That's pretty sad news for anyone who has been following the gestation of the project, which certainly sounded like a very interesting one to be coming from a major studio. JGL is pretty clear on what it wasn't working, with the transition to New Line causing some kind of friction for the filmmaker. He was on board as a producer but everyone was hoping that he would also play the central part of Morpheus - he has the presence and clearly a lot of passion for the project.
As of right now the script is still being written, and there's no confirmation on director, cast or release date. We wouldn't be surprised if this particular dream never comes to pass.