Sources are telling us that news has broken in Vancouver that developer Radical Entertainment has been hit by the layoff bus, with 90 employees being let go. According to a source close to the situation, 90 employees being dismissed equals about half of the entire studio contingent.

Radical Entertainment was the developer of the 2009 surprise hit Prototype that has not as of yet shown up on Activision’s 2010 release schedule, and has been assumed unlikely for a sequel this year. The studio is also known for Hulk: Ultimate Destruction.

It has been said that the recent Marvel purchase by Disney has created a situation where a project that was in the works has been canceled, as Disney seeks to bring more of the Marvel licenses in house for Disney Interactive aligned studios to develop. In addition, the studio underwent a restructuring during the Vivendi Games merger era, so this cut is the second in a relatively short time period.

While it is unknown why Prototype was not on the 2010 Activision release schedule, our sources claim that though the reviews of the game were positive, scores good, and initial sales were decent, sales dropped off quickly. Of course, this could have led to the decision by Activision not to commission another round in the Prototype franchise.

Given the current situation, it is unknown exactly what the remaining staff at Radical is working on.