This fascinating material was created by Ayi Sanchez for a level where characters get trapped inside the Riftworm's insides, intended for a Gears of War 2 remaster that, unfortunately, is never seeing the light of day, according to the artist.
It's just a sculpt: Ayi mentioned that he didn't use Substance 3D Designer, this piece was created in ZBrush and Photoshop and then finalized in Unreal Engine 4. Here's the animated version, which has two masks for different areas, each controlling the displacement with two separate cycles: