Recently a demo of an Xbox 360 project called "Haggar" was revealed, a Mega Bloks version of the Halo universe that was cancelled. On the official Halo Waypoint site head of 343 Industries, Bonnie Ross, went on to explain why the project was cancelled.
In a post Ross wrote:
"Over the past few days, footage has recently made the rounds of an exploratory Xbox 360 project we worked on several years ago, known as “Haggar.” Since then, we’ve received a lot of great feedback from the community. Haggar was something we prototyped with our friends at Mega Bloks that focused on the elements of action, exploration and user creativity found within the Halo universe. Haggar had a lot of fun ideas and invention behind it, but ultimately didn’t progress beyond the early prototyping levels that are shown in the recent video. This is just one example of several similar projects we have evaluated throughout the years – a process that we continue exploring on an ongoing basis."
Basically, the game was conceived and basic elements were built but the company didn't feel like it was meant to be so it was cancelled. This isn't uncommon as big companies like 343 Industries brainstorm multiple projects and only a few get selected for full-fledged production. In this case only a prototype was built for Haggar before it was cancelled.
Source: Halo Waypoint