Project Dagger, an upcoming game from Outriders developer People Can Fly, is no longer being developed in co-operation with Take-Two Interactive after the U.S. publisher terminated its publishing agreement with the studio.

People Can Fly broke the news to investors on its website, and explained it has received a letter of intent from Take-Two to terminate the development and publishing agreement "by means of a mutual understanding between the two parties."

Project Dagger had been in development for two years under the direction of People Can Fly's New York team, and is being billed as a "new action-adventure IP."

Although Take-Two has ended its interest in the project, People Can Fly is confident Project Dagger will eventually see the light of day.

"[Take-Two] has also not declared the intention to exercise its option to buy-out the intellectual property rights to the products produced under the agreement," reads the investor note.

"Consequently, People Can Fly has retained the intellectual property rights to the Project Dagger as the sole owner of these rights and is now determined to grow the project on its own."

Project Dagger is one of seven projects People Can Fly currently has in the works, with the studio also working on Gemini alongside Square Enix, self-published titles Projects Bifrost and Victoria, two virtual reality productions, and Project Red, which remains in the concept phase.

People Can Fly chief exec Sebastian Wojciechowski believes the studio will part on good terms with Take-Two and could even work with the publisher again in the future.

"We strongly believe in the Project Dagger's potential and are now committed to continue its development within our self-publishing pipeline," added the CEO.

"The game is still in pre-production – our team is now focusing on closing combat and game loops and migrate from UE4 to UE5. I’m conscious that this decision will add investments on us, but self-publishing is part of our strategy. Of course, we are not ruling out working with a new publisher if this creates a compelling business opportunity."