The authors of Disco Elysium have confirmed the leak of a spin-off codenamed X7 and noted that the game was cancelled at the pre-production stage

After a high-profile leak of the presentation of the game codenamed X7 on YouTube, ZA/UM has finally made an official statement. The developers of Disco Elysium confirmed that the materials from the video are the footage of a cancelled project that was in pre-production.
Here's What We Know
"Since the release of Disco Elysium in 2019, the ZA/UM team has been exploring many exciting concepts," the statement reads. "The results of which we showed last month: Project [C4] and Disco Elysium for Android."
"We are aware of a recent leak of internal development materials. This is from a project that was cancelled in pre-production. Many of us have been affected by the NDA breach. We're proud of the work we've done in the past, as it certainly influences our current projects. We remain committed to our work."
"We won't let anything get in the way of our hard work - drawing, modelling, coding, writing, designing, and recording. We put our hearts and minds into it and can't wait to show you more."
Thus, ZA/UM confirmed that X7 is not an ongoing project, but a cancelled idea.
The X7 project was called "Locust City - An Elysium Story" and offered players to take on the roles of Cuno and Cunoesse, two well-known characters from the original game.
The gameplay involved switching between these characters, each of whom had their own skills. Cuno, for example, had the skills "Inland Empire" and "Scar Shield", while Cunoesse had "Authority" and "Pursuit".
Source: @studiozaum