You will come across webbed corpses. Hit them a couple times to get guns, ammo or explosives. From now on keep looking after such cocoons - each can be hit up to 3 times.
After a short walk through the tentacles and exploding puffballs you will return to the main cave (but upper), where you will meet more Octabrains. If you have been searching all the bodies until now, there's a chance you found a Railgun which is great for dealing with octopuses, irrespectively of the distance between you. A few jump between the springboards and a couple puffballs later you will find another "barricaded" sphincter.
This time the bug needed to open it can be found a bit further. Keep going up the corridor, along the edge of the precipice. Once you reach a dead end you will see some explosives, a dead soldier and a shotgun which will definitely come in handy. On the other side of the precipice there's a glowing springboard.
Throw a pipe bomb at it and wait for it to bounce off to the room above, with a glowing bug inside. Detonate the bomb and the bug will roll down, making it possible to roll it to the closed sphincter. Go through it to reach the main cave once again. Jump onto the springboard (but look out for the puffballs above) and go through the next one. You will reach a junction: puffballs on one side and tentacles on the other. Go along the left side after shooting the puffballs to find some supplies.
Eventually you will reach a room with Pregnators - small bugs with huge scrotums hanging from their backs - hatch from cocoons growing out of the floor. If you let them shoot you 10 times, you will earn I Need a Towel.
After a heavy fight in the next room, you will reach a set of stairs which will lead you to the Queen.