Stizz, I'll try to answer as best I can and I welcome corrections.

Warrants: You ask "Why wouldn't someone who was fortunate enough to buy the warrants simply be happy with an ever escalating stock price, pay the $2.40 when it is due, and ring the cash register on the way out the door?"

The simple answer is that through hedging the investor can lock in gains. This is no different than the folks that sold 11.2 million shares today. The complex answer is most likely buried in the details of the offering prospectus that covered the warrants. If you look at MNKD history, you will realize that the stock proce has not always been "ever escalating".

ATM: You ask: " My thought (please correct me if I am wrong) is that you sell your tens of millions of shares to long hedge funds and move on.

You are mostly correct. The dilutive impact of the ATM should already have been priced in by the market shortly after it was announced. I suppose on the days they are actually selling shares there could be some downward pricing pressure due to an abudance of shares available for sale. Hopefully this was anticipated in the sales agreement w/ the investment bankers.

Call Options: You asked lots of questions.

Assuming you hold your call options through maturity you will not actually physically purchase the 10k shares in your example. Your brokerage will credit your account the value of your option on the day it expires. Same for the party that sold you the calls - they will have to pay the value of the calls upon expiration. However, they may have margin call issues if they do not have the funds on hand to cover option losses.