You can go north or east here, but on your first visit, go right to progress; you can do more that way, and save a few tough battles for later.
You might want to switch your equipment around when you reach this section; there's Toxic Squid and various Jellies to worry about, and their weaknesses and resistances are a bit different from the enemies in previous rooms.
Come back when you have the ladder to reach the first chest.
Sludge Slime: Three waves. (must be cleared to progress)
Wave #1: Three Sludge Slimes and two Big Sludge Slimes
Wave #2: Three Sludge Slimes and two Copper Fish
Wave #3: Two Sludge Slimes, two Steel Fish, and one Toxic Squid
Toxic Squid: Two waves. (must be cleared to progress)
Wave #1: Three Sludge Slimes and two Yellow Jellies
Wave #2: Two Sludge Slimes and two Toxic Squids
Yellow Jelly: Three Yellow Jellies and two Steel Fishes (guards Chest #1)
CHESTS (IN PROGRESS):
Chest #1: Debilitate (skill), 3 Bio Virus, 9 Seaweed