They are not cocooning, they are pupating. Phoenix worms are fly grubs, not caterpillars.
Sterilization has nothing to do with the success of this process.
Why would you not want them to 'hatch'?
Once the grub has pupated, it becomes the adult form of the insect, which is the Soldier Fly. My male Veiled loves them. He's not at all interested in the small grubs, but he sure loves hunting down the flies they turn into.
I don't suppose the flies are very nutritious, but they do serve as a source of mental/reflex stimulation for the cham.
Just make sure you keep them in a fly-proof container whilst they are pupating, so they don't escape once they can fly. Then release them into the cham's cage (assuming the cage has mesh that is fine enough to prevent them from escaping).
I bought a few today...my cham looked at them once and didnt even bother and they stayed in her cage and she didnt even touch them but as soon as i put a cricket in there she started chasing the cricket...