The parasite bomb was a biological doomsday weapon that was created by the Chiss Ascendancy during the Chiss-Killik conflict known as the Swarm War.
A special chemical soup was created that contained parasites that had been bio-engineered to attack the internal physiology of the Killik race and, eventually, kill them. The effect was not immediate and would take some time for it to slowly destroy the internal biology of the insectoid species over the course of a standard year. This did not worry the Chiss designers for it served a secondary purpose as the parasite would reproduce and the time the infected Killik survived, it would, unwittingly, spread the parasite to the rest of the Colony through the exchange of bodily fluids. Once it infected the entire population, it was believed that the Killiks would be incapable of replenishing their numbers and would ultimately have meant the extinction of the species.
These bio-weapons were placed within carefully made warheads that were to be used during the Battle of Tenupe and deployed by fighters while the Chiss fought and died to appear as they were defeated. This would have allowed the unknowing Killiks to become infected by the deployed parasite bombs and continue their normal behavior without realizing the insidious bio-weapon taking its effect on the Killik hives. The plan ultimately failed and the parasite bombs were destroyed by the Jedi when Commander Baltke unwittingly revealed information to his captive in the interrogation aboard a Chiss Star Destroyer.