A rapid skin growth toxin was featured prominently in the episode "Ability". First diagnosed when Patient Holly Musto came into Walter's office with an extra nose growing. She also had a funny smell coming from the growth.
The toxin causes scar tissue to grow at a rapid rate. It seals all orifices, killing the victim. At one point, Olivia tried to save a young FBI agent who had come into contact with the toxin, but the growth was too fast.
Walter kept the toxin in his basement storage frozen and used it against the Observers to retrieve the materials he needed to defeat the Observers.