The Neo Zeed are developing bio weapons, and this round takes place in their secret laboratory. Some of the first enemies you'll encounter are these weapons, including small winged insects which home in towards you, and mutants who rise out of the slime to attack. The mutants can fire bouncing projectiles, and take more than one hit to destroy with standard shurikens.
Not far into this stage you will encounter several test tubes, which break open and small creatures will attack. These small, pink beings try to jump into you, but they only take one hit to destroy. They are often numerous however and you'll often have to fight them whilst trying to deal with one of the flying insects also. As you progress through the lab, you'll come across a large conveyer belt that you'll have to grab onto to move across a slime bath.
This leads to several more smaller conveyer belts, some of which have small, electrical spheres moving around them. Carefully timed jumps are needed to make your way upwards, where you'll see a much larger conveyer belt on the ceiling. Grab onto this and let it take you all the way across to the right.
You will have to drop down a short distance, keep to the right to avoid falling into a slime pit. Not far along from here is the sub-boss, which is a kind of endurance test. You will be on a conveyer belt, and several of the small beings will keep being dropped down from above.
Keep killing these enemies until no more drop, and the slime nearby will be drained. This allows you to go down the pit and into the next stage.
You will enter a heavily mutated sewer. The main enemies here are some overgrown insects, which burst out of the ground when you approach them. You can just about see their pincers before they make a move, so look carefully at the ground. A constant problem throughout this stage is that Joe sinks into the ground -keep jumping to get him out. Another problem is a huge creature which appears in the background, and will try and lock onto you. If it manages to do this, it will fire a laser at you which can't be avoided, so always be on the move.
Try using a close range attack on the insects, and keep moving right to avoid the creature's laser. The creature will keep disappearing and reappearing throughout this stage, and will go for good when you reach the end.
However, the creature then appears again as it is the boss of this round. Despite how large it is, you can hit it anywhere. But whenever this boss takes a hit, it will bring out a hand and try and flatten you with it. Somersault jump to avoid this.
The boss also has a couple of attacks it will use throughout the fight, the first being three small projectiles. You can avoid these be waiting around next to the boss. But the other attack the boss has is far more dangerous, as it will sometimes use a powerful laser. It takes the boss a few seconds to charge this up, so be ready to somersault out of the way in time.
Finally the other thing this boss occasionally does is bury itself underground, by charging forward. Stay to the left of the screen and jump when it does this to avoid being hit, and then jump again when the boss comes back. Keep firing away at the boss and it will eventually scream and fall apart.