The card text says:
"Whenever a spell or ability an opponent controls causes you to lose mana or pay mana, including upkeep costs and Mana Drain/Transfer effects, place that mana on Mana Prism instead. If the mana was being transferred to their supply, cancel that transfer. During the Channeling Phase you may remove 2 mana from the Mana Prism and place it in your supply."
I think it is pretty clear if you read the proper text. The only time it refers to canceling is in regards to mana being transferred to an opponent mage, so no it does not cancel the loss of mana but merely redirects that lost mana into the prism.
