Ask @slowbeef:

Loredump: I think the mutated patients in Research Hall were attempts by the Healing Church to turn people into those "mushroom alien" things, and the Living Failures were a failed "first draft" for the Celestial Emissary; you fight both bosses in a flower garden that constantly spawns new enemies.

Will Staples
I figured Living Failures were "failed experiments that survived" hence the name but I def like your theory

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