If my sources are correct, here's what probably happened.
- SSM Scifi IP conceptualised and greenlit. Enters production.
- Destiny announced. Unfortunate similarities to new IP (no idea what exactly: genre, presentation, story, design, etc). Sony/SSM not impressed.
- Sony/SSM request reworking the design to distance from Destiny. This naturally increases dev time, workload, and resources.
- Reworking fails. Either conceptually still too similar to Destiny, or (most likely) unable to conceptualise new designs and implement them efficiently. Project and development process suffers.
- Sony/SSM pull the plug on a project that has now gone on for too long, become too expensive, with no real end in sight and/or lack of confidence in a high quality game at the end of the tunnel.
- Decision made to downsize SSM as a whole. God of War 4 still in development (assuming it's not being headed by someone else), as well as aiding other studios on their projects (eg: The Order: 1886, Everybody's Gone to the Rapture).
- Many senior personnel of cut project let go as their positions at SSM no longer needed. Those roles already filled on existing projects. Staff that can move over to the production of existing projects kept.