It looks like Sony is not willing to give up on Knack 2 yet as new rumors now suggest that they will be working on a sequel for the game. This all started after the people over at NeoGaf spotted it in the job description of one of 3D animator working for XPEC Entertainment.
In her job description, the animator stated that she was tasked with working on the animated 3D characters for Knack II as well as working for some of the cutscenes for PS4.
The description was later removed from her LinkedIn account but it was all too late. The first Knack game got a lot of hype in the beginning but the fans were just not impressed with what Sony had to offer at the end of the day.
Knack 2 has not been announced yet but t does seem like a sequel might really be on its way.