man wakes up to discoverhis penisonfire

Yes, it turns out that he was up rather late doing some writing by candlelight, and had nodded off, letting his pen fall by his candle.  As the candle melted down to the pen, the heat had caused its case to ignite, and the fumes awoke the man who then saw that his pen is on fire.

It would have been funnier if it wasn't gramatically incorrect. "Pen is on fire" is in the present, while your story appears to be in the past.