Shoot the eye with energy through that narrow open spot in the wall around it, or bite it with beast (but that usually gives you damage).
For extra firepower, let Li + the blaster peg pet fire too (if you have it). Not sure if the nautilus can bash the eye; you can try.
And of course avoid the electricity - best with beast form because youre faster. Fish takes too much damage if hit.
Beast is also useful for eating the pests away and refilling health a bit in the process.
Hint: The reward he gives is well worth the fight.
EDIT: Beast + Spicy Soup instead of energy works too if switching forms takes too much time. But then better aim well!
