This cover art is known for being iconically weird. Destructoid tracked down one of the persons responsible for the cover art, and it's an interesting read.
Matt Guss said:My ad agency had the Kemco account, and our task was to develop packaging and marketing materials for over 40 titles. Kemco would typically buy their games from 3rd party developers in Japan. Some were good, and some were not good. Weaker games needed more help graphically to get them to stand out on the retail shelf. We wanted people to pick up the package, get engaged with the story, and buy the damn game. The package was also used to help Kemco sell the game to retailers, so it had to make the buyers think the game would sell at their stores (i.e. Walmart, etc.). Most of the games back then were in a look-alike category: same genre, same kind of graphics. Nothing to differentiate them from each other. Keith was not a gamer, and, in fact, none of us were in our agency. But Keith was a brilliant idea guy and always was. We knew the game didn't have a lot to offer, but we wanted to make the package arresting. Keith called this kind of thing the "heavy huh factor." If we couldn't do anything else, we'd try and get the potential purchaser to stare at the package and try and figure out what just happened. Today it might be called a WTF moment.
So Keith could have done some predictable spaceship shooting bullshit that would have been like every other game out there. Or he could create a story that would make people stop and think about it. And I guess it's proof that was a good idea because people are still thinking about it. Phalanx was a very average game with an unexpected cover design. It needed a great/weird idea to stand out from the crowd.
Full story of how they discovered this at the link.
https://www.destructoid.com/discovering-the-mystery-behind-the-phalanx-cover-art-471030.phtml (via GoNintendo.com)