From Sonic Retro
Sonic Mars is a conceptual Sonic the Hedgehog originally designed for the Sega 32X. Likely due to the system's limitations and commercial failure, the project was moved to the Sega Saturn where it evolved into Sonic X-treme.
The proposal for the game was put together on May 17, 1994 by then-lead designer Michael Kosaka with assistance from Chris Senn and Don Goddard. Choosing to ground the game within the framework of the Saturday morning show that was still on the air at the time, the hope was to make the first fully 3D game of Sonic and his world. Presented to the management of Sega of America, they gave the green light to have the Sega Technical Institute go through with the project. When shown what the American side of STI was concocting for the next installment in the Sonic the Hedgehog series, Yuji Naka, one of the originators of the character, could only shake his head and say "good luck," not being all that impressed with what he was shown, and knowing first hand the difficulties involved in making a Sonic game.
Shortly after the proposal was accepted, Michael Kosaka left Sega due to issues between himself and Dean Lester, the producer of Comix Zone. Without a lead designer, Chris Senn was placed into the role, with Don Goddard reworking the script to Sonic Mars. Eventually, the Saturday morning premise was dropped due to disinterest, and the game was completely reworked once it switched systems, becoming the more familiar Sonic X-treme.