Worm (or Dionin, its fan-given nickname) is one of the unused colossi that did not make it into the final release of the game.
According to the artbook, "The flower bulb-like section was its weak point." Besides that, there isn't any other information, making this one of the most mysterious unused colossi.
According to an old Team Ico Gamers Blog post, the colossus was removed for being too powerful and because it required a huge arena to be able to dodge its attacks.
Unlike the names given by fans to Spider and Phoenix, Dionin is not a Welsh word. The nickname is possibly a tribute to the snake god Dionin from the film The Lair of the White Worm
Worm and Wander
. Note Wander's different outfit.
The statue texture of Worm, found in the game's code. Note its circular mouth that can also be seen in the screenshots.