Essential had quite a bit of employee turnover, both in the software and hardware project teams. I'm guessing that this was a huge factor in deciding to cut the PH-2, that the turnover really hurt them in getting the phone completed.
Essential starting on the 2nd gen, I believe, all it meant was the product team was engaging in building the design and prototypes may be. Phone designs are usually years out before they go into production so not surprised Essential was already working on the 2nd gen.