The studio is known for the Kingdom Come: Deliverance series, and the rights to games based on the universe are currently held by Embracer Group.
The developers first commented on the situation during an AMA on Reddit. The creators of Kingdom Come: Deliverance 2 did not confirm work on a Tolkien game, but they did not deny it either. Ondřej Bittner and Tom Gray stated: “we cannot reveal details of future projects,” but added that “the team is working hard on a new game” and that it is “a big, immersive, story-driven RPG,” consistent with the studio's style.
There is no official announcement, but the tone of the response has changed. Instead of a direct denial, the studio left room for speculation. The rumor remains a rumor, but after these words, the discussion around Warhorse and Middle-earth intensified again.