In this article, we propose a Bayesian approach to phase I/II dose-finding oncology trials by jointly modeling a binary toxicity outcome and a continuous biomarker expression outcome. We apply our method to a clinical trial of a new gene therapy for bladder cancer patients. In this trial, the biomarker expression indicates biological activity of the new therapy. For ethical reasons, the trial is conducted sequentially, with the dose for each successive patient chosen using both toxicity and activity data from patients previously treated in the trial. The modeling framework that we use naturally incorporates correlation between the binary toxicity and continuous activity outcome via a latent Gaussian variable. The dose-escalation/de-escalation decision rules are based on the posterior distributions of both toxicity and activity. A flexible state-space model is used to relate the activity outcome and dose. Extensive simulation studies show that the design reliably chooses the preferred dose using both toxicity and expression outcomes under various clinical scenarios.