new things and so have I. The Ninjas are a really strong creative team and I can’t wait to see what they’ll come up with next.